Forsyth County Board of Education annual financial report for the fiscal year ended 2018 June 30

FORSYTH COUNTY BOARD OF EDUCATION
ANNUAL FINANCIAL REPORT FOR THE
FISCAL YEAR ENDED JUNE 30, 2018

FORSYTH COUNTY BOARD OF EDUCATION
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2018
TABLE OF CONTENTS
I. FINANCIAL SECTION
Independent Auditor's Report Management's Discussion and Analysis Basic Financial Statements:
Government-wide Financial Statements: Statement of Net Position Statement of Activities
Fund Financial Statements: Balance Sheet Governmental Funds Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities General Fund - Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual (Budgetary Basis) Statement of Fiduciary Assets and Liabilities Agency Fund
Notes to Financial Statements Required Supplementary Information:
Schedule of Proportionate Share of Net Pension Liability Teachers Retirement System of Georgia
Schedule of Contributions Teachers Retirement System of Georgia Schedule of Proportionate Share of Net Pension Liability Public School
Employees Retirement System of Georgia Schedule of Proportionate Share of Net OPEB Liability School OPEB Fund Schedule of Contributions School OPEB Fund Notes to Required Supplementary Information Combining Fund Statements and Schedule: Combining Balance Sheet Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund
Balances Nonmajor Governmental Funds Schedule of Expenditures of Special Purpose Local Option Sales Tax Proceeds

1-3 4-13
14 15
16
17
18
19
20 21 22-55
56 57
58 59 60 61
62
63 64

FORSYTH COUNTY BOARD OF EDUCATION
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2018
TABLE OF CONTENTS

II. SINGLE AUDIT SECTION
Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards
Independent Auditor's Report on Compliance For Each Major Federal Program and on Internal Control Over Compliance Required by the Uniform Guidance
Schedule of Expenditures of Federal Awards Notes to the Schedule of Expenditures of Federal Awards Schedule of Findings and Questioned Costs Status of Prior Year Findings

65 and 66
67-69 70 and 71
72 73 and 74
75

I. FINANCIAL SECTION

INDEPENDENT AUDITOR'S REPORT
To the Superintendent and Members of the Forsyth County Board of Education
Cumming, Georgia
Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Forsyth County Board of Education as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise the Forsyth County Board of Education's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
200 GALLERIA PARKWAY S.E., SUITE 1700 ATLANTA, GA 30339-5946 770-955-8600 800-277-0080 FAX 770-980-4489 www.mjcpa.com Members of The American Institute of Certified Public Accountants

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Forsyth County Board of Education as of June 30, 2018, and the respective changes in financial position and the budgetary comparison for the General Fund, for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As discussed in notes N and O, Forsyth County Board of Education implemented Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, as of July 1, 2017. This standard significantly changed the accounting for Forsyth County Board of Education's net other postemployement benefits (OPEB) liability and the related disclosures. Our opinions are not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis on pages 4 through 13 and the Schedule of Proportionate Share of Net Pension Liability Teachers Retirement System of Georgia, Schedule of Contributions Teachers Retirement System of Georgia, Schedule of Proportionate Share of Net Pension Liability Public School Employees Retirement System of Georgia, Schedule of Proportionate Share of the Net OPEB Liability School OPEB Fund, and the Schedule of Contributions School OPEB Fund on pages 56, 57, 58, 59, and 60 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
2

Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Forsyth County Board of Education's basic financial statements. The combining fund statements, the schedule of expenditures of special purpose local option sales tax proceeds, as required by the Official Code of Georgia 48-8-121, and the accompanying schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements.
The combining fund statements, the schedule of expenditures of special purpose local option sales tax proceeds, and the schedule of expenditures of federal awards (collectively the "supplementary information") are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Other Reporting Required by Governmental Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated December 14, 2018 on our consideration of the Forsyth 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 solely 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 effectiveness of the Forsyth County Board of Edcuation's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Forsyth County Board of Education's internal control over financial reporting and compliance.
Atlanta, Georgia December 14, 2018
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FORSYTH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018
INTRODUCTION
Our discussion and analysis of the Forsyth County School District's ("School District") financial performance provides an overview of the School District's financial activities for the fiscal year ended June 30, 2018. The intent of this discussion and analysis is to look at the School District's financial performance as a whole. Readers should also review the notes to the basic financial statements and financial statements to enhance their understanding of the School District's financial performance.
FINANCIAL HIGHLIGHTS
Key financial highlights for fiscal year 2018 are as follows:
On the district-wide financial statements, the assets of the School District exceeded liabilities by $1.3 million.
The School District had $507.3 million in expenses relating to governmental activities; only $264.7 million of these expenses are offset by program specific charges for services, grants and contributions. General revenues (primarily property and sales taxes) of $263.7 million were adequate to provide for these programs.
As stated above, general revenues accounted for $263.7 million or 49.9% of all revenues totaling $528.4 million. Program specific revenues in the form of charges for services, grants and contributions accounted for the remaining revenues.
Net position for the School District rose by $21.1 million.
OVERVIEW OF THE FINANCIAL STATEMENTS
This annual report consists of three parts; management's discussion and analysis, the basic financial statements and supplementary information. The basic financial statements include two levels of statements that present different views of the School District. These include the districtwide and fund financial statements.
The district-wide financial statements include the Statement of Net Position and Statement of Activities. These statements provide information about the activities of the School District presenting both 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 fund financial statements reflect the School District's major funds. In the case of the Forsyth County School District, the General Fund and Capital Projects Fund are reported as major funds.
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FORSYTH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018
The financial statements also include notes that explain some of the information in the statements and provide more detailed data. Additionally, other supplementary information (not required) is also presented that further supplements understanding of the financial statements.
District-Wide Statements
The District-Wide financial statements are basically a consolidation of all of the District's operating funds into one column called governmental activities. In reviewing the District-Wide financial statements, a reader might ask the question, are we in a better financial position than last year? The Statement of Net Position and the Statement of Activities provides the basis for answering this question. These financial statements include all of the School District's assets and liabilities and use the accrual basis of accounting similar to the accounting used by most privatesector 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 the net position. The change in net position is important because it tells the reader that, for the School District as a whole, the financial position of the School District has improved or diminished. The causes of this change may be the results of many factors, including those not under the School District's control, such as the property tax base, facility conditions, required educational programs and other factors.
The Statement of Net Position and the Statement of Activities reflects the School District's governmental activities.
Fund Financial Statements
The School District uses many funds to account for a multitude of financial transactions during the fiscal year. However, the fund financial statements presented in this report provide separate columns of detailed information about only the School District's major funds.
Governmental Funds - Most of the School District's activities are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end available for spending in future periods. These funds are reported using the modified accrual basis of accounting which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the School District's general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The differences between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds are reconciled in the financial statements.
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FORSYTH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018
FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT AS A WHOLE
Table 1 Net Position

ASSETS

Current and other assets

$

Capital assets

Total assets

DEFERRED OUTFLOWS OF RESOURCES

Deferred charges on refunding Pension related items OPEB related items
Total deferred outflows of resources

LIABILITIES

Current liabilities Long-term liabilities
Total liabilities

DEFERRED INFLOWS OF RESOURCES

Pension related items OPEB related items
Total deferred inflows of resources

NET POSITION

Net investment in capital assets

Restricted

Unrestricted

Total net position

$

Fiscal Year 2017

Governmental Activities

Fiscal Year 2018

216,263,073 $ 816,624,476 1,032,887,549

194,037,034 841,624,564 1,035,661,598

6,035,447 113,457,405 11,985,007 131,477,859

5,281,016 84,154,981 22,478,718 111,914,715

35,672,006 1,146,654,237 1,182,326,243

41,739,611 1,076,143,544 1,117,883,155

1,877,253 -
1,877,253

3,793,510 24,591,850 28,385,360

434,722,914 61,926,859 (516,487,861) (19,838,088) $

465,887,669 61,998,516 (526,578,387) 1,307,798

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FORSYTH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018

Table 2 Change in Net Position

Governmental

Activities

Fiscal

Fiscal

Year 2017

Year 2018

Revenues Program revenues: Charges for services Operating grants and contributions Capital grants and contributions General revenues: Taxes: Property taxes For maintenance and operations For debt service Sales taxes Other taxes: Intangible taxes Real estate transfer taxes Title ad valorem tax Unrestricted investment earnings Other Total revenues

$ 11,948,641 225,460,197 36,983,557

$ 11,650,645 247,262,552 5,812,337

160,940,546 23,810,277 36,609,462
6,936,938 2,325,305 10,628,446
701,222 8,068,688 524,413,279

176,321,724 25,984,756 38,573,834
5,961,794 2,439,477 11,796,536 1,034,565 1,586,803 528,425,023

Expenses Instruction Support services: Pupil services Improvement of instructional services Instructional staff training Educational media services Federal grant administration General administration School administration Business administration Maintenance and operation of plant Student transportation services Central support services Other support services Food services operations Community services operations Interest on long-term debt Total expenses

322,048,480
11,577,338 7,762,549
3,809,788
189,717 1,220,192 26,343,668 2,643,602 29,905,963 19,601,388 9,141,749
295,987 18,540,196 2,014,201 11,936,182 467,031,000

349,996,105
12,826,994 7,617,543 1,219,020 3,454,127
320,530 1,297,732 28,798,395 2,857,970 33,141,296 22,813,438 10,881,140
241,738 18,871,572 2,139,413 10,802,124 507,279,137

Change in net position

57,382,279

21,145,886

Net position, beginning of year, restated Net position, end of year

(77,220,367)

(19,838,088)

$ (19,838,088) $

1,307,798

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FORSYTH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018

Governmental Activities

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

Table 3 Costs of Services

Instruction Support services: Pupil services Improvement of instructional services Instructional staff training Educational media services Federal grant administration General administration School administration Business administration Maintenance and operation of plant Student transportation services Central support services Other support services Food services operations Community services operations Interest on long-term debt
Total expenditures

Governmental Activities

Total Cost of Services

Net Cost of Services

2017

2018

2017

2018

322,048,480

349,996,105 $ 115,004,428 $ 151,228,004

11,577,338 7,762,549
3,809,788
189,717 1,220,192 26,343,668 2,643,602 29,905,963 19,601,388 9,141,749
295,987 18,540,196 2,014,201 11,936,182

12,826,994 7,617,543 1,219,020 3,454,127
320,530 1,297,732 28,798,395 2,857,970 33,141,296 22,813,438 10,881,140
241,738 18,871,572 2,139,413 10,802,124

7,514,751 5,493,965
(2,456,497)
189,717 (3,905,424) 16,534,186 2,601,781 15,894,975 15,123,606 8,238,802
129,508 435,722 (97,097) 11,936,182

8,202,844 4,994,388 1,219,020 (2,784,620)
320,530 (4,906,759) 18,767,439 2,821,069 18,508,091 20,586,343 10,455,133
74,356 2,374,634 (108,993) 10,802,124

$ 467,031,000 $ 507,279,137 $ 192,638,605 $ 242,553,603

FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT'S FUNDS
The School District's governmental funds are accounted for using the modified accrual basis of accounting. The governmental funds had total revenues and other financing sources of $549.2 million and total expenditures and other financing uses of $581 million.
Major Funds:
General Fund The General Fund is the operating fund of the District. Revenue from state and federal sources accounted for 51.7% of the districts revenues. The other 48.3% is from local sources, primarily ad valorem taxes.

