Habersham County Board of Education, Clarkesville, Georgia, annual financial report for the fiscal year ended 2020 June 30 (including independent auditor's reports)

HABERSHAM COUNTY BOARD OF EDUCATION
ANNUAL FINANCIAL REPORT FOR THE
FISCAL YEAR ENDED JUNE 30, 2020

HABERSHAM COUNTY BOARD OF EDUCATION
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2020
TABLE OF CONTENTS

I. Financial Section
Independent Auditor's Report Basic Financial Statements:
Government-wide Financial Statements: Statement of Net Position Statement of Activities
Fund Financial Statements: Balance Sheet Governmental Funds Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities
Notes to the Basic Financial Statements
II. Required Supplementary Information
General Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual
Schedule of Proportionate Share of Net Pension Liability Teachers Retirement System of Georgia Schedule of Contributions Teachers Retirement System of Georgia Schedule of Proportionate Share of Net Pension Liability Public School
Employees Retirement System of Georgia Schedule of Proportionate Share of Net OPEB Liability School OPEB Fund Schedule of Contributions School OPEB Fund Notes to Required Supplementary Information
III. Other Supplementary Information
Schedule of Expenditures of Special Purpose Local Option Sales Tax Proceeds
IV. Single Audit Section
Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards
Independent Auditor's Report on Compliance For Each Major Federal Program and on Internal Control Over Compliance Required by the Uniform Guidance
Schedule of Expenditures of Federal Awards
Schedule of Findings and Questioned Costs
Schedule of Prior Audit Findings
Management's Corrective Action Plan

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51
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I. FINANCIAL SECTION

INDEPENDENT AUDITOR'S REPORT
To the Superintendent and Members of the Habersham County Board of Education
Clarkesville, Georgia
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Habersham County Board of Education as of and for the year ended June 30, 2020, and the related notes to the financial statements, which collectively comprise the Habersham County Board of Education's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
200 GALLERIA PARKWAY S.E., SUITE 1700 ATLANTA, GA 30339-5946 770-955-8600 800-277-0080 FAX 770-980-4489 www.mjcpa.com Members of The American Institute of Certified Public Accountants

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Habersham County Board of Education as of June 30, 2020, and the respective changes in financial position, for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the General Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual, Schedule of Proportionate Share of Net Pension Liability Teachers Retirement System of Georgia, Schedule of Contributions Teachers Retirement System of Georgia, Schedule of Proportionate Share of Net Pension Liability Public School Employees Retirement System of Georgia, Schedule of Proportionate Share of Net OPEB Liability School OPEB Fund, and Schedule of Contributions School OPEB Fund, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Management has omitted the management's discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information.
2

Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Habersham County Board of Education's basic financial statements. The schedule of expenditures of special purpose local option sales tax proceeds, as required by the Official Code of Georgia 48-8-121, and the schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements.
The schedule of expenditures of special purpose local option sales tax proceeds and the schedule of expenditures of federal awards (collectively "the supplementary information") are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Other Reporting Required by Governmental Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated January 26, 2021 on our consideration of the Habersham County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Habersham County Board of Education's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Habersham County Board of Education's internal control over financial reporting and compliance.
Atlanta, Georgia January 26, 2021
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BASIC FINANCIAL STATEMENTS

HABERSHAM COUNTY BOARD OF EDUCATION
STATEMENT OF NET POSITION JUNE 30, 2020

ASSETS
Cash and cash equivalents Receivables:
Taxes Intergovernmental:
State Federal Local Inventory Capital assets (nondepreciable) Capital assets (depreciable, net of accumulated depreciation)
Total assets
DEFERRED OUTFLOWS OF RESOURCES Deferred charges on refunding Pension related items OPEB related items
Total deferred outflows of resources
LIABILITIES
Accounts payable Salaries and benefits payable Accrued interest payable Claims payable due within one year Financed purchases due within one year Financed purchases due in more than one year Bonds payable due within one year Bonds payable due in more than one year Net pension liability Net OPEB liability
Total liabilities
DEFERRED INFLOWS OF RESOURCES Pension related items OPEB related items
Total deferred inflows of resources
NET POSITION
Net investment in capital assets Restricted for:
Federal programs Capital projects Debt service Unrestricted
Total net position

Governmental Activities

$

18,372,802

2,605,516

5,881,432 693,430 4,288 113,781
6,141,134
110,907,661 144,720,044

3,071,097 19,456,120
4,394,379 26,921,596

1,095,940 9,456,617
270,461 34,927 998,772 1,711,634 3,085,000 29,292,491 69,416,104 57,530,836 172,892,782
3,213,808 14,564,566 17,778,374

85,031,995

504,816

2,122,705

3,299,099

(109,988,131)

$

(19,029,516)

The accompanying notes are an integral part of these financial statements.
4

HABERSHAM COUNTY BOARD OF EDUCATION
STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2020

Functions/Programs

Governmental activities:

Instruction

$

Support services:

Pupil services

Improvement of instructional

services

Educational media services

General administration

School administration

Business administration

Maintenance and operation of facilities

Student transportation services

Central support services

Other support services

Operations of non-instructional services:

Community services operations

Food services operation

Interest on long-term debt

Total governmental activities

$

Expenses
62,220,073
3,802,697
1,451,365 1,766,594
746,839 5,441,062
537,298 5,318,182 6,594,497
364,814 825,692
6,994,158 1,325,314 97,388,585

Charges for Services

Program Revenues Operating Grants and
Contributions

Capital Grants and Contributions

$ 1,188,063 $ 43,796,216 $

-

-

579,238

-

-

648,211

-

-

1,045,078

-

-

1,678,931

-

-

2,547,652

-

-

12,521

-

-

2,750,217

-

-

807,498

154,440

-

5,695

-

-

51,321

-

5,483

-

723,777

3,756,981

-

-

$ 1,917,323 $ 57,679,559 $

154,440

Net (Expense) Revenue and
Changes in Net Position Governmental
Activities
$ (17,235,794)
(3,223,459)
(803,154) (721,516) 932,092 (2,893,410) (524,777) (2,567,965) (5,632,559) (359,119) (774,371)
5,483 (2,513,400) (1,325,314) (37,637,263)

General revenues: Taxes: Property taxes, levied for maintenance and operations Sales taxes: For debt service Local option sales tax Other taxes Grants and contributions not restricted to specific programs Unrestricted investment earnings Other miscellaneous general revenues Total general revenues Change in net position
Net position, beginning of year Net position, end of year
The accompanying notes are an integral part of these financial statements.

14,448,617
7,422,175 7,445,501 2,972,688 5,575,575
177,243 3,225,443 38,041,799
404,536 (19,434,052) $ (19,029,516)

5

HABERSHAM COUNTY BOARD OF EDUCATION
BALANCE SHEET GOVERNMENTAL FUNDS
JUNE 30, 2020

ASSETS
Cash and cash equivalents Receivables:
Taxes Intergovernmental:
State Federal Local Inventory

General

Capital Projects

$

13,874,151 $

2,053,565 $

1,481,042

-

5,812,292 693,430 4,288 113,781

69,140 -

Debt Service
2,445,086
1,124,474

Total Governmental
Funds

$

18,372,802

2,605,516

-

5,881,432

-

693,430

-

4,288

-

113,781

Total assets

$

LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES

LIABILITIES

Accounts payable

$

Salaries and benefits payable

Claims payable

Total liabilities
DEFERRED INFLOWS OF RESOURCES Unavailable revenue - property taxes Unavailable revenue - sales taxes

Total deferred inflows of resources

FUND BALANCES Nonspendable:
Inventory Restricted for:
Federal programs Capital projects Debt service Assigned: 2021 fiscal year appropriations of fund balance
Unassigned

Total fund balances

Total liabilities, deferred inflows

of resources, and fund balances

$

21,978,984 $
1,095,940 $ 9,456,617
34,927
10,587,484
82,431 515,024
597,455
113,781 391,035
3,633,436 6,655,793 10,794,045
21,978,984 $

2,122,705 $
- $ -
-
-
-
2,122,705 2,122,705
2,122,705 $

3,569,560 $

27,671,249

- $ -
-
515,024
515,024

1,095,940 9,456,617
34,927
10,587,484
82,431 1,030,048
1,112,479

3,054,536 3,054,536
3,569,560 $

113,781 391,035 2,122,705 3,054,536 3,633,436 6,655,793 15,971,286
27,671,249

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

6

HABERSHAM COUNTY BOARD OF EDUCATION
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION
JUNE 30, 2020

Total fund balances - governmental funds

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

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

Cost

$

Less accumulated depreciation

Other long-term assets are not available to pay for current-period expenditures and,

therefore, are unavailable in the funds.

Property taxes

$

Sales taxes

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

Net pension liability

$

Pension related deferred outflows of resources

Pension related deferred inflows of resources

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

Net OPEB liability

$

OPEB related deferred outflows of resources

OPEB related deferred inflows of resources

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

therefore, are not reported in the governmental funds.

