Floyd County Board of Education, Rome, Georgia, annual financial report for the fiscal year ended June 30, 2010 (including independent auditor's reports)

FLOYD COUNTY BOARD OF EDUCATION
ROME, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30,2010
(Including Independent Auditor's Reports)

FLOYD COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURESOF FEDERALAWARDS

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

B

STATEMENT OF ACTIVITIES

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

E

STATEMENT OF REVENUES, EXPENDITURESAND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

G

STATEMENT OF FIDUCIARY NET ASSETS

FlDUCIARY FUNDS

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES- BUDGET AND ACTUAL
GENERAL FUND

FLOYD COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I
FINANCIAL
SCHEDULES
SUPPLEMENTARY INFORMATION
2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 3 SCHEDULE OF STATE REVENUE
4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 5 ALLOTMENTS AND EXPENDITURES
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM

Page

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MAlTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WlTH GOVERNMENTAUDITING STANDARDS
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WlTH REQUIREMENTS THAT COULD HAVE A DIRECTAND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WlTH OMB CIRCULAR A-133

SECTION Ill 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

DEPARTMENOFTAUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
April 28, 2 0 1 1

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the 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 of the 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, 2010, 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 of America and the standards applicable to financial audits contained in GovernmentAuditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and the 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.
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, 2010, 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 April 28, 2011, on our consideration of the Floyd County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and

not to provide an opinion on 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 assessingthe results of our audit.
Accounting principles generally accepted in the United States of America require that the Management's Discussionand Analysis and the Schedule of Revenues, Expendituresand Changes in Fund Balances - Budget and Actual, as presented on pages i through ix and page 27 respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures, to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses t o our inquiries, the basic financial statements, and other knowledge we obtained during the audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence t o express an opinion or provide any assurance.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Floyd County Board of Education's financial statements as a whole. The accompanying supplementary information consists 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 of States, fowl Governments, and Nun-Profit Organizations/ are presented for purposes of additional analysis and are not a required part of the financial statements. Such information is the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements 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,
CPA, CGFM

FLOYD COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCALYEAR ENDED JUNE 30,2010

INTRODUCTION
The School District's financial statements for the fiscal year ended June 30, 2010, 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 2010 are as follows:
On the District-wide financial statements:
District-wide net assets at June 30, 2010, were $117,126,899. 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, 2010, of $117,126,899 represented an increase of $5,383,791 in net assets when compared to the prior year.
The School District had $111.11 million in expenses relating to governmental activities; only $66.31 million of these expenses were offset by program specific charges for services, grants and contributions. However, general revenues (primarily property and sales taxes) of $50.29 million were adequate to provide for these programs.
As stated above, general revenues accounted for $50.29 million or about 43.0% of all revenues totaling $116.6 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

2- 27.3% -General Revenue Sales Taxes 8.7%
GeneAr7all.l1OR%tehveernue

The School District decreased its outstanding bond debt by $7.65 million. The existing bond debt of $27.0 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.

FLOYD COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCALYEAR ENDEDJUNE 30,2010
On the fund financial statements:
= Among major funds, the General Fund had $107.1 million in revenues and $106.5
million in expenditures. The General Fund balance of $7.03 million at June 30, 2010, decreased $322 thousand from the prior year fund balance. Even though there were decreases in mid-year state funding, careful planning along with staff furloughs and staff reductions through attrition (retirements, resignations) allowed the School District to avoid a major decrease in fund balance.
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 3 4 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 understandingof the financial statements.
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 Districtwide financial statements, a reader might ask the question, are we in a better financial position now than last year? The 'Statement of Net Assets1and 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 t o 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

FLOYD COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2010
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 NetAssets investedincapitalasset;s; net ofrelateddebt o R e ~ t ~ c tneedt assetsare those with constraints placed on the use by external sources
such as creditors, grantors, contributors or laws and regulations. o UnrestrictednetasseBare 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.
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 year-end available for spending in future periods. These funds are reported using the modified accrual method of accounting which measures cash and all other financial assets that can 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.
Fiduciarv 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 District-wide 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

FLOYD COUNTY BOARD OF EDUCATION MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2010

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 $117.1 million at June 30, 2010. 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 $117.1 million of net assets, almost $12.69 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. The School District also had a deficit in unrestricted net assets of just over $462,000. The deficit amount of unrestrided net assets of $462,000 reflects reductions in state revenues and the value of the severance pay liability. The School District has resolved to terminate the severance pay policy as of December 31, 2011. The elimination of this liability should return unrestricted net assets to an amount that will allow to School District to meet the ongoing needs of its citizens and creditors.

In addition, the School District also had $104.9 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 component of net assets, it must be recognized that this portion of the net assets is notavailable for future spending.

