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

ELBERT 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

GOVERNMENT-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

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TEACHERS RETIREMENT SYSTEM OF GEORGIA
2 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM OF GEORGIA
3 SCHEDULE OF CONTRIBUTIONS TEACHERS RETIREMENT SYSTEM OF GEORGIA 4 NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION 5 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND

Page
i
1 2
4 5 6 7 8 9 11
33 34 35 36 37

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ELBERT COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I
FINANCIAL
SCHEDULES
SUPPLEMENTARY INFORMATION
6 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 7 SCHEDULE OF STATE REVENUE 8 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

Page
38 39 41

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

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

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

SECTION V MANAGEMENT'S CORRECTIVE ACTION FOR CURRENT YEAR FINDINGS SCHEDULE OF MANAGEMENT'S CORRECTIVE ACTION

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SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
July 28, 2017

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Elbert 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 Elbert County Board of Education (School District), as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the School District's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also

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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 School District, as of June 30, 2016, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As described in Note 2 to the financial statements, in 2016, the School District adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 72, Fair Value Measurement and Application, GASB Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets that are not within the Scope of GASB Statement No. 68, and Amendments to Certain Provisions of GASB Statements No. 67 and 68, and GASB Statement No. 79, Certain External Investment Pools and Pool Participants. Our opinions are not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis, Schedules of Proportionate Share of the Net Pension Liability, Schedule of Contributions to Retirement 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 33 through 37 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 School District's basic financial statements. The accompanying supplementary information, consisting of Schedules 6 through 8, is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by Title 2

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U. S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements.
The accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated July 28, 2017, on our consideration of the School District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School District's internal control over financial reporting and compliance.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated Section 50-6-24.
Respectfully submitted,
Greg S. Griffin State Auditor

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ELBERT COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016
Introduction
Our discussion and analysis of the Elbert County School District's financial performance provides an overview of the School District's financial activities for the fiscal year ended June 30, 2016. The intent of this discussion and analysis is to look at the School District's financial performance; readers should also review the notes to the basic financial statements and financial statements to enhance their understanding of the School District's financial performance.
Financial Highlights
Key financial highlights for fiscal year 2016 are as follows:
On the government-wide financial statements, the assets and deferred outflows of resources of the School District exceeded liabilities and deferred inflows of resources by $5.52 million. Of this amount, the School District has a deficit of $19.41 million in unrestricted net position due to GASB No. 68 implementation and pension plan reporting.
The School District had $31.23 million in expenses relating to governmental activities; only $20.89 million of these expenses are offset by program specific charges for services, grants and contributions. General revenues (primarily property and sales taxes) of $12.72 million were utilized to provide for these programs with the result that net position was increased by $2.38 million.
As stated above, general revenues accounted for $12.72 million or 37.85% of all revenues totaling $33.61 million. Program specific revenues in the form of charges for services, grants and contributions accounted for the rest.
Overview of the Financial Statements
This annual report consists of three parts; management's discussion and analysis, the basic financial statements and required supplementary information. The basic financial statements include two levels of statements that present different views of the School District. These include the government-wide and fund financial statements.
The government-wide financial statements include the Statement of Net Position and the Statement of Activities. These statements provide information about the activities of the School District presenting both short-term and long-term information about the School District's overall financial status.
The fund financial statements focus on individual parts of the School District, reporting the School District's operation in more detail. The governmental funds statements disclose how basic services are financed in the short-term as well as what remains for future spending. The fiduciary funds statements provide information about the financial relationships in which the School District acts solely as a trustee or agent for the benefit of others. The fund financial statements reflect the School District's most significant funds. In the case of the Elbert County School District, the general fund and capital projects fund are the most significant funds.
The financial statements also include notes that explain some of the information in the statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the financial statements. Additionally, other supplementary information (not required) is also presented that further supplements understanding of the financial statements.
i

ELBERT COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016
Government-wide Statements
The government-wide financial statements are basically a consolidation of all of the School District's operating funds into one column called governmental activities. In reviewing the government-wide financial statements, a reader might ask the question, are we in a better financial position than last year? The Statement of Net Position and the Statement of Activities provides the basis for answering this question. These financial statements include all School District's assets and liabilities and uses the accrual basis of accounting similar to the accounting used by most private-sector companies. This basis of accounting takes into account all of the current year's revenues and expenses regardless of when cash is received or paid.
These two statements report the School District's net position and any changes in net position. The change in net position is important because it tells the reader that, 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 results of many factors, including those not under the School District's control, such as the property tax base, facility conditions, required educational programs and other factors.
The Statement of Net Position and the Statement of Activities reflects the School District's governmental activities.
Fund Financial Statements
The School District uses many funds to account for a multitude of financial transactions during the fiscal year. However, the fund financial statements presented in this report provide detail information about only the School District's significant or major funds.
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 the modified accrual method of accounting which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the School District's general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The differences between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds are reconciled to the financial statements.
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 and a private purpose trust. 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 government-wide financial statements because it cannot use these assets to finance its operations.
ii

ELBERT COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016
Financial Analysis of the School District as a Whole
Recall that the Statement of Net Position provides the perspective of the School District as a whole. Table 1 provides a summary of the School District's net position for this fiscal year as compared to the prior fiscal year.

Assets Current and Other Assets Capital Assets, Net
Total Assets
Deferred Outflows for Pension Plan

Table 1 Net Postion

Governmental Activities

Fiscal Year 2016

Fiscal Year 2015

$

9,042,593.91 $

7,503,011.73

29,265,723.42

29,839,100.45

38,308,317.33 2,288,096.62

37,342,112.18 2,106,396.50

Liabilities and Deferred Outflows Current and Other Liabilities Long-Term Liabities Net Pension Liability
Total Liabilities
Deferred Inflows for Pension Plan

3,572,773.84 5,154,201.77 23,057,977.00
31,784,952.61
3,289,105.00

3,449,923.59 5,629,983.48 20,046,746.00
29,126,653.07
7,180,110.00

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

24,568,840.98 362,059.94
(19,408,544.58)

24,209,116.97 411,559.44
(21,478,930.80)

$

5,522,356.34 $

3,141,745.61

iii

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

Table 2 shows the Changes in Net Position for this fiscal year as compared to the prior fiscal year.

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

Table 2 Changes in Net Position

Governmental Activities

Fiscal Year 2016

Fiscal Year 2015

$

205,774.60 $

20,601,936.13

82,826.77

20,890,537.50

268,340.40 19,706,577.90
77,220.00
20,052,138.30

General Revenues: Taxes Property Taxes for Maintenance and Operations Sales Taxes Other Sales Taxes Grants and Contributions Not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Total Revenues

8,752,361.43 2,028,530.70
115,072.82 947,124.00
3,859.67 876,558.35
12,723,506.97
33,614,044.47

8,566,701.21 1,851,380.45
724,005.00
2,927.36 1,507,820.59
12,652,834.61
32,704,972.91

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

18,130,744.84
1,181,328.15 1,452,089.20
440,398.38 741,778.64 2,100,671.89 326,763.76 2,118,974.46 1,664,316.48 443,474.05 357,997.17
19,435.56 2,103,948.35
151,512.81

18,158,697.25
1,295,468.88 1,431,125.37
425,342.75 754,322.60 2,022,822.10 424,077.50 2,192,886.89 1,587,928.10 377,566.13 415,818.76
10,137.58 2,250,069.78
170,816.48

Total Expenses

31,233,433.74

31,517,080.17

Increase in Net Position

$

2,380,610.73 $

1,187,892.74

iv

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

Governmental Activities

The Statement of Activities shows the cost of program services and the charges for services and grants offsetting these services. Table 3 shows, for governmental activities, the total cost of services and the net cost of services. Net cost of services can be defined as the total cost less fees generated by the activities and intergovernmental revenue provided for specific programs. The net cost reflects the financial burden on the School District's taxpayers by each activity as compared to the prior fiscal year.