8

FORSYTH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 The student population of the district continues to grow. There was an increase in FTE of 1,793 when comparing state QBE allotment sheets for fiscal years 2017 and 2018. Capital Projects Fund The Capital Projects Fund is used to account for school construction and improvement projects. Special Purpose Local Option Sales Tax (SPLOST) made up the majority of the 2018 revenues. Those funds were transferred to the Debt Services Fund for the payment of bonds which were designated in the SPLOST referendum. SPLOST funds were also spent on the acquisition, construction, and equipping of new schools during the year. General Fund Budgeting Highlights The School District's budget is prepared according to Georgia Law. The most significant budgeted fund is the General Fund. During the course of fiscal year 2018, the School District amended its General Fund budget as needed. The School district uses site-based budgeting as a part of the budget process. The budgeting systems are designed to control total site budgets but provide flexibility for the site management. For the General Fund, the budget basis revenues and other financing sources of $411.1 million were more than the original budgeted amounts of $405.2 million by $5.9 million. Total budget basis actual total revenues had a $1.5 million favorable variance when compared to the final budgeted revenue total. The budget basis actual expenditures of $406.5 million were more than the original budgeted amount of $404.9 million by $1.6 million. The budget basis actual expenditures had a $2.9 million favorable variance when compared to the final budgeted expenditures.
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FORSYTH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018
Table 4 General Fund Changes in Fund Balances Budget and Actual

REVENUES State sources Federal sources Local sources and other funds On behalf payments
Total revenues

Budget

Original

Final

Actual

Variance with Final Budget

$ 208,323,517 50,000
196,837,933 -
405,211,450

$ 211,346,580 50,000
197,585,933 711,013
409,693,526

$ 213,562,568 $ 60,167
196,815,818 711,013
411,149,566

2,215,988 10,167
(770,115) -
1,456,040

EXPENDITURES Current:
Instruction Support services:
Pupil services Improvement of instructional services Instructional staff training Educational media services General administration School administration Business administration Maintenance and operation of plant Student transportation services Central support services Other support services Food services operations Debt service: Principal retirement Interest and fixed charges Total expenditures
Excess (deficiency) of revenues over (under) expenditures
OTHER FINANCING SOURCES (USES) Proceeds from sale of capital assets Transfers out Total of other financing sources (uses)
Net change in fund balances
FUND BALANCES, beginning of year
FUND BALANCES, end of year

295,416,670
7,811,209 6,154,625
756,637 3,486,831 1,034,370 24,496,068 2,447,922 33,581,719 18,714,563 8,558,410
91,815 -
1,225,000 1,141,200 404,917,039
294,411
540,000 -
540,000
834,411
61,044,621
$ 61,879,032

298,184,453
8,215,486 6,182,173
756,637 3,482,499 1,053,136 25,034,068 2,473,525 33,833,512 18,956,490 8,616,986
108,740 133,433
1,225,000 1,141,200 409,397,338
296,188
540,000 -
540,000
836,188
61,044,621
$ 61,880,809

293,549,260
7,974,462 6,035,466
756,637 2,984,115 1,114,909 24,973,283 2,550,061 32,150,816 19,957,263 8,868,986
70,664 133,433
4,244,580 1,168,046 406,531,981
4,617,585
586,101 (9,378)
576,723
5,194,308
61,044,621
$ 66,238,929 $

4,635,193
241,024 146,707
498,384 (61,773) 60,785 (76,536) 1,682,696 (1,000,773) (252,000) 38,076
-
(3,019,580) (26,846)
2,865,357
4,321,397
46,101 (9,378) 36,723
4,358,120
-
4,358,120

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FORSYTH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
At fiscal year ended June 30, 2018, the School District had $841.6 million invested in capital assets, all in governmental activities. Capital assets increased $25 million over the balance at June 30, 2017.
Note F reflects a summary of these balances net of accumulated depreciation.
Table 5 Capital Assets (Net of Accumulated Depreciation)

Year 2017

Year 2018

Land Land Improvements Construction in Progress Buildings Furniture and Equipment

$ 100,690,551 19,203,758
180,818,584 473,952,326
41,959,257

$ 100,690,551 17,710,865 2,734,296
683,289,746 37,199,106

Total

$ 816,624,476 $ 841,624,564

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FORSYTH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018
Debt
At fiscal year ended June 30, 2018, the School District had $359.3 million in bonds outstanding and $7.3 million in capital leases outstanding.
Note G summarizes the School District's debt for general obligation bonds and capital leases.
Table 6 Debt Summary

Governmental

Activities

Fiscal

Fiscal

Year 2017

Year 2018

General Obligation Bonds Capital Leases

$ 396,124,766 10,282,314

$ 359,256,438 7,262,734

Total General Long-Term Debt $ 406,407,080 $ 366,519,172

At June 30, 2018, the School District's assigned bond ratings were "Aaa" and "AA" as determined by Moody's Investor Services, Inc. and Standard and Poor's Rating Services. On July 19, 2018, Standard and Poor's Rating Services upgraded the School District to AAA making it one of only two school districts in the State of Georgia to have a AAA rating from both agencies.
CURRENT ISSUES
Currently known facts, decisions or conditions that are expected to have a significant effect on financial position or results of operations are as follows:
Beginning in FY18, the School District was required to report its other postemployment benefits (OPEB) liabilities and related expense on the Statement of Net Position which led to an adjustment to the beginning of year net position.
Two new schools, Denmark High School and Alliance Academy for Innovation, opened in FY 2019.
Locally, the value of the ad valorem tax digest has finally shown growth in the last few years. For fiscal year 2017 the digest showed an increase of 5.9% and for fiscal year 2018 it showed an increase of 9.1%.

12

FORSYTH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 Capital Improvements - The School District plans capital improvements as future capital needs arise due to increased student population and facility repair and maintenance needs. Specific capital expenditure plans are formalized in conjunction with individual general obligation bond issues, anticipated annual receipts of capital outlay funds from the State of Georgia Department of Education and collections from the Special Purpose Local Option Sales Tax. The School District regularly monitors anticipated capital outlay needs. CONTACTING THE SCHOOL DISTRICT'S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overview of the School District's finances and to show the School District's accountability for the money it receives. If you have questions about this report or need additional financial information, contact Mr. Chris Griner, Chief Financial Officer at Forsyth County School District, 1120 Dahlonega Highway, Cumming, Georgia 30040. You may also email your questions to Mr. Griner at cgriner48@forsyth.k12.ga.us.
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FORSYTH COUNTY BOARD OF EDUCATION
STATEMENT OF NET POSITION JUNE 30, 2018

ASSETS
Cash and cash equivalents Investments Receivables:
Accounts Intergovernmental Interest Taxes, net of allowances Inventory Prepaid Items Capital assets (nondepreciable) Capital assets (depreciable, net of accumulated depreciation)
Total assets
DEFERRED OUTFLOWS OF RESOURCES Deferred charges on refunding Pension related items OPEB related items
Total deferred outflows of resources
LIABILITIES
Accounts payable Salaries and benefits payable Accrued interest payable Unearned revenue Accrued claims payable due within one year Accrued claims payable due in more than one year Intergovernmental payable due within one year Intergovernmental payable due in more than one year Bonds payable due within one year Bonds payable due in more than one year Capital leases due within one year Capital leases due in more than one year Net pension liability Net OPEB liability
Total liabilities
DEFERRED INFLOWS OF RESOURCES Pension related items OPEB related items
Total deferred inflows of resources
NET POSITION
Net investment in capital assets Restricted for:
Capital projects Debt service Federal programs School food services Unrestricted
Total net position
The accompanying notes are an integral part of these financial statements.
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Governmental Activities
$ 107,456,015 38,535,849
511,481 39,476,741
207,650 7,072,909
722,717 53,672
103,424,847 738,199,717 1,035,661,598
5,281,016 84,154,981 22,478,718 111,914,715

13,672,301 28,067,310
6,415,875 631,842 416,558 277,706
1,290,000 21,630,000 30,865,000 328,391,438
2,359,792 4,902,942 356,011,983 322,950,408 1,117,883,155
3,793,510 24,591,850 28,385,360

465,887,669

49,035,837

9,755,062

101,676

3,105,941

(526,578,387)

$

1,307,798

FORSYTH COUNTY BOARD OF EDUCATION
STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2018

Functions/Programs Governmental activities:
Instruction Support services: Pupil services Improvement of instructional services Instructional staff training Educational media services Federal grant administration General administration School administration Business administration Maintenance and operation of plant Student transportation services Central support services Other support services
Food services operation Community services operation Interest on long-term debt
Total governmental activities

Expenses
$ 349,996,105
12,826,994
7,617,543 1,219,020 3,454,127
320,530 1,297,732 28,798,395 2,857,970 33,141,296 22,813,438 10,881,140
241,738 18,871,572
2,139,413 10,802,124 $ 507,279,137

Charges for Services

$

102,519

-

9,408,713 2,139,413 $ 11,650,645

Program Revenues Operating Grants and
Contributions

$

193,831,877

4,622,380

2,618,765

-

6,168,516

-

6,201,374

9,972,605

32,705

14,615,709

1,857,138

189,566

167,382

6,875,542

108,993

-

$

247,262,552

Capital Grants and Contributions
$ 4,833,705
1,770
4,390 -
70,231 -
3,117 58,351
4,196 17,496 369,957 236,441
212,683
$ 5,812,337

Net (Expense) Revenue and
Changes in Net Position Governmental
Activities
$ (151,228,004)
(8,202,844)
(4,994,388) (1,219,020) 2,784,620
(320,530) 4,906,759 (18,767,439) (2,821,069) (18,508,091) (20,586,343) (10,455,133)
(74,356) (2,374,634)
108,993 (10,802,124) (242,553,603)

General revenues: Property taxes, levied for general purposes Property taxes, levied for debt service Sales taxes Intangible taxes Real estate transfer taxes Title ad valorem tax Unrestricted investment earnings Other Total general revenues Change in net position
Net position, beginning of year, as restated Net position, end of year
The accompanying notes are an integral part of these financial statements.

176,321,724

25,984,756

38,573,834

5,961,794

2,439,477

11,796,536

1,034,565

1,586,803

263,699,489

21,145,886

(19,838,088)

$

1,307,798

15

FORSYTH COUNTY BOARD OF EDUCATION
BALANCE SHEET GOVERNMENTAL FUNDS
JUNE 30, 2018

ASSETS
Cash and cash equivalents Investments Receivables:
Accounts Intergovernmental Taxes, net of allowances Interest Due from other funds Inventory Prepaid Items Advances from other funds
Total assets
LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES
LIABILITIES Accounts payable Salaries and benefits payable Due to other funds Unearned revenue Advances to other funds
Total liabilities
DEFERRED INFLOWS OF RESOURCES Unavailable revenue - property taxes Unavailable revenue - state grants
Total deferred inflows of resources
FUND BALANCES Nonspendable:
Inventory Prepaid items Advances Restricted: Capital projects Debt service Federal programs School food services Committed: School activities Unassigned
Total fund balances Total liabilities, deferred inflows of
resources and fund balances

General

$

36,730,576 $

29,986,000

450,845

33,286,335

3,195,906

163,308

1,789,788

502,286

53,672

560,000

$

106,718,716 $

Capital Projects

Nonmajor Governmental
Funds

Total Governmental
Funds

45,033,966 $ 8,549,849
4,120,904 3,468,466
44,342 -
61,217,527 $

25,691,473 $ -
60,636 2,069,502
408,537
220,431
28,450,579 $

107,456,015 38,535,849
511,481 39,476,741 7,072,909
207,650 1,789,788
722,717 53,672
560,000 196,386,822

$

12,357,029 $

26,784,138

-

-

-

39,141,167

1,338,620 -
1,338,620

1,283,514 $ -
283,290 -
1,566,804
3,794,212 3,794,212

31,758 $ 1,283,172 1,506,498
631,842 560,000 4,013,270
183,845 -
183,845

13,672,301 28,067,310 1,789,788
631,842 560,000 44,721,241
1,522,465 3,794,212 5,316,677

502,286 53,672 560,000
-
65,122,971 66,238,929

$

106,718,716 $

-
53,662,886 2,193,625 -
55,856,511
61,217,527 $

220,431 -
13,793,467
101,676 2,885,510
7,252,380 -
24,253,464
28,450,579 $

722,717 53,672 560,000
53,662,886 15,987,092
101,676 2,885,510
7,252,380 65,122,971 146,348,904
196,386,822

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

16

FORSYTH COUNTY BOARD OF EDUCATION
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION
JUNE 30, 2018

Total fund balances - governmental funds

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

Capital assets used in governmental activities are not current financial resources and, therefore, are not reported in the funds.

Cost

$ 1,152,628,445

Less accumulated depreciation

(311,003,881)

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

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

governmental funds.

Net pension liability

$ (356,011,983)

Pension related deferred outflows of resources

84,154,981

Pension related deferred inflows of resources

(3,793,510)

The net OPEB liability is not a financial liability in governmental fund activities and, therefore, not reported in

governmental funds.

