Lamar County Board of Education, Barnesville, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2007

LAMAR COUNTY BOARD OF EDUCATION
BARNESVILLE, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2007
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

LAMAR COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

1

B

STATEMENT OF ACTIVITIES

2

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

4

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

5

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

6

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

7

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

8

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

9

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

23

LAMAR COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

24

3 SCHEDULE OF STATE REVENUE

25

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

26

5 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

27

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDITING 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

LAMAR COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTIONV MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES

SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
September 26, 2008

Honorable Sonny Perdue, Governor Members ofthe General Assembly Members ofthe State Board of Education
and Superintendent and Members ofthe Lamar 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) of the Lamar County Board of Education, as of and for the year ended June 30, 2007, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe Lamar 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 of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Lamar County Board of Education's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.

2007ARL-11

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Lamar County Board of Education, as of June 30, 2007, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated September 26, 2008, on our consideration ofthe Lamar County Board ofEducation's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.
Management's Discussion and Analysis and the Schedule ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through x and page 23 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 Lamar 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.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24.
Respectfully submitted,
~tD.-4J~ Russell W. Hinton, CPA, CGFM State Auditor
RWH:gp 2007ARL-11

LAMAR COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
INTRODUCTION
Our discussion and analysis of the Lamar County School District's financial performance provides an overview of the School District's financial activities for the fiscal year ended June 30, 2007. The intent of this discussion and analysis is to look at the School District's financial performance as a whole. Readers should also review the financial statements and the notes to the statements to enhance their understanding of the School District's financial performance.
This is the fifth year the School District has prepared its annual financial report using the government financial reporting model. The reporting model is a combination of both government-wide financial statements and fund financial statements. The basic financial statements contain three components:
1) District-wide financial statements including the Statement of Net Assets and the Statement of Activities, which provide both short-term and long-term overviews of the School District's finances.
2) Fund financial statements including the balance sheets, which provide a greater level of detail and focus on how well the School District has performed in the short-term in the most significant or major funds.
3) Notes to the Financial Statements.
FINANCIAL HIGHLIGHTS
Key financial highlights for fiscal year 2007, are as follows:
On the District-wide financial statements:
Total assets of the School District exceeded liabilities by over $25.2 million. This represented an increase of $2.2 million in net assets when compared to the prior year. Of this amount, $6.7 million is unrestricted and available for spending at the School District's discretion.
The School District had $21.8 million in expenses relating to governmental activities; only $14.6 million of these expenses were offset by program specific charges for services, grants, and contributions. However, general revenues (primarily property and other taxes) of $9.4 million were adequate to provide for these programs.
As stated above, general revenues accounted for $9.4 million or about 39.2% of all revenues, which totaled over $24.0 million. Program specific revenues in the form of charges for services, grants, and contributions accounted for the balance of these revenues.

LAMAR COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
On the fund financial statements:
Among major funds, the General Fund had over $22.4 million in revenues and $21.5 million in expenditures. The general fund balance of $6.9 million at June 30, 2007, increased $0.9 million when compared to the prior year.
The Capital Projects Fund's balance at June 30, 2007, was $91 thousand. This fund balance increased over $90 thousand during the year with funds transferred from Debt Service SPLOST for renovations and repairs to existing facilities in the spring and summer of 2007.
The fund balance of the Debt Service Fund decreased to almost $2.1 million. The local option sales tax for education, interest revenue and prior year fund balance exceeded the payments due on the principal and interest on the bonds during the year.
OVERVIEW OF THE FINANCIAL STATEMENTS
This annual report consists of several parts including management's discussion and analysis (this section), the basic financial statements and required supplementary information. The basic financial statements include two levels of statements that present different views of the School District. These include the District-wide and fund financial statements.
The District-wide financial statements include the Statement of Net Assets and Statement of Activities. These statements provide information about the activities of the School District, presenting both short-term and long-term information about the School District's overall financial status.
The fund financial statements focus on individual parts of the School District, reporting the School District's operation in more detail. The Governmental Funds statements disclose how basic services are financed in the short-term as well as what remains for future spending. The Fiduciary Funds statement provides information about the financial relationships in which the School District acts as a trustee or agent for the benefit of others. The fund financial statements reflect the School District's most significant funds. In the case of the Lamar County School District, the General Fund, District-wide Capital Projects Funds, and Debt Service Funds are all considered to be major funds. The School District has no nonmajor funds as defined by GASB Statement 34 for the purposes of this report.
The financial statements also include notes that explain some of the information in the statements and provide more detailed data. The statements are followed by a section of required supplementary information which further explains and supports the financial statements. Additionally, other supplementary information (not required) is also presented that further supplements understanding of the financial statements.

LAMAR COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
DISTRICT-WIDE STATEMENTS
Since Lamar County School District has no operations that have been classified as "Business Activities", the District-wide financial statements are basically a consolidation of all of the School District's operating funds into one column called governmental activities. In reviewing the District-wide financial statements, a reader might ask the question, are we in a better financial position now than last year? The Statement ofNet Assets and the Statement ofActivities provide the basis for answering this question. These financial statements include all School District's assets and liabilities and use the accrual basis of accounting similar to the accounting used by most private-sector companies. This basis of accounting takes into account all of the current year's revenues and expenses regardless of when cash is received or paid.
These two statements report the School District's net assets and any changes in those assets. The change in net assets is important because it tells the reader that, for the School District as a whole, the financial position of the School District has improved or diminished. The causes of this change may be the result of many factors, including those not under the School District's control, such as the property tax base, facility conditions, required educational programs, student-teacher ratios, and other factors.
The Statement of Net Assets and the Statement of Activities reflect the School District's governmental activities.
FUND FINANCIAL STATEMENTS
The School District uses many funds to account for a multitude of financial transactions during the fiscal year. The fund financial statements presented in this report provide detailed information about the School District's significant or major funds. As discussed previously, the School District has no nonmajor funds as defined by generally accepted accounting principles.
Governmental Funds: Most of the School District's activities are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at yearend available for spending in future periods. These funds are reported using the modified accrual method of accounting which measures cash and all other financial assets that can be readily converted to cash. The governmental fund statements provide a detailed short-term view of the School District's general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The differences between government activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds are reconciled in the financial statements.
Fiduciary Funds: The School District is the trustee, or fiduciary, for assets that belong to others, such as school clubs and organizations within the principals' accounts. The School District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. Because it cannot use these assets to finance its operations, these activities are excluded from the District-wide financial statements.
111