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

Table 3 Governmental Activities

Total Cost of Services

Fiscal Year 2016

Fiscal Year 2015

Net Cost of Services

Fiscal Year 2016

Fiscal Year 2015

$ 18,130,744.84 $ 18,158,697.25 $

3,243,071.58 $

5,051,278.72

1,181,328.15 1,452,089.20
440,398.38 741,778.64 2,100,671.89 326,763.76 2,118,974.46 1,664,316.48 443,474.05 357,997.17

1,295,468.88 1,431,125.37
425,342.75 754,322.60 2,022,822.10 424,077.50 2,192,886.89 1,587,928.10 377,566.13 415,818.76

1,007,674.41 1,213,411.54
95,429.38 246,739.64 1,076,066.54 323,029.26 1,311,257.00 990,984.10 433,514.20 357,997.17

1,128,452.81 556,630.00 30,066.75 122,520.31 969,052.39 399,667.01
1,219,490.46 923,952.02 371,657.65 376,340.55

19,435.56 2,103,948.35
151,512.81

10,137.58 2,250,069.78
170,816.48

(4,342.40) (103,448.99) 151,512.81

(2,307.12) 147,323.84 170,816.48

$ 31,233,433.74 $ 31,517,080.17 $ 10,342,896.24 $

11,464,941.87

Financial Analysis of the School District's Funds
The School District's governmental funds are accounted for using the modified accrual basis of accounting. The governmental funds had total revenues and other financing sources of $34.43 million and total expenditures and other financing uses of $33.00 million. The excess of revenues relates to a new capital lease and tax revenues coming in higher than budgeted. Expenses were also lower with regards to some functional areas due to not having to spend some budgeted items.
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 2016, the School District amended its general fund budget as needed.
For the general fund, the final actual revenues and other financing sources of $32.05 million exceeded the original budgeted amounts of $24.79 million by $7.26 million. This difference (final actual vs. original budget) was due primarily to federal and miscellaneous revenues exceeding the original budget by $4.46 million and $0.52 million, respectfully. Additionally, state revenues were $1.2 million more than budgeted.
The final actual expenditures and other financing uses of $30.62 million exceeded the original budgeted amount of $24.79 million by $5.83 million. This difference was primarily due to federal grants, school activity and school nutrition expenditures that are not considered in the budget process.

v

ELBERT COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016
CAPITAL ASSETS AND DEBT ADMINISTRATION

Capital Assets
At fiscal year ended June 30, 2016, the School District had $29.3 million invested in capital assets, all in governmental activities. Table 4 reflects a summary of these balances net of accumulated depreciation as compared to the prior fiscal year.

Land Buildings and Improvements Equipment Intangible Assets Land Improvements

Table 4 Capital Assets (Net of Depreciation)

Governmental Activities

Fiscal Year 2016

Fiscal Year 2015

$

1,497,522.00

23,634,633.21

3,732,732.91

60,476.66

340,358.64

$

1,497,522.00

24,112,469.93

3,790,436.51

98,538.59

340,133.42

Total Capital Assets
Debt

$

29,265,723.42

$

29,839,100.45

At fiscal year ended June 30, 2016, the School District had $5.15 million in other long-term debt. Table 5 summarizes the School District's debt for Energy Efficiency Lease, Capital Leases, Revenue Bonds and Installment Sales Agreements outstanding.

Energy Efficiency Lease Capital Leases Installment Sales Agreements Revenue Bonds
Total Long-Term Debt
Current Issues

Table 5 Long-Term Debt

Governmental Activities

Fiscal Year 2016

Fiscal Year 2015

$ 1,598,960.00 $ 352,020.00
3,139,000.00 64,221.77

1,938,320.30 3,691,663.18
-

$ 5,154,201.77 $

5,629,983.48

Currently known facts, decisions or conditions that are expected to have a significant effect on financial positions or results of operations are as follows:

In an attempt to ensure that the School District is maintaining a high quality staff, the School District reinstated the local supplement for certified individuals for 2017. The School District has taken the necessary steps and measures to ensure that the increases do not effect fund balance and the liquidity of the School District.

The current Education Special Purpose Local Option Sales Tax expires in June 2017. The ESPLOST funds capital improvements and debt payments for the School District. The voters approved the continuation of the current ESPLOST until June 2022.

vi

ELBERT COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016 Over the past several years, the enrollment of the School District has declined, causing a reduction in state funding. The School District has been able to absorb the reductions through normal attrition of staff to match student enrollment trends. Current forecasts have the number of students remaining about the same over the next five years. Contacting the School District's Financial Management This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overview of the School District's finances and to show the School District's accountability for the money it receives. If you have questions about this report or need additional financial information, contact Mr. Ben M. Childs, Financial Services at Elbert County School District, 50 Laurel Drive, Elberton, Georgia 30635 or by phone at (706) 213-4000. You may also email your question to Mr. Childs at bchilds@elbert.k12.ga.us.
vii

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ELBERT COUNTY BOARD OF EDUCATION

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ELBERT COUNTY BOARD OF EDUCATION STATEMENT OF NET POSITION JUNE 30, 2016
ASSETS
Cash and Cash Equivalents Accounts Receivable, Net
Taxes State Government Federal Government Local Other Inventories Restricted Assets Cash and Investments with Fiscal Agent of Trustee Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation)
Total Assets
DEFERRED OUTFLOWS OF RESOURCES
Related to Defined Benefit Pension Plan
LIABILITIES
Accounts Payable Salaries and Benefits Payable Net Pension Liability Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
DEFERRED INFLOWS OF RESOURCES
Related to Defined Benefit Pension Plan
NET POSITION
Net Investment in Capital Assets Restricted for
Continuation of State and Federal Programs Unrestricted (Deficit)
Total Net Position

EXHIBIT "A"

GOVERNMENTAL ACTIVITIES

$

5,224,474.04

979,042.97 2,085,023.49
504,455.56 35,368.32
152,054.55 45,326.06

16,848.92 1,497,522.00 27,768,201.42

38,308,317.33

2,288,096.62

137,895.38 3,434,878.46 23,057,977.00
797,663.97 4,356,537.80
31,784,952.61

3,289,105.00

24,568,840.98
362,059.94 (19,408,544.58)

$

5,522,356.34

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

- 1 -

ELBERT COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2016

GOVERNMENTAL ACTIVITIES
Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services Interest on Short-Term and Long-Term Debt
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations 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
Net Position - End of Year

EXPENSES

CHARGES FOR SERVICES

$

18,130,744.84 $

1,181,328.15 1,452,089.20
440,398.38 741,778.64 2,100,671.89 326,763.76 2,118,974.46 1,664,316.48 443,474.05 357,997.17

19,435.56 2,103,948.35
151,512.81

$

31,233,433.74 $

1,654.76
-
23,777.96 180,341.88
-
205,774.60

- 2 -

EXHIBIT "B"

PROGRAM REVENUES OPERATING GRANTS AND
CONTRIBUTIONS

CAPITAL GRANTS AND CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET POSITION

$

14,886,018.50 $

173,653.74 238,677.66 344,969.00 495,039.00 1,024,605.35
3,734.50 807,717.46 596,112.38
4,353.08 -

2,027,055.46
-

$

20,601,936.13 $

- $
77,220.00 5,606.77 -
-
82,826.77

(3,243,071.58)
(1,007,674.41) (1,213,411.54)
(95,429.38) (246,739.64) (1,076,066.54) (323,029.26) (1,311,257.00) (990,984.10) (433,514.20) (357,997.17)
4,342.40 103,448.99 (151,512.81)
(10,342,896.24)

8,752,361.43
2,028,530.70 115,072.82 947,124.00 3,859.67 876,558.35
12,723,506.97
2,380,610.73
3,141,745.61

$

5,522,356.34

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

- 3 -

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

EXHIBIT "C"

ASSETS
Cash and Cash Equivalents Accounts Receivable, Net
Taxes State Government Federal Government Local Other Inventories Restricted Cash and Investments with Fiscal Agent or Trustee

GENERAL FUND

CAPITAL PROJECTS
FUND

TOTAL

$ 5,389,446.76 $
814,070.25 2,085,023.49
504,455.56 35,368.32
152,054.55 45,326.06
16,848.92

- $
164,972.72 -
-

5,389,446.76
979,042.97 2,085,023.49
504,455.56 35,368.32
152,054.55 45,326.06
16,848.92

Total Assets

$ 9,042,593.91 $

164,972.72 $

9,207,566.63

LIABILITIES
Cash Overdraft Accounts Payable Salaries and Benefits Payable
Total Liabilities
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - Property Taxes/State Revenue
FUND BALANCES
Nonspendable Restricted Assigned Unassigned
Total Fund Balances

$

- $

137,895.38

3,434,878.46

3,572,773.84

540,796.29

45,326.06 333,582.80 151,951.84 4,398,163.08
4,929,023.78

164,972.72 $ -
164,972.72

164,972.72 137,895.38 3,434,878.46
3,737,746.56

-

540,796.29

-

45,326.06

-

333,582.80

-

151,951.84

-

4,398,163.08

-

4,929,023.78

Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 9,042,593.91 $

164,972.72 $

9,207,566.63

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

- 4 -

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

EXHIBIT "D"

Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Position are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported 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 funds.
Net pension liability
Deferred Outflows and Inflows of Resources related to pensions are applicable to future periods and, therefore, are not reported in the governmental funds.
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. These consist of:
Energy efficiency lease payable Capital leases payable Installment sales agreement Revenue bonds payable
Total long-term liabilities

$ 4,929,023.78

$ 1,497,522.00 33,723,522.76 8,653,520.41 601,673.56 354,036.20 (15,564,551.51)

29,265,723.42

(23,057,977.00) (1,001,008.38)

540,796.29

$ (1,598,960.00) (352,020.00)
(3,139,000.00) (64,221.77)

(5,154,201.77)

Net position of governmental activities (Exhibit "A")

$ 5,522,356.34

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

- 5 -

ELBERT COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2016

EXHIBIT "E"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Food Services Operation
Capital Outlay Debt Services
Principal Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Capital Lease Proceeds Transfers In Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning

GENERAL FUND

CAPITAL PROJECTS
FUND

TOTAL

$

8,761,420.94 $

- $ 8,761,420.94

115,072.82

2,028,530.70

2,143,603.52

17,141,322.26

-

17,141,322.26

4,537,637.64

-

4,537,637.64

205,774.60

-

205,774.60

348.82

3,510.85

3,859.67

876,558.35

-

876,558.35

31,638,135.43

2,032,041.55

33,670,176.98

18,041,716.35
1,183,631.91 1,454,399.12
441,122.23 735,817.05 2,104,120.41 326,456.97 2,015,851.78 1,652,133.92 167,460.76 341,471.91
19,493.30 2,119,939.40
-
13,441.41 3,408.03
30,620,464.55
1,017,670.88
408,120.56
-
408,120.56
1,425,791.44
3,503,232.34

172,952.66
11,063.30 846.70 119,607.43 24,978.00 277,083.60 17,572.10 443,790.12
759,942.30 148,104.78
1,975,940.99
56,100.56

18,214,669.01
1,183,631.91 1,454,399.12
441,122.23 746,880.35 2,104,120.41 327,303.67 2,135,459.21 1,677,111.92 444,544.36 359,044.01
19,493.30 2,119,939.40
443,790.12
773,383.71 151,512.81
32,596,405.54
1,073,771.44

352,020.00 -
(408,120.56)
(56,100.56)
-
-

352,020.00 408,120.56 (408,120.56)
352,020.00
1,425,791.44
3,503,232.34

Fund Balances - Ending

$

4,929,023.78 $

- $ 4,929,023.78

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

- 6 -

ELBERT COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2016

EXHIBIT "F"

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

$ 1,425,791.44

$ 788,912.79 (1,243,812.59)

(454,899.80)

(118,477.23)

(9,059.51)

$ (352,020.00) 225,000.00 114,360.30 475,000.00 13,441.41

475,781.71

1,061,474.12 $ 2,380,610.73

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

- 7 -

ELBERT COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUNDS JUNE 30, 2016
ASSETS Cash and Cash Equivalents Investments
Total Assets
LIABILITIES Accounts Payable and Accrued Liabilities Funds Held for Others
Total Liabilities NET POSITION Held in Trust for Private Purposes

EXHIBIT "G"

PRIVATE PURPOSE TRUSTS

AGENCY FUNDS

$

- $ 164,847.51

40,743.56

-

$ 40,743.56 $ 164,847.51

$

3,500.00 $

-

-

164,847.51

3,500.00 $ 164,847.51

$ 37,243.56

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

- 8 -

ELBERT COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FIDUCIARY FUNDS YEAR ENDED JUNE 30, 2016
ADDITIONS Investment Earnings Interest
Net Position - Beginning
Net Position - Ending

EXHIBIT "H"

PRIVATE PURPOSE TRUSTS

$

-

-

37,243.56

$ 37,243.56

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

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

EXHIBIT "I"

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

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

EXHIBIT "I"

Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
FUND FINANCIAL STATEMENTS
The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate financial statements are presented for governmental and fiduciary funds. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.
The School District reports the following major governmental funds:
The general fund is the School District's primary operating fund. It accounts for and reports all financial resources not accounted for and reported in another fund.
The capital projects fund accounts for and reports financial resources including Education Special Purpose Local Option Sales Tax (ESPLOST) that are restricted, committed or assigned for capital outlay expenditures, including the acquisition or construction of capital facilities and other capital assets.
The School District reports the following fiduciary fund types:
Private purpose trust funds are used to report all trust arrangements, other than those properly reported elsewhere, in which principal and income benefit individuals, private organizations or other governments.
Agency funds are used to report resources held by the School District in a purely custodial capacity (assets equal liabilities) and do not involve measurement of results of operations.
BASIS OF ACCOUNTING
The basis of accounting determines when transactions are reported on the financial statements. The government-wide and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, 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 and acquisitions under capital leases are reported as other financing sources.
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ELBERT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "I"

The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
NEW ACCOUNTING PRONOUNCEMENTS
In fiscal year 2016, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 72, Fair Value Measurement and Application. This statement addresses accounting and financial reporting issues related to fair value measurements. The definition of fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This statement provides guidance for determining a fair value measurement for financial reporting purposes. This statement also provides guidance for applying fair value to certain investments and disclosures related to all fair value measurements. The School District did not have any items that required a reassessment of value for reporting purposes as a result of adoption of this statement.
In fiscal year 2016, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets that are not within the Scope of GASB Statement No. 68, and Amendments to Certain Provisions of GASB Statements No. 67 and 68. This statement establishes requirements for defined benefit pensions that are not within the scope of Statement No. 68, Accounting and Financial Reporting for Pensions, as well as for the assets accumulated for purposes of providing those pensions. In addition, it establishes requirements for defined contribution pensions that are not within the scope of Statement No. 68. It also amends certain provisions of Statement No. 67, Financial Reporting for Pension Plans, and Statement No. 68 for pension plans and pensions that are within their respective scopes. The adoption of this statement does not have a significant impact on the School District's financial statements.
In fiscal year 2016, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 79, Certain External Investment Pools and Pool Participants. This statement addresses accounting and financial reporting for certain external investment pools and pool participants. If an external investment pool meets the criteria in this statement and measures all of its investments at amortized cost, the pool's participants also should measure their investments in that external investment pool at amortized cost for financial reporting purposes. The adoption of this statement does not have an impact on the School District's financial statements.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand, demand deposits, investments in the State of Georgia local government investment pool (Georgia Fund 1) and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated (O.C.G.A.) 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations.
INVESTMENTS
The School District can invest its funds as permitted by O.C.G.A. 36-83-4. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity.
Investments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. All other investments are reported at fair value.

- 13 -

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

EXHIBIT "I"

For accounting purposes, certificates of deposit are classified as investments if they have an original maturity greater than three months when acquired.
RECEIVABLES
Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.
INVENTORIES
Food Inventories
On the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (calculated on the first-in, first-out basis). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.
RESTRICTED ASSETS
Certain resources set aside for repayment of debt are classified as restricted assets on the Statement of Net Position because their use is limited by applicable debt statutes, e.g. Qualified Zone Academy Bond sinking funds and Rutland Center revenue bonds.
CAPITAL ASSETS
On the government-wide financial statements, capital assets are recorded at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at acquisition value on the date donated. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. The School District does not capitalize book collections or works of art.
Capital acquisition and construction are recorded as expenditures in the governmental fund financial statements at the time of purchase (including ancillary charges), and the related assets are reported as capital assets in the governmental activities column in the government-wide financial statements.
Depreciation is computed using the straight-line for all assets, except land, and is used to allocate the actual or estimated historical cost of capital assets over estimated useful lives.
Capitalization thresholds and estimated useful lives of capital assets reported in the government-wide statements are as follows:

Capitalization Policy

Estimated Useful Life

Land

Any Amount

Land Improvements

$

5,000.00

Buildings and Improvements $

5,000.00

Equipment

$

5,000.00

Intangible Assets

$

5,000.00

N/A 20 years
up to 50 years 2 to 25 years
3 to 6 years

- 14 -

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

EXHIBIT "I"

DEFERRED OUTFLOWS/INFLOWS OF RESOURCES
In addition to assets, the statement of financial position will report a separate section for deferred outflows of resources. This separate financial statement element, represents a consumption of resources that applies to a future period(s) and therefore will not be recognized as an outflow of resources (expense/expenditure) until then.
In addition to liabilities, the statement of financial position will report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of resources that applies to a future period(s) and therefore will not be recognized as an inflow of resources (revenue) until that time.
PENSIONS
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the pension plan's fiduciary net position and additions to/deductions from the plan's fiduciary net position have been determined on the same basis as they are reported by the plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
FUND BALANCES
Fund balance for governmental funds is reported in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent.
The School District's fund balances are classified as follows:
Nonspendable consists of resources that cannot be spent either because they are in a nonspendable form or because they are legally or contractually required to be maintained intact.
Restricted consists of resources that can be used only for specific purposes pursuant constraints either (1) externally imposed by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation.
Committed consists of resources that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board. The Board is the School District's highest level of decisionmaking authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Committed fund balance also should incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements.
Assigned consists of resources constrained by the School District's intent to be used for specific purposes, but are neither restricted nor committed. The intent should be expressed by (1) the Board or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes.
Unassigned consists of resources within the general fund not meeting the definition of any aforementioned category. The general fund should be the only fund that reports a positive unassigned fund balance amount. In other governmental funds, it may be necessary to report a negative unassigned fund balance.
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.

