FLOYD COUNTY BOARD OF EDUCATION ROME, GEORGIA REPORT ON AUDIT OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS Russell W. Hinton State Auditor FLOYD COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION I FINANCIAL INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED SUPPLEMENTARY INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS EXHIBITS BASIC FINANCIAL STATEMENTS DISTRICT-WIDE FINANCIAL STATEMENTS A STATEMENT OF NET ASSETS I B STATEMENT OF ACTIVITIES 2 FUND FINANCIAL STATEMENTS C BALANCE SHEET GOVERNMENTAL FUNDS 4 D RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS 5 E STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS 6 F RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES 7 G STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS 8 H NOTES TO THE BASIC FINANCIAL STATEMENTS 9 SCHEDULES REQUIRED SUPPLEMENTARY INFORMATION I SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND 27 FLOYD COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION I FINANCIAL SCHEDULES SUPPLEMENTARY INFORMATION 2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 28 3 SCHEDULE OF STATE REVENUE 30 4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 32 5 ALLOTMENTS AND EXPENDITURES GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM 33 SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS 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 REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133 SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS SECTION I FINANCIAL Russell W. Hinton STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 June 8, 2009 Honorable Sonny Perdue, Governor Members ofthe General Assembly Members ofthe State Board of Education and Superintendent and Members ofthe Floyd County Board of Education INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Ladies and Gentlemen: We have audited the accompanying financial statements ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) of the Floyd County Board of Education, as of and for the year ended June 30, 2008, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Floyd County Board of Education's management. 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 ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Floyd County Board of Education's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. 2008ARL-11 In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Floyd County Board of Education, as of June 30, 2008, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated June 8, 2009, on our consideration ofthe Floyd County Board ofEducation'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 ofinternal control over financial reporting and compliance and the results ofthat testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Management's Discussion and Analysis and the Schedule ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through x and page 27 respectively, are not a required part ofthe basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Floyd County Board of Education's basic financial statements. The accompanying supplementary information which consist of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U.S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. 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, -;?~ uJ. 4)$ Russell W. Hinton, CPA, CGFM State Auditor RWH:as 2008ARL-11 FLOYD COUNTY SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 INTRODUCTION The School District's financial statements for the fiscal year ended June 30, 2008, includes a series of basic financial statements that report financial information for the School District as a whole, its funds, and its fiduciary responsibilities. The Statement of Net Assets and the Statement of Activities provide financial information about all of the School District's activities and present both a short-term and long-term view of the School District's finances on a global basis. The fund financial statements provide information about all of the School District's funds. Information about these funds, such as the School District's General Fund, is important in its own right, but will also give insight into the School District's overall soundness as reported in the Statement of Net Assets and the Statement of Activities. FINANCIAL HIGHLIGHTS Key financial highlights for fiscal year 2008 are as follows: On the District-wide financial statements: District-wide net assets at June 30, 2008, were $104,577,007. Net assets reflect the difference between all assets of the School District (including capital assets, net of depreciation) and all liabilities, both short-term and long-term. The net assets at June 30, 2008, of $104,577,007 represented an increase of $8,092,565 in net assets when compared to the prior year. The School District had $113.6 million in expenses relating to governmental activities; only $70.4 million of these expenses were offset by program specific charges for services, grants and contributions. However, general revenues (primarily property and sales taxes) of $51.3 million were adequate to provide for these programs. As stated above, general revenues accounted for $51.3 million or about 42% of all revenues totaling $121.7 million. Program specific revenues in the form of charges for services, grants, and contributions accounted for the balance of these revenues. Source of Revenues General Revenue Property Taxes 25.5% General Revenue Sales Taxes 9.3% General Revenue All Other 7.3% FLOYD COUNTY SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 The School District decreased its outstanding bond debt $7.685 million through the payment of general obligation bond principal. The remaining bond debt of $17.54 million will be retired by a Special Purpose Local Option Sales Tax and interest earned thereon that was approved by the citizenry in conjunction with the Bond Sale. On the fund financial statements: Among major funds, the General Fund had over $108.9 million in revenues and almost $110.9 million in expenditures. The General Fund balance of $9.1 million at June 30, 2008, decreased $2.8 million from the prior year fund balance. The drawdown of the fund balance was planned and provided for in the original budget, and significant unspent budget or unanticipated revenues did not offset the budgeted decrease. OVERVIEW OF THE FINANCIAL STATEMENTS These financial statements consists of three parts; management's discussion and analysis (this section), the basic financial statements including notes to the 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 District-wide and fund financial statements. The District-wide financial statements include the 'Statement of Net Assets' and '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. In the case of the Floyd County School District, the General Fund, Capital Projects Funds, and Debt Service Funds are all considered to be major funds. The School District has no nonmajor funds as defined by GASB Statement 34 for the purposes of this report. 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. 11 FLOYD COUNTY SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 DISTRICT-WIDE STATEMENTS Since Floyd County School District has no operations that have been classified as "Business Activities", the District-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 District-wide financial statements, a reader might ask the question, are we in a better financial position now than last year? The 'Statement of Net Assets' 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 assets and any changes in those assets. The change in net assets 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, student-teacher ratios, and other factors. When analyzing District-wide financial statements, it is important to remember these statements are prepared using an economic resources measurement focus (accrual accounting) and involve the following steps to format the Statement of Net Assets: Capitalize current outlays for capital assets Depreciate capital assets Report long-term debt as a liability Calculate revenue and expense using the economic resources measurement focus and the accrual basis of accounting Allocate net assets as follows: o Net Assets invested in capital assets, net ofrelated debt. o Restricted net assets are those with constraints placed on the use by external sources such as creditors, grantors, contributors or laws and regulations. o Unrestricted net assets are net assets that do not meet any of the above restrictions. FUND FINANCIAL STATEMENTS The School District uses many funds or sub-funds to account for a multitude of financial transactions during the fiscal year. The fund financial statements presented in this report provide detail information about the School District's significant or major funds. As discussed previously, the School District has no nonmajor Funds as defined by generally accepted accounting principles. 