Net OPEB liability

$

OPEB related deferred outflows of resources

OPEB related deferred inflows of resources

(322,950,408) 22,478,718 (24,591,850)

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

in the funds.

Bonds payable

$ (315,410,000)

Premium, net of amortization

(43,846,438)

Intergovernmental contract payable

(22,920,000)

Deferred loss on refunding

5,281,016

Accrued interest

(6,415,875)

Accrued claims payable

(694,264)

Capital leases

(7,262,734)

Net position of governmental activities The accompanying notes are an integral part of these financial statements.

$

146,348,904

841,624,564 5,316,677

(275,650,512)

(325,063,540)

(391,268,295)

$

1,307,798

17

FORSYTH COUNTY BOARD OF EDUCATION
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2018

REVENUES State funds Federal funds Local and other funds On behalf payments Total revenues
EXPENDITURES Current: Instruction Support services: Pupil services Improvement of instructional services Instructional staff training Educational media services Federal grant administration General administration School administration Business administration Maintenance and operation of plant Student transportation services Central support services Other support services Food services operation Community services operation Capital outlay Debt service: Principal retirement Interest Total expenditures
Excess (deficiency) of revenues over expenditures

General
$ 213,562,568 $ 60,167
198,955,231 711,013
413,288,979

Capital Projects

Nonmajor Governmental
Funds

Total Governmental
Funds

2,344,818 $ -
39,810,302 -
42,155,120

416,830 $ 17,448,077 52,201,895
70,066,802

216,324,216 17,508,244 290,967,428
711,013 525,510,901

293,549,260
7,974,462 6,035,466
756,637 2,984,115
1,114,909 24,973,283 2,550,061 32,150,816 19,957,263 8,868,986
70,664 133,433 2,139,413
-
4,244,580 1,168,046 408,671,394
4,617,585

-
58,944,515
58,944,515
(16,789,395)

20,943,472
3,487,513 746,028 462,383 274,874 60,007 2,464 165,413 107,378 166,666
17,542,153 -
29,490,000 16,872,350 90,320,701
(20,253,899)

314,492,732
11,461,975 6,781,494 1,219,020 2,984,115
274,874 1,174,916 24,975,747 2,550,061 32,150,816 20,122,676 8,976,364
237,330 17,675,586 2,139,413 58,944,515
33,734,580 18,040,396 557,936,610
(32,425,709)

OTHER FINANCING SOURCES (USES) Proceeds from sale of capital assets Transfers in Transfers out Total other financing sources (uses)
Net change in fund balances
FUND BALANCES, beginning of year
FUND BALANCES, end of year

586,101 -
(9,378) 576,723

5,194,308 61,044,621

$

66,238,929 $

(23,088,800) (23,088,800)
(39,878,195) 95,734,706
55,856,511 $

23,098,178
23,098,178
2,844,279 21,409,185
24,253,464 $

586,101 23,098,178 (23,098,178)
586,101
(31,839,608) 178,188,512
146,348,904

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

18

FORSYTH COUNTY BOARD OF EDUCATION
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2018

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

Net change in fund balances - total governmental funds

$

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

Capital outlay Depreciation expense

$ 55,961,539 (28,375,219)

The net effect of the disposal of capital assets is to decrease net position. Net book value of assets sold

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

Property taxes

$

State grants

143,104 2,771,018

In the governmental funds, current year expenditures related to pensions and OPEB are comprised solely of amounts contributed to the plan for the current year. However, in the statement of activities, expenses related to pensions and OPEB include amounts that do not require the use of current financial resources. This amount represents the difference in the required accounting treatment of pensions, OPEB, and related items.

(31,839,608)
27,586,320 (2,586,232) 2,914,122 (15,850,869)

The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. This amount is the net effect of these differences in the treatment of long-term debt and related items.

Principal payments Amortization of bond premium Amortization of deferred loss from refunding

$ 33,734,580 7,378,328 (754,431)

Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds.

Claims payable Change in accrued interest

$

(50,699)

Accrued interest payable, June 30, 2017

7,030,250

Accrued interest payable, June 30, 2018

(6,415,875)

Change in net position - governmental activities

$

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

40,358,477
563,676 21,145,886

19

FORSYTH COUNTY BOARD OF EDUCATION
GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGETARY BASIS)
FOR THE FISCAL YEAR ENDED JUNE 30, 2018

REVENUES State sources Federal sources Local sources and other funds On behalf payments
Total revenues

Budget

Original

Final

$ 208,323,517 $ 211,346,580 $

50,000

50,000

196,837,933

197,585,933

-

711,013

405,211,450

409,693,526

EXPENDITURES Current:
Instruction Support services:
Pupil services Improvement of instructional services Instructional staff training Educational media services General administration School administration Business adminstration Maintenance and operation of plant Student transportation services Central support services Other support services Food service operations Debt service: Principal retirement Interest and fiscal charges
Total expenditures

295,416,670
7,811,209 6,154,625
756,637 3,486,831 1,034,370 24,496,068 2,447,922 33,581,719 18,714,563 8,558,410
91,815 -
1,225,000 1,141,200 404,917,039

298,184,453
8,215,486 6,182,173
756,637 3,482,499 1,053,136 25,034,068 2,473,525 33,833,512 18,956,490 8,616,986
108,740 133,433
1,225,000 1,141,200 409,397,338

Excess of revenues over expenditures

294,411

296,188

OTHER FINANCING SOURCES (USES) Proceeds from sale of capital assets Transfers out Total other financing sources (uses)

540,000 -
540,000

540,000 -
540,000

Net change in fund balances

834,411

836,188

FUND BALANCES, beginning of year

61,044,621

61,044,621

FUND BALANCES, end of year

$ 61,879,032 $ 61,880,809 $

Actual

Variance With Final Budget

213,562,568 $ 60,167
196,815,818 711,013
411,149,566

2,215,988 10,167
(770,115) -
1,456,040

293,549,260
7,974,462 6,035,466
756,637 2,984,115 1,114,909 24,973,283 2,550,061 32,150,816 19,957,263 8,868,986
70,664 133,433
4,244,580 1,168,046 406,531,981

4,635,193
241,024 146,707
498,384 (61,773) 60,785 (76,536) 1,682,696 (1,000,773) (252,000)
38,076 -
(3,019,580) (26,846)
2,865,357

4,617,585

4,321,397

586,101 (9,378)
576,723
5,194,308
61,044,621
66,238,929 $

46,101 (9,378) 36,723
4,358,120
-
4,358,120

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

20

FORSYTH COUNTY BOARD OF EDUCATION
STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES AGENCY FUND JUNE 30, 2018

Cash Total assets
Due to others Total liabilities

ASSETS LIABILITIES

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

Agency Fund $ 1,338,368 $ 1,338,368
$ 1,338,368 $ 1,338,368

21

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of Forsyth County Board of Education (the "School District") have been prepared in conformity with accounting principles generally accepted in the United States of America ("USGAAP") as applicable to governmental units. The more significant of the School District's accounting policies are summarized below.
Reporting Entity
The School District is governed by an elected five member board (the "Board"). Board members are elected by the public and have the authority to make decisions, the power to approve selection of management personnel, the ability to significantly influence operations, and the primary accountability for fiscal matters. The Board determines the millage rate at which school taxes are levied and may incur bonded indebtedness with voters' approval. The School District has no component units.
Government-wide and Fund Financial Statements
The School District's financial statements have been prepared in accordance with the Governmental Accounting Standards Board Statement 34 - Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments.
The government-wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all of the nonfiduciary activities of the School District. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. However, the School District does not consider any of its activities to be business-type activities.
The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds. Major individual governmental funds are reported as separate columns in the fund financial statements.
22

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Agency funds are custodial in nature and do not present results of operations or have a measurement focus. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue when all requirements imposed by the provider have been met.
Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they are both measurable and available. Property taxes are recognized as revenue in the period for which they were levied, if they are collected within sixty days of year end. All other revenues are also considered to be available when they are collectible within one hundred and eighty days of year end. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, are recorded only when payment is due.
Revenue from grants and donations is recognized in the year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year when the resources are required to be used or the year when use is first permitted, matching requirements, in which the School District must provide local resources to be used for a specified purpose, and expenditure requirements, in which the resources are provided to the School District on a reimbursement basis.
The State of Georgia reimburses the School System for teachers' salaries and operating costs through the Quality Basic Education (QBE) Formula Earnings program. State of Georgia law defines the formula driven grant that determines the cost of an academic school year and the State of Georgia's share in this cost. Generally teachers are contracted for the school year (July 1 June 30) and paid over a twelve month contract period, generally September 1 through August 31. In accordance with the requirements of the enabling legislation of the QBE program, the State of Georgia reimburses the School System over the same twelve month period in which teachers are paid, funding the academic school year expenditures. At June 30, the amount of teachers' salaries incurred but not paid until July and August of the subsequent year are accrued as the State of Georgia has only postponed the final payment of their share of the cost until the subsequent appropriations for cash management purposes. By June 30 of each year, the State of Georgia has a signed appropriation that includes this final amount, which represents the State of Georgia's intent to fund this final payment. Based on guidance in Government Accounting Standards Board (GASB) Statement No. 33, paragraph 74, the State of Georgia recognizes its QBE liability for the July and August salaries at June 30, and the School System recognizes the same QBE as a receivable and revenue, consistent with symmetrical recognition.
Property taxes, sales taxes, grant revenue, state Quality Basic Education (QBE) revenue and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenue of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the government.
23

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Measurement Focus, Basis of Accounting, and Financial Statement Presentation - Continued
The School District reports the following major governmental funds:
The General Fund is the School District's primary operating fund. The General Fund is used to account for all financial transactions of the School District except those required to be accounted for in another fund.
The Capital Projects Fund accounts for resources which are used exclusively for acquiring school sites, constructing and equipping new school facilities, and renovating existing facilities. The major inflows are sales taxes and bond proceeds.
Additionally, the School District reports the following fund types:
The Agency Fund is used to account for school activity funds that the School District holds for others in an agency capacity.
The Debt Service Fund accounts for the accumulation of resources for, and the payment of general long-term debt principal, interest, and related costs. The primary revenue sources are local property taxes levied specifically for debt service.
The School Activity Fund is also reported as a special revenue fund. The School Activity Fund is used to account for funds collected primarily through the fund raising efforts of the individual schools. Each school's principal is responsible, under the authority of the School District, for collecting, controlling, disbursing, and accounting for his or her school's funds. All resources of the fund, including any earnings on invested resources, have been committed by the Board of Education to be used to support the schools' activities.
The special revenue funds are used to account for federal and state funded grants and school food service operations.
The effect of interfund activity has been eliminated from the government-wide financial statements.
Prepaid Items Payments made to vendors for services that will benefit periods beyond June 30, 2018, are recorded as prepaid items using the consumption method by recording an asset for the prepaid amount and reflecting the expenditure/expense in the year in which services are consumed. At the fund reporting level, an equal amount of fund balance is reported as nonspendable as this amount is not available for general appropriation.
24

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Inventories

Inventories of the General Fund and School Food Services Fund are stated at cost using the first-in, first-out method. Donated food commodities are recorded at their federally assigned value at the date of donation. The School District utilizes the consumption method to recognize inventory usage. Under the consumption method, inventories are recorded as expenses/expenditures when used rather than when purchased.

Interfund Receivables and Payables
During the course of its operations, the School District makes transfers between funds to finance operations, provide services, acquire assets and service debt. To the extent that certain transfers between funds had not been received as of year end, balances of interfund amounts receivable or payable have been recorded.

Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to/from other funds" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as "due to/from other funds."

Capital Assets
Capital assets, which include property, plant and equipment, are reported in the governmental activities in the government-wide statement of net position and depreciated over their estimated useful lives in the governmentwide statement of activities. Capital assets are defined by the School District as assets with an initial, individual cost of $10,000 and useful life of more than one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. However, all additions to land and buildings are capitalized. Items such as furniture and computer equipment purchased in groups costing more than $10,000 are capitalized by type as a group. Donated capital assets are recorded at estimated acquisition value at the date of donation. Major outlays for capital assets and improvements are capitalized as projects are constructed.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend lives are not capitalized.