- 15 -

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

EXHIBIT "I"

PROPERTY TAXES
The Elbert County Board of Commissioners adopted the property tax levy for the 2015 tax digest year (calendar year) on September 3, 2015 (levy date) based on property values as of January 1, 2015. Taxes were due on December 4, 2015 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2015 tax digest are reported as revenue in the governmental funds for fiscal year 2016. The Elbert County Board of Commissioners 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, 2016, for maintenance and operations amounted to $8,195,910.39.
The tax millage rate levied for the 2015 tax year (calendar year) for the School District was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

16.861 mills

Additionally, Title Ad Valorem Tax revenues, at the fund reporting level, amounted to $565,510.55 during fiscal year ended June 30, 2016.
SALES TAXES
Education Special Purpose Local Option Sales Tax (ESPLOST), at the fund reporting level, during the year amounted to $2,028,530.70 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.
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 fund. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds, except the various school activity (principal) accounts, is prepared and adopted by fund and function. The legal level of budgetary control was established by the Board at the aggregate fund level. The budget for the general fund was prepared in accordance with accounting principles generally accepted in the United States of America.
The budgetary process begins with the School District's administration presenting an initial budget for the Board's review. The administration makes revisions as necessary based on the Board's guidelines, and a tentative budget is approved. After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper of general circulation in the locality, as well as the School District's website. At the next regularly scheduled meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. The approved budget is then submitted, in accordance with provisions of O.C.G.A. 20-2-167(c), to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.
See the General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual in the Supplementary Information Section for a detail of any over/under expenditures during the fiscal year under review.

- 16 -

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

EXHIBIT "I"

NOTE 4: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS
O.C.G.A. 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110% of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110% of the daily pool balance.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
CATEGORIZATION OF DEPOSITS
Custodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2016, the School District had deposits with a carrying amount of $5,430,065.11, which includes $40,743.56 in Certificates of Deposits that are recorded as investments, and a bank balance of $6,349,269.93. The bank balances insured by Federal depository insurance were $896,746.98 and the bank balances collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name were $5,452,522.95.

- 17 -

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

EXHIBIT "I"

CATEGORIZATION OF INVESTMENTS
At June 30, 2016, the School District had the following investments:

Investment Type

Fair Value

Investment Maturity Less Than 1 Year

Debt Securities U. S. Treasuries Bond Mutual Funds

$ 16,848.92 $

16,848.92

Fair Value of Investments
The School District measures and records its investments using fair value measurement guidelines established by generally accepted accounting principles. These guidelines recognize a three-tiered fair value hierarchy, as follows:
Level 1: Quoted prices for identical measurements in active markets;
Level 2: Observable inputs other than quoted market prices; and,
Level 3: Unobservable inputs.
The School District has the following recurring fair value measurement as of June 30, 2016:
Bond Mutual Funds of $16,848.92 are valued using market observable information for identical or similar instruments in the market (Level 2 inputs).
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.
At June 30, 2016, $16,848.92 of the School District's applicable investments were held by the investment's counterparty, not in the School District's name.
NOTE 5: RESTRICTED ASSETS
The restricted investment balance, totaling $16,848.92, is for the Rutland Center revenue bonds. These assets are pledged to redeem revenue bonds upon maturity.

- 18 -

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

EXHIBIT "I"

NOTE 6: CAPITAL ASSETS
The following is a summary of changes in the capital assets for governmental activities during the fiscal year:

Balances July 1, 2015

Increases

Decreases

Balances June 30, 2016

Governmental Activities Capital Assets, Not Being Depreciated:
Land
Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements Intangible Assets
Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements Intangible Assets
Total Capital Assets, Being Depreciated, Net
Governmental Activity Capital Assets - Net

$

1,497,522.00 $

- $

- $

1,497,522.00

33,654,094.64 8,485,253.92 571,779.36 392,211.20

69,428.12 649,840.47
29,894.20 39,750.00

481,573.98
77,925.00

33,723,522.76 8,653,520.41 601,673.56 354,036.20

9,541,624.71 4,694,817.41
231,645.94 293,672.61

547,264.84 605,495.60
29,668.98 61,383.17

28,341,578.45

(454,899.80)

$ 29,839,100.45 $ (454,899.80) $

379,525.51
61,496.24

10,088,889.55 4,920,787.50 261,314.92 293,559.54

118,477.23

27,768,201.42

118,477.23 $ 29,265,723.42

Current year depreciation expense by function is as follows:

Instruction

Support Services

Pupil Services

$

47,144.53

Improvements of Instructional Services

57,929.30

Educational Media Services

17,570.08

General Administration

29,748.54

School Administration

83,807.96

Business Administration

13,036.64

Maintenance and Operation of Plant

85,056.20

Student Transportation Services

66,800.04

Central Support Services

17,706.38

Other Support Services

14,300.87

Enterprise Operations

776.43

Food Services

$ 725,497.58
433,876.97 84,438.04

$ 1,243,812.59

- 19 -

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

EXHIBIT "I"

NOTE 7: INTERFUND TRANSFERS INTERFUND TRANFERS
Interfund transfers for the year ended June 30, 2016, consisted of the following:

Transfers to

Transfers From Capital Projects
Fund

General Fund

$ 408,120.56

Transfers from the capital projects fund to the general fund are to repay the general fund for prior year SPLOST expenditures.
NOTE 8: LONG-TERM LIABILITIES
The changes in long-term liabilities during the fiscal year for governmental activities, were as follows:

Energy Efficiency Lease Capital Leases Installment Sales Agreement Revenue Bonds

Balance July 1, 2015

Additions

Governmental Activities

Deductions (1)

Balance June 30, 2016

Due Within One Year

$ 1,823,960.00 $ 114,360.30
3,614,000.00 77,663.18

- $ 352,020.00
-

225,000.00 $ 1,598,960.00 $

114,360.30

352,020.00

475,000.00 3,139,000.00

13,441.41

64,221.77

225,000.00 70,404.00
488,000.00 14,259.97

$ 5,629,983.48 $ 352,020.00 $ 827,801.71 $ 5,154,201.77 $ 797,663.97

(1) Deductions do not tie to principal expenditures on the Statement of Revenues, Expenditures and Changes in Fund Balances by $54,418.00. This is due to an arrangement under a new capital lease agreement where the new capital lease would pay off the remaining balance on an old capital lease.

GENERAL OBLIGATION DEBT OUTSTANDING
Voters have authorized $7,475,000.00 in general obligation debt which was not issued as of June 30, 2016.

OBLIGATIONS UNDER ENERGY EFFICIENCY LEASES
An energy efficiency lease agreement dated November 26, 2012 was executed by and between the School District, the lessee, and Regions Bank, the lessor. The agreement authorized the borrowing of $1,998,960.00 for the purchase of energy efficiency equipment, machinery, supplies, building modifications and other energy saving items. Payments of the lease shall be made from the School District's capital projects fund.

