HARALSON COUNTY BOARD OF EDUCATION BUCHANAN, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2003
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor
HARALSON COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTION I
FINANCIAL
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
REQUIRED SUPPLEMENTARY INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
EXHIBITS
BASIC FINANCIAL STATEMENTS
DISTRICT-WIDE FINANCIAL STATEMENTS
A
STATEMENT OF NET ASSETS
3
B
STATEMENT OF ACTIVITIES
4
FUND FINANCIAL STATEMENTS
C
BALANCE SHEET
GOVERNMENTAL FUNDS
6
D
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS
7
E
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES
GOVERNMENTAL FUNDS
8
F
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT
OF REVENUES, EXPENDITURES AND CHANGES IN FUND
BALANCES TO THE STATEMENT OF ACTIVITIES
9
G
STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
11
H
NOTES TO THE BASIC FINANCIAL STATEMENTS
12
SCHEDULES
REQUIRED SUPPLEMENTARY INFORMATION
1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES - BUDGET AND ACTUAL
GENERAL FUND
29
HARALSON COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTION I
FINANCIAL
SCHEDULES
SUPPLEMENTARY INFORMATION
2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
30
3 SCHEDULE OF STATE REVENUE
32
4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
34
5 ALLOTMENTS AND EXPENDITURES
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)
BY PROGRAM
35
SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133
SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS
SECTION I FINANCIAL
RUSSELL W. HINTON
STATE AUDITOR
(404) 656-2174
DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400
March 12, 2004
Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Haralson County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) ofthe Haralson County Board of Education, as of and for the year ended June 30, 2003, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe Haralson County Board ofEducation's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opm1ons.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective position ofthe governmental activities, each major fund, and the aggregate remaining fund information of the Haralson County Board of Education, as of June 30, 2003, and the respective changes in financial position thereoffor the year then ended in conformity with accounting principles generally accepted in the United States of America.
2003-34ARL-11
As discussed in Note 2 to the basic financial statements, during fiscal year 2003, the Board completed a comprehensive inventory of its capital assets for inclusion in the basic financial statements and consolidated its individual school activity accounts for inclusion in the basic financial statements. These changes are in accordance with generally accepted accounting principles.
As described in Note 2, the Haralson County Board of Education has implemented a new financial reporting model as required by provisions of Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments, as of June 30, 2003.
In accordance with Government Auditing Standards, we have also issued our report dated March 12, 2004, on our consideration of the Haralson County Board of Education's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
Management's Discussion and Analysis and the Schedule ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through ix and page 29 respectively, are not a required part of the basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Haralson County Board of Education's basic financial statements. The accompanying supplementary information which consist of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U.S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
2003-34ARL-11
A copy ofthis report has been filed as a permanent record in the office ofthe State Auditor and made available to the press ofthe State, as provided for by Official Code ofGeorgia Annotated section 506-24.
Respectfully submitted,
~------
~.~
RWH:as 2003-34ARL-11
State Auditor
HARALSON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
The discussion and analysis of the Haralson County Board of Education's financial performance provides an overall review of the Board's financial activities for the fiscal year ended June 30, 2003. The intent of this discussion and analysis is to look at the Board's financial performance as a whole; readers should also review the financial statements and the notes to the basic financial statements to enhance their understanding of the Board's financial performance.
Financial Highlights
Key financial highlights for fiscal year 2003 are as follows:
The Governmental Accounting Standards Board (GASB) issued GASB Statement 34 in June of 1999, requiring governments to comply with a new reporting model for financial statements. Based upon total revenues, the Haralson County Board of Education was a Phase Two implementer, and was required to implement GASB Statement 34 beginning in fiscal year 2003.
Due to this being the implementation year for GASB Statement 34, many comparisons are not available that will be available for fiscal year 2004.
In total, net assets decreased $958,050, which represents a 4 percent decrease from fiscal year 2002. This total decrease was due to governmental activities since the Board has no business-type activities.
General revenues accounted for $10 million in revenue or 32 percent of all revenues. Program specific revenues in the form of charges for services and sales, grants and contributions accounted for $21.6 million or 68 percent of total revenues. Total revenues were $31.6 million.
The Board had $32.6 million in expenses related to governmental activities; $21.6 million of these expenses were offset by program specific charges for services, grants or contributions. General revenues of $10 million were less than adequate to provide for the remainder of expenses related to these activities.
Among major funds, the general fund had $27.7 million in revenues and $27.5 million in expenditures. Fund balance within the general fund increased to $2.6 million from $2.4 million.
Using the Basic Financial Statements
This annual report consists of a series of financial statements and notes to those statements. These statements are organized so the reader can understand the Haralson County Board of Education as a financial whole, or as an entire operating entity.
HARALSON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
The Statement ofNet Assets and Statement ofActivities provide information about the activities of the whole Board, presenting both an aggregate view of the Board's finances and a longer-term view of those finances. The fund financial statements provide the next level of detail. For governmental funds, these statements tell how services were financed in the short-term as well as what remains for future spending. In the case of the Haralson County Board of Education, the general fund is by far the most significant fund.
Reporting the Board as a Whole
Statement ofNet Assets and Statement ofActivities
While these documents contain the large number of funds used by the Board to provide programs and activities, the view of the Board as a whole looks at all financial transactions and asks the question, "How did we do financially during fiscal year 2003?" The Statement ofNet Assets and the Statement of Activities answer this question. These statements include all assets and all liabilities using the accrual basis ofaccounting similar to the accounting used by most privatesector companies. This basis of accounting takes into account all of the current year's revenues and expenses regardless of when cash is received or paid.
These two statements report the Board's net assets and changes in those assets. This change in net assets is important because it tells the reader whether, for the Board as a whole, the financial position of the Board has improved or diminished. The causes of this change may be the result of many factors, some financial, some not. Nonfinancial factors include the Board's property tax base, facility conditions, required educational programs and other factors.
In the Statement of Net Assets and the Statement of Activities, the Board has one distinct type of activity:
Governmental Activities - All of the Board's programs and services are reported here including instruction, support services, operation and maintenance of plant, pupil transportation, food service, after school program, school activity accounts and various others.
Reporting the Board's Most Significant Funds
Fund Financial Statements
Fund financial reports provide detailed information about the Board's major funds. The Board uses many funds to account for a multitude of financial transactions. However, these fund financial statements focus on the Board's most significant funds. The Board's major governmental funds are the general fund, the district-wide capital projects fund, and the debt service fund.
11
HARALSON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
Governmental Funds Most of the Board's activities are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end available for spending in future periods. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the Board's general government operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The relationship (or differences) between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmentalfunds is reconciled in the financial statements. Fiduciary Funds The district is the trustee, or fiduciary, for assets that belong to others, such as school clubs and organizations within the school activity accounts. The district is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The district excludes these activities from the district-wide financial statements because it cannot use these assets to finance its operations. The Board as a Whole The perspective of the Statement of Net Assets is of the Board as a whole. Table 1 provides a summary of the Board's net assets for fiscal year 2003. Since this is the first year the Board has been required to prepare financial statements following GASB Statement 34, net asset comparisons to fiscal year 2002 are not available.