Property, plant and equipment is depreciated using the straight line method over the following estimated useful lives:

Assets Land improvements Buildings Building improvements Vehicles Equipment

Years 20-40 25-50 10-30
8-15 5-20

25

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Compensated Absences
Vacation leave must be used in the fiscal year in which it is earned. Accordingly, there is no liability for vacation leave at year end.
Sick and personal leave does not vest with the employee and unused accumulated sick and personal leave is forfeited upon retirement or termination of employment. Therefore, no liability is recorded for non-vesting accumulating rights to receive sick pay benefits.
Long-Term Debt
In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bond using the effective interest method. Bond issuance costs are reported as expenses in the period during which the debt is issued.
In the fund financial statements, the face amount of debt issued, as well as any premium, is reported as other financing sources. Issuance costs, whether or not withheld from actual proceeds, are reported as debt service expenditures.
Deferred Outflows/Inflows of Resources
In addition to liabilities, the financial statements will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The School District has two items that qualify for reporting in this category. The first item, which arises only under a modified accrual basis of accounting, is for the unavailable revenues from property taxes and state grants. Unavailable revenue is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from property taxes and state grants, as these amounts are deferred and will be recognized as an inflow of resources in the period in which the amounts become available. The other item that qualifies for reporting in this category occurs only in the governmental activities. The Governmental Activities (1) a deferred inflow of resources for experience gains or losses from periodic studies by the actuary, which will be amortized over the remaining service period; (2) a deferred inflow of resources for the net difference between projected and actual investment earnings on the pension assets, which will be amortized over a five year period; and (3) a deferred inflow of resources for the changes in actuarial assumptions in relation to the OPEB plan which will be amortized over the remaining service period.
26

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Deferred Outflows/Inflows of Resources - Continued
In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The School District has several items that qualify for reporting in this category. One is the deferred charge on refunding reported in the government-wide statement of net position. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded debt or the refunding debt. The other items all relate to the reporting of the net pension and net OPEB liability reported in the government-wide statement of net position. Governmental Activities report (1) a deferred outflow of resources for the District's actual contributions to the pension plan during the fiscal year ended June 30, 2018 which are subsequent to the measurement date of the net pension liability and will be recognized in fiscal year 2019; (2) a deferred outflow of resources for experience gains or losses related to the pension plan which will be amortized over the remaining service period; (3) a deferred outflow of resources for the changes in actuarial assumptions which will be amortized over the remaining service period; (4) a deferred outflow of resources for the change in the District's proportionate share based on actual contributions towards the pension plan, which will be amortized over the remaining service period; (5) a deferred outflow of resources for the District's actual contributions to the OPEB plan during the fiscal year ended June 30, 2018 which are subsequent to the measurement date of the net OPEB liability and will be recognized in fiscal year 2019; (6) a deferred outflow of resources for the change in the District's proportionate share based on actual contributions towards the school OPEB plan, which will be amortized over the remaining service period; and (7) a deferred outflow of resources for the net difference between projected and actual investment earnings on the OPEB assets, which will be amortized over a five year period.
Fund Equity
Fund equity at the governmental fund financial reporting level is classified as "fund balance." Fund equity for all other reporting is classified as "net position."
Fund Balance Generally, fund balance represents the difference between the assets and liabilities and deferred inflows of resources under the current financial resources measurement focus of accounting. In the fund financial statements, governmental funds report fund balance classifications that comprise a hierarchy based primarily on the extent to which the School District is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. Fund balances are classified as follows:
Nonspendable Fund balances are reported as nonspendable when amounts cannot be spent because they are either (a) not in spendable form (i.e., items that are not expected to be converted to cash) or (b) legally or contractually required to be maintained intact.
27

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Fund Equity - Continued
Restricted Fund balances are reported as restricted when there are limitations imposed on their use either through the enabling legislation adopted by the Board or through external restrictions imposed by creditors, grantors or laws or regulations of other governments.
Committed Fund balances are reported as committed when they can be used only for specific purposes pursuant to constraints imposed by formal action of the Board members through the adoption of a resolution. Only the Board Members may modify or rescind the commitment, also through a resolution.
Assigned - Fund balances are reported as assigned when amounts are constrained by the Board's intent to be used for specific purposes, but are neither restricted nor committed. Through resolution, the Board Members have authorized the Board's Superintendent and Chief Financial Officer to assign fund balances.
Unassigned - Fund balances are reported as unassigned as the residual amount when the balances do not meet any of the above criterion. The Board reports positive unassigned fund balance only in the general fund. Negative unassigned fund balances may be reported in all funds.
Flow Assumptions When both restricted and unrestricted amounts of fund balance are available for use for expenditures incurred, it is the School District's policy to use restricted amounts first and then unrestricted amounts as they are needed. For unrestricted amounts of fund balance, it is the School District's policy to use fund balance in the following order:
Committed Assigned Unassigned
Net Position - Net position represents the difference between assets and deferred outflows of resources and liabilities and deferred inflows of resources in reporting which utilizes the economic resources measurement focus. Net investment in capital assets consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowing used (i.e., the amount that the School District has spent) for the acquisition, construction or improvement of those assets. Net position is reported as restricted using the same definition as used for restricted fund balance as described in the section above. All other net position balances are reported as unrestricted.
The School District applies restricted resources first when an expense is incurred for purposes for which both restricted and unrestricted net position balances are available.
28

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Pensions
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Teachers Retirement System of Georgia (TRS) and additions to/deductions from TRS's fiduciary net position have been determined on the same basis as they are reported by TRS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Public School Employees Retirement System of Georgia (PSERS) and additions to/deductions from PSERS's fiduciary net position have been determined on the same basis as they are reported by PSERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
Other Postemployment Benefits (OPEB)
For purposes of measuring the net OPEB liability (asset), deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the Georgia School Employees Postemployment Benefit Fund (School OPEB Fund) and additions to/deductions from the School District OPEB Fund's fiduciary net position have been determined on the same basis as they are reported by the School OPEB Fund. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, deferred outflows and inflows of resources, and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
NOTE B - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
The School District adopts an annual budget for its General Fund, all special revenue funds, and the Debt Service Fund. The budget is prepared in accordance with provisions of the Quality Basic Education Act, OCGA Section 20-2-167. After the Board of Education has tentatively adopted the budget, the budget is advertised at least one time in a local newspaper of general circulation. At the next regular meeting of the Board after advertisement, the budget is revised as necessary and adopted as the final budget.
29

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018

NOTE B - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY - CONTINUED

The School District employs encumbrance accounting. However, all appropriations lapse at year end and encumbrances are rebudgeted in the subsequent year.

The following functions had excess of actual expenditures over appropriations in the amount shown for the fiscal year ended June 30, 2018:

General Fund:

Support services:

General administration

$

61,773

Business administration

76,536

Student transportation services

1,000,773

Central support services

252,000

Debt service:

Principal

3,019,580

Interest

26,846

These over expenditures were funded by greater than anticipated revenues and other expenditures that were less

than budgeted.

Budgetary/GAAP Basis Reconciliation

In the General Fund, accounting principles used in developing the budget on a budgetary basis differ from those used in preparing financial statements in conformity with generally accepted accounting principles (GAAP). The following table includes the items that were not considered in the budget period and are needed to reconcile the General Fund budget to the amounts reported in accordance with GAAP.

The accounting basis difference between the budget and actual Statement of Revenues, Expenditures and Changes in Fund Balances in the General Fund is reconciled as follows:

Actual Revenues GAAP Basis Community Service Activity (not budgeted) Actual Revenues, Budgetary Basis

$ 413,288,979 (2,139,413)
$ 411,149,566

Expenditures GAAP Basis Community Service Activity (not budgeted) Actual Expenditures, Budgetary Basis

$ 408,671,394 (2,139,413)
$ 406,531,981

Net Change in Fund Balance, Budgetary Basis

$

5,194,308

Net Change in Fund Balance, GAAP Basis

$

5,194,308

30

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018

NOTE C - DEPOSITS AND INVESTMENTS

Total deposits as of June 30, 2018 are summarized as follows:

Investment Deposits with Financial Institutions United States Treasuries Georgia Fund 1 - cash equivalents
Total

Weighted Average Maturity
--76 days 10 days

As reported in the Statement of Net Position: Cash and cash equivalents Investments
Agency fund - Statement of Assets and Liabilities Total

Fair Value $ 71,343,329
38,535,849 37,451,054 $ 147,330,232
$ 107,456,015 38,535,849 1,338,368
$ 147,330,232

Composition
Cash consists of deposits (including certificates of deposit, savings accounts and interest bearing checking accounts) in authorized financial institutions. Georgia Law authorizes the School District to deposit its funds in one or more solvent banks, insured federal savings and loan associations, or insured state chartered building and loan associations. The placement of proceeds from bond issues in certificates of deposits is limited to financial institutions located within this state.
The local government investment pool, "Georgia Fund 1" created by OCGA 36-83-8 is a stable asset value investment pool, which follows Standard and Poor's criteria for AAAf rated money market funds and is regulated by the Georgia Office of the State Treasurer. The pool is not registered with the SEC as an investment company. The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($1 per share). The asset value is calculated weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and determines participants' shares sold and redeemed based on $1 per share. The pool also adjusts the value of its investments to fair market value as of year-end and the School District's investment in Georgia Fund 1 is reported at fair value.
Increases or decreases in the fair value during the year are recognized as a component of interest income.
Interest rate risk. The School District does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates.

31

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018

NOTE C - DEPOSITS AND INVESTMENTS CONTINUED

Custodial credit risk. Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover deposits or will not be able to recover collateral securities that are in the possession of an outside party. State statutes require all deposits and investments (other than federal or state government instruments) to be covered by depository insurance or pledged securities. Amounts that exceed standard depository insurance limits are required to be collateralized either (1) individually by the financial institutions through pledged obligations of the U.S. Government, obligations backed by the full faith and credit of the U.S. Government, obligations of the State of Georgia or other states, or obligations of counties, municipalities, or public authorities of the State of Georgia, or (2) participation in the State of Georgia Secure Deposit Program. As of June 30, 2018, the financial institution holding all of the District's deposits is a participant of the State of Georgia Secure Deposit Program, which is administered by the Office of the State Treasurer, and requires participating banks holding deposits of public funds to pledge collateral at varying rates depending on the tier assigned by the State. As of June 30, 2018, all of the District's bank balances were insured and/or collateralized as defined by GASB and required by State Statutes.

Credit risk. State statutes and the District's policies authorize the District to invest in obligations of the State of Georgia or other states, obligations issued by the U.S. Government, obligations fully insured or guaranteed by the U.S. Government or by a government agency of the United States, obligations of any corporation of the U.S. government, prime bankers' acceptances, the local government investment pool established by state law, repurchase agreements, and obligations of other political subdivisions of the State of Georgia. The District does not have a credit rating policy which provides restrictions or limitations on credit ratings for the District's
investments.

Fair Value Measurements. The District categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs.