Debt currently outstanding is as follows:

Purpose

Interest Rate

Issue Date

Maturity Date

Amount Issued

Amount Outstanding

Regions Bank Energy Efficiency Lease

2.60%

11/26/2012

1/1/2023

$

1,998,960.00 $ 1,598,960.00

- 20 -

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

EXHIBIT "I"

The following is a schedule of total energy efficiency lease payments:

Fiscal Year Ended June 30:

Principal

Interest

2017 2018 2019 2020 2021 2022 - 2026

$

225,000.00 $

41,604.94

225,000.00

35,750.44

225,000.00

29,895.94

225,000.00

24,041.44

225,000.00

18,186.94

473,960.00

18,810.38

Total Principal and Interest

$

1,598,960.00 $

168,290.08

CAPITAL LEASES
During the current fiscal year, the School District entered into a lease agreement as lessee for financing the acquisition of copier equipment at a cost of $352,020.00. This lease qualifies as a capital lease for accounting purposes, and, therefore, has been recorded at the present value of the future minimum lease payments as of the date of inception.
Capital leases currently outstanding are as follows:

Purpose

Interest Rate

Issue Date

Maturity Date

Amount Issued

Amount Outstanding

Leaf Copier Lease

0.00%

6/21/2016

6/21/2021 $

352,020.00 $

352,020.00

The following is a schedule of total capital lease payments:
Fiscal Year Ended June 30:

Principal

2017 2018 2019 2020 2021

$

70,404.00

70,404.00

70,404.00

70,404.00

70,404.00

Total Principal and Interest

$

352,020.00

INSTALLMENT SALES AGREEMENT
The Elbert County School District entered into an agreement dated April 16, 2014, with the Georgia Municipal Association for the construction and subsequent lease of buildings and related improvements. Under the terms of the agreement, the School District will make semi-annual payments through May 1, 2022.
Debt currently outstanding under the installment sales agreement is as follows:

Purpose

Interest Rate

Issue Date

Maturity Date

Amount Issued

Amount Outstanding

Georgia Municipal Association

2.72%

4/16/2014

5/1/2022 $

4,127,000.00 $ 3,139,000.00

- 21 -

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

EXHIBIT "I"

The following is a schedule of total installment sales agreement payments:

Fiscal Year Ended June 30:
2017 2018 2019 2020 2021 2022 - 2026
Total Principal and Interest

Principal

$

488,000.00 $

502,000.00

516,000.00

530,000.00

544,000.00

559,000.00

$

3,139,000.00 $

Interest
85,380.80 72,107.20 58,452.80 44,417.60 30,001.60 15,204.80
305,564.80

REVENUE BONDS
The Elbert County Board of Education entered into a contract with the Northeast Georgia Regional Educational Service Agency (RESA), in conjunction with other School Districts to provide funding to build the Rutland Center, located in Athens, Georgia. This facility was built through the sale of bonds, retirement of which was pledged by funds from various local School Districts in the area. Under terms of the agreement, the various School Districts pledged funds annually to retire the bonds as they become due. The obligation of the School District is absolute and unconditional so long as any of the bonds remain outstanding. Under the contract, the School District will exercise its power of taxation to the extent necessary to pay the amounts required to be paid by the contract.
Debt currently outstanding under revenue bonds is as follows:

Purpose

Interest Rate

Issue Date

Maturity Date

Amount Issued

Amount Outstanding

Rutland Agreement

3.07%

6/1/2006

8/1/2020 $

176,332.95 $

64,221.77

The following is a schedule of total revenue bonds payments:

Fiscal Year Ended June 30:

Principal

Interest

2017 2018 2019 2020 2021

$

14,259.97 $

14,719.98

15,331.00

15,946.63

3,964.19

2,667.88 2,081.03 1,468.68
830.82 167.44

Total Principal and Interest

$

64,221.77 $

7,215.85

ASSETS ACQUIRED UNDER CAPITAL LEASES
The School District has acquired buildings and equipment under the provisions of various long-term lease agreements classified as capital leases for accounting purposes because they provide for a bargain purchase option or a transfer of ownership by the end of the lease term.

- 22 -

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

EXHIBIT "I"

The following assets were acquired through capital leases and are reflected in the capital asset note at fiscal year-end:

Energy Efficiency Lease:
Equipment Less: Accumulated Depreciation

Funds
$ 1,853,841.00 (370,768.20)

$ 1,483,072.80

Capital Lease:
Equipment Less: Accumulated Depreciation

$

352,020.00

(5,867.00)

$

346,153.00

Installment Sales Agreement:
Buildings and Improvements Less: Accumulated Depreciation

$ 4,480,429.05 (358,758.99)
$ 4,121,670.06

Revenue Bonds:
Buildings and Improvements Less: Accumulated Depreciation

$

145,820.89

(17,352.69)

$

128,468.20

NOTE 9: RISK MANAGEMENT
INSURANCE
Commercial Insurance
The School District is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors or omissions; job related illness or injuries to employees; and natural disasters. Except as noted below, the School District carries commercial insurance for these risks. Settled claims resulting from these insured risks have not exceed commercial insurance coverage in any of the past three fiscal years.
Georgia School Boards Association Risk and Insurance Management System
The School District participates in the Georgia School Boards Association Risk and Insurance Management System (the System), a public entity risk pool organized on July 1, 1994, to develop and administer a plan to reduce risk of loss on account of general liability, motor vehicle liability, or property damage, including safety engineering and other loss prevention and control techniques, and to administer one or more groups of self-insurance funds, including the processing and defense of claims brought against members of the system. The School District pays an annual premium to the System for its general insurance coverage. Additional coverage is provided through agreements by the System with other companies according to their specialty for property, boiler and machinery (including coverage for flood and earthquake), general liability (including coverage for sexual harassment, molestation and abuse), errors and omissions, crime and automobile risks. Payment of excess insurance for the System varies by line of coverage.

- 23 -

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

EXHIBIT "I"

WORKERS' COMPENSATION
Georgia School Boards Association Workers' Compensation Fund
The School District participates in the Georgia School Boards Association Workers' Compensation Fund (the Fund), a public entity risk pool organized on July 1, 1992, 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 Fund for its Workers' Compensation insurance coverage. Excess insurance coverage is provided through an agreement by the Fund with the Safety National Casualty Corporation to provide coverage for potential losses sustained by the Fund in excess of $550 thousand loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided by Safety National Casualty Corporation to provide coverage for potential losses sustained by the Fund in excess of $550 thousand loss per occurrence, up to $2.0 million. In addition to the $550,000.00 per occurrence retention, the Fund also retains an additional $200,000.00 per year corridor retention.

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

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

2015 $

(1,348.00)

$

2016 $

(1,348.00)

$

-

$

-

$

-

$

(1,348.00)

-

$

(1,348.00)

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

Position Covered

Amount

Superintendent

$

100,000.00

- 24 -

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

EXHIBIT "I"

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

Nonspendable Inventories
Restricted Continuation of Federal Programs Debt Service
Assigned School Activity Accounts
Unassigned

$ 45,326.06

$ 316,733.88 16,848.92

333,582.80

151,951.84 4,398,163.08

Fund Balance, June 30, 2016

$ 4,929,023.78

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

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

NOTE 11: SIGNIFICANT COMMITMENTS
OPERATING LEASES
The School District leases copiers under the provisions of one or more long-term lease agreements classified as operating leases for accounting purposes. Rental expenditures under the terms of the operating leases totaled $19,675.44 for governmental activities for the year ended June 30, 2016. The following future minimum lease payments were required under operating leases at June 30, 2016:

Year Ending

Governmental Funds

2017 2018 2019

$

19,675.44

16,167.58

2,036.00

Total

$

37,879.02

NOTE 12: SIGNIFICANT CONTINGENT LIABILITIES
FEDERAL GRANTS
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. Any disallowances resulting from the grantor audit may become a liability of the School District. However, the School District believes that such disallowances, if any, will be immaterial to its overall financial position.

- 25 -

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

EXHIBIT "I"

LITIGATION
The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to have a material adverse effect on the financial condition of the School District.
NOTE 13: POST-EMPLOYMENT BENEFITS
GEORGIA SCHOOL PERSONNEL POST-EMPLOYMENT HEALTH BENEFIT FUND
Plan Description. The Georgia School Personnel Post-Employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Benefit Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (O.C.G.A.) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board). Additional information about the School OPEB Fund is disclosed in the State of Georgia Comprehensive Annual Financial Report. This report can be obtained from the Georgia Department of Audits and Accounts at www.audits.ga.gov/SGD/CAFR.html.
Funding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. For members with fewer than five years of service as of January 1, 2012, contributions also vary based on years of service. On average, members with five years or more of service as of January 1, 2012 pay approximately 25% of the cost of the health insurance coverage. In accordance with the Board resolution dated December 8, 2011, for members with fewer than five years of service as of January 1, 2012, the State provides a premium subsidy in retirement that ranges from 0% for fewer than 10 years of service to 75% (but no greater than the subsidy percentage offered to active employees) for 30 or more years of service. The subsidy for eligible dependents ranges from 0% to 55% (but no greater than the subsidy percentage offered to dependents of active employees minus 20%). No subsidy is available to Medicare eligible members not enrolled in a Medicare Advantage Option. The Board of Community Health sets all member premiums by resolution and in accordance with the law and applicable revenue and expense projections. Any subsidy policy adopted by the Board may be changed at any time by Board resolution and does not constitute a contract or promise of any amount of subsidy.
Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected "payas-you-go" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.