LAMAR COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT AS A WHOLE Recall that the Statement ofNet Assets provides the perspective of the School District as a whole. The reader can think of the School District's net assets as the difference between its assets (i.e., what the School District owns) and its liabilities (i.e., what the School District owes) at the end of a fiscal year. This balance represents one way to measure the School District's financial health or its financial position. In the Lamar County School District, assets exceeded liabilities by $25.2 million on June 30, 2007. To better understand the School District's actual financial position and ability to deliver services in future periods, the reader will need to review the various components of the net asset category. For example, of the $25.2 million of net assets, $2.4 million was restricted for continuation of Federal programs, debt service and capital projects. Accordingly, these funds were not available to meet the School District's ongoing obligations to citizens and creditors. In addition, the School District had over $16.1 million (net of related debt) invested in capital assets (e.g., land, buildings, and equipment). These capital assets are used to provide educational services to students served by the School District. Because of the nature and continuing use of the assets reported in this component of net assets, it must be recognized that this portion of the net assets is not available for future spending. The remaining balance of unrestricted net assets of $6.7 million may be used to meet the School District's ongoing obligations to citizens and creditors. Table 1 provides a summary of the School District's net assets for this fiscal year as compared to the prior fiscal year.
IV

LAMAR COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007

Table 1 Net Assets

Governmental Activities

Fiscal

Fiscal

Year 2007

Year 2006

Assets Current and Other Assets Capital Assets, Net

$ 11,530,928 $ 10,629,478

21,177,921

20,972,452

Total Assets

$ 32,708,849 $ 31,601,930

Liabilities Current and Other Liabilities Long-Term Liabilities

$ 2,394,897 $ 2,111,512

5,050,000

6,440,000

Total Liabilities

$ 7,444,897 $ 8,551,512

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

$ 16,127,921 2,469,192 6,666,839

$ 14,532,452 2,481,038 6,036,928

Total Net Assets

$ 25,263.952 $ 23,050,418

The above comparison reflects that total net assets increased about $2.2 million, the unrestricted net assets increased $0.6 million for the fiscal year.

Table 2 shows the Change in Net Assets for this fiscal year as compared to the prior fiscal year and summarizes the revenues and expenses that caused the increase.

V

LAMAR COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007

Table 2 Change in Net Assets

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

Governmental Activities

Fiscal

Fiscal

Year 2007

Year 2006

$

510,397

13,887,027

203,268

$

503,163

12,695,869

81,278

Total Program Revenues

$ 14,600,692 $ 13,280,310

General Revenues:

Taxes

Property Taxes

For Maintenance and Operations

$ 6,467,079 $ 5,566,950

Sales Taxes

Special Purpose Local Option Sales Tax

1,585,071

1,528,254

Intangible Recording Tax

148,659

Real Estate

70,736

59,802

Grants and Contributions not Restricted to

Specific Programs

107,480

400,059

Investment Earnings

463,639

356,515

Miscellaneous

717,039

635,046

Total General Revenues

$ 9,411.044 $ 8,695,285

Total Revenues

$ 24,011,736 $ 21,975,595

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

$ 13,286,112
972,576 846,199 406,552 424,315 1,087,437 155,281 1,392,376 1,239,245 259,599 163,181
17,268 30,824 1,291,245 225.992

$ 13,191,445
788,485 844,462 371,367 345,869 1,006,147 151,634 1,354,133 1,159,526 491,687 224,715
1,273,859 267,833

Total Expenses

$ 21,798,202 $ 21,471,162

Increase in Net Assets

$ 2,213,534 $

504A33

VI

LAMAR COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007

GOVERNMENTAL ACTIVITIES

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

Table 3 Governmental Activities

Total Cost of Services

Fiscal

Fiscal

Year 2007 Year 2006

Net Cost of Services

Fiscal

Fiscal

Year 2007 Year 2006

Instruction

$ 13,286,112 $ 13,191,445 $

Support Services

Pupil Services

972,576

788,485

Improvement of Instructional Services

846,199

844,462

Educational Media Services

406,552

371,367

General Administration

424,314

345,869

School Administration

1,087,437 1,006,147

Business Administration

155,281

151,634

Maintenance and Operation ofPlant

1,392,376 1,354,133

Student Transportation Services

1,239,245 1,159,526

Central Support Services

259,599

491,687

Other Support Services

163,181

224,715

Operations ofNon-Instructional Services

Enterprise Operations

17,269

Community Services

30,824

Food Services

1,291,245 1,273,859

Interest on Short-Term and Long-Term Debt

225,992

267,833

3,952,663 $
591,789 268,101 185,612 -128,964 562,294 155,281 730,271 347,210 248,906 -35,476
12,274 30,824 50,733 225,992

4,622,030
442,145 318,659 170,413 -157,360 528,509 151,634 751,923 451,787 481,961 37,181
124,137 267,833

Total Expenses

$ 21.798.202 $ 21.471.162 $ 7,127,510 $ 8,190.852

The table above shows that the net cost of services decreased more than $0.9 million. There was a continuing cost of services increase but reductions in the Amended Formula Adjustment, increases in funds to purchase buses by the State of Georgia and increased funds for the school nutrition program reduced the local cost of providing programs.

FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT'S FUNDS

Information about the School District's governmental funds is presented starting on Exhibit "C" of this report. Governmental funds are accounted for using the modified accrual basis of accounting. The governmental funds had total revenues of $24.1 million and total expenditures of $23.3 million in fiscal year 2007. Revenues increased slightly from almost all sources, and expenditures from capital outlay reduced significantly from fiscal year 2006.

Vil

LAMAR COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007

GENERAL FUND BUDGET HIGHLIGHTS

The School District's budget is prepared according to Georgia Law. The most significant budgeted fund is the General Fund.

During the course of fiscal year 2007, the School District amended its general fund budget as needed. The School District budget is adopted at the functional level and maintained at the program, function, object, and site levels to facilitate budgetary control. The budgeting systems are designed to control the total budget, but provide flexibility to meet the ongoing programmatic needs. The budgeting systems are also designed to control total site budgets but provide flexibility for site management as well.

