Gordon County Board of Education, Calhoun, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2008

GORDON COUNTY BOARD OF EDUCATION
CALHOUN, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

GORDON COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

1

B

STATEMENT OF ACTIVITIES

2

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

4

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

5

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

6

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

7

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

8

H

STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

9

I

NOTES TO THE BASIC FINANCIAL STATEMENTS

11

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

27

GORDON COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

28

3 SCHEDULE OF STATE REVENUE

29

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

30

5 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

31

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133

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

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

SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
July 29, 2009

Honorable Sonny Perdue, Governor Members ofthe General Assembly Members ofthe State Board of Education
and Superintendent and Members ofthe Gordon County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through I) of the Gordon County Board of Education, as of and for the year ended June 30, 2008, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe Gordon County Board ofEducation's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in GovernmentAuditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Gordon County Board of Education's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.

2008ARL-11

In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position ofthe governmental activities, each major fund, and the aggregate remaining fund information ofthe Gordon County Board ofEducation, as ofJune 30, 2008, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued our report dated July 29, 2009, on our consideration of the Gordon 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 ofthat 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 assessing the results of our audit.

Management's Discussion and Analysis and the Schedule ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through ix and page 27 respectively, are not a required part ofthe basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it.

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Gordon County Board of Education's basic financial statements. The accompanying supplementary information which consist of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U.S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Pro.fit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.

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

Respectfully submitted,

.

w~

Ru ell W. Hinton, CPA, CGFM State Auditor

RWH:as 2008ARL-11

GORDON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008
INTRODUCTION
Our discussion and analysis of the Gordon County School District's financial performance provides an overview of the School District's financial activities for the fiscal year ended June 30, 2008. 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 to enhance their understanding of the School District's financial performance.
The reporting model is a combination of both government-wide financial statements and fund financial statements. The basic financial statements contain three components:
1) District-wide financial statements including the Statement of Net Assets and the Statement of Activities, which provide both short-term and long-term overviews of the School District's finances.
2) Fund financial statements including the balance sheets that provide a greater level of detail and focus on how well the School District has performed in the short-term in the most significant or major funds.
3) Notes to the Basic Financial Statements.
FINANCIAL HIGHLIGHTS
Key financial highlights for fiscal year 2008 are as follows:
On the District-wide financial statements:
Total assets of the School District exceeded liabilities by $69.2 million. This represented an increase of $1.3 in net assets when compared to the prior year.
The School District had $71.2 million in expenses relating to governmental activities; only $43.5 million of these expenses were offset by program specific charges for services, grants and contributions. However, general revenues (primarily property and sales taxes) of $29.0 million were adequate to provide for these programs.
As stated above, general revenues accounted for $29.0 million or about 40% of all revenues totaling $72.5 million. Program specific revenues in the form of charges for services, grants, and contributions accounted for the balance of these revenues.
On the fund financial statements:
Among major funds, the General Fund had $65.4 million in revenues and $66.0 million in expenditures.

GORDON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008
OVERVIEW OF THE FINANCIAL STATEMENTS
This annual report consists of three parts; management's discussion and analysis (this section), the basic financial statements and required supplementary information. The basic financial statements include two levels of statements that present different views of the School District. These include the District-wide and fund financial statements.
The District-wide financial statements include the 'Statement of Net Assets' and 'Statement of Activities'. These statements provide information about the activities of the School District presenting both short-term and long-term information about the School District's overall financial status.
The fund financial statements focus on individual parts of the School District, reporting the School District's operation in more detail. The 'Governmental Funds' statements disclose how basic services are financed in the short-term as well as what remains for future spending. The 'Fiduciary Funds' statements provide information about the financial relationships in which the School District acts solely as a trustee or agent for the benefit of others. In the case ofthe Gordon County School District, the General Fund, Capital Projects Funds, and Debt Service Funds are all considered to be major funds. The School District has no nonmajor funds as defined by GASB Statement 34 for the purposes of this report.
The financial statements also include notes that explain some of the information in the statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the financial statements. Additionally, other supplementary information (not required) is also presented that further supplements understanding of the financial statements.
District-wide Statements
Since Gordon County School District has no operations that have been classified as "Business Activities", the District-wide financial statements are basically a consolidation of all of the School District's operating funds into one column called governmental activities. In reviewing the District-wide financial statements, a reader might ask the question, are we in a better financial position now than last year? The 'Statement of Net Assets' and the 'Statement of Activities' provide 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 which is similar to the accounting used by most private-sector companies. This basis of accounting takes into account all of the current year's revenues and expenses regardless of when cash is received or paid.
These two statements report the School District's net assets and any changes in those assets. The change in net assets is important because it tells the reader that, for the School District as a whole, the financial position of the School District has improved or diminished. The causes of this change may be the results of many factors, including those not under the School District's control, such as the property tax base, facility conditions, required educational programs, student-teacher ratios, and other factors.
11

GORDON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008
The 'Statement of Net Assets' and the 'Statement of Activities' reflect 100% of the School District's governmental activities.
Fund Financial Statements
The School District uses many funds or sub-funds to account for a multitude of financial transactions during the fiscal year. The fund financial statements presented in this report provide detail information about the School District's significant or major funds. As discussed previously, the School District has no nonmajor Funds as defined by generally accepted accounting principles.
Governmental Funds - Most of the School District's activities are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at yearend available for spending in future periods. These funds are reported using the modified accrual method of accounting which measures cash and all other financial assets that can be readily converted to cash. The governmental fund statements provide a detailed short-term view of the School District's general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The differences between government activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds are reconciled in the financial statements.
Fiduciary Funds - The School District is the trustee, or fiduciary, for assets that belong to clubs, organizations and others within the principals' accounts. The School District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The School District excludes these activities from the Districtwide financial statements because it cannot use these assets to finance its operations.
FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT AS A WHOLE
As discussed previously, the Statement of Net Assets provides a financial snapshot of the School District as a whole. The reader can think of the School District's net assets as the difference between its assets (i.e., what the School District owns) and its liabilities (i.e., what the School District owes) at the end of a fiscal year. This balance represents one way to measure the School District's financial health or its financial position. In the case of the Gordon County School District, assets exceeded liabilities by $69.2 million at June 30, 2008.
To better understand the School District's actual financial position and ability to deliver services in future periods, it is necessary to review the various components of the net asset category. For example, of the $69.2 million of net assets, about $1.7 million was restricted for continuation of Federal programs, capital projects and debt service. Accordingly, these funds were not available to meet the School District's ongoing obligations to citizens and creditors.
In addition, the School District also had $60.7 million, net of related debt, invested in capital assets (e.g., land, buildings, and equipment). The School District uses these capital assets to
lll

GORDON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008

provide educational services to students within geographic boundaries served by the School District. Because of the very nature and on-going use of the assets being reported in this component of net assets, it must be recognized that this portion of the net assets is not available for future spending.

