Madison County Board of Education, Danielsville, Georgia, annual financial report for the fiscal year ended 2019 June 30 (including independent auditor's reports)

MADISON COUNTY BOARD OF EDUCATION
DANIELSVILLE, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2019
(Including Independent Auditor's Reports)

MADISON COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

Page

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S REPORT

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

i

EXHIBITS

BASIC FINANCIAL STATEMENTS

GOVERNMENT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET POSITION

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 POSITION

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 POSITION

FIDUCIARY FUNDS

8

H

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION

FIDUCIARY FUNDS

9

I NOTES TO THE BASIC FINANCIAL STATEMENTS

11

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY

TEACHERS RETIREMENT SYSTEM OF GEORGIA

39

2 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA

40

3 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY

PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM OF GEORGIA

41

4 SCHEDULE OF PROPORTIONATE SHARE OF THE NET OPEB LIABILITY

SCHOOL OPEB FUND

42

5 SCHEDULE OF CONTRIBUTIONS TEACHERS RETIREMENT SYSTEM OF GEORGIA

43

6 SCHEDULE OF CONTRIBUTIONS EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 44

MADISON COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I
FINANCIAL
SCHEDULES
REQUIRED SUPPLEMENTARY INFORMATION
7 SCHEDULE OF CONTRIBUTIONS SCHOOL OPEB FUND 8 NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION 9 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND
SUPPLEMENTARY INFORMATION
10 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 11 SCHEDULE OF STATE REVENUE 12 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

Page
45 46 47
48 49 51

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE

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

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

SECTION I FINANCIAL

Greg S. Griffin
STATE AUDITOR
(404) 656-2174

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

INDEPENDENT AUDITOR'S REPORT

The Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education
and Superintendent and Members of the Madison County Board of Education
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Madison County Board of Education (School District), as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the School District's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the of the governmental activities, each major fund, and the aggregate remaining fund information of the School District as of June 30, 2019, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis and required supplementary information listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the School District's basic financial statements. The accompanying supplementary information, as listed in the table of contents, is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by Title 2 U. S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements.
The accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.

Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated March 30, 2020 on our consideration of the School District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the School District's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School District's internal control over financial reporting and compliance.
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,

March 30, 2020

Greg S. Griffin State Auditor

MADISON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019
INTRODUCTION
The Madison County Board of Education's (School District) financial statements for the fiscal year ended June 30, 2019 includes a series of basic financial statements that report financial information for the School District as a whole, its funds, and its fiduciary responsibilities. The Statement of Net Position and the Statement of Activities provide financial information about all of the School District's activities and present both a short-term and long-term view of the School District's finances on a global basis. The fund financial statements provide information about all of the School District's funds. Information about these funds, such as the School District's general fund, is important in its own right, but will also give insight into the School District's overall soundness as reported in the Statement of Net Position and the Statement of Activities.
FINANCIAL HIGHLIGHTS
Key financial highlights for fiscal year 2019 are as follows:
On the government-wide financial statements:
The School District's net position at June 30, 2019 was a deficit of ($33.7) million. Net position reflects the difference between all assets and deferred outflows of resources of the School District (including capital assets, net of depreciation) and all liabilities, both short-term and long-term, and deferred inflows of resources. The net position at June 30, 2019 of ($33.7) million represented an increase of $4.2 million when compared to the prior year.
The School District had over $59.8 million in expenses relating to governmental activities; $40.1 million of the $59.8 million in expenses were offset by program specific charges for services, grants and contributions. General revenues (primarily property and sales taxes) of $23.9 million provided funding for the balance of these programs during fiscal year 2019.
As stated above, general revenues accounted for $23.9 million or about 37.3% of all revenues totaling over $64.0 million. Program specific revenues in the form of charges for services, grants, and contributions accounted for the balance of these revenues. (Percentages in table below have been rounded to one decimal place.)