For the General Fund, the final actual revenues of $22.4 million exceeded the final budgeted amount of $20.5 million by about $1.9 million. This difference was primarily due to higher than expected interest income, the unbudgeted taxpayer relief credit from the state, and miscellaneous unbudgeted revenues. The final actual expenditures of $21.5 million were less than the final budgeted amount by $0.3 million.

CAPITAL ASSETS

At fiscal year ended June 30, 2007, the School District had $21.2 million invested in capital assets, all in governmental activities. Table 4 reflects a summary of these balances net of accumulated depreciation as compared to the prior fiscal year.

Table 4 Capital Assets (Net of Depreciation)

Governmental Activities

Fiscal

Fiscal

Year 2007

Year 2006

Land Buildings and Improvements Equipment Land Improvements

$

879,428

17,620,851

1,387,535

1.290,107

$

521,056

17,835,051

1,185,368

1,430.977

Total

$ 21,177,921 $ 20,972A52

The overall increase in capital assets is due to donated assets received.

Vlll

LAMAR COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007

DEBT

At fiscal year ended June 30, 2007, the School District had $5.05 million in bonds outstanding. There was no other long-term debt. Table 5 summarizes the School District's debt as compared to the prior fiscal year.

Table 5 Debt at June 30

Governmental Activities

Fiscal

Fiscal

Year 2007

Year 2006

Bonds Payable

$ 5,050.000 $ 6,440.000

CURRENT ISSUES

Currently known facts, decisions, or conditions that are expected to have a significant effect on financial positions or results of operations in future years are as follows:

Funding Reductions - In fiscal year 2007, the State of Georgia continued the reductions in funding of the QBE revenue formula for all state school districts with amended formula adjustments. These 2007 reductions were in addition to QBE and state grant funding reductions made in prior fiscal years. The state austerity reductions in funding, coupled with mandated class size reductions, state and Federal program requirements, and remediation requirements continued the need for more funding from local taxpayers. Raising the millage rate in fiscal year 2007 reduced the possibility of additional funding being taken from existing fund balance. Educational funding from the State of Georgia is expected to remain at a conservatively low level. Continued formula funding reductions by the state and partially funded programs forced the School District to raise the millage rate for fiscal year 2008 in addition to taking funding from existing fund balance. Despite these reductions, the system remains confident in its ability to maximize resources to provide the best possible educational experience for all Lamar County students.

Capital Improvements - The School District plans capital improvements as future capital needs arise due to increased student population and facility repair and maintenance needs. Development in the county as residents move farther south from the Atlanta metro area is expected to increase the student population in future years. Specific long-term capital expenditure plans are formalized in conjunction with individual general obligation bond issues and anticipated annual receipts of capital outlay funds from the State of Georgia Department of Education. Bond repayment requirements are continuing to be met by local option sales tax for education collections.

IX

LAMAR COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 Contacting the School District's Financial Management This financial report is designed to provide our citizens, taxpayers, investors, and creditors with a general overview of the School District's finances and to show the School District's accountability for the money it receives. If you have questions about this report or need additional financial information, contact Ms. Mona Faulkner, Lamar County Board of Education, 3 Trojan Way, Barnesville, Georgia, 30204. You may also email your questions to Ms. Faulkner at mfaulkne@lamar.k12.ga.us.
X

LAMAR COUNTY BOARD OF EDUCATION

LAMAR COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS
JUNE 30, 2007
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Interest Taxes State Government Federal Government Other Inventories Capital Assets Land Land Improvements Buildings Equipment Less: Accumulated Depreciation
Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Continuation of Federal Programs Debt Service Capital Projects Unrestricted
Total Net Assets
Total Liabilities and Net Assets
The notes to the basic financial statements are an integral part of this statement.
- 1-

EXHIBIT"A"

GOVERNMENTAL ACTIVITIES

$

1,081,144.24

7,965,452.02

11,586.00 684,157.95 1,400,179.41 290,182.96
77,483.49 20,741.69

879,428.00 1,640,672.00 21,875,062.00 3,564,339:oo -6,781,580.00

$ ====3i=l2,=70.,.8,...,8..,.4.8....7..6....

$

264,217.01

2,130,679.52

1,650,000.00 3,400,000.00

$

7,444,896.53

$ 16,127,921.00
245,755.00 2,133,084.30
90,352.43 6,666,839.50
$ 25,263,952.23

$ =====3=!2,=70=8=,8=4=8.=76=

LAMAR COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2007

GOVERNMENTAL ACTIVITIES
Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Community Services Food Services Interest on Short-Term and Long-Term Debt
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations 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

EXPENSES

CHARGES FOR SERVICES

$ 13,286,111.70 $
972,575.77 846,199.36 406,551.73 424,314.60 1,087,437.26 155,280.90 1,392,375.71 1,239,245.45 259,599.06 163,181.00
17,268.50 30,823.97 1,291,245.37 225,991.50
$ 21,798,201.88 $

203,567.00
4,995.00 301,834.75 510,396.75

Net Assets - End of Year

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

EXHIBIT"B"

PROGRAM REVENUES

OPERATING

CAPITAL

GRANTS AND

GRANTS AND

CONTRIBUTIONS CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

$

9,129,882.09

380,786.60 578,098.13 220,939.98 553,278.80 525,143.14

662,104.30 688,767.32 $
10,693.15 198,656.67

938,677.40 $ 13,887,027.58 $

$ 203,268.00 203,268.00 $

-3,952,662.61
-591, 789.17 -268, 101.23 -185,611.75 128,964.20 -562,294.12 -155,280.90 -730,271.41 -347,210.13 -248,905.91
35,475.67
-12,273.50 -30,823.97 -50,733.22 -225 991.50
-7, 197,509.55

$

6,467,078.61

1,378,071.43 207,000.00 70,735.94 107,480.00 463,638.65 717 039.15

$

9411043.78

$

2,213,534.23

23,050,418.00

$ ===25=,2=6=3==,9=5=2-=2=3

-3-

LAMAR COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2007

EXHIBIT"C"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Interest Taxes State Government Federal Government Other Inventories
Total Assets
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Salaries and Benefits Payable
Total Liabilities
FUND BALANCES
Reserved for: Continuation of Federal Programs Debt Service Inventories Capital Projects
Unreserved Designated for Student Activities Undesignated Reported in: General Fund Capital Projects
Total Fund Balances
Total Liabilities and Fund Balances

