Early County Board of Education, Blakely, Georgia, annual financial report for the fiscal year ended 2015 June 30 (including independent auditor's reports)

EARLY COUNTY BOARD OF EDUCATION
BLAKELY, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2015
(Including Independent Auditor's Reports)

EARLY COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S REPORT

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET POSITION

B

STATEMENT OF ACTIVITIES

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET POSITION

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

G

STATEMENT OF FIDUCIARY NET POSITION

FIDUCIARY FUNDS

H

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION

FIDUCIARY FUNDS

I NOTES TO THE BASIC FINANCIAL STATEMENTS

Page
i
1 2 4 5 6 7 8 9 11

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY

31

TEACHERS' RETIREMENT SYSTEM OF GEORGIA

2 SCHEDULE OF CONTRIBUTIONS TEACHERS' RETIREMENT SYSTEM OF GEORGIA

32

3 NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION

34

4 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

35

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EARLY COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I
FINANCIAL
SCHEDULES
SUPPLEMENTARY INFORMATION
5 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 6 SCHEDULE OF STATE REVENUE 7 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 8 ALLOTMENTS AND EXPENDITURES
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM

Page
36 37 38 39

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133

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

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

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SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
March 14, 2016

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Early County Board of Education
INDEPENDENT AUDITOR'S REPORT
Ladies and Gentlemen:
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Early County Board of Education, as of and for the year ended June 30, 2015, and the related notes to the financial statements (Exhibits A through I), which collectively comprise the Board's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
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effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
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 basic 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 Early County Board of Education, as of June 30, 2015, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As described in Note 2 to the financial statements, in 2015, the Early County Board of Education adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions an amendment of GASB Statement No. 27 and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date an amendment of GASB Statement No. 68. The School District restated beginning Net Position for the cumulative effect of these accounting changes. Our opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis, Schedules of Proportionate Share of the Net Pension Liability, Schedules of Contributions to Retirement Systems, Notes to the Required Supplementary Information and the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual as presented on pages i through vii and pages 31 through 35, respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Early County Board of Education's basic financial statements. The accompanying supplementary information, consisting of Schedules 5 through 8, is presented for the
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purposes of additional analysis and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements.
The accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated March 14, 2016, on our consideration of the Early 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 Early County Board of Education's internal control over financial reporting and compliance.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated Section 50-6-24.
Respectfully submitted,

GSG:er 2015ARL-11

Greg S. Griffin State Auditor

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EARLY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015
Introduction
The discussion and analysis of the Early County Board of Education's 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 notes to the basic financial statements to enhance their understanding of the School District's financial performance.
Financial Highlights
Key financial highlights for 2015 are as follows:
In total, net position decreased to $8.3 million.
General revenues accounted for $7.9 million in revenue or 34.4 percent of all revenues. Program specific revenues in the form of charges for services and sales, grants and contributions accounted for $15.1 million or 65.6 percent of total revenues of $23.0 million.
The School District had $23.3 million in expenses related to governmental activities; however, $15.1 million of these expenses were offset by program specific charges for services, grants or contributions. General revenues (primarily taxes) of $7.9 million were adequate to provide for these programs.
Among major funds, the general fund had $21.5 million in revenues and $22.2 million in expenditures.
Using the Basic Financial Statements
This annual report consists of a series of financial statements and notes to those statements. These statements are organized so the reader can understand the Early County Board of Education as a financial whole, or as an entire operating entity.
The Statement of Net Position and Statement of Activities provide information about the activities of the whole School District, presenting both an aggregate view of the School District's finances and a longerterm view of those finances. Fund financial statements provide the next level of detail. For governmental funds, these statements tell how services were financed in the short-term as well as what remains for future spending. The fund financial statements also look at the School District's most significant funds with all other nonmajor funds presented in total in one column. The general fund is by far the most significant fund in the case of the Early County Board of Education.
Reporting the School District as a Whole
Statement of Net Position and the Statement of Activities
While these documents contain the large number of funds used by the School District to provide programs and activities, the view of the School System 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 and all liabilities using the accrual basis of accounting similar to the accounting used by most private-sector companies. This basis of accounting takes into account all of the current year's revenues and expenses regardless of when cash is received or paid.
i

EARLY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015
These two statements report the School District's net position and changes in those assets. This change in net position is important because it tells the reader whether, for the School 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. Nonfinancial factors include the School 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 Board has one distinct type of activity:
Governmental Activities - All of the School 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.
Reporting the School District's Most Significant Funds
Fund Financial Statements
Although the School District uses many funds to account for a multitude of transactions, the fund financial statements focus on the School District's most significant funds. The School District's major governmental funds are the General Fund, the Capital Projects Fund, and the Debt Service Fund.
Governmental Funds Most of the School 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 School 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 School District is the trustee, or fiduciary, for assets that belong to others such as school clubs and organizations within the principals' accounts. The School 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 School District excludes these activities from the District-wide financial statements because it cannot use these assets to finance its operations.
The School District as a Whole
The perspective of the Statement of Net Position is of the School District as a whole. Table 1 provides a summary of the School District's net position for fiscal year 2015.
ii

EARLY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015

Table 1 Net Position (In Thousands)

Assets

Current and Other Assets

$

Capital Assets, Net

Total Assets

Deferred Outflows of Resources Related to Defined Benefit Pension Plans

Liabilities Current and Other Liabilities Long-Term Liabilities

Total Liabilities

Deferred Inflows of Resources Related to Defined Benefit Pension Plans

Net Position Net Investment in Capital Assets Restricted Unrestricted

Total Net Position

$

Governmental Activities

Fiscal

Fiscal

Year 2015

Year 2014 (1)

8,293 $ 22,404

8,095 23,457

30,697

31,552

1,597

0

2,219 16,450
18,669

2,096 1,900
3,996

5,309

0

20,504 4,851
-17,039
8,316 $

21,557 3,937 2,062
27,556

(1) Fiscal year 2014 balances do not reflect the effects of the Restatement of Net Position. See Note 2 in the Notes to the Basic Financial Statements for additional information.
Total net position decreased $19.2 million mainly due the implementation of GASB 68, Accounting and Financial Reporting for Pensions, and GASB 71, Pension Transition for Contributions Made Subsequent to Measurement Date - an amendment of GASB 68, in fiscal year 2015.
Table 2 shows the changes in net position for fiscal year 2014 and 2015.

iii

EARLY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015

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

Table 2

Change in Net Position

(In Thousands)

Governmental Activities

Fiscal Year

Fiscal Year

2015

2014 (1)

$

275 $

276

14,770

13,916

77

77

Total Program Revenues

15,122

14,269

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

5,985 46
1,525 20
63 102 174

6,556 42
1,597 12 1
393 90
416

Total General Revenues

7,915

9,107

Total Revenues

23,037

23,376

Progr am Expenses: Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Operations of Non-Instructional Services Food Services Interest on Short-Term and Long-Term Debt