Source of Revenues
Program Revenues
62.7%

General Revenue Property Taxes 19.6%
General Revenue Sales Taxes 4.0%

General Revenue -
All Other 13.7%

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MADISON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019
On the fund financial statements:
Among major funds, the general fund had $61.9 million in revenues, $58.6 million in expenditures and $2.1 million in transfers to the capital projects fund to provide supplemental funding for various capital outlay projects. The general fund balance of almost $7.0 million at June 30, 2019 increased about $1.2 million from the prior year.
OVERVIEW OF THE FINANCIAL STATEMENTS
These financial statements consists of three parts; management's discussion and analysis (this section), the basic financial statements including notes to the 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 government-wide and fund financial statements.
The government-wide financial statements include the `Statement of Net Position' and `Statement of Activities'. These statements provide information about the activities of the School District presenting both short-term and long-term information about the School District's overall financial status.
The fund financial statements focus on individual parts of the School District, reporting the School District's operation in more detail. The `governmental funds' statements disclose how basic services are financed in the short-term as well as what remains for future spending. The `fiduciary funds' statements provide information about the financial relationships in which the School District acts solely as a trustee or agent for the benefit of others. In the case of the Madison County School District, the general fund, capital projects fund, and debt service funds are all considered to be major funds. The School District has no funds reported as nonmajor funds as defined by generally accepted accounting principles.
The financial statements also include notes that explain some of the information in the statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the financial statements. Additionally, other supplementary information (not required) is also presented that further supplements understanding of the financial statements.
Government-Wide Statements
Since Madison County School District has no operations that have been classified as "business-type activities," the government-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 government-wide financial statements, a reader might ask the question, are we in a better financial position now than last year? The `Statement of Net Position' and the `Statement of Activities' provides the basis for answering this question. These financial statements include all School District's assets and liabilities and uses 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 position and any changes in net position. The change in net position is important because it tells the reader that, for the School District as a whole, the financial position of the School District has improved or diminished. The causes of this change may be the results of many factors, including those not under the School District's control, such as the property tax base, facility conditions, required educational programs, student-teacher ratios, and other factors.
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MADISON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019
When analyzing government-wide financial statements, it is important to remember these statements are prepared using an economic resources measurement focus (accrual accounting) and involve the following steps to format the Statement of Net Position:
Capitalize current outlays for capital assets. Depreciate capital assets. Report long-term debt, including pension and postemployment obligations, as a liability. Calculate revenue and expense using the economic resources measurement focus and the
accrual basis of accounting. Allocate net position as follows:
o Net Investment in capital assets, o Restricted net position is amounts with constraints placed on the use by external
sources such as creditors, grantors, contributors or laws and regulations, o Unrestricted for no specific use.
Fund Financial Statements
The School District uses many funds or sub-funds to account for a multitude of financial transactions during the fiscal year. The fund financial statements presented in this report provide detail information about the School District's significant or major funds. As discussed previously, the School District has no nonmajor funds as defined by generally accepted accounting principles.
The School District has two kinds of funds as discussed below:
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 year-end 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 be 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 Position and the Statement of Activities) and governmental funds are reconciled in the financial statements.
Fiduciary Funds The School District is the trustee, or fiduciary, for assets that belong to clubs, organizations and others within the principals' accounts. The School District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The School District excludes these activities from the governmentwide financial statements because it cannot use these assets to finance its operations.
FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT AS A WHOLE
Net position, which is the difference between total assets and deferred outflows of resources, and total liabilities and deferred inflows of resources, is one indicator of the financial condition of the School District. When revenues exceed expenses, the result is an increase in net position. When expenses exceed revenues, the result is a decrease in net position. The relationship between revenues and expenses can be thought of as the School District's operating results. The School District's net position, as measured in the Statement of Net Position is one way to measure the School District's financial health, or financial position. Over time, increases or decreases in the School District's net position - as measured in the Statement of Activities - are one indicator of whether its financial health is improving or deteriorating. However, the School District's goal and
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MADISON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019

mission is to provide success for each child's education, not to generate profits as private corporations do. For this reason, many other nonfinancial factors should be considered in assessing the overall health of the School District.

In the case of the Madison County School District, liabilities and deferred inflows of resources exceeded assets and deferred outflows of resources by almost $33.7 million at June 30, 2019. To better understand the School District's actual financial position and ability to deliver services in future periods, it is necessary to review the various components of the net position category. For example, of the ($33.7) million in net position, $3.3 million was restricted for continuation of various Federal programs, debt service and ongoing 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 almost $57.9 million (net of related debt) invested in capital
assets (e.g., land, buildings, and equipment). The School District uses these capital assets to provide educational services to students within geographic boundaries served by the School District.
Because of the very nature and on-going use of the assets being reported in this component of net position, it must be recognized that this portion of the net position is not available for future
spending.

Because of the restrictions on net position as discussed above, the School District had an
unrestricted deficit of almost $94.9 million at June 30, 2019. The reader should remember this
deficit includes pension related charges recorded because of the implementation (fiscal year 2015) of GASB Statement No. 68, Accounting and Financial Reporting for Pensions and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date on Amendment to GASB No. 68; and also includes charges recorded because of the implementation (fiscal year 2018) of GASB Statement No. 75, Accounting and Financial reporting for Postemployment Benefits Other than Pensions. The School District believes it is also meaningful to
view the School District's net position in the following manner:

Net position associated with pension obligations

$ (37,014,345.00)

Net position associated with postemployment benefits other than pension obligations

(45,006,069.00)

Net position exclusive of pension obligations and postemployment benefits

48,337,609.54

Net position, June 30, 2019

$ (33,682,804.46)

The above analysis shows that the recognition of liabilities for pension obligations and postemployment benefits on the financial statements has had a severe effect on the School District's unrestricted net position. However, despite these obligations, management believes the School District's financial position is sound.