11l FLOYD COUNTY SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 The School District has two kinds of funds as discussed below: Governmental Funds: Most of the School District's activities are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at yearend 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 be 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 government activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds are reconciled in the financial statements. Fiduciary Funds: The School District is the trustee, or fiduciary, for assets that belong to clubs, organizations and others within the principals' accounts. The School District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The School District excludes these activities from the Districtwide financial statements because it cannot use these assets to finance its operations. FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT AS A WHOLE Net assets, which is the difference between total assets and total liabilities, is one indicator of the financial condition of the School District. When revenues exceed expenses, the result is an increase in net assets. When expenses exceed revenues, the result is a decrease in net assets. The relationship between revenues and expenses can be thought of as the School District's operating results. The School District's net assets, as measured in the Statement of Net Assets, can be one way to measure the School District's financial health, or financial position. Over time, increases or decreases in the School District's net assets - as measured in the Statement of Activities - are one indicator of whether its financial health is improving or deteriorating. However, the School District's goal and mission is to provide success for each child's education, not to generate profits as private corporations do. For this reason, many other nonfinancial factors should be considered in assessing the overall health of the School District. In the case of the Floyd County School District, assets exceeded liabilities by $104.6 million at June 30, 2008. To better understand the School District's actual financial position and ability to deliver services in future periods, it is necessary to review the various components of the net asset category. For example, of the $104.6 million of net assets, almost $13.9 million was restricted for continuation of Federal programs, debt service, and capital projects. Accordingly, these funds were not available to meet the School District's ongoing obligations to citizens and creditors. In addition, the School District also had $89.1 million (net of related debt) invested in capital assets (e.g., land, buildings, and equipment). The School District uses these capital assets to provide educational services to students within geographic boundaries served by the School District. Because of the very nature and on-going use of the assets being reported in this lV FLOYD COUNTY SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 component of net assets, it must be recognized that this portion of the net assets is not available for future spending. The remaining balance of unrestricted net assets of almost $1.5 million may be used to meet the School District's ongoing obligations to citizens and creditors. Table 1 provides a summary of the School District's net assets for this fiscal year as compared to the prior fiscal year. Table 1 Net Assets Governmental Activities Fiscal Fiscal Year 2008 Year 2007 Assets Current and Other Assets Capital Assets, Net $ 37,647,631 $ 41,640,998 113,603,556 108,885,013 Total Assets $ 151,251,187 $ 150,526,011 Liabilities Current and Other Liabilities Long-Term Liabilities $ 14,955,819 $ 14,405,771 31,718,361 39,635,798 Total Liabilities $ 46,674,180 $ 54,041,569 Net Assets Invested in Capital Assets, Net of Related Debt Restricted Unrestricted $ 89,156,250 13,937,251 1,483,506 $ 76,126,432 15,760,451 4,597,559 Total Net Assets $ 104,577,007 $ 96,484,442 Table 2 shows the Changes in Net Assets for this fiscal year as compared to the prior fiscal year. V FLOYD COUNTY SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Table 2 Change in Net Assets Revenues Program Revenues: Charges for Services and Sales Operating Grants and Contributions Capital Grants and Contributions Governmental Activities Fiscal Fiscal Year 2008 Year 2007 $ 2,976,370 64,901,023 2,553,633 $ 3,026,768 64,474,151 1,045,305 Total Program Revenues $ 70,431,026 $ 68,546,224 General Revenues: Taxes Property Taxes For Maintenance and Operations $ Other Taxes - Railroad Equipment Sales Taxes Special Purpose Local Option Sales Tax For Debt Service For Capital Projects Intangible Recording Tax Real Estate Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous Special Item Gain or Loss on Disposal of Assets 31,012,856 35,550 7,042,621 3,706,810 483,994 129,350 5,203,232 1,043,552 2,718,008 -93 677 $ 31,463,216 5,421,482 5,206,953 538,560 149,121 4,507,471 1,589,488 2,669,684 -2,106,017 Total General Revenues Total Revenues $ 51,282,296 $ 121,713,322 $ 49,439,958 $ 117,986,182 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 Community Services Food Services Interest on Short-Term and Long-Term Debt Total Expenses Increase in Net Assets vi $ 71,163,357 3,314,188 2,121,889 2,334,167 2,470,666 8,701,737 682,325 9,861,626 5,018,765 713,062 550,112 21,773 5,820,943 846 147 $ 113,620,757 $ 8,092.565 $ 67,558,894 3,406,191 1,897,013 2,226,344 2,433,042 8,020,930 684,640 8,594,302 4,121,449 708,305 559,016 29,028 5,490,137 1,096,754 $ 106,826,045 $ 11,160,137 FLOYD COUNTY SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 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. Table3 Governmental Activities Total Cost of Services Fiscal Fiscal Year 2008 Year 2007 Net Cost of Services Fiscal Fiscal Year 2008 Year 2007 Instruction $ 71,163,357 $ 67,558,894 $ 21,340,128 $ 18,538,713 Support Services Pupil Services 3,314,188 3,406,191 1,850,731 1,991,684 Improvement oflnstructional Services 2,121,889 1,897,013 1,281,927 1,159,552 Educational Media Services 2,334,167 2,226,344 954,005 923,403 General Administration 2,470,666 2,433,042 1,763,573 -80,395 School Administration 8,701,737 8,020,930 4,475,597 4,943,295 Business Administration 682,325 684,640 569,937 684,640 Maintenance and Operation ofPlant 9,861,626 8,594,302 4,478,926 4,414,774 Student Transportation Services 5,018,765 4,121,449 4,097,399 3,527,41 I Central Support Services 713,062 708,305 605,633 479,555 Other Support Services 550,112 559,016 517,156 475,202 Operations of Non-Instructional Services Community Services 21,773 29,028 18,056 28,283 Food Services 5,820,943 5,490,137 390,516 96,949 Interest on Short-Term and Long-Term Debt 846.147 1,096.754 846.147 1,096.754 Total Expenses $113,620.757 $106.826.045 $ 43,189.731 $ 38.279.820 The table above shows that while the total cost of services for providing services increased 6% from the prior year, the net cost to the local taxpayers increased almost 13% from the prior year. In other words, as compared to the proceeding fiscal year, a larger percentage of the cost of providing services in fiscal year 2008 fell to the taxpayers of Floyd County. This condition is occurring because increased costs for such items as salaries, benefits, maintenance, fuel etc. is occurring at a higher rate than is being funded from program revenues (State, Federal, and revenues for services and sales). FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT'S FUNDS Information about the School District's governmental funds is presented starting on Exhibit "C" of this report. Governmental funds are accounted for using the modified accrual basis of accounting. The governmental funds had total revenues of $122.3 million and total expenditures of $126.4 million in fiscal year 2008. Total governmental fund balances of $22.7 million at vu FLOYD COUNTY SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 June 30, 2008, decreased by $4.0 million from the prior year. This decrease in fund balance occurred primarily because expenditures for general funds and debt service exceeded current year revenues dedicated to general fund and debt service. GENERAL FUND BUDGET 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 2008, the School District amended its general fund budget as needed. The School District budget is adopted at the aggregate level and maintained at the program, function, object, and site levels to facilitate budgetary control. The budgeting systems are designed to control the total budget, but provide flexibility to meet the ongoing programmatic needs. The budgeting systems are also designed to control total site budgets but provide flexibility for site management as well. For the General Fund, the final actual revenues of $108.9 million were over the final budgeted amount of almost $105.4 million by almost $3.5 million. This difference (final actual vs. final budget) was primarily attributable to revenues for property taxes over final budget of $0.4 million, sales taxes over final budget of $0.6 million, revenues for State Funds over final budget of $2.9 million, revenues for charges for services over final budget of $0.6 million, and miscellaneous revenues under final budget of $0.5 million. The School District traditionally estimates revenue on a conservative basis to avoid shortfalls in actual revenues. The General Fund's final actual expenditures of $110.8 million exceeded the final budget amount of $108.4 million by $2.4 million. This difference (final actual vs. final budget) was primarily attributable to actual expenditures for instruction falling under the final budget by $194,000, expenditures for pupil services exceeding the final budget by $740,000, expenditures for Improvement of Instructional Services were below the final budget by $120,000, expenditures for General Administration exceeding the final budget by $220,000, expenditures for School Administration exceeding the final budget by $1,046,000, expenditures for Educational Media Services exceeding the final budget by $140,000, expenditures for Maintenance and Operation of Plant exceeding the final budget by $250,000, expenditures for Student Transportation exceeding the final budget by $280,000, expenditures for other support services exceeding final budget of over $160,000, expenditures for School Nutrition Program falling under the final budget by $129,000, and other insignificant variances totaling in other functions totaling less than $20,000. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets At fiscal year ended June 30, 2008, the School District had almost $113.6 million invested in capital assets, net of accumulated depreciation, all in governmental activities. These assets are made up of a broad range of items including buildings; land; land improvements; and food service, transportation and maintenance equipment. This year's major additions totaled almost $9.0 million and included: Vlll FLOYD COUNTY SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Construction in progress costs, classroom additions and school renovations, central office warehouse roof replacement, and capital equipment purchases including telecommunications equipment from E-Rate funds all totaling approximately $9.0 million. Two major renovation projects were the renovation of Pepperell Primary School and the remodeling of the existing Pepperell High School gymnasium. Table 4 reflects a summary of these balances, net of accumulated depreciation, as compared to the prior fiscal year. Table 4 Capital Assets (Net of Depreciation) Governmental Activities Fiscal Fiscal Year 2008 Year 2007 Land Construction in Progress Land Improvements Buildings and Improvements Equipment $ 2,651,488 1,173,686 1,029,289 IO 1,264,701 7,484,392 $ 2,546,400 3,871,985 959,506 95,821,831 5,685,291 Total $ 113,603,556 $ 108,885,013 Additional information about the School District's Capital Assets can be found in the Notes to the Basic Financial Statements. Debt At June 30, 2008, the School District had over $31. 7 million in total debt outstanding which consisted of $17.54 million in bond debt, $6.6 million in capital lease debt, $7.3 million in compensated absences debt, and $268,000 in unamortized bond premium. Table 5 summarizes the School District's debt as compared to the prior fiscal year. IX FLOYD COUNTY SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Table 5 Debt at June 30 Governmental Activities Fiscal Fiscal Year 2008 Year 2007 Bonds Payable Unamortized Bond Premium Capital Leases Compensated Absences $ 17,540,000 268,575 6,638,731 7,271,055 $ 25,225,000 498,781 7,121,916 6,790,101 Total $ 31!718!361 $ 39!635!798 Additional information about the School District's debt can be found in the Notes to the Basic Financial Statements. FACTORS BEARING ON THE SCHOOL DISTRICT'S FUTURE Currently known circumstances that are expected to have a significant effect on financial position or results of operations in future years are as follows: The School District is financially stable. The School District's current operating millage is 18.676, which produces approximately $1,711,577 per mill net of fees. The School District continued growth remained stable this school year as compared to past 3 years with an average of 100 students per year over the last three years. The School plans to construct a new replacement Model High School and other classroom additions in the next year to reduce portable classrooms at various schools. The School District plans to fund additional capital outlays with the one percent local sales tax revenue, general obligation bonds and state capital outlay grants. The School District will continue to face challenges from the nationwide economic downturn resulting in the state funding decreases. The School District will also continue to be impacted by the remedial actions required for under performing schools under the No Child Left Behind Act. In the midst of these challenges, the School District remains confident in the ability to maximize resources to provide the best possible educational experience for all of our students. 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. Chris Toles, Executive Director of Financial Services, Floyd County School District, 600 Riverside Parkway, NE, Rome, GA. You may also email your questions to Mr. Toles at ctoles@floydboe.net. X FLOYD COUNTY BOARD OF EDUCATION FLOYD COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2008 ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net Interest Taxes State Government Federal Government Local Government Other Inventories Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Depreciation) Total Assets LIABILITIES Accounts Payable Salaries and Benefits Payable Claims Payable Deferred Revenue Long-Term Liabilities Due Within One Year Due in More Than One Year Total Liabilities NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted for Continuation of Federal Programs Debt Services Capital Projects Unrestricted Total Net Assets Total Liabilities and Net Assets The notes to the basic financial statements are an integral part of this statement. -1- EXHIBIT"A" GOVERNMENTAL ACTIVITIES $ 6,503,318.52 19,716,634.20 117,486.86 2,847,392.55 7,572,896.00 653,187.48 82,302.51 575.00 153,837.28 3,825,174.00 109,778,382.00 $ ==1=5=1,=25=1=,1=8=6.=40= $ 44,971.00 14,241,794.12 401,964.89 267,089.00 9,229,124.00 22,489,236.62 $ 46,674,179.63 $ 89,156,250.00 407,361.82 10,363,641.67 3,166,247.38 1,483,505.90 $ 104,577,006.77 $ ==15=1=,2=5=1,=18=6=.4=0 FLOYD COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2008 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 Food Services Community Services Operations Interest on Short-Term and Long-Term Debt Total Governmental Activities General Revenues Taxes Property Taxes For Maintenance and Operations Other Taxes - Railroad Equipment Sales Taxes Special Purpose Local Option Sales Tax For Debt Services For Capital Projects Real Estate Transfer Tax Intangible Recording Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous Special Item Gain or Loss of Sale and Disposals of Assets Total General Revenues and Special Item Change in Net Assets Net Assets - Beginning of Year EXPENSES CHARGES FOR SERVICES $ 71,163,357.36 $ 3,314,188.01 2,121,889.44 2,334,166.71 2,470,665.45 8,701,736.67 682,325.37 9,861,626.29 5,018,765.35 713,062.02 550,112.00 5,820,942.69 21,772.50 846,147.06 $ 113,620,756.92 $ 380,364.60 549,270.15 2,046,735.57 2,976,370.32 Net Assets - End of Year The notes to the basic financial statements are an integral part of this statement. -2- EXHIBIT"B" PROGRAM REVENUES OPERATING GRANTS AND CONTRIBUTIONS CAPITAL GRANTS AND CONTRIBUTIONS NET (EXPENSES) REVENUES AND CHANGES IN NET ASSETS $ 47,341,165.75 $ 914,186.86 839,962.64 1,362,004.16 702,553.43 4,226,139.33 112,388.21 5,382,700.75 637,387.39 107,428.74 32,956.63 3,238,433.04 3,716.40 $ 64,901,023.33 $ 2,101,699.00 $ 18,157.23 4,539.31 283,979.00 145,257.80 2,553,632.34 $ -21,340, 128.01 -1,850,731.00 -1,281,926.80 -954,005.32 -1,763,572.71 -4,475,597 .34 -569,937.16 -4,478,925.54 -4,097,398.96 -605,633.28 -517, 155.37 -390,516.28 -18,056.10 -846 147.06 -43, 189,730.93 $ 31,012,855.98 35,550.10 7,042,621.08 3,706,810.45 129,350.32 483,993.96 5,203,232.00 1,043,551.76 2,718,007.74 -93 677.49 $ 51,282,295.90 $ 8,092,564.97 96,484,441.80 $ =====1=04==,5=7=7'=00=6=7.