Table 1provides a summary of the School District's net assets for this fiscal year as compared to the prior fiscal year.
Table 1 Net Assets

Assets Current and Other Assets Capital Assets, Net

Governmental Activities

FY 2010

FY 2009

Total Assets
Liabilities Current and Other Liabilities Long-Term Liabilities

Total Liabilities
Net Assets Invested in Capital Assets, Net of Debt Restricted Unrestricted
Total Net Assets

FLOYD COUNTY BOARD OF EDUCATION MANAGEMENTSDISCUSSIONAND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2010

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

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

Table 2 Change in Net Assets

Governmental Activities

FY 2010

FY 2009

General Revenues: 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 RecordingTax Real Estate Grants and Contributions not Restrictedto Specific Programs Investment Earnings Miscellaneous Gain or Loss on Disposal of Assets
Total General Revenues

Total Revenues

Program Expenses Instruction Support Services Pupil Services Improvementof Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenanceand Operation of Plant Student Transportation Services Central Support Services Other Support Services Operationsof Non-InstructionalServices Enterprise Operations Community Services Food Services Interest on Short-Termand Long-TermDebt

Total Expenses

Increase in Net Assets

FLOYD COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCALYEAR ENDEDJUNE 30,2010

Cost of ProvidingServices

The Statement of Activities shows the cost of program services and the charges for services and grants offsettingthese 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.
Table 3
Cost of Services

Total Cost of Services

PI2 0 1 0

PI 2 0 0 9

Net Cost of Services

PI 2 0 1 0

PI 2 0 0 9

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-InstructionalServices Community Services Enterprise Operations Food Services Interest on Short-Term and Long-Term Debt
Total Expenses

259,856 988,771

289,490 434,233

257,140 988,771

20,199 434,233

The table above shows that while the total cost of services for providing services decreased by 2% from the prior year, the net cost to the local taxpayers also decreased by 1% from the prior year. In other words, as compared to the proceeding fiscal year, a percentage of the cost of providing services in fiscal year 2010 fell to the taxpayers of Floyd County. Even with reductions in budgeted expenditures, 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 revenuesfor 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"and
Exhibit "ENof this report. Governmental funds are accounted for using the modified accrual basis of accounting. The governmental funds had total revenues of $118.1 million and total expenditures of $143.9 million in fiscal year 2010. Total governmental fund balances of $19.47 million at June 30, 2010, decreased almost $25.87 million from the prior year. This decrease in fund balance occurred primarily because the School District used revenues from the $25.0 million in General Obligation Bonds issued for capital projects during 2009 with the majority of those funds expended for a new Model High School and other renovations in 2010.

FLOYD COUNTY BOARD OF EDUCATION MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE FISCALYEAR ENDED JUNE 30,2010
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 2010, 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 $107.1 million were under the final budgeted amount of $114.3 million by almost $7.2 million. This difference (final actual vs. final budget) was primarily attributable to revenues for property taxes under final budget of $14 thousand, revenues for State Funds under the final budget of $7.17 million (from mid-year austerity reductions which is the largest reduction ever for public education), revenues for charges for services over final budget of $204 thousand, and miscellaneous revenues under final budget of $672 thousand. The School District traditionally estimates revenue on a conservative basis to avoid shortfalls in actual revenues. The General Fund's final actual expenditures of $106.53 million were under the final budget amount of $113.44 million by $6.9 million. This difference (final actual vs. final budget) was primarily attributable to actual expenditures for instruction under the final budget of $6.9 million, expenditures for pupil services exceeding the final budget by $513,000, expenditures for Improvement of Instruction under the final budget by $456,000, expenditures for school administration exceedingthe final budget by $696,000 expenditures for M&O under the final budget by $22,000, expenditures for other support services exceedingfinal budget of over $312,000, Food Services under the final budget by $468,000 and other community services exceeding the final budget by $233,000 (for reimbursed after school care) and other functions totaling approximately $200,000 under the final budget.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
At fiscal year ended June 30, 2010, the School District had almost $138.2 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 $28.2 million and included:
Construction in progress of a New Model High School Beginning roof replacement projects at Garden Lakes, McHenry, Alto Park, and Pepperell High School Beginning preliminary work for classroom additions at various schools

FLOYD COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCALYEAR ENDEDJUNE 30,2010
Table 4 reflects a summary of these balances, net of accumulated depreciation, as compared to the prior fiscal year.
Table 4 Capital Assets at June 30
(Net of Depreciation)
Governmental Activities
Land Construction in Progress Land lmprovements Buildingsand lmprovements Equipment
Total
Additional information about the School District's Capital Assets can be found in the Notes to the Basic Financial Statements.
Debt
At June 30, 2010, the School District had over $40.65 million in total debt outstanding which consisted of $27.0 million in bond debt, $5.6 million in capital lease debt, $7.3 million in compensated absences debt, and $744,684 in unamortized bond premium. Table 5 summarizes the School District's debt as compared to the prior fiscal year. In September 2008, the citizens of Floyd County passed an Educational Local Option Sales Tax (ELOST) for a period of five years which began on April 1,2009, for the purpose of construction and renovation, technology and transportation.
Table 5 Debt at June 30
Governmental Activities
Bonds Payable Unamortized Bond Premium Capital Leases Compensated Absences
Total
Additional information about the School District's debt can be found in the Notes to the Basic Financial Statements.