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MADISON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019

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

Table 1 Net Position

Assets Current and Other Assets Capital Assets, Net

Governmental Activities

Fiscal Year

Fiscal Year

2019

2018

$ 16,607,908 $ 15,532,480

73,497,804

73,778,946

Total Assets

90,105,712

89,311,426

Deferred Outflows of Resources Deferred Charge on Refunding of Debt Related to Defined Benefit Pension Plans Related to OPEB Plan

412,786 10,434,872
2,408,836

455,859 7,908,279 1,662,184

Total Deferred Outflows of Resources

13,256,494

10,026,322

Total Assets and Deferred Outflows of Resources

103,362,206

99,337,748

Liabilities Current and Other Liabilities Long-Term Liabilities Net Pension Liability Net OPEB Liability

7,330,646 34,850,242 45,378,864 39,772,570

6,760,030 37,097,133 44,986,076 43,282,587

Total Liabilities

127,332,322

132,125,826

Deferred Inflows of Resources Related to Defined Benefit Pension Plans Related to OPEB Plan

2,070,353 7,642,335

1,774,141 3,295,859

Total Deferred Inflows of Resources

9,712,688

5,070,000

Total Liabilities and Deferred Inflows of Resources

137,045,010

137,195,826

Net Position Net Investment in Capital Assets Restricted Unrestricted (Deficit)

57,885,074 3,323,010
(94,890,888)

56,756,801 2,988,158
(97,603,037)

Total Net Position

$ (33,682,804) $ (37,858,078)

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MADISON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019

Total net position increased (the deficit decreased) $4.2 million in fiscal year 2019 from the prior year, primarily due a reduction in the School District's OPEB liability of $3.5 million as determined by professional actuaries engaged by the State of Georgia. In connection with unrestricted deficit shown above, management presents the following additional information:

Total unrestricted net position (deficit)

$ (94,890,889)

Add: Unrestricted deficit in net position resulting from recognition of net pension obligations

37,014,345

Unrestricted deficit in net position resulting from recognition of postemployment benefits other than pension obligations

45,006,069

Unrestricted net position (deficit), exclusive of the net pension obligation and postemployment benefits effect

$ (12,870,475)

The above analysis reflects, except for pension obligations and postemployment benefits, the School District's unrestricted net position (deficit) was about ($12.9) million. This deficit is primarily attributable to an energy improvement program the School District implemented in fiscal year 2017, by incurring a substantial amount of debt to pay for substantial energy improvement expenditures, of which a large majority, did not meet the School District's capitalization threshold.

vi

MADISON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019

Table 2 provides a summary of the School District's net position for this fiscal year as compared to the prior fiscal year.

Table 2 Change in Net Position

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

Governmental Activities

Fiscal Year

Fiscal Year

2019

2018

$

1,584,275

$

1,457,867

38,397,209

36,686,806

154,440

77,216

Total Program Revenues
General Revenues: Property Taxes Sales Taxes Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Special Items Loss on Disposal of Capital Assets

40,135,924
12,566,801 2,579,377 6,322,207 112,569 2,348,918
(41,275)

38,221,889
12,367,530 2,306,106 5,567,211 107,321 1,675,872
(48,308)

Total General Revenues and Special Items

23,888,597

21,975,732

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

64,024,521
37,261,428
3,197,397 1,153,556
962,314 948,770 3,275,206 940,458 3,263,608 2,717,703 369,385 650,371
482,270 3,380,538 1,246,242

60,197,621
38,480,294
3,007,533 1,213,494
989,678 957,517 3,223,248 861,077 3,351,352 2,871,626 271,652 572,282
420,316 3,496,653
920,709

Total Expenses

59,849,246

60,637,431

Increase (Decrease) in Net Position

$

4,175,275

$

(439,810)

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MADISON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019
Cost of Providing Services
The Statement of Activities shows the cost of program services and the charges for services and grants offsetting these services. Table 3 shows, for governmental activities, the total cost of services and the net cost of services. Net cost of services can be defined as the total cost less fees generated by the activities and intergovernmental revenue provided for specific programs. The net cost reflects the financial burden on the School District's taxpayers by each activity as compared to the prior fiscal year.
Table 3 Cost of Services