Bonds payable

$

Premium, net of amortization

Unamortized loss on refunding

Accrued interest

Financed purchase payable

$
157,337,028 (40,288,233)
82,431 1,030,048
(69,416,104) 19,456,120 (3,213,808)
(57,530,836) 4,394,379
(14,564,566)
(30,905,000) (1,472,491) 3,071,097 (270,461) (2,710,406)

Net position of governmental activities

$

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

15,971,286 117,048,795
1,112,479 (53,173,792) (67,701,023)
(32,287,261) (19,029,516)

7

HABERSHAM COUNTY BOARD OF EDUCATION
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2020

REVENUES Property taxes Sales taxes Other taxes State funds Federal funds Investment income Charges for services 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 facilities Student transportation services Central support services Other support services Food services operation Capital outlay Debt service: Principal retirement Interest and fees Bond issuance costs Total expenditures
Excess (deficiency) of revenues over expenditures
OTHER FINANCING SOURCES (USES) Transfers in Transfers out Issuance of bonds Payment to refunded bond escrow agent Financed purchases Total other financing sources (uses)
Net change in fund balances

General

$

14,366,186 $

6,930,477

2,972,688

51,849,552

8,134,714

110,381

1,917,323

3,225,443

89,506,764

Capital Projects
- $ 69,140 20,761 89,901

Debt Service

Total Governmental
Funds

- $ 6,907,151
46,101 6,953,252

14,366,186 13,837,628
2,972,688 51,918,692
8,134,714 177,243
1,917,323 3,225,443 96,549,917

56,063,105
3,377,624 1,854,472 1,718,346
733,594 5,283,416
519,096 7,264,008 4,145,766
356,219 825,692 6,834,320
-
88,975,658
531,106
-
531,106

1,064,690
59,120
321,510 38,310 95,923
1,579,553
(1,489,652)
2,057,783 -
2,057,783
568,131

-
1,889,700 -
3,878,985 1,261,805
159,358 7,189,848
(236,596)
(2,057,783) 17,165,000 (17,005,642) 1,889,700
(8,725)
(245,321)

57,127,795
3,377,624 1,913,592 1,718,346
733,594 5,283,416
519,096 7,585,518 6,073,776
356,219 825,692 6,834,320
95,923
3,878,985 1,261,805
159,358 97,745,059
(1,195,142)
2,057,783 (2,057,783) 17,165,000 (17,005,642) 1,889,700 2,049,058
853,916

FUND BALANCES, beginning of year

10,262,939

1,554,574

FUND BALANCES, end of year

$

10,794,045 $

2,122,705 $

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

3,299,857 3,054,536 $

15,117,370 15,971,286

8

HABERSHAM COUNTY BOARD OF EDUCATION
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2020

Amounts reported for governmental activities in the statement of activities are different because:
Net change in fund balances - total governmental funds
Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. The amount by which depreciation exceeded capital outlays in the current period is as follows:

$

853,916

Capital outlay

$

Depreciation expense

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

Property taxes

$

Sales taxes

Intergovernmental revenues

3,615,226 (5,034,651)
82,431 1,030,048
(69,140)

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

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

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

Issuance of bonds

$

Payment of refunded general obligation debt to escrow agent

Initiation of financed purchases

Principal payments - bonds

Principal payments - financed purchases

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

(17,165,000) 17,005,642 (1,889,700)
2,860,000 1,018,985

Amortization of bond premium Amortization of loss on refunding Change in accrued interest
Change in net position of governmental activities

$

379,112

(393,192)

109,929

$

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

(1,419,425) 1,043,339 (2,118,587)
119,517
1,829,927 95,849
404,536

9

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020
NOTE 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
Reporting Entity
The Habersham County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The School District 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 government-wide financial statements, fund financial statements and notes to the basic financial statements of the Habersham County Board of Education.
Government-wide Statements: The Statement of Net Position and the Statement of Activities display information about the financial activities of the overall School District. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
In the Statement of Net Position, equity is reported as net position and consists of net investment in capital assets, amounts restricted by outside parties for specific purposes and unrestricted amounts.
10

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Basis of Presentation (Continued)
Fund Financial Statements: The fund financial statements provide information about the School District's funds. Eliminations have been made to minimize the double counting of internal activities. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for all financial resources of the School District, except those resources required to be accounted for in another fund.
Capital Projects Fund accounts for and reports financial resources including Education Special Purpose Local Option Sales Tax (ESPLOST) and bond proceeds that are restricted, committed, or assigned for capital outlay expenditures, including the acquisition or construction of capital facilities and other capital assets.
Debt Service Fund accounts for and reports financial resources that are restricted, committed, or assigned including taxes (sales) legal restricted for the payment of general long-term principal and interest.
Basis of Accounting/Measurement Focus
The basis of accounting determines when transactions are reported on the financial statements. The School District-wide governmental activities 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.
11

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Basis of Accounting/Measurement Focus (Continued)
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the School District considers most revenues to be available if they are collected within 60 days of the end of the current fiscal period; however, intergovernmental revenues reported in the governmental funds are considered to be available if they are collected within 120 days after year-end.
Property taxes, sales taxes, intergovernmental revenue, 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 claims and judgments, 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 financed purchases are reported as other financing sources.
Revenue from grants and donations is recognized in the year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year when the resources are required to be used or the year when use is first permitted, matching requirements, in which the School District must provide local resources to be used for a specified purpose, and expenditure requirements, in which the resources are provided to the School District on a reimbursement basis.
The State of Georgia reimburses the School District for teachers' salaries and operating costs through the Quality Basic Education (QBE) Formula Earnings program. State of Georgia law defines the formula-driven grant that determines the cost of an academic school year and the State of Georgia's share in this cost. Generally teachers are contracted for the school year (July 1 June 30) and paid over a twelve month contract period, generally September 1 through August 31. In accordance with the requirements of the enabling legislation of the QBE program, the State of Georgia reimburses the School District over the same twelve month period in which teachers are paid, funding the academic school year expenditures. At June 30, the amount of teachers' salaries incurred but not paid until July and August of the subsequent year are accrued as the State of Georgia has only postponed the final payment of their share of the cost until the subsequent appropriations for cash management purposes. By June 30 of each year, the State of Georgia has a signed appropriation that includes this final amount, which represents the State of Georgia's intent to fund this final payment. Based on guidance in Government Accounting Standards Board (GASB) Statement No. 33, paragraph 74, the State of Georgia recognizes its QBE liability for the July and August salaries at June 30, and the School District recognizes the same QBE as a receivable and revenue, consistent with symmetrical recognition.
12

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Basis of Accounting/Measurement Focus (Continued)
The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net position 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
Cash and cash equivalents consist of cash on hand, demand deposits, Georgia Fund 1 and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks and insured federal savings and loan associations.
Investments
Investments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(1) Obligations issued by the State of Georgia or by other states, (2) Obligations issued by the United States Government, (3) Obligations fully insured or guaranteed by the United States Government or a United
States Government agency, (4) Obligations of any corporation of the United States Government, (5) Prime banker's acceptances, (6) The Local Government Investment Pool administered by the State Treasurer of the State
of Georgia, (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 investments that addresses credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks.
13

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 are reported net of an allowance for uncollectible receivables when necessary.

Property Taxes

The Habersham County Tax Commissioner levied the property tax for the tax digest year (calendar year) on August 7, 2019 (levy date). Taxes were due on November 15, 2019 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the tax digest are reported as revenue in the governmental funds for fiscal year 2020. The Habersham County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2020, for maintenance and operations amounted to $14,366,186.

The Georgia Constitution, Article VIII, Section VI, Paragraph I requires the board of education of each school system to annually certify to its fiscal authority or authorities a school tax not greater than 20 mills per dollar for the support and maintenance of education. The is in compliance with this law. Tax millage rates levied for the tax year (calendar year) for the Habersham County Board of Education were as follows (a mill equals $1 per thousand dollars of assessed value):

School Maintenance and Operations

13.423 mills

Sales Taxes

Local Option Sales Tax, at the fund reporting level, during the year amounted to $6,930,477 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.

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $6,907,151 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.

14

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Inventories

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

Capital Assets

Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the School Districtwide 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 acquisition value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art. Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives.

