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

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

GILMER COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

B

STATEMENT OF ACTIVITIES

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

H

STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

I

NOTES TO THE BASIC FINANCIAL STATEMENTS

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

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

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 3 SCHEDULE OF STATE REVENUE

GILMER COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTION 1 FINANCIAL SCHEDULES SUPPLEMENTARY INFORMATION 4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 5 ALLOTMENTS AND EXPENDITURES GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM
SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER M A l l E R S BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WlTH GOVERNMENTAUDITING STANDARDS INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WlTH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WlTH OMB CIRCULAR A-133
SECTION Ill AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I Fl NANClAL

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

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
March 18,2011

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Gilmer County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information (ExhibitsA through I) of the Gilmer County Board of Education, as of and for the year ended June 30, 2010, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Gilmer County Board of Education's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in GovernmentAuditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Gilmer County Board of Education, as of June 30, 2010, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
The Gilmer County Board of Education has not presented Management's Discussion and Analysis that accounting principles generally accepted in the United States of America has determined is necessary to supplement, although not to be part of, the basic financial statements.

In accordance with Government Auditing Standards, we have also issued our report dated March 18, 2011, on our consideration of the Gilmer County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessingthe results of our audit.

Accounting principles generally accepted in the United States of America require that the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on page 27, is 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 the audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Gilmer County Board of Education's financial statements as a whole. The accompanying supplementary information consists of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Audits of States, focal Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the financial statements. Such information is the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole.

A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24.

Respectfully submitted,

4

~ u l s e lWl . Hinton, CPA, CGFM State Auditor

GILMER COUNTY BOARD OF EDUCATION

GILMER COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30,2010
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Local Inventories Capitalized Bond and Other Debt Issuance Costs Capital Assets. Non-Depreciable Capital Assets. Depreciable (Net of Accumulated Depreciation)
~ o t Aas~sets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Interest Payable Contracts Payable Retainages Payable Long-Term Liabilities
Due With~nOne Year Due In More Than One Year
Total Liabilities
NET ASSETS
Invested i n Capital Assets. Net of Related Debt Restricted for
Bus Replacement Continuation of Federal Programs Debt Service Capital Projects Unrestricted
Total Net Assets
Total Liabilities and Net Assets

EXHIBIT" A
GOVERNMENTAL ACTIVITIES

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

GILMER COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDEDJUNE 30,2010

EXHIBIT "6'

EXPENSES

PROGRAM REVENUES

OPERATING

CHARGES FOR

GRANTS AND

SERVICES

CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

GOVERNMENTAL ACTIVITIES

~nstruct~on Support Services
Pupil Services Improvement of Instructional Serv~ces Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterpr~seOperations Food Services interest on Short-Term and LoneTerm Debt

Total Governmental Activities

$ 46,240,918.40 $

548,115.11 $ 22,275,415.31 $

-23,417,387.98

General Revenues Taxes Propem Taxes For Maintenance and Operations Other Taxes Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Sales Tax Investment Earnings Miscellaneous

Total General Revenues

$

30.176.095.94

Change in Net Assets
Net Assets - Beginning of Year

$

6,758,707.96

Net Assets - End of Year

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

GILMER COUNN BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30.2010

EXHIBIT "C"

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

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

LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Salaries and Benefits Payable Contracts Payable Retainages Payable Depos~tsand Deferred Revenue
Total Liabilities
FUND BALANCES
Reserved for: Bus Replacement Continuation of Federal Programs Debt Serv~ce Capital Projects
Unreserved Designated for Future Capital Expenditures Designated for Student Activities Undesignated Reported in: General Fund
Total Fund Balances

Total L~abilitiesand Fund Balances

$ 19,416,812.99 $ 10,650,135.39 $

98,939.37 $

30,165,887.75

The notes to the basic financial statements are a n integral part of this statement.
- 3 -

GILMER COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30,2010
Total Fund Balances - Governmental Funds (Exhibit"C"]
Amounts reportedfor GovernmentalActivities in the Statement of Net Assets are different because: Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of: Land Construction in Progress Land Improvements Build~ngs Equipment Accumulated Depreciation Total Capital Assets Taxes that are not available to pay for current period expendituresare deferred in the funds. Long-Term Liabilities, including Bonds Payable, are not due and payable In the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of: Bonds Payable Accrued Interest Cap~taLl eases Payable Capitalized Bond and Other Debt Issuance Costs Unamortized Bond Premiums Total Long-Term Liabilities
Net Assets of Governmental Activities (Exhibit"A")
The notesto the basic financial statements are an integral part of this statement. -4-