111
HARALSON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
Table 1 Net Assets (in Thousands)
Governmental Activities Fiscal Year 2003
Assets Current and Other Assets Capital Assets, Net
$
8,695
22,774
Total Assets
$_ _=31=.,_4.c..=6'-"--9
Liabilities Current and Other Liabilities Long-Term Liabilities
$
4,113
6,333
Total Liabilities
$_~1~0_44~6
Net Assets Invested in Capital Assets, Net of Related Debt Restricted Unrestricted
$
17,089
2,089
1 845
Total Net Assets Total net assets decreased $0.958 million in fiscal year 2003.
$=="'=21-,0=2=3
Table 2 shows the changes in net assets for fiscal year 2003. Since this is the first year the Board has been required to prepare financial statements following GASB 34, revenue and expense comparisons to fiscal year 2002 are not available.
IV
HARALSON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
Table 2 Change in Net Assets
(in Thousands)
Revenues Program Revenues: Charges for Services and Sales Operating Grants and Contributions Capital Grants and Contributions
Total Program Revenues
General Revenues: Taxes Property Taxes For Maintenance and Operations Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Debt Service For Capital Projects Intangible Recording Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Total Revenues
Program Expenses Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Operations of Non-Instructional Services Food Services Interest on Short-Term and Long-Term Debt
Total Expenses
Decrease in Net Assets
V
Governmental Activities Fiscal Year 2003
$
514
19,117
1,981
$ 21,612
$
5,322
15
1,652 6
39
1,522 206
1,272
$ 10,034
$ 31,646
$ 21,616
1,317 608 524 411
1,559 224
1,565 2,331
223
2,023 203
$ 32,604
$===-9"='5==8
HARALSON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
Governmental Activities
Instruction comprises 66 percent of governmental program expenses. General and Business expense comprises 1.9 percent of governmental program expenses. Interest expense was attributable to the outstanding bonds for capital projects.
The Statement of Activities shows the cost of program services and the charges for services and grants offsetting those services. Table 3 shows, for governmental activities, the total cost of services and the net cost of services. That is, it identifies the cost of these services supported by tax revenue and unrestricted State entitlements. Since this is the first year the Board has been required to prepare financial statements following GASB Statement 34, cost of service comparisons to fiscal year 2002 are not available.
Table 3 Governmental Activities
(in Thousands)
Total Cost of Services Fiscal Year 2003
Net Cost of Services Fiscal Year 2003
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 Other Support Services Operations ofNon-Instructional Services Food Services Interest on Short-Term and Long-Term Debt
$ 21,616 $
1,317 608 524 411
1,559 224
1,565 2,331
223
2,023 203
6,528
754 342 209 -160 700 224
588
1,068 211
325 203
Total Expenses
$ 32!604 $ 10!992
Although program revenues make up a majority of the revenues, the Board is still dependent upon tax revenues for governmental activities. Over 30 percent of instruction activities are supported through taxes and other general revenues.
vi
HARALSON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
The Board's Funds
The Board's governmental funds are accounted for using the modified accrual basis of accounting. Total governmental funds had revenues and other financing sources of $31.6 million and expenditures and other financing uses of $38.9 million. There was a decrease of $8.9 million in the capital projects fund due to capital funds on hand being expended. The general fund had an increase of $0.16 million and the debt service fund had an increase of $1.5 million. The positive change in the fund balance of the general fund for the year indicates that the Board was able to meet current costs from current revenues. The increase in the debt service fund was due to no principal payments due within fiscal year 2003.
General Fund Budgeting Highlights
The Board's budget is prepared according to Georgia law. The most significant budgeted fund is the General Fund.
During the course of fiscal year 2003, the Board amended its general fund budget as needed. The Board uses site-based budgeting. The budgeting systems are designed to tightly control total site budgets but provide flexibility for site management.
For the General Fund, the final budgeted revenues of $22.1 million exceeded the original budgeted amount of $21.7 million by $0.4 million. This difference was due to an increase in ad valorem tax revenues budgeted. The actual revenues of $27.7 million exceeded the final budgeted amount by $5.6 million. Federal funds, state funds and revenue from other local LUA's (local units of administration) not originally budgeted contributed to the variance in actual revenues exceeding budgeted revenues.
The final budgeted expenditures of $22.2 million exceeded the original budgeted amount of $22.1 million by $0.1 million. This difference was due to an increase in pupil services and school administration of $0.1 million. The actual expenditures of $27.5 exceeded the final budgeted amount by $5.4 million. This was primarily due to the inclusion in our financial statements of the actual amounts of food service, other support services, improvement of instructional services, and pupil services accounts which were not included in our budgeted amounts. Reclassification of pupil services and improvement of instructional services by the Department of Education contributed to the instruction category variance.
General Fund revenues exceeded expenditures by $0.16 million. The Board has made a concerted effort to maintain fund balance in anticipation of future needs, and this result is evidence of their work.
vii
HARALSON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
Capital Assets and Debt Administration
Capital Assets
At the end of fiscal year 2003, the Board had $22.8 million invested in capital assets, all in governmental activities. Table 4 indicates balances at June 30, 2003. Since this is the first year the Board has been required to prepare financial statements following GASB Statement 34, capital asset comparisons to fiscal year 2002 are not available.
Table 4 Capital Assets In Thousands
Governmental Activities Fiscal Year 2003
Land Construction in Progress Buildings and Improvements Equipment Land Improvements
$
391
6,771
18,092
3,914
938
Total Assets Less: Accumulated Depreciation
$ 30,106 -7,332
Capital Assets - Net
$ 22,774
The primary increases occurred in Buildings and Improvements and in Construction in Progress. Due to the aging facility that housed Tallapoosa Primary School, the Board is building a new facility on a new campus. Two other extensive renovation projects at Buchanan Elementary and West Haralson Elementary were completed at the beginning of the school year. Presently, phase I of an extensive renovation to Haralson County High School is in the final engineering stage.
Debt
At June 30, 2003, the Board had $6.3 million in bonds outstanding with $0.97 million due within one year. Since this is the first year the Board has been required to prepare financial statements using GASB Statement 34, debt comparisons to fiscal year 2002 are not available. At June 30, 2003, the Board's overall legal bonding authority was $46,487,010.
vm
HARALSON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
Current Issues Haralson County, and the Haralson County School System, has suffered economic setbacks slightly less than that experienced in populous areas of the state. Sales tax revenue growth has remained steady. Capital projects initially planned in the SPLOST resolution are still scheduled to take place as planned. The tax digest increased 57 percent between 1998 and 2003, including growth, reassessment and reappraisals. Population growth is continuing at a steady rate. The number of building permits issued decreased 20 percent from 2002 to 2003. Contacting the Board's Financial Management This financial report is designed to provide our citizens, taxpayers, investors, and creditors with a general overview of the Board's finances and to show the Board's accountability for the money it receives. If you have questions about this report or need additional information, contact Todd Hooper, Director of Finance & Facilities at the Haralson County Board of Education, 10 South Van Wert Street, Buchanan, Georgia 30113. You may also email your questions to todd.hooper@haralson.k12.ga.us.