15,097
701 648 381 683 1,587 137 1,602 1,073
82
1,371

14,934
655 639 380 639 1,658 142 1,598 1,160
87
1,306 1

Total Expenses

23,362

23,199

Increase/Decrease in Net Position

$

-325 $

177

(1) Fiscal year 2014 balances do not reflect the effects of the Restatement of Net Position. See Note 2 in the Notes to the Basic Financial Statements for additional information.

iv

EARLY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015

Governmental Activities
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 Cost of Services (In Thousands)

Total Cost of Services

Fiscal

Fiscal

Year 2015

Year 2014 (1)

Net Cost of Services

Fiscal

Fiscal

Year 2015

Year 2014 (1)

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

$ 15,097 $
701 648 381 683 1,587 137 1,602 1,073
82
1,371
$ 23,362 $

14,934 $
655 639 380 639 1,658 142 1,598 1,160
87
1,306 1
23,199 $

4,376 $
603 343 106
41 1,026
130 972 654
7
-19
8,239 $

5,034
548 234 109
37 1,104
139 945 716
12
551 1
9,430

(1) Fiscal year 2014 balances do not reflect the effects of the Restatement of Net Position. See Note 2 in the Notes to the Basic Financial Statements for additional information.
Although program revenues make up a majority of the revenues, the School District is still dependent upon tax revenues for governmental activities. 29.0 percent of instruction activities are supported through taxes and other general revenues; for all governmental activities general revenue support is 35.3 percent.
The School District's Funds
The School District's governmental funds are accounted for using the modified accrual basis of accounting. Total governmental funds had revenues and other financing sources of $23.1 million and expenditures and other financing uses of $23.0 million. The capital projects fund had an overall increase of $0.8 million because the School District expended less in capital outlay. The general fund decreased $0.8 million and the debt service fund remained virtually the same.

v

EARLY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015

General Fund Budgeting Highlights
The School District's budget is prepared according to Georgia law. The most significant budgeted fund is the General Fund.

During the course of fiscal year 2015, the School District amended its general fund budget as needed. The School 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 final budgeted revenues of $20.6 million exceeded the original budgeted amount of $18.0 million by $2.6 million. The actual revenues of $21.5 million were above the final budgeted amount by $0.9 million because the School District received more Quality Basic Education (QBE) funding than originally projected.
The final budgeted expenditures of $21.1 million exceeded the original budgeted amount of $18.7 million by $2.4 million. The actual expenditures of $22.2 million were above the final budgeted amount by $1.1 million. The majority of this variance was due to the fact that the entity did not include certain grants, such as Pre-Kindergarten, Math and Science Supplements and Technology for Connections to Classrooms, in the final budget.

Capital Assets and Debt Administration

Capital Assets
At the end of fiscal year 2015, the School District had $22.4 million invested in capital assets, all in governmental activities. Table 4 indicates balances at June 30, 2015.

Table 4 Capital Assets (Net of Depreciation, in Thousands)

Governmental Activities

Fiscal

Fiscal

Year 2015

Year 2014

Land

$

Construction In Progress

Building and Improvements

Equipment

Land Improvements

333 $ 38
18,509 2,579 944

333 32
19,364 2,723 1,005

Total

$

22,403 $

23,457

vi

EARLY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015

Debt At June 30, 2015, the Board had $1.9 million in bonds outstanding with all due within one year.

Table 5 Debt at June 30 (in Thousands)

Governmental Activities

Fiscal

Fiscal

Year 2015

Year 2014

General Obligation Bonds

$

Current Issues

1,900 $

1,900

The Early County School District has faced severe financial challenges in recent years but has remained relatively stable and financially sound. The financial challenges have included rising costs in employee benefits, the continued state formula allotment reductions, a slow decline in student enrollment (FTE), and a declining local tax digest.
The School District's current millage rate is at 16.5 mils. The amount of taxes collected per mill is $413,500.

Student enrollment is a factor in the State's education funding formula. According to the State's funding formula, student enrollment is converted to a "Full Time Equivalent (FTE)" count. As student enrollment and FTE decrease so does state funding. The student enrollment for fiscal year 2015 and the three years prior is as follows:

FY 2012 FY 2013 FY 2014 FY 2015

2,206 2,210 2,082 2,082

The amended formula adjustment, the reduction in state funding, for fiscal year 2015 was $1.0 million. The School District has reduced the number of faculty and staff through normal attrition and tenured positions to help with the budget shortfall. The School District employees had 7 furlough days for fiscal year 2014, 3 furlough days for fiscal year 2015, and 2 furlough days for fiscal year 2016.

The Early County School District recognizes its responsibility to the taxpayers in overseeing the spending of state and local funds. The School District is striving to maintain sound fiscal management while emphasizing student achievement.
Contacting the Board's Financial Management
This financial report is designed to provide our citizens, taxpayers, investors, and creditors with a general overview of the Board's finances and to show the Board's accountability for the money it receives. If you have questions about this report or need additional information, contact Stella M. Smith, CPA, Assistant Superintendent of Business Services/Chief Financial Officer at the Early County Board of Education, 11927 Columbia Street, Blakely, Georgia 39823.
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EARLY COUNTY BOARD OF EDUCATION

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EARLY COUNTY BOARD OF EDUCATION STATEMENT OF NET POSITION JUNE 30, 2015
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Inventories Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation)
Total Assets
DEFERRED OUTFLOWS OF RESOURCES
Related to Defined Benefit Pension Plans
LIABILITIES
Accounts Payable Salaries and Benefits Payable Deposits and Unearned Revenues Long-Term Liabilities
Due Within One Year Net Pension Liability
Total Liabilities
DEFERRED INFLOWS OF RESOURCES
Related to Defined Benefit Pension Plans
NET POSITION
Net Investment in Capital Assets Restricted for
Continuation of Federal Programs Debt Service Capital Projects Bus Replacement Unrestricted (Deficit)
Total Net Position

EXHIBIT "A"

GOVERNMENTAL ACTIVITIES

$

4,108,425.68

1,875,968.06

457,649.53 1,463,066.00
366,075.99 22,689.03
371,494.37 22,032,309.04

30,697,677.70

1,596,835.76

108,555.54 2,101,014.90
9,250.00
1,900,000.00 14,550,084.00
18,668,904.44

5,309,291.00

20,503,803.41
357,568.09 1,875,968.06 2,480,941.84
137,098.25 -17,039,061.63

$

8,316,318.02

The notes to the basic financial statements are an integral part of this statement. - 1 -

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

GOVERNMENTAL ACTIVITIES
Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Operations of Non-Instructional Services Food Services
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Sales Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Change in Net Position
Net Position - Beginning of Year, Restated
Net Position - End of Year

EXPENSES

CHARGES FOR SERVICES

$

15,096,468.71 $

700,889.65 647,909.87 381,375.24 682,799.24 1,587,269.26 137,343.98 1,601,881.87 1,073,105.92
82,335.34