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 931,969.75 $ 6,130,793.95
11,586.00 408,439.31 1,400,179.41 290,182.96
77,483.49 20,741.69

126,466.90 $

22,707.59 $ 1,081,144.24

1,834,658.07 7,965,452.02

275,718.64

11,586.00 684,157.95 1,400,179.41 290,182.96
77,483.49 20.741.69

$ 9,271,376.56 $ 126,466.90 $ 2,133,084.30 $ 11,530,927.76

$ 228,848.49 $ 2,130,679.52
$ 2,359,528.01 $

35,368.52 35,368.52

$ 264,217.01 2,130,679.52
$ 2,394,896.53

$ 224,649.31 21,105.69 $ 171,225.15
6,494,868.40
$ 6,911,848.55 $

$ 90,352.43

$ 2,133,084.30

224,649.31 2,133,084.30
21,105.69 90,352.43

171,225.15

745.95

6,494,868.40 745.95

91,098.38 $ 2,133,084.30 $ 9,136,031.23

$ 9,271,376.56 $ 126,466.90 $ 2,133,084.30 $ 11,530,927.76

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

LAMAR COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2007

EXHIBIT" "

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 Land Improvements Building& Equipment Accumulated Depreciation
Total Capital Assets
Long-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of:
Bonds Payable

$ 9,136,031.23

$ 879,428.00 1,640,672.00
21,875,062.00 3,564,339.00 -6, 781,580.00

21,177,921.00

-5,050,000.00

Net Assets of Governmental Activities (Exhibit "A")

$ 25,263,952.23

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

LAMAR COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2007

EXHIBIT"E"

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

$ 6,719,404.87 70,735.94 $
11,275,986.19 2,921,789.40
510,396.75 353,760.56 583,562.15
$ 22,435,635.86 $

207,000.00 $ 3,221.72

$ 1,378,071.43
106,656.37

6,719,404.87 1,655,807.37 11,275,986.19 2,921,789.40
510,396.75 463,638.65 583,562.15

210,221.72 $ 1,484,727.80 $ 24,130,585.38

$ 13,096,412.43
972,575.77 846,199.36 406,551.73 424,314.60 1,087,437.26 155,280.90 1,391,310.48 1,409,748.92 268,664.06 163,181.00 17,268.50 30,823.97 1,254,579.33
$
$ 21,524,348.31 $
$ 911,287.55 $
6,000,561.00

$ 13,096,412.43

119,854.34

972,575.77 846,199.36 406,551.73 424,314.60 1,087,437.26 155,280.90 1,391,310.48 1,409,748.92 268,664.06 163,181.00 17,268.50 30,823.97 1,254,579.33 119,854.34

$ 1,390,000.00 225,991.50

1,390,000.00 225,991.50

119 854.34 $ 1,615,991.50 $ 23,260,194.15

90,367.38 $ -131,263.70 $ 870,391.23

731.00

2,264,348.00

8,265,640.00

$ 6,911,848.55 $

91,098.38 $ 2,133,084.30 $ 9,136,031.23

The notes to the basic financial statements are an integral part of this statement. -6-

LAMAR 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, 2007

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
Donated capital assets in the Statement of Activities that do not provide current financial resources are not reported as revenues in the Governmental Funds.
Because some property taxes will not be collected for several months after the School District's fiscal year ends, they are not considered "available" revenues.
In the Statement of Activities, only the loss on the disposition of the building, land improvements and equipment is reported, whereas in the Governmental Funds, the entire proceeds from the sale increase financial resources. Thus, the change in net assets differs from the change in fund balances by the carrying value of the building, land improvements and equipment sold or disposed.
Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of:
Bond Principal Retirements

$ 870,391.23

$ 788,612.00 -716,615.00

71,997.00

237,138.26

-252,326.26

-103,666.00

1,390,000.00

Change in Net Assets of Governmental Activities (Exhibit "B")

$ 2,213,534.23

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

LAMAR COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS JUNE 30, 2007
ASSETS Cash and Cash Equivalents
LIABILITIES Funds Held for Others

EXHIBIT"G"
AGENCY FUNDS
$ 23,945.12
$ 23,945.12

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

LAMAR COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT"H"

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Lamar County Board ofEducation (School District) was established under the laws ofthe State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists ofall 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 Lamar 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.

-9-

LAMAR COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund.
District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST) 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, governments 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 ofwhen 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, which are recognized
- 10 -

LAMAR COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT"H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds ofgeneral long-term liabilities are reported as other financing sources.
The School District funds certain programs by a combination ofspecific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorize the School District to deposit its funds in one or more solvent banks 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 are reported at fair value. The Official Code ofGeorgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(1) Obligations issued by the State of Georgia or by other states,
(2) Obligations issued by the United States government,
(3) Obligations fully insured or guaranteed by the United States government or a United States government agency,
(4) Obligations of any corporation of the United States government,
(5) Prime banker's acceptances,

- 11 -

LAMAR COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

(7) Repurchase agreements, and

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

The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration ofcredit risks, interest rate risks or foreign currency risks.

RECEIVABLES

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

PROPERTY TAXES

The Lamar County Board ofCommissioners fixed the property tax levy for the 2006 tax digest year (calendar year) on August 31, 2006 (levy date). Taxes were due on November 30, 2006 (lien date). Taxes collected within the current fiscal year or within 60 days after year ended, on the 2006 tax digest are reported as revenue in the governmental funds for fiscal year 2007. The Lamar County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2007, for maintenance and operations amounted to $6,719,404.87.

The tax millage rate levied for the 2006 tax year (calendar year) for the Lamar County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

16.0 mills

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $1,585,071.43 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.

- 12 -

LAMAR COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT"H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

Capitalization Policy

Estimated Useful Life

Land Land Improvements Buildings and Improvements Equipment

All

NIA

$ 5,000.00 10 to 60 years

$ 5,000.00 20 to 60 years

$ 5,000.00

3 to 5 years

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives.