Total Cost of Services

Fiscal Year

Fiscal Year

2019

2018

Net Cost of Services

Fiscal Year

Fiscal Year

2019

2018

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 Food Services Interest on Short-Term and Long-Term Debt

$ 37,261,428 $ 38,480,294 $ 6,628,618 $ 9,772,987

3,197,397 1,153,556
962,314 948,770 3,275,206 940,458 3,263,608 2,717,703 369,385 650,371

3,007,533 1,213,494
989,678 957,517 3,223,248 861,077 3,351,352 2,871,626 271,652 572,282

3,014,608 700,389 195,167 637,814
1,865,844 734,888
1,801,474 1,672,672
303,630 574,749

2,734,683 706,600 261,444 614,233
1,857,756 670,782
1,900,343 1,849,807
226,449 513,698

482,270 3,380,538 1,246,242

420,316 3,496,653
920,709

357,281 (20,054) 1,246,242

181,071 204,980 920,709

Total Expenses

$ 59,849,246 $ 60,637,431 $ 19,713,322 $ 22,415,542

Overall School District expenses decreased about $0.8 million from the prior year, while the net costs of services decreased by $2.7 million from the prior year. The decrease in the net costs of services occurred primarily because operating revenues from State and Federal sources increased about $2.6 million as compared to the prior year.

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MADISON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019
The chart below shows a functional summary of the expenses made by the School District during fiscal year 2019. (The percentages are rounded to one decimal place).
Governmental Activities -- Cost of Services

Instructional 62.3%

Support Services 29.2%

Interest on Debt 2.1%

All Others 0.8%
Food Services 5.6%

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 $64.2 million and total expenditures of $63.4 million in fiscal year 2019. Total governmental fund balances of $8.8 million at June 30, 2019, increased about $0.8 million from the prior year.
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 2019, the School District amended its general fund budget as needed.
The School District budget is adopted at the aggregate level and maintained at the program, function, object, and site levels to facilitate budgetary control. The budgeting systems are designed to control the total budget, but provide flexibility to meet the ongoing programmatic needs. The budgeting systems are also designed to control total site budgets but provide flexibility for site management as well.
For the general fund, the final actual revenues of $61.9 million exceeded the final budgeted revenues by $7.6 million. This situation resulted primarily because revenues for property taxes exceeded the final budget by almost $0.8 million; State revenues exceeded the final budget by $1.0 million; Federal revenues exceeded the final budget by over $3.1 million; revenues for charges for services exceeded the final budget by $0.9 million and miscellaneous revenues exceeded the final budget by $1.5 million.
The general fund's final actual expenditures of about $58.6 million were less than the final budget amount by $1.5 million. This variance resulted from budgeted expenditures exceeding actual expenses for instruction by almost $2.0 million, thereby creating a total net under expenditure of the final budget.

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MADISON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
At fiscal year ended June 30, 2019, the School District had $73.5 million invested in capital assets, net of accumulated depreciation, all in governmental activities. These assets are made up of a broad range of items including buildings; land; land improvements; construction in progress; and instructional; food service, transportation and maintenance equipment. Table 4 reflects a summary of these balances, net of accumulated depreciation and amortization, as compared to the prior fiscal year.
Table 4 Capital Assets at June 30
(Net of Depreciation)

Governmental Activities

Fiscal Year

Fiscal Year

2019

2018

Land Construction in Progress Land Improvements Buildings and Improvements Equipment

$

1,147,402

$

1,147,402

996,079

-

1,013,265

811,562

65,086,324

66,555,236

5,254,734

5,264,746

Total

$

73,497,804

$

73,778,946

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

Long-Term Liabilities

At June 30, 2019, the School District had almost $34.9 million in total debt outstanding which consisted of almost $15.3 million in various forms of bond debt, $19.1 million in capital lease debt, $450,000 in unamortized bond premiums and $85,000 in compensated absences. Table 5 summarizes the School District's debt as compared to the prior fiscal year.
Table 5
Change in Long-Term Liabilities

Governmental Activities

Fiscal Year

Fiscal Year

2019

2018

General Obligation Bonds Payable Revenue Bonds-Rutland Center Unamortized Bond Premiums Financed Purchases Capital Lease Debt Compensated Absences