The remaining balance of unrestricted net assets of $6.8 million may be used to meet the School District's ongoing obligations to citizens and creditors.

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

Table 1 Net Assets

Governmental Activities

Fiscal

Fiscal

Year 2008

Year 2007

Assets Current and Other Assets Capital Assets, Net

$ 42,425,495 62,194,094

$ 50,561,053 55,101,445

Total Assets

$ 104,619,589 $ 105,662,498

Liabilities Current and Other Liabilities Long-Term Liabilities

$ 9,867,741 25,511,400

$ 7,192,360 30,537,399

Total Liabilities

$ 35,379,141 $ 37,729,759

Net Assets Invested in Capital Assets, Net of Related Debt Restricted Unrestricted

$ 60,660,110 1,701,711 6,878,627

$ 49,073,410 11,108,598 7,750,731

Total Net Assets

$ 69,240,448 $ 67,932,739

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

IV

GORDON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008

Table 2 Change in Net Assets

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

Governmental Activities

Fiscal

Fiscal

Year 2008

Year2007

$ 1,825,238 41,439,767 197 045

$ 1,196,633 39,145,545 3,480,625

Total Program Revenues

$ 43,462,050 $ 43,822,803

General Revenues:

Taxes

Property Taxes

For Maintenance and Operations

$ 13,645,683

For Debt Service

-1,560

Railroad Cars

24,826

Sales Taxes

Special Purpose Local Option Sales Tax

6,245,991

Intangible Recording Tax

484,757

Real Estate

94,545

Grants and Contributions not Restricted to

Specific Programs

5,544,659

Investment Earnings

1,311,443

Miscellaneous

1,693,570

$ 13,121,567 -1,254
6,490,557 520,378 156,839
4,577,590 1,065,285 2,587,652

Total General Revenues

$ 29,043,914 $ 28,518,614

Total Revenues

$ 72,505,964 $ 72,341,417

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

$ 44,691,833
2,786,487 2,661,731 1,363,516
829,751 3,271,746
638,888 5,183,215 3,047,706
601,848 379,250
785,950 69,054
3,757,864 1,129,416

$ 39,630,295
2,506,548 2,298,520 1,240,339
706,252 2,965,221
555,988 5,274,143 2,595,298
486,512 514,565
754,730 51,780 3,335,550 335,203

Total Expenses

$ 71,198,255 $ 63,250,944

Increase in Net Assets

$ 1,307)Q2 $ 9,09QA73

V

GORDON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008

Cost of Providing Services

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

Table 3 Governmental Activities

Total Cost of Services

Fiscal

Fiscal

Year2008 Year2007

Net Cost of Services

Fiscal

Fiscal

Year2008 Year2007

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

$44,691,833 $39,630,295 $13,741,922

2,786,487 2,661,731 1,363,516
829,751 3,271,746
638,888 5,183,215 3,047,706
601,848 379,250

2,506,548 2,298,520 1,240,339
706,252 2,965,221
555,988 5,274,143 2,595,298
486,512 514,565

1,842,939 1,801,403
565,497 -118,334 1,774,595 617,367 3,222,280 1,621,085 582,011 356,405

69,054 785,950 3,757,864 l,129.416

51,780 754,730 3,335,550 335,203

68,297 430,134 101,186 1,129.416

$7,250,026
1,787,10 I 1,524,913
550,736 -175,945 1,570,896 542,915 3,425,145 989,612 467,181 479,035
51,780 754,730 -125,188 335,203

Total Expenses

$1 I, 128,255 $63,25Q,24~ $21,136,203 $12,~28,HQ

The table above shows that while the total cost of providing services increased 12.5% from the prior year, the net cost to the local taxpayers increased 42.8% from the prior year. In other words, as compared to the proceeding fiscal year, a greater percentage of the cost of providing services is falling to the taxpayers of Gordon County.

FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT'S FUNDS

Information about the School District's governmental funds is presented starting on Exhibit "C" of this report. Governmental funds are accounted for using the modified accrual basis of accounting. The governmental funds had total revenues of $72.8 million and total expenditures of $83 .5 million in fiscal year 2008. Total governmental fund balances of almost $3 I.0 million at June 30, 2008, decreased $10.8 million from the prior year. This decrease in fund balance occurred primarily because of capital projects and debt payments on prior year bonds.

VI

GORDON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008
General Fund Budget Highlights
The School District's budget is prepared according to Georgia Law. The most significant budgeted fund is the General Fund. During the course of fiscal year 2008, the School District amended its general fund budget as needed.
The School District budget is adopted at the aggregate level and maintained at the program, function, object, and site levels to facilitate budgetary control. The budgeting systems are designed to control the total budget, but provide flexibility to meet the ongoing programmatic needs. The budgeting systems are also designed to control total site budgets but provide flexibility for site management as well.
For the General Fund, the final actual revenues of $65.4 million were over the final budgeted amount of $60.0 million by $5.4 million. This difference (final actual vs. final budget) was primarily attributable to revenues for property taxes over final budget of $821,000, revenues for State Funds over final budget of $2.5 million, revenues for charges for services over final budget of $666,000, and miscellaneous revenues over final budget of $1.6 million. The School District traditionally estimates revenue on a conservative basis to avoid shortfalls in actual revenues. Additionally, the School District did not include revenues for school activity accounts (included in miscellaneous revenues) in the final budget.
The General Fund's final actual expenditures of $66.0 million exceeded the final budget amount of $62.5 million by $3.5 million. This difference (final actual vs. final budget) was primarily attributable to actual expenditures for instruction exceeding the final budget of $751,000, expenditures for pupil services exceeding the final budget by $946,000, expenditures for other support services exceeding final budget of almost $296,000 and expenditures for food services exceeding final budget of almost $409,000, and expenditures for community service exceeding final budget of $721,000. Additionally, actual expenditures of $174,000 for debt service were not included in the School District's final budget.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
At fiscal year ended June 30, 2008, the School District had $62.2 million invested in capital assets, all in governmental activities. Table 4 reflects a summary of these balances net of accumulated depreciation as compared to the prior fiscal year.
Vil

GORDON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008

Table 4 Capital Assets (Net of Depreciation)

Governmental Activities

Fiscal

Fiscal

Year 2008

Year 2007

Land Construction in Progress Land Improvements Buildings and Improvements Equipment

$ 1,665,556 9,331,058 3,356,221
45,093,798 2,747,461

$ 1,665,555 263,550
3,557,822 46,768,634
2,845,884

Total

$ 62!1941094 $ 551101A45

Additional information about the School District's Capital Assets can be found in the Notes to the Basic Financial Statements.