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

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvementof Instructional Services Educational Media Services General Administration School Administration Bus~nessAdministration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Food Services Operation
Capital Outlay Debt Services
Pr~nc~pal Dues and Fees Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES [USES)
Proceeds of Bonds Premiums on Bonds Sold Transfers In Transfers Out
Total Other Financing Sources (Uses)
Net Change In Fund Balances
Fund Balances- Beginning

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

$ 47,430.280.21 $ 3,850,114.39 $

$ 44,307.573.83 $ $ 3.122.706.38 $

1,719,521.17 $ 2,130,593.22 $

$

0.18 $ 5,584,736.72 $

$ 3,122,706.56 $ 7,715,329.94 $

DEBT SERVICE
FUND

TOTAL

203.95 $

51.280.598.55

3,917,375.00 $ -3,917,171.05 $

49,944,470.00 1,336,128.55

4,002,372.70 $ 85.201.65 $

9,587.109.60 10.923.238.15

Fund Balances- Ending

The notes to the basic financial statementsare an integralpart of this statement. -5-

GILMER COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30,2010
Total Net Change in Fund Balances - GovernmentalFunds (Exhibit"En)
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Capital Outlays are reported as expenditures in GovernmentalFunds. However, in the Statement of Activities, the cost of Capital Assets is allocated over thelr estimated useful lives as depreciation expense. In the current period, these amounts are: Capital Outlay Depreciation Expense Excess of Capital Outlay over Depreciation Expense
Taxes reported in the Statement of Activitiesthat do not provide current financial resourcesare not reported as revenues in the funds.
The net effect of various miscellaneoustransactions involvingcapital assets (i.e., sales, trade-ins, donations, and disposals) is to decrease net assets.
Bond proceeds provide current financial resourcesto GovernmentalFunds; however, issuing debt increases Long-Term Liabilities in the Statement of Net Assets. In the current period, proceeds were receivedfrom: General Obligation Bonds ISSued, Including a Premium of $587,109.60
Bond issuance costs, deferred gains on refundings and similar items when debt is first issued are reported as an expenditure in GovernmentalFunds. but are reported as deferred charges on the Statement of Net Assets and amortized over the term of the debt, usingthe straight-line method. The details of this difference in the current period are as follows: Deferral of Bond Issuance Costs
Repaymentof Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-TermLiabilities in the Statement of Net Assets. In the current year, these amounts consist of: Bond Principal Retirements
Some items reported in the Statement of Activities do not require the use of current financial resourcesand therefore are not reported as expenditures in Governmental Funds. These activities consist of: Net Increase in Accrued Interest Amortization of Bond Premium Total Additional Expenditures
Change in Net Assets of GovernmentalActivities (Exhibit"B")
The notes to the basicfinanc~asl tatements are an integral part of this Statement. -6-

GILMER COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS JUNE 30,2010

ASSETS Cash and Cash Equivalents

PRIVATE PURPOSE TRUSTS

LIABILITIES Funds Held for Others
NET ASSETS Held in Trust for Private Purposes
Total Liabilities and Net Assets

EXHIBIT "G"
AGENCY FUNDS

The notes t o the basic financial statements are a n integral part of this statement.

(This page left intentionally blank)

GILMER COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FIDUCIARY FUNDS YEAR ENDED JUNE 30.2010
ADDITIONS Investment Earnings Interest Change in Net Assets
Net Assets - Beginning
Net Assets - Ending

EXHIBIT " H "
PRIVATE PURPOSE TRUSTS

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

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

EXHIBIT "I"

NOTE 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Gilmer County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Gilmer County Board of Education.
Distrfct-wide Statements: The Statement of Net Assets and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenuesthat are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column.
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for all financial resources of the School District, except those resources required to be accounted for in another fund.

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

EXHIBIT "I"

District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST) and Bond Proceeds to be used for the acquisition, construction or renovation of major capital facilities.
Debt Service Fund accounts for taxes (sales) legally restricted for the payment of general long-term principal, interest and paying agent's fees.
The School District reports the following fiduciary fund types:
Private Purpose Trust fund reports trust arrangements under which principal and income benefit a select number of students to receive the Watkins Scholarship.
Agency funds account for assets held by the School District as an agent for various funds, governments or individuals.
BASIS OF ACCOUNTING
The basis of accounting determines when transactions are reported on the financial statements. The District-wide (governmental and fiduciary) fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, and grants. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources.
The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.