1,370,412.32

$

23,361,791.40 $

246,223.76
28,420.57 274,644.33

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

EXHIBIT "B"

PROGRAM REVENUES OPERATING GRANTS AND
CONTRIBUTIONS

CAPITAL GRANTS AND CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET POSITION

$

10,473,896.76

97,695.67 305,306.85 275,802.00 641,366.63 561,554.00
6,976.82 629,513.44 342,131.30 $
75,169.69

1,361,016.91

$

14,770,430.07 $

$
77,220.00 77,220.00

-4,376,348.19
-603,193.98 -342,603.02 -105,573.24
-41,432.61 -1,025,715.26
-130,367.16 -972,368.43 -653,754.62
-7,165.65
19,025.16
-8,239,497.00

5,984,725.98 45,732.28
1,524,843.24 19,614.69 63,579.00
102,247.97 174,110.81
7,914,853.97
-324,643.03
8,640,961.05

$

8,316,318.02

- 3 -

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

EXHIBIT "C"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Inventories

GENERAL FUND

DISTRICT-WIDE CAPITAL PROJECTS FUND

DEBT SERVICE
FUND

TOTAL

$ 1,740,003.63 $ 2,368,422.05

$ 4,108,425.68

$ 1,875,968.06

1,875,968.06

345,129.74 1,463,066.00
366,075.99 22,689.03

112,519.79

457,649.53 1,463,066.00
366,075.99 22,689.03

Total Assets

$ 3,936,964.39 $ 2,480,941.84 $ 1,875,968.06 $ 8,293,874.29

LIABILITIES, DEFERRED INFLOWS OR RESOURCES AND FUND BALANCES

LIABILITIES

Accounts Payable Salaries and Benefits Payable Deposits and Unearned Revenue

$ 108,555.54 2,101,014.90 9,250.00

$ 108,555.54 2,101,014.90 9,250.00

Total Liabilities

2,218,820.44

2,218,820.44

DEFERRED INFLOWS OF RESOURCES

Unavailable Revenue - Property Taxes

132,055.76

132,055.76

FUND BALANCES

Nonspendable Restricted Committed Unassigned

22,689.03 471,977.31 $
92,730.03 998,691.82

2,480,941.84 $

1,875,968.06

22,689.03 4,828,887.21
92,730.03 998,691.82

Total Fund Balances

1,586,088.19

2,480,941.84

1,875,968.06

5,942,998.09

Total Liabilities, Deferred Inflows of Resources and Fund Balances

$ 3,936,964.39 $ 2,480,941.84 $ 1,875,968.06 $ 8,293,874.29

The notes to the basic financial statements are an integral part of this statement. - 4 -

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

EXHIBIT "D"

Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Position are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported as assets in governmental funds. These assets consist of:
Land Construction in Progress Land Improvements Buildings Equipment Accumulated Depreciation
Total Capital Assets
Some liabilities, including net pension obligations, are not due and payable in the current period and, therefore, are not reported in the governmental funds.
Net Pension Liability
Taxes that are not available to pay for current period expenditures are deferred in the governmental funds.
Property Taxes
Long-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of:
Bonds Payable
Deferred Outflows and Inflows of Resources related to pensions are applicable to future periods and, therefore, are not reported in the governmental funds.
Net Position of Governmental Activities (Exhibit "A")

$ 5,942,998.09

$

333,213.12

38,281.25

2,217,194.44

31,487,068.07

6,727,478.57

-18,399,432.04

22,403,803.41

-14,550,084.00

132,055.76

-1,900,000.00 -3,712,455.24 $ 8,316,318.02

The notes to the basic financial statements are an integral part of this statement. - 5 -

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

EXHIBIT "E"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Food Services Operation
Capital Outlay
Total Expenditures
Net Change in Fund Balances
Fund Balances - Beginning
Fund Balances - Ending

GENERAL FUND

DISTRICT-WIDE CAPITAL PROJECTS FUND

DEBT SERVICE
FUND

TOTAL

$ 6,041,959.94 19,614.69 $
11,403,780.18 3,545,417.85 274,644.33 14,798.08 174,110.81
21,474,325.88

1,524,843.24 13,814.60 $
1,538,657.84

$ 73,635.29

6,041,959.94 1,544,457.93 11,403,780.18 3,545,417.85
274,644.33 102,247.97 174,110.81

73,635.29

23,086,619.01

14,407,772.06
721,818.20 670,233.66 393,467.30 694,261.76 1,240,845.96 142,991.37 1,571,783.48 978,572.75
86,919.69 1,324,416.02
22,233,082.25
-758,756.37
2,344,844.56

28,311.86
86,393.00 651,698.21 766,403.07 772,254.77 1,708,687.07

0.00 0.00 73,635.29 1,802,332.77

14,436,083.92
721,818.20 670,233.66 393,467.30 694,261.76 1,240,845.96 142,991.37 1,571,783.48 1,064,965.75
86,919.69 1,324,416.02
651,698.21
22,999,485.32
87,133.69
5,855,864.40

$ 1,586,088.19 $ 2,480,941.84 $ 1,875,968.06 $ 5,942,998.09

The notes to the basic financial statements are an integral part of this statement. - 6 -

EARLY COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2015

EXHIBIT "F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:
Capital Outlay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense
Taxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds.
Some items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in Governmental Funds. These activities consist of:
Pension Expense

$

87,133.69

$

396,909.31

-1,450,515.11

-1,053,605.80

-11,501.68

653,330.76

Change in Net Position of Governmental Activities (Exhibit "B")

$

-324,643.03

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

ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net
Interest and Dividends Other
Total Assets
LIABILITIES Funds Held for Others
NET POSITION Held in Trust for Private Purposes

EARLY COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUNDS JUNE 30, 2015

EXHIBIT "G"

PRIVATE PURPOSE TRUSTS

AGENCY FUNDS

$

6,075.07 $ 106,155.82

43,000.00

75.44

16,521.81

49,150.51 $ 122,677.63

$ 122,677.63

$

49,150.51

The notes to the basic financial statements are an integral part of this statement. - 8 -

EARLY COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FIDUCIARY FUNDS YEAR ENDED JUNE 30, 2015
ADDITIONS Investment Earnings Interest
DEDUCTIONS Scholarships Change in Net Position
Net Position - Beginning
Net Position - Ending

EXHIBIT "H"

PRIVATE PURPOSE TRUSTS

$

227.27

750.00 -522.73 49,673.24

$

49,150.51

The notes to the basic financial statements are an integral part of this statement. - 9 -

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EARLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "I"

NOTE 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Early 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 District-wide financial statements, fund financial statements and notes to the basic financial statements of the Early County Board of Education.
District-wide Statements:
The Statement of Net Position and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements:
The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds.
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for and reports all financial resources not accounted for and reported in another fund.
District-wide Capital Projects Fund accounts for and reports financial resources including Education Special Purpose Local Option Sales Tax (ESPLOST) and Bond Proceeds that are restricted, committed or assigned to the expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets.
Debt Service Fund accounts for and reports financial resources that are restricted, committed, or assigned including taxes (sales) legally restricted for the payment of general long-term principal and interest.