FLOYD COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2010
FACTORS BEARING ON THE DISTRICTS 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 18.588, which produces approximately $1,707,610 per mill net of fees. The School District's enrollment remained stable this school year as compared to past 3 years with an average of 1 0 0 students per year over the last three years. The School District completed construction on a new Model High School which opened on August 1, 2010. The School District also began work on 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. From fiscal year 2003 through fiscal year 2010, the QBE formula adjustments (austerity cuts) have totaled just slightly over $24.0 million. For fiscal year 2 0 1 1 alone, the Amended QBE Formula Adjustment is projected to be $10,474,000 with $4,992,992 to be replaced by state fiscal stabilization funds from the American Recovery and Reinvestment Act (ARRA) funded by the Federal government. To meet these funding reductions, the School District will reduce its expenditures thoughtfully to avoid reducing services that directly impact student achievement, and with the use of Stimulus funding, save or create jobs that will positively impact student achievement. 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 experiencefor all of our students.
CONTACTING THE SCHOOL DISTRICTS 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 t o 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@flovdboe.net.

FLOYD COUNTY BOARD OF EDUCATION

FLOYD COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30,2010
ASSETS Cash and Cash Equivalents Investments Accounts Receivable Taxes State Government Federal Government Local Government Inventories Deferred Charges Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Depreciation)
Total Assets
LIABILITIES Accounts Payable Salaries and Benefits Payable Contracts Payable Retainages Payable Interest Payable Long-Term Debt 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 (Deficit)
Total Net Assets
Total Liabilities and Net Assets

EXHIBIT "A"
GOVERNMENTAL ACTlVlTl ES

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

FLOYD COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES YEAR ENDEDJUNE 30,2010

GOVERNMENTAL ACTIVITIES
Instruction Support Services
Pupil Services Improvementof InstructionalServices EducationalMedia Services General Administration School Administration Business Administration MaintenanceAnd Operation Of Plant Services Student TransportationService
Support Services - Central
Other Support Services Operations of Non-InstructionalServices
Enterprise Operations Food Services Community Services Operations Interest on Short-Term and Long-Term Debt
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenanceand Operations
Other Taxes - Railroad Equipment
Sales Tax Special Purpose Local Option Sales Tax For Capital Outlay/Debt Services
Other Sales Taxes Grantsand Contributionsnot Restricted to Specific Programs Investment Earnings Miscellaneous Gain or Loss of Sale and Disposals of Assets
Total General Revenues
Change in Net Assets
- Net Assets Beginningof Year (Restated)
- NetAssets End of Year

EXPENSES

CHARGES FOR SERVICES

The notes to the basicfinancial 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

FLOYD COUNN BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30,2010

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable. Net
Taxes State Government Federal Government Local Inventories
Total Assets

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Salaries and Benefits Payable Contracts Payable Retainages Payable Deposits and Deferred Revenue
Total Liabilities
FUND BAIANCES
Reserved for: Continuation of Federal Programs Debt Service Capital Projects
Unre~elved Designated for Capital Outlay Designated for Student Activities Designated for Self-Insurance Designated for Severance Pay Undesignated Reported in: General Fund Capital Projects
Total Fund Balances
Total Liabilities and Fund Balances

DEBT SERVICE
FUND

EXHIBIT "C" TOTAL

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 30,2010
Total Fund Balances- GovernmentalFunds (Exhibit"C")
Amounts reportedfor GovernmentalActivities in the Statementof Net Assets are different because:
CapitalAssets used in Governmental Activities are not financial resources and therefore are not reDortedin the funds. These assets consist of:
Land Land Improvements Buildings Constructionin Progress Machineryand Equipment Accumulated Depreciation
Total Capital Assets
Bond IssuanceCosts are recognizedwhen incurred in the GovernmentalFund Statements,but are amortizedover the life of the Bond Issue in the District-wideStatements.
Some of the School District's property tax revenues will be collected after yearend but are not available soon enough to pay for the current period's expenditures.
Property Taxes
Some liabilities reported in the Governmental Activities do not require the use of current financial resources, and therefore are not reported as consideredliabilities in the GovernmentalFund Statements.
Accrued Interest on Long-Term Debt
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:
General Obligation Bonds Payable Unamortized Bond Premiums Capital Leases Payable Compensated Absences Payable
Total Long-Term Liabilities
Net Assets of GovernmentalActivities (Exhibit "A")

EXHIBIT "D"

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

FLOYD COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDEDJUNE 30,2010

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

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

EXHIBIT "E" TOTAL

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, EXPENDITURESAND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES YEAR ENDEDJUNE 30.2010
- Total Net Change in Fund Balances Governmental Funds (Exhlbit"E")
Amounts reported for GovernmentalActivities in the Statement of Activities are different because:
Capital Outlays are reported as expendituresin Governmental Funds. However, In the Statement of Activities. the cost of Capital Assets is allocated over their estimated useful lives as depreciationexpense. In the current period, these amounts are:
Capital Outlay Depreciation Expense
Total Capital Assets Taxes reported in the Statement of Activities that do not provldecurrent financial resources are not reported as revenues in the funds. In the Statement of Activities. only the gain or loss on the sale or disposal of the capital assets equipment is 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 carryingvalue of the capltal assets sold or disposed of. Some items in the Statement of Activities are requiredto be amortized over the life of the Bondswhereas the entire transaction is recognized in the Governmental Fund Statements in the year of occurrence.
Amortization of Bond Issuance Costs Amortization of Bond Premiums Repaymentof Lon&Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces LoneTerm Liabilities in the Statement of Net Assets. In the current year, these amounts consist of: Payment of Capital Lease Debt Redemption of Bond Principal
Total Debt Repayment Some items reported on the Statement of Activities do not requirethe use of current financial resourcesand, therefore are not reported as expenditures in the Governmental Funds. These activities consist of:
Net Increase Accrued Interest Expense Decrease in Workers Compensation Claims (Incurred but not reported) Decrease in Compensated Absences
Change in Net Assets of GovernmentalActivities (Exhibit"BR)
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 30,2010
ASSETS Cash and Cash Equivalents
LIABILITIES Funds Held for Others