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

EXHIBIT "I"

The State of Georgia reimburses the School District for teachers' salaries and operating costs through the Quality Basic Education Formula Earnings program (QBE). Generally teachers are contracted for the school year (July 1- June 30) and paid over a twelve month contract period, generally September 1through August 31. In accordance with the respective rules and regulations of the QBE program, the State of Georgia reimburses the School District over the same twelve month period in which teachers are paid. At June 30, the amount of teachers' salaries incurred but not paid until July and August of the subsequent year are accrued. Since the State of Georgia recognizes its QBE liability for the July and August salaries at June 30, the School District recognizes the same QBE as a receivable and revenue, consistent with symmetrical recognition.
NEW ACCOUNTING PRONOUNCEMENTS
In fiscal year 2010, the School District adopted the Governmental Accounting and Standards Board
(GASB) Statement No. 51,Accounting and Reporting for Intangible Assee. The provisions of this
Statement generally require retroactive reporting for intangible assets acquired after June 30, 1980, with the exception of those intangible assets that have indefinite useful lives and those that are considered internally generated.
In addition, the School District adopted GASB Statement No. 53, Accounting and Financial Reporting for Derivative Instruments. The provisions of this Statement impacts disclosure regarding derivative instruments entered into by the state and local governments. Derivative disclosures, if any, will be identified in Note 3.
CASH AND CASH EQUIVALENTS
Composition of Deposits Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations.
l NVESTMENTS
Composition of Investments lnvestments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interestearning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
1. Obligations issued by the State of Georgia or by other states,
2. Obligations issued by the United States government,
3. Obligations fully insured or guaranteed by the United States government or a United States government agency,
4. Obligations of any corporation of the United States government,

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

EXHIBIT "I"

5 . Prime banker's acceptances,
6. The Georgia Fund 1administered by the State of Georgia, Office of Treasury and Fiscal Services,
7. Repurchase agreements, and
8. Obligations of other political subdivisions of the State of Georgia.
The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks.

RECEIVABLES

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

PROPERTY TAXES

The Gilmer County Board of Commissioners fixed the property tax levy for the 2009 tax digest year (calendar year) on September 30, 2009 (levy date). Taxes were due on December 20, 2009 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2009 tax digest are reported as revenue in the governmental funds for fiscal year 2010. The Gilmer County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2010, for maintenance and operations amounted to $23,090,675.04.

The tax millage rate levied for the 2009 tax year (calendar year) for the Gilmer County Board of Education was as follows (a mill equals $1per thousand dollars of assessed value):

School Operations

16.25 mills

SALES TAXES
Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $3,780,322.18 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.

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

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

EXHIBIT "I"

CAPITAL ASSETS

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

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

Capitalization

Estimated

Policy

Useful Life

Land Land Improvements Buildings and Improvements Equipment Intangible Assets

All

$

10,000.00

$

10,000.00

$

10,000.00

$ 250,000.00

N/A 15 to 8 0 years 2 5 to 8 0 years
5 to 5 0 years
x.

*Dependent on the following factors: the School District's expected use of the asset; the expected useful life of another related asset or group of assets; and any legal, regulatory or contractual provisions that may limit the useful life.
Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives, with the exception of intangible assets which are amortized.

Amortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, copyrights and internally generated software is computed using the straight-line method over the estimated useful lives of the assets, generally 10 to 20 years.

GENERAL OBLIGATION BONDS

The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide financial statements, bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are reported as deferred charges and amortized over the term of the debt for the 2010 general obligation bonds. Bond issuance costs for the 2004 general obligation bonds were recognized as costs during the fiscal year the bonds were issued. To conform to generally accepted accounting principles, issuance costs should be deferred over the life of the bonds using straight-line method. The effect of this deviation is deemed to be immaterial to the presentation of the basic financial statements.