- 11 -

EARLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "I"

The School District reports the following fiduciary fund types:
Private Purpose Trust funds report trust arrangements under which principal and income may be expended to provide scholarships for selected students and financial assistance to selected students in pursuit toward long-term employment and financial independence.
Agency funds account for assets held by the School District as an agent for various funds or individuals.
BASIS OF ACCOUNTING
The basis of accounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, 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.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. The School District considers all intergovernmental revenues to be available if they are collected within 120 days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general longterm debt which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities are reported as other financing sources.
The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, both restricted and unrestricted resources are available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
RESTATEMENT OF PRIOR YEAR NET POSITION
For fiscal year 2015, the School District made several prior period adjustments due to the adoption of GASB Statement No. 68 and GASB Statement No. 71, as described in "New Accounting Pronouncements" below, which require the restatement of the June 30, 2014, net position in Governmental Activities. The result is a decrease in Net Position at July 1, 2014 of $18,915,870.00. This change is in accordance with generally accepted accounting principles.

- 12 -

EARLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "I"

Net Position, July 1, 2014, as previously reported Prior Period adjustment - Implementation of GASB 68: Net pension liability (measurement date) TRS Deferred Outflows - School District's contribution made during fiscal year 2014 TRS
Net Position, July 1, 2014, as restated

$ 27,556,831.05 $ -20,358,707.00
1,442,837.00 -18,915,870.00 $ 8,640,961.05

NEW ACCOUNTING PRONOUNCEMENTS
In fiscal year 2015, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions. The provisions of this statement establish accounting and financial reporting standards for pensions that are provided to the employees of state and local governmental employers through pension plans that are administered through trusts. Implementation of this statement requires a restatement to beginning net position. The adoption of this statement has a significant impact on the School District's financial statements. As noted above the School District restated beginning Net Position for the cumulative effect of this accounting change.
In fiscal year 2015, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 69, Government Combinations and Disposals of Government Operations. This statement provides specific accounting and financial reporting guidance for combinations in the governmental environment. This statement also requires that disclosures be made by governments about combination arrangements in which they engage and for disposals of government operations. The School District did not have any activities of this type during the fiscal year and the adoption of this statement does not have a significant impact on the School District's financial statements.
In fiscal year 2015, the School District adopted Governmental Accounting Standards Board (GASB) Statement 71, Pension Transition for Contributions Made Subsequent to the Measurement Date - an amendment of GASB No. 68. The objective of this statement is to improve accounting and financial reporting by addressing an issue in Statement No. 68, Accounting and Financial Reporting for Pensions, concerning transition provisions related to certain pension contributions made to defined benefit pension plans prior to implementation of statement. This statement amends paragraph 137 of Statement No. 68 which limited recognition of pension-related deferred inflows of resources at the transition to circumstances in which it is practical to determine the amounts of all deferred outflows of resources and deferred inflows of resources related to pensions. The adoption of this statement has a significant impact on the School District's financial statements. As noted above the School District restated beginning Net Position for the cumulative effect of this accounting change.
CASH AND CASH EQUIVALENTS
Composition of Deposits
Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations.
INVESTMENTS
Composition of Investments
Investments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported
- 13 -

EARLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "I"

at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
1. Obligations issued by the State of Georgia or by other states,
2. Obligations issued by the United States government,
3. Obligations fully insured or guaranteed by the United States government or a United States government agency,
4. Obligations of any corporation of the United States government,
5. Prime banker's acceptances,
6. The local government investment pool (Georgia Fund 1) administered by the State of Georgia, Office of the State Treasurer,
7. Repurchase agreements, and
8. Obligations of other political subdivisions of the State of Georgia.
The School District does not have a formal policy regarding investment policies that address credit quality risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks.

RECEIVABLES
Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.

PROPERTY TAXES
The Early County Board of Commissioners adopted the property tax levy for the 2014 tax digest year (calendar year) on September 16, 2014 (levy date) based on property values as of January 1, 2014. Taxes were due on December 20, 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 Early County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% 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 $5,948,104.45.
The Tax millage rate levied for the 2014 tax year (calendar year) for the Early County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

16.5 mills

Additionally, Title Ad Valorem Tax revenues, at the fund reporting level, amounted to $48,123.21 during fiscal year ended June 30, 2015.

- 14 -

EARLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "I"

SALES TAXES
Education Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $1,524,843.24 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.
INVENTORIES
Food Inventories
On the basic financial statements, inventories 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.
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. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District.
Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide statements are as follows:

Capitalization Policy

Estimated Useful Life

Land Land Improvements Buildings and Improvements Equipment Intangible Assets

All $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 100,000.00

N/A 15 to 30 years 15 to 40 years 10 to 25 years 10 to 20 years

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives, with the exception of intangible assets which are amortized.
Amortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, copyrights and internally generated software is computed using the straight-line method over the estimated useful lives of the assets, generally 10 to 20 years.

- 15 -

EARLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "I"

DEFERRED OUTFLOWS/INFLOWS OF RESOURCES
In addition to assets, the statement of net position and/or the balance sheet will report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of resources that applies to a future period(s) and therefore will not be recognized as an outflow of resources (expense/expenditure) until then. Under the full accrual method of accounting, the School District has reported deferred outflows of resources related to a defined benefit pension plan, as discussed in Note 13 Retirement Plans.
In addition to liabilities, the statement of net position and/or the balance sheet will report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of resources that applies to a future period(s) and therefore will not be recognized as an inflow of resources (revenue) until that time. Under the full accrual method of accounting, the School District has reported deferred inflows of resources related to a defined benefit pension plan, as discussed in Note 13 Retirement Plans. This item is reported only in the District-wide Statement of Net Position. Additionally, the School District has only one type of item, which arises only under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from property taxes and grants and these amounts are deferred and will be recognized as an inflow of resources in the period in which the amounts become available.
GENERAL OBLIGATION BONDS
The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide financial statements, bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are recognized as an outflow of resources in the fiscal year in which the bonds are issued.
In the fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Position.
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 the Public School Employees Retirement System (PSERS) and additions to/deductions from TRS/PSERS's fiduciary net position have been determined on the same basis as they are reported by TRS/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. See Note 13 - Retirement Plans.
NET POSITION
The School District's net position in the District-wide Statements is classified as follows:
Net Investment in Capital Assets - This represents the School District's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of net investment in capital assets.