EXHIBIT "G"
AGENCY FUNDS

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 30,2010

EXHIBIT "H"

NOTE 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Floyd County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
BLENDED COMPONENT UNIT - FLOYD COUNTYSCHOOLS COLLEGE AND CAREER ACADEMY, INC.
The Floyd County Schools College and Career Academy, Inc. (Charter School) is responsible to provide a seamless blend of academics 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 whereby 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 operations. The financial statements of the Charter School have been reported in 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.
Distnstnwcti-de Statements The Statement of Net Assets and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenuesthat are not classified as program revenues, includingall taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for all financial resources of the School District, except those resources required to be accounted for in another fund.
District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST), Bond Proceeds, and grants from Georgia State Financing and Investment Commission to be used for the acquisition, construction or renovation of major capital facilities.
Debt Service Fund accounts for taxes (sales) legally restricted for the payment of general long-term principal, interest and payingagent'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 of accounting 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 are recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. 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 of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

The State of Georgia reimburses the School District for teachers' salaries and operating costs through the Quality Basic Education Formula Earnings program (QBE). Generally teachers are contracted for the school year (July 1- June 30) and paid over a twelve month contract period, generally September 1through August 31. In accordance with the respective rules and regulations of the QBE program, the State of Georgia reimburses the School District over the same twelve month period in which teachers are paid. At June 30, the amount of teachers' salaries incurred but not paid until July and August of the subsequent year are accrued. Since the State of Georgia recognizes its QBE liability for the July and August salaries at June 30, the School District recognizes the same QBE as a receivable and revenue, consistent with symmetrical recognition.

NEW ACCOUNTING PRONOUNCEMENTS
In fiscal year 2010, the School District adopted the Governmental Accounting and Standards Board (GASB) Statement No. 51,Accounting and Reporthg for Intangible Assets. The provisions of this Statement generally require retroactive reportingfor intangible assets acquired after June 30, 1980, with the exception of those intangible assets that have indefinite useful lives and those that are considered internally generated.
In addition, the School District adopted GASB Statement No. 53, Accounting and Financial Reporting for Derivative Instruments. The provisions of this Statement impacts disclosure regarding derivative instruments entered into by the state and local governments. Derivative disclosures, if any, will be identified in Note 3.

RESTATEMENT OF PRIOR YEAR NET ASSETS/FUND BALANCE
For fiscal year 2010, the School District made a prior period adjustment due to an omission, which requires the restatement of the June 30,2010, net assets in Governmental Activities. The result is a decrease in Net Assets at July 1, 2009, of $118,500.00. This change is in accordance with generally accepted accounting principles.

Net assets, July 1,2009, as previously reported

$ 111,743,107.85

Bond interest payable

-118,500.00

Net Assets, July 1,2009, as restated

$ 111,624,607.85

CASH AND CASH EQUIVALENTS

Composition of Deposits Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations.

INVESTMENTS

Composition of Investments lnvestments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interestearning 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

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

investments with a maturity at purchase greater than one year and equity investments are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:

1. Obligations issued by the State of Georgia or by other states,
2. Obligations issued by the United States government, 3. Obligations fully insured or guaranteed by the United States government or a United States
government agency,
4. Obligations of any corporation of the United States government, 5 . Prime banker's acceptances,
6. The Georgia Fund 1administered 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. The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks.

RECEIVABLES

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

PROPERTY TAXES

The Floyd County Board of Commissioners fixed the property tax levy for the 2 0 0 9 tax digest year (calendar year) on July 28, 2009 (levy date). Taxes were due on November 15, 2009 (lien date). Taxes collected within the current fiscal year or within 6 0 days after year-end on the 2009 tax digest are reported as revenue in the governmental funds for fiscal year 2010. The Floyd County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2010, for maintenance and operations amounted to $31,724,477.28.

The tax millage rate levied for the 2009 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

18.588 mills

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $10,009,237.98 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.

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

INVENTORIES

Food Inventories On the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.

CAPITAL ASSETS

Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District.

Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide statements are as follows:

Capitalization

Estimated

Policy

Useful Life

Land Land Improvements Buildings and Improvements Equipment Intangible Assets

All $ 5,000.00 $ 10,000.00 $ 5,000.00 $ 200,000.00

N/A 20 to 8 0 years 1 0 to 8 0 years
3 to 2 0 years 1 0 to 2 0 years

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives, with the exception of intangible assets which are amortized.

Amortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, copyrights and internally generated software is computed using the straight-line method over the estimated useful lives of the assets, generally 1 0 to 2 0 years.

COMPENSATED ABSENCES

Members of the Teachers Retirement System of Georgia (TRS) may apply unused sick leave toward early retirement. The liability for early retirement will be borne by TRS rather than by the individual school districts.