- 26 -

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

EXHIBIT "I"

The combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30, 2016:

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

July 1, 2015 June 30, 2016

$945.00 per member per month

For non-certificated school personnel:

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

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

No additional contribution was required by the Board for fiscal year 2016 nor contributed to the School OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the School plan for other post-employment benefits and are subject to appropriation.

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

Fiscal Year

Percentage Contributed

Required Contribution

2016 2015 2014

100%

$

3,489,350.60

100%

$

3,428,485.55

100%

$

3,423,540.60

NOTE 14: RETIREMENT PLANS
The School District participates in various retirement plans administered by the State of Georgia, as further explained below.

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
Plan Description: All teachers of the School District as defined in O.C.G.A 47-3-60 and certain other support personnel as defined by 47-3-63 are provided a pension through the Teachers Retirement System of Georgia (TRS). TRS, a cost-sharing multiple-employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. The Teachers Retirement System of Georgia issues a publicly available separate financial audit report that can be obtained at www.trsga.com/publications.

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

- 27 -

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

EXHIBIT "I"

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. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees were required to contribute 6% of their annual pay during fiscal year 2016. The School District's contractually required contribution rate for the year ended June 30, 2016 was 14.27% of annual School District payroll. For the current fiscal year, employer contributions to the pension plan were $2,288,096.92.
PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM (PSERS)
Plan description: PSERS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly in 1969 for the purpose of providing retirement allowances for public school employees who are not eligible for membership in the Teachers Retirement System of Georgia. The ERS Board of Trustees, plus two additional trustees, administers PSERS. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. PSERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/formspubs/formspubs.
Benefits provided: A member may retire and elect to receive normal monthly retirement benefits after completion of ten years of creditable service and attainment of age 65. A member may choose to receive reduced benefits after age 60 and upon completion of ten years of service.
Upon retirement, the member will receive a monthly benefit of $14.75, multiplied by the number of years of creditable service. Death and disability benefits are also available through PSERS. Additionally, PSERS may make periodic cost-of-living adjustments to the monthly benefits. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contribution, the member forfeits all rights to retirement benefits.
Contributions: The general assembly makes an annual appropriation to cover the employer contribution to PSERS on behalf of local school employees (bus drivers, cafeteria workers, and maintenance staff). The annual employer contribution required by statute is actuarially determined and paid directly to PSERS by the State Treasurer in accordance with O.C.G.A. 47-4-29(a) and 60(b). Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.
Individuals who became members prior to July 1, 2012 contribute $4 per month for nine months each fiscal year. Individuals who became members on or after July 1, 2012 contribute $10 per month for nine months each fiscal year. The State of Georgia, although not the employer of PSERS members, is required by statute to make employer contributions actuarially determined and approved and certified by the PSERS Board of Trustees. The current fiscal year contribution was $61,962.00.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions
At June 30, 2016, the School District reported a liability of $23,057,977.00 for its proportionate share of the net pension liability for TRS.
The net pension liability for TRS was measured as of June 30, 2015. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2014. An expected total pension liability as of June 30, 2015 was determined using standard roll-forward techniques. The School District's proportion of the net pension liability was based on contributions to TRS during the fiscal year ended June 30, 2015.
At June 30, 2015, the School District's TRS proportion was 0.151458%, which was a decrease of 0.007219% from its proportion measured as of June 30, 2014.

- 28 -

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

EXHIBIT "I"

At June 30, 2016, the School District did not have a PSERS liability for a proportionate share of the net pension liability because of a Special Funding Situation with the State of Georgia, which is responsible for the net pension liability of the plan. The amount of the State's proportionate share of the net pension liability associated with the School District is $249,672.00.
The PSERS net pension liability was measured as of June 30, 2015. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2014. An expected total pension liability as of June 30, 2015 was determined using standard roll-forward techniques. The State's proportion of the net pension liability associated with the School District was based on actuarially determined contributions paid by the State during the fiscal year ended June 30, 2015.
For the year ended June 30, 2016, the School District recognized pension expense of $1,222,553.00 for TRS and $14,889.00 for PSERS and revenue of $14,889.00 for PSERS. The revenue is support provided by the State of Georgia.
At June 30, 2016, the School District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

TRS

Deferred

Deferred

Outflows of

Inflows of

Resources

Resources

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

$

- $ 202,807.00

-

1,944,965.00

-

1,141,333.00

2,288,096.62

-

$ 2,288,096.62 $ 3,289,105.00

The School District contributions subsequent to the measurement date of $2,288,096.62 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, 2017. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year Ended June 30:

TRS

2017 2018 2019 2020 2021

$ (1,231,484.00) $ (1,231,484.00) $ (1,231,485.00) $ 462,309.00 $ (56,961.00)

- 29 -

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

EXHIBIT "I"

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

Teachers Retirement System: Inflation Salary increases Investment rate of return

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

Mortality rates were based on the RP-2000 Combined Mortality Table for Males or Females set back two years for males and set back three years for females.
The actuarial assumptions used in the June 30, 2014 valuation were based on the results of an actuarial experience study for the period July 1, 2004 June 30, 2009.

Public School Employees Retirement System:

Inflation

3.00%

Salary increases

N/A

Investment rate of return

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

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

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

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:

Long-term

Target

expected real

Asset class

allocation

rate of return*

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

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

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

Total

100.00%

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

- 30 -

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

EXHIBIT "I"

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

Teachers Retirement System:

1% Decrease (6.50%)

Current Discount Rate (7.50%)

1% Increase (8.50%)

School District's proportionate share of the net pension liability

$

39,623,389.00 $

23,057,977.00 $ 9,404,135.00

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 http://www.ers.ga.gov/formspubs/formspubs.html.

DEFINED CONTRIBUTION PLAN
On July 1, 1995, the School District began an employer paid 403(b) annuity plan for the group of employees covered under the Public School Employees Retirement System (PSERS). Recognizing that PSERS was a limited defined contribution and defined benefit plan which did not provide for an adequate retirement for this group of employees, it was the Board's desire to supplement the retirement of this group.
The School District selected Lincoln Financial Services as the provider of this plan. For each employee covered under PSERS, the Board began contributing to the plan an amount equal to 3% of the employee's base pay.
The employee becomes vested in the plan from the enrollment date.
Funds accumulated in the employer paid accounts are only available to the employee upon termination of employment.

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

Fiscal Year

Percentage Contributed

Required Contribution

2016 2015 2014

100%

$

100%

$

100%

$

14,542.00 15,748.00 14,335.00

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

SCHEDULE "1"

Year Ended

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

2016 2015

0.151458% $ 0.158677% $

23,057,977.00 $ 20,046,746.00 $

- $ 23,057,977.00 $ - $ 20,046,746.00 $

16,023,377.62 16,202,581.03

143.90% 123.73%

81.44% 84.03%

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

- 33 -

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

SCHEDULE "2"

Year Ended
2016 2015

School District's proportion of the
net pension liability

School District's proportionate share of the net pension liability

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

0.00% $ 0.00% $

- $ - $

249,672.00 $ 224,650.00 $

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

249,672.00 $ 224,650.00 $

794,053.46 773,148.31

N/A

87.00%

N/A

88.29%

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

- 34 -

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

SCHEDULE "3"

Year Ended

Contractually required contribution

Contributions in relation to the contractually required
contribution

Contribution deficiency (excess)

School District's covered-employee
payroll

2016 $ 2015 $ 2014 $ 2013 $ 2012 (1) $ 2011 (1) $ 2010 (1) $

2,288,096.62 $ 2,106,396.50 $ 1,989,676.95 $ 1,839,965.90 $ 1,773,669.56 $ 2,036,726.54 $ 1,966,942.61 $

2,288,096.62 $ 2,106,396.50 $ 1,989,676.95 $ 1,839,965.90 $ 1,773,669.56 $ 2,036,726.54 $ 1,966,942.61 $

- $ - $ - $ - $ - $ - $ - $

16,034,314.13 16,023,377.62 16,202,581.03 16,125,906.22 17,253,594.96 19,812,514.95 20,194,482.68

Contribution as a percentage of covered-
employee payroll
14.27% 13.15% 12.28% 11.41% 10.28% 10.28%
9.74%

(1) These amounts include contributions paid on the School District's behalf by the Georgia Department of Education.

This schedule is intended to show information for 10 years. Due to the District's retention policy, the School District is only able to display 7 years of information.