Capitalization thresholds and estimated useful lives of capital assets reported in the School District-

wide statements are as follows:

Capitalization Estimated

Policy

Useful Life

Land Land Improvements Buildings and improvements Equipment Intangible assets

$ 10,000

N/A

100,000

80 years

100,000

80 years

10,000

20 years

100,000 10 to 20 years

15

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Compensated Absences Vacation leave must be used in the fiscal year in which it is earned. Accordingly, there is no liability for vacation leave at year end. Sick and personal leave do not vest with the employee, and unused accumulated sick and personal leave is forfeited upon retirement or termination of employment. Therefore, no liability is recorded for non-vesting accumulating rights to receive sick pay benefits. Deferred Outflows/Inflows of Resources In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense) until then. The School District has six (6) items that qualify for reporting in this category which occurs only in the governmental activities. Governmental Activities report (1) a deferred outflow of resources for the School District's actual contributions to the pension plan during the fiscal year ended June 30, 2020 which are subsequent to the measurement date of the net pension liability and will be recognized in fiscal year 2021; (2) a deferred outflow of resources for experience gains or losses related to the pension plan which will be amortized over the remaining service period; (3) a deferred outflow of resources for the changes in actuarial assumptions for the pension and OPEB plans which will be amortized over the remaining service period; (4) a deferred outflow of resources for the School District's actual contributions to the OPEB plan during the fiscal year ended June 30, 2020 which are subsequent to the measurement date of the net OPEB liability and will be recognized in fiscal year 2021; (5) a deferred outflow of resources for the change in the School District's proportionate share based on actual contributions towards the school OPEB plan, which will be amortized over the remaining service period; and (6) a deferred outflow of resources for the net difference between projected and actual investment earnings on the OPEB assets, which will be amortized over a five year period.
16

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Deferred Outflows/Inflows of Resources (Continued)
In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The School District has one type of deferred inflow under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from property taxes and sales taxes and these amounts are deferred and will be recognized as an inflow of resources in the period in which the amounts become available. The School District has four (4) items that qualify for reporting in this category which occur only in the governmental activities. Governmental Activities report (1) a deferred inflow of resources for the net difference between projected and actual investment earnings on the pension assets, which will be amortized over a five year period; (2) a deferred inflow of resources for experience gains or losses from periodic studies by the actuary for both pension and OPEB, which will be amortized over the remaining service period; (3) a deferred inflow of resources for the change in the School District's proportionate share based on actual contributions towards the pension and OPEB plans, which will be amortized over the remaining service period; (4) a deferred inflow of resources for the changes in actuarial assumptions in relation to the OPEB plan which will be amortized over the remaining service period.
General Obligation Bonds
The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In addition, general obligation bonds have been issued to refund existing general obligations bonds. Bond issuance costs are recognized in the financial statements during the fiscal year bonds are issued. General obligation bonds are direct obligations and pledge the full faith and credit of the government.
In the fund financial statements, the face amount of debt issued and any related premium, is reported as other financing sources. Issuance costs, whether or not withheld from actual proceeds, are reported as debt service expenditures.
In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities statement of net position. Bond premiums and discounts are accrued and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are expensed when incurred.
17

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, deferred outflows of resources, liabilities and deferred inflows of resources, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Pensions
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Teachers Retirement System of Georgia (TRS) and additions to/deductions from TRS's fiduciary net position have been determined on the same basis as they are reported by TRS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Public School Employees Retirement System of Georgia (PSERS) and additions to/deductions from PSERS's fiduciary net position have been determined on the same basis as they are reported by PSERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
Other Postemployment Benefits (OPEB)
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the Georgia School Employees Postemployment Benefit Fund (School OPEB Fund) and additions to/deductions from the School OPEB Fund's fiduciary net position have been determined on the same basis as they are reported by the School OPEB Fund. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
18

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Fund Equity
Fund equity at the governmental fund financial reporting level is classified as "fund balance." Fund equity for all other reporting is classified as "net position."
Fund Balance Generally, fund balance represents the difference between the assets, liabilities and deferred inflows of resources under the current financial resources measurement focus of accounting. In the fund financial statements, governmental funds report fund balance classifications that comprise a hierarchy based primarily on the extent to which the School District is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. Fund balances are classified as follows:
Nonspendable Fund balances are reported as nonspendable when amounts cannot be spent because they are either (a) not in spendable form (i.e., items that are not expected to be converted to cash) or (b) legally or contractually required to be maintained intact.
Restricted Fund balances are reported as restricted when there are limitations imposed on their use either through the enabling legislation adopted by the School District or through external restrictions imposed by creditors, grantors, or laws or regulations of other governments.
Committed Fund balances are reported as committed when they can be used only for specific purposes pursuant to constraints imposed by formal action of the Board of Education through the adoption of a resolution. Only the Board of Education may modify or rescind the commitment through adoption of a subsequent resolution.
Assigned Fund balances are reported as assigned when amounts are constrained by the School District's intent to be used for specific purposes, but are neither restricted nor committed. Through resolution, the Board of Education has authorized the Superintendent or his or her designee to assign fund balances.
Unassigned Fund balances are reported as unassigned as the residual amount when the balances do not meet any of the above criterion. The School District reports positive unassigned fund balance only in the general fund. Negative unassigned fund balances may be reported in all funds.
19

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Fund Equity (Continued) Flow Assumptions When both restricted and unrestricted amounts of fund balance are available for use for expenditures incurred, it is the School District's policy to use restricted amounts first and then unrestricted amounts as they are needed. For unrestricted amounts of fund balance, it is the School District's policy to use fund balance in the following order:
Committed Assigned Unassigned Net Position Net position represents the difference between assets and deferred outflows of resources, and liabilities and deferred inflows of resources in reporting which utilizes the economic resources measurement focus. Net investment in capital assets, consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowing used (i.e., the amount that the School District has spent) for the acquisition, construction or improvement of those assets. Net position is reported as restricted using the same definition as used for restricted fund balance as described in the section above. All other net position is reported as unrestricted. The School District applies restricted resources first when an expense is incurred for purposes for which both restricted and unrestricted net position is available. NOTE 3: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY The School Disctrict adopts an annual budget for the General Fund and Debt Service Fund. The budget is prepared in accordance with provisions of the Quality Basic Education Act, OCGA Section 20-2-167 and in accordance with U.S. generally accepted accounting principles. After the Board of Education has tentatively adopted the budget, such budget is advertised at least one time in a local newspaper of general circulation. At the next regular meeting of the Board after advertisement, the budget is revised as necessary and adopted as the final budget.
20

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020

NOTE 3: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (Continued)
The following function had excesses of actual expenditures over appropriations in the amount shown for the fiscal year ended June 30, 2020:

General Fund: Support services: Food services operation

$ 2,090,084

This over-expended function was funded with excess budget in under expended functions or greater than anticipated revenues.

NOTE 4: DEPOSITS AND INVESTMENTS

Categorization of Investments The investment in the local government investment pool, "Georgia Fund 1," created by OCGA 3683-8, is a stable asset value investment pool, which follows Standard and Poor's criteria for AAAf rated money market funds and is regulated by the Georgia Office of the State Treasurer. The pool is not registered with the SEC as an investment company. The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($1 per share value). The asset value is calculated weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and determines participants' shares sold and redeemed based on $1 per share. The pool also adjusts the value of its investments to fair market value as of yearend and the School District's investment in the Georgia Fund 1 is reported at fair value. The School District considers amounts held in Georgia Fund 1 as cash equivalents for financial statement presentation.

Investment Georgia Fund 1

Maturity 38 days

Fair Value $ 13,305,470

Interest Rate Risk The School District does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates.

21

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020
NOTE 4: DEPOSITS AND INVESTMENTS (Continued)
Fair Value Measurements The School District categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs.
The Georgia Fund 1 is an investment pool which does not meet the criteria of GASB Statement No. 79 and is thus valued at fair value in accordance with GASB Statement No. 31. As a result, the School District does not disclose investment in the Georgia Fund 1 within the fair value hierarchy.
Custodial Credit Risk Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, the School District will not be able to recover deposits or will not be able to recover collateral securities that are in the possession of an outside party. State statutes require all deposits and investments (other than federal or state government instruments) amounts that exceed standard depository insurance limits are required to be collateralized either (1) individually by the financial institutions through pledged obligations of the U.S. Government, obligations backed by the full faith and credit of the U.S. Government, obligations of the State of Georgia or other states, or obligations of counties, municipalities, or public authorities of the State of Georgia, or (2) participation in the State of Georgia Secure Deposit Program. As of June 30, 2020, the financial institution holding some of the School District's deposits is a participant in the State of Georgia Secure Deposit Program, which is administered by the Office of the State Treasurer, requires participating banks holding deposits of public funds to pledge collateral at varying rates depending on the tier assigned by the State. As of June 30, 2020, the School District's cash accounts were insured and/or collateralized as defined by GASB Standards.
NOTE 5: NON-MONETARY TRANSACTIONS
The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. For the year ended June 30, 2020, the commodities usage is recorded at its federally assigned value of $318,423.
22

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020

NOTE 6: CAPITAL ASSETS

The following is a summary of changes in the capital assets during the fiscal year:

Governmental activities:
Capital assets, not being depreciated: Land Total
Capital assets, being depreciated: Building improvements Equipment Land improvements Total
Less accumulated depreciation for: Building improvements Equipment Land improvements Total
Total capital assets, being depreciated, net
Governmental activities capital assets, net