IX
HARALSON COUNTY BOARD OF EDUCATION
HARALSON COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30. 2003
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories Capital Assets Land Construction in Progress Land Improvements Buildings and Building Improvements Equipment Less: Accumulated Depreciation
Total Assets
LIABILITIES
Accounts Payable Salaries Payable Contracts Payable Retainages Payable Deferred Revenue Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Bus Replacement Continuation of Federal Programs Debt Service Unrestricted
Total Net Assets
Total Liabilities and Net Assets
The notes to the basic financial statements are an integral part of this statement. -3 -
EXHIBIT"A"
GOVERNMENTAL ACTIVITIES
$
4,129,601
945,859
584,509 2,345,769
573,838 77,558 37,862
390,751 6,771,287
937,945 18,091,820 3,914,073 -7,331,988
$ ===3=1=4=6=8,=88=4=
$
800,058
2,419,921
643,318
238,137
11,117
970,000 5,363,648
$
10 446 199
$
17,089,205
25,246 515,681 1,547,792 1 844 761
$
21,022,685
$ ===3=1=,4=6=8=,8=84=
HARALSON COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30. 2003
GOVERNMENTAL ACTIVITIES
Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Operations of Non-Instructional Services Food Services Interest on Short-Term and Long-Term Debt
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Debt Services For Capital Projects Real Estate Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Change in Net Assets
Net Assets - Beginning of Year
Net Assets - Ending of Year
EXPENSES
CHARGES FOR SERVICES
$
21,615,862 $
1,317,199 608,115 524,385 411,339
1,558,512 224,523
1,564,632 2,331,468
222,833
2,022,928 202 785
$
32,604,581 $
6,110
507,655 513 765
The notes to the basic financial statements are an integral part of this statement. -4-
EXHIBIT"B"
PROGRAM REVENUES
OPERATING
CAPITAL
GRANTS AND
GRANTS AND
CONTRIBUTIONS CONTRIBUTIONS
NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS
$
13,820,341 $
563,580 265,703 315,337 571,608 858,136
975,969 778,693
12,303
955,673
$
19117 343 $
1,261,766 $
485,041 234,125 1,980,932 $
-6,527,645
-753,619 -342,412 -209,048 160,269 -700,376 -224,523 -588,663 -1,067,734 -210,530
-325,475 -202 785
-10,992,541
$
5,322,197
14,999
1,651,947 5,688
38,815 1,522,485
206,229 1,272,131
$
10 034 491
$
-958,050
21,980,735
$===2=1=,0=22='=68=5=
-5-
HARALSON COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30. 2003
EXHIBIT"C"
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories
Total Assets
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Salaries Payable Contracts Payable Retainages Payable Deferred Revenue
Total Liabilities
FUND BALANCES
Reserved for: Bus Replacement Continuation of Federal Programs Debt Service Inventories Capital Projects
Unreserved Designated for Self-Insurance Undesignated Reported in: General Fund
Total Fund Balances
Total Liabilities and Fund Balances
GENERAL FUND
DISTRICTWIDE
CAPITAL PROJECTS
FUND
DEBT SERVICE
FUND
TOTAL
$ 2,964,404 $
136,113 2,092,727
573,838 77,558 37,862
84,871 $
762,878
1,080,326 $
182,981
4,129,601 945,859
253,042
284,485
420,598 2,345,769
573,838 77,558 37,862
$ 5,882,502 $ 1 100 791 $ 1,547,792 $ 8,531,085
$ 800,058
2,419,921
$
11 117
$ 3,231,096 $
643,318 238,137
881,455
$
800,058
2,419,921
643,318
238,137
11,117
$ 4,112,551
$
25,246
477,819
37,862
$
63,692
2,046,787
$ 2,651,406 $
$
219,336
$
1,547,792
25,246 477,819 1,547,792
37,862 219,336
63,692
2,046,787
219,336 $ 1,547,792 $ 4,418,534
$ 5,882,502 $ 1,100,791 $ 1,547,792 $ 8,531,085
The notes to the basic financial statements are an integral part of this statement. -6-
HARALSON COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30. 2003
EXHIBIT"D"
Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Assets are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of:
Land Construction in Progress Land Improvements Buildings Equipment Accumulated Depreciation
Total Capital Assets
Some of the School District"s property tax revenues will be collected after year end but are not available soon enough to pay for the current period's expenditures.
Long-Term Liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of:
Bonds and Notes Payable Compensated Absences
Total Long-Term Liabilities
$
4,418,534
$
390,751
6,771,287
937,945
18,091,820
3,914,073
-7,331,988
22,773,888
163,911
$ -6,300,000 -33 648
-6,333,648
Net Assets of Governmental Activities (Exhibit "A")
$ 21,022,685
The notes to the basic financial statements are an integral part of this statement. -7-
HARALSON COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30. 2003
EXHIBIT"E"
REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Food Services Operation
Capital Outlay Debt Services
Principal Interest
Total Expenditures
Net Change in Fund Balances
Fund Balances - Beginning
Fund Balances - Ending
GENERAL FUND
DISTRICTWIDE
CAPITAL PROJECTS
FUND
DEBT SERVICE
FUND
TOTAL
$ 5,247,854 38,815 $
17,891,006 2,748,822 513,765 35,998 1,238,410
5,688 $ 1,980,932
163,967 33 721
$ 1,651,947
6,264
$ 27,714,670 $ 2,184,308 $ 1,658,211 $
5,247,854 1,696,450 19,871,938 2,748,822
513,765 206,229 1,272,131
31,557,189
$ 18,547,179
$
1,317,199
612,004
524,385
414,761
1,558,512
224,326
$
266
1,563,625
1,110,918
222,833
1,431,049
$ 11,155,177
21,231 661
202,124
$ 27,548,683 $ 11,155,177 $
202,390 $
$
165,987 $ -8,970,869 $ 1,455,821 $
2,485,419
9,190,205
91,971
18,547,179
1,317,199 612,004 524,385 414,761
1,558,512 224,592
1,563,625 1,110,918
222,833 1,431,049 11,155,177
21,231 202,785
38,906,250
-7,349,061
11,767,595
$ 2,651,406 $
219,336 $ 1,547,792 $====='4=41=8=5=34=
The notes to the basic financial statements are an integral part of this statement. -8-
HARALSON COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2003
EXHIBIT"F"
Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:
Capital Outlay
$
Depreciation Expense
Excess of Capital Outlay over Depreciation Expense
Because some property taxes will not be collected for several months after the School District's fiscal year ends, they are not considered "available" revenues
Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of:
Capital Lease Payments
Some items 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. These activities consist of:
Decrease in Compensated Absences
$ -7,349,061
6,993,385 -717 994
6,275,391 89,342
21,231
5047
Change in Net Assets of Governmental Activities (Exhibit "B")
$ ==-9=5=8=,0=50=
The notes to the basic financial statements are an integral part of this statement. -9-
HARALSON COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30, 2003
ASSETS Cash and Cash Equivalents
LIABILITIES Funds Held for Others
EXHIBIT"G"
AGENCY FUNDS
$ ===5=5=1,=25=
$ ===5=5=1,=25=
The notes to the basic financial statements are an integral part of this statement. - 11 -
HARALSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003
EXHIBIT "H"
Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Haralson County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Haralson County Board of Education.
District-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support ofthe School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients ofgoods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting ofinternal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.
The School District reports the following major governmental funds:
- 12 -
HARALSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003
EXHIBIT"H"
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund.
District-wide Capital Projects Fund accounts for financial resources including Bond Proceeds, grants from Georgia State Financing and Investment Commission and Special Purpose Local Option Sales Tax proceeds to be used for the acquisition, construction or renovation of major capital facilities.
Debt Service Fund accounts for taxes (sales) legally restricted for the payment ofgeneral longterm principal, interest and paying agent's fees.