- 16 -

EARLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "I"

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

Unrestricted Net Position - Unrestricted Net Position is the net amount of the assets, deferred outflows of resources, liabilities and deferred inflows of resources that are not included in the determination of Net Investments of Capital Assets and Restricted Net Position. Included in the net deficit reported is the School District's Net Pension liability of $14,550,084 which is required for financial reporting.

FUND BALANCES
The School District's fund balances are classified as follows:

Nonspendable Amounts that cannot be spent either because they are in a nonspendable form or because they are legally or contractually required to be maintained intact.

Restricted Constraints are placed on the use of resources are either (1) externally imposed conditions by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation.

Committed Amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board of Education. The Board of Education is the School District's highest level of decision-making authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Committed fund balance also should incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements.

Assigned Amounts that are constrained by the School District's intent to be used for specific purposes, but are neither restricted nor committed. The intent should be expressed by (1) the Board of Education or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes.

Unassigned The residual classification for the General Fund. This classification represents fund balances that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the General Fund.

Fund Balances of the Governmental Funds at June 30, 2015, are as follows:

Nonspendable Inventories Inventories
Restricted Bus Replacement Continuation of Federal Programs Capital Projects Debt Service
Committed School Activity Accounts
Unassigned

$

22,689.03

$

137,098.25

334,879.06

2,480,941.84

1,875,968.06

4,828,887.21

92,730.03 998,691.82

Fund Balance, June 30, 2015

$ 5,942,998.09

When multiple categories of fund balance are available for expenditure, the School District will start with the most restricted category and spend those funds first before moving down to the next category with available funds.
- 17 -

EARLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "I"

USE OF ESTIMATES
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.
NOTE 3: BUDGETARY DATA
The budget is a complete financial plan for the School District's fiscal year, and is based upon careful estimates of expenditures together with probable funding sources. The budget is legally adopted each year for the general, debt service and capital projects funds. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds is prepared and adopted by fund, function and object. The legal level of budgetary control was established by the Board at the aggregate function level. The budget for the General Fund was prepared in accordance with accounting principles generally accepted in the United States of America.
The budgetary process begins with the School District's administration presenting an initial budget for the Board's review. The administration makes revisions as necessary based on the Board's guidelines and a tentative budget is approved. After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper of general circulation in the locality, as well as the School District's website. At the next regularly scheduled meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. The approved budget is then submitted, in accordance with provisions of Official Code of Georgia Annotated section 20-2-167(c), to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal yearend.
See Schedule 4 General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual for a detail of any over/under expenditures during the fiscal year under review.
NOTE 4: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS
Official Code of Georgia Annotated (O.C.G.A.) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. Section 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 percent of the daily pool balance.
Acceptable security for deposits consists of any one of or any combination of the following:
1. Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
2. Insurance on accounts provided by the Federal Deposit Insurance Corporation,
3. Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
4. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,

- 18 -

EARLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "I"

5. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,

6. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and

7. Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.

CATEGORIZATION OF DEPOSITS
Custodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2015, the School District had deposits with a carrying amount of $4,263,656.57, which includes $43,000.00 in Certificates of Deposit, that are reported as Investments and a bank balance of $4,945,309.39. The bank balances insured by Federal depository insurance were $291,332.74 and the bank balances collateralized with securities held by the pledging institution or by the pledging financial institution's trust department or agent in the School District's name were $4,653,976.65.

CATEGORIZATION OF INVESTMENTS

At June 30, 2015, the carrying value of the School District's total investment was $1,918,968.06. This includes $43,000.00 invested in Certificates of Deposit, which are collateralized in the same manner as other cash deposits. The School District's investments as of June 30, 2015, are presented below. All investments are presented by investment type and debt securities are presented by maturity.

Investment Type

Fair Value

Investment Maturity Less Than 1 Year

Debt Securities U. S. Agencies Implicitly Guaranteed Federal National Mortage Association (FNMA)

$ 1,875,968.06 $ 1,875,968.06

Interest Rate Risk
Interest rate risk is the risk that changes in interest rates of debt investment will adversely affect the fair value of an investment. The School District does not have a formal policy for managing interest rate risk.
Custodial Credit Risk
Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, the School District will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The School District does not have a formal policy for managing custodial credit risk for investments.
At June 30, 2015, the fair value of the School District's total investments were $1,875,968.06, and this entire amount consisted of Federal National Mortgage Association securities which were not exposed to custodial credit risk.
- 19 -

EARLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "I"

Credit Quality Risk
Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The School District does not have a formal policy for managing credit quality risk.

The investments subject to credit quality risk are reflected below:

Rated Debt Investments

Fair Value

Quality Ratings Unrated

Debt Securities U. S. Agencies Implicitly Guaranteed Federal National Mortgage Association $

1,875,968.06

$ 1,875,968.06

Concentration of Credit Risk
Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The School District does not have a formal policy for managing concentration of credit risk. More than 5% of the School District's investments are in Federal National Mortgage Association Obligations. This investment is 100% of the School District's total investments.

NOTE 5: NON-MONETARY TRANSACTIONS
The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories

NOTE 6: CAPITAL ASSETS
The following is a summary of changes in the Capital Assets during the fiscal year:

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

Balances July 1, 2014

Increases

Decreases

Balances June 30, 2015

$

333,213.12

32,470.00 $

38,281.25 $

$ 32,470.00

333,213.12 38,281.25

Total Capital Assets, Not Being Depreciated

365,683.12

38,281.25

32,470.00

371,494.37

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

31,487,068.07 6,366,261.51 2,187,313.44
12,123,258.92 3,643,277.02 1,182,380.99

361,217.06 29,881.00
854,864.36 505,167.25
90,483.50

0.00

31,487,068.07

6,727,478.57

2,217,194.44

12,978,123.28 4,148,444.27 1,272,864.49

Total Capital Assets, Being Depreciated, Net

23,091,726.09

-1,059,417.05

0.00

22,032,309.04

Governmental Activity Capital Assets - Net $ 23,457,409.21 $ -1,021,135.80 $

32,470.00 $ 22,403,803.41

- 20 -

EARLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "I"

Current year depreciation expense by function is as follows:

Instruction Support Services
General Administration School Administration Maintenance and Operation of Plant Student Transportation Services Food Services

$
$ 7,755.98 273,799.98 29,016.97 139,638.14

935,356.94
450,211.07 64,947.10

$ 1,450,515.11

NOTE 7: RISK MANAGEMENT

The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation.

The School District has obtained commercial insurance for risk of loss associated with torts, assets, errors or omissions, job related illness or injuries to employees, and acts of God. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years.

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:

Claims and

Beginning of Year

Changes in

Claims

End of Year

Liability

Estimates

Paid

Liability

2014 $ 2015 $

0.00 $ 0.00 $

858.00 $ 0.00 $

858.00 $ 0.00 $

0.00 0.00

The School District participates in the Georgia Education Workers' Compensation Trust, a public entity risk pool organized on December 1, 1991, to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Trust for its general worker's compensation insurance coverage. Specific excess of loss insurance coverage is provided through an agreement by the Trust with the Safety National Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $1 million loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided with limits of $2 million. The Trust covers the first $1 million of each Employers liability claim with Safety National providing additional Employers Liability limits up to a $2 million per occurrence maximum. Safety National Casualty Company also provides $2 million in aggregate coverage to the Trust, attaching at 110% of the loss fund and based on the Fund's annual normal premium.