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

EXHIBIT "I"

In the fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financingsources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Assets.
NET ASSETS
The School District's net assets in the District-wideStatements are classified as follows:
Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.
Restricted net assets -These represent resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation of Federal Programs, debt service, and capital projects in accordance with restrictions imposed by external third parties.
Unrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes.
FUND BALANCES
Unreserved - Designated Designatedfund balances represent tentative plans for future use of financial resources.
The Board approved at their August 2010 meeting designations as follows: Bus Replacement $1,850,000.00; Major Maintenance/CustodiaI Equipment $250,000.00; and Technology Improvement $2,150,000.00.
USE OF ESTIMATES
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.
NOTE 3: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS
Official Code of Georgia Annotated (O.C.G.A.) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face

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

EXHIBIT "I"

value of such surety bond and the market value of securities pledged shall be equal to not less than 1 1 0 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. Section 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 percent of the daily pool balance.

Acceptable security for deposits consists of any one of or any combination of the following:

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

CATEGORIZATION OF DEPOSITS

Custodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. At June 30, 2010, the bank balances were $24,106,253.57. The amounts exposed t o custodial credit risk are classified into three categories as follows:

Category 1Category 2 -
Category 3 -

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

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

Custodial Credit Risk Category

Bank Balance

Total

$ 21,819,854.12 -16-

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

EXHIBlT "I"

CATEGORIZATION OF INVESTMENTS
At June 30, 2010, the carrying value of the School District's total investments was $9.13, which is materially the same as fair value. This investment consisted entirely of funds invested in the Georgia Fund 1,formerly referred to as LGIP, administered by the State of Georgia, Office of Treasury and Fiscal Services which are not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office of Treasury and Fiscal Services for the Georgia Fund 1(Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1is disclosed in the State of GeorgiaComprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at htt~://www.audits.~a.~ov/SGD/cafr.html.
The Primary Liquidity Portfolio consists of Georgia Fund 1which is not registered with the SEC as an investment company but does operate in a manner consistent with the SEC's Rule 2a-7 of the
Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per
share. The pool is an AAAm rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1may not exceed 6 0 days. The weighted average maturity for Georgia Fund 1on June 30,2010, was 46 days.
- NOTE 4: NON-MONETARYTRANSACTIONS
The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories

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

EXHIBIT "I"

NOTE 5: CAPITAL ASSETS

The following is a summary of changes in the Capital Assets during the fiscal year:

Governmental Activities Capital Assets, Not Being Depreciated:
Land Construct~onWork In Progress

Balances July 1, 2009

Increases

Decreases

Balances June 30, 2010

$ 3,894,274.83

$ 3,894,274.83

Total Capital Assets, Not Being Depreciated $ 4,587,309.99 $ 1,127,440.45 $ 693,035.16 $ 5,021,715.28

Capital Assets, Being Depreciated: Build~ngsand Improvements Equipment Land Improvements

$ 64,046,282.45 $ 1,073,014.36

4,831,965.38

21,600.00 $

2,421,768.36

$ 65,119,296.81

186,920.00

4,666,645.38

2,421,768.36

Less: Accumulated Depreciation: Buildings and Improvements Equipment Land Improvements

9,606,765.13 2,790,740.34 1,283,498.29

1,292,064.28 330,116.79 93,923.41

185,125.25

10,898,829.41 2,935,731.88 1.377.421.70

Total Capital Assets, Being Depreciated, Net $ 57,619,012.43 $ -621,490.12 $

1,794.75 $ 56,995.727.56

Governmental Activity Capital Assets - Net

$ 62,206,322.42 $ 505,950.33 $ 694,829.91 $ 62.017.442.84

Capital assets being acquired under capital leases as of June 30, 2010, are as follows:
Governmental Funds

Buildings and lmprovements Land Less: Accumulated Depreciation

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

EXHIBIT "I"

Current year depreciation expense by function is as follows:
Instruction Support Services
Pupil Services General Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Food Services

$

1,335,397.54

NOTE 6: INTERFUNDTRANSFERS

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

Transfer to

Transfers From

District-wide

Capital

Debt Service

Projects

Fund

General Fund Debt Service Fund

Total

Transfers are used to (1)move sales tax revenue from the Capital Project fund to the Debt Service fund to pay principal and interest on bonds; and (2) to correct cash between the Debt Service fund and General Fund.
NOTE 7: RISK MANAGEMENT
The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation.
The School District participates in the Georgia School Boards Association Risk and Insurance Management System, a public entity risk pool organized on July 1,1994, to develop and administer a plan to reduce risk of loss on account of general liability, motor vehicle liability, or property damage, including safety engineering and other loss prevention and control techniques, and to administer one or more groups of self-insurance funds, including the processing and defense of claims brought against members of the system. The School District pays an annual premium to the system for its general insurance coverage which includes property, boiler and machinery (including coverage for flood and earthquake), general liability (including coverage for sexual harassment, molestation and abuse), errors and omissions, crime and automobile risks. Payment of excess insurance for the system varies by line of coverage.