Debt

At June 30, 2008, the School District had over $25.5 million in total debt outstanding which was consisted of $25 million in bond debt, $278,000 in unamortized premiums and $233,000 in compensated absences debt. Table 5 summarizes the School District's debt as compared to the prior fiscal year.

Table 5 Debt at June 30

Governmental Activities

Fiscal

Fiscal

Year 2008

Year 2007

Bonds Payable Capital Leases Compensated Absences Unamortized Premium

$ 25,000,000
233,394 278,006

$ 29,800,000 167,012 213,793 356,594

Total

$ 25!511.400 $ 30j37,399

At June 30, 2008, the School District's assigned bond rating was "AA+" as determined by Standard and Poor's.

Additional information about the School District's debt can be found in the Notes to the Basic Financial Statements.

Vlll

GORDON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008
FACTORS BEARING ON THE DISTRICT'S FUTURE Currently known circumstances that are expected to have a significant effect on financial position or results of operations in future years are as follows:
The School District will continue to face challenges from the implementation of the A+ Education Reform Act, which mandates lower teacher to student ratios. The School District will also continue to be impacted by the remedial actions required for under performing schools under the No Child Left Behind Act. In the midst of these challenges, the School District remains confident in the ability to maximize resources to provide the best possible educational experience for all of our students.
Capital Improvements - The School District plans capital improvements as future capital needs arise due to increased student population and facility repair and maintenance needs. To that end, September 2006, the citizens of Gordon County approved a special purpose local option sales tax in conjunction with a $25 million issuance of general obligation bonds that provides for new capital projects that include construction of a new elementary school that will open in the fall of 2009, anew middle school, current major renovations at Gordon Central High School as well as additions and modifications to all existing schools. The School District remains steadfast in its commitment to deliver quality education to the students of Gordon County.
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 Mrs. Gail Farriba, Finance Director, Gordon County Board of Education, P.O. Box 12001, Calhoun, Georgia 30703. You may also email your questions to Mrs. Farriba at gfarriba@gcbe.org.
ix

GORDON COUNTY BOARD OF EDUCATION

GORDON COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2008
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Interest Taxes State Government Federal Government Other Inventories Deferred Charges Capital Assets Land Construction in Progress Land Improvements Buildings Equipment Less: Accumulated Depreciation
Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Deferred Revenue Contracts Payable Retainages Payable Other Current Liabilities Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Continuation of Federal Programs Capital Projects Debt Service Unrestricted
Total Net Assets
Total Liabilities and Net Assets
The notes to the basic financial statements are an integral part of this statement.
1 -

EXHIBIT"A"

GOVERNMENTAL ACTIVITIES

$

21,753,709.88

10,851,706.00

13,029.92 2,924,074.51 4,741,438.73 1,604,674.87
133,853.89 106,674.62 296,332.39

1,665,556.40 9,331,057.79 5,447,616.20 62,138,983.29 8,188,911.76 -24,578,031.31

$ ====10:04.=61=9.!:,5=8=8=.9=4

$

982,536.98

7,030,191.61

196,842.00

1,073,413.25

559,843.00

24,914.20

4,698,588.11 20,812,811.85

$

35,379,141.00

$

60,660,110.02

666,784.74 831,268.66 203,657.91 6,878,626.61

$

69,240,447.94

$ ==1=04=,6=19_,5=8=8=:;94=

GORDON COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2008

GOVERNMENTAL ACTIVITIES
Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Food Services Enterprise Operations Community Services Interest on Short-Term and Long-Term Debt
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations For Debt Services Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Intangible Recording Tax Real Estate Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Change in Net Assets
Net Assets - Beginning of Year

EXPENSES

CHARGES FOR SERVICES

$ 44,691,832.79
2,786,487.37 $ 2,661,731.06 1,363,515.58
829,750.60 3,271,745.75
638,888.55 5,183,215.12 3,047,705.54
601,848.21 379,250.46
3,757,863.77 69,053.90
785,950.50 1,129,416.25
$ 71,198,255.45 $

261,372.80
1,212,666.01 351,198.85
1,825,237.66

Net Assets - End of Year

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

EXHIBIT"B"

PROGRAM REVENUES OPERATING GRANTS AND
CONTRIBUTIONS

CAPITAL GRANTS AND CONTRIBUTIONS

NET{EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

$

30,949,910.79

682,175.51 860,327.87 798,018.65 948,084.52 1,497,150.88
21,521.18 1,960,935.25 1,229,575.17 $
19,836.92 22,845.03

2,444,011.50 756.50
4,617.34

$

41,439,767.11 $

$ 197,045.00 197,045.00 $

-13,741,922.00
-1,842,939.06 -1,801,403.19
-565,496.93 118,333.92 -1,774,594.87 -617,367.37 -3,222,279.87 -1,621,085.37 -582,011.29 -356,405.43
-101,186.26 -68,297.40 -430, 134.31 -1,129,416.25
-27,736,205.68

$

13,645,682.48

-1,559.84

24,826.19

6,245,990.46 484,757.43 94,545.26
5,544,658.58 1,311,442.79 1,693,570.76

$

29,043,914.11

$

1,307,708.43

67,932,739.51

$ ===6=9=,2=40=,44===7=.9==4

- 3.