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 of retirement or voluntary termination of employment. The amount of severance pay due shall be calculated according to a set

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

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 (i.e. .5 must be paired with another .5to 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

Increases

Decreases

End of Year Liability

GENERAL OBLIGATION BONDS
The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide financial statements, bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are reported as deferred charges and amortized over the term of the debt.
In the fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Assets.
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 of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of 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.
USE OF ESTIMATES
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.
-14-

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

NOTE 3: DEPOSITS AND INVESTMENTS

COLLATERALIZATION OF DEPOSITS

Official Code of Georgia Annotated (O.C.G.A.) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. Section 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 1 1 0 percent of the daily pool balance. At June 30, 2010, $76,346.07 of deposits were not secured by surety bond, insurance or collateral as specified above. The School District is working with the affected financial institutions to ensure appropriate levels of collateral are maintained for all of the School District's deposits.

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. lnsurance on accounts provided by the Federal Deposit lnsurance Corporation,
3. Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
4. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
5. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
6. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
7. Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan MortgageAssociation, and the Federal National MortgageAssociation.
CATEGORIZATION OF DEPOSITS

Custodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a formal policy for managing custodial credit risk. At June 30, 2010, the bank balances were $19,465,069.68. The amounts exposed to custodial credit risk are classified into three categories as follows:

Category 1Category 2 -
Category 3 -

Uncollateralized, Cash collateralized with securities held by the pledging financial institution, 0 r Cash collateralized with securities held by the pledging financial institution's trust department or agent but not in the School District's name.

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

The School District's deposits by custodial risk category at June 30,2010, are as follows:

Custodial Credit Risk Categotv

Bank Balance

Total

$ 17,631,739.82

CATEGORIZATION OF INVESTMENTS

The School District's investments as of June 30, 2010, are presented below. All investments are presented by investment type and debt securities are presented by maturity.

lnvestment Type

Fair Value

lnvestment Maturity Less than 1Year

Debt Securities U. S. Agencies Implicitly Guaranteed

$ 1,484,851.50 $ 1,484,851.50

Other Investments U. S. Treasury Money Market Funds
Total Investments

9,689,753.18 $ 11,174,604.68

The First American Treasury Obligations Fund administered by First American Funds, Incorporated, is not required to be categorized since the School District did not own any specific identifiable securities in the pool. The First American Treasury Obligations Fund invests primarily in a portfolio of short-term U. S. Treasury obligations, including repurchase agreements secured by U. S. Treasury obligations.
The First American Treasury Obligations Fund is registered with the SEC as an investment company and operates in a manner consistent with the SEC's Rule 2a-7 of the lnvestment Company Act of 1940. The investment is valued at the fund's share price, $1.00 per share. The fund is an AAAm rated investment pool by Standard and Poor's and Aaa by Moody's. The weighted average maturity for First American Treasury Obligations Fund was 4 1 days.
lnterest Rate Risk lnterest rate risk is the risk that changes in interest rates of debt investment will adversely affect the fair value of an investment. The School District does not have a formal policy for managing interest rate risk.

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, the School District will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The School District does not have a formal policy for managing custodial credit risk.

At June 30, 2010, $1,484,851.50 of the 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 Unrated

Debt Securities U. S. Agencies Implicitly Guaranteed

Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The School District does not have a formal policy for managing concentration of credit risk. More than 5% of the School District's investments are in Federal National Mortgage Association Discount Notes. This investment is 13% of the School District's total investments.
NOTE 4: NON-MONETARY TRANSACTIONS
The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally
assigned value. See Note 2 - Inventories

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

NOTE 5: CAPITAL ASSETS The following is a summary of changes in the Capital Assets during the fiscal year:

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

Balances July 1,2009

Increases

Decreases

Balances June 30,2010

$ 2,651,464.00 5,22l,473.60$ 27,334,939.00$ 3,327,066.00 29,229,346.60

Total Capital Assets, Not Being Depreciated $

7,872,937.60$ 27,334,939.00$

3,327,066.00$ 31,880,810.60

Capital Assets, Being Depreciated: Buildings and Improvements Equipment Land Improvements

$ 125,145,199.00$ 16,733,965.00 3,951,744.00

3,353,628.00$ 766,072.00 86,434.00

2,651,288.00$ 281,001.00 45,802.00

125,847,539.00 17,219,036.00 3,992.376.00

Less: Accumulated Depreciation: Buildings and Improvements Equipment Land Improvements

26,153,300.00 9,177,778.00 2,866,639.00

2,742,727.00 1,309,673.00
94,077.00

L327.278.00 265,53100 45,802.00

27,568,749.00 10,221,920.00 2,914,914.00

Total Capital Assets, Being Depreciated, Net $ 107,633,191.00$

59,657.00 $

Governmental Activity Capital Assets - Net $ 115,506,128.60$ 27,394,596.00$

1,339,480.00$ 106,353,368.00 4,666,546.00$ 138,234,178.60

Capital assets being acquired under capital leases as of June 30, 2010, are as follows:
Governmental Funds
Buildings and lmprovements Less: Accumulated Depreciation

Current year depreciation expense by function is as follows:
Instruction Support Services
Educational Media Services General Administration Student TransportationServices Food Services

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30.2010

EXHIBIT "H"

NOTE 6: INTERFUND TRANSFERS

Interfund transfers for the year ended June 30, 2010, consisted of the following:

Transfer to

Transfers From
General Fund

District-wide Capital Projects

$ 893,180.11

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 7 : RISK MANAGEMENT

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

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

The School District 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.