The District's recurring fair value measurements as of June 30, 2018 are as follow:

Investment
United States Treasuries
Total investments measured at fair value Investments not subject to level disclosure:
Georgia Fund 1

Level 1 $ 38,535,849 $ 38,535,849

Level 2 $ $ -

Level 3 $ $ -

Fair Value $ 38,535,849
38,535,849
37,451,054

Total investments

$ 75,986,903

32

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018
NOTE C - DEPOSITS AND INVESTMENTS CONTINUED The United States Treasuries classified in Level 1 of the fair value hierarchy is valued using prices quoted in active markets for the investment. The Georgia Fund 1 is an investment pool which does not meet the criteria of GASB Statement No. 79 and is thus valued at fair value in accordance with GASB Statement No. 31. As a result, the District does not disclose its investment in the Georgia Fund within the fair value hierarchy. NOTE D - DUE FROM OTHER GOVERNMENTS Due from other governments consists of grant reimbursements due from federal, state or other grantors for expenditures made but not yet reimbursed. The Georgia Department of Education is the main government agency that grants are due from as of June 30, 2018. NOTE E - TAXES RECEIVABLE Taxes receivable include property taxes and sales taxes due to the School District. Property taxes were levied on July, 31, 2017, based on property values assessed as of January 1, 2017, and were payable on or before November 15, 2017. An interest penalty of 10% per annum is charged on property taxes paid after that date. Property tax receivables are shown net of an allowance for uncollectibles of $28,514 in the General Fund and $3,882 in the Debt Service Fund.
33

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018

NOTE F - CAPITAL ASSETS

Changes in capital assets used in the School District's governmental activities during the year ended June 30, 2018 were as follows:

Governmental activities:
Capital assets, not being depreciated: Land Construction in progress Total
Capital assets, being depreciated: Land improvements Buildings Furniture and equipment Total
Less accumulated depreciation for: Land improvements Buildings Furniture and equipment Total
Total capital assets, being depreciated, net
Governmental activities capital assets, net

Balances July 1, 2017

Increases

Decreases

Transfers

Balances June 30, 2018

$ 100,690,551 $
180,818,584 281,509,135

- $
1,747,667 1,747,667

- $

- $ 100,690,551

-

(179,831,955)

2,734,296

-

(179,831,955)

103,424,847

38,955,796 648,533,413 136,319,733 823,808,942

246,455 47,636,476 6,330,941 54,213,872

(8,651,171) (8,651,171)

179,831,955
179,831,955

39,202,251 876,001,844 133,999,503 1,049,203,598

(19,752,038) (174,581,087) (94,360,476) (288,693,601)

(1,739,348) (18,131,011) (8,504,860) (28,375,219)

6,064,939 6,064,939

-

(21,491,386)

-

(192,712,098)

-

(96,800,397)

-

(311,003,881)

535,115,341

25,838,653

(2,586,232)

179,831,955

738,199,717

$ 816,624,476 $ 27,586,320 $ (2,586,232) $

- $ 841,624,564

Depreciation expense was charged to the functions as follows:
Instruction Support services:
Pupil services General administration Business administration Maintenance and operation of plant Student transportation services Central support services Food services

$ 24,879,320
85,199 2,501 24,099 60,845 1,809,802 1,139,888 373,565 $ 28,375,219

34

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018

NOTE G - LONG TERM DEBT

The following is a summary of long-term debt activity of the School District for the year ended June 30, 2018:

Governmental activities
Bonds payable Bond premiums
Bonds payable, net

Restated Beginning Balance

Additions

Reductions

Ending Balance

Due Within One Year

$ 344,900,000 $ 51,224,766
396,124,766

- $ (29,490,000) $ 315,410,000 $ 30,865,000

-

(7,378,328)

43,846,438

-

-

(36,868,328)

359,256,438 30,865,000

Intergovernmental payable Capital leases Net pension liability Net OPEB liability Claims payable
Total governmental activities long-term liabilities

24,145,000 10,282,314 379,625,926 328,802,416
643,565

60,282,315 30,724,849 1,055,911

(1,225,000) (3,019,580) (83,896,258) (36,576,857) (1,005,212)

22,920,000 7,262,734
356,011,983 322,950,408
694,264

1,290,000 2,359,792
416,558

$ 1,139,623,987 $ 92,063,075 $ (162,591,235) $ 1,069,095,827 $ 34,931,350

Bonds

The District has issued various general obligation bonds for the purpose of financing construction projects of the District. The outstanding issues are as follows:

Is s uance
Series 2004 Series 2013 Series 2014 Series 2016

Inte re s t Rate s

Maturity

Amount Outs tanding

2.35 - 5.00% 4.00 - 5.00% 4.00 - 5.00%
5.00%

February 1, 2019 $ February 1, 2025 February 1, 2033 February 1, 2033
$

11,300,000 117,265,000 90,190,000 96,655,000 315,410,000

In the fiscal year 2013, the School District issued $134,715,000 of general obligation refunding bonds, Series 2013, for the purpose of advance refunding a portion of the balance of the Series 2005 general obligation bonds. The bonds were issued on May 16, 2013 with a premium of $30,949,906 and interest rates ranging from 4% to 5%. The reacquisition price exceeded the net carrying amount of the old debt by $9,053,171. This amount is being amortized over the remaining life of the refunding bonds. The refunding was undertaken to reduce total debt service payments by $24,593,775 and resulted in an economic gain and a present value cash flow of $22,128,494. The proceeds from the refunding bonds were placed into trust, along with certain amounts held in sinking funds, to pay the principal and interest on the refunded bonds as they become due. The amount of outstanding bonds that is considered defeased at June 30, 2018 was $129,300,000.

35

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018

NOTE G - LONG TERM DEBT - CONTINUED

Bonds continued

In the fiscal year 2015, the School District issued $94,170,000 of general obligation bonds, Series 2014, for the purposes of funding construction projects for the School District. The bonds were issued October 23, 2014 with a premium of $15,007,792 and interest rates ranging from 4% to 5%. The interest payments are due semiannually beginning February 1, 2015 and principal payments beginning in 2018. The bonds are scheduled to mature on February 1, 2033.

In the fiscal year 2016, the School District issued $100,830,000 of general obligation bonds, Series 2016, for the purposes of funding construction projects for the District. The bonds were issued February 11, 2016 with a premium of $23,180,790 and an interest rate of 5%. The interest payments are due semiannually beginning August 1, 2016 and principal payments beginning in 2018. The bonds are schedule to mature on February 1, 2033.

At June 30, 2018, principal and interest payments due by fiscal year for the District's Bonds are as follows:

Fiscal Year Ending June 30,
2019 2020 2021 2022 2023 2024-2028 2029-2033 Total

Principal
$ 30,865,000 24,935,000 26,065,000 27,265,000 28,505,000 99,440,000 78,335,000
$ 315,410,000

Inte re s t

Total

$ 15,398,100 $ 46,263,100

13,854,850

38,789,850

12,608,100

38,673,100

11,304,850

38,569,850

9,941,600

38,446,600

30,080,500

129,520,500

10,994,550

89,329,550

$ 104,182,550 $ 419,592,550

36

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018

NOTE G - LONG TERM DEBT - CONTINUED

Intergovernmental Payable

On July 1, 2016, the Forsyth County Public Facilities Authority (the "PFA") issued Revenue Bonds (Forsyth County School District Project), Series 2016 in the aggregate principal amount of $25,320,000. The proceeds from the sale of the Series 2016 bonds were used for the purpose of (a) financing the acquisition, construction and equipping of a high school and (b) paying the costs of issuing bonds.

The Series 2016 bonds are limited obligations of the PFA payable solely from amounts paid to the PFA pursuant to an intergovernmental contract, dated as of July 1, 2016, between the PFA and the District. Under the contract, the PFA agreed to issue the Series 2016 bonds and remit payment of the proceeds from the sale of the bonds to the District. This payment totaled $30,293,992 when the proceeds from the bonds (less the costs of issuance) were combined with the original issue premium of $4,973,992. The District has agreed to (a) acquire, construct, equip and operate the high school, (b) pay the PFA amounts sufficient to enable the PFA to pay the debt service on the Series 2016 bonds, and (c) levy an ad valorem property tax, limited to 20 mills, on all property in the District subject to such tax in order to make the payments to the PFA. Accordingly, the District has recorded the outstanding principal balance of the Series 2016 bonds as an intergovernmental payable to the PFA.

The bonds bear interest at rates ranging from 2.0% - 5.0% and interest payments are due on February 1 and August 1 of each year, commencing on February 1, 2017. Principal payments are due annually, also commencing on February 1, 2017 until the bonds mature in 2031. The District's debt service requirements to maturity on the intergovernmental payable are as follows:

Fiscal Year Ending June 30,
2019 2020 2021 2022 2023 2024-2028 2028-2032 Total

Principal
$ 1,290,000 1,355,000 1,425,000 1,500,000 1,575,000 9,170,000 6,605,000
$ 22,920,000

Inte re s t

$

1,079,950 $

1,015,450

947,700

876,450

801,450

2,742,250

535,400

$

7,998,650 $

Total
2,369,950 2,370,450 2,372,700 2,376,450 2,376,450 11,912,250 7,140,400 30,918,650

37

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018

OTE G - LONG TERM DEBT - CONTINUED

Capital Leases

The School District has entered into several capital lease agreements for financing the acquisition of computer equipment. The lease agreements carry interest rates ranging from 2.57% - 6.35%. The lease agreements qualify as capital leases for accounting purposes (title transfers at the end of the lease term) and, therefore, have been recorded at the present value of the future minimum lease payments as of the date of inception.

The following is a schedule of the future minimum lease payments under the capital lease, and the present value of the net minimum lease payments at June 30, 2018:

Fiscal Year Ending June 30,

2019 2020 2021 Total minimum lease payments Less amount representing interest
Present value of future minimum lease payments

$ 2,546,301 2,546,301 2,546,301 7,638,903 (376,169)
$ 7,262,734

As of June 30, 2017 the School District has various computers with original cost of $9,578,699 and accumulated depreciation of $4,591,966 which are currently financed under a capital lease. The current year amortization expense for the leased assets is included in the depreciation expense for capital assets.

38

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018

NOTE H - INTERFUND TRANSACTIONS

These balances resulted from the time lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made. Interfund transactions as of the year ended June 30, 2018 are as follows:

Receivable Fund
General Fund General Fund

Payable Fund
Capital Projects Fund Nonmajor Govt Funds

Amount

$

283,290

1,506,498

$ 1,789,788

This advance form the General Fund to the School Activities Fund is the result of the General Fund advancing funds for start-up operating costs for school activities at the new schools. The balance is expected to be repaid in annual installments equal to one-fifth of the balance over the next five years. Interfund advances as of the year ended June 30, 2018 are as follows:

Receivable Fund

Payable Fund

Amount

General Fund

Nonmajor Govt Funds

$

560,000

Transfers are used to (1) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations, and (2) move SPLOST proceeds from the Capital Projects Fund to Debt Service Fund to fund debt service as allowed in the referendum. Interfund transfers for the year ended June 30, 2018 are as follows:

Transfer In
Nonmajor Govt Funds Nonmajor Govt Funds

Transfer Out
General Fund Capital Projects Fund

Amount

$

9,378

23,088,800

$ 23,098,178

NOTE I - OPERATING LEASES
The School District is committed under various leases for equipment. These leases are considered for accounting purposes to be operating leases. Lease expenditures for the year totaled $644,058. Future minimum lease payments on these leases are as follows:

Fiscal Year Ending June 30,

2019 2020
Total

644,058 322,029

$

966,087

39

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018

NOTE J - RISK MANAGEMENT
The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disaster. The School District is self-insured for workers' compensation and unemployment claims. The School District purchases commercial insurance for all other risks of loss. Settled claims have not exceeded purchased commercial insurance coverage in any of the past three years. There was no significant reduction in insurance coverage since last fiscal year.

Workers' Compensation Claims
The School District is self-insured for workers' compensation claims. The School District accounts for workers' compensation claims in the General Fund. Workers' compensation claims expenditures and liability are reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. These losses include an estimate of claims that have been incurred but not reported and related claims administration expenses. Changes in the workers' compensation claims liability during the last two fiscal years are as follows:

Beginning of Year Liability

2018 $ 2017 $

643,565 783,969

Current Year Claims Accrual

$

1,055,911

$

1,527,695

Claims Paid

End of year Liability

Due Within One Year

$

1,005,212 $

$

1,668,099 $

694,264 $ 643,565 $

416,558 386,139

Unemployment Claims
The School District is self insured with regard to unemployment compensation claims. These claims are accounted for in the School District's General Fund. Unemployment compensation expenditures and liabilities are reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. These losses include an estimate of claims that have been incurred but not reported and claims administration expenses. Changes in the unemployment compensation liability during the last two fiscal years are as follows:

Beginning of Year Liability

2018 $

-

2017 $

-

Current Year Claims Accrual

$

10,008

$

492

Claims Paid

End of year Liability

$

10,008 $

-

$

492 $

-

40

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018
NOTE K - RETIREMENT PLANS General Information About the Teachers Retirement System of Georgia (TRS) Plan description: All teachers of the School District as defined in 47-3-60 of the Official Code of Georgia Annotated (O.C.G.A.) and certain other support personnel as defined by 47-3-63 are provided a pension through the Teachers Retirement System of Georgia (TRS). TRS, a cost-sharing multiple-employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. TRS issues a publicly available financial report that can be obtained at www.trsga.com/publications. Benefits provided: TRS provides service retirement, disability retirement, and death benefits. Normal retirement benefits are determined as 2% of the average of the employee's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. An employee is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. Ten years of service is required for disability and death benefits eligibility. Disability benefits are based on the employee's creditable service and compensation up to the time of disability. Death benefits equal the amount that would be payable to the employee's beneficiary had the employee retired on the date of death. Death benefits are based on the employee's creditable service and compensation up to the date of death. Contributions: Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. Pursuant to O.C.G.A. 47-3-63, the employer contributions for certain full-time public school support personnel are funded on behalf of the employer by the State of Georgia. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees were required to contribute 6.00 % of their annual pay during fiscal year 2018. The School District's contractually required contribution rate for the year ended June 30, 2018 was 16.81% of annual School District payroll. District contributions to TRS were $39,732,532 for the year ended June 30, 2018.
41

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018

NOTE K - RETIREMENT PLANS - CONTINUED

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

At June 30, 2018, the School District reported a liability for its proportionate share of the net pension liability that reflected a reduction for support provided to the School District by the State of Georgia for certain public school support personnel. The amount recognized by the School District as its proportionate share of the net pension liability, the related State of Georgia support, and the total portion of the net pension liability that was associated with the School District were as follows:

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

$ 356,011,983
430,622 $ 356,442,605

The net pension liability was measured as of June 30, 2017. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2016. An expected total pension liability as of June 30, 2017 was determined using standard roll-forward techniques. The School District's proportion of the net pension liability was based on contributions to TRS during the fiscal year ended June 30, 2017. At June 30, 2017, the School District's proportion was 1.915556%, which was an increase of 0.075491% from its proportion measured as of June 30, 2016.