GORDON COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2008

EXHIBIT"C"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Interest Taxes State Government Federal Government Other Inventories
Total Assets

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 5,896,819.81 $ 15,653,242.94 $

51,706.00

10,800,000.00

596,808.24 4,741,438.73 1,604,674.87
133,853.89 106 674.62

13,029.92 1,050,100.47

203,647.13 $ 21,753,709.88 10,851,706.00

10.78

13,029.92 1,646,919.49 4,741,438.73 1,604,674.87
133,853.89 106,674.62

$ 13,131,976.16 $ 27,516,373.33 $ 203,657.91 $ 40,852,007.40

LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Salaries and Benefits Payable Deferred Revenue Contracts Payable Retainages Payable Other Current Liabilities
Total Liabilities
FUND BALANCES
Reserved for: Continuation of Federal Programs Inventories Debt Service Capital Projects
Unreserved Designated for Self-Insurance Designated for School Activity Accounts Undesignated Reported in: General Fund Capital Projects
Total Fund Balances

$

548,840.61 $

7,030,191.61

196,842.00

24 914.20 $ 7,800,788.42 $

433,696.37
1,073,413.25 559,843.00
2,066,952.62

$ 982,536.98 7,030,191.61 196,842.00 1,073,413.25 559,843.00 24 914.20
$ 9867 741.04

$

560,110.12

106,674.62

$

$ 24,278,958.41

183,470.70 798,838.84

3,682,093.46

1,170,462.30

$ 5 331187.74 $ 25 449,420.71 $

$ 203,657.91

560,110.12 106,674.62 203,657.91 24,278,958.41

183,470.70 798,838.84

3,682,093.46 1,170,462.30

203,657.91 $ 30,984,266.36

Total Liabilities and Fund Balances

$ 13,131,976.16 $ 27,516,373.33 $ 203,657.91 $ 40,852,007.40

The notes to the basic financial statements are an integral part of this statement. -4-

GORDON COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2008

EXHIBIT "D"

Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Assets are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of:
Land Construction in Progress Land Improvements Buildings Equipment Accumulated Depreciation
Total Capital Assets
Some of the School District's property tax revenues will be collected after year-end but are not available soon enough to pay for the current period's expenditures.
Other Long-Term Assets are not available to pay for current period expenditures and therefore, are deferred on the Statement of Net Assets.
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 Compensated Absences Unamortized Bond Premiums
Total Long-Term Liabilities

$ 30,984,266.36

$ 1,665,556.40 9,331,057.79 5,447,616.20
62,138,983.29 8,188,911.76
-24,578,031.31

62,194,094.13

1,277,155.02 296,332.39

$ -25,000,000.00 -233,393.71 -278,006.25

-25,511,399.96

Net Assets of Governmental Activities (Exhibit "A")

$ 69,240,447.94

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

GORDON COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2008

EXHIBIT"E"

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

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 14,176,424.51 $
41,425,016.36 5,756,454.33 1,825,237.66 227,430.27 1,998,166.85

$ 6,245,990.46
927,790.94 23,668.99

$ 65.408,729.98 $ 7,197.450.39 $

491.55 $ 156,221.58

14,176,916.06 6,245,990.46 41,425,016.36 5,756,454.33 1,825,237.66 1,311,442.79 2,021,835.84

156,713.13 $ 72,762,893.50

$ 41,153,490.08 $ 1,063,664.48

$ 42,217,154.56

2,754,328.07 2,653,328.11 1,365,840.05
809,715.21 3,266,928.37
637,149.06 5,006,D15.08 2,768,061.77
584,901.37 379,250.46 3,595,079.33
69,053.90 785,348.92

12,112.00 361.53
12,564.16 101,851.37
10,426,815.24

2,766,440.07 2,653,328.11 1,366,201.58
822,279.37 3,266,928.37
637,149.06 5,107,866.45 2,768,061.77
584,901.37 379,250.46 3,595,079.33
69,053.90 785,348.92 10,426,815.24

167,012.36 7 029.79

$ 4,800,000.00 1,117,100.00

4,967,012.36 1,124,129.79

$ 66,002,531.93 $ 11,617,368.78 $ 5,917,100.00 $ 83,537,000.71

$ -593,801.95 $ -4.419,918.39 $ -5, 760,386.87 $ -10,774, 107.21

$

500.00

$

500.00

32.50

32.50

$ 3,955,758.46

3,955,758.46

-268,971.82

$ -3,686,786.64

-3,955, 758.46

$ -268.439.32 $ 3,955,758.46 $ -3,686,786.64 $

532.50

$ -862,241.27 $ -464, 159.93 $ -9,447,173.51 $ -10,773,574.71

6,193,429.01

25,913,580.64

9,650,831.42

41,757,841.07

Fund Balances - Ending

$ 5,331,187.74 $ 25.449.420.71 $

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

203,657.91 $ 30,984,266.36

-6-

GORDON COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2008

EXHIBIT"F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:
Capital Outlay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense
Because some property taxes will not be collected for several months after the School District's fiscal year ends, they are not considered "available" revenues.
In the Statement of Activities, only the loss on the sale of capital assets is reported, whereas in the Governmental Funds, the entire proceeds from the sale increase financial resources. Thus, the change in net assets differs from the change in fund balances by the carrying value of the assets sold.
Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of:
Bond Principal Retirements Capital Lease Payments
Total Long-Term Debt Repayments
Some items reported in the Statement of Activities do not req1Jire the use of current financial resources and therefore are not reported as expenditures in Governmental Funds. These activities consist of:
Increase in Compensated Absences Amortization of Premiums Deferral of Issuance Costs
Total Additional Expenditures
Change in Net Assets of Governmental Activities (Exhibit "B")

$ -10,773,574.71

$ 9,632,959.84 -2,236,339.32

7,396,620.52

46,509.27

-303,971.39

$ 4,800,000.00 167 012.36

4,967,012.36

$ -19,601.16 78,588.11 -83 874.57

-24 887.62

$ 1,307,708.43

The notes to the basic financial statements are an integral part of this statement. -7-

GORDON COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS JUNE 30, 2008

EXHIBIT"G"

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

PRIVATE PURPOSE TRUSTS

AGENCY FUNDS

$

20,408.97 $ 129,595.56

$

375.00

$ 129,595.56

$

375.00 $ 129,595.56

20,033.97

$

20,408.97 $ 129,595.56

The notes to the basic financial statements are an integral part of this statement. - 8-

GORDON COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FIDUCIARY FUNDS YEAR ENDED JUNE 30, 2008

EXHIBIT "H"

ADDITIONS Contributions Donors Investment Earnings Interest Total Additions
DEDUCTIONS Administrative Expenses Change in Net Assets
Net Assets - Beginning
Net Assets - Ending

PRIVATE PURPOSE TRUSTS

$

22,341.00

211.25

$

22,552.25

15,359.47

$

7,192.78

12,841.19

$

20,033.97

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

(This page left intentionally blank)

GORDON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "I"

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Gordon County Board of Education (School District) was established under the laws ofthe State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
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 Gordon County Board of Education.
District-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement 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 ofthe 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 ofgoods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.