$

15,175,000

$

16,431,000

80,755

142,755

450,285

497,271

18,913,869

19,662,362

144,839

213,549

85,494

150,196

Total

$

34,850,242

$

37,097,133

x

MADISON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019 Additional information about the School District's debt can be found in the Notes to the Basic Financial Statements. FACTORS BEARING ON THE SCHOOL DISTRICT'S FUTURE Currently known circumstances that are expected to have a significant effect on financial position or results of operations in future years are as follows: The School District is financially stable. The School District's operating millage for fiscal year 2019 was 16.99 mills, which produced over $671,000 per mill, which was a decrease of $45,000 per mill as compared to the prior year. The School District will construct additional facilities to accommodate the growth at various schools as needed. The School District plans to fund additional capital outlays, in part, with the one percent local sales tax revenue and state capital outlay grants. The local economy has continued to grow from the prior year. Operating revenues from the State of Georgia (both State Funds and Federal Funds) increased about $2.6 million or about 6.0% from the prior year. Property tax revenues continued to rise as well and increased $0.2 million or about 1.6% as compared to the prior year. The general fund had an unassigned fund balance of about $7.0 million at June 30, 2019, which is an increase of about $1.2 million from the prior year. The Board anticipates significant financial challenges going forward due to expected continued higher health insurance and benefit costs for employees. In spite of these challenges, the School District will continue to be a good steward of tax dollars while providing a quality educational opportunity. 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. Amanda Wommack, Assistant Superintendent, Madison County Board of Education, 800 Madison Street, Danielsville, Georgia 30633.
xi

MADISON COUNTY BOARD OF EDUCATION

MADISON COUNTY BOARD OF EDUCATION STATEMENT OF NET POSITION JUNE 30, 2019
ASSETS
Cash and Cash Equivalents Receivables, Net
Taxes State Government Federal Government Other Notes Receivable Inventories Prepaid Items Restricted Investments Held by Trustee Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation)
Total Assets
DEFERRED OUTFLOWS OF RESOURCES
Deferred Charge on Refunding of Debt Deferred Outflow of District Contributions - Pensions Deferred Outflow of District Contributions - OPEB
Total Deferred Outflows of Resources
LIABILITIES
Salaries and Benefits Payable Interest Payable Contracts Payable Retainages Payable Proportionate Share of Collective Net Pension Liability Proportionate Share of Collective OPEB Liability Long-Term Debt
Due Within One Year Due in More Than One Year
Total Liabilities
DEFERRED INFLOWS OF RESOURCES
Deferred Inflow of Resources - Pension Plans Deferred Inflow of Resources - OPEB Plan
Total Deferred Inflows of Resources
NET POSITION
Net Investment in Capital Assets Restricted for
Continuation of Federal Programs Debt Service Capital Projects Unrestricted (Deficit)
Total Net Position
The notes to the basic financial statements are an integral part of this statement.

EXHIBIT "A"

GOVERNMENTAL ACTIVITIES

$

9,507,067.13

978,960.38 4,612,975.75
491,174.32 292,313.22 508,073.83
92,999.11 55,955.65 68,388.41 2,143,480.80 71,354,323.65

90,105,712.25

412,785.66 10,434,872.00
2,408,836.00
13,256,493.66

6,262,854.94 406,800.40 601,203.00 59,788.00
45,378,864.00 39,772,570.00
2,293,128.52 32,557,113.51
127,332,322.37

2,070,353.00 7,642,335.00
9,712,688.00

57,885,073.66
1,211,798.48 2,027,168.54
84,043.41 (94,890,888.55)

$ (33,682,804.46)

- 1 -

MADISON COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2019

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 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 Capital Projects/Debt Services Other Sales Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Special Items Loss on Disposal of Capital Assets
Total General Revenues and Special Items
Change in Net Position
Net Position - Beginning of Year

EXPENSES

CHARGES FOR SERVICES

PROGRAM REVENUE

$ 37,261,428.16 $
3,197,396.49 1,153,556.31
962,313.98 948,769.68 3,275,206.05 940,458.37 3,263,608.33 2,717,702.82 369,384.98 650,371.09
482,270.11 3,380,538.37 1,246,241.52
$ 59,849,246.26 $

786,156.15
-
124,988.85 673,130.14
-
1,584,275.14

Net Position - End of Year

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

- 2 -

EXHIBIT "B"

PROGRAM REVENUES OPERATING GRANTS AND
CONTRIBUTIONS

CAPITAL GRANTS AND CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET POSITION

$ 29,846,653.50 $
182,788.23 453,166.92 767,146.85 310,956.15 1,409,362.07 205,570.11 1,462,134.68 890,591.24
65,754.85 75,621.95
2,727,462.13
-
$ 38,397,208.68 $

- $
154,440.00 -
-
154,440.00

(6,628,618.51)
(3,014,608.26) (700,389.39) (195,167.13) (637,813.53)
(1,865,843.98) (734,888.26)
(1,801,473.65) (1,672,671.58)
(303,630.13) (574,749.14)
(357,281.26) 20,053.90
(1,246,241.52)
(19,713,322.44)