42

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018

NOTE K - RETIREMENT PLANS - CONTINUED
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions - Continued
For the year ended June 30, 2018, the School District recognized pension expense of $47,337,270 and revenue of $43,337 for support provided by the State of Georgia for certain support personnel. At June 30, 2018, the School District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Net difference between projected and actual earnings on pension plan investments

Deferred Outflows of Resources

Deferred Inflows of Resources

$

- $ 2,449,958

Experience differences

13,317,041

1,343,552

Assumption changes

7,804,224

Changes in proportion and differences between School

District contributions and proportionate share of

contributions

23,301,184

-

School District contributions subsequent to the measurement date
Total

39,732,532

-

$ 84,154,981 $ 3,793,510

School District contributions subsequent to the measurement date of $39,732,532 are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ended June 30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year ended June 30: 2019 2020 2021 2022 2023 Total

$ 6,031,158 26,103,025 14,252,095 (6,228,501) 471,162
$ 40,628,939

43

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018

NOTE K - RETIREMENT PLANS - CONTINUED
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions - Continued

Actuarial assumptions: The total pension liability as of June 30, 2017 was determined by an actuarial valuation as of June 30, 2016 using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation Salary increases
Investment rate of return
Postretirement benefit increases

2.75% 3.75 9.00%, average, including inflation 7.50%, net of pension plan investment expense, including inflation 1.50% semi-annually

Postretirement mortality rates were based on the RP-2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males) for service retirements and dependent beneficiaries. The RP-2000 Disable Mortality Table with future mortality improvement projected to 2025 with Society of Actuaries' projection scale BB (set forward two years for males and four years for females) was used for death after disability retirement. There is a margin for future mortality improvement on the tables used by the System. Based on the results of the most recent experience study adopted by the Board on November 18, 2015, the numbers of expected future deaths are 8-11% less than the actual number of deaths that occurred during the study period for healthy retirees and 9-11% less than expected under the selected table for disabled retirees. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB.
The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014.

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

44

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018

NOTE K - RETIREMENT PLANS - CONTINUED

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions Continued

Asset class
Fixed income Domestic large equities Domestic mid equities Domestic small equities International developed market equities International emerging market equities
Total
* Rates shown are net of the 2.75% assumed rate of inflation

Target allocation
30.00% 39.80 3.70 1.50 19.40 5.60
100.00%

Long-term expected real rate of return*
(0.50)% 9.00 12.00 13.50 8.00 12.00

Discount rate: The discount rate used to measure the total pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that Plan member contributions will be made at the current contribution rate and that employer and State of Georgia contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current Plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

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

School District's proportionate share of the net pension liability

1% Decrease (6.50%)
$ 584,257,433

Current discount rate
(7.50%)
$ 356,011,983

1% Increase (8.50%)
$ 167,989,032

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

45

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018
NOTE K - RETIREMENT PLANS - CONTINUED
General Information About the Public School Employees Retirement System (PSERS)
Plan description: PSERS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly in 1969 for the purpose of providing retirement allowances for public school employees who are not eligible for membership in the Teachers Retirement System of Georgia. The ERS Board of Trustees, plus two additional trustees, administers PSERS. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. PSERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/formspubs/formspubs.
Benefits provided: A member may retire and elect to receive normal monthly retirement benefits after completion of ten years of creditable service and attainment of age 65. A member may choose to receive reduced benefits after age 60 and upon completion of ten years of service.
Upon retirement, the member will receive a monthly benefit of $14.75, multiplied by the number of years of creditable service. Death and disability benefits are also available through PSERS. Additionally, PSERS may make periodic cost-of-living adjustments to the monthly benefits. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contribution, the member forfeits all rights to retirement benefits.
Contributions: The general assembly makes an annual appropriation to cover the employer contribution to PSERS on behalf of local school employees (bus drivers, cafeteria workers, and maintenance staff). The annual employer contribution required by statute is actuarially determined and paid directly to PSERS by the State Treasurer in accordance with O.C.G.A. 47-4-29(a) and 60(b). Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.
Individuals who became members prior to July 1, 2012 contribute $4 per month for nine months each fiscal year. Individuals who became members on or after July 1, 2012 contribute $10 per month for nine months each fiscal year. The State of Georgia, although not the employer of PSERS members, is required by statute to make employer contributions actuarially determined and approved and certified by the PSERS Board of Trustees.
46

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018

NOTE K - RETIREMENT PLANS - CONTINUED

General Information About the Public School Employees Retirement System (PSERS) - Continued

Pension Liabilities and Pension Expense

At June 30, 2018, the School District did not have a liability for a proportionate share of the net pension liability because of the related State of Georgia support. The amount of the State's proportionate share of the net pension liability associated with the School District is as follows:

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

$

3,647,269

The net pension liability was measured as of June 30, 2017. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2016. An expected total pension liability as of June 30, 2017 was determined using standard roll-forward techniques. The State's proportion of the net pension liability associated with the School District was based on actuarially determined contributions paid by the State during the fiscal year ended June 30, 2017.

For the year ended June 30, 2018, the School District recognized pension expense of $735,067 and revenue of $735,067 for support provided by the State of Georgia.

Actuarial assumptions: The total pension liability was determined by an actuarial valuation as of June 30, 2016, using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation Salary increase Investment rate of return

2.75% N/A 7.50%, net of pension plan
investment expense, including inflation

Postretirement mortality rates were based on the RP-2000 Blue-Collar Mortality Table projected to 2025 with projection scale BB (set forward 3 years for males and 2 years for females) for the period after service retirements and for dependent beneficiaries. The RP-2000 Disabled Mortality projected to 2025 with projection scale BB (set forward 5 years for both males and females) was used for death after disability retirement. There is a margin for future mortality improvement in the tables used by the system. Based on the results of the most recent experience study adopted by the Board on December 17, 2015, the numbers of expected future deaths are 9-11% less than the actual number of deaths that occurred during the study period for healthy retirees and 9-11% less than expected under the selected table for disabled retirees. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB.

47

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018

NOTE K - RETIREMENT PLANS - CONTINUED

General Information About the Public School Employees Retirement System (PSERS) - Continued

The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014.

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

Asset class Fixed income Domestic large stocks Domestic mid stocks Domestic small stocks International developed market stocks International emerging market stocks Alternatives
Total
* Rates shown are net of the 2.75% assumed rate of inflation

Target allocation
30.00% 37.20 3.40 1.40 17.80 5.20 5.00
100.00%

Long-term expected real rate of return*
(0.50)% 9.00 12.00 13.50 8.00 12.00 11.00

Discount rate: The discount rate used to measure the total pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that Plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current Plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

48

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018
NOTE K - RETIREMENT PLANS - CONTINUED
Deferred Compensation Plan
Beginning January 1, 1996, the School District established a deferred compensation plan created in accordance with Internal Revenue Code Section 403(b). The Plan is available to all employees who are not eligible to participate in the Teachers' Retirement System of Georgia and permits them to defer a portion of their salary until future years. Participation in the Plan is optional. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency.
Contributions to the Plan are invested exclusively in annuity contracts issued by the Variable Annuity Life Insurance Company (VALIC) and any other life insurance companies approved by the School District for use in the Plan and approved for sale in Georgia in the employees' name. The assets are held by VALIC and not recorded in these financial statements.
The School District will match eligible participants' contributions up to 4% of their salary. Employee annual contributions are limited to maximums established by Internal Revenue Service guidelines. For the years ended June 30, 2018, 2017, and 2016, the School District contributed $322,250, $319,924, and $302,372, respectively, to the Plan on behalf of its employees. For the years ended June 30, 2018, 2017, and 2016, employees contributed $502,063, $510,040, and $451,163, respectively, to the plan.
NOTE L - CONTINGENCIES AND COMMITMENTS
Grant Programs
The School District participates in numerous state and federal grant programs, which are governed by various rules and regulations of the grantor agencies.
Costs charged to the respective grant programs are subject to audit and adjustment by the grantor agencies; therefore, to the extent that the School District has not complied with the rules and regulations governing the grants, refunds of any amounts received may be required and the collectibility of any related receivable at yearend may be impaired. In the opinion of the School District, there are no significant contingent liabilities relating to compliance with the rules and regulations governing the respective grants; therefore, no provision has been recorded in the accompanying financial statements for such contingencies.
Litigation
The School District is a defendant in certain legal actions in the nature of claims for alleged damages to persons and property and other similar types of actions rising in the course of School District operations. While the ultimate results of these legal actions cannot be determined, the School District does not expect that these matters will have a material adverse effect on the financial condition of the School District.
Commitments
The School District has outstanding construction commitments of $16,256,686 as of June 30, 2018. This amount
is not reflected in the basic financial statements.
49

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018
NOTE M - ON-BEHALF PAYMENTS FOR FRINGE BENEFITS
The School District has recognized revenue and expenditures in the amount of $711,013 for retirement contributions and health insurance premiums paid on the School District's behalf as follows:
Paid by the Office of Treasury and Fiscal Services to the Public School Employees Retirement System (PSERS) for Public School Employees Retirement in the amount of $668,475.
Paid by the Georgia Department of Education to the Teachers Retirement System (TRS) for Teachers Retirement in the amount of $42,538.
NOTE N - POSTEMPLOYMENT BENEFITS
Georgia School Personnel Employees Postemployment Health Benefit Fund
Plan Description: The Board participates in the State of Georgia School Employees Postemployment Benefit Fund (the "School OPEB Fund") which is an other postemployment benefit (OPEB) plan administered by the State of Georgia Department of Community Health (DCH). Certified teachers and non-certified employees of the Board as defined in 20-2-875 of the Official Code of Georgia Annotated (O.C.G.A.) are provided OPEB through the School OPEB Fund - a cost-sharing multiple-employer defined benefit postemployment healthcare plan, reported as an employee trust fund of the State of Georgia and administered by a Board of Community Health (DCH Board). Title 20 of the O.C.G.A. assigns the authority to establish and amend the benefit terms of the group health plan to the DCH Board. The School OPEB Fund is included in the State of Georgia Comprehensive Annual Financial Report which is publicly available and can be obtained at https://sao.georgia.gov/comprehensive-annual-financial-reports.
Benefits: The School OPEB Fund provides healthcare benefits for retirees and their dependents due under the group health plan for public school teachers, including librarians, other certified employees of public schools, regional educational service agencies, and non-certified public school employees. Retiree medical eligibility is attained when an employee retires and is immediately eligible to draw a retirement annuity from Employees' Retirement System (ERS), Georgia Judicial Retirement System (JRS), Legislative Retirement System (LRS), Teachers Retirement System (TRS) or Public School Employees Retirement System (PSERS). If elected, dependent coverage starts on the same day as retiree coverage. Medicare-eligible retirees are offered Standard and Premium Medicare Advantage plan options. Non-Medicare eligible retiree plan options include Health Reimbursement Arrangement (HRA), Health Maintenance Organization (HMO) and a High Deductible Health Plan (HDHP). The School OPEB Fund also pays for administrative expenses of the fund. By law, no other use of the assets of the School OPEB Fund is permitted.
Contributions: As established by the Board of Community Health, the School OPEB Fund is substantially funded on a pay-as-you-go basis; that is, annual cost of providing benefits will be financed in the same year as claims occur. Contributions required and made to the School OPEB Fund from the Board were $12,336,767 for the year ended June 30, 2018. Active employees are not required to contribute to the School OPEB Fund.
50

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018

NOTE N - POSTEMPLOYMENT BENEFITS - CONTINUED

OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB
Effective July 1, 2017, the Board implemented the provisions of GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, which significantly changed the Board's accounting for OPEB amounts. The information disclosed in this note is presented in accordance with this new standard.