- 35 -

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

SCHEDULE "4"

Teachers Retirement System
Changes of assumptions: In 2010 and later, the expectation of retired life mortality was changed to the RP 2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. In 2010, assumed rates of salary increase were adjusted to more closely reflect actual and anticipated experience.
Method and assumptions used in calculations of actuarially determined contributions: The actuarially determined contribution rates in the schedule RIFRQWULEXWLRQVDUHFDOFXODWHGDVRI-XQHWKUHH\HDUVSULRUWRWKHHQGRIWKHILVFDO\HDULQZKLFKFRQWULEXWLRQVDUHUHSRUWHG7KHIROORZLQJDFWXDULDO methods and assumptions were used to determine the contractually required contributions for year ended June 30, 2016 reported in that schedule:

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

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

Public School Employees Retirement System
Changes of assumptions: The last experience investigation was prepared for the five-year period ending June 30, 2009, and based on the results of the investigation various assumptions and methods were revised and adopted by the board on December 16,2010. The next experience investigation will be prepared for the period July 1, 2009 through June 30, 2014.
Method and assumptions used in calculations of actuarially determined contributions: The actuarially determined contribution rates in the schedule RIFRQWULEXWLRQVDUHFDOFXODWHGDVRI-XQHWKUHH\HDUVSULRUWRWKHHQGRIWKHILVFDO\HDULQZKLFKFRQWULEXWLRQVDUHUHSRUWHG7KHIROORZLQJDFWXDULDO methods and assumptions were used to determine the contractually required contributions for year ended June 30, 2016 reported in that schedule:

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

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

- 36 -

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

SCHEDULE "5"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Food Services Operation
Debt Service
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES
Other Sources
Net Change in Fund Balances
Fund Balances - Beginning

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

VARIANCE OVER/UNDER

$

8,356,508.00 $

8,356,508.00 $

8,761,420.94 $

-

-

115,072.82

15,985,905.00

16,714,222.30

17,141,322.26

77,214.00

4,138,393.00

4,537,637.64

1,500.00

183,600.00

205,774.60

5,000.00

5,500.00

348.82

359,939.00

722,927.00

876,558.35

24,786,066.00

30,121,150.30

31,638,135.43

404,912.94 115,072.82 427,099.96 399,244.64
22,174.60 (5,151.18) 153,631.35
1,516,985.13

15,924,522.00
931,274.00 710,562.00 392,431.00 645,356.00 1,720,833.00 352,548.00 1,957,475.00 1,651,566.00 168,042.00 316,457.00
15,000.00
24,786,066.00
-
-
-
3,503,232.34

17,627,334.37
1,185,280.00 1,477,164.00
441,934.00 737,808.00 2,105,835.93 324,527.00 1,920,856.00 1,703,260.00 168,142.00 320,009.00
2,092,000.00
17,000.00
30,121,150.30
-
-
-
3,503,232.34

18,041,716.35
1,183,631.91 1,454,399.12
441,122.23 735,817.05 2,104,120.41 326,456.97 2,015,851.78 1,652,133.92 167,460.76 341,471.91
19,493.30 2,119,939.40
16,849.44
30,620,464.55
1,017,670.88
408,120.56
1,425,791.44
3,503,232.34

(414,381.98)
1,648.09 22,764.88
811.77 1,990.95 1,715.52 (1,929.97) (94,995.78) 51,126.08
681.24 (21,462.91) (19,493.30) (27,939.40)
150.56
(499,314.25)
1,017,670.88
408,120.56
1,425,791.44
-

Fund Balances - Ending

$

3,503,232.34 $

3,503,232.34 $

4,929,023.78 $

1,425,791.44

Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual
(1) Original and Final Budget amounts do not include the budgeted revenues or expenditures of the various principal accounts. The actual revenues and expenditures of the various principal accounts are $300,114.90 and $338,734.90, respectively.
The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 37 -

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

SCHEDULE "6"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total U. S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Other Programs Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States English Language Acquisition Grants Improving Teacher Quality State Grants Migrant Education - State Grant Program Rural Education Title I Grants to Local Educational Agencies
Total Other Programs
Total U. S. Department of Education
Health and Human Services, U. S. Department of Other Programs Pass-Through From Y.M.C.A. Head Start
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

16165GA324N1099 $ 16165GA324N1099

613,089.37 1,505,627.05
2,118,716.42

84.027 84.173

H027A150073 H173A150081

84.048 84.365 84.367 84.011 84.358 84.010

V048A150010 S365A150010 S367A150001 S011A150011 S358B150010 S010A150010

675,562.50 26,332.00
701,894.50
40,879.90 9,487.75
177,133.43 20,510.47 78,895.17
1,047,791.66
1,374,698.38
2,076,592.88

93.600

04CH010232

400,037.00

12.UNKNOWN

89,691.56

Total Expenditures of Federal Awards

$ 4,685,037.86

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

See notes to the basic financial statements.

- 38 -

ELBERT COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2016
AGENCY/FUNDING
GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Central Administration School Administration Facility Maintenance and Operations Amended Formula Adjustment Regular Nursing Services Education Equalization Funding Grant Food Services Math and Science Supplements Preschool Handicapped Program Pupil Transportation - State Bonds Vocational Education
Governor's Office of Student Achievement Connections for Classrooms Grant
Office of the State Treasurer Public School Employees Retirement

SCHEDULE "7"
GOVERNMENTAL FUND TYPE GENERAL FUND
$ 698,335.38
887,362.00 337,579.00 2,374,275.00 526,062.00 1,059,232.00 262,960.00 1,880,498.00 1,580,090.00 574,733.00 2,404,587.00 557,755.00
89,475.00 133,491.00 120,224.00 344,969.00 104,632.00
57,719.00 495,039.00 815,754.00 753,789.00 (801,519.00) 580,453.00
55,583.00 947,124.00
49,236.00 4,734.11
50,477.00 77,220.00 51,885.00
5,606.77
61,962.00
$ 17,141,322.26

See notes to the basic financial statements.

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

SCHEDULE "8"

PROJECT SPLOST 2011

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3) (4)

AMOUNT EXPENDED IN PRIOR YEARS (3) (4)

TOTAL COMPLETION
COST

EXCESS PROCEEDS NOT EXPENDED (5) (6)

ESTIMATED COMPLETION
DATE

(1) Renovating, modernizing, equipping, repairing,

and improving Elbert County Comprehensive High

School to include mechanical, structural, educational,

and other facility functions;

$

7,095,663.00 $ 7,406,235.00 $

- $ 7,275,510.27 $ 7,275,510.27 $

(2) Purchasing textbooks and software;

1,230,469.00

1,232,524.22

141,082.46

423,833.30

-

(3) Acquiring and improving school buses and other

vehicles;

703,125.00

250,000.00

16,048.00

58,732.12

-

(4) Purchasing, upgrading and supporting existing and

future technology initiatives;

2,109,375.00

1,700,000.00

292,083.60

1,264,700.60

-

130,724.73 Complete

-

June 2017

-

June 2017

-

June 2017

(5) Renovating, modernizing, equipping, repairing,

improving, planning, and acquiring other system

facilities to include elementary, middle, athletic and

operational facilities;

2,009,805.00

2,178,871.79

618,679.85

1,474,842.45

-

(6) Acquiring any other real or personal property as so

desired.

351,563.00

-

-

-

-

-

June 2017

-

June 2017

$ 13,500,000.00 $ 12,767,631.01 $ 1,067,893.91 $ 10,497,618.74 $ 7,275,510.27 $ 130,724.73

(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 from all funding sources, including other state revenues.

(3) The voters of Elbert County approved the imposition of a 1% sales tax to fund the above projects and retire associated debt. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects.

(4) In addition to the expenditures shown above, the School District has incurred interest to provide advance funding for the above projects as follows:

Prior Years

$

237,571.28

Current Year

148,104.78

Total

$

385,676.06

(5) All projects in SPLOST 2011 are appropriately funded as of June 30, 2016.

(6) All projects in SPLOST 2011 are expected to be completed on or before June 30, 2017.

See notes to the basic financial statements.

- 41 -

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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
July 28, 2017

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Elbert County Board of Education
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
INDEPENDENT AUDITOR'S REPORT
Ladies and Gentlemen:
We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Elbert County Board of Education (School District) as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the School District's basic financial statements, and have issued our report thereon dated July 28, 2017.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the School District's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the School District's internal control. Accordingly, we do not express an opinion on the effectiveness of the School District's internal control.
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.