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

- 13 -

LAMAR COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT"H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
statements during the fiscal year bonds are issued. In addition, general obligation bonds have been issued to refund existing general obligation bonds. 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 ofNet Assets.
NET ASSETS
The School District's net assets in the District-wide Statements are classified as follows:
Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net ofoutstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.
Restricted net assets - These represent resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation ofFederal programs, debt service and capital projects in accordance with restrictions imposed by external third parties.
Unrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes.
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 ofinsurance, 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.
Ifa depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe
securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. At June 30, $695,539.85 of deposits were not secured by surety bond, insurance or collateral as specified above. The School District is working with the affected financial institutions to ensure appropriate levels of collateral are maintained for all of the School District's deposits.
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,

- 14 -

LAMAR COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 3: DEPOSITS AND INVESTMENTS

(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 ofthe State of Georgia, and

(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by 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, 2007, the bank balances were $3,395,167.80. The amounts of the total uninsured bank balances are classified into three categories of custodial credit risk:

Category 1 - Uncollateralized, Category 2 - Cash collateralized with securities held by the pledging financial institution, or Category 3 - Cash collateralized with securities held by the pledging financial institution's
trust department or agent but not in the School District's name.

The School District's uninsured deposits are classified by custodial credit risk category at June 30, 2007, as follows:

Custodial Credit Risk Category

Bank Balance

1

$ 695,539.85

2

0.00

3

2,276,920.96

Total

$ 2,972,460.81

- 15 -

LAMAR COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT"H"

Note 3: DEPOSITS AND INVESTMENTS
CATEGORIZATION OF INVESTMENTS At June 30, 2007, the carrying value of the School District's total investments was $7,587,317.51, 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 ofGeorgia, Office ofTreasury and Fiscal Services which are not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office of Treasury and Fiscal Services for the Local Government Investment Pool (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. Additional information on the Local Government Investment Pool is disclosed in the State of Georgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at http://www.audits.state.ga.us/intemet/searchRpts.html.
The Primary Liquidity Portfolio consists of Georgia Fund 1 which is not registered with the SEC as an investment company but does operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share. The pool is an AAAm rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2007, was 15 days.
Note 4: NON-MONETARY TRANSACTIONS
The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories
Note 5: CAPITAL ASSETS
The following is a summary of changes in the Capital Assets during the fiscal year:

- 16 -

LAMAR COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 5: CAPITAL ASSETS

Balances July 1, 2006

Increases

Decreases

Balances June 30, 2007

Governmental Activities Capital Assets, Not Being Depreciated:
Land

$ 521,056.00 $ 358,372.00 $

0.00 $ 879,428.00

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements

$21,752,352.00 $ 237,143.00 $ 114,433.00 $21,875,062.00

3,155,294.00 430,240.00

21,195.00 3,564,339.00

1,726,995.00

86,323.00 1,640,672.00

Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements

3,917,301.00 1,969,931.00
296,018.00

384,271.00 228,068.00 104,276.00

47,361.00 21,195.00 49,729.00

4,254,211.00 2,176,804.00
350,565.00

Total Capital Assets, Being Depreciated, Net $20,451,391.00 $ -49,232.00 $ 103,666.00 $20,298,493.00

Governmental Activity Capital Assets - Net $20,972,441,QQ $ 3Q2,14Q,QQ $ IQ3,666,QQ $21.171,221.QQ

Current year depreciation expense by function is as follows:

Instruction Support Services
Maintenance and Operation of Plant Student Transportation Services Food Services

$ 480,481.00

$ 18,189.00 180,050.00

198,239.00 37,895.00

$ 716,615.00

Note 6: RESTRICTED ASSETS

Special Purpose Local Option Sales Tax (SPLOST) proceeds are restricted assets in the Statement of Net Assets because their use is limited by statutory provisions. Restricted assets at June 30, 2007, were as follows:

District-wide Capital Projects SPLOST

Debt Service Funds

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

$ 22,707.59 $ 125,720.95
$ 1,834,658.07

- 17 -

LAMAR COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT"H"

Note 7: RISK MANAGEMENT

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

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

The School District 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.

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

2006 2007

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End ofYear Liability

$

0.00 $

0.00 $

0.00 $

0.00

$

0.00 $

2,031.00 $

2,031.00 $

0.00

The School District participates in the Georgia School Boards Association Workers' Compensation Fund, a public entity risk pool organized on July l, 1992, to develop, implement, and administer a program ofworkers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Fund for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Fund with the Safety National Casualty Corporation to provide coverage for potential losses sustained by the Fund in excess of$400,000.00 loss per occurrence, up to $1,000,000.00.

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

Position Covered

Amount

Superintendent All Employees

$ 100,000.00 $ 15,000.00

- 18 -

LAMAR COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT"H"

Note 8: LONG-TERM DEBT

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

Purpose

Interest Rates

Amount

General Government - Series 2002 General Government - Refunding - Series 2005

3.82% 3.33%

$ 1,300,000.00 3,750,000.00

$ 5,050,000.00

The changes in Long-Term Debt during the fiscal year ended June 30, 2007, were as follows:

Governmental Funds General
Obligation Bonds

Balance July 1, 2006

$ 6,440,000.00

Deductions Debt Retired

1,390,000.00

Balance June 30, 2007

$ 5,050,000.00

Portion of Long-Term Debt Due within One Year

$ 1,650,000.00

At June 30, 2007, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30

General Obligation

Debt

Principal

Interest

2008 2009 2010 2011 2012 2013 - 2016

$ 1,650,000.00 $ 174,535.00

365,000.00

113,220.00

380,000.00

101,066.00

395,000.00

88,412.00

415,000.00

75,258.00

1,845,000.00

156,677.00

Total Principal and Interest

$ 5,050,000.00 $ 709,168.00

- 19 -

LAMAR COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT"H"

Note 9: ON-BEHALF PAYMENTS
The School District has recognized revenues and costs in the amount of $374,083.86 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.
Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance ofNon-Certified Personnel In the amount of $359,191.07
Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $11,590.79
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 $3,302.00
Note 10: SIGNIFICANT CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.
The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance ofroutine School District operations. The ultimate disposition ofthese proceedings is not presently determinable, but is not believed to be material to the basic financial statements.
Note 11: SUBSEQUENT EVENTS
In the subsequent fiscal year, voters authorized the School District to issue general obligation bonds not to exceed $14,000,000.00. Ofthis balance, the School District issued $12,000,000.00 in general obligation bonds. The proceeds from these bonds will be used for various capital outlay projects including new construction, renovations, technology upgrades, and various equipment. As a part of this referendum, the voters authorized a 1% sales tax for educational purposes to raise not more than $10,000,000.00 for the purpose of debt service as well as a portion of capital outlay projects described above.