- 11 -

GORDON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund.
District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST), Bond Proceeds and grants from Georgia State Financing and Investment Commission to be used for the acquisition, construction or renovation ofmajor capital facilities.
Debt Service Fund accounts for taxes (property and 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 a trust arrangement under which principal and income may be expended to provide scholarships for selected students.
Agency funds account for assets held by the School District as an agent for various school activity accounts.
BASIS OF ACCOUNTING
The basis of accounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations 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 ofaccounting. Under this method, revenues are recognized when measurable
- 12 -

GORDON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, and compensated absences, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources.
The School District funds certain programs by a combination ofspecific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorize the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations.
INVESTMENTS
COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code ofGeorgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(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,

- 13 -

GORDON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(4) Obligations of any corporation of the United States government,

(5) Prime banker's acceptances,

(6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services,

(7) Repurchase agreements, and

(8) Obligations of other political subdivisions of the State of Georgia.

The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration ofcredit 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 Gordon County Board ofCommissioners fixed the property tax levy for the 2007 tax digest year (calendar year) on November 15, 2007 (levy date). Taxes were due on January 31, 2008(lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2007 tax digest are reported as revenue in the governmental funds for fiscal year 2008. The Gordon 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 oftaxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2008, for maintenance and operations amounted to $14,176,424.51 and for school bonds amountedto$491.55.

The tax millage rate levied for the 2007 tax year (calendar year) for the Gordon County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

16.302 mills

- 14 -

GORDON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $6,245,990.46 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.

INVENTORIES

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

CAPITAL ASSETS

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

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

Capitalization Policy

Estimated Useful Life

Land Land Improvements Buildings and Improvements Machinery and Equipment Computer Applications

All

NIA

$ 25,000.00 20 to 80 years

$ 25,000.00 10 to 60 years

$ 5,000.00 3 to 20 years

$ 5,000.00

5 years

- 15 -

GORDON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives.
COMPENSATED ABSENCES
Members ofthe Teachers Retirement System ofGeorgia (TRS) may apply unused sick leave toward early retirement. The liability for early retirement will be borne by TRS rather than by the individual school districts. Otherwise, sick leave does not vest with the employee, and no liability is reported in the School District's financial statements.
Vacation leave of 10 days is awarded on a calendar year basis to all full time personnel employed on a twelve month basis. No other employees are eligible to earn vacation leave. Vacation leave not utilized during the calendar year may be carried over to the next calendar year, providing such vacation leave does not exceed 5 days.
GENERAL OBLIGATION BONDS
The School District issues general obligation bonds to provide funds for the acquisition and construction ofmajor capital facilities. In the District-wide financial statements, bond premiums as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are reported as deferred charges and amortized over the term of the debt.
In the fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Assets.
NET ASSETS
The School District's net assets in the District-wide Statements are classified as follows:
Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net ofoutstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.
Restricted net assets - These represent resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation of Federal programs, debt service and capital projects in accordance with restrictions imposed by external third parties.
- 16 -

GORDON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Unrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes.
Note 3: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount of deposit insurance. Ifa depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(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.
- 17 -

GORDON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "I"

Note 3: DEPOSITS AND INVESTMENTS
CATEGORIZATION OF DEPOSITS At June 30, 2008, the bank balances were $24,117,220.46. The bank balances were entirely covered by Federal depository insurance or securities held by the pledging financial institution or by its trust department or agent, in the School District's name.
CATEGORIZATION OF INVESTMENTS At June 30, 2008, the carrying value ofthe School District's total investments was $51,706.00, 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 ofTreasury and Fiscal Services for the Georgia Fund 1 (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1 is disclosed in the State ofGeorgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at http://www.audits.state.ga.us/intemet/searchRpts.html.
The Primary Liquidity Portfolio consists of Georgia Fund 1 which is not registered with the SEC as an investment company but does operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share. The pool is an AAAm rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2008, was 40 days.
Note 4: NON-MONETARY TRANSACTIONS
The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories
Note 5: CAPITAL ASSETS
The following is a summary of changes in the Capital Assets during the fiscal year:

- 18 -

GORDON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "I"

Note 5: CAPITAL ASSETS

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

Balances July 1, 2007

Increases

Decreases

Balances June 30, 2008

$ 1,665,555.00

$

263,550.00 $ 9,067,507.79

$ 1,929,105.00 $ 9,067,507.79 $

-1.40 $ 1,665,556.40 9,331,057.79
-1.40 $10,996,614.19

$62,360,718.00 7,798,359.00 $ 5,415,581.00

$ 479,646.05
85,806.00

221,734.7] $62,138,983.29 89,093.29 8,188,911.76 53,770.80 5,447,616.20

15,592,084.00 4,952,475.00 1,857,759.00

1,417,446.94 571,237.39 247,654.99

-35,654.81 82,261.82 14,019.00

17,045,185.75 5,441,450.57 2,091,394.99

$ 53,172,340.00 $ -1,670,887.27 $ 303,972.79 $51,197,479.94

$ 55,lQl,445.QQ $ :Z,326,62Q.52 $ 3Q3 971.32 $ 62 124,024 13

Capital assets being acquired under capital leases as of June 30, 2008, are as follows:

Governmental Funds

Equipment Less: Accumulated Depreciation

$ 558,349.00 163,584.00

$ 394.765.00

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 Central Support Services Food Services

$ 1,613,705.50

$

9,952.69

3,266.80

769.50

54,586.83

424,480.58

10,224.32

503,280.72 119,353.10

$ 2,236,339.32

- 19 -

GORDON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "I"

Note 6: RESTRICTED ASSETS

Special Purpose Local Option Sales Tax (SPLOST), general obligation bond proceeds and Georgia State Financing and Investment Commission (GSFIC) funds are restricted assets in the Statement of Net Assets because their use is limited by applicable bond covenants or statutory provisions. Restricted assets at June 30, 2008, were as follows:

Restricted Cash and Cash Equivalents: Debt Services Capital Acquisitions
Restricted Investments: Capital Acquisitions

District-wide Capital Projects

Bond

SPLOST

Proceeds

GSFIC

Debt Service Funds

$ 1,012,236.73 $13,464,458.00 $10,800,000.00

$ 203,647.13 $ 2,170.76

Note 7: INTERFUND TRANSFERS

Interfund transfers for the year ended June 30, 2008, consisted of the following:

Transfer to

Transfers From

General

Debt Service

Fund

Fund

District-wide Capital Projects

$ 268,971.82 $ 3,686,786.64

Transfers are used to move property tax revenues collected by the General Fund and excess SPLOST tax revenues collected by the Debt Service Fund to the District-wide Capital Projects Fund for capital construction projects.

Note 8: RISK MANAGEMENT

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

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

The School District has elected to self-insure for all losses related to acts of God. The School District has not experienced any losses related to this risk in the past three years.