Balances July 1, 2019

$

6,141,134 $

6,141,134

125,931,608 13,313,583 8,335,477 147,580,668

(22,966,930) (8,656,284) (3,630,368) (35,253,582)
112,327,086
$ 118,468,220 $

Increases

Decreases

- $

-

-

-

-

-

3,587,928

-

27,298

-

3,615,226

-

(3,745,271)

-

(1,033,000)

-

(256,380)

-

(5,034,651)

-

(1,419,425)

-

(1,419,425) $

-

Balances June 30, 2020

$

6,141,134

6,141,134

125,931,608 16,901,511 8,362,775 151,195,894

(26,712,201) (9,689,284) (3,886,748) (40,288,233)
110,907,661
$ 117,048,795

Depreciation expense was charged to functions as follows:

Instruction Support services:
Pupil services Maintenance and operation of plant Student transportation services Operations of non-instructional services Food services

$ 3,989,107
357,929 118,513 474,542
94,560 $ 5,034,651

23

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020

NOTE 7: INTERFUND TRANSFERS Interfund transfers for the year ended June 30, 2020, consisted of the following:

Transfers To

Transfers From Debt Service Fund

Capital Projects Fund

$

2,057,783

Transfers are used to move ESPLOST tax revenues collected by the Debt Service Fund to the Capital Projects Fund to fund capital projects as approved in the referendum.
NOTE 8: RISK MANAGEMENT
The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God; and unemployment compensation and vision plan. Except as described below, the School District carries commercial insurance for these risks. Settled claims resulting from these insured risks have not exceeded commercial insurance coverage in any of the past three fiscal years.
The School District participates in the Georgia School Boards Association Risk and Insurance Management System, a public entity risk pool organized on July 1, 1994, to develop and administer a plan to reduce risk of loss on account of general liability, motor vehicle liability, or property damage, including safety engineering and other loss prevention and control techniques, and to administer one or more groups of self-insurance funds, including the processing and defense of claims brought against members of the district. The School District pays an annual premium to the district for its general insurance coverage. Additional coverage is provided through agreements by the district with other companies according to their specialty for property, boiler and machinery (including coverage for flood and earthquake), general liability (including coverage for sexual harassment, molestation and abuse), errors and omissions, crime and automobile risks. Payment of excess insurance for the district varies by line of coverage.

24

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020

NOTE 8: RISK MANAGEMENT (Continued)

The School District participates in the Georgia School Boards Association Workers' Compensation Fund (the Fund), a public entity risk pool organized on July 1, 1992, to develop, implement, and administer a program of workers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Fund for its Workers' Compensation insurance coverage. Excess insurance coverage is provided through an agreement by the Fund with the Safety National Casualty Corporation to provide coverage for potential losses sustained by the Fund in excess of $550,000 loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided by Safety National Casualty Corporation to provide coverage for potential losses sustained by the Fund in excess of $550,000 loss per occurrence, up to $2 million. In addition to the $550,000 per occurrence retention, the Fund also retains an additional $200,000 per year corridor retention.

The School District has established a limited risk management program for dental insurance claims for its employees. A premium is charged when needed by the general fund to each user program on the basis of employee participation in order to cover estimated claims budgeted by management based on known claims and prior experience. The School District accounts for claims with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.
Changes in the dental insurance claims liability during the last two fiscal years are as follows:

Beginning of Year

Claims and Changes in Estimates

Claims Paid

End of Year

2019

$ 34,282 $ 418,872 $ 416,264 $ 36,890

2020

36,890

373,963

375,926

34,927

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

Position Covered

Amount

Superintendent

$100,000

The School District is self-insured with regard to unemployment compensation claims. A premium is charged when needed by the General Fund to each user program on the basis of the percentage of the fund's payroll to total payroll in order to cover estimated claims budgeted by management based on known claims and prior experience. The School District accounts for claims 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. The School District had no claims in the last two fiscal years.

25

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020

NOTE 9: LONG TERM DEBT

The changes in long-term obligations during the fiscal year ended June 30, 2020, were as follows:

B e ginning Balance

Additions

Governmental activities:

General obligation bonds $

Unamortized bond premium

Total bonds payable

Financed purchases payable

Claims payable

Net pension liability

Net OPEB Liability

Governmental activity

Long-term liabilities

$

31,805,000 $ 3,257,454 35,062,454 1,839,691
36,890 60,833,522 59,001,955

17,165,000 $ -
17,165,000 1,889,700
373,963 16,826,570 5,970,345

156,774,512 $ 42,225,578 $

Re ductions

Ending Balance

Due Within One Year

(18,065,000) $ (1,784,963) (19,849,963) (1,018,985)
(375,926) (8,243,988) (7,441,464)

30,905,000 $ 1,472,491 32,377,491 2,710,406
34,927 69,416,104 57,530,836

3,085,000 -
3,085,000 998,772 34,927 -

(36,930,326) $ 162,069,764 $ 4,118,699

For governmental activities, the claims payable and net pension and OPEB liabilities are being liquidated primarily by the General Fund.

General Obligation Debt Outstanding General Obligation Bonds currently outstanding are as follows:

Purpose

Interest Rate

Outstanding Balance at June 30, 2020

General Government - Series 2013 Refunding Bonds General Government - Series 2020 Refunding Bonds

3.00% - 5.00% 2.10%

$ 13,740,000 17,165,000
$ 30,905,000

In fiscal year 2013, the School District issued $37,240,000 of Series 2013 General Obligation Refunding Bonds to (i) refund a portion of the Series 2005 General Obligation Refunding Bonds and (ii) pay the costs of issuing the Series 2013 General Obligation Refunding Bonds. The School District defeased the 2005 bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. At June 30, 2020, the defeased Series 2005 bonds have been paid in full and are no longer outstanding as of June 30, 2020. The School District has pledged its full faith and credit and taxing power to service the debt. During fiscal year 2020, the School District refunded $15,205,000 of the Series 2013 Refunding Bonds through the issuance of the Series 2020 Refunding Bonds.

26

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020

NOTE 9: LONG TERM DEBT (Continued)

Direct Placement General Obligation Bonds In fiscal year 2020, the School District issued $17,165,000 of Series 2020 General Obligation Refunding Bonds to (i) refund a portion of the Series 2013 General Obligation Refunding Bonds and (ii) pay the costs of issuing the Series 2020 General Obligation Refunding Bonds. The School District defeased $15,205,000 of the 2013 bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. The School District has pledged its full faith and credit and taxing power to service the debt. The Series 2020 bonds bear interest at 2.1% and are payable semi-annually on April 1 and October 1 beginning in April of 2020 through the maturity date of April 1, 2027. The refunding transaction undertaken by the School District resulted in aggregate debt service savings of $631,957 and an economic gain (net present value of the aggregate debt service savings) of $632,099. The current outstanding amount of debt considered legally defeased equals $15,205,000 as of June 30, 2020.

At June 30, 2020, payments due by fiscal year, which includes principal and interest, for these items are as follows:

Fiscal Year Ended June 30
2021 2022 2023 2024 2025 2026-2028 Total

General Obligation Bonds

Principal

Interest

$ 3,005,000 $ 601,700

3,155,000

451,450

3,315,000

293,700

-

127,950

-

127,950

4,265,000

383,850

$ 13,740,000 $ 1,986,600

Direct Placement Bonds

Principal

Interest

$ 80,000 $ 360,465

400,000

358,785

405,000

350,385

3,900,000

341,880

4,060,000

259,980

8,320,000

262,815

$ 17,165,000 $ 1,934,310

Total

Principal

Interest

$ 3,085,000 $ 962,165

3,555,000

810,235

3,720,000

644,085

3,900,000

469,830

4,060,000

387,930

12,585,000

646,665

$ 30,905,000 $ 3,920,910

Financed Purchases through Direct Borrowings In May 2018, the School District entered into a financed purchase in the amount of $1,769,444 to finance the acquisition of school buses. Annual principal and interest payments in the amount of $375,139 are required until May 2022 at an interest rate of 3.00%.
In June 2018, the School District entered into a financed purchase agreement in the amount of $956,955 to finance the acquisition of computers. Quarterly principal and interest payments in the amount of $52,366 are required until June 2023 at an interest rate of 4.50%.

In July 2019, the School District entered into a financed purchase agreement in the amount of $1,889,700 to finance the acquisition of school buses. Annual principal and interest payments in the amount of $491,153 are required until July 2022 at an interest rate of 2.66%.

27

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020

NOTE 9: LONG TERM DEBT (Continued)

The School District's future payments on its financed purchases through direct borrowings for governmental activities are as follows:

Fiscal Year Ended June 30

Financed Purchases

Principal

Interest

2021 2022 2023
Total

$

998,772 $

1,028,222

683,412

$

2,710,406 $

76,985 47,535 17,206 141,725

The following is an analysis of assets under financed purchases as of June 30, 2020:

Asset

Governmental Activities

Equipment Accumulated depreciation
Total net book value of financed purchased assets

$ 4,616,099 (701,358)
$ 3,914,741

Annual amortization of these assets is included with depreciation expense.