-20-

LAMAR COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT"H"

Note 12: 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 ofGeorgia (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 ofAudits 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 ofTrustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.28% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2007 2006 2005

100% 100% 100%

$1,191,488.55 $ 971,201.00 $ 898,284.00

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LAMAR COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2007

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 Enterprise Operations Community Services Operations
Total Expenditures
Net Change in Fund Balances
Fund Balances - Beginning
Fund Balances - Ending

NONAPPROPRIATED BUDGETS

ORIGINAL (1}

FINAL (1)

ACTUAL AMOUNTS

$ 6,009,333.26 $ 6,009,333.26 $ 6,719,404.87

70,735.94

10,130,204.07

11,087,475.58

11,275,986.19

804,029.04

2,930,352.04

2,921,789.40

294,280.27

294,280.27

510,396.75

152,939.59

152,939.59

353,760.56

90,931.00

90,931.01

583,562.15

$ 17,481,717.23 $ 20,565,311.75 $ 22,435,635.86

$ 11,434,878.95 $ 13,190,790.97 $ 13,096,412.43

652,032.37 546,703.85 391,986.24 377,203.34 1,075,857.41 161,777.65 1,511,788.54 1,335,801.28 251,493.40 124,850.00 1,217,183.53

1,018,974.48 877,315.65 401,588.78 441,250.41
1,111,437.87 166,017.52
1,527,795.37 1,403,604.67
268,007.68 216,238.73 1,220,997.64

972,575.77 846,199.36 406,551.73 424,314.60 1,087,437.26 155,280.90 1,391,310.48 1,409,748.92 268,664.06 163,181.00
17,268.50 30,823.97 1,254,579.33

$ 19,081,556.56 $ 21,844,019.77 $ 21,524,348.31

$ -1,599,839.33 $ -1,278,708.02 $

911,287.55

26,403,554.24

5,940,453.83

6,000,561.00

$ 24,803,714.91 $

4,661,745.81 $

6,911,848.55

Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual
(1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the various principal accounts.
The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 23 -

LAMAR COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2007

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Food Donation (1)
Total U.S. Department of Agriculture
Education, U.S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Other Programs Pass-Through From Georgia Department of Education Enhancing Education Through Technology Program Improving Teacher Quality State Grants Reading First State Grants Safe and Drug-Free Schools and Communities State Grants for Innovative Programs Title I Grants to Local Educational Agencies Vocational Education - Basic Grants to States
Total U.S. Department of Education
Health and Human Services, U. S. Department of Pass-Through From Georgia Department of Human Resources Temporary Assistance for Needy Families

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

10.553 10.555

N/A

(2)

N/A $ _ _1.:..1.,.:...11=5=,0=62=.6=5a....

$ 1,115,062.65

10.550

N/A

71,548.68

84.027 84.173

N/A

$

N/A

$

584,380.00 12,855.00
597,235.00

84.318 84.367 84.357 84.186 84.298 84.010 84.048

N/A

110,246.82

N/A

142,270.43

N/A

285,074.35

N/A

13,846.11

N/A

4,852.66

N/A

768,904.85

N/A

29,076.35

$ 1,951,506.57

93.556

N/A $

139,547.82

Total Federal Financial Assistance

$ 3,277,665.72

N/A = Not Available

Notes to the Schedule of Expenditures of Federal Awards

(1) The amount shown for the Food Donation Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year.
(2) Expenditures for the funds earned on the School Breakfast Program ($174,830.88) were not maintained separately and are included in the 2007 National School Lunch Program.

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 Lamar County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 24 -

LAMAR COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2007
AGENCY/FUNDING
GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities 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 Education Equalization Funding Grant Food Services Vocational Education Amended Formula Adjustment Other State Programs Graduation Coaches Health Insurance K-3 Statewide Reading Program Middle School Summer Remedial Program National Teacher Certification Preschool Handicapped Program Pupil Transportation - State Bonds Teachers' Retirement Virtual Schools Grant
Office of Treasury and Fiscal Services Public School Employees Retirement

See notes to the basic financial statements.

- 25-

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

429,857.03

639,634.00 164,327.00 1,381,105.00 384,409.00 597,954.00 259,233.00 1,224,685.00 1,317,028.00 331,274.00 1,151,447.00 190,399.00 76,817.00 104,708.00 218,107.00 69,826.00 43,283.00
364,909.00 484,449.00 581,074.00
485,133.00 53,268.00 35,802.00 58,708.00 7,843.00 9,429.00
107,480.00 67,968.00 10,588.00
-213,000.00
40,075.00 359,191.07
37,179.07 2,966.23 9,905.00
23,733.00 150,000.00
11,590.79 300.00
3,302.00
$ =====11=.2=1.,.5...9....,8,..6...,19=

LAMAR COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2007

SCHEDULE "4"

PROJECT
Payment of a portion of the principal and interest on the Lamar County School District's General Obligation School Bonds, Series 1995.
Acquisition, construction, equipping and furnishing of a new school and additions, renovations and improvements at existing schools and facilities, including the acquisition of any property necessary or desirable therefor.

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3) (4) (5)

AMOUNT EXPENDED
IN PRIOR YEARS (3) (4)

PROJECT STATUS

$ 2,443,930.00 $ 2,443,930.00 $

471,030.50 $ 958,624.00 Ongoing

5,056,070.00 9,833,563.34

119,854.34

9,713,709.00 Ongoing

$ 7,500,000.00 $ 12,277,493.34 $

590,884.84 $ 10,672,333.00

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

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

Prior Years

$ 545,942.00

Current Year

89,961.00

Total

$ 635,903.00

(5) The Series 1995 Bonds were retired through the sale of the Series 2005 Refunding Bond Issue. The School District will utilize the SPLOST proceeds budgeted for this project, plus any excess SPLOST proceeds to retire the Series 2005 Refunding Bond Issue.