The School District reports the following fiduciary fund type:
Agency funds account for assets held by the School District as an agent for various funds, government or individuals.
BASIS OF ACCOUNTING
The basis ofaccounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis ofaccounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which ~re recognized as expenditures to the extent they have
- 13 -
HARALSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003
EXHIBIT"H"
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources.
The School District funds certain programs by a combination ofspecific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
A substantial number of personnel of the School District were employed for a one hundred and ninety day period beginning in August 2002 and ending in early June 2003. Employment contracts for these employment periods typically specify that compensation be paid in twelve equal monthly payments beginning in September 2002 and ending in August 2003. State grants to fund the State's share of these contracts are disbursed to the School District in the same twelve month period. In accordance with generally accepted accounting principles, salary and fringe benefit costs and the related revenue from the State to fund these contracts are recorded in the fiscal period covered by these financial statements.
RESTATEMENT OF PRIOR YEAR FUND BALANCE - GENERAL FUND
In prior years, the financial activities of the School District's School Food Services Fund, Lottery Programs and Federal Programs were reported as Special Revenue Funds. These funds had a combined fund balance of $479,796 at July 1, 2002. For fiscal year 2003, these funds have been reported as part of the General Fund. In addition, governmental fund activity from the various school activity accounts, which were not reported in the prior year's financial statements, have been reported within the General Fund for fiscal year ended June 30, 2003. The governmental fund activity ofthe various school activity accounts had a fund balance of$273,044 at July 1, 2002. This change is in accordance with generally accepted accounting principles.
General Fund Balance July 1, 2002
$ 1,732,579
Add Funds Consolidated with General Fund: School Food Services Fund School Activity Account - Governmental Activity
479,796 273,044
General Fund Balance July 1, 2002 (Restated)
$ 2,485.419
CHANGES IN ACCOUNTING PRINCIPLES
The Haralson County Board of Education has implemented a new financial reporting model as required by provisions of Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments, as of June 30, 2003.
- 14 -
HARALSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003
EXHIBIT"H"
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The provisions of GASB Statement No. 34 require the inclusion of a Statement ofNet Assets. The elements comprising Net Assets - Beginning include the following:
General Fund (Restated) July 1, 2002 Capital Projects Fund Debt Service Fund
$ 2,485,419 9,190,205 91 971
Governmental Funds (Restated) July 1, 2002 Capital Assets Accumulated Depreciation Property Tax Revenue Timing Differences Bonds and Notes Payable Capital Leases Payable Compensated Absences
$ 11,767,595 23,112,491 -6,613,994 74,569 -6,300,000 -21,231 -38,695
Net Assets Beginning (See Exhibit "B")
$ 21,980.735
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the Board to deposit its funds in one or more solvent banks or insured Federal savings and loan associations.
INVESTMENTS
COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year and equity investments are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(1) Obligations issued by the State of Georgia or by other states,
(2) Obligations issued by the United States government,
- 15 -
HARALSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003
EXHIBIT"H"
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(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 of Georgia, Office of Treasury and Fiscal Services,
(7) Repurchase agreements, and
(8) Obligations of other political subdivisions of the State of Georgia.
RECEIVABLES
Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.
PROPERTY TAXES
The Haralson County Board of Commissioners fixed the property tax levy for the 2002 tax digest year (calendar year) on October 1, 2002 (levy date). Taxes were due on December 20, 2002 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2002 tax digest are reported as revenue in the governmental funds for fiscal year 2003. The Haralson County Tax Commissioner bills and collects the property taxes for the School District, withholds .25% 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, 2003, for maintenance and operations amounted to $5,232,855.
The tax millage rate levied for the 2002 tax year (calendar year) for the Haralson County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):
School Operations
12.81 mills
- 16 -
HARALSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003
EXHIBIT "H"
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SALES TAXES
Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $1,657,635 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.
INVENTORIES
FOOD INVENTORIES On the basic financial statements, inventories ofdonated food commodities used in the preparation ofmeals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.
CAPITAL ASSETS
Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time ofpurchase. On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost ofnormal 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.
Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide statements are as follows:
Capitalization Policy
Estimated Useful Life
Land Land Improvements Buildings and Improvements Equipment
ALL
NIA
$
5,000
NIA
$
5,000 10 to 40 years
$
5,000 5 to 15 years
Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives.
- 17 -
HARALSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003
EXHIBIT "H"
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL OBLIGATION BONDS
The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. 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. The outstanding amount of these bonds is recorded in the Statement of Net Assets.
Note 3: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum ofmoney which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. If a depository elects the pooled method (OCGA 45-8-13 .1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. OCGA Section 45-8-11 (b) provides an officer holding public funds may, in his discretion, waive the requirement for security in the case ofoperating funds placed in demand deposit checking accounts.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
- 18 -
HARALSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003
EXHIBIT "H"
Note 3: DEPOSITS AND INVESTMENTS
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
CATEGORIZATION OF DEPOSITS At June 30, 2003, the bank balances were $5,290,458. The amounts of the total bank balances are classified into three categories of credit risk:
Category 1 - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the School District or by the School District's agent in the School District's name.
Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name.
Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the School District's name.)
The School District's deposits are classified by risk category at June 30, 2003, as follows:
Risk Category
Bank Balance
1
$ 1,283,017
2
884,722
3
3,122,719
Total
$ 5,290,458
At June 30, 2003, the carrying value ofthe School District's total investments was $945,859 which is materially the same as fair value. This investment consisted entirely of funds invested in the Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services which are not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy ofthe State ofGeorgia, Office ofTreasury and Fiscal Services for the Local Government Investment Pool (Primary Liquidity Portfolio and Extended Term Portfolio) does not provide for investment in derivatives or similar investments. A description of the Primary Liquidity Portfolio is as follows:
The Primary Liquidity Portfolio consists of Georgia Fund 1, which is a combination local and state government investment pool, and Fund 6. Georgia Fund 1 is a stable net asset value investment pool which follows Standard and Poor's criteria for AAAm rated money market funds. The pool is not registered with the SEC as an investment company but does operate Georgia Fund 1 in a manner
- 19 -
HARALSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003
EXHIBIT "H"
Note 3: DEPOSITS AND INVESTMENTS
consistent with Rule 2a-7 of the Investment Company Act of 1940. The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($1.00 per share value). Net asset value is calculated daily and reported to the rating agency to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and values participant's shares sold and redeemed at the pool's share price, $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost. The pool does not issue any legally binding guarantees to support the value of the shares. Participation in the pool is voluntary and deposits consist of funds from local governments; operating and trust funds of Georgia's state agencies, colleges and universities; and current operating funds of the State of Georgia's General Fund.
Investments in Georgia Fund 1 and Fund 6 are directed toward short-term instruments such as U. S. Treasury obligations, securities issued or guaranteed as to principal and interest by the U. S. Government or any of its agencies or instrumentalities, banker's acceptances and repurchase agreements. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2003, was 30 days. The average investment duration for Fund 6 on June 30, 2003, was 0.39 years.