- 21 -

EARLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "I"

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

Position Covered

Amount

Superintendent Principals Bookkeeper All Employees

$ 50,000.00 $ 1,000.00 - $ 2,500.00
$ 14,000.00 $ 100,000.00

NOTE 8: OPERATING LEASES
Early County Board of Education has entered into various leases as lessee for copy machines. These leases are considered for accounting purposes to be operating leases. Lease expenditures for the year ended June 30, 2015, for governmental funds amounted to $52,932.10. Future minimum lease payments for these leases are as follows:

Year Ending

Governmental Funds

2016 2017 2018

$

26,979.96

47,271.02

11,111.90

Total

$

85,362.88

NOTE 9: LONG-TERM LIABILITIES GENERAL OBLIGATION DEBT OUTSTANDING
General Obligation Bonds currently outstanding are as follows:

Purpose

Interest Rate

Amount

General Government - QZAB - Series 2002B

0.00%

$ 1,900,000.00

Voters have authorized $5,000,000.00 in general obligation debt for capital outlay which was not issued as of June 30, 2015.

The changes in Long-Term Liabilities during the fiscal year ended June 30, 2015, were as follows:

Governmental Activities

Balance July 1, 2014

Additions

Deductions

Balance June 30, 2015

Due Within One Year

G.O. Bonds $ 1,900,000.00 $ 0.00 $

0.00 $ 1,900,000.00 $

1,900,000.00

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 Debt

Principal

Interest

2016

$

1,900,000.00 $

0.00

- 22 -

EARLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "I"

NOTE 10: ON-BEHALF PAYMENTS
The School District has recognized revenues and costs in the amount of $53,924.95 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.
Georgia Department of Education Paid to the Teachers' Retirement System of Georgia For Teachers' Retirement System (TRS) Employer's Cost In the amount of $10,482.95
Office of the State Treasurer Paid to the Public School Employees' Retirement System For Public School Employees' Retirement (PSERS) Employer's Cost In the amount of $43,442.00
Funds paid on behalf of the School District are reported in governmental funds. See Note 13 Retirement Plans for the State support related to the Net Pension Liability.
NOTE 11: 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 12: POST-EMPLOYMENT BENEFITS
GEORGIA SCHOOL PERSONNEL POST-EMPLOYMENT HEALTH BENEFIT FUND
Plan Description. The Georgia School Personnel Post-employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Benefit Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (O.C.G.A.) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board). The Department of Community Health, which includes the School OPEB Fund, issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.
Funding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. For members with fewer than five years of service as of January 1, 2012, contributions also vary based on years of service. On average, members with five years or more of service as of January 1, 2012, pay approximately 25 percent of the cost of the health insurance coverage. In accordance with the Board resolution dated December 8, 2011, for members with fewer than five years of service as of January 1, 2012, the State provides a premium subsidy in retirement that ranges from 0% for fewer than 10 years of service to 75% (but no greater than the subsidy percentage offered to active employees) for 30 or more years of service. The subsidy for eligible dependents ranges from 0% to 55% (but no greater than the subsidy percentage offered to dependents of active employees minus 20%). No subsidy is available to Medicare eligible
- 23 -

EARLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "I"

members not enrolled in a Medicare Advantage Option. The Board of Community Health sets all member premiums by resolution and in accordance with the law and applicable revenue and expense projections. Any subsidy policy adopted by the Board may be changed at any time by Board resolution and does not constitute a contract or promise of any amount of subsidy.
Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected "payas-you-go" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.
The combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30, 2015:
For certificated teachers, librarians and regional educational service agencies and certain other eligible participants:

July 1, 2014 - June 30, 2015 For non-certificated school personnel:
July 1, 2014 - June 30, 2015

$945 per member per month $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 post-employment benefits and are subject to appropriation.

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

Fiscal Year

Percentage Contributed

Required Contribution

2015 2014 2013

100% 100% 100%

$

2,246,241.00

$

2,264,372.40

$

2,135,765.40

NOTE 13: RETIREMENT PLANS
Early County Board of Education participates in various retirement plans administered by the State of Georgia, as further explained below.

- 24 -

EARLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "I"

TEACHERS' RETIREMENT SYSTEM OF GEORGIA (TRS)
Plan Description: All teachers of the School 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 pension through the Teachers Retirement System of Georgia (TRS). TRS, a cost-sharing multiple- employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. The Teachers' Retirement System of Georgia issues a publicly available separate financial audit report that can be obtained at www.trsga.com/publications.

Benefits Provided: TRS provides service retirement, disability retirement, and death benefits. Normal retirement benefits are determined as 2% of the average of the employee's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. An employee is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. Ten years of service is required for disability and death benefits eligibility. Disability benefits are based on the employee's creditable service and compensation up to the time of disability. Death benefits equal the amount that would be payable to the employee's beneficiary had the employee retired on the date of death. Death benefits are based on the employee's creditable service and compensation up to the date of death.

Contributions: Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. Pursuant to O.C.G.A. 47-3-63, the employer contributions for certain full-time public school support personnel are funded on behalf of the employer by the State of Georgia. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees were required to contribute 6% of their annual pay during fiscal year 2015. The school district's contractually required contribution rate for the year ended June 30, 2015 was 13.15% of annual school district payroll. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2015 2014 2013

100% 100% 100%

$ 1,607,903.59 $ 1,452,541.51 $ 1,352,534.43

PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM (PSERS)
Plan description: PSERS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly in 1969 for the purpose of providing retirement allowances for public school employees who are not eligible for membership in the Teachers Retirement System of Georgia. The ERS Board of Trustees, plus two additional trustees, administers PSERS. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. PSERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/formspubs/formspubs.

Benefits provided: A member may retire and elect to receive normal monthly retirement benefits after completion of ten years of creditable service and attainment of age 65. A member may choose to receive reduced benefits after age 60 and upon completion of ten years of service.

- 25 -

EARLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "I"

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, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension At June 30, 2015, the School District reported a liability of $14,550,084.00 for its proportionate share of the net pension liability for TRS.

The TRS net pension liability reflected a reduction for support provided to the School District by the

State of Georgia for certain public school support personnel. The amount recognized by the School

District as its proportionate share of the net pension liability, the related State of Georgia support, and

the total portion of the net pension liability that was associated with the School District were as follows:

School District's proportionate share of the net pension liability

$ 14,550,084.00

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

97,911.00

Total

14,647,995.00

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 School 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 School District's TRS proportion was 0.115169%, which was a decrease of 0.001668% from its proportion measured as of June 30, 2013.
At June 30, 2015, the School District did not have a PSERS liability for a proportionate share of the Net Pension Liability because of a Special Funding Situation with the State of Georgia, which is responsible for the Net Pension Liability of the plan. The amount of the State's proportionate share of the Net Pension Liability associated with the School District is $170,734.00.