NOTE 10: ON-BEHALF PAYMENTS
The School District has recognized revenues and costs in the amount of $199,865 for retirement contributions paid on the School District's behalf by the following State Agencies.

Georgia Department of Education Paid to the Teachers Retirement District for Teachers Retirement (TRS) in the amount of $30,734

State Treasurer of the State of Georgia Paid to the Public School Employees Retirement System for Public School Employees Retirement (PSERS) Employer's Cost in the amount of $169,131

28

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020
NOTE 11: SIGNIFICANT CONTINGENT LIABILITIES Amounts received or receivable principally from the federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position. The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the basic financial statements. NOTE 12: RETIREMENT PLANS General Information About The Teachers Retirement System Of Georgia (TRS) Plan description: All teachers of the School District as defined in 47-3-60 of the Official Code of Georgia Annotated (O.C.G.A.) and certain other support personnel as defined by 47-3-63 are provided a pension through the Teachers Retirement System of Georgia (TRS). TRS, a cost-sharing multiple-employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. TRS issues a publicly available financial report that can be obtained at www.trsga.com/publications. Benefits provided: TRS provides service retirement, disability retirement, and death benefits. Normal retirement benefits are determined as 2% of the average of the employee's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. An employee is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. Ten years of service is required for disability and death benefits eligibility. Disability benefits are based on the employee's creditable service and compensation up to the time of disability. Death benefits equal the amount that would be payable to the employee's beneficiary had the employee retired on the date of death. Death benefits are based on the employee's creditable service and compensation up to the date of death.
29

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020

NOTE 12: RETIREMENT PLANS (Continued)

General Information About The Teachers Retirement System Of Georgia (TRS) (Continued)

Contributions: Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. Pursuant to O.C.G.A. 47-3-63, the employer contributions for certain full-time public school support personnel are funded on behalf of the employer by the State of Georgia. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees were required to contribute 6.00 % of their annual pay during fiscal year 2020. The School District's contractually required contribution rate for the year ended June 30, 2020 was 21.14% of annual school district payroll, excluding payroll attributable to those personnel funded on behalf of the School District by the State. School District contributions to TRS, excluding contributions funded by the State on behalf of the School District were $8,882,094 for the year ended June 30, 2020.

Pension Liabilities, Pension Expense, and Deferred Outflows Of Resources And Deferred Inflows Of Resources Related To Pensions

At June 30, 2020, the School District reported a liability for its proportionate share of the net pension liability that reflected a reduction for support attributable to those personnel funded on behalf of the School District by the State of Georgia. The amount recognized by the School District as its proportionate share of the net pension liability, the related State of Georgia support, and the total portion of the net pension liability that was associated with the School District were as follows:

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

$ 69,416,104
214,812 $ 69,630,916

The net pension liability was measured as of June 30, 2019. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2018. An expected total pension liability as of June 30, 2019 was determined using standard roll-forward techniques. The School District's proportion of the net pension liability was based on contributions to TRS during the fiscal year ended June 30, 2019. At June 30 2019, the School District's proportion was 0.322825%, which was a decrease of 0.004904% from its proportion measured as of June 30, 2018.

30

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020

NOTE 12: RETIREMENT PLANS (Continued)
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related To Pensions (Continued)

For the year ended June 30, 2020, the School District recognized pension expense of $11,000,681 and expense of $2,585 for support provided to the State of Georgia for certain support personnel. At June 30, 2020, the School District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Net difference between projected and actual earnings on pension plan investments
Differences between expected and actual experience

Deferred Outflows of Resources

Deferred Inflows of Resources

$

- $ 1,653,009

3,912,645

20,580

Changes in proportion and differences between School District contributions and proportionate share of contributions
Actuarial assumption changes
School District contributions subsequent to the measurement date Total

6,661,381

1,540,219 -

8,882,094

-

$ 19,456,120 $ 3,213,808

School District contributions subsequent to the measurement date of $8,882,094 are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ending June 30, 2021. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year ending June 30: 2021 2022 2023 2024 Total

$ 3,145,468 186,154
1,927,582 2,101,014 $ 7,360,218

31

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020

NOTE 12: RETIREMENT PLANS (Continued)

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources And Deferred Inflows Of Resources Related To Pensions (Continued)

Actuarial assumptions: The total pension liability as of June 30, 2019 was determined by an actuarial valuation as of June 30, 2018 using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation Salary increases
Investment rate of return
Post-retirement benefit increases

2.50% 3.00 8.75%, average, including inflation 7.25%, net of pension plan investment expense, including inflation 1.50% semi-annually

Post-retirement mortality rates were based on the RP-2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males) for service retirements and dependent beneficiaries. The RP-2000 Disabled Mortality Table with future mortality improvement projected to 2025 with Society of Actuaries' projection scale BB (set forward two years for males and four years for females) was used for death after disability retirement. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB.
The actuarial assumptions used in the June 30, 2018 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014, with the exception of the long-term assumed rate of return on assets (discount rate) which was changed from 7.50% to 7.25%, and the assumed annual rate of inflation which was changed from 2.75% to 2.50%, effective with the June 30, 2018 valuation.

32

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020

NOTE 12: RETIREMENT PLANS (Continued)

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources And Deferred Inflows Of Resources Related To Pensions (Continued)

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

Asset class
Fixed income Domestic large equities Domestic small equities International developed market equities International emerging market equities
Total
* Rates shown are net of the 2.50% assumed rate of inflation

Target allocation
30.00% 51.00 1.50 12.40 5.10
100.00%

Long-term expected real rate of return*
(0.10)% 8.90 13.20 8.90 10.90

Discount rate: The discount rate used to measure the total pension liability was 7.25 percent. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

33

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020

NOTE 12: RETIREMENT PLANS (Continued)

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related To Pensions (Continued)

Sensitivity of the School District's proportionate share of the net pension liability to changes in the discount rate: The following presents the School District's proportionate share of the net pension liability calculated using the discount rate of 7.25%, as well as what the School District's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.25%) or 1-percentage-point higher (8.25%) than the current rate:

District's proportionate share of the net pension liability

1% Decrease (6.25%)
$ 112,682,654

Current discount rate
(7.25%)

1% Increase (8.25%)

$ 69,416,104 $ 33,835,627

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

General Information About The Public School Employees Retirement System (PSERS)

Plan description: PSERS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly in 1969 for the purpose of providing retirement allowances for public school employees who are not eligible for membership in the Teachers Retirement System of Georgia. The ERS Board of Trustees, plus two additional trustees, administers PSERS. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. PSERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/financials.

34

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020

NOTE 12: RETIREMENT PLANS (Continued)

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

Benefits Provided: A member may retire and elect to receive normal monthly retirement benefits after completion of ten years of creditable service and attainment of age 65. A member may choose to receive reduced benefits after age 60 and upon completion of ten years of service.

Upon retirement, the member will receive a monthly benefit of $15.25, multiplied by the number of years of creditable service. Death and disability benefits are also available through PSERS. Additionally, PSERS may make periodic cost-of-living adjustments to the monthly benefits. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contribution, the member forfeits all rights to retirement benefits.

Contributions: The general assembly makes an annual appropriation to cover the employer contribution to PSERS on behalf of local school employees (bus drivers, cafeteria workers, and maintenance staff). The annual employer contribution required by statute is actuarially determined and paid directly to PSERS by the State Treasurer in accordance with O.C.G.A. 47-4-29(a) and 60(b). Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.

Individuals who became members prior to July 1, 2012 contribute $4 per month for nine months each fiscal year. Individuals who became members on or after July 1, 2012 contribute $10 per month for nine months each fiscal year. The State of Georgia, although not the employer of PSERS members, is required by statute to make employer contributions actuarially determined and approved and certified by the PSERS Board of Trustees.

Pension Liabilities and Pension Expense

At June 30, 2020, the School District did not have a liability for a proportionate share of the net pension liability because of the related State of Georgia support. The amount of the State's proportionate share of the net pension liability associated with the School District is as follows:

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

$ 959,171

35

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020

NOTE 12: RETIREMENT PLANS (Continued)

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

The net pension liability was measured as of June 30, 2019. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2018. An expected total pension liability as of June 30, 2019 was determined using standard roll-forward techniques. The State's proportion of the net pension liability associated with the School District was based on actuarially determined contributions paid by the State during the fiscal year ended June 30, 2019.

For the year ended June 30, 2020, the School District recognized pension expense of $295,796 and revenue of $295,796 for support provided by the State of Georgia.

Actuarial Assumptions: The total pension liability was determined by an actuarial valuation as of June 30, 2018, using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation Salary increase Investment rate of return
Post-retirement benefit increases

2.75% N/A 7.30%, net of pension plan
investment expense, including inflation 1.50% semi-annually

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

The actuarial assumptions used in the June 30, 2018 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014, with the exception of the assumed investment rate of return.