-20-

GORDON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "I"

Note 8: RISK MANAGEMENT

The School District is self-insured with regard to unemployment compensation claims. In connection with this program, a self-insurance reserve has been established within the General Fund by the School District. The School District accounts for claims within the General Fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.

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

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

2007 2008

$

0.00 $

4,210.00 $

4,210.00 $

0.00

$

0.00 $

3,045.80 $

3,045.80 $

0.00

The School District is self-insured with regard to dental claims. The School District accounts for claims within the General Fund with 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 dental claims liability during the last two fiscal years are as follows:

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

2007 2008

$

0.00 $ 26,129.00 $ 26,129.00 $

0.00

$

0.00 $ 404,375.66 $ 404,375.66 $

0.00

The School District participates in the Georgia Education Workers' Compensation Trust, a public entity risk pool organized on December 1, 1991, 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 Trust for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Trust with the Midwest Employers Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $500,000.00 loss per occurrence, up to $2,000,000.00.

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

- 21 -

GORDON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "I"

Note 8: RISK MANAGEMENT

Position Covered

Amount

Superintendent Each Associate Superintendent School Nutrition Director Finance Director Each Principal

$

30,000.00

$

5,000.00

$

5,000.00

$

5,000.00

$

5,000.00

Note 9: LONG-TERM DEBT

CAPITAL LEASES The Gordon County Board of Education entered into various lease agreements for school buses. These lease agreements qualify as capital leases for accounting purposes, and, therefore, have been recorded at the present value ofthe future minimum lease payments as ofthe date oftheir inception.

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

GENERAL OBLIGATION DEBT OUTSTANDING General Obligation Bonds currently outstanding are as follows:

Purpose

Interest Rates

Amount

General Government - Series 2006 General Government - Series 2007

4.00% - 4.50% 4.00%

$ 15,000,000.00 10,000,000.00

$ 25.000.000.00

The changes in Long-Term Debt during the fiscal year ended June 30, 2008, were as follows:

- 22 -

GORDON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "I"

Note 9: LONG-TERM DEBT

Balance July I, 2007

Governmental Funds

Additions

Deductions

Balance June 30, 2008

Due Within One Year

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

$29,800,000.00 167,012.36 213,792.55 356,594.36

$ 207,269.50

$ 4,800,000.00 $ 25,000,000.00

167,012.36

0.00

187,668.34

233,393.71

78,588.11

278,006.25

$ 4,620,000.00 78,588.11

$30.537 399 27 $ 207,269.50 $ 5,233,268.8 I $ 25 511 399,96 $ 4,628,588 11

At June 30, 2008, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30

General Obligation

Debt

Principal

Interest

Unamortized Bond Premium

2009 2010 2011 2012 2013

$ 4,620,000.00 $ 4,805,000.00 4,990,000.00 5,190,000.00 5,395,000.00

919,150.00 $ 719,100.00 523,200.00 319,600.00 107,900.00

78,588.11 78,588.11 78,588.11 42,241.92

Total Principal and Interest

$ 25,000,000.00 $ 2,588,950.00 $

Note 10: ON-BEHALF PAYMENTS

278,006.25

The School District has recognized revenues and costs in the amount of $1,232,181.62 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$1,199,533.08

Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $26,484.54

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 $6,164.00

- 23 -

GORDON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "I"

Note 11: SIGNIFICANT COMMITMENTS

The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2008, together with funding available:

Project

Unearned Executed Contracts

Funding Available From State

07RA-664-011 Sonoraville Elementary School

$ 318,494.18 $ 2,386,545.00 10.409,000.03

$ 10,727,494.21 $ 2,386,545.00

The amounts described in this note are not reflected in the basic financial statements.

Note 12: SIGNIFICANT CONTINGENT LIABILITIES

Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.

The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance ofroutine School District operations. The ultimate disposition ofthese proceedings is not presently determinable, but is not believed to be material to the basic financial statements.

Note 13: POSTEMPLOYMENT BENEFITS

Georgia Retiree Health Benefit Fund

Plan Description. The School District contributes to the Georgia Retiree Health Benefit Fund ("GRHBF"), a cost-sharing multiple-employer defined benefit postemployment healthcare plan administered by the Department ofCommunity Health. GRHBF provides health insurance benefits to eligible retirees and their qualified beneficiaries. Pursuant to Title 45, Chapter 18 ofthe Official Code ofGeorgia Annotated, the authority to establish and amend the benefit provisions ofthe plan is assigned to the Board of Community Health. The Department of Community Health issues a publicly available financial report that includes financial statements and required supplementary information for GRHBF. That report may be obtained from the Department ofCommunity Health at 2 Peachtree Street, Atlanta, Georgia 30303.

Funding Policy. The contribution requirements of plan members and participating employers are established and may be amended by the Board of Community Health. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately twenty-five percent (25%) of the cost of health insurance coverage.

- 24-

GORDON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "I"

Note 13: POSTEMPLOYMENT BENEFITS

Participating employers are statutorily required to contribute in accordance with the employer contribution rate established by the Board of Community Health. This contribution rate is established to fund both the active and retired employee health insurance plans based on projected pay-as-you-go financing requirements. The employer contribution rates for the combined active and retiree plans for the fiscal year ended June 30, 2008, were as follows:

Teachers Non-Certificated Employees

18.534% of state-based salaries $162.72 per month

The School District's contribution to the health insurance plans for the fiscal year ended June 30, 2008, was $5,503,193.96, which equaled the required contribution.

Note 14: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school systems are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.28% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$ 3,207,077.01 $ 2,992,629.46 $ 2,734,845.00

- 25 -

(This page left intentionally blank)

GORDON COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2008

SCHEDULE "1"

REVENUES
Property Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operation Enterprise Operations Community Services
Capital Outlay Debt Service
Total Expenditures
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

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

$ 13,355,748.00 $ 13,355,748.00 $ 14,176,424.51

38,924,754.00

38,924,754.00

41,425,016.36

6,145,049.00

6,145,049.00

5,756,454.33

1,159,450.00

1,159,450.00

1,825,237.66

121,042.00

121,042.00

227,430.27

352,939.00

352,939.00

1,998,166.85

$ 60,058,982.00 $ 60,058,982.00 $ 65,408,729.98

$ 40,402,147.00 $ 40,402,147.00 $ 41,153,490.08

1,807,876.00 3,057,259.00 1,299,188.00
716,142.00 3,105,735.00
591,102.00 4,839,591.00 2,815,150.00
584,678.00 83,536.00 3,186,349.00
64,282.00 1,672.00