The Extended Term Portfolios consist of Fund 3 "Georgia Extended Asset Pool", Fund 7 and Fund 8. The Georgia Extended Asset Pool is a variable net asset value investment pool which follows Standard and Poor's criteria for AAAf rated funds. The pool is not registered with the SEC as an investment company. The pool's primary objective is the prudent management of public funds on behalf of the State of Georgia and local governments seeking income higher than money market rates. Net Asset Value (NAV) is calculated daily to determine current share price. NAV is calculated by taking the closing fair value of securities owned plus other assets and subtracting liabilities. The remainder is then divided by the total number ofshares outstanding to compute NAV per share (current share price). The pool distributes earnings (net ofmanagement fees) on a monthly basis and determines participant's shares sold and redeemed based on the current share price, which at June 30, 2003, was at $2.03 per share. The Office of Treasury and Fiscal Services has hired a third party bank, Investors Bank and Trust, to perform custody and valuation services to include calculation ofthe NAV. Pooled cash and cash equivalents and investments are reported at fair value. The pool does not issue any legally binding guarantees to support the value of the shares. Participation in the pool is voluntary and deposits consist offunds from local governments, operating and trust funds of State agencies, and current operating funds of the State's General Fund.
Investments in the Georgia Extended Asset Pool consist generally ofsecurities issued or guaranteed as to principal and interest by the U.S. Government or any of its agencies or instrumentalities and repurchase agreements. The duration at June 30, 2003 was 0.70 years.
Investments in Fund 7 consist generally of repurchase agreements and certain U.S. Government Securities. The average investment duration for Fund 7 on June 30, 2003 was 1.17 years.
-20 -
HARALSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003
EXHIBIT"H"
Note 3: DEPOSITS AND INVESTMENTS
Investments in Fund 8 consist generally of repurchase agreements and certain U.S. Government Securities, which include mortgage-backed securities such as collateralized mortgage obligations and adjustable rate mortgages. These mortgage-backed securities are reported as U. S. Government Securities in the disclosure of custodial risk. Investments in Fund 8 are transacted by an external investment management firm under direction ofinvestment advisory agreements executed between the Office and the investment management firm.
The agreement directs the investment firm to utilize the Merrill Lynch 1-3 year Treasury Index in managing the average duration of the overall portfolio, excluding cash, to within plus or minus 6 months ofthe duration ofthe Index. The average investment duration for Fund 8 on June 30, 2003 was 1.49 years. In addition, the investment advisory agreements place limitations on individual security purchases and holdings as follows:
1) Limits the duration of any security at the time ofpurchase to a maximum offive (5) years.
2) Requires any mortgage-backed security, at the time of purchase and periodically, thereafter, to pass a "stress test" which provides for a duration profile not to exceed 7 years given an instantaneous and permanent interest yield increase of 300 basis points.
3) With the exception ofU. S. Treasury securities, limits individual security investments to no more than the greater of$5 million or 10% ofthe separate portfolio's total investments.
4) Prohibits investments in interest only strips, principal only strips, inverse floaters, and Z tranche securities.
Note 4: NON-MONETARY TRANSACTIONS
The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories
- 21 -
HARALSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003
EXHIBIT "H"
Note 5: CAPITAL ASSETS
The following is a summary of changes in the Capital Assets during the fiscal year:
Balances July 1, 2002
Increases
Balances Decreases June 30, 2003
Governmental Activities Capital Assets, Not Being Depreciated:
Land Construction in Progress
Total Capital Assets Not Being Depreciated
$ 319,210 $
71,541 $
1,146,539
5,624,748
$ 1,465,749 $ 5,696,289 $
0 $ 390,751 6,771,287
0 $ 7,162,038
Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements
$ 17,209,783 $ 3,669,658 767,301
882,037 $ 244,415 170,644
Less Accumulated Depreciation for: Net Accumulated Depreciation
6,613,994
717 994
Total Capital Assets, Being Depreciated, Net $ 15,032,748 $ 579,102 $
Governmental Activity Capital Assets - Net $ 16,498.497 $ 6,275.391 $
0 $ 18,091,820 3,914,073 937,945
7,331,988 0 $ 15,611,850 0 $ 22,773.888
Current year depreciation expense by function is as follows:
Instruction Support Services
Student Transportation Services Food Services
$ 457,331
175,804 84,859
$.====7~17~9~9~4
Note 6: RESTRICTED ASSETS
Special Purpose Local Option Sales Tax (SPLOST), general obligation bond proceeds and property tax levied specifically for retirement of outstanding bond principal, interest and paying agent's fees (Debt Service Funds) are reported as restricted assets in the Statement ofNet Assets because their use is limited by applicable bond covenants or statutory provisions. Restricted assets at June 30, 2003, were as follows:
- 22 -
HARALSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003
EXHIBIT "H"
Note 6: RESTRICTED ASSETS
District-wide Capital Projects
Bond
SPLOST
Proceeds
Debt Service Funds
Restricted Cash and Cash Equivalents: Debt Services Capital Acquisitions
Restricted Investments: Capital Acquisitions
$ 1,080,326
$
48,076 $
36,795
$
26,615 $ 736,263 $ 182,981
Note 7: RISK MANAGEMENT
The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God; unemployment compensation and dental claims.
The School District has obtained commercial insurance for risk ofloss associated with job related illness or injuries to employees. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the Board's insurance coverage in any of the past three 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 ofthe system. The School District pays an annual premium to the system for its general insurance coverage. Additional coverage is provided through agreements by the system 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) and automobile risks. Payment of excess insurance for the system varies by line of coverage.
The School District is self-insured with regard to unemployment compensation claims. 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.
- 23 -
HARALSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003
EXHIBIT"H"
Note 7: RISK MANAGEMENT
Changes in the unemployment compensation claims liability during the last two fiscal years are as follows:
Beginning of Year Liability
Claims and Changes in Estimates
Claims Paid
End ofYear Liability
2002 2003
$
0 $
2 094 $
2 094 $
0
$
0 $
12 674 $
12,674 $
0
The School District is self-insured with regards to dental claims. In connection with this program, a self-insurance reserve has been established within the General Fund by the School District. The School District accounts for claims within the General Fund with expenditures and liabilities being reported when it is probable that a loss has occurred, and the amount ofthat loss can be reasonably estimated.
Beginning of Year Liability
Claims and Changes in Estimates
Claims Paid
End ofYear Liability
2002 2003
$
0 $
179,260 $
179,260 $
0
$
0 $
185,100 $
185,100 $
0
The School District has purchased surety bonds to provide additional insurance coverage as follows:
Position Covered
Amount
Superintendent All Other Employees
$ 100,000 $ 100,000
Note 8: LONG-TERM DEBT
CAPITAL LEASES The Haralson County Board of Education had entered into a lease agreement as lessee for portable classrooms. This lease agreement qualified as a capital lease for accounting purposes and, therefore, has been recorded at the present value of the future minimum lease payments as of the date of its inception.
COMPENSATED ABSENCES Compensated absences represent obligations of the School District relating to employees' rights to receive compensation for future absences based upon service already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. The School District uses the vesting method to compute compensated absences.
- 24 -
HARALSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003
EXHIBIT"H"
Note 8: LONG-TERM DEBT
GENERAL OBLIGATION DEBT OUTSTANDING General Obligation Bonds currently outstanding are as follows:
Purpose
Interest Rate
Amount
General Government - Series 2002
3.5%
$ 6,300.000
The changes in Long-Term Debt during the fiscal year ended June 30, 2003, were as follows:
Balance July 1, 2002
Retroactive Restatement of Prior Year Balances
Balance July 1, 2002 Restated
Additions Annual Leave Earned
Deductions Annual Leave Utilized Debt Retired
Balance June 30, 2003
Portion of Long-Term Debt Due within One Year
Capital Leases
Governmental Funds
General
Compensated Obligation
Absences (1)
Bonds
Total
$
21,231
$ 6,300,000 $ 6,321,231
$
38,695
38 695
$
21,231 $
38,695 $ 6,300,000 $ 6,359,926
69,314
69,314
21,231
74,361
74,361 21,231
$
0 $
33 648 $ 6,300,000 $ 6 333 648
$
0 $
0 $ 970 000 $ 970 000
(I) The portion of Compensated Absences due within one year has been determined to be immaterial to the basic financial statements.