36

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020

NOTE 12: RETIREMENT PLANS (Continued)

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

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

Asset class Fixed income Domestic large stocks Domestic small stocks International developed market stocks International emerging market stocks Alternatives
Total

Target allocation
30.00% 46.20 1.30 12.40 5.10 5.00
100.00%

Long-term expected real rate of return*
(0.10)% 8.90 13.20 8.90 10.90 12.00

* Rates shown are net of the 2.75% assumed rate of inflation

Discount Rate: The discount rate used to measure the collective total pension liability was 7.30%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

37

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020
NOTE 13: POSTEMPLOYMENT BENEFITS
Georgia School Personnel Employees Postemployment Health Benefit Fund
Plan Description. The School District participates in the State of Georgia School Employees Postemployment Benefit Fund (School OPEB Fund), which is another postemployment benefit (OPEB) plan administered by the State of Georgia Department of Community Health (DCH). Certified teachers and non-certified employees of the School District as defined in 20-2-875 of the Official Code of Georgia Annotated (O.C.G.A.) are provided OPEB through the School OPEB Fund - a cost-sharing multiple-employer defined benefit postemployment healthcare plan, reported as an employee trust fund of the State of Georgia and administered by a Board of Community Health (DCH Board). Title 20 of the O.C.G.A. assigns the authority to establish and amend the benefit terms of the group health plan to the DCH Board. The School OPEB Fund is included in the State of Georgia Comprehensive Annual Financial Report which is publicly available and can be obtained at https://sao.georgia.gov/comprehensive-annual-financial-reports.
Benefits: The School OPEB Fund provides healthcare benefits for retirees and their dependents due under the group health plan for public school teachers, including librarians, other certified employees of public schools, regional educational service agencies, and non-certified public school employees. Retiree medical eligibility is attained when an employee retires and is immediately eligible to draw a retirement annuity from Employees' Retirement System (ERS), Georgia Judicial Retirement System (JRS), Legislative Retirement System (LRS), Teachers Retirement System (TRS) or Public School Employees Retirement System (PSERS). If elected, dependent coverage starts on the same day as retiree coverage. Medicare-eligible retirees are offered Standard and Premium Medicare Advantage plan options. Non-Medicare eligible retiree plan options include Health Reimbursement Arrangement (HRA), Health Maintenance Organization (HMO) and a High Deductible Health Plan (HDHP). The School OPEB Fund also pays for administrative expenses of the fund. By law, no other use of the assets of the School OPEB Fund is permitted.
Contributions: As established by the Board of Community Health, the School OPEB Fund is substantially funded on a pay-as-you-go basis; that is, annual cost of providing benefits will be financed in the same year as claims occur. Contributions required and made to the School OPEB Fund from the School District were $1,567,496 for the year ended June 30, 2020. Active employees are not required to contribute to the School OPEB Fund.
38

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020

NOTE 13: POSTEMPLOYMENT BENEFITS (Continued)

OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB

At June 30, 2020, the School District reported a liability of $57,530,836 for its proportionate share of the net OPEB liability. The net OPEB liability was measured as of June 30, 2019. The total OPEB liability used to calculate the net OPEB liability was based on an actuarial valuation as of June 30, 2018. An expected total OPEB liability as of June 30, 2019 was determined using standard rollforward techniques. The School District's proportion of the net OPEB liability was actuarially determined based on employer contributions to the School OPEB Fund during the fiscal year ended June 30, 2019. At June 30 2019, the School District's proportion was 0.468792%, which was an increase of 0.004564% from its proportion measured as of June 30, 2018.

For the year ended June 30, 2020, the School District recognized OPEB expense of $1,447,979. At June 30, 2020, the School District reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Outflows of Resources

Deferred Inflows of Resources

Difference between expected and actual experience $

Net difference between projected and actual

earnings on OPEB plan investments

Changes in proportion and differences between

School District contributions and proportionate

share of contributions

Changes in plan assumptions

School District contributions subsequent to the

measurement date

Total

$

- $ 125,284

6,258,756 -

703,665 1,997,934
1,567,496 4,394,379

195,779 8,110,031
$ 14,564,566

39

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020

NOTE 13: POSTEMPLOYMENT BENEFITS (Continued)
School District contributions subsequent to the measurement date of $1,567,496 are reported as deferred outflows of resources and will be recognized as a reduction of the net OPEB liability in the year ending June 30, 2021. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Year ending June 30: 2021 2022 2023 2024 2025 2026 Total

$ (2,668,641) (2,668,641) (2,673,456) (2,307,860) (1,194,282) (224,803)
$ (11,737,683)

Actuarial Assumptions:

The total OPEB liability as of June 30, 2019 was determined by an actuarial valuation as of June 30, 2018 using the following actuarial assumptions and other inputs, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2019:

Inflation

2.50%

Salary Increases

3.00-8.75%, including inflation

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

7.30%, compounded annually, net of investment expense, and including inflation
7.25% 5.375%
4.75% 4.75%
2028 2022

40

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020
NOTE 13: POSTEMPLOYMENT BENEFITS (Continued)
Mortality rates were based on the RP-2000 Combined Mortality Table for Males or Females, as appropriate, with adjustments for mortality improvements based on Scale BB as follows:
For TRS Members: The RP-2000 White Collar Mortality Table projected to 2025 with projection scale BB (set forward 1 year for males) was used for death after service retirement and beneficiaries. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward 2 years for males and four years for females) was used for death after disability retirement.
For PSERS Members: The RP-2000 Blue Collar Mortality Table projected to 2025 with projection scale BB (set forward 3 years for males and 2 years for females) was used for the period after service retirement and for beneficiaries of deceased members. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward 5 years for both males and females) was used for the period after disability retirement.
The actuarial assumptions used in the June 30, 2018 valuation were based on the results of an actuarial experience study for the pension systems, which covered the five-year period ending June 30, 2014, which covered the five-year period ending June 30, 2014, and adopted by the pension Board on December 17, 2015. The next experience study for TRS will be for the period ending June 30, 2018.
The remaining actuarial assumptions (e.g., initial per capita costs, health care cost trends, rate of plan participation, rates of plan election, etc.) used in the June 30, 2018 valuation were based on a review of recent plan experience done concurrently with the June 30, 2018 valuation.
Projection of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the School District and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculation.
41

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020

NOTE 13: POSTEMPLOYMENT BENEFITS (Continued)

The long-term expected rate of return on OPEB plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected nominal returns, net of investment expense and the assumed rate of inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Beginning in fiscal year 2018, the State OPEB fund updated their investment strategy to a more long-term approach, investing more in domestic and international stocks. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset class
Fixed income Domestic large stocks Domestic small stocks International developed market stocks International emerging market stocks Alternatives
Total

Target allocation
30.00% 46.20% 1.30% 12.40% 5.10% 5.00%
100.00%

Long-Term Expected Real Rate of Return*
(0.10)% 8.90% 13.20% 8.90% 10.90% 12.00%

*Net of Inflation

Discount Rate:
In order to measure the total OPEB liability for the School OPEB, a single equivalent interest rate of 3.58% was used as the discount rate, as compared with last year's rate of 3.87%. This is comprised mainly of the yield or index rate for 20 year tax-exempt general obligation bonds with an average rating of AA or higher (3.58% per the Municipal Bond Index Rate). The projection of cashflows used to determine the discount rate assumed that contributions from members and from the employers will be made at the current level as averaged over the last five years, adjusted for annual projected changes in headcount. Projected future benefit payments for all members were projected through 2119. Based on these assumptions, the OPEB plan's fiduciary net position was projected to be available to make OPEB payments for inactive employees through year 2026. Therefore, the calculated discount rate of 3.58% was applied to all periods of projected benefit payments to determine the total OPEB liability.