At June 30, 2018, the Board reported a liability of $322,950,408 for its proportionate share of the net OPEB liability. The net OPEB liability was measured as of June 30, 2017. The total OPEB liability used to calculate the net OPEB liability was based on an actuarial valuation as of June 30, 2016. An expected total OPEB liability as of June 30, 2017 was determined using standard roll-forward techniques. The Board's proportion of the net OPEB liability was actuarially determined based on employer contributions to the School OPEB Fund during the fiscal year ended June 30, 2017. At June 30 2017, the Board's proportion was 2.298586%, which was an increase of 0.079989% from its proportion measured as of June 30, 2016.

For the year ended June 30, 2018, the Board recognized OPEB expense of $20,582,898. At June 30, 2018, the Board reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Net difference between projected and actual earnings on OPEB plan investments Changes in proportion and differences between Board contributions and proportionate share of contributions
Changes in plan assumptions

Deferred Outflows Deferred Inflows of

of Resources

Resources

$

94,457 $

-

10,047,494 -

24,591,850

Board contributions subsequent to the measurement date Total

12,336,767

-

$

22,478,718 $

24,591,850

51

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018

NOTE N - POSTEMPLOYMENT BENEFITS - CONTINUED

Board contributions subsequent to the measurement date of $12,336,767 are reported as deferred outflows of resources and will be recognized as a reduction of the net OPEB liability in the year ended June 30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Year ended June 30: 2019

$ (2,592,276)

2020

(2,592,276)

2021

(2,592,276)

2022

(2,592,276)

2023

(2,615,891)

2024 Total

(1,464,904) $ (14,449,899)

Actuarial assumptions: The total OPEB liability as of June 30, 2017 was determined by an actuarial valuation as of June 30, 2016 using the following actuarial assumptions and other inputs, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2017:

Inflation Salary Increases
Long-term expected rate of return
Healthcare cost trend rate: Pre-Medicare eligible Medicare eligible
Ultimate trend rate Pre-Medicare eligible Medicare eligible
Year of ultimate trend rate

2.75% TRS 3.25-9.00%, including inflation
PSERS N/A 3.88%, compounded annually, net of investment expense, and including inflation
7.75% 5.75%
5.00% 5.00% 2022

52

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018

NOTE N - POSTEMPLOYMENT BENEFITS - CONTINUED

Additionally, there was a change that affected measurement of the total OPEB liability since the prior measurement date. The methodology used to determine employee and retiree participation in the School OPEB Fund is based on their current or last employer payroll location. Current and former employees of public school districts, libraries, regional educational service agencies, and community colleges are allocated to the School OPEB Fund irrespective of retirement system affiliation.

Mortality rates were based on the RP-2000 Combined Mortality Table for Males or Females, as appropriate, with adjustments for mortality improvements based on Scale BB as follows:

For TRS Members: The RP-2000 White Collar Mortality Table projected to 2025 with projection scale BB (set forward 1 year for males) was used for death after service retirement and beneficiaries. The RP2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward 2 years for males and four years for females) was used for death after disability retirement.
For PSERS Members: The RP-2000 Blue Collar Mortality Table projected to 2025 with projection scale BB (set forward 3 years for males and 2 years for females) was used for the period after service retirement and for beneficiaries of deceased members. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward 5 years for both males and females) was used for the period after disability retirement.

The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the pension system, which covered the five-year period ending June 30, 2014.

Projection of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the Board and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculation.

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

Asset class Local Government Investment Pool

Target allocation
100.00%

Long-term expected real rate of return
3.88%

53

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018

NOTE N - POSTEMPLOYMENT BENEFITS - CONTINUED

Discount rate:

The discount rate has changed since the prior measurement date from 3.07% to 3.58%. In order to measure the total OPEB liability for the School OPEB Fund, a single equivalent interest rate of 3.58% was used as the discount rate. This is comprised mainly of the yield or index rate for 20 year tax-exempt general obligation municipal bonds with an average rating of AA or higher (3.56% per the Bond Buyer Index). The projection of cash flows used to determine the discount rate assumed that the current sharing of costs between the employer and the member will continue and that contributions from the employer will be made at the current level as averaged over the last five years, adjusted for annual projected changes in headcount. Projected future benefit payments for all current plan members were projected through 2115. Based on these assumptions, the OPEB plan's fiduciary net position was projected to be available to make OPEB payments for inactive employees through year 2029. Therefore, the long-term expected rate of return on OPEB plan investments was applied to discount projected benefit payments until 2029. The discount rate of 3.58% was the single rate which, when applied to all projected benefit payments, resulted in the same present value of benefit payments when the above discussed calculations are combined. The calculated discount rate of 3.58% was applied to all periods of projected benefit payments to determine the total OPEB liability.

Sensitivity of the Board's proportionate share of the net OPEB liability to changes in the discount rate:

The following presents the Board's proportionate share of the net OPEB liability calculated using the discount rate of 3.58%, as well as what the Board's proportionate share of the net OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (2.58%) or 1-percentage-point higher (4.58%) than the current rate:

Board's proportionate share of the

net OPEB liability

$

1% Decrease (2.58%)

Current discount rate
(3.58%)

383,445,759 $ 322,950,408 $

1% Increase (4.58%)
275,207,323

54

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018

NOTE N - POSTEMPLOYMENT BENEFITS CONTINUED

Sensitivity of the Board's proportionate share of the net OPEB liability to changes in the healthcare cost trend rate:

The following presents the Board's proportionate share of the net OPEB liability calculated using the healthcare cost trend rates of 5.00% to 7.75%, as well as what the Board's proportionate share of the net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower (4.00% to 6.75%) or 1-percentage-point higher (6.00% to 8.75%) than the current rates:

Board's proportionate share of the net OPEB liability

1% Decrease (4.00% to 6.75%)

Current discount rate (5.00% to 7.75%)

1% Increase (6.00% to 8.75%)

$ 267,689,095 $ 322,950,408 $ 394,900,553

NOTE O CHANGE IN ACCOUNTING PRINCIPLE

In conjunction with the implementation of Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, the Board is required to change its accounting treatment of OPEB liabilities and the related OPEB expense. The new standard requires that the Board's proportionate share of the Net OPEB Liability be recorded on the Statement of Net Position. Therefore, in conjunction with the implementation of Statement No. 75, the following restatement was required to the beginning net position of the Governmental Activities to properly recognize the Board's Net OPEB Liability and related deferred outflows of resources for contributions subsequent to the measurement date as of the end of the prior period:

Net Position - beginning, as previously reported
Recognition of the net OPEB liability related to the OPEB plan accordance with GASB Statement No. 75
Recognition of the beginning of the measurement period deferred outflows of resources for contributions subsequent to the measurement period in accordance with GASB Statement No. 75
Net Position - beginning, as restated

Governmental Activities
$ 296,979,321
(328,802,416)
11,985,007 $ (19,838,088)

55

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

School District's proportion of the net pension liability
School District's proportionate share of the net pension liability
State of Georgia's proportionate share of the net pension liability associated with the School District
Total
School District's covered payroll
School District's proportionate share of the net pension liability as a percentage of its covered payroll

2018 1.915556%

2017 1.840065%

2016 1.791631%

2015 1.715709%

$ 356,011,983 $ 379,625,926 $ 272,758,029 $ 216,757,202

430,622

482,768

360,504

303,335

$ 356,442,605 $ 380,108,694 $ 273,118,533 $ 217,060,537

$ 219,950,252 $ 202,223,069 $ 189,117,141 $ 189,374,053

161.86%

187.73%

144.23%

114.46%

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

79.33%

76.06%

81.44%

84.03%

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

56

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

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

2018 $ 39,732,532

2017 $ 31,386,901

2016 $ 28,857,232

2015 $ 24,868,904

2014 $ 21,494,467

39,732,532

$

-

236,362,475

31,386,901

$

-

219,950,252

28,857,232

$

-

202,223,069

24,868,904

$

-

189,117,141

21,494,467

$

-

189,374,053

16.81%

14.27%

14.27%

13.15%

11.35%

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

57

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

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

2018 0.000000%

2017 0.000000%

2016 0.000000%

2015 0.000000%

$

- $

- $

- $

-

3,647,269 $ 3,647,269 $ 14,561,899

4,671,562 $ 4,671,562 $ 13,666,269

2,968,319 $ 2,968,319 $ 12,941,258

2,474,142 $ 2,474,142 $ 12,019,629

N/A 85.69%

N/A 81.00%

N/A 87.00%

N/A 88.29%

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

58

FORSYTH COUNTY BOARD OF EDUCATION
REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF NET OPEB LIABLITY
SCHOOL OPEB FUND FOR THE FISCAL YEAR ENDED JUNE 30

Board's proportion of the net OPEB liability

Board's proportionate share of the net OPEB liability

$

Total

$

Board's covered-employee payroll

$

Board's proportionate share of the net OPEB liability as a percentage of its coveredemployee payroll

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

2018 2.298586% 322,950,408 322,950,408 181,013,656
178.41% 1.61%

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

59

FORSYTH COUNTY BOARD OF EDUCATION
REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS SCHOOL OPEB FUND
FOR THE FISCAL YEAR ENDED JUNE 30
Contractually required contributions Contributions in relation to the contractually required contributions Contribution deficiency (excess) District's covered-employee payroll Contributions as a percentage of covered-employee payroll Note: Schedule is intended to show information for the last 10 fiscal years. Additional years will be displayed as they become available.

2018 $ 12,336,767

12,336,767

$

-

$ 198,472,527

6.22%

60

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION FOR THE FISCAL YEAR ENDED JUNE 30, 2018
Teachers Retirement System of Georgia: Changes of assumptions: In 2010 and later, the expectation of retired life mortality was changed to the RP2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. In 2010, assumed rates of salary increase were adjusted to more closely reflect actual and anticipated experience. On November 18, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the system. Primary among the changes were the updates to rates of mortality, retirement, disability, withdrawal and salary increases. The expectation of retired life mortality was changed to RP-2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males). Public School Employees Retirement System of Georgia: Changes of assumptions: In 2010 and later, the expectation of retired life mortality was changed to the RP-2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. On December 17, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the system. Primary among the changes were the updates to rates of mortality, retirement and withdrawal. The expectation of retired life mortality was changed to the RP-2000 Blue Collar Mortality Table projected to 2025 with projection scale BB (set forward 3 years for males and 2 years for females). School OPEB Fund: Changes of assumptions: In the revised June 30, 2017 actuarial valuation, there was a change relating to employee allocation. Employees were previously allocated based on their Retirement System membership, and currently employees are allocated based on their current employer payroll allocation. In the June 30, 2015 actuarial valuation, decremental and underlying inflation assumptions were changed to reflect the Retirement Systems' experience studies. In the June 30, 2012 actuarial valuation, a data audit was performed and data collection procedures and assumptions were changed.
61

FORSYTH COUNTY BOARD OF EDUCATION
NONMAJOR GOVERNMENTAL FUNDS

SCHOOL ACTIVITY FEDERAL PROGRAMS SCHOOL FOOD SERVICES
DEBT SERVICE

SPECIAL REVENUE FUNDS
To account for funds collected primarily through the fundraising efforts of individual schools, which have been committed by the Board.
To account for federal and state funded grants. These grants are awarded to the School District for the purpose of accomplishing specific educational tasks as defined in the grant agreements. This fund also contains several locally funded programs whose expenditures are limited to specified purposes.
To account for the monies and commodities received from the federal and state governments and the School Food Service's cafeteria sales which are restricted for the purpose of maintaining the School District's breakfast, lunch, and snack programs.
DEBT SERVICE FUND
To account for the accumulation of resources for, and the payment of general long-term debt principal, interest, and related costs. The primary revenue sources are local property taxes levied specifically for debt service.