At June 30, 2003, payments due by fiscal year which includes principal and interest for these items are as follows:
- 25 -
HARALSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003
EXHIBIT"H"
Note 8: LONG-TERM DEBT
Fiscal Year Ended June 30
General Obligation
Debt
Principal
Interest
2004 2005 2006 2007
$ 970,000 $ 1,115,000 1,255,000 2,960,000
203,525 167,038 125,562 106,225
Total Principal and Interest
$ 6,300.000 $ 602.350
Note 9: ON-BEHALF PAYMENTS
The Board has recognized revenues and costs in the amount of$312,760 for health insurance and retirement contributions paid on the Board's behalf by the following State Agencies.
Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of$260,722
Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $52,038
Note 10: SIGNIFICANT COMMITMENTS
The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2003:
Project
Unearned Executed Contracts
GSFIC SA0lS-671-049 Haralson County High School Renovation West Haralson Elementary Renovation
$ 127,302 417,848 19 199
$ 564.349
The amounts described in this note are not reflected in the basic financial statements.
- 26 -
HARALSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30. 2003
EXHIBIT "H"
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.
Note 12: ACCUMULATEDEMPLOYEES'LEAVE
The School District's twelve month employees earn 10 days per year of annual leave for employees with 5 or less years of continuous experience and 15 days per year of annual leave for employees with more than 5 years ofcontinuous experience. Annual leave may be accumulated to a maximum of 30 days, and upon retirement or termination ofemployment an amount based on unused leave, up to a maximum of20 days, is paid to employees at the current rate ofpay at the time oftermination or retirement. See Note 8 - Long-Term Debt
Note 13: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school systems are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.
TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.24% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:
Fiscal Year
Percentage Contributed
Required Contribution
2003 2002 2001
100% 100% 100%
$ 1,397,062 $ 1,306,075
1,483,023
-27 -
HARALSON COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30. 2003
SCHEDULE "1"
REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operation
Debt Service
Total Expenditures
Net Change in Fund Balances
Fund Balances - Beginning
Adjustments
NONAPPROPRIATED BUDGETS
ORIGINAL (1)
FINAL (1)
ACTUAL AMOUNTS
$
4,966,074 $
5,564,679 $
5,247,854
15,000
15,000
38,815
16,427,637
16,089,691
17,891,006
126,000
2,748,822
1,500
1,500
513,765
33,600
33,600
35,998
282,262
272 172
1,238,410
$
21,726,073 $
22,102,642 $
27 714 670
$
16,151,997 $
16,180,231 $
18,547,179
395,528 388,267 534,816 345,888 1,417,410 349,697 1,488,751 1,020,823
8,956
471,677 386,080 534,861 311,961 1,431,756 349,697 1,483,907 1,020,892
8,956
1,317,199 612,004 524,385 414,761
1,558,512 224,326
1,563,625 1,110,918
222,833 1,431,049
21 892
$
22,102,133 $
22,180,018 $
27,548,683
$
-376,060 $
-77,376 $
165,987
2,088,972
2,088,972
2,485,419
-10 965
-10 965
Fund Balances - Ending
$
1 701 947 $
2,000,631 $ ==,,,;2;i,,6;;,,;5~1,b,4~0=6
Notes to the Schedule of Revenues. Expenditures and Changes in Fund Balances Budget and Actual (1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the various principal accounts.
See notes to the basic financial statements.
- 29 -
HARALSON COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30. 2003
SCHEDULE "2"
FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food and Nutrition Program Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Food and Nutrition Program Food Distribution Program (1)
Total U. S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Individuals with Disabilities Education Act Part B - Special Education Flow Through Preschool Capacity Building Improvement
Total Special Education Cluster
Other Programs Pass-Through From Georgia Department of Education Elementary and Secondary Education Act Title I Grants to Local Educational Agencies Title II Enhancing Education Through Technology Improving Teacher Quality Technology Literacy Challenge Fund Grants Title VI Innovative Education Program Strategies Rural and Low Income Schools Vocational Education - Basic Grants to States High School Program Basic Grant Pass-Through From Hall County Board of Education d/b/a Piedmont Migrant Education Agency Elementary and Secondary Education Act Title I Migrant Education Pass-Through From Pioneer Regional Educational Service Agency d/b/a Piedmont Migrant Education Agency Elementary and Secondary Education Act Title I Migrant Education
Total U. S. Department of Education
CFDA NUMBER
PASSTHROUGH
ENTITY ID
NUMBER
EXPENDITURES IN PERIOD
. 10.553 . 10.555
N/A
N/A
$
$
(2) 1,334,951 (3)
1,334,951
10.550
N/A
$
96,098 1 431 049
84.027 84.173 84.027
N/A
$
N/A
N/A
$
448,569 41,054 3 074
492,697
. 84.010
N/A
84.318
N/A
84.367
N/A
84.318
N/A
84.298
N/A
84.358
N/A
84.048
N/A
925,908
74,474 141,841
23,724
22,599 71,008
47,347
84.011
N/A
2,458
84.011
N/A $
55,892 1857948
- 30 -
HARALSON COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30. 2003
SCHEDULE "2"
FUNDING AGENCY PROGRAM/GRANT
Justice, U. S. Department of Pass-Through From Children and Youth Coordinating Council Truancy Prevention and Early Intervention
Labor, U. S. Department of Pass-Through From Coosa Valley Regional Development Center Workforce Investment Act Youth Activities
CFDA NUMBER
PASSTHROUGH
ENTITY ID
NUMBER
EXPENDITURES IN PERIOD
16.540
N/A $
15,607
17.259
N/A $
32 515
Total Federal Financial Assistance N/A = Not Available
$ ====!3=33=7e!=i1=1=9
Notes to the Schedule of Expenditures of Federal Awards
(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 School District during the current fiscal year.
(2) Expenditures for the funds earned on the School Breakfast Program ($192,736) were not maintained separately and are included in the 2003 National School Lunch Program.
(3) Expenditures for this program include State, and/or Other Funds. Expenditures are not maintained by fund source.
Major Programs are identified by an asterisk (*) in front of the CFDA number.
The School District did not provide Federal Assistance to any Subrecipient.
The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Haralson County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the basic financial statements.
See notes to the basic financial statements.