(This page left intentionally blank)

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. We did identify a certain deficiency in internal control, described in the accompanying Schedule of Findings and Questioned Costs as item FS 2016-001, that we consider to be a significant deficiency.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the School District's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
School District's Response to Findings
The School District's response to the finding identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. The School District's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the School District's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School District's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Respectfully submitted,
Greg S. Griffin State Auditor

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
July 28, 2017

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

(This page left intentionally blank)

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the School District's compliance.
Opinion on Each Major Federal Program
In our opinion, the School District complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2016.
Report on Internal Control over Compliance
Management of the School District is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the School District's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the School District's internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
Respectfully submitted,
Greg S. Griffin State Auditor

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

(This page left intentionally blank)

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

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS-6521-12-01 Deficiencies in Controls over System Access

Control Category:
Internal Control Impact: Compliance Impact:

Accounting Controls (Overall) Inadequate Accounting Procedures Material Weakness None

Finding Status:

Partially Resolved

The School District was able to hire a Director of Technology for 2016 fiscal year, which eliminated the need for the chief financial officer to have access to the server room. In addition, in the 2016 fiscal year, procedures were put into place that separated the ability to access the accounting system and the users within the system by having the accounting system hosted and user access is controlled by the hosting firm and must be properly approved by the School District administration.

FS-6521-12-02 Deficiencies in Controls over Cash

Control Category: Internal Control Impact: Compliance Impact:

Cash and Cash Equivalents Significant Deficiency None

Finding Status:

Previously Reported Corrective Action Implemented

FS-6521-12-04 Deficiencies in Financial Reporting

Control Category: Internal Control Impact: Compliance Impact:

Financial Reporting Significant Deficiency None

Finding Status:

Partially Resolved

The School District has implemented management controls and a financial review process to ensure that any errors are detected prior to the submission of financial statements to the auditors.

FS-6521-13-01 Deficiencies in Controls over System Access

Control Category:
Internal Control Impact: Compliance Impact:

Accounting Controls (Overall) Inadequate Separation of Duties Material Weakness None

Finding Status:

Partially Resolved

The School District was able to hire a Director of Technology for 2016 fiscal year, which eliminated the need for the chief financial officer to have access to the server room. In addition, in the 2016 fiscal year, procedures were put into place that separated the ability to access the accounting system and the users within the system by having the accounting system hosted and user access is controlled by the hosting firm and must be properly approved by the School District administration.

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

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS-6521-13-02 Deficiencies in Controls over Cash

Control Category: Internal Control Impact: Compliance Impact:

Cash and Cash Equivalents Material Weakness None

Finding Status:

Previously Reported Corrective Action Implemented

FS-6521-13-03 Deficiencies in Financial Reporting

Control Category: Internal Control Impact: Compliance Impact:

Financial Reporting Material Weakness None

Finding Status:

Partially Resolved

The School District has implemented management controls and a financial review process to ensure that any errors are detected prior to the submission of financial statements to the auditors.

FS 2014-001 Deficiencies in Controls over System Access

Control Category:
Internal Control Impact: Compliance Impact:

Accounting Controls (Overall) Inadequate Separation of Duties Material Weakness None

Finding Status:

Partially Resolved

The School District was able to hire a Director of Technology for 2016 fiscal year, which eliminated the need for the chief financial officer to have access to the server room. In addition, in the 2016 fiscal year, procedures were put into place that separated the ability to access the accounting system and the users within the system by having the accounting system hosted and user access is controlled by the hosting firm and must be properly approved by the School District administration.

FS 2014-002 Deficiencies in Controls over Cash

Control Category: Internal Control Impact: Compliance Impact:

Cash and Cash Equivalents Significant Deficiency None

Finding Status:

Previously Reported Corrective Action Implemented

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

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS 2014-003 Deficiencies in Financial Reporting

Control Category: Internal Control Impact: Compliance Impact:

Financial Reporting Material Weakness None

Finding Status:

Partially Resolved

The School District has implemented management controls and a financial review process to ensure that any errors are detected prior to the submission of financial statements to the auditors.

FS 2015-001 Deficiencies in Controls over System Access

Control Category:
Internal Control Impact: Compliance Impact:

Accounting Controls (Overall) Inadequate Separation of Duties Material Weakness None

Finding Status:

Partially Resolved

The School District was able to hire a Director of Technology for 2016 fiscal year, which eliminated the need for the chief financial officer to have access to the server room. In addition, in the 2016 fiscal year, procedures were put into place that separated the ability to access the accounting system and the users within the system by having the accounting system hosted and user access is controlled by the hosting firm and must be properly approved by the School District administration.

FS 2015-002 Deficiencies in Controls over Cash

Control Category: Internal Control Impact: Compliance Impact:

Cash and Cash Equivalents Significant Deficiency None

Finding Status:

Previously Reported Corrective Action Implemented

FS 2015-003 Deficiencies in Financial Reporting

Control Category: Internal Control Impact: Compliance Impact:

Financial Reporting Significant Deficiency None

Finding Status:

Partially Resolved

The School District has implemented management controls and a financial review process to ensure that any errors are detected prior to the submission of financial statements to the auditors.

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

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS 2015-004 Deficiencies in School Activity Accounts

Control Category: Internal Control Impact: Compliance Impact:

Revenues/Receivables/Receipts Significant Deficiency None

Finding Status:

Partially Resolved

The School District has developed detailed procedures and policies for the accounting of pupil activity funds. Management reviews these procedures on an annual basis with all administrators to ensure and stress the importance of following prescribed procedures. The School District documents the delivery of the requirements and ensures through random sampling that procedures are being followed as prescribed.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.

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SECTION IV FINDINGS AND QUESTIONED COSTS

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

I SUMMARY OF AUDITOR'S RESULTS

Financial Statements

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

Unmodified

Internal control over financial reporting:

Material weakness identified?

No

Significant deficiency identified?

Yes

Noncompliance material to financial statements noted:

No

Federal Awards

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

No None Reported

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

Unmodified

Any audit findings disclosed that are required to be reported in

accordance with 2 CFR 200.516(a)?

No

Identification of major programs:

CFDA Numbers

Name of Federal Program or Cluster

10.553, 10.555 84.010

Child Nutrition Cluster Title I Grants to Local Educational Agencies

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

$750,000.00

Auditee qualified as low-risk auditee?

No

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

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

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

Maintenance of Capital Assets Capital Assets Significant Deficiency None None

Description: Adequate policies and procedures are not in place to ensure capital assets inventory records are properly maintained.

Criteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that capital asset inventory records are properly maintained. Chapter 37 Implementing a Capital Assets Management System of the Financial Management for Georgia Local Units of Administration provides that School Districts must establish capital asset policies, define system requirements, implement a capital asset system, and maintain capital asset inventory records.

Condition: A review of the School District's capital assets records revealed the following items:

Three capital asset items are recorded in the wrong asset category according to the entity's capitalization policy.
Three expenditures totaling $31,302.45 exceeded the capitalization threshold and were not capitalized as additions in the current year. Uncapitalized expenditures identified during the prior year audit in the amount of $29,527.00 went uncapitalized in the current year.
Two current year landscaping additions in the amount of $17,430.30 were capitalized despite the Board's capitalization policy stating that landscaping would not be capitalized.
A misstatement in the amount of $417,814.59 was noted during a recalculation of current year depreciation expense. Upon analysis of the capital asset listing, several assets were noted that were depreciated beyond their depreciable cost in the amount of $142,206.72. The net effect of these issues resulted in a misstatement to accumulated depreciation in the amount of $275,617.87.

Cause: In discussing this deficiency with the School District, they stated that the cause was a direct result of errors in calculating depreciation and in capitalization.

Effect or Potential Effect: The condition of this deficiency can lead to inaccurate internal and external reporting, as well as noncompliance with generally accepted accounting principles.

Recommendation: The School District's management should review the capital asset records and make appropriate adjustments to ensure that depreciation is recorded correctly and that capital asset records conform to the School District's approved capital asset policy.

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ELBERT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2016 II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS Views of Responsible Officials: We concur with this finding. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.
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SECTION V MANAGEMENT'S CORRECTIVE ACTION

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

CORRECTIVE ACTION PLANS - FINANCIAL STATEMENT FINDINGS

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

Maintenance of Capital Assets Capital Assets Significant Deficiency None None

The School District did not maintain an adequate capital assets listing.

Corrective Action Plans: The School District will utilize the capital asset module within the accounting system to track and maintain all capital assets and depreciation. A physical inventory will be conducted in June 2017 and data verified prior to the completion of the 2017 fiscal year.

Estimated Completion Date: June 2017

Contact Person: Ben M. Childs

Telephone: (706) 213-4052

E-mail:

bchilds@elbert.k12.ga.us

CORRECTIVE ACTION PLANS FEDERAL AWARD FINDINGS

No matters were reported.