$

2,330,505.25

248,871.30

12,566,800.68
2,579,376.55 6,322,207.00
112,568.96 2,348,918.20
(41,275.00) 23,888,596.39
4,175,273.95 (37,858,078.41)

$

(33,682,804.46)

- 3 -

MADISON COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2019

EXHIBIT "C"

ASSETS
Cash and Cash Equivalents Receivables, Net
Taxes State Government Federal Government Other Notes Receivable Inventories Prepaid Items Restricted Investments with a Fiscal Agent or Trustee

GENERAL FUND

CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 7,264,395.43 $

- $ 2,242,671.70 $ 9,507,067.13

787,663.14 4,612,975.75
491,174.32 292,313.22 508,073.83
92,999.11 40,300.65

15,655.00

191,297.24 -

978,960.38 4,612,975.75
491,174.32 292,313.22 508,073.83
92,999.11 55,955.65

-

68,388.41

-

68,388.41

Total Assets
LIABILITIES
Salaries and Benefits Payable Contracts Payable Retainages Payable
Total Liabilities
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - Property Taxes Unavailable Revenue - Sale of Land
Total Deferred Inflows of Resources
FUND BALANCES
Nonspendable Restricted Committed Assigned Unassigned
Total Fund Balances

$ 14,089,895.45 $ 84,043.41 $ 2,433,968.94 $ 16,607,907.80

$ 6,262,854.94 $

- $

-

601,203.00

-

59,788.00

6,262,854.94

660,991.00

- $ 6,262,854.94

-

601,203.00

-

59,788.00

-

6,923,845.94

341,992.54

-

508,073.83

-

850,066.37

-

-

341,992.54

-

508,073.83

-

850,066.37

133,299.76 1,118,799.37
590,984.51 831,996.12 4,301,894.38
6,976,974.14

15,655.00 68,388.41
(660,991.00)
(576,947.59)

2,433,968.94
-
2,433,968.94

148,954.76 3,621,156.72
590,984.51 831,996.12 3,640,903.38
8,833,995.49

Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 14,089,895.45 $ 84,043.41 $ 2,433,968.94 $ 16,607,907.80

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

- 4 -

MADISON COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION JUNE 30, 2019

EXHIBIT "D"

Total fund balances - governmental funds (Exhibit "C")
Amounts reported for governmental activities in the Statement of Net Position 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 Accumulated depreciation - land improvements Buildings and improvements Accumulated depreciation - buildings and improvements Construction in progress Equipment Accumulated depreciation - equipment
Certain liabilities, including pension and post employment benefit obligations are not due and payable in the current period, and therefore are not reported in the governmental funds.
Net pension liability Net OPEB liability
Certain revenues will be collected after year-end, but are not available soon enough to pay for the current period expenditures.
Unavailable revenues - installment sale of land Unavailable property taxes
Deferred outflows and inflows of resources related to pensions and other postemployment benefits are applicable to future periods and, therefore are not reported in the governmental funds.
Net for pensions Net for OPEB
Deferred outflows of differences between the carrying value of the refunded debt and the resources used to refund it are not reported in the governmental funds.
Deferred outflow of refunding of debt
Some liabilities reported in the Statement of Activities do not require the use of current financial resources, and therefore are not reported as liabilities in the governmental fund statements.
Accrued interest on long-term debt
Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds. Long-term liabilities at year-end consist of:
Bonds payable Unamortized bond premiums Capital leases payable Financed purchases Rutland Center revenue bonds Compensated absences payable

$

8,833,995.49

$

1,147,402.00

2,203,078.00

(1,189,813.00)

85,156,191.27

(20,069,866.62)

996,078.80

9,880,905.00

(4,626,171.00)

73,497,804.45

$ (45,378,864.00) (39,772,570.00)

(85,151,434.00)

$

508,073.83

341,992.54

850,066.37

$

8,364,519.00

(5,233,499.00)

3,131,020.00

412,785.66

(406,800.40)

$ (15,175,000.00) (450,284.40) (144,839.02)
(18,913,869.30) (80,755.00) (85,494.31)

(34,850,242.03)

Net position of governmental activities (Exhibit "A")

$ (33,682,804.46)

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

- 5 -

MADISON COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2019

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 Food Services Operation
Capital Outlay Debt Services
Principal Dues and Fees Interest
Total Expenditures
Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Transfers In Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning

GENERAL FUND

CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 12,690,607.25 $ 248,871.30
39,247,610.23 5,658,901.61 1,584,275.14 110,408.05 2,363,627.60
61,904,301.18

- $ 30.52 -

- $ 2,330,505.25
2,130.39 -

12,690,607.25 2,579,376.55
39,247,610.23 5,658,901.61 1,584,275.14 112,568.96 2,363,627.60