42

HABERSHAM COUNTY BOARD OF EDUCATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020

NOTE 13: POSTEMPLOYMENT BENEFITS (Continued)

Sensitivity of The School District's Proportionate Share of The Net OPEB Liability to Changes in the Discount Rate:

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

School District's proportionate share of the net OPEB liability $

1% Decrease (2.58%)

Current discount rate
(3.58%)

66,869,821 $ 57,530,836 $

1% Increase (4.58%)
49,933,992

Sensitivity of the School District's Proportionate Share of the Net OPEB Liability to Changes in the Healthcare Cost Trend Rate:

The following presents the School District's proportionate share of the net OPEB liability, as well as what the School District's proportionate share of the net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower or 1-percentage-point higher than the current healthcare trend rates:

Current

1%

healthcare cost

1%

Decrease

trend rate

Increase

School District's proportionate

share of the net OPEB liability $ 48,463,635 $ 57,530,836 $ 69,046,871

43

II. REQUIRED SUPPLEMENTARY INFORMATION

HABERSHAM COUNTY BOARD OF EDUCATION
GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (GAAP BASIS)
FOR THE FISCAL YEAR ENDED JUNE 30, 2020

REVENUES Taxes State funds Federal funds Charges for services Investment income 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 Debt service
Total expenditures
Net change in fund balances
FUND BALANCES, beginning of year
FUND BALANCES, end of year

Budget Original

Final

$

23,008,000 $ 24,298,900 $

50,785,638

51,870,280

8,082,411

11,485,311

849,826

2,061,492

91,000

107,405

1,487,674

1,424,428

84,304,549

91,247,816

Actual

Variance With Final Budget

24,269,351 $ 51,849,552
8,134,714 1,917,323
110,381 3,225,443 89,506,764

(29,549) (20,728) (3,350,597) (144,169)
2,976 1,801,015 (1,741,052)

55,497,991

58,824,392

2,764,069 2,297,506 1,764,556
723,012 5,105,387
519,567 6,142,834 4,162,771
618,754 167,000 4,778,500
84,541,947

3,989,264 1,994,633 1,720,700
887,489 5,284,200
522,000 7,586,000 4,146,000
357,000 827,000 4,744,236
800 90,883,714

(237,398)

364,102

10,262,939

10,262,939

$ 10,025,541 $ 10,627,041 $

56,063,105
3,377,624 1,854,472 1,718,346
733,594 5,283,416
519,096 7,264,008 4,145,766
356,219 825,692 6,834,320
88,975,658
531,106
10,262,939
10,794,045 $

2,761,287
611,640 140,161
2,354 153,895
784 2,904 321,992
234 781 1,308 (2,090,084) 800 1,908,056
167,004
-
167,004

44

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

School District's proportion of the net pension liability

2020 0.322825%

2019 0.327729%

2018 0.330166%

School District's proportionate share of the net pension liability

$

69,416,104 $

60,833,522 $

61,362,368

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

214,812

218,476

320,225

Total

$

69,630,916 $

61,051,998 $

61,682,593

School District's covered payroll

$

39,394,612 $

39,022,731 $

38,048,629

School District's proportionate share of the net pension liability as a percentage of its covered payroll

176.21%

155.89%

161.27%

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

78.56%

80.27%

79.33%

School District's proportion of the net pension liability

2017 0.334515%

2016 0.340686%

2015 0.347005%

School District's proportionate share of the net pension liability

$

69,014,174 $

51,866,060 $

43,839,505

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

337,319

326,098

239,029

Total

$

69,351,493 $

52,192,158 $

44,078,534

School District's covered payroll

$

36,874,778 $

36,187,575 $

35,594,471

School District's proportionate share of the net pension liability as a percentage of its covered payroll

187.16%

143.33%

123.16%

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

76.06%

81.44%

84.03%

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

45

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

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

2020

2019

2018

$

8,882,094 $

8,233,474 $

6,559,721

8,882,094

8,233,474

6,559,721

$

- $

- $

-

$

42,015,582 $

39,394,612 $

39,022,731

21.14%

20.90%

16.81%

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

2017

2016

2015

$

5,408,349 $

5,236,435 $

4,728,929

5,408,349

5,236,435

4,728,929

$

- $

- $

-

$

38,048,629 $

36,874,778 $

36,187,575

14.21%

14.20%

13.07%

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

46

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

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

2020 0.000000%

2019 0.000000%

2018 0.000000%

$

- $

- $

-

959,171

908,747

837,279

$

959,171 $

908,747 $

837,279

$ 3,083,357 $ 2,967,051 $ 2,977,940

N/A 85.02%

N/A 85.26%

N/A 85.69%

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

2017 0.000000%

2016 0.000000%

2015 0.000000%

$

- $

- $

-

1,065,159

703,936

626,024

$ 1,065,159 $

703,936 $

626,024

$ 2,663,776 $ 2,712,452 $ 2,697,737

N/A 81.00%

N/A 87.00%

N/A 88.29%

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

47

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

School District's proportion of the net OPEB liability

School District's proportionate share of the net OPEB liability

$

Total

$

School District's covered- employee payroll

$

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

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

2020 0.468792% 57,530,836 $ 57,530,836 $ 37,753,541 $
152.39% 4.63%

2019 0.464228% 59,001,955 $ 59,001,955 $ 37,066,034 $
159.18% 2.93%

2018 0.466095% 65,486,160 65,486,160 35,851,308
182.66% 1.61%

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

48

HABERSHAM COUNTY BOARD OF EDUCATION
REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS SCHOOL OPEB FUND
FOR THE FISCAL YEAR ENDED JUNE 30

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

2020

2019

$

1,567,496 $

2,524,770 $

1,567,496

2,524,770

$

- $

- $

$

39,567,248 $

37,753,541 $

3.962%

6.688%

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

2018 2,406,049 2,406,049 -
37,066,034 6.491%

49

HABERSHAM COUNTY BOARD OF EDUCATION
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION FOR THE FISCAL YEAR ENDED JUNE 30, 2020
Teachers Retirement System of Georgia: Changes of assumptions: In 2010 and later, the expectation of retired life mortality was changed to the RP2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. In 2010, assumed rates of salary increase were adjusted to more closely reflect actual and anticipated experience. On November 18, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, disability, withdrawal and salary increases. The expectation of retired life mortality was changed to RP-2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males). On May 15, 2019, the Board adopted recommended changes from the smoothed valuation interest rate methodology that has been in effect since June 30, 2009, to a constant interest rate method. In conjunction with the methodology, the long-term assumed rate of return in assets (discount rate) has been changed from 7.50% to 7.25%, and the assumed annual rate of inflation has been reduced from 2.75% to 2.50%. Public Schools Employees Retirement System of Georgia: Changes of assumptions: In 2010 and later, the expectation of retired life mortality was changed to the RP-2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. On December 17, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement and withdrawal. The expectation of retired life mortality was changed to the RP-2000 Blue Collar Mortality Table projected to 2025 with projection scale BB (set forward 3 years for males and 2 years for females). On March 15, 2018, the Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for June 30, 2017 actuarial valuation. In addition, based on the Board's new funding policy, the assumed investment rate of return was further reduced by 0.10% from 7.40% to 7.30% as of the June 30, 2018 measurement date. School OPEB Fund: Changes in assumptions: The June 30, 2017 actuarial valuation was revised, for various factors, including the methodology used to determine how employees and retirees were assigned to each of the OPEB Funds and anticipated participation percentages. Current and former employees of State organizations (including technical colleges, community service boards and public health departments) are now assigned to State OPEB fund based on their last employer payroll location; irrespective of retirement affiliation. The discount rate was updated from 3.07% as of June 30,2016 to 3.58% as of June 30, 2017 to 3.87% as of June 30, 2018, and back to 3.58% as of June 30, 2019. In the June 30, 2015 actuarial valuation, decremental and underlying inflation assumptions were changed to reflect the Retirement Systems' experience In the June 30, 2012 actuarial valuation, a data audit was performed and data collection procedures and assumptions were changed.
50

III. OTHER SUPPLEMENTARY INFORMATION

HABERSHAM COUNTY BOARD OF EDUCATION
SCHEDULE OF EXPENDITURES OF SPECIAL PURPOSE LOCAL OPTION SALES TAX PROCEEDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2020

Project

Original Estimated Cost (1)

Current Estimated Cost (2)

Expended In Current Year (3) (4)

Expended In Prior Years (3)

SPLOST Issue 2016:

(i) Paying a portion of the principal and

interest due on outstanding Habersham

County School District (Georgia) General

Obligation Refunding Bonds, Series 2013, the

maximum amount of total debt service to be

paid shall not exceed $28,000,000.

$ 20,000,000 $ 20,000,000 $ 4,065,034 $

(ii) Modernizing, adding to, renovating, repairing, improving, furnishing and equipping existing school buildings and other facilities, including, but not limited to Hazel Grove and Woodville Elementary Schools, agricultural, athletic/physical education and fine arts facilities; (iii) Acquiring new school equipment, including, but not limited to agricultural, athletic/physical education and fine arts; (iv) Acquiring technology, including safety and security equipment, computers/tablets, hardware, software and infrastructure; (v) Acquiring school buses and other vehicles.

15,000,000

15,000,000

2,559,386

2,015,525 5,797,854

Total Completion
Cost

Project Status

$

6,080,559 Ongoing

8,357,240 Ongoing

Total

$ 35,000,000 $

35,000,000 $

6,624,420 $

7,813,379 $

14,437,799

(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax.
(2) The School District's current estimate of total cost for the project(s). Includes all cost from project inception to completion.
(3) The voters of Habersham 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) During fiscal year 2020, the Habersham County Board of Education issued General Obligation Refunding Bond Series 2020, to refund a portion of the 2013 Bond Issue. The amount expended in the current year includes debt service on the replacement refunding issues.