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

EXHIBIT "I"

The School District is self-insured with regard to unemployment compensation claims. A premium is charged when needed by the General Fund to each user program on the basis of the percentage of that fund's payroll to total payroll in order to cover estimated claims budgeted by management based on known claims and prior experience. The School District accounts for claims with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.

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

Claims and

Beginningof Year

Changes in

Claims

End of Year

Liability

Estimates

Paid

Liability

The School District participates in the Georgia School Boards Association Workers' Compensation Fund, a public entity risk pool organized on July 1,1992, to develop, implement, and administer a program of workers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Fund for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Fund with the Safety National Casualty Corporation to provide coverage for potential losses sustained by the Fund in excess of $500,000.00 loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided by Safety National Casualty Corporation to provide coverage for potential losses sustained by the Fund in excess of $500,000.00 loss per occurrence, up to $2,000,000.00.
The School District has purchasedsurety bonds to provide additional insurance coverage as follows:

Position Covered

Amount

Superintendent Principals

NOTE 8: LONG-TERM DEBT CAPITAL LEASES

The Gilmer County Board of Education entered into an agreement dated June 29, 2006, with the Georgia School Board Association for the construction and subsequent lease of the purchase of three tracts of real property and the renovation of a fieldhouse. Under the terms of the agreement, the School District will make annual payments through November 1,2015.

GILMER COUNN BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "I"

GENERAL OBLIGATION DEBT OUTSTANDING

General Obligation Bonds currently outstanding are as follows:

Purpose

Interest Rates

General Government -Series 2004 General Government -Series 2010

2.50% - 5.00%
2.00% - 4.00%

Amount
$ 4,250,000.00 9,000,000.00

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

Balance July 1, 2009

Additions

Governmental Funds

Balance

Deductions

June 30, 2010

Due Within One Year

G. 0.Bonds Capital Leases Bond Premiums Amortized

$ 7,800.000.00 $ 9,000,000.00 $ 3,550,000.00 $ 13,250,000.00 $ 4,250,000.00

2,560.000.00

2,560,000.00

270.509.89

587,109.60

216,474.67

641,144.82

181,667.74

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

Fiscal Year Ended June 30:

Caoital Leases

Principal

Interest

Total Principal and lnterest Fiscal Year Ended June 30:
Total Principal and lnterest

General Obligation Debt

Principal

Interest

Unamortized Bond Premium

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

EXHIBIT "I"

NOTE 9: ON-BEHALF PAYMENTS

The School District has recognized revenues and costs in the amount of $131,428.82 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.

Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $88,339.87

Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $25,035.94

Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $18,053.01

NOTE 10: SIGNIFICANT COMMITMENTS

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

Project

Unearned Executed Contracts

HVAC Controls - All Schools except Clear Creek Middle School
Paving Project - All Schools except Clear Creek Middle School and MountainView ElementarySchool

The amounts described in this note are not reflected in the basic financial statements.
NOTE 11: SIGNIFICANT CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.
The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the basic financial statements.

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

EXHIBIT "I"

NOTE 12: POST-EMPLOYMENT BENEFITS

GEORGIA SCHOOL PERSONNEL EMPLOYEES POST-EMPLOYMENT HEALTH BENEFIT FUND

Plan Description. The Georgia School Personnel Post-employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fun provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Insurance Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (OCGA) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board).

Funding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately 25 percent of the cost of health insurance coverage.

Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rate is established to fund both the active and retired employee health insurance plans based on projected "pay-as-you-go" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not t o exceed thirty years.
The combined rates for the active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30, 2010:

For certificated teachers, librarians and regional educational service agencies:

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

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

For non-certificated school personnel:

July 2009 -June 2010

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

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

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

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

EXHIBIT "I"

Fiscal Year

Percentage Contributed

Required Contribution

NOTE 13: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
Plan Description. The TRS is a cost-sharing multiple-employer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.
On October 25, 1996, the Board created the Supplemental Retirement Benefits Plan of the Georgia Teachers Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1,1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits.
TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 3 0 years of creditable service, regardless of age, or after 1 0 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service.
Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 4 0 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 6 0 or by 7% for each year or fraction thereof by which the member has less than 3 0 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available.
Funding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 1 0 years of service. If a member terminates with less than 10 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2010, were 5.25% of annual salary. The member contribution rate will increase to 5.53% effective July 1,2010. Employer contributions required for fiscal year 2010 were 9.74% of annual salary as required by the June 30, 2007, actuarial valuation. The employer contribution rate will increase to 10.28% effective July 1,2010.