FORSYTH COUNTY BOARD OF EDUCATION
COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2018

ASSETS
Cash and cash equivalents Receivables:
Accounts Intergovernmental Taxes, net of allowances Inventory
Total assets

School Activity
Fund

Special Revenue Funds
Federal Programs
Fund

School Food Services Fund

Debt Service Fund

Total Nonmajor Governmental
Funds

$ 7,812,380 $

- $

4,310,318 $ 13,568,775 $ 25,691,473

$ 7,812,380 $

2,069,502
2,069,502 $

60,636

-

-

-

-

408,537

220,431

-

4,591,385 $ 13,977,312

60,636 2,069,502
408,537 220,431 $ 28,450,579

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES AND FUND BALANCES

LIABILITIES

Accounts payable

$

Salaries and benefits payable

Due to other funds

Unearned revenue

Advances from other funds

Total liabilities

- $ 560,000 560,000

31,758 $ 545,518 1,390,550
1,967,826

- $ 737,654 115,948 631,842
1,485,444

- $ -

31,758 1,283,172 1,506,498
631,842 560,000 4,013,270

DEFERRED INFLOWS OF RESOURCES Unavailable revenue - property taxes Total deferred inflows of resources

-

-

-

183,845

183,845

-

-

-

183,845

183,845

FUND BALANCES Nonspendable:
Inventory Restricted:
Federal programs Debt service School food services Committed: School activities
Total fund balances

-
-
7,252,380 7,252,380

-
101,676 -
101,676

220,431
2,885,510
3,105,941

-
13,793,467
-
13,793,467

220,431
101,676 13,793,467
2,885,510
7,252,380 24,253,464

Total liabilities, deferred inflows of resources,

and fund balances

$

7,812,380 $

2,069,502 $

4,591,385 $ 13,977,312 $ 28,450,579

62

FORSYTH COUNTY BOARD OF EDUCATION
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2018

REVENUES
State funds Federal funds Local and other funds
Total revenues
EXPENDITURES Instruction
Support services: Pupil services Improvement of instructional services Instructional staff training Federal grant administration General administration School administration Student transportation services Central support services Other support services
Food services operation Debt service: Principal retirement Interest Total expenditures
Excess (deficiency) of revenues over expenditures
OTHER FINANCING SOURCES Transfers in Total other financing sources
Net change in fund balances
FUND BALANCES, beginning of year
FUND BALANCES, end of year

School Activity
Fund

Special Revenue Funds
Federal Programs
Fund

School Food Services Fund

Debt Service Fund

Total Nonmajor Governmental
Funds

$

- $

-

15,760,398

15,760,398

48,500 $ 10,956,361
35,000 11,039,861

368,330 6,491,716 9,408,713 16,268,759

$

-

-

26,997,784

26,997,784

$

416,830

17,448,077

52,201,895

70,066,802

15,278,916
-
15,278,916

5,664,556
3,487,513 746,028 462,383 274,874 60,007 2,464 165,413 107,378 166,666 -
11,137,282

-
17,542,153
17,542,153

-
-
29,490,000 16,872,350 46,362,350

20,943,472
3,487,513 746,028 462,383 274,874 60,007 2,464 165,413 107,378 166,666
17,542,153
29,490,000 16,872,350 90,320,701

481,482

(97,421)

(1,273,394)

(19,364,566)

(20,253,899)

9,378 9,378
490,860

-
(97,421)

-
(1,273,394)

23,088,800 23,088,800
3,724,234

23,098,178 23,098,178
2,844,279

6,761,520 $ 7,252,380 $

199,097 101,676 $

4,379,335

10,069,233

21,409,185

3,105,941 $ 13,793,467 $ 24,253,464

63

FORSYTH COUNTY BOARD OF EDUCATION
SCHEDULE OF EXPENDITURES OF SPECIAL PURPOSE LOCAL OPTION SALES TAX PROCEEDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2018

Acquisition, construction, renovation and equipping of schools
Debt service

Original Estimated
Cost

Current Estimated
Cost

SPLOST IV
Prior Years

Current Year

$ 53,624,925 $ 53,624,925 $

17,250 $

141,375,075

141,375,075

118,557,037

$ 195,000,000 $ 195,000,000 $ 118,574,287 $

18,360,588 $ 3,195,375
21,555,963 $

Total
18,377,838 121,752,412 140,130,250

Acquisition, construction, renovation and equipping of schools
Debt service

Original Estimated
Cost

Current Estimated
Cost

SPLOST V
Prior Years

Current Year

$ 35,528,375 $ 35,528,375 $

159,471,625

159,471,625

$ 195,000,000 $ 195,000,000 $

- $ -
- $

- $ 19,893,425
19,893,425 $

Total
19,893,425 19,893,425

Total SPLOST expenditures Non-SPLOST monies expended in Capital Projects Fund
Total expenditures of Capital Projects Fund $

41,449,388 40,583,927 82,033,315

64

II. SINGLE AUDIT SECTION

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL
STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Superintendent and Members of the Forsyth County Board of Education
Cumming, Georgia
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Forsyth County Board of Education, as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise the Forsyth County Board of Education's basic financial statements, and have issued our report thereon dated December 14, 2018. Our report includes a reference to the change in accounting principle resulting from the implementation of Governmental Accounting Standards Board Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, as of July 1, 2017.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Forsyth County Board of Education's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Forsyth County Board of Education's internal control. Accordingly, we do not express an opinion on the effectiveness of the Forsyth County Board of Education's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
200 GALLERIA PARKWAY S.E., SUITE 1700 ATLANTA, GA 30339-5946 770-955-8600 800-277-0080 FAX 770-980-4489 www.mjcpa.com Members of The American Institute of Certified Public Accountants

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Forsyth County Board of Education's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Atlanta, Georgia December 14, 2018
66

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL
OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE
To the Superintendent and Members of the Forsyth County Board of Education
Cumming, Georgia
Report on Compliance for Each Major Federal Program
We have audited the Forsyth County Board of Education's compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the Forsyth County Board of Education's major federal programs for the year ended June 30, 2018. The Forsyth County Board of Education's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs.
Management's Responsibility
Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of the Forsyth County Board of Education's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the Forsyth County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the Forsyth County Board of Education's compliance.
200 GALLERIA PARKWAY S.E., SUITE 1700 ATLANTA, GA 30339-5946 770-955-8600 800-277-0080 FAX 770-980-4489 www.mjcpa.com Members of The American Institute of Certified Public Accountants

Opinion on Each Major Federal Program In our opinion, the Forsyth County Board of Education complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2018. Report on Internal Control Over Compliance Management of the Forsyth County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the Forsyth County Board of Education's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Forsyth 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 a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
68

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
Atlanta, Georgia December 14, 2018
69

FORSYTH COUNTY BOARD OF EDUCATION
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2018

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U.S. Department of: Pass-Through From Georgia Department of Education Child Nutrition Cluster Food and Nutrition Program Food Services School Breakfast Program - Cash Assistance National School Lunch Program: Cash Assistance Non-Cash Assistance (Commodities)
Total Child Nutrition Cluster
Commercial Warehouse Grant
Farm to School Grant
Total U.S. Department of Agriculture
Education, U.S. Department of: Pass-Through from Georgia Department of Education Special Education Cluster (IDEA) Part B-Special Education Flow Through Flow Through High Cost Fund Pool Preschool Preschool
Total Special Education Cluster (IDEA)
Title I, Part A Improving Academic Achievement Improving Academic Achievement Distinguished District Awards
Total Title I, Part A
Title I - C Migrant Education
Title II Improving Teacher Quality Improving Teacher Quality Advance Placement Advance Placement
Total Title II
Title III Immigrant Immigrant Limited English Proficient Limited English Proficient
Total Title III
(continued)

CFDA NUMBER

PASSTHROUGH ENTITY ID NUMBER

EXPENDITURES IN PERIOD

10.553 10.555 10.555
10.560 10.579

18185GA324N1099 $ 18185GA324N1100 18185GA324N1100
185GA904N2533 185GA350N8103

1,262,806 4,074,089 1,037,459 6,374,354
26,256 91,106 6,491,716

84.027 84.027 84.027 84.173 84.173

H027A160073 H027A170073 H027A170073 H173A160081 H173A170081

84.010 84.010 84.010

S010A160010 S010A170010 S010A160010

84.011
84.367 84.367 84.367 84.367

S011A160011
S367A160001 S367A170001 S367A160001 S367A170001

84.365 84.365 84.365 84.365

S365A160010 S365A170010 S365A160010 S365A170010

1,511,475 5,190,957
116,778 28,300
(172)
6,847,338
341,328 2,305,661
24,949
2,671,938
2,179
183,950 329,879
7,450 9,100
530,379
6,792 10,739 158,237 190,622
366,390

70

FORSYTH COUNTY BOARD OF EDUCATION
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2018

FUNDING AGENCY PROGRAM/GRANT

CFDA NUMBER

Education, U.S. Department of (Continued): Pass-Through from Georgia Department of Education (Continued) Title IV Student Support & Academic Enrichment

84.424A

Total Title IV

Education of Homeless Children and Youth Education of Homeless Children and Youth

84.196 84.196

Total Education of Homeless Children and Youth

Vocational Education-Basic Grants to States Program Improvement CTE Perkins Carryover CTE Perkins Plus

84.048 84.048 84.048

Total Vocational Education-Basic Grants to States

Total U.S. Department of Education

Health and Human Services, U.S. Department of Mentors and Motivators

93.959

Defense, U.S. Department of R.O.T.C Program

12.357

Pass-Through from Office of the State Treasurer Payments to States in Lieu of Real Estate Taxes

12.112

Total U.S. Department of Defense

Total Expenditures of Federal Awards

See accompanying notes to the Schedule of Expenditures of Federal Awards.

PASSTHROUGH ENTITY ID NUMBER

EXPENDITURES IN PERIOD

S424A170011
S196A160011 S196A170011

64,835 64,835
4,215 48,524 52,739

V048A170010 V048A170010 V048A170010

170,878 9,452
20,000
200,330
10,736,128

B08TI010061

114,844

Unknown

105,970

Unknown

274,717

380,687

$

17,723,375

71

FORSYTH COUNTY BOARD OF EDUCATION
NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2018

Notes to the Schedule of Expenditures of Federal Awards

N/A - Not Available

Expenditures for the School Breakfast Program were not maintained separately and are included in the National School Lunch Program.

(1)

The amount shown for the Food Distribution Program represents the Federally assigned value of nonmonetary assistance

for donated commodities received and/or consumed by the system during the current fiscal year.

The Forsyth County Board of Education did not provide Federal Assistance to any Subrecipient.

BASIS OF PRESENTATION

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

The School District did not utilize the 10% de minimis indirect cost rate.

The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements of Federal Awards . Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of the financial statements.

72

FORSYTH COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018

SECTION I SUMMARY OF AUDITOR'S RESULTS

Financial Statements Type of report the auditor issued on whether the financial statements audited were prepared in accordance with GAAP

Unmodified

Internal control over financial reporting: Material weaknesses identified?

_____ yes X no

Significant deficiencies identified?

_____ yes X none reported

Noncompliance material to financial statements noted?

_____ yes X no

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

_____ yes X no

Significant deficiencies identified?

_____ yes X none reported

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

Unmodified

Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a) ?

_____ yes X no

Identification of major federal programs:

CFDA Number

Name of Federal Program or Cluster

10.553 and 10.555 84.010

Child Nutrition Cluster Title I, Part A Cluster

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

$750,000

Auditee qualified as low-risk auditee?

X yes _____ no

73

None reported. None reported.

FORSYTH COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018
SECTION II FINANCIAL STATEMENT FINDINGS AND RESPONSES
SECTION III FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS

74

None reported.

FORSYTH COUNTY BOARD OF EDUCATION
STATUS OF PRIOR YEAR FINDINGS FOR THE FISCAL YEAR ENDED JUNE 30, 2018

75