1,807,876.00 3,057,259.00 1,299,188.00
716,142.00 3,105,735.00
591,102.00 4,839,591.00 2,815,150.00
584,678.00 83,536.00
3,186,349.00
64,282.00 1,672.00

2,754,328.07 2,653,328.11 1,365,840.05
809,715.21 3,266,928.37
637,149.06 5,006,015.08 2,768,061.77
584,901.37 379,250.46 3,595,079.33 69,053.90 785,348.92
174 042.15

$ 62,554,707.00 $ 62,554,707.00 $ 66,002,531.93

$ -2,495,725.00 $ -2,495,725.00 $

-593,801.95

$

57,351.00 $

57,351.00 $

532.50

-429,933.00

-429,933.00

-268,971.82

$

-372,582.00 $

-372,582.00 $

-268,439.32

$

-2,868,307.00 $

-2,868,307.00 $

-862,241.27

0.00

0.00

6,193,429.01

Fund Balances - Ending

$ -2,868,307.00 $ -2,868,307.00 $ ===5,..,3=3=1,.,.1=8=7.=74=

Notes to the Schedule of Revenues. Expenditures and Changes in Fund Balances Budget and Actual

(1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the various principal accounts.

The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

27-

GORDON COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2008

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Food Donation (1) Pass-Through From Office of Treasury and Fiscal Services National Forest Reserve Funds
Total U. S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Other Programs Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Education for Homeless Children and Youth English Language Acquisition Grants Improving Teacher Quality State Grants Reading First State Grants Safe and Drug-Free Schools and Communities - State Grants State Grants for Innovative Programs Title I Grants to Local Educational Agencies
Total U. S. Department of Education

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

10.553 10.555
10.550 10.665

N/A

(2)

N/A

$ _ _3='--'17'--'4.._,3~1~4=.2~7

$

3,174,314.27

N/A

211,859.09

N/A

(3)

84.027 84.173

N/A

$

1,041,125.52

N/A

87,152.96

$

1,128,278.48

84.048 84.196 84.365 84.367 84.357 84.186 84.298 84.010

N/A

53,880.47

N/A

22,422.90

N/A

50,519.09

N/A

265,210.32

NIA

645,658.81

N/A

2,019.00

N/A

9,876.34

N/A

1,298,984.41

$

3,476,849.82

Total Federal Financial Assistance

$

NIA = Not Available

Notes to the Schedule of Expenditures of Federal Awards

(1) The amount shown for the Food Donation Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year.
(2) Expenditures for the funds earned on the School Breakfast Program ($546,001.96) were not maintained separately and are included in the 2008 National School Lunch Program.
(3) Funds earned on this program, in the amount of $4,047.58, do not require reporting of expenditures.
Major Programs are identified by an asterisk (*) in front of the CFDA number.
The School District did not provide Federal Assistance to any Subrecipient.
The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Gordon County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.
See notes to the basic financial statements.

-28-

6,863,023.18

GORDON COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2008

AGENCY/FUNDING
GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle Grades (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Gifted Student - Category VI Remedial Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Bus Replacement Sparsity Nursing Services Vocational Supervisors Education Equalization Funding Grant Food Services Vocational Education Amended Formula Adjustment Other State Programs Alternative Program Apprenticeship Program Health Insurance High School Graduation Coaches Middle School Graduation Coaches Middle School Remediation National Teacher Certification Preschool Handicapped Program Project Adventure Teachers' Retirement Virtual Schools State Grant
Office of Treasury and Fiscal Services Public School Employees Retirement

See notes to the basic financial statements.

- 29 -

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

1,821,284.12

2,125,511.00 611,168.00
5,248,509.00 730,357.00
2,274,356.00 324,430.00
3,981,743.00 3,525,488.00 1,083, 134.00
4,189,615.00 879,272.00 176,096.00 419,453.00 726,720.00 222,086.00 140,627.00
906,934.00 1,388,537.00 1,790,549.00
1,094,281.00 197,045.00 20,000.00 129,881.00 17,327.00
5,540,611.00 179,682.00 226,261.62 -580,975.00
314,787.00 21,296.00
1,199,533.08 129,575.00 84,192.00 7,786.00 19,145.00 97,120.00 128,901.00 26,484.54 50.00
6 164.00
$ =====41='-4=2=5==0=1=6=.3=6

GORDON COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2006

SCHEDULE "4"

PROJECT
Acquisition, construction, and equipping of a new high school, the renovation, expansion, and improvement of Gordon Central High School and Belwood, Fairmount, and Tolbert Elementary Schools, including specifically but not limited to site work and infrastructure improvements at such facilities, the acquisition of land for a new elementary school, acquisition and construction of new school facilities or additions and improvements to existing facilities, additions to the existing facility or conversion of another facility for use as administrative offices and support services, and the acquisition and installation of new technology throughout the Gordon County School System.
Acquisition, construction and equipping of a new middle school and a new Sonoraville Elementary School; the renovation, expansion, and improvement of Gordon Central High School, Ashworth Middle School, Sonoraville Middle School, and Belwood, Fairmount, Red Bud, Swain and Tolbert Elementary Schools, including specifically but not limited to site work and infrastructure improvements at such facilities; the acquisition, construction, and equipping of agricultural science/athletic buildings at Ashworth and Sonoraville Middle Schools; the acquisition of land for future building sites; acquisition and construction of new school facilities or additions and improvements to existing facilities; and the acquisition and installation of computers and new technology throughout the Gordon County School System.

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS(2)

AMOUNT EXPENDED IN CURRENT YEAR (3)(4)

AMOUNT EXPENDED
IN PRIOR YEARS (3) (4)

PROJECT STATUS

$ 35,205,000.00 $ 35,799,690.63 $ 6,661,073.46 $ 26,916,617.37 Completed

39,666,500.00

39,666,500.00

2,513,122.29

419 372.81 Ongoing

$ 74,691,500.00 $ 75,466,390.63 $ 11,394,195.75 $ 27,336,190.18

(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax.

(2) The School District's current estimate of total cost for the projects. Includes all cost from project inception to completion.

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

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

Prior Years

$

933,275.00

Current Year

1 117 100.00

Total

$ 2,050,375.00

See notes to the basic financial statements.