51

IV. SINGLE AUDIT SECTION

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT
OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Superintendent and Members of the Habersham County Board of Education
Clarkesville, Georgia We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Habersham County Board of Education, as of and for the year ended June 30, 2020, and the related notes to the financial statements, which collectively comprise the Habersham County Board of Education's basic financial statements, and have issued our report thereon dated January 26, 2021. Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Habersham County Board of Education's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Habersham County Board of Education's internal control. Accordingly, we do not express an opinion on the effectiveness of the Habersham County Board of Education's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
200 GALLERIA PARKWAY S.E., SUITE 1700 ATLANTA, GA 30339-5946 770-955-8600 800-277-0080 FAX 770-980-4489 www.mjcpa.com Members of The American Institute of Certified Public Accountants

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and, therefore, material weaknesses or significant deficiencies may exist that have not been identified. We did identify a certain deficiency in internal control, described in the accompanying schedule of findings and questioned costs as item 2020-001 that we consider to be a material weakness.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Habersham County Board of Education's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. 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.
The School District's Response to the Finding The School District's response to the finding identified in our audit is described in the accompanying schedule of findings and questioned costs. The School District's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Atlanta, Georgia January 26, 2021
53

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE
To the Superintendent and Members of the Habersham County Board of Education
Clarkesville, Georgia
Report on Compliance for Each Major Federal Program
We have audited the Habersham County Board of Education's compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the Habersham County Board of Education's major federal programs for the year ended June 30, 2020. The Habersham County Board of Education's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs.
Management's Responsibility
Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of the Habersham County Board of Education's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the Habersham County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the Habersham County Board of Education's compliance.
200 GALLERIA PARKWAY S.E., SUITE 1700 ATLANTA, GA 30339-5946 770-955-8600 800-277-0080 FAX 770-980-4489 www.mjcpa.com Members of The American Institute of Certified Public Accountants

Opinion on Each Major Federal Program
In our opinion, the Habersham County Board of Education complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2020.
Report on Internal Control Over Compliance
Management of the Habersham County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the Habersham County Board of Education's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Habersham County Board of Education's internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
55

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Atlanta, Georgia January 26, 2021
56

HABERSHAM COUNTY BOARD OF EDUCATION
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2020

Federal Grantor/Pass-Through Grantor/Program Title
U. S. Department of Agriculture: Passed through Georgia Department of Education: Child Nutrition Cluster: School Breakfast Program - Cash Assistance National School Lunch Program: Non-Cash Assistance - Commodities (1) Cash Assistance School Snack Program
Total Child Nutrition Cluster
Fresh Fruit and Vegetable Program
Child Nutrition Discretionary Grants Limited Availability
Passed through Office of the State Treasurer Forest Service Schools and Roads Cluster Schools and Roads - Grants to States
Total U. S. Department of Agriculture
U.S. Department of Education: Passed through Georgia Department of Education: Special Education Cluster: Special Education - Grants to States (IDEA, Part B) Special Education - Grants to States (IDEA, Part B) Special Education - Preschool Grants (IDEA Preschool) Special Education - Preschool Grants (IDEA Preschool)
Total Special Education Cluster
Career and Technical Education - Basic Grants to States
English Language Acquisition State Grants English Language Acquisition State Grants English Language Acquisition State Grants Total English Language Acquisition State Grants
Supporting Effective Instruction State Grants Supporting Effective Instruction State Grants Supporting Effective Instruction State Grants Total Supporting Effective Instruction State Grants
Migrant Education - State Grant Program Migrant Education - State Grant Program Migrant Education - State Grant Program Total Migrant Education - State Grant Program

Federal CFDA Number

Pass Through Entity Identifying
Number

Total Expenditures

10.553 10.555 10.555 10.555
10.582 10.579

205GA324N1099 $ 205GA324N1099 205GA324N1099 205GA324N1099
195GA324L1603 205GA350N8103

1,072,483
318,423 2,142,361
21,362
3,554,629
6,831
8,047

10.665

486 Forest

29,306 3,598,814

84.027 84.027 84.173 84.173

H027A190073 H027A180073 H173A190081 H173A180081

84.048
84.365 84.365

V048A200010
S365A180010 S365A190010

84.367 84.367

S367A180001 S367A190001

84.011 84.011

S011A170011 S011A180011

1,468,998 35,466 90,906 1,068
1,596,438
63,510
5,060 107,110 112,171
69,376 162,460 231,836
7,954 104,518 112,472
(Continued)

57

HABERSHAM COUNTY BOARD OF EDUCATION
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2020

Federal Grantor/Pass-Through Grantor/Program Title
Small Rural Schools Achievement Alternative Uses of Funds Program
Student Support and Academic Enrichment Student Support and Academic Enrichment Student Support and Academic Enrichment Total Student Support and Academic Enrichment
COVID-19 Education Stabilization Fund
Title I Grants to Local Educational Agencies Title I Grants to Local Educational Agencies Title I Grants to Local Educational Agencies Title I Grants to Local Educational Agencies
Total U. S. Department of Education
U. S. Department of Defense: R.O.T.C. Program Total U. S. Department of Defense

Federal CFDA Number
84.358

Pass Through Entity Identifying
Number

Total Expenditures

S358B180010

$

17,023

84.424 84.424
84.425D

S424A180011 S424A19001-1
S425D200012

10,000 100,454 110,454
519,172

84.010 84.010

S010A180010 S010A190010

11,651 1,700,237 1,711,888
4,474,963

12.Unknown

N/A

60,936 60,936

Total Expenditures of Federal Awards

$

8,134,712

(1) The amounts shown for the Food Distribution Program represents the federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the system during the current fiscal year.
The Schedule of Expenditures of Federal Awards includes the federal grant activity of the Habersham County Board of Education and is presented on the modified accrual basis of accounting.
The School District did not utilize the 10% de minimis indirect cost rate.

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

58

HABERSHAM COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020

SECTION I SUMMARY OF AUDITOR'S RESULTS

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

Unmodified

Internal control over financial reporting: Material weaknesses identified?

X yes

no

Significant deficiencies identified?

yes X none reported

Noncompliance material to financial statements noted?

yes X no

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

yes X no

Significant deficiencies identified?

yes X none reported

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

Unmodified

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

yes X no

Identification of major federal program:

Name of Federal Program or Cluster Child Nutrition Cluster Title I Part A Cluster

CFDA Number 10.553 and 10.555 84.010

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

$750,000

Auditee qualified as low-risk auditee?

yes X no

59

HABERSHAM COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020

SECTION II FINANCIAL STATEMENT FINDINGS AND RESPONSES
2020-001 Capital Assets
Criteria: Internal controls over financial reporting should be in place to ensure that all capital assets are reported within the financial statements in accordance with generally accepted accounting principles.
Condition: Internal controls were not sufficient to detect a misstatement in capital assets of the School District.
Context/Cause: During our testing of capital asset balances, we noted an adjustment to capital assets in the amount of approximately $766,000 due to various capital outlay items not being capitalized in a prior year. This adjustment was due to the School District recording the capital outlay in the Capital Projects fund but not capitalizing those expenditures in Governmental Activities.
Effects: An adjustment of approximately $766,000 was required to correctly report capital assets as of the fiscal year ended June 30, 2020.
Recommendation: We recommend the School District carefully review its capital assets detail and capital outlay expenditures each year to ensure that all material capital assets are properly recorded and depreciated in accordance with generally accepted accounting principles.
Auditee's Response: We concur with the finding and have addressed this in the current fiscal year. We will ensure that all material capital assets are properly reported during the year and at the conclusion of each financial reporting cycle.

None reported.

SECTION III FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS

60

HABERSHAM COUNTY BOARD OF EDUCATION
SCHEDULE OF PRIOR AUDIT FINDINGS FOR THE FISCAL YEAR ENDED JUNE 30, 2020

None reported.

SECTION IV STATUS OF PRIOR AUDIT FINDINGS

61

HABERSHAM COUNTY BOARD OF EDUCATION P.O. Box 70, Clarkesville, Georgia 30523 Ph: 706-754-2110 Fax: 706-754-1549
Matthew Cooper, Superintendent MANAGEMENT'S CORRECTIVE ACTION PLAN
FOR THE YEAR ENDED JUNE 30, 2020
2020-001 Capital Assets Name of the Contact Person Responsible for the Corrective Action Plan: Staci Newsome, Chief Financial Officer. Corrective Action Plan: The internal control deficiency for financial statement reporting was identified during the audit process for year ended June 30, 2020. Although Habersham County Board of Education Policy DIB states the significant value for capital asset reports of equipment is $10,000 per item, and the per item purchase price of this transaction was $832.13, it has been determined that the grand total capital outlay expenditures of this installment sales agreement reached a material amount thus requiring capital asset to be reported in accordance with generally accepted accounting principles. Financial staff have incorporated additional internal control processes relative to capital asset reporting and GAAP compliance to ensure the district's financial statements are materially correct when presented for audit. Financial staff will review all capital outlay purchases for bulk purchases of capital assets. Completion Date: January 31, 2021
62