30.52

2,332,635.64

64,236,967.34

36,594,533.69
3,288,019.49 1,190,398.04
981,484.62 922,684.06 3,433,608.89 950,959.58 3,596,712.10 2,721,784.88 385,478.71 652,158.09 482,270.11 3,220,250.05
69,514.49
68,710.33 -
9,778.73
58,568,345.86
3,335,955.32

79,943.53
1,638,482.60
810,492.25 -
551,764.45
3,080,682.83
(3,080,652.31)

-
-
1,256,000.00 8,150.63
478,047.19
1,742,197.82
590,437.82

36,674,477.22
3,288,019.49 1,190,398.04
981,484.62 922,684.06 3,433,608.89 950,959.58 3,596,712.10 2,721,784.88 385,478.71 652,158.09 482,270.11 3,220,250.05 1,707,997.09
2,135,202.58 8,150.63
1,039,590.37
63,391,226.51
845,740.83

(2,143,740.08) (2,143,740.08) 1,192,215.24 5,784,758.90

2,295,370.08 -
2,295,370.08 (785,282.23) 208,334.64

(151,630.00) (151,630.00) 438,807.82 1,995,161.12

2,295,370.08 (2,295,370.08)
845,740.83 7,988,254.66

Fund Balances - Ending

$ 6,976,974.14 $ (576,947.59) $ 2,433,968.94 $ 8,833,995.49

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

- 6 -

MADISON 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, 2019

EXHIBIT "F"

Net change in fund balances total governmental funds (Exhibit "E")

Amounts reported for governmental activities are different because:

Capital outlays are reported as expenditures in governmental finds. 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 - net change Depreciation expense

In the Statement of Activities, only the gain or loss on the sale or disposal of the capital assets is reported, whereas in the governmental funds, the entire proceeds from the sale increase financial resources. Thus, the change in net assets differs from the change in fund balances by the carrying value of the capital assets sold or disposed of.

In the Statement of Activities, the difference between the proceeds from a bond refunding issue and the principal of the bonds refunded are amortized over the life of refunding bonds, whereas in the governmental funds this difference is recognized in the fiscal year the refunding is completed.

Unamortized amount - deferred outflow June 30, 2018 June 30, 2019

Governmental funds report pension and OPEB contributions as expenditures. However, in the Statement of Activities, the costs of pensions and OPEB benefits earned net of employee contributions are reported as expense (net).

Pension expense OPEB expense

Because some revenues will not be collected for several months after the School District's fiscal year ends, they are not considered "available" revenues.

Unavailable revenues

Sale of land

June 30, 2018

$

June 30, 2019

Deferred inflows of resources

Unavailable property tax

June 30, 2018

$

June 30, 2019

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

Accrued interest expense

June 30, 2018

$

June 30, 2019

Compensated absences

June 30, 2018

$

June 30, 2019

Repayment of long-term debt is reported as expenditures in governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Position. In the current year, these amounts consist of:

Amortization of bond premium Payment of capital lease debt Payment of financed purchases of debt Payment of revenue bond debt Redemption of bond principal
Total debt repayment

$

845,740.83

$ 1,793,704.80 (2,033,571.00)

(239,866.20)

(41,275.00)

$

(455,858.94)

412,785.66

(43,073.28)

$ 1,837,593.00 (89,807.00)

1,747,786.00

(522,783.23) 508,073.83 $

(14,709.40)

(465,799.11) 341,992.54

(123,806.57)

(138,515.97)

204,386.96 (406,800.40) $

(202,413.44)

150,196.54 (85,494.31)

64,702.23

(137,711.21)

$

46,986.20

68,710.33

748,492.25

62,000.00

1,256,000.00

2,182,188.78

Change in net position of governmental activities (Exhibit "B")

$ 4,175,273.95

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

- 7 -

MADISON COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUNDS JUNE 30, 2019

EXHIBIT "G"

ASSETS Cash and Cash Equivalents Investments
Total Assets LIABILITIES Funds Held for Others NET POSITION Held in Trust for Private Purposes

PRIVATE PURPOSE TRUSTS

AGENCY FUNDS

$

38,492.18 $ 262,627.85

2,000.00

-

$

40,492.18 $ 262,627.85

$ 262,627.85

$

40,492.18

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

- 8 -

MADISON COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FIDUCIARY FUNDS YEAR ENDED JUNE 30, 2019
ADDITIONS Contributions Donors
DEDUCTIONS Scholarships Change in Net Position
Net Position - Beginning
Net Position - Ending

EXHIBIT "H"

PRIVATE PURPOSE TRUSTS

$

34,394.06

33,175.00 1,219.06
39,273.12

$

40,492.18

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

- 9 -

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MADISON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "I"