See notes to the basic financial statements.

-26-

LAMAR COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2007

SCHEDULE "5"

DESCRIPTION
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 II Category Ill Gifted Student - Category VI Remedial Education Program Alternative Education Program
TOTAL DIRECT INSTRUCTIONAL PROGRAMS
Media Center Program Staff and Professional Development

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

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

$

778,474.00 $ 876,795.43 $

14,135.77 $

890,931.20

174,592.00

73,256.50

354.00

73,610.50

1,654,551.00

1,802,987.39

54,530.08

1,857,517.47

447,577.00

403,141.39

958.43

404,099.82

721,810.00

849,860.65

39,592.42

889,453.07

310,753.00 1,500,493.00 1,585,162.00
394,038.00 1,375,677.00
212,893.00 82,843.00
126,933.00

238,833.26 1,922,979.56 1,855,261.66
338,175.07
51,548.56 1,185,009.79
135,847.31
57 037.86

1,474.00 47,093.87 69,138.82 57,462.26
28,870.76 2,134.34 583.88
88185.18

240,307.26 1,970,073.43 1,924,400.48
395,637.33
51,548.56 1,213,880.55
137,981.65 583.88
145,223.04

$

9,365,796.00 $ 9,790,734.43 $ 404,513.81 $ 10,195,248.24

261,912.00 52 408.00

369,614.64

24,401.64

394,016.28 41,529.58

TOTAL QBE FORMULA FUNDS

$

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

See notes to the basic financial statements.

- 27 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
September 26, 2008

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Lamar County Board of Education
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Lamar County Board of Education as of and for the year ended June 30, 2007, which collectively comprise Lamar County Board of Education's basic financial statements and have issued our report thereon dated September 26, 2008. 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.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Lamar County Board of Education's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose ofexpressing an opinion on the effectiveness of the Lamar County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Lamar County Board of Education's internal control over financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified certain deficiencies in internal control over financial reporting that we consider to be significant deficiencies.
2007YB-30

A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affect the Lamar County Board of Education's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Lamar County Board of Education's financial statements that is more than inconsequential will not be prevented or detected by the Lamar County Board of Education's internal control. We consider item FS-6851-07-01 in the accompanying Schedule of Findings and Questioned Costs to be a significant deficiency in internal control over financial reporting.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement ofthe financial statements will not be prevented or detected by the Lamar County Board of Education's internal control.
Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily disclose all deficiencies in internal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, we believe the significant deficiency described above is not a material weakness.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Lamar County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
We noted certain matters that we have reported to management of Lamar County Board of Education in a separate letter dated September 26, 2008.
Lamar County Board of Education's response to the findings identified in our audit is described in the accompanying Schedule ofManagement's Responses. We did not audit Lamar County Board of Education's response and, accordingly, we express no opinion on it.
2007YB-30

This report is intended solely for the information and use ofthe management, members ofthe Lamar 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,
~,..,-..Ql ~4~ Russell W. Hinton, CPA, CGFM State Auditor
RWH:gp 2007YB-30

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
September 26, 2008

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members ofthe Lamar 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 ofLamar County Board ofEducation with the types ofcompliance requirements described in the U.S. Office of Management and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each ofits major Federal programs for the year ended June 30, 2007. Lamar County Board of Education's major Federal programs are identified in the Summary ofAuditor's Results Section ofthe 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 Lamar County Board of Education's management. Our responsibility is to express an opinion on Lamar 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 ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Lamar County Board ofEducation'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 Lamar County Board of Education's compliance with those requirements.
2007SA-35

In our opinion, the Lamar County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each ofits major Federal programs for the year ended June 30, 2007.
Internal Control Over Compliance
The management of Lamar 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 Lamar County Board ofEducation's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose ofexpressing our opinion on compliance, but not for the purpose ofexpressing an opinion on the effectiveness ofinternal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Lamar County Board of Education's internal control over compliance.
Our consideration ofthe internal control over compliance was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in the Board's internal control that might be significant deficiencies or material weaknesses as defined below. However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be significant deficiencies and others we consider to be material weaknesses.
A control deficiency in an entity's internal control over compliance exists when the design or operation ofa control does not allow management or employees, in the normal course ofperforming their assigned functions, to prevent or detect noncompliance with a type ofcompliance requirement of a Federal program on a timely basis. A significant deficiency is a control deficiency, or combination ofcontrol deficiencies, that adversely affects the entity's ability to administer a Federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement ofa Federal program that is more than inconsequential will not be prevented or detected by the entity's internal control. We consider the deficiency in internal control over compliance described in the accompanying Schedule ofFindings and Questioned Costs as item FA6851-07-01 to be a significant deficiency.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a Federal program will not be prevented or detected by the entity's internal control. However, the significant deficiency noted above is also considered to be a material weakness.
Lamar County Board of Education's response to the findings identified in our audit is described in the accompanying Schedule ofManagement's Responses. We did not audit Lamar County Board of Education's response and, accordingly, we express no opinion on it.
2007SA-35

This report is intended solely for the information and use ofthe management, members ofthe Lamar 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,
~W.~~ Russell W. Hinton, CPA, CGFM State Auditor
RWH:gp 2007SA-35

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

LAMAR COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2007

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER

AUDITEE'S RESPONSE/STATUS

SEE AUDITOR'S COMMENTS

FS-6851-05-0 I Previously Reported Corrective Action Implemented

FS-6851-05-02 Further Action Not Warranted

FS-6851-06-0 I Previously Reported Corrective Action Implemented

FS-6851-06-02 Unresolved - See Corrective Action/Responses

FS-6851-06-03 Further Action Not Warranted

(I)

CORRECTIVE ACTION/RESPONSES

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Separation of Duties Finding Control Number: FS-6851-06-02

No corrective action was planned in fiscal year 2006 schedule ofresponses. There are still no funds available for additional clerical staffing necessary for adequate separation of duties at each school.

AUDITOR'S COMMENTS

(1) Findings/internal control deficiencies of this nature, that are not deemed significant deficiencies or material weaknesses and do not require reporting in the audit report in accordance with Statements on Auditing Standards (SAS) 112 or Governmental Auditing Standards (Yellow Book), will be communicated in a management letter in subsequent periods.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.