- 31 -
HARALSON COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 2003
SCHEDULE "3"
AGENCY/FUNDING
GRANTS Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV Gifted Student - Category VI Remedial Education Program Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Bus Replacement Sparsity Nursing Services Principal Supplements Vocational Supervisors Migrant Education Education Equalization Funding Grant Food Services Vocational Education Austerity Reduction Other State Programs Health Insurance Mentor Teachers National Teacher Certification Post Secondary Option Preschool Handicapped Program Statewide After School Program Statewide Reading Program Lottery Programs Assistive Technology Computers in the Classroom Technology Installation
Georgia Institute of Technology Lottery Programs State Data and Research Center
- 32 -
GOVERNMENTAL FUND TYPES
CAPITAL
GENERAL
PROJECTS
FUND
FUND
$
998,697
$
208,137
2,040,637
397,779
1,184,645
236,152 2,093,343 1,484,921
574,605
41,586 348,330 1,473,467 464,830 185,979
89,240 150,079 318,889 106,194
67,735
446,796 705,746 949,515
573,725 132,724
34,095 83,915 14,399 22,574
2,130 1,349,810
104,898 21,273
-400,427
260,722 1,162 3,874 885
42,132 31,370 52,107
9,667 73,584 61,426
27,922
TOTAL
998,697 208,137 2,040,637 397,779 1,184,645
236,152 2,093,343 1,484,921
574,605
41,586 348,330 1,473,467 464,830 185,979
89,240 150,079 318,889 106,194
67,735
446,796 705,746 949,515
573,725 132,724
34,095 83,915 14,399 22,574
2,130 1,349,810
104,898 21,273
-400,427
260,722 1,162 3,874 885
42,132 31,370 52,107
9,667 73,584 61,426
27,922
HARALSON COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 2003
SCHEDULE "3"
AGENCY/FUNDING
GRANTS Georgia State Financing and Investment Commission Reimbursement on Construction Projects
Office of School Readiness Pre-Kindergarten Program
Office of Treasury and Fiscal Services Public School Employees Retirement
GOVERNMENTAL FUND TYPES
CAPITAL
GENERAL
PROJECTS
FUND
FUND
TOTAL
$
1,980,932 $
1,980,932
$
767,699
767,699
52,038
52,038
$
1,980,932 $===19=,8=7=1=,9=38=
See notes to the basic financial statements.
- 33-
HARALSON COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30. 2003
SCHEDULE "4"
PROJECT
Adding to, renovating, repairing, equipping, improving existing school buildings and facilities useful or desirable in connection therewith, including classroom additions, acquiring system-wide technology, acquiring and constructing a bus garage, central office and maintenance shop and acquiring the necessary property therefor, both real and personal, and sites for future schools
The acquisition, construction and equipping of school buildings, the addition to and the renovation, repair, improvement and equipping of, existing school buildings, the acquisition, construction, furnishing and equipping of a new Tallapoosa primary school, the acquisition of system-wide technology improvements, the acquisition and construction of a bus garage and the acquisition of the necessary property for such schools, both real and personal and for future school sites
ORIGINAL ESTIMATED
COST (1)
CURRENT ESTIMATED COSTS (2}
AMOUNT EXPENDED IN CURRENT YEAR (3} (4}
AMOUNT EXPENDED
IN PRIOR YEARS (3)
PROJECT STATUS
$ 10,000,000 $ 10,152,949 $ 4,533,026 $ 5,619,923 Ongoing
12,200,000
15,500,000
6,622,151
1,456,505 Ongoing
$ 22,200,000 $ 25,652,949 $ 11 155 177 $ 7,076,428
(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax.
(2) The School District"s current estimate of total cost for the projects. Includes all cost from project inception to completion.
(3) The voters of Haralson County approved the imposition of a 1% sales tax to fund the above projects and retire associated debt. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects.
(4) In addition to the expenditures shown above, the School District has incurred interest to provide advance funding for the above projects as follows:
Current Year
$ ==2=02='=12=4=
See notes to the basic financial statements.
- 34-
HARALSON COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE}
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2003
SCHEDULE "5"
DESCRIPTION
ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) (2)
ELIGIBLE QBE PROGRAM COSTS
SALARIES
OPERATIONS
TOTAL
Direct Instructional Programs
Kindergarten Program
$
Kindergarten Program-Early Intervention Program
Primary Grades (1-3) Program
Primary Grades-Early Intervention (1-3) Program
Upper Elementary Grades (4-5) Program
Upper Elementary Grades-Early Intervention (4-5)
Program
Middle School (6-8) Program
High School General Education (9-12) Program
Vocational Laboratory (9-12) Program
Students with Disabilities
Category I
Category II
Category Ill
Category IV
Gifted Student - Category VI
Remedial Education Program
Alternative Education Program
1,083,167 $ 228,953
2,237,242 466,589
1,293,583
273,032 2,320,494 1,641,854
635,383 2,573,772
203,990 102,389 166 367
996,676 $ 287,744 2,129,399 787,937 1,358,531
259,449 2,476,770 1,778,258
618,350
51,621 459,885 1,569,264 395,022 186,059
98,801 290,416
53,952 $ 3,149
83,807 7,324
61,472
6,725 104,957 174,330
69,288
1,477 6,108 20,026 12,707 1,133
7,277
1,050,628 290,893
2,213,206 795,261
1,420,003
266,174 2,581,727 1,952,588
687,638
53,098 465,993 1,589,290 407,729 187,192
98,801 297,693
TOTAL DIRECT INSTRUCTIONAL PROGRAMS
$
13,226,815 $ 13,744,182 $
613,732 $
14,357,914
Media Center Program Staff and Professional Development
352,520 75,722
459,855 15174
56,850 48674
516,705 63 848
TOTAL QBE FORMULA FUNDS
$
13,655,057 $ 14,219,211 $
719 256 $ =~1,;.4,,;;;;93;;;,;;8;,.,.4;,;;:6;;,.7
(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State budget austerity reduction.
See notes to the basic financial statements.
- 35 -
SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS
RUSSELL W. HINTON
STATE AUDITOR
(404) 656-2174
DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400
March 12, 2004
Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Haralson County Board of Education
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information ofHaralson County Board ofEducation as ofand for the year ended June 30, 2003, which collectively comprise Haralson County Board of Education's basic financial statements and have issued our report thereon dated March 12, 2004. We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Compliance
As part of obtaining reasonable assurance about whether Haralson County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination offinancial statement amounts. However, providing an opinion on compliance with those provisions was not an objective ofour audit, and accordingly, we do not express such an opinion. The results ofour tests disclosed no instances ofnoncompliance that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Haralson County Board ofEducation's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal
2003-34YB-30
control over financial reporting. However, we noted certain matters involving the internal control over financial reporting and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over financial reporting that, in ourjudgment, could adversely affect Haralson County Board ofEducation's ability to record, process, summarize and report financial data consistent with assertions of management in the financial statements. Reportable conditions are described in the accompanying Schedule ofFindings and Questioned Costs as items FS-6711-03-01 and FS-6711-03-02.
A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we believe none of the reportable conditions described above is a material weakness.
This report is intended solely for the information and use of the management, members of the Haralson County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
LO~
RWH:as 2003-34YB-30
State Auditor
RUSSELL W. HINTON
STATE AUDITOR
(404) 656-2174
DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400
March 12, 2004
Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Haralson County Board of Education
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of Haralson County Board of Education with the types of compliance requirements described in the U.S. Office ofManagement and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each ofits major Federal programs for the year ended June 30, 2003. Haralson County Board of Education's major Federal programs are identified in the Summary of Auditor's Results Section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of Haralson County Board of Education's management. Our responsibility is to express an opinion on Haralson County Board of Education's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types ofcompliance 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 Haralson County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Haralson County Board ofEducation's compliance with those requirements.
2003SA-30
In our opinion, the Haralson County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 2003.