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

Beginningof Year Liability

Changes in Estimates

Claims Paid

End of Year Liability

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.

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

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

Beginningof Year

Changes in

Claims

End of Year

Liability

Estimates

Paid

Liability

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

Position Covered

Amount

Superintendent Blanket Employee
NOTE 8: POLLUTION REMEDIATIONOBLIGATIONS

The School District is the owner of Model High School located at Rome, Georgia, and is responsible for asbestos removal.

The School District has recorded construction in progress related to this pollution remediation in the amount of $850,000.00, on the Statement of Net Assets. The removal of asbestos contamination detected is to be considered a cost of the new high school that is currently being built. Pollution remediation liability activity in fiscal year 2010 was as follows:

Balance July 1,2009

Additions

Reductions

Balance June 30,2010

Current Portion

Pollution Remediation Obligations $

0.00 $ 677,320.40 $ 677,320.40 $

0.00 $

0.00

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 of the School District relating to employees' rights to receive compensation for future absences based upon service already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. Typically, the General Fund is the fund used to liquidate this long-term debt. The School District uses the vesting method to compute compensated absences.

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 3 0 , 2 0 1 0

GENERAL OBLIGATION DEBT OUTSTANDING

General Obligation Bonds currently outstanding are as follows:
lnterest Rates

General Government - Series QZAB 2004 General Government - Series 2009

0.00%
3.00%- 4.00%

EXHIBIT "H"
Amount

The changes in Long-Term Debt duringthe fiscal year ended June 30,2010, were as follows:

Balance
July 1. 2009

Additions

Governmental Funds

Balance

Deductions

June 30,2010

Due Within One Year

G. 0.Bonds Capital Leases Compensated Absences Bond Premiums Amortized

$ 34,650,000.00 6,129,813.31 7,593,363.84$ 995,819.47

$
2,942,748.46

7,650,000.00$ 27,000,000.00$

536,021.77 5,593,791.54

3,223,976.79 7,312,135.51

251,135.77

744,683.70

3.000.000.00 564,568.90 600,000.00 212,766.77

At June 30, 2010, payments due by fiscal year which includes principal and interest for these items are as follows:

Capital Leases

Principal

Interest

Fiscal Year Ended June 30:

Total Principal and lnterest
Fiscal Year Ended June 30:

General Obligation Debt

Principal

Interest

Unamortized Bond Premium

Total Principal and lnterest

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

NOTE 10: ON-BEHALF PAYMENTS

The School District has recognized revenues and costs in the amount of $215,732.20 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 $157.554.62

Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $25,792.91

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 $32,384.67

NOTE 11: SIGNIFICANT COMMITMENTS

The following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30,2010, together with funding available:

Project

Unearned Executed Contracts

Funding Available From State

10-657-064 10-657-065 10-657-066 10-657-067
Coosa High School Renovation Model High School

The amounts described in this note are not reflected in the basic financial statements.
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 of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the basic financial statements.

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

NOTE 13: SUBSEOUENT EVENTS
On May 4, 2010, the School Board approved a revision to the School District's compensated absences policy. The policy was revised to include the following: "This administrative regulation shall terminate on January 1,2012, and any employees who retire or voluntarily terminate their employment with the Floyd County Board of Education after December 31, 2011, shall not be entitled to any severance pay benefit pursuant to this policy." As a result of this change there will be no liability to the School District as of January 1,2012.
NOTE 14: POST-EMPLOYMENT BENEFITS
GEORGIA SCHOOL PERSONNEL EMPLOYEES POST-EMPLOYMENT HEALTH BENEFIT FUND
Plan Description. The Georgia School Personnel Post-employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fun provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Insurance Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (OCGA) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board).
Funding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately 25 percent of the cost of health insurance coverage.
Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected "pay-as-you-go" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.
The combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30,2010:

For certificated teachers, librarians and regional educational service agencies:

July 2009 August 2009 -October 2009 November 2009 -June 2010

18.534% of covered payroll for August Coverage
14.492% of covered payroll for September - November Coverage 18.534% of covered payroll for December- July Coverage

For non-certificated school personnel:

July 2009 -June 2010

$162.72 per member per month plus Departmentof Education contribution of $22,838,311.00

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

No additional contribution was required by the Board for fiscal year 2010 nor contributed to the State OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the State plan for other postemployment benefits and are subject to appropriation.

The School District's combined active and retiree contributions to the health insurance plans, which

equaled the required contribution, for the current fiscal year and the preceding two fiscal years were

as follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

NOTE 15: RETIREMENT PLANS
TEACHERS RETIREMENTSYSTEM OF GEORGIA (TRS)
Plan Description. The TRS is a cost-sharing multiple-employer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS. 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.
On October 25, 1996, the Board created the Supplemental Retirement Benefits Plan of the Georgia Teachers Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1,1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits.
TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 3 0 years of creditable service, regardless of age, or after 1 0 years of service and attainment of age 60. A member is eligible for early retirement after 2 5 years of creditable service.
Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 4 0 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 6 0 or by 7% for each year or fraction thereof by which the member has less than 3 0 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available.