30

GORDON COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2008

SCHEDULE "5"

DESCRIPTION

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

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

Direct Instructional Programs

Kindergarten Program

$

Kindergarten Program-Early Intervention Program

Primary Grades (1-3) Program

Primary Grades-Early Intervention (1-3) Program

Upper Elementary Grades (4-5) Program

Upper Elementary Grades-Early Intervention (4-5)

Program

Middle Grades (6-8) Program

Middle School (6-8) Program

High School General Education (9-12) Program

Vocational Laboratory (9-12) Program

Students with Disabilities

Category I

Category II

Category Ill

Category IV

CategoryV

Gifted Student - Category VI

Remedial Education Program

Alternative Education Program

English Speakers of Other Languages (ESOL)

2,346,821.00 $ 720,818.00
5,762,644.00 893,581.00
2,496,470.00

2,451,499.58 $ 624,021.96
5,295,563.62 837,327.37
2,890,007.93

386,213.00 27,228.00
4,434,528.00 3,928,035.00 1,220,288.00 4,771,594.00
962,856.00 170,083.00 352,748.00 456 477.00

352,525.72
4,826,640.79 5,876,036.77 1,094,514.90
340,417.40 400,969.33 3,078,681.76 518,218.73 769,365.80 999,297.33
372,181.01 417 610.06

58,073.62 $ 9,582.52
179,217.32 28,630.83 90,975.55

2,509,573.20 633,604.48
5,474,780.94 865,958.20
2,980,983.48

9,318.36

361,844.08

141,930.86 167,894.44 124,928.47

4,968,571.65 6,043,931.21 1,219,443.37

5,428.64 3,010.35 47,364.06 20,275.34 13,343.89 10,951.43

345,846.04 403,979.68 3,126,045.82 538,494.07 782,709.69 1,010,248.76

2,961.13 2,614.53

375,142.14 420,224.59

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

$

28,930,384.00 $ 31,144,880.06 $

916,501.34 $ 32,061,381.40

Media Center Program Staff and Professional Development

809,294.00 158,682.00

1,090,398.28 65,229.21

90,272.61 103,096.86

1,180,670.89 168,326.07

TOTAL QBE FORMULA FUNDS

$

29,898,360.00 $ 32,300,507.55 $ 1,109,870.81 $ 33,410,378.36

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

See notes to the basic financial statements.

- 31 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
July 29, 2009

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Gordon County Board of Education
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Gordon County Board ofEducation as ofand for the year ended June 30, 2008, which collectively comprise Gordon County Board of Education's basic financial statements and have issued our report thereon dated July 29, 2009. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Gordon County Board of Education's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose ofexpressing an opinion on the effectiveness of the Gordon County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Gordon County Board of Education's internal control over financial reporting.
A control deficiency exists when the design or operation ofa control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affect the Gordon County Board ofEducation's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted
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accounting principles such that there is more than a remote likelihood that a misstatement of the Gordon County Board ofEducation's financial statements that is more than inconsequential will not be prevented or detected by the Gordon County Board of Education's internal control.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement ofthe financial statements will not be prevented or detected by the Gordon County Board of Education's internal control.
Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph ofthis section and would not necessarily disclose all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Gordon County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
We noted certain matters that we have reported to management of Gordon County Board of Education in a separate letter dated July 29, 2009.
This report is intended solely for the information and use of management, members ofthe Gordon 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,
~
Ru ell W. Hinton, CPA, CGFM State Auditor
RWH:as 2008YB-10

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
July 29, 2009

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Gordon County Board of Education
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of Gordon County Board of Education with the types of compliance requirements described in the U.S. Office ofManagement and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each ofits major Federal programs for the year ended June 30, 2008. Gordon County Board ofEducation'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 Gordon County Board of Education's management. Our responsibility is to express an opinion on Gordon County Board of Education's compliance based on our audit.
We conducted our audit ofcompliance in accordance with auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Gordon County Board ofEducation's compliance with those requirements and performing such other procedures as we considered necessary in the

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circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Gordon County Board of Education's compliance with those requirements.
In our opinion, the Gordon County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each ofits major Federal programs for the year ended June 30, 2008.
Internal Control Over Compliance
The management of Gordon County Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered Gordon County Board ofEducation's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose ofexpressing our opinion on compliance, but not for the purpose ofexpressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Gordon County Board of Education's internal control over compliance.
A control deficiency in an entity's internal control over compliance exists when the design or operation ofa control does not allow management or employees, in the normal course ofperforming their assigned functions, to prevent or detect noncompliance with a type of compliance requirement of a Federal program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity's ability to administer a Federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a Federal program that is more than inconsequential will not be prevented or detected by the entity's internal control.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a Federal program will not be prevented or detected by the entity's internal control.
Our consideration of the internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above.
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This report is intended solely for the information and use of management, members ofthe Gordon County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,

RWH:as 2008SA-10

=.:l~in~c*~~ State Auditor

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

GORDON COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER

AUDITEE'S RESPONSE/STATUS

SEE AUDITOR'S COMMENTS

FS-6641-04-02

Further Action Not Warranted

(1)

AUDITOR'S COMMENTS

(1) The final resolution ofthis finding rests with the Georgia Department ofCommunity Health.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.

SECTION IV FINDINGS AND QUESTIONED COSTS

GORDON COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008
I SUMMARY OF AUDITOR'S RESULTS
I. Type of Report Issued on the Financial Statements The auditor's opinion on the Gordon County Board ofEducation's financial statements was unqualified.
2. Significant Deficiencies in Internal Control Disclosed by the Audit ofthe Financial Statements The audit report for the Gordon County Board of Education did not disclose any significant deficiencies related to the financial statements.
3. Noncompliance Material to the Financial Statements The audit of the Gordon County Board of Education disclosed no instances of noncompliance that were deemed to be material to the financial statements.
4. Significant Deficiencies in Internal Control Over Major Programs The audit report for the Gordon County Board ofEducation did not disclose any significant deficiencies in internal control over major programs.
5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Gordon County Board ofEducation's report on compliance with requirements applicable to major programs was unqualified.
6. Audit Findings Required to be Reported by Section .5 IO(a) of 0MB Circular A-133 The Gordon County Board ofEducation's audit did not disclose audit findings required to be reported by section .510(a) ofOMB Circular A-133.
7. Major Programs Federal awards audited as major programs are as follows: 84.010 Title I Grants to Local Educational Agencies 84.357 Reading First State Grants 84.367 Improving Teacher Quality State Grants
8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00.
9. Low Risk Auditee The Gordon County Board ofEducation qualified as a low risk auditee as defined by Section .530 ofOMB Circular A-133.
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GORDON COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008 II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. III FEDERAL A WARD FINDINGS AND QUESTIONED COSTS No matters were reported.
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