Internal Control Over Compliance
The management of Haralson County Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered Haralson County Board of Education's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with 0MB Circular A-133.
We noted a certain matter involving the internal control over compliance and its operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over compliance that, in our judgment, could adversely affect the Haralson County Board of Education's ability to administer a major Federal program in accordance with applicable requirements oflaws, regulations, contracts and grants. The reportable condition is described in the accompanying Schedule of Findings and Questioned Costs as item FA-6711-03-01.
A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level of risk that noncompliance with the applicable requirements oflaws, regulations, contracts and grants that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we believe the reportable condition described above is not a material weakness.
This report is intended solely for the information and use of the management, members of the Haralson County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
~-~
RWH:as 2003SA-30
State Auditor
SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS
HARALSON COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2003
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
FINDING CONTROL NUMBER AND STATUS
FS-6711-01-01 FS-6711-02-01
Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented
SECTION IV FINDINGS AND QUESTIONED COSTS
HARALSON COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
I SUMMARY OF AUDITOR'S RESULTS
1. Type of Report Issued on the Financial Statements The auditor's opinion on the Haralson County Board ofEducation's financial statements was unqualified.
2. Reportable Conditions in Internal Control Disclosed by the Audit of the Financial Statements The audit report for the Haralson County Board of Education disclosed financial statement reportable conditions related to the following control categories.
Revenues/Receivables/Receipts
Capital Assets
None ofthe reportable conditions described above are considered to be material weaknesses.
3. Noncompliance Material to the Financial Statements The audit of the Haralson County Board of Education disclosed no instances of noncompliance that were deemed to be material to the financial statements.
4. Reportable Conditions in Internal Control Over Major Programs The audit report for the Haralson County Board of Education disclosed a reportable condition in internal control over major programs for the following compliance requirement.
Special Tests and Provisions
The reportable condition described above is not considered to be a material weakness.
5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Haralson County Board of Education's report on compliance with requirements applicable to major programs was unqualified.
6. Audit Findings Required to be Reported by Section .510(a) of 0MB Circular A-133 The Haralson County Board of Education's audit disclosed an audit finding required to be reported by section .510(a) ofOMB Circular A-133. This audit finding is included in section IV of this report.
7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food and Nutrition Program - Food Services - School Breakfast Program 10.555 Food and Nutrition Program-Food Services-National School Lunch Program 84.010 Elementary and Secondary Education Act - Title I - Grants to Local Educational Agencies
8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.
- 1-
HARALSON COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
I SUMMARY OF AUDITOR'S RESULTS
9. Low Risk Auditee The Haralson County Board ofEducation did not qualify as a low risk auditee as defined by Section .530 of 0MB Circular A-133.
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
REVENUES/RECEIVABLES/RECEIPTS Inadequate Separation of Duties Reportable Condition Finding Control Number: FS-6711-03-01
Our examination of the various principals' accounts disclosed weaknesses in internal control as discussed below:
Revenues/Receivables/Receipts 1) Deposit preparation was not separated from the record keeping functions.
2) Adequate receipt documentation was not maintained for cash receipt transactions recorded in the general ledger.
These deficiencies were a result ofmanagement's decision to limit the number ofadministrative staff made responsible for account functions, at the various principal account sites, and failure to ensure established controls were functioning as designed. Management should implement procedures to ensure that the key accounting functions ofcustody, record keeping and authorization be segregated. Additionally, controls should be revised and monitored to provide reasonable assurance that transactions are processed according to established procedures.
Management's Response:
Due to the small number ofclerical staffwithin a local school environment it is difficult to segregate some bookkeeping functions. Oversight of processes and procedures are closely monitored by the school Principal as a compensating control. Additional documentation to support receipts and deposits will be required of student activity sponsors.
CAPITAL ASSETS Failure to Provide Required Note Disclosure Reportable Condition Finding Control Number: FS-6711-03-02
The Haralson County Board of Education did not disclose in the notes to the basic financial statements accumulated and current year depreciation by major class ofcapital assets as required by
-2 -
HARALSON COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CAPITAL ASSETS Failure to Provide Required Note Disclosure Reportable Condition Finding Control Number: FS-6711-03-02
generally accepted accounting principles. Management should take the necessary steps to ensure that the School District's financial statements include a breakdown of accumulated and current year depreciation as required.
Management's Response:
Management has conferred with McAleer, its software vendor, to insure the availability ofrequired reports and a better understanding ofthe fixed asset module. This finding is not expected to reoccur.
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
SPECIAL TESTS AND PROVISIONS Fiscal Requirements of School-wide Program Not Fully Implemented Reportable Condition U.S. Department of Education Through Georgia Department of Education Finding Control Number: FA-6711-03-01
During the year in review, the School District identified five schools that participated in a schoolwide program. Federal provisions prescribe that multiple funding sources (Federal, State or Local) are required to support a school-wide program. The Title I program (CFDA #84.010) and two Title II programs (CFDA #84.318 and CFDA #84.367) supported the school-wide program at five of the District's schools. Although required by U.S. Department of Education and 0MB Circular A-133 Compliance Supplement provisions, we found that the School District had not consolidated the different Federal funds for each of those schools that participated in a school-wide program. Furthermore, we noted that the School District arbitrarily charged each Federal fund with individual school-wide expenditures rather than using a prescribed cost allocation plan to distribute school-wide program expenditures to each funding source.
In accordance with provisions ofU. S. Department ofEducation Instructions and 0MB Circular A133, Compliance Supplement provisions, eligible schools are able to use their Title I, Part A funds, in combination with other Federal, State and local funds, in order to upgrade the entire educational program ofthe school and to raise academic achievements for all students. By combining funds from Title I and other eligible U. S. Department ofEducation funded programs in support ofa school-wide program, U. S. Department of Education Instructions provide that specific school-wide program costs lose their identity but only in those circumstances when funds are combined in a schoolwide program. In line with 0MB Circular A-87 requirements, school-wide expenditures should be
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HARALSON COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
SPECIAL TESTS AND PROVISIONS Fiscal Requirements of School-wide Program Not Fully Implemented Reportable Condition U.S. Department of Education Through Georgia Department of Education Finding Control Number: FA-6711-03-01
charged to those Federal funding sources supporting the school-wide program in a reasonable manner. When more than one Federal program supports a school-wide program, then school-wide program expenditures may be allocated to specific Federal funds in proportion to the different Federal funds provided in support ofthe school-wide program. To distribute such costs, provisions of 0MB Circular A-87, Attachment E, F.3 state that a cost allocation plan should be developed, documented, maintained for audit. The School District personnel were unaware of these requirements and it was the School District's understanding that school-wide program expenditures lose their identity and therefore any school-wide program cost can be charged to Title I and other Federal funding programs.
The School District should implement procedures to (1) combine such funds as prescribed by U. S. Department of Education and (2) in line with 0MB Circular A-87 provisions allocate such schoolwide program costs to the respective Federal fund in a reasonable manner. The Board should seek Georgia Department of Education guidance in implementing fiscal procedures for combining and allocating school-wide program expenditures to Federal programs.
Management's Response:
The system has complied with all of the guidelines/regulations currently set forth by the Georgia Department of Education. The system is awaiting additional guidance on how the LEA should implement funding and operational procedures to remove fiscal and accounting barriers under the current accounting system of Georgia. We expect that guidance to be provided prior to or no later than July 22, 2004.
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