=7 - 3- FLOYD COUNTY BOARD OF EDUCATION BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2008 EXHIBIT"C" ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net Interest Taxes State Government Federal Government Local Other Inventories GENERAL FUND DISTRICTWIDE CAPITAL PROJECTS FUND DEBT SERVICE FUND TOTAL $ 5,321,049.61 $ 1,182,268.91 $ 9,344,265.55 1,980,228.47 $ 8,392,140.18 972,353.24 7,569,146.00 653,187.48 82,302.51 575.00 153,837.28 3,750.00 117,486.86 1,854,014.63 6,503,318.52 19,716,634.20 117,486.86 2,826,367.87 7,572,896.00 653,187.48 82,302.51 575.00 153,837.28 TotalAssets $ 24,096,716.67 $ 3,166,247.38 $ 10,363,641.67 $===3=7'=62=6..,,6=0=5=.7=2 LIABILITIES AND FUND BALANCES LIABILITIES Accounts Payable $ 44,971.00 $ Salaries and Benefits Payable 14,241,794.12 Claims Payable 401,964.89 Deposits and Deferred Revenue 267,089.00 Total Liabilities $ 14,955,819.01 $ FUND BALANCES Reserved for: Continuation of Federal Programs Debt Service Capital Projects Unreserved Designated for Capital Outlay Designated for Student Activities Designated for Self-Insurance Designated for Severance Pay Undesignated Reported in: General Fund $ 407,361.82 $ $ 10,363,641.67 $ 3,166,247.38 800,000.00 1,468,485.86 126,048.51 750,000.00 5,589,001.47 Total Fund Balances $ 9,140,897.66 $ 3,166,247.38 $ 10,363,641.67 $ 44,971.00 14,241,794.12 401,964.89 267,089.00 14,955,819.01 407,361.82 10,363,641.67 3,166,247.38 800,000.00 1,468,485.86 126,048.51 750,000.00 5,589,001.47 22,670,786.71 Total Liabilities and Fund Balances $ 24,096,716.67 $ 3,166,247.38 $ 10,363,641.67 $ ====37=,6=26=,6=05=.7=2 The notes to the basic financial statements are an integral part of this statement. -4- FLOYD COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS JUNE 30, 2008 EXHIBIT "D" Total Fund Balances - Governmental Funds (Exhibit "C") Amounts reported for Governmental Activities in the Statement of Net Assets are different because: Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of: Land Construction in Progress Land Improvements Buildings Machinery and Equipment Accumulated Depreciation Total Capital Assets Some of the School District's property tax revenues will be collected after year-end but are not available soon enough to pay for the current period's expenditures. Long-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of: Bonds Payable Unamortized Bond Premiums Capital Leases Compensated Absences Total Long-Term Liabilities Net Assets of Governmental Activities (Exhibit "A") $ 22,670,786.71 $ 2,651,488.00 1,173,686.00 3,803,754.00 124,735,873.00 16,403,728.00 -35, 164,973.00 113,603,556.00 21,024.68 $ -17,540,000.00 -268,575.00 -6,638,731.00 -7,271,054.62 -31,718,360.62 $ 104,577,006.77 The notes to the basic financial statements are an integral part of this statement. -5- FLOYD COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2008 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 Community Services Food Services Operation Capital Outlay Debt Services Principal Interest Total Expenditures Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES (USES) Sale of Equipment Transfers In Transfers Out Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances - Beginning GENERAL FUND DISTRICTWIDE CAPITAL PROJECTS FUND DEBT SERVICE FUND TOTAL $ 31,525,444.40 $ 31,525,444.40 613,344.28 $ 3,706,810.45 $ 7,042,621.08 11,362,775.81 62,883,465.04 1,377,925.22 64,261,390.26 7,504,769.29 891,728.12 8,396,497.41 2,976,370.32 2,976,370.32 720,199.07 92,847.72 230,504.97 1,043,551.76 2,718,007.74 2 718 007.74 $ 108,941,600.14 $ 6,069,311.51 $ 7,273,126.05 $ 122,284,037.70 $ 70,872,403.43 $ 70,872,403.43 3,315,838.85 2,112,408.84 2,309,710.95 2,459,129.28 $ 8,599,995.15 692,533.38 8,410,912.08 5,019,850.70 694,298.62 547,406.93 21,772.50 5,799,331.25 19,925.00 2,722,811.09 501.92 3,550,273.23 3,315,838.85 2,112,408.84 2,309,710.95 2,479,054.28 8,599,995.15 692,533.38 11,133,723.17 5,019,850.70 694,800.54 547,406.93 21,772.50 5,799,331.25 3,550,273.23 483,185.00 $ 358,931.56 7,685,000.00 717 421.50 8,168,185.00 1,076,353.06 $ 110,855,591.96 $ 7,135,627.80 $ 8,402,421.50 $ 126,393,641.26 $ -1,913,991.82 $ -1,066,316.29 $ -1, 129,295.45 $ -4, 109,603.56 $ 43,226.51 $ 930,000.00 -930,000.00 $ 43,226.51 930,000.00 -930,000.00 $ -886, 773.49 $ 930,000.00 $ 43,226.51 $ -2,800,765.31 $ -136,316.29 $ -1,129,295.45 $ -4,066,377.05 11,941,662.97 3,302,563.67 11,492,937.12 26,737,163.76 Fund Balances - Ending $ 9,140,897.66 $ 3,166,247.38 $ 10,363,641.67 $ 22,670,786.71 The notes to the basic financial statements are an integral part of this statement. -6 - FLOYD 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, 2008 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 Because some property taxes will not be collected for several months after the School District's fiscal year ends, they are not considered "available" revenues. In the Statement of Activities, only the gain or loss on the sale or disposal of the capital assets are reported, whereas in the Governmental Funds, the entire proceeds from the sale increase financial resources. Thus, the change in net assets differs from the change in fund balances by the carrying value of the buildings/equipment sold or disposed of. Some items in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in the Governmental Funds. This activity consists of: Increase in Compensated Absences Repayment of Long-Term Debi is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of: Bond Principal Retirements Capital Lease Payments Amortization of Bond Premiums Total Long-Term Debt Repayments Change in Net Assets of Governmental Activities (Exhibit "B") $ -4,066,377.05 $ 8,788,514.00 -3,933,067.00 4,855,447.00 -477,038.32 -136,904.00 -480,953.66 $ 7,685,000.00 483,185.00 230,206.00 8,398,391.00 $ 8,092,564.97 The notes to the basic financial statements are an integral part of this statement. -7- FLOYD COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30, 2008 ASSETS Cash and Cash Equivalents LIABILITIES Funds Held for Others EXHIBIT"G" AGENCY FUNDS $ 177,966.73 $ 177,966.73 The notes to the basic financial statements are an integral part of this statement. -8 - FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY REPORTING ENTITY The Floyd County Board ofEducation (School District) was established under the laws ofthe State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity. Blended Component Unit - Floyd County Schools College and Career Academy, Inc. The Floyd County Schools College and Career Academy, Inc., (Charter School) is responsible to provide a seamless blend ofacademics with career and technical education and skills to better serve the Floyd County community. The Charter School was created through a contract between the School District and the Charter School commencing July 1, 2008. All State funding associated with the students attending the Charter School and certain specified local funds are turned over to the Charter School to cover the cost of its operation. The financial statements will be reported within the general fund. Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Floyd County Board of Education. District-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe 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 ofActivities 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 ofthe School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs. -9- FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Program revenues include (a) charges paid by the recipients ofgoods 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 ofinternal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. The School District reports the following major governmental funds: General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund. District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST), Bond Proceeds and grants from Georgia State Financing and Investment Commission to be used for the acquisition, construction or renovation ofmajor capital facilities. Debt Service Fund accounts for taxes (sales) legally restricted for the payment ofgeneral longterm principal, interest and paying agent's fees. The School District reports the following fiduciary fund type: Agency funds account for assets held by the School District as an agent for various funds, governments or individuals. BASIS OF ACCOUNTING The basis ofaccounting determines when transactions are reported on the financial statements. The District-wide governmental 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. - IO - FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 ofaccounting. 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. 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 long-term debt and compensated absences, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources. The School District funds certain programs by a combination ofspecific 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. CASH AND CASH EQUIVALENTS COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorize the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations. INVESTMENTS COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code ofGeorgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following: - 11 - FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (1) Obligations issued by the State of Georgia or by other states, (2) Obligations issued by the United States government, (3) Obligations fully insured or guaranteed by the United States government or a United States government agency, (4) Obligations of any corporation of the United States government, (5) Prime banker's acceptances, (6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services, (7) Repurchase agreements, and (8) Obligations of other political subdivisions of the State of Georgia. RECEIVABLES Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. PROPERTY TAXES The Floyd County Board of Commissioners fixed the property tax levy for the 2007 tax digest year (calendar year) on July 16, 2007 (levy date). Taxes were due on November 15, 2007 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2007 tax digest are reported as revenue in the governmental funds for fiscal year 2008. The Floyd County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% oftaxes 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, 2008, for maintenance and operations amounted to $31,489,894.30. The tax millage rate levied for the 2007 tax year (calendar year) for the Floyd County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value): School Operations 18.676 mills - 12 - FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SALES TAXES Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $10,749,431.53 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years. INVENTORIES FOOD INVENTORIES On the basic financial statements, inventories of donated food commodities used in the preparation ofmeals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used. CAPITAL ASSETS Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value ofassets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works ofart. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District. Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide statements are as follows: Capitalization Policy Estimated Useful Life Land Land Improvements Buildings and Improvements Equipment All NIA $ 5,000.00 20 to 80 years $ 5,000.00 10 to 80 years $ 5,000.00 3 to 20 years - 13 - FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives. COMPENSATED ABSENCES Members ofthe Teachers Retirement System of Georgia (TRS) may apply unused sick leave toward early retirement. The liability for early retirement will be borne by TRS rather than by the individual school districts. Employees of the Floyd County Board of Education shall receive severance pay based upon: (1) years of service and (2) amount of accumulated sick leave at the time ofretirement or voluntary termination ofemployment. The amount ofseverance pay due shall be calculated according to a set of formulas, definitions, and regulations approved by the Board. Severance pay will be paid only once in an employee's tenure with the school system. All payments are based on the total number of years of service as a full-time employee for a full day. Partial days will be computed only as a portion of a day. Employees working partial days must work additional partial days to equal a full day (i.e..5 must be paired with another .5 to equal a full day). The amount will be paid from local funds. Activity for the preceding three years is as follows: Beginning of Year Liability Increase Decrease End of Year Liability 2005 2006 2007 $ 5,553,035.00 $ 2,544,090.00 $ 2,387,467.00 $ 5,709,658.00 $ 5,709,658.00 $ 2,653,896.00 $ 2,081,681.00 $ 6,281,873.00 $ 6,281,873.00 $ 2,883,959.07 $ 2,375,731.11 $ 6,790,100.96 GENERAL OBLIGATION BONDS The School District issues general obligation bonds to provide funds for the acquisition and construction ofmajor capital facilities. In the District-wide financial statements, bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. In the District-wide and fund financial statements, the School District recognizes bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. To conform to generally accepted accounting principles, issuance costs should be deferred and amortized over the life of the bonds using the straight-line method. The effect of this deviation is deemed to be immaterial to the fair presentation of the basic financial statements. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Assets. - 14 - FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NET ASSETS The School District's net assets in the District-wide Statements are classified as follows: Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net ofoutstanding 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 invested in capital assets, net of related debt. Restricted net assets - These represent resources for which the School District is legally or contractually obligated to spend resources for continuation of Federal programs, debt service and capital projects in accordance with restrictions imposed by external third parties. Unrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes. Note 3: DEPOSITS AND INVESTMENTS COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. Ifa depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe 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, - 15 - FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 3: DEPOSITS AND INVESTMENTS (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 At June 30, 2008, the bank balances were $10,110,081.70. The amounts ofthe total uninsured bank balances are classified into three categories of custodial credit risk: Category 1 - Uncollateralized, Category 2 - Cash collateralized with securities held by the pledging financial institution, or Category 3 - Cash collateralized with securities held by the pledging financial institution's trust department or agent but not in the School District's name. The School District's uninsured deposits are classified by custodial credit risk category at June 30, 2008, as follows: Custodial Credit Risk Category Bank Balance 1 $ 0.00 2 9,168,719.55 3 361,282.61 Total $ 9,530,002.16 CATEGORIZATION OF INVESTMENTS The School District's investments as of June 30, 2008, are presented below. All investments are presented by investment type and debt securities are presented by maturity. - 16 - FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 3: DEPOSITS AND INVESTMENTS Investment Type Fair Value Investment Maturity Less Than 1 Year Debt Securities U. S. Treasuries Repurchase Agreements $ 905,843.93 $ 905,843.93 9,466,524.72 9,466,524.72 $10,372,368.65 $10.372,368.65 Investment Pools Office of Treasury and Fiscal Services Georgia Fund 1 9,022,891.89 Total Investments $19,395,260.54 The Georgia Fund 1, formerly referred to as LGIP, administered by the State of Georgia, Office of Treasury and Fiscal Services is not required to be categorized since the School District did not own any.specific identifiable securities in the pool. The investment policy ofthe State ofGeorgia, Office of Treasury and Fiscal Services for the Georgia Fund 1 (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1 is disclosed in the State ofGeorgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at http://www.audits. state.ga.us/intemet/searchRpts.html. The Primary Liquidity Portfolio consists ofGeorgia Fund 1 which is not registered with the SEC as an investment company but does operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share. The pool is an AAAm rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2008, was 40 days. Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investment will adversely affect the fair value ofan 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 ofthe failure ofthe counterparty to a transaction, the School District will not be able to recover the value ofthe 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. - 17 - FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 3: DEPOSITS AND INVESTMENTS At June 30, 2008, $10,372,368.65 ofthe School District's applicable investments were (1) uninsured and unregistered, with securities held by the counterparty's trust department or agent in the name of the School District and (2) uninsured or unregistered, with securities held by the counterparty, or by its trust department or agent, but not in the School District's name. Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The School District does not have a formal policy for managing credit quality risk. The investments subject to credit quality risk are reflected below: Rated Debt Investments Fair Value Quality Ratings AAA Debt Securities Repurchase Agreements $ 9,466.524.72 $ 9,466,524.72 Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The School District does not have a formal policy for managing concentration of credit risk. More than 5% of the School District's investments are in Implicitly Guaranteed U. S. Agency Repurchase Agreements. These investments are 49% of the School District's total investments. Note 4: NON-MONETARY TRANSACTIONS The School District receives food commodities from the United States Department ofAgriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories Note 5: CAPITAL ASSETS The following is a summary of changes in the Capital Assets during the fiscal year: - 18 - FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 5: CAPITAL ASSETS Governmental Activities Capital Assets, Not Being Depreciated: Land Construction in Progress Total Capital Assets Not Being Depreciated Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements Total Capital Assets, Being Depreciated, Net Governmental Activity Capital Assets - Net Balances July 1, 2007 Increases Decreases Balances June 30, 2008 $ 2,546,400.00 $ 105,088.00 $ 2,651,488.00 3,871,985.00 4,625,724.00 $ 7,324,023.00 1,173,686.00 $ 6,418,385.00 $ 4,730,812.00 $ 7,324,023.00 $ 3,825,174.00 $116,631,913.00 $ 8,143,074.00 $ 39,114.00 $124,735,873.00 14,079,803.00 3,084,254.00 760,329.00 16,403,728.00 3,649,357.00 154,397.00 3,803,754.00 20,810,082.00 8,394,512.00 2,689,851.00 2,700,204.00 1,148,249.00 84,614.00 39,114.00 623,425.00 23,471,172.00 8,919,336.00 2,774,465.00 $102,466,628.00 $ 7,448,658.00 $ 136,904.00 $109,778,382.00 $1Q8,885,013.QO $12 172 47Q OQ $ 7,46Q,927.0Q $113 6Q3 556.QQ Capital assets being acquired under capital leases as of June 30, 2008, are as follows: Buildings and Improvements Less: Accumulated Depreciation Governmental Funds $ 3,048,396.00 936,526.00 $ 2,111,870.00 Current year depreciation expense by function is as follows: Instruction Support Services Educational Media Services General Administration Student Transportation Services Food Services $ 3,060,486.00 $ 26,349.00 7,939.00 628,855.00 663,143.00 209,438.00 $"3,933,067.00 Note 6: RESTRICTED ASSETS Special Purpose Local Option Sales Tax (SPLOST) is restricted assets in the Statement ofNet Assets because its use is limited by applicable bond covenants or statutory provisions. Restricted assets at June 30, 2008, were as follows: - 19 - FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 6: RESTRICTED ASSETS District-wide Capital Projects SPLOST Debt Service Funds Restricted Cash and Cash Equivalents: Capital Acquisitions Restricted Investments: Debt Services Capital Acquisitions $ 1,126,685.07 $ 8,392,140.18 $ 1,980,228.47 Note 7: INTERFUND TRANSFERS Interfund transfers for the year ended June 30, 2008, consisted of the following: Transfer to Transfers From General Fund District-wide Capital Projects $ 930,000.00 Transfers are used to move other local revenues collected by the General Fund to the District-wide Capital Projects Fund to fund local capital projects. Note 8: RISK MANAGEMENT The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation. The School District has obtained commercial insurance for risk ofloss associated with torts, assets, errors or omissions and acts ofGod. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years. The School District has established a limited risk management program for workers' compensation claims. In connection with this program, a self-insurance reserve has been established within the General Fund by the School District. 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. An excess coverage insurance policy covers individual claims in excess of $250,000.00 loss per occurrence, up to the statutory limit. - 20 - FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 8: RISK MANAGEMENT Changes in the workers' compensation claims liability during the last two fiscal years are as follows: 2007 2008 Beginning of Year Liability Claims and Changes in Estimates Claims Paid End of Year Liability $ 0.00 $ 959,376.05 $ 375,791.00 $ 583,585.05 $ 583,585.05 $ 602,070.63 $ 783,690.79 $ 401,964.89 The School District is self-insured with regard to unemployment compensation claims. In connection with this program, a self-insurance reserve has been established within the General Fund by the School District. 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: 2007 2008 Beginning of Year Liability Claims and Changes in Estimates Claims Paid EndofYear Liability $ 0.00 $ 4,530.00 $ 4,530.00 $ 0.00 $ 0.00 $ 7,684.00 $ 7,684.00 $ 0.00 The School District has purchased surety bonds to provide additional insurance coverage as follows: Position Covered Amount Superintendent Blanket Employee $ 100,000.00 $ 100,000.00 Note 9: LONG-TERM DEBT CAPITAL LEASES The Floyd County Board of Education entered into a lease agreement for construction and energy management systems. This lease agreement 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 its inception. COMPENSATED ABSENCES Compensated absences represent obligations ofthe School District relating to employees' rights to receive compensation for future absences based upon service already rendered. This obligation - 21 - FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 9: LONG-TERM DEBT relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. Typically, the General Fund is the fund used to liquidate this long-term debt. The School District uses the vesting method to compute compensated absences. GENERAL OBLIGATION DEBT OUTSTANDING General Obligation Bonds currently outstanding are as follows: Purpose Interest Rates Amount General Government - Series 2003 General Government - Series QZAB 2004 General Government - Series 2004 2.49% 0.00% 2.00% - 4.50% $ 2,030,000.00 2,000,000.00 13,510,000.00 $17,540,000.00 The changes in Long-Term Debt during the fiscal year ended June 30, 2008, were as follows: Balance July I, 2007 Governmental Funds Additions Deductions Balance June 30, 2008 Due Within One Year G.O. Bonds Capital Leases Compensated Absences Bond Premiums Amortized $25,225,000.00 $ 7,685,000.00 $17,540,000.00 $ 7,890,000.00 7,121,916.00 483,185.00 6,638,731.00 508,918.00 6,790,100.96 $ 2,832,936.29 2,351,982.63 7,271,054.62 600,000.00 498,781.00 230,206.00 268,575.00 230,206.00 $32,635 727 26 $ 2 832 236 22 $10,750 373 63 $31,718 360 62 $ 2,222, l 2~ QQ (I) The portion of Compensated Absences due within one year has been determined to be immaterial to the basic financial statements. At June 30, 2008, payments due by fiscal year which includes principal and interest for these items are as follows: Fiscal Year Ended June 30 Capital Leases Principal Interest 2009 2010 2011 2012 2013 2014 - 2018 2019 $ 508,918.00 $ 536,021.88 564,568.90 594,636.38 626,305.18 3,668,834.38 139,446.28 333,198.45 306,094.79 277,547.66 247,480.18 215,811.38 541,748.00 907.06 Total Principal and Interest $6,638,731.00 $ 1,922,787.52 - 22 - FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 9: LONG-TERM DEBT Fiscal Year Ended June 30 General Obligation Debt Principal Interest Unamortized Bond Premium 2009 2010 2018 $ 7,890,000.00 $ 437,623.50 $ 230,206.00 7,650,000.00 142,000.00 38,369.00 2,000,000.00 Total Principal and Interest $ 17,540,000.00 $ 579,623.50 $ 268,575.00 Note 10: ON-BEHALF PAYMENTS The School District has recognized revenues and costs in the amount of $2,139,364.97 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies. Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $2,089,252.97 Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $40,805.00 Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $9,307.00 Note 11: SIGNIFICANT COMMITMENTS The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2008, together with funding available: Project Unearned Executed Contracts Funding Available From State Floyd County College and Career Academy $2,297,866.30 $3,000,000.00 The amounts described in this note are not reflected in the basic financial statements. - 23 - FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 12: SIGNIFICANT CONTINGENT LIABILITIES Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position. The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance ofroutine School District operations. The ultimate disposition ofthese proceedings is not presently determinable, but is not believed to be material to the basic financial statements. Note 13: POSTEMPLOYMENT BENEFITS Georgia Retiree Health Benefit Fund Plan Description. The School District contributes to the Georgia Retiree Health Benefit Fund ("GRHBF"), a cost-sharing multiple-employer defined benefit postemployment healthcare plan administered by the Department of Community Health. GRHBF provides health insurance benefits to eligible retirees and their qualified beneficiaries. Pursuant to Title 45, Chapter 18 ofthe Official Code of Georgia Annotated, the authority to establish and amend the benefit provisions ofthe plan is assigned to the Board of Community Health. The Department of Community Health issues a publicly available financial report that includes financial statements and required supplementary information for GRHBF. That report may be obtained from the Department ofCommunity Health at 2 Peachtree Street, Atlanta, Georgia 30303. Funding Policy. The contribution requirements of plan members and participating employers are established and may be amended by the Board of Community Health. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately twenty-five percent (25%) of the cost of health insurance coverage. Participating employers are statutorily required to contribute in accordance with the employer contribution rate established by the Board of Community Health. This contribution rate is established to fund both the active and retired employee health insurance plans based on projected pay-as-you-go financing requirements. The employer contribution rates for the combined active and retiree plans for the fiscal year ended June 30, 2008, were as follows: Teachers Non-Certificated Employees 18.534% of state-based salaries $162.72 per month The School District's contribution to the health insurance plans for the fiscal year ended June 30, 2008, was $9,570,121.25, which equaled the required contribution. - 24 - FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 14: RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS) TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school systems are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts. TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.28% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows: Fiscal Year Percentage Contributed Required Contribution 2008 2007 2006 100% 100% 100% $ 5,699,815.91 $ 5,266,884.59 $4,858,118.00 - 25 - (This page left intentionally blank) FLOYD COUNTY BOARD OF EDUCATION GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2008 SCHEDULE "1" REVENUES Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous Total Revenues EXPENDITURES Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Community Services Food Services Operation Total Expenditures Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES (USES) Sale or Compensation for Loss of Fixed Assets Operating Transfers to Other Funds Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances - Beginning Adjustments NONAPPROPRIATED BUDGETS ORIGINAL FINAL ACTUAL AMOUNTS $ 31,116,013.00 $ 31,116,013.00 $ 31,525,444.40 613,344.28 59,808,188.64 59,978,351.92 62,883,465.04 7,410,784.00 7,999,465.00 7,504,769.29 2,337,000.00 2,337,000.00 2,976,370.32 750,000.00 750,000.00 720,199.07 3,240,000.00 3,240,000.00 2,718 007.74 $ 104 661 985.64 $ 105,420,829.92 $ 108,941 600.14 $ 70,204,907.25 $ 71,066,537.12 $ 70,872,403.43 2,376,890.17 1,934,573.60 2,218,298.83 1,852,774.21 7,538,757.05 685,557.00 8,148,238.45 3,923,287.02 670,680.06 366,542.00 20,000.00 5,929,907.00 2,575,867.02 2,229,509.54 2,167,910.83 2,239,544.39 7,553,896.43 687,557.00 8,168,252.49 4,738,833.30 681,480.77 387,150.75 20,500.00 5,927,893.02 3,315,838.85 2,112,408.84 2,309,710.95 2,459,129.28 8,599,995.15 692,533.38 8,410,912.08 5,019,850.70 694,298.62 547,406.93 21,772.50 5.]99,331.25 $ 105 870 412.64 $ 108,444,932.66 $ 110,855,591.96 $ -1,208,427.00 $ -3,024, 102.74 $ -1,913,991.82 $ 15,000.00 $ -1 330 000.00 15,000.00 $ -930 000.00 43,226.51 -930,000.00 $ -1 315 000.00 $ -915 000.00 $ -886 773.49 $ -2,523,427.00 $ -3,939,102.74 $ -2,800, 765.31 11,795,228.02 11,795,228.02 11,941,662.97 570 469.56 Fund Balances - Ending $ 9,271,801.02 $ 8,426,594.84 $ ==9='=14=0=,8=9=7=.6=6 Notes to the Schedule of Revenues. Expenditures and Changes in Fund Balances Budget and Actual 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. - 27 - FLOYD COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2008 SCHEDULE "2" FUNDING AGENCY PROGRAM/GRANT Agriculture, U.S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program Total Child Nutrition Cluster Other Programs Pass-Through From Georgia Department of Education Food Donation (1) Pass-Through From Office of Treasury and Fiscal Services National Forest Reserve Funds Total U. S. Department of Agriculture Education, U.S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants Total Special Education Cluster Other Programs Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Education for Homeless Children and Youth English Language Acquisition Grants Improving Teacher Quality State Grants State Grants for Innovative Programs Title I Grants to Local Educational Agencies Twenty-First Century Community Learning Centers Pass-Through From Florida State University Comprehensive School Reform Demonstration Total U. S. Department of Education Total Federal Financial Assistance N/A = Not Available CFDA NUMBER PASSTHROUGH ENTITY ID NUMBER EXPENDITURES IN PERIOD . 10.553 . 10.555 N/A N/A $ $ (2) 5,202,883.59 5,202,883.59 10.550 10.665 N/A NIA $ 223,350.41 (3) 5,426,234.00 84.027 84.173 NIA $ NIA $ 1,928,272.66 90,650.92 2,018,923.58 84.048 84.196 84.365 84.367 84.298 84.010 84.287 84.332 N/A N/A N/A NIA N/A NIA N/A N/A $ 80,814.00 27,502.84 41,407.37 367,681.37 13,938.00 1,696,576.86 202,667.72 28,800.00 4,478,311.74 $===9'=90=4=,5=4=5.=74= - 28 - FLOYD COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2008 SCHEDULE "2" Notes to the Schedule of Expenditures of Federal Awards (1) The amount shown for the Food Donation Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year. (2) Expenditures for the funds earned on the School Breakfast Program ($707,828.53) were not maintained separately and are included in the 2008 National School Lunch Program. (3) Funds earned on this program, in the amount of $3,292.03, do not require reporting of expenditures. Major Programs are identified by an asterisk (*) in front of the CFDA number. The School District did not provide Federal Assistance to any Subrecipient. The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Floyd County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. See notes to the basic financial statements. - 29- FLOYD COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2008 SCHEDULE "3" AGENCY/FUNDING GOVERNMENTAL FUND TYPES CAPITAL GENERAL PROJECTS FUND FUND GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program $ 1,666,852.92 $ 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 Grades (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Bus Replacement Nursing Services Vocational Supervisors Education Equalization Funding Grant Food Services Vocational Education Amended Formula Adjustment Other State Programs Communities in Schools - Dropout Recovery and Prevention Graduation Coaches Health Insurance Middle School Remediation Grant National Teacher Certification Preschool Handicapped Program Special Education Low Incidence Grant Teachers' Retirement Virtual Schools 3,209,319.00 513,853.00 7,566,738.00 1,026,489.00 3,612,644.00 252,635.00 5,582,037.00 5,221,980.00 1,917,616.00 9,523,156.00 3,310,840.00 471,244.00 473,505.00 1,127,448.00 341,878.00 328,841.00 218,333.00 1,537,630.00 2,535,076.00 2,643,720.00 1,382,140.00 283,979.00 186,945.00 34,653.00 5,203,232.00 268,116.00 216,583.00 -1,003,417.00 26,412.00 406,004.83 2,089,252.97 6,493.00 116,589.00 312,334.00 21,726.00 40,805.00 525.00 Georgia State Financing and Investment Commission Reimbursement on Construction Projects $ 1,172,809.00 Office of Treasury and Fiscal Services Public School Employees Retirement 9,307.00 TOTAL 1,666,852.92 3,209,319.00 513,853.00 7,566,738.00 1,026,489.00 3,612,644.00 252,635.00 5,582,037.00 5,221,980.00 1,917,616.00 9,523,156.00 3,310,840.00 471,244.00 473,505.00 1,127,448.00 341,878.00 328,841.00 218,333.00 1,537,630.00 2,535,076.00 2,643,720.00 1,382,140.00 283,979.00 186,945.00 34,653.00 5,203,232.00 268,116.00 216,583.00 -1,003,417.00 26,412.00 406,004.83 2,089,252.97 6,493.00 116,589.00 312,334.00 21,726.00 40,805.00 525.00 1,172,809.00 9,307.00 - 30 - FLOYD COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2008 SCHEDULE "3" AGENCY/FUNDING OTHER Community Affairs, Georgia Department of Local Assistance Grant Human Resources, Georgia Department of Family Connections Natural Resources, Georgia Department of Arrowhead Grant Environmental Protection Division Technical and Adult Education, Department of Coosa Valley Technical College Georgia Career Academy GOVERNMENTAL FUND TYPES CAPITAL GENERAL PROJECTS FUND FUND TOTAL $ 15,000.00 $ $ 1,690.04 44,901.50 143,475.00 15,000.00 1,690.04 44,901.50 143,475.00 9,883.78 190,116.22 200,000.00 $ 62,883,465.04 $ 1,377,925.22 $ 64,261,390.26 See notes to the basic financial statements. - 31 - FLOYD COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS YEAR ENDED JUNE 30, 2008 SCHEDULE "4" PROJECT ORIGINAL ESTIMATED COST(1) CURRENT ESTIMATED COSTS (2) AMOUNT EXPENDED IN CURRENT YEAR (3) AMOUNT EXPENDED IN PRIOR YEARS (3) PROJECT STATUS Construct, replace, add to, renovate, repair, modify, improve and equip existing school buildings and other buildings and facilities useful or desirable in connection therewith, including Alto Park Elementary, Armuchee Elementary, Armuchee Middle School, Armuchee High, Cave Spring Elementary, Coosa Middle, Coosa High, Floyd County Education Center, Floyd County Technical High School, Garden Lakes Elementary, Glenwood Elementary, Johnson Elementary, McHenry Elementary, Midway Elementary, Model Elementary, Model Middle, Model High, Pepperell High, Pepperell Middle, Pepperell Primary, Pepperell Elementary, and the central office, acquire systemwide technology improvements, acquire school buses, acquire the necessary property therefor, both real and personal, and to pay or reimburse the expenses of the Floyd County School District necessary to accomplish the foregoing, and providing funds for the retirement of previously incurred general obligation indebtedness evidenced by the Floyd County School District General Obligation School Bonds, Series 1999. $ 48,750,000.00 $ 54,097,393.00 $ 6,763,520.00 $ 47,333,873.00 Ongoing (1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax. (2) The School District's current estimate of total cost for the project. Includes all cost from project inception to completion. (3) The voters of Floyd County approved the imposition of a 1% sales tax to fund the above project and retire associated debt. Amounts expended for this project may include sales tax proceeds, state, local property taxes and/or other funds over the life of the project. See notes to the basic financial statements. - 32- FLOYD COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE) ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2008 SCHEDULE "5" DESCRIPTION ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) (2) ELIGIBLE QBE PROGRAM COSTS SALARIES OPERATIONS TOTAL Direct Instructional Programs Kindergarten Program $ Kindergarten Program-Early Intervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category