SECTION IV FINDINGS AND QUESTIONED COSTS

LAMAR COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

I SUMMARY OF AUDITOR'S RESULTS

1. Type of Report Issued on the Financial Statements The auditor's opinion on the Lamar County Board of Education's financial statements was unqualified.

2. Significant Deficiencies in Internal Control Disclosed by the Audit ofthe Financial Statements The audit report for the Lamar County Board of Education disclosed a financial statement significant deficiency related to the following control categories.

Cash and Cash Equivalents Revenues/Receivables/Receipts

Expenditures/Liabilities/Disbursements

The significant deficiency described above is not considered to be a material weakness.

3. Noncompliance Material to the Financial Statements The audit ofthe Lamar County Board ofEducation disclosed no instances ofnoncompliance that were deemed to be material to the financial statements.

4. Significant Deficiencies in Internal Control Over Major Programs The audit report for the Lamar County Board ofEducation disclosed a significant deficiency in internal control over major programs for the following compliance requirements.

Activities Allowed or Unallowed

Allowable Costs/Cost Principles

The significant deficiency described above is considered to be a material weakness.

5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Lamar 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 Lamar County Board of Education's audit disclosed an audit finding required to be reported by section .510(a) of 0MB 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 Services - School Breakfast Program 10.555 Food Services - National School Lunch Program 84.027 Special Education - Grants to States 84.173 Special Education - Preschool Grants

- 1-

LAMAR COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

I SUMMARY OF AUDITOR'S RESULTS

8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00.

9. Low Risk Auditee The Lamar County Board ofEducation qualified as a low risk auditee as defined by Section .530 ofOMB Circular A-133.

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Separation of Duties over School Activity Accounts Significant Deficiency Finding Control Number: FS-6851-07-01

Condition:

This is a repeat finding (FS-6851-06-02, FS-6851-05-02, and FS-6851-0402) from the years ended June 30, 2006, June 30, 2005, and June 30, 2004, respectively. The accounting procedures of the School District were insufficient to provide adequate separation ofduties over the school activity accounts.

Criteria:

The School District's management is responsible for designing and maintaining internal controls that provide proper separation ofduties. Such internal controls would limit any one individual's access to both physical assets and the related accounting records.

Questioned Cost: NIA

Information:

Cash and Cash Equivalents The bank reconciliation function was not separated from the record keeping function and voucher payment functions.

Revenues/Receivables/Receipts Deposit preparation was not separated from the record keeping and cash custody functions.

Expenditures/Liabilities/Disbursements The check writing function was not separated from record keeping or processing of signed checks.

-2 -

LAMAR COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Separation of Duties over School Activity Accounts Significant Deficiency Finding Control Number: FS-6851-07-01

Cause:

These deficiencies were a result ofthe School District's decision to limit the number of clerical staff made responsible, at the various principal sites, for accounting functions and failure to ensure established controls were functioning as designed.

Effect:

Fraud, errors, and/or irregularities may occur and not be detected in a timely manner.

Recommendation:

The School District should implement procedures to ensure that the key accounting functions of custody, record keeping and authorization are separated and/or utilize management oversight of these incompatible activities.

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ALLOWABLE COSTS/COST PRINCIPLES ACTIVITIES ALLOWED OR UNALLOWED Inadequate Separation of Duties Material Weakness U.S. Department of Education Special Education - Grants to States (CFDA 84.027) Special Education - Preschool Grants (CFDA 84.173) Finding Control Number: FA-6851-07-01

Condition:

The accounting procedures ofthe School District were insufficient to provide adequate separation of duties over the contracted services. Superintendent's approval was not obtained for contracted services that occurred during the year under review in accordance with School District's established policy.

Criteria:

The School District's management is responsible for ensuring that internal controls are in place that provides proper separation of duties. School District policy requires the Superintendent's approval over contracted services.

Questioned Cost: NIA

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LAMAR COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ALLOWABLE COSTS/COST PRINCIPLES ACTIVITIES ALLOWED OR UNALLOWED Inadequate Separation of Duties Material Weakness U.S. Department of Education Special Education - Grants to States (CFDA 84.027) Special Education - Preschool Grants (CFDA 84.173) Finding Control Number: FA-6851-07-01

Information:

Testing revealed two incidents where the Superintendent's approval was not obtained for contracted service disbursements that occurred during the period under review. In both incidents, the Assistant Superintendent for Support Services entered into an agreement for services and approved payment for those services that occurred during the period under review related to Special Education Grants to States (CFDA 84.027) and Special Education Preschool Grants (CFDA 84.173). Management of the School District used contracts from fiscal year 2001 as documentation of Superintendent's approval for the disbursements. However, the fiscal year 2001 contracts had contract periods that had previously expired. Additionally, the total contract amount was not documented.

Cause:

This deficiency was the result of the School District not obtaining updated contracts for purchased services. Additionally, procedures were not in place to ensure that the Superintendent's approval was obtained for all contracted services before payment was made thereby creating an environment where inadequate separation of duties could exist.

Effect:

For the improperly executed contracts, no unallowable expenditures were noted; however, fraud, errors, and/or irregularities may occur and not be detected in a timely manner.

Recommendation:

The School District should implement procedures to ensure that Superintendent's approval was obtained for all contracted services in accordance with established policy.

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SECTIONV MANAGEMENT'S RESPONSES

LAMAR COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2007
Finding Control Number: FS-6851-07-01
We concur with this finding. In September 2008, all schools will send monthly vouchers and check reconciliations to the Central Business Office for review. This review looks at the total process of each school. The vouchers are being checked for proper signatures and accuracy. Bank accounts are reviewed to be sure checks are written to voucher accounts and for the correct amounts. This is a compensating control only. Funds are not available to hire additional personnel.
Finding Control Number: FA-6851-07-01
The School District has obtained updated contracts for all purchased services and the Superintendent's or the Board's approval has been obtained for these contracts.
Contact Person: Mona Faulkner Title: Head Bookkeeper Phone: (770) 358-5812 Fax: (770) 358-5858 E-mail: mfaulkne@lamar.k12.ga.us