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

Funding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 1 0 years of service. If a member terminates with less than 1 0 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2010, were 5.25% of annual salary. The member contribution rate will increase to 5.53% effective July 1,2010. Employer contributions required for fiscal year 2010 were 9.74% of annual salary as required by the June 30, 2007, actuarial valuation. The employer contribution rate will increase to 10.28% effective July 1,2010.
Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

(This page left intentionally blank)

FLOYD COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDEDJUNE 30.2010

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings M~scellaneous
Total Revenues
Current Instruction Support Services Pupil Services Improvementof Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Sewices Other Support Services Food Services Operation Enterprise Operations Community Services Operations
Total Exoenditures
Excess of Revenuesover (under) Expenditures
OTHER FINANCING SOURCES (USES)
Other FinancingSources Other FinancingUses
Total Other FinancingSources (Uses)
Net Change in Fund Balances
- Fund Balances Beginning
Adjustments
Fund Balances - Ending

NONAPPROPRIATED BUDGETS

ORIGINAL

FINAL

SCHEDULE '1"
ACTUAL AMOUNTS

The accompanyingscheduleof revenues, expendituresand changes in fund balances budget and actual is presentedon 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.

FLOYD COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30.2010

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Ch~ldNutrition 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 Office of the Treasury and Fiscal Services Schools and Roads Cluster
Total U. S. Department of Agriculture
Education. U. S. Department of Educationof Homeless Childrenand Youth Cluster Pass-Through From Georgia Departmentof Education Educationfor Homeless Childrenand Youth
EducationTechnology State Grants Cluster Pass-Through From Georgia Department of Education EducationTechnology State Grants
Pass-ThroughFrom Georgia Departmentof Education Special Education ARRA- Grants to States ARRA- Preschool Grants Grantsto States Preschool Grants
Total Special EducationCluster
State Fiscal Stabilization Fund Cluster Pass-Through From Georgia Department of Educat~on ARRA- Education State Grants
Title I. Part A Cluster Pass-Through From Georgia Departmentof Education ARRA- T~tleI Grants to Local EducationalAgencies Title 1 Grants to Local EducationalAgencies
Total Title I, Part A Cluster
Other Programs Pass-Through From Georgia Department of Education
Career and Technical Education- Basic Grants to States
English Language Acquisition Grants ImprovingTeacher QualityState Grants Mathematics and Science Partnerships Pass-Through From Florida State Un~venity Comprehensive School Reform Demonstration
Total Other Programs
Total U. S. Department of Education

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

FLOYD COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURESOF FEDERALAWARDS
YEAR ENDEDJUNE 30.2010

SCHEDULE 9'

FUNDING AGENCY PROGRAM/GRANT
Health and Human Services, U. S. Department of Child Care and Development Fund Cluster Pass-ThroughFrom Bright From the Start: Georgia Department of Early Care and Learning ARRA- Ch~ldCare and Development Block Grant

CFDA NUMBER

PASS THROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

Total Federal Financial Assistance
N/A = Not Available
Notes to the Schedule of Exoenditures of Federal Awards
(1) Includesthe Federally assigned value of donated commodities for the Food Donation Program in the amount of $374.821.52.
(2) Expenditures for the funds earned on the School Breakfast Program ($786.263.58) were not maintained separately and are included in the 2010 National School Lunch Program.
(3) Funds earned on this program. in the amount of $5,522.61, do not require report~ngoef xpenditures.
Major Programs are identified by an aster~sk(*) in front of the CFDA number.
The School District did not provide Federal Assistance to any Subrecipient.
The accompanyingschedule 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 accountingwhich is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

FLOYD COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDEDJUNE 30.2010

GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Educabon. Georgia Department of Quality Basic Education D~recItnstructional Cost Kindergarten Program
Kindergarten Program - Early Intervention Program
Primary Grades (1-3) Program
Primary Grades - Early lntervention (1-3) Program
Upper Elementary Grades (4-5) Program
Upper Elementary Grades - Early lntervention (4-5) Program Middle Grades (MP)rogram
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 FacilityMaintenanceand Operations Categorical Grants Pupil Transportation Regular Nuning Services Vocational Superv~sors Mid-termAdjustment Hold-Harmless Education Equalizabon Fund~ngGrant Food Services Vocational Education Amended Formula Adjustment Other State Programs Dual Enrollment Funding Georgia Special Needs Scholarship Fund Health Insurance National Teacher Certification Preschool Handicapped Program Rule 1 0 Spec~aEl ducationState Grant Teachen' Retirement Virtual Schools Grant
Georgia State Financingand Investment Commission Reimbursement on Construction Projects
Office of Treasury and Fiscal Services Public School Employees Retirement

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

SCHEDULE "3' TOTAL

See notesto the basic financ~asl tatements.