Ill Category V Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) 3,677,782.00 $ 593,751.00 8,727,269.00 1,165,339.00 4,148,063.00 3,972,362.31 $ 1.34 11,717,247.00 635,984.10 4,854,665.41 312,986.00 6,489,260.00 6,021,323.00 2,236,399.00 10,881,926.00 3,746,814.00 539,575.00 548,231.00 396 476.00 515,425.72 9,813,607.93 10,151,679.50 1,669,324.60 194,163.88 9,385,083.56 354,373.88 1,748,893.89 203,000.00 503,284.59 209 775.41 65,703.28 $ 288,198.60 137,890.22 4,038,065.59 1.34 12,005,445.60 635,984.10 4,992,555.63 437,622.81 639,507.72 328,660.13 515,425.72 10,251,230.74 10,791,187.22 1,997,984.73 124,823.58 185,016.64 33,877.68 194,163.88 9,509,907.14 539,390.52 1,782,771.57 203,000.00 503,284.59 209 775.41 TOTAL DIRECT INSTRUCTIONAL PROGRAMS $ 49,485,194.00 $ 55,928,873.12 $ 2,241,300.66 $ 58,170,173.78 Media Center Program Staff and Professional Development 1,299,491.00 253 513.00 1,948,272.37 72 389.00 158,516.75 223,250.71 2,1.06,789.12 295,639.71 TOTAL QBE FORMULA FUNDS $ 51,038,198.00 $ 57,949,534.49 $ 2,623,068.12 $ 60,572,602.61 (1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State amended formula adjustment. See notes to the basic financial statements. - 33 - SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS Russell W. Hinton STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 June 8, 2009 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Floyd 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 Ladies and Gentlemen: We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Floyd County Board of Education as of and for the year ended June 30, 2008, which collectively comprise Floyd County Board ofEducation's basic financial statements and have issued our report thereon dated June 8, 2009. 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. Internal Control Over Financial Reporting In planning and performing our audit, we considered Floyd County Board of Education's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose ofexpressing an opinion on the effectiveness of the Floyd County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Floyd County Board of Education's internal control over financial reporting. A control deficiency exists when the design or operation ofa control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affect the Floyd County Board ofEducation's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted 2008YB-10 accounting principles such that there is more than a remote likelihood that a misstatement of the Floyd County Board ofEducation's financial statements that is more than inconsequential will not be prevented or detected by the Floyd County Board of Education's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement ofthe financial statements will not be prevented or detected by the Floyd County Board of Education's internal control. Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph ofthis section and would not necessarily disclose all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Compliance and Other Matters As part of obtaining reasonable assurance about whether Floyd County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. We noted a certain matter that we have reported to management of Floyd County Board of Education in a separate letter dated June 8, 2009. This report is intended solely for the information and use of management, members of the Floyd County Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, ~ uJ.c:fJ~ Russell W. Hinton, CPA, CGFM State Auditor RWH:as 2008YB-10 Russell W. Hinton STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 June 8, 2009 Honorable Sonny Perdue, Governor Members of the General Assembly Members ofthe State Board of Education and Superintendent and Members of the Floyd County Board of Education REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULARA-133 Ladies and Gentlemen: Compliance We have audited the compliance ofFloyd County Board ofEducation with the types of compliance requirements described in the U.S. Office of Management and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each ofits major Federal programs for the year ended June 30, 2008. Floyd County Board of Education's major Federal programs are identified in the Summary ofAuditor's Results Section ofthe accompanying Schedule ofFindings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of Floyd County Board of Education's management. Our responsibility is to express an opinion on Floyd County Board of Education's compliance based on our audit. We conducted our audit ofcompliance in accordance with auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and 0MB Circular A133, Audits ofStates, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Floyd County Board ofEducation's compliance with those requirements and performing such other procedures as we considered necessary in the 2008SA-10 circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Floyd County Board ofEducation's compliance with those requirements. In our opinion, the Floyd County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 2008. Internal Control Over Compliance The management of Floyd County Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered Floyd County Board ofEducation's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose ofexpressing our opinion on compliance, but not for the purpose ofexpressing an opinion on the effectiveness ofinternal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Floyd County Board of Education's internal control over compliance. A control deficiency in an entity's internal control over compliance exists when the design or operation ofa control does not allow management or employees, in the normal course ofperforming their assigned functions, to prevent or detect noncompliance with a type ofcompliance requirement of a Federal program on a timely basis. A significant deficiency is a control deficiency, or combination ofcontrol deficiencies, that adversely affects the entity's ability to administer a Federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a Federal program that is more than inconsequential will not be prevented or detected by the entity's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a Federal program will not be prevented or detected by the entity's internal control. Our consideration ofthe internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. 2008SA-10 This report is intended solely for the information and use of management, members of the Floyd County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, '7,,,_JJ2 uJ. .a'.)~ Russell W. Hinton, CPA, CGFM State Auditor RWH:as 2008SA-10 SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS FLOYD COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AUDITEE'S RESPONSE/STATUS SEE AUDITOR'S COMMENTS FS-6571-04-02 Further Action Not Warranted (1) FS-6571-06-01 Further Action Not Warranted FS-6571-07-01 Previously Reported Corrective Action Implemented FS-6571-07-02 Previously Reported Corrective Action Implemented FS-6571-07-03 Previously Reported Corrective Action Implemented AUDITOR'S COMMENTS (1) The final resolution ofthis finding rests with the Georgia Department ofCommunity Health. PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported. SECTION IV FINDINGS AND QUESTIONED COSTS FLOYD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008 I SUMMARY OF AUDITOR'S RESULTS 1. Type of Report Issued on the Financial Statements The auditor's opinion on the Floyd County Board of Education's financial statements was unqualified. 2. Significant Deficiencies in Internal Control Disclosed by the Audit ofthe Financial Statements The audit report for the Floyd County Board of Education did not disclose any significant deficiencies related to the financial statements. 3. Noncompliance Material to the Financial Statements The audit ofthe Floyd County Board ofEducation disclosed no instances ofnoncompliance that were deemed to be material to the financial statements. 4. Significant Deficiencies in Internal Control Over Major Programs The audit report for the Floyd County Board of Education did not disclose any significant deficiencies in internal control over major programs. 5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Floyd County Board ofEducation's report on compliance with requirements applicable to major programs was unqualified. 6. Audit Findings Required to be Reported by Section .5 lO(a) of 0MB Circular A-133 The Floyd County Board of Education's audit did not disclose audit findings required to be reported by section .510(a) of 0MB Circular A-133. 7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food Services - School Breakfast Program 10.555 Food Services - National School Lunch Program 84.287 Twenty-First Century Community Leaming Centers 8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00. 9. Low RiskAuditee The Floyd County Board ofEducation qualified as a low risk auditee as defined by Section .530 of 0MB Circular A-133. - 1- FLOYD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008 II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported. -2 -