- 26 -

EARLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "I"

The PSERS net pension liability was measure 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 School District was based on actuarially determined contributions paid by the State during the fiscal year ended June 30, 2014.

For the year ended June 30, 2015, the School District recognized pension expense of $943,505.00 for TRS and $14,827.00 for PSERS and revenue of $1,129.00 for TRS and $14,827.00 for PSERS. The revenue is support provided by the State of Georgia.

At June 30, 2015, the School District reported deferred outflows of resources and deferred inflows of resources related to pension from the following sources:

TRS

Deferred Outflows

Deferred Inflows of

of Resources

Resources

Net difference between projected and actual earnings on pension plan investments

$

5,072,468.00

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

236,823.00

School District contributions subsequent to the measurement date

$

1,596,835.76

Total

$

1,596,835.76 $

5,309,291.00

Early County Board of Education contributions subsequent to the measurement date of June 30, 2014 for TRS 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

$

TRS
-1,321,940.00 -1,321,940.00 -1,321,940.00 -1,321,941.00
-21,530.00

- 27 -

EARLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "I"

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:

Teachers' Retirement System:

Inflation Salary increases Investment rate of return

3.00% 3.75% - 7.00%
7.50%

average, including inflation 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.

Public School Employees' Retirement System:

Inflation Salary increases Investment rate of return

3.00% 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.
The long-term expected rate of return on TRS and PSERS pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

- 28 -

EARLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "I"

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 TRS and PSERS pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the TRS and PSERS pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
Sensitivity of the Early County Board of Education's proportionate share of the net pension liability to changes in the discount rate: The following presents the School District's proportionate share of the net pension liability calculated using the discount rate of 7.50%, as well as what the School District's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate:

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

1% Decrease (6.50%)

Current Discount Rate
(7.50%)

1% Increase (8.50%)

$ 26,813,853.00 $ 14,550,084.00 $ 4,451,125.00

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

- 29 -

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EARLY COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TEACHERS' RETIREMENT SYSTEM OF GEORGIA
FOR THE YEAR ENDED JUNE 30, 2015

SCHEDULE "1"

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

2015 0.115169% $ 14,550,084.00
97,911.00 14,647,995.00 $ 11,828,513.92
123.00% 84.03%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. Schedule includes all significant plans and funds administered by Early County Board of Education
- 31 -

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

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

2015

2014

2013

$ 1,607,903.69 $ 1,452,541.51 $ 1,352,534.43

1,607,903.69

1,452,541.51

1,352,534.43

$

0.00 $

0.00 $

0.00

$ 12,227,403.68 $ 11,828,513.92 $ 11,853,938.92

13.15%

12.28%

11.41%

Schedule includes all significant plans and funds administered by Early County Board of Education. - 32 -

SCHEDULE "2"

2012

2011

2010

2009

2008

2007

2006

$ 1,267,846.27 $ 1,396,712.00 $ 1,386,531.46 $ 1,354,083.85 $ 1,277,599.00 $ 1,187,973.68 $ 1,140,554.00

1,267,846.27

1,396,712.00

1,386,531.46

1,354,083.85

1,277,599.00

1,187,973.68

1,140,554.00

$

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00

$ 12,333,134.93 $ 13,586,692.61 $ 14,235,435.94 $ 14,591,420.80 $ 13,767,230.61 $ 12,801,440.52 $ 12,343,658.01

10.28%

10.28%

9.74%

9.28%

9.28%

9.28%

9.24%

- 33 -

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

SCHEDULE "3"

Teachers' Retirement System

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

- 34 -

EARLY COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2015

SCHEDULE "4"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Food Services Operation
Total Expenditures
Net Change in Fund Balances
Fund Balances - Beginning
Adjustments
Fund Balances - Ending

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

VARIANCE OVER/UNDER

$

6,195,301.00 $

6,195,301.00 $

6,041,959.94 $

19,614.69

10,438,268.00

10,713,404.00

11,403,780.18

1,235,964.00

3,528,806.00

3,545,417.85

78,420.00

78,420.00

274,644.33

14,500.00

14,500.00

14,798.08

53,000.00

53,000.00

174,110.81

18,015,453.00

20,583,431.00

21,474,325.88

-153,341.06 19,614.69
690,376.18 16,611.85
196,224.33 298.08
121,110.81
890,894.88

11,699,179.60
564,908.00 410,188.00 400,000.00 624,000.00 1,200,000.00 143,725.00 1,475,100.00 942,500.00
11,750.00 1,219,000.00
18,690,350.60
-674,897.60
1,967,362.51

13,466,171.37
617,004.00 683,306.63 400,000.00 781,768.00 1,200,000.00 153,415.00 1,475,100.00 979,562.62
88,785.00 1,219,000.00
21,064,112.62
-480,681.62
1,967,362.51
4,180.05

14,407,772.06
721,818.20 670,233.66 393,467.30 694,261.76 1,240,845.96 142,991.37 1,571,783.48 978,572.75
86,919.69 1,324,416.02
22,233,082.25
-758,756.37
2,344,844.56

$

1,292,464.91 $

1,490,860.94 $

1,586,088.19 $

-941,600.69
-104,814.20 13,072.97 6,532.70 87,506.24 -40,845.96 10,423.63 -96,683.48 989.87 1,865.31
-105,416.02
-1,168,969.63
-278,074.75
377,482.05
-4,180.05
95,227.25

Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual
(1) Original and Final Budget amounts do not include the budgeted revenues ($286,948.48) or expenditures ($261,544.41) of the various principal accounts.
The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 35 -

EARLY COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2015

SCHEDULE "5"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Food Services Child Nutrition Discretionary Grants Limited Availability
Total U. S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Other Programs Direct Safe and Drug-Free Schools and Communities - National Programs Pass-Through From Georgia Department of Education ARRA - Race-to-the-Top Incentive Grants Career and Technical Education - Basic Grants to States Improving Teacher Quality State Grants Rural Education Title I Grants to Local Educational Agencies
Total Other Programs
Total U. S. Department of Education
Defense, U. S. Department of Direct Department of the Army R.O.T.C. Program

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

* 10.553 * 10.555
10.579

N/A

N/A

$

(2) 1,245,650.87 (1)

1,245,650.87

N/A

34,361.00

1,280,011.87

84.027

N/A

84.173

N/A

84.184

84.395

N/A

84.048

N/A

84.367

N/A

84.358

N/A

84.010

N/A

491,013.00 20,647.29
511,660.29
75,209.75 5,318.78
32,818.00 174,101.59
55,149.04 1,310,804.23 1,653,401.39 2,165,061.68
54,776.15

Total Expenditures of Federal Awards

$

N/A = Not Available

Notes to the Schedule of Expenditures of Federal Awards

(1) Includes the Federally assigned value of donated commodities for the Food Donation Program in the amount of $45,105.39.
(2) Expenditures for the funds earned on the School Breakfast Program ($297,236.51) were not maintained separately and are included in the 2015 National School Lunch Program.