FLOYD COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30,2010

SCHEDULE "4"

PROJECT

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3) (4)

AMOUNT EXPENDED IN PRIOR YEARS (3) (4)

PROJECT STATUS

2003 SPLOST (51

(1) Renovating, Repairing, improvingand equippingexistingschools and facilities including roof replacements and HVAC systems $ (2) Technology system-wide including purchasing hardware (3)TransportationDepartment lmprovements and Bus Purchases (4) acquiringany capital property necessary or desirablefor the foregoingpurposes, both real and personal (5) Legal and AdministrativeCosts

3,701,000.00 $ 2,300.000.00 2,270,000.00
115,000.00

3,465,647.62 $ 2.489.116.01 3,829,740.04
130,526.40 333,602.81

989,105.29 $ 1,417,465.22 Ongoing

274.010.65

1,917,616.01 Ongoing

3,759,740.04 Completed

52,873.00

5.000.00 280,729.81

Ongoing Ongoing

2009 SPLOST (1) acquiring. constructing. equippingand furnishinga new Model High School with buildingsand facilities useful and desirable therewith (2) Additional Classrooms
(3) Renovating.Repairing, improvingand equippingexistingschools and facilities including roof replacements and HVAC systems (4) Technology system-wide including purchasinghardware (5) TransportationDepartmentlmprovements and Bus Purchases (6) acquiringany capital property necessaryor desirablefor the foregoing purposes, both real and personal (7) Legal and Administrative Costs

8,842,000.00 2,500,000.00 2,000,000.00
700,000.00

7,748.755.92 2,500,000.00 2,000,000.00
700,000.00 258,091.85

1,958,337.84 335,825.87 6,138.56
2,356.86

Ongoing Ongoing

451.042.18 Ongoing 132,169.02 Ongoing
Ongoing

255.734.99

Ongoing Ongoing

(1)The School District'soriginal cost estimateas specified in the resolutioncalling for the impositionof the Local Option Sales Tax.

2) The School District'scurrent estimate of total cost for the projects. Includesall cost from project inceptionto completion.

(3) The voters of Floyd Countyapprovedthe impositionof a 1%sales tax to fund the above projectsand retire associated debt. Amounts expendedfor these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects.

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

Prior Years

$ 3,801,970.00

Current Year

716,416.54

Total

(5) Only projects not completed prior to July 1,2009, are included in this report for 2003 SPLOST and include current and ongoing project expenditures.

See notesto the basic financial statements.

(This page left intentionally blank)

FLOYD COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES- BY PROGRAM
YEAR ENDEDJUNE 30.2010

SCHEDULE "5"

D~recItnstructional Programs Kindergarten Program Kindergarten Program-Early Intervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper ElementaryGrades (4-5) Program Upper ElementaryGrades-Early lnterventlon (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 IV
Gifted Student - Category VI
Remedial Education Program Alternative Education Program EnglishSpeakers of Other Languages (ESOL)
TOTAL DIRECT INSTRUCTIONAL PROGRAMS
Media Center Program Staff and Profess~onaDl evelopment

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

ELIGIBLE OBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

TOTAL QBE FORMULA FUNDS

(1) Comprised of State Funds plus Local Five M ~ lSl hare. (2) Allotments do not include the impact of the State amended formula adjustment

See notes to the basic financial statements.

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

Russell W. Hinton
STATE AUDITOR
(404)656-2174

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-1 56 Atlanta, Georgia 30334-8400
April 28,2011

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Floyd County Board of Education
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MAlTERS 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, 2010, which collectively comprise Floyd County Board of Education's basic financial statements and have issued our report thereon dated April 28, 2011. 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 GovernmentAuditing Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Re~orting
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 of expressing 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 deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis.
Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, 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.

Comeliance 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 of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
We noted a certain matter that we have reported t o management of Floyd County Board of Education in a separate letter dated April 28, 2011.
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,
State Auditor

Russell W. Hinton
STATE AUDITOR
(404)656-2174

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
April 28, 2 0 1 1

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Floyd County Board of Education
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WlTH REOUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WlTH OMB CIRCULAR A-133
Ladies and Gentlemen:

We have audited Floyd County Board of Education's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2010. Floyd County Board of Education's major Federal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs. 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 of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, local Governmen6 and Non-Profit Organizations. Those etandards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Floyd County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Floyd County Board of Education's compliance with those requirements.
In our opinion, the Floyd County Board of Education complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major Federal programsfor the year ended June 30,2010.

Internal Control Over Compliance

Management of Floyd County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to Federal programs. In planning and performing our audit, we considered Floyd County Board of Education's internal control over compliance with the requirements that could have a direct and material effect on a major Federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Floyd County Board of Education's internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a Federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a Federal program will not be prevented, or detected and corrected, on a timely basis.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed t o identify all deficiencies in internal control over compliance that might be deficiencies, 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.

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,

~ y 6 s e lWl . Hinton, CPA, CGFM State Auditor

SECTION Ill AUDITEE'S RESPONSETO 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 30.2010
PRIOR YEAR FINANCIALSTATEMENT FINDINGSAND QUESTIONED COSTS No matters were reported. 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 30,2010

1 SUMMARY OF AUDITOR'S RESULTS

Financial Statements

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

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

Noncompliance material t o financial statements noted:

Federal Awards

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

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

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

Identification of major programs:

CFDA Numberk)

Name of Federal Program or Cluster

Title I, Part A Cluster Special Education Cluster State Fiscal Stabilization Fund Cluster

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

Auditee qualified as low-risk auditee?

II FINANCIALSTATEMENT FINDINGSAND QUESTIONEDCOSTS

No matters were reported.

Ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.

Unqualified No
None Reported
N 0 None Reported
Unqualified