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

EXHIBIT "I"

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

Fiscal Year

Percentage Contributed

Required Contribution

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GILMER COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30.2010

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Chargesfor Servlces Investment Earnlng Miscellaneous
Total Revenues
EXPENDITURES
Current lnstructlon Support Services Pup11Services Improvement of InstructionalServices Educat~onaMl edla Services General Administration School Administration Business Administration Maintenance and Operatlon of Plant Student Transportatlon Services Central Support Services Other Support Servlces Enterprise Operations Food S e ~ l c e sOperatlon
Debt Service
Total ExDendltUreS
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Other Sources Other Uses
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning
Adjustments
Fund Balances - Endlng

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

Notes t.g theSchemle of Revenues, ExggndlUres and Changes In Fund Balances Budget and Actual (1) Original and Final Budget amounts do not ~ncludebudgeted revenues or expendltures of the varlous pr~nclpaal ccounts. The accompanylngschedule of revenues, expend~turesand changes In fund balances budget and actual IS presented on the modlfled accrual bas6 of accounting whlch IS the basis of accounting used In the presentation of the fund flnanclal statements.
See notes to the basic financial statements.

SCHEDULE "1"
ACTUAL AMOUNTS

GILMER COUNlY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDEDJUNE 30.2010

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agr~culture,U. S. Department of Chlld Nutrltlon Cluster Pass-Through From Georgla Department of Educatlon Food Servlces School Breakfast Program Nat~onaSl chool Lunch Program
Total U. S. Department of Agriculture
Education. U. S. Department of Educatlon Technology State Grants Cluster Pass-Through From Georgia Department of Education Educatlon Technology State Grants
School Improvement Grants Cluster Pass-Through From Georgia Department of Educatlon School Improvement Grants
Special Education Cluster Pass-Through From Georgia Department of Educat~on Special Educatlon ARRA Grants t o States ARRA- Preschool Grants Grants to States Preschool Grants
Total Speclal Educatlon Cluster
State Fiscal Stabillzat~onFund Cluster Pass-Through From Georgia Department of Education ARRA- Education State Grants
T~tleI, Part A Cluster Pass-Through From Georg~aDepartment of Educatlon ARRATltle I Grants to Local Educational Agencies Title I Grants t o Local Educational Agencies
Total Title I, PanA Cluster
Other Programs Pass-Through From Georg~aDepartment of Education Career and Technical Education - Bas~cGrants to States English Language Acquisition Grants Improving Teacher Quality State Grants Mlgrant Education -State Grant Program Readlng First State Grants
Safe and Drug-Free Schools and Communltles - State Grants
Total Other Programs
Total U. S. DeDartment of Educatlon

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

GILMER COUNW BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDEDJUNE 30,2010

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Health and Human Services, U. S. Department of Child Care and Development Fund Cluster Pass-ThroughFrom Bright From the Start: Georgja Department of Early Care and Learning ARRA - Child Care and Development Block Grant
Head Start Cluster Pass-ThroughFrom Ninth District Opponunity Head Start
Other Programs Pass-ThroughFrom Georgia Department of Human Resources Block Grants for Prevent~onand Treatment of Substance Abuse
Total U. S. Depanment of Health and Human Services

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

Total Federal Financial Assistance
N/A = Not Available
Notes to the Schedule of EXDendltureS of Federal Awards
(1) Includes the Federally ass~gnedvalue of donated cornmod~tresfor the Food Donauon Program In the amount of $213,838.22.
(2) Expend~turesfor the funds earned on the School Breakfast Program ($383,432.42) were not ma~ntalnedseparately and are Included In the 2010 National School Lunch Program.
Major Programsare Identifled by an aster~sk(*) in front of the CFDA number.
The School Dlstrict d ~ ndot prov~deFederal Ass~stanceto any Subrec~p~ent.
The accompanylngschedule of expend~turesof Federal awards includes the Federal grant activity of the Gilmer County Board of Education and is presented on the modified accrual basis of accountlngwhich is the basis of accounting used In the presentation of the fund financial statements.