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

The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Early County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

3,499,849.70

See notes to the basic financial statements.

- 36 -

EARLY COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2015
AGENCY/FUNDING
GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Gifted Student - Category VI Remedial Education Program Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Principal Staff and Professional Development Amended Formula Adjustment Categorical Grants Pupil Transportation Regular Nursing Services Education Equalization Funding Grant Other State Programs Food Services Math and Science Supplements Preschool Handicapped Program Pupil Transportation - State Bonds Teacher of the Year Teachers' Retirement Vocational Education Vocational Supervisors
Office of the State Treasurer Public School Employees' Retirement
Office of the Student Achievement Technology for Connections to Classrooms Grant

See notes to the basic financial statements.

- 37 -

SCHEDULE "6"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

461,261.01

491,073.00 212,182.00 1,041,897.00 758,537.00 544,791.00 363,999.00 1,162,130.00 1,008,391.00 489,245.00 2,099,582.00 754,598.00 354,199.00
87,133.00 232,803.00
67,722.00 41,984.00
447,104.00 474,292.00 528,098.00
847.00 -1,004,172.00
296,269.56 45,000.00 63,579.00
30,631.00 17,444.41 18,898.00 77,220.00
1,014.25 10,482.95 87,749.00
6,534.00
43,442.00
87,820.00
$ 11,403,780.18

EARLY COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2015

SCHEDULE "7 "

PROJECT

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED IN PRIOR YEARS (3)

TOTAL COMPLETION
COST

EXCESS PROCEEDS NOT
EXPENDED

ESTIMATED COMPLETION
DATE

SPLOST 2013-2017
Acquiring real and personal property
Acquiring a bus storage and maintenance equipment facility
Purchase buses and system vehicles
Purchasing technology
Purchasing textbooks
Safety and security equipment
Renovations, extensions, additions, and improvements to existing school facilities including playground, fine arts, and athletic facilities
Acquiring equipment and furnishings including band instruments
Renovations and additions to central administrative facilities
Paying expenses to accomplish the above

$

110,000.00

$ 106,347.60 $

$ 1,842,480.00 428,000.00
1,955,000.00 1,310,000.00
493,600.00

1,750,000.00 $ 38,281.25

428,000.00

86,393.00

21,173.00

1,955,000.00

204,677.60

564,091.63

1,310,000.00

28,311.86

183,977.56

490,000.00

357,058.98 .

4,021,845.00 601,375.00 547,700.00

4,025,000.00

296,361.95

601,375.00

111,515.41

530,000.00 9,000.00

862.00

930,257.88 207,702.08
8,187.59

0.00 $

$ 11,200,000.00 $ 11,208,375.00 $ 766,403.07 $ 2,378,796.32 $

0.00 $

(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax.
(2) The School District's current estimate of total cost for the projects. Includes all cost from project inception to completion
(3) The voters of Early 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

0.00 Dec. 2017 Dec. 2017 Dec. 2017 Dec. 2017 Dec. 2017 Dec. 2017
Dec. 2017 Dec. 2017 Dec. 2017 Dec. 2017
0.00

See notes to the basic financial statements.

- 38 -

EARLY COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2015

SCHEDULE "8"

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

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

$

597,073.00 $

256,024.00

1,210,516.00

905,963.00

627,393.00

468,942.00 1,381,185.00 1,184,852.00
578,045.00 2,436,617.00

897,894.00 427,171.00 103,171.00
11,074,846.00
275,384.00 49,680.00

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

444,022.21 278,855.62 1,413,292.24 $ 725,650.96 636,348.53
429,334.68 2,454,476.65 2,250,746.40
520,134.37
1,421,122.74 497,724.00 35,360.94
320,553.13 54,682.60
262,607.32
11,744,912.39
340,838.11 21,062.30

$
10,352.70 439.99
21,739.44
34,344.44 43,397.62 51,267.51
4,345.60 9,382.15 8,712.55 1,422.70
650.00 20,987.19
443.76
207,485.65
41,529.19 47,500.00

444,022.21 278,855.62 1,423,644.94 726,090.95 658,087.97
429,334.68 2,488,821.09 2,294,144.02
571,401.88
4,345.60 1,430,504.89
506,436.55 36,783.64 650.00
341,540.32 54,682.60
263,051.08
11,952,398.04
382,367.30 68,562.30

TOTAL QBE FORMULA FUNDS

$

11,399,910.00 $

12,106,812.80 $

296,514.84 $ 12,403,327.64

(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State amended formula adjustment.

See notes to the basic financial statements.

- 39 -

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SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

(This page left intentionally blank)

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
March 14, 2016

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Early County Board of Education
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Early 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 Early County Board of Education's basic financial statements and have issued our report thereon dated March 14, 2016.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered Early 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 Early County Board of Education's internal control. Accordingly, we do not express an opinion on the effectiveness of the Early County Board of Education's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on 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.

2015YB-10

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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.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Early 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.
We noted certain matters that we have reported to management of Early County Board of Education in a separate letter dated March 14, 2016.
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, not to provide an opinion on the effectiveness of the Early County Board of Education'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 Early County Board of Education's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Respectfully submitted,

GSG:er 2015YB-10

Greg S. Griffin State Auditor

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
March 14, 2016

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Early County Board of Education
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133
Ladies and Gentlemen:
Report on Compliance for Each Major Federal Program
We have audited Early County Board of Education's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2015. Early 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 Early 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 Early 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 Early County Board of Education's compliance.

2015SA-10

(This page left intentionally blank)

Opinion on Each Major Federal Program
In our opinion, the Early 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 Early 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 Early 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 Early 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.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.
Respectfully submitted,

GSG:er 2015SA-10

Greg S. Griffin State Auditor

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

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EARLY COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2015
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
No matters were noted.
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
No matters were noted.

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SECTION IV FINDINGS AND QUESTIONED COSTS

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EARLY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2013

I SUMMARY OF AUDITOR'S RESULTS

Financial Statements

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

Unmodified

Internal control over financial reporting: Material weakness identified? Significant deficiency identified?

No None Reported

Noncompliance material to financial statements noted:

No

Federal Awards

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

No None Reported

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

Unmodified

Any audit findings disclosed that are required to be reported in

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

No

Identification of major programs: CFDA Numbers

Name of Federal Program or Cluster

10.553, 10.555

Child Nutrition Cluster

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

$300,000.00

Auditee qualified as low-risk auditee?

Yes

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported.

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.