See notes to the bas~cfinancial statements.

(This page left intentionally blank)

GILMER COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDEDJUNE 30,2010
GRANTS Bright From the Start: Georgia Department of Early Care and Learning PreKindergarten Program
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program
Primary Grades - Early Intervention (1-3) Program
Upper Elementary Grades (4-5) Program
Upper Elementary Grades - Early Intervention (4-5) Program
Middle School (6-8) Program High School General Education ( 4 1 2 ) Program Vocational Laboratory ( 9 1 2 ) Program Students with Dlsabllitles
Gifted Student - Category VI
Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Sparslty Nursing Services Vocational Supervisors Food Services Vocational Education Amended Formula Adjustment Other State Programs Dual Enrollment Health Insurance National Teacher Certification Preschool Handicapped Program Teachers' Retirement Virtual Schools Grant
Office of Treasuly and Fiscal Services Public School Employees Retirement
CONTRACT Human Resources, Georgia Department of Family Connection
See notes to the basic financial statements.

SCHEDULE " 3
GOVERNMENTAL FUND TYPE GENERAL FUND

GILMER COUNlY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDEDJUNE 30.2010

SCHEDULE " 4

PRO) EST

ORIGINAL ESTIMATED
COST (1)

CURRENT EST1MATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3)(4)

AMOUNT MPENDED IN PRIOR YEARS (3) (4)

PROJECT STATUS

2004 SPLOST
(1)Acqulrlng, construct~ngand equlpplng a new
mlddle school In Gllmer County and a multipurpose faclllty and addltlonal classrooms at G~lmerCounty HlghSchool,

$ 19,684,310.00 $ 24,850,773.59

$ 24,850,773.59 Completed

(2) acqu~ringclear t ~ t l eto certain real propertythrough payment or prepayment of all amounts due pursuant to an installment sale agreement for sald property;

1.740.000.00

1,732.458.00

1,732.458.00 Completed

(3) addlng to, remodeling, renovatlng. Improving, and equlpplng extstlngeducatlonal bu~ldings. properties, and factlit~es,lncludlng physlcal eduCatlOn and athletlc facll~t~oefs the School D~strlct:

2,269,607.00

3,151,305.83 $ 228,139.98

2,923,165.85 Completed

(4) developingwater and sewer infrastructure to serve the property of the School District;

500.000.00

Cancelled

( 5 ) acqulringany necessary personal property and equipment, including computers and related technology, coplers, energy management systems, heating and alr condltlonlng systems, llghting and slmllar equipment.

806.083.00

1,402,765.07

151,839.22

1,250,925.85 Completed

2009 SPLOST (1) A new elementaryschool;

9,000,000.00

9.000.000.00

63,630.46

Ongolng

(2) athlet~cfac~l~t~aet Gs llmer County Hlgh School lncludlnga baseball f~eldr,estroom and concesslon areas, bleachers, dr~vewaysand parklng lots, a new sewer llne at the football fleldhouse, paving around the f~eldhouse,fenclng, vlS!tOr restrooms and concesslonareas at the football fleld, and storage facllltles for athletlc equipment and basketball goals.

(3) athletlc faclllties at Clear Creek Middle School includinga f~elhouse,restrooms, and concession areas;

Ongoing

(4) payoff and acqulsltion of clear tltle to the f~eldhouse at Gilmer County High School;

Ongolng

(5) paylngoff and acquiring clear title to approximately 172.12 acres of real propew adjacent to Georg~aHighway 382;

Ongoing

(6) a technology buildlng with admlnlstratlve oftices and a bus and equipment maintenance complex;

Ongoing

(7) renovations and Improvementsat Gllmer County Hlgh School, G~lmerCounty M~ddleSchool. Ellljay ~iementarySchool, Ell~jayPr~marySchool, Oakland Elementary School. Crossroad Alternative School/~EC,Mountaln V~ewElementary School, pre kindergarten facllltles, and construction of new faclllties for an alternatlve/evenlng/post seconda~y school:

Ongoing

GILMER COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDEDJUNE 30.2010

PROJECT
(8) a new f ~ n earts center;
(9) real and personal property, includlngslte Improvements, safety and securlty equipment. renovations and Improvement to facllltles, and technology upgrades In accordance wlth the f a c ~ l ~ t ~pleasns of the School Dlstrlct, as the same may be revlsed In accordancewlth the needs of the School District

ORIGINAL ESTIMATED
COST (I)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3)(4)

AMOUNT EXPENDED IN PRIOR YEARS (3) (4)

PROJECT STATUS

1,625.000.00

1,625,000 00

28,518 70

Ongoing

(1) The School Dlstrlct's origtnal cost estimate as specified In the resolution calllngfor the imposition of the Local OptlOn Sales Tax.

(2) The School District's current estlmate of total cost for the projects. Includes ail cost from project Inception to completion.
(3) The voters of G~lrnerCounty approved the ~mposit~onf a 1%sales tax to fund the above projects and retire assoc~ateddebt Amounts expended for these projects may lnclude sales tax proceeds, state, local propem/ taxes and/or other funds over the lhfe of the projects.

(4) In additlon to the expendituresshown above, the School District has incurred interest to provldeadvance funding for tne above projects as follows:

Prior Years

$ 2,887,375.00

Current Year

Total

See notes to the bas~cfinancial statements.

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GILMER COUNTY BOARD OF EDUCATION
GENERAL FUND- QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM
YEAR ENDED JUNE 30.2010

SCHEDULE " 5

DESCRIPTION
D~recltnstructlonal Programs Kindergarten Program Klnderganen Program Early lntervent~onProgram Primary Grades (1-3) Program Prlmary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades Early Interventlon (4-5) Program Middle School (6-8) Program High School General Educatlon ( 9 12) Program Vocahonal Laboratory (9-12) Program Students wlth Dlsabllities Category 11 Category Ill Category IV Category V G~ftedStudent Category Vl Remedlal Educatlon Program Alternative Education Program English Speakers of Other Languages (ESOL)
TOTAL DIRECT INSTRUCTIONALPROGRAMS
Medla Center Program Staff and Professional DeVelODment

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

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

TOTAL QBE FORMULA FUNDS

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

See notes to the baslc flnanclal statements.

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
March 1 8 , 2 0 1 1

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Gilmer County Board of Education
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Gilmer County Board of Education as of and for the year ended June 30, 2010, which collectively comprise Gilmer County Board of Education's basic financial statements and have issued our report thereon dated March 18, 2011. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Gilmer County Board of Education's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressingour opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Gilmer County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Gilmer County Board of Education's internal control over financial reporting.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis.
Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.

Com~lianceand Other Matters

As part of obtaining reasonable assurance about whether Gilmer County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing
Standards.

This report is intended solely for the information and use of management, members of the Gilmer

County Board of Education, others within the entity, Federal awarding agencies and pass-through

entities and is not intended to be and should not be used by anyone other than these specified

parties.

Respectfully submitted,

-

~u.!isell W. Hinton, CPA, CGFM State Auditor

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

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1- 156
Atlanta, Georgia 30334-8400
March 1 8 , 2 0 1 1

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

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

Internal Control Over Com~liance
Management of Gilmer County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to Federal programs. In planning and performing our audit, we considered Gilmer County Board of Education's internal control over compliance with the requirements that could have a direct and material effect on a major Federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Gilmer County Board of Education's internal control over compliance.
A deficienq in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a Federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a Federal program will not be prevented, or detected and corrected, on a timely basis.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above.
This report is intended solely for the information and use of management, members of the Gilmer County Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
fRus II W. Hinton, CPA, CGFM
Sta Auditor

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

GILMER COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30,2010
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. PRIOR YEAR FEDERAL AWARD FINDINGS AND OUESTIONED COSTS No matters were reported.

SECTION IV FINDINGS AND QUESTIONED COSTS

GILMER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONEDCOSTS
YEAR ENDEDJUNE 30,2010

I SUMMARY OF AUDITOR'S RESULTS

Financial Statements

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

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

Noncompliance material to financial statements noted:

Federal Awards

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

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

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

Identification of major programs:

CFDA Numbeds)

Name of Federal Program or Cluster Title I, Part A Cluster Special Education Cluster State Fiscal Stabilization Fund Cluster

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

Auditee qualified as low-risk auditee?

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

No matters were reported.

Ill FEDERALAWARD FINDINGS AND QUESTIONEDCOSTS

No matters were reported.

Unqualified N 0
None Reported
No None Reported
Unqualified
$300,000.00 Yes