NOTE 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Madison County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a board elected by the voters and a Superintendent appointed by the Board. The School District is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
Additionally, the School District has been granted Charter System Status by the State of Georgia as provided in Georgia Annotated Code section 20-2-2063.2. This status gives the School District freedom from many State rules and regulations in exchange for the School District's agreement to increase academic achievement by its students.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements of the School District have been prepared in conformity with generally accepted accounting principles (GAAP) as prescribed by the Governmental Accounting Standards Board (GASB). GASB is the accepted standard-setting body for governmental accounting and financial reporting principles. The most significant of the School District's accounting policies are described below.
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the government-wide financial statements, fund financial statements and notes to the basic financial statements. The government-wide statements focus on the School District as a whole, while the fund financial statements focus on major funds. Each presentation provides valuable information that can be analyzed and compared between years and between governments to enhance the information's usefulness.
GOVERNMENT-WIDE STATEMENTS:
The Statement of Net Position and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Net Position presents the School District's non-fiduciary assets and liabilities, with the difference reported as net position. Net position is reported in three categories as follows:
1. Net investment in capital assets consists of the School District's total investment in capital assets, net of accumulated depreciation, and reduced by outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of net investment in capital assets.
2. Restricted net position consists of resources for which the School District is legally or contractually obligated to spend in accordance with restrictions imposed by external third parties or imposed by law through constitutional provisions or enabling legislation.

3. Unrestricted net position consists of resources not meeting the definition of the two preceding categories. Unrestricted net position often has constraints on resources imposed by management which can be removed or modified.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.

- 11 -

MADISON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "I"

Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
FUND FINANCIAL STATEMENTS:
The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate financial statements are presented for governmental and fiduciary funds. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. The School District had no funds reported as nonmajor funds.
The School District reports the following major governmental funds:
The general fund is the School District's primary operating fund. It accounts for and reports all financial resources not accounted for and reported in another fund.
The capital projects fund accounts for and reports financial resources including Education Special Purpose Local Option Sales Tax (ESPLOST) and bond proceeds that are restricted, committed or assigned for capital outlay expenditures, including the acquisition or construction of capital facilities and other capital assets.
The debt service fund accounts for and reports financial resources that are restricted, committed, or assigned including taxes (sales) legally restricted for the payment of general long-term principal and interest.
The School District reports the following fiduciary fund types:
Private purpose trust funds are used to report all trust arrangements for scholarships and for the purchase of library books.
Agency funds are used to report resources held by the School District in a purely custodial capacity (assets equal liabilities) and do not involve measurement of results of operations.
BASIS OF ACCOUNTING
The basis of accounting determines when transactions are reported on the financial statements. The government-wide and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.

- 12 -

MADISON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "I"

Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. The School District considers all intergovernmental revenues to be available if they are collected within 120 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 longterm debt, and compensated absences, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources.
The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
NEW ACCOUNTING PRONOUNCEMENTS
In fiscal year 2019, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 83, Certain Asset Retirement Obligations. This statement addresses accounting and financial reporting for certain asset retirement obligations (AROs). An ARO is a legally enforceable liability associated with the retirement of a tangible capital asset. A government that has legal obligations to perform future asset retirement activities related to its tangible capital assets should recognize a liability based on the guidance in this statement. The adoption of this statement did not have an impact on the School District's financial statements.
In fiscal year 2019, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements. The primary objective of this statement is to improve the information that is disclosed in notes to government financial statements related to debt, including direct borrowings and direct placements. It also clarifies which liabilities governments should include when disclosing information related to debt. The School District included additional information in the Long-Term Liabilities note disclosure.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand, demand deposits, investments in the State of Georgia local government investment pool (Georgia Fund 1) 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 (O.C.G.A.) 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations.

- 13 -

MADISON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "I"

INVESTMENTS
The School District can invest its funds as permitted by O.C.G.A. 36-83-4. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity.
Investments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. All other investments are reported at fair value.
For accounting purposes, certificates of deposit are classified as investments if they have an original maturity greater than three months when acquired.
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.
INVENTORIES
Consumable Supplies Inventory
On the basic financial statements, inventories of consumable supplies are reported at weighted average cost. The School District uses the consumption method to account for inventories whereby supplies are recorded as an asset when purchased, and expenses/expenditures are recorded as the inventory items are used. This account had a zero balance at fiscal year end.
Food Inventories
On the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (calculated on the first-in, first-out basis). 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.
PREPAID ITEMS
Payments made to vendors for services that will benefit future accounting periods are recorded as prepaid items, in both the government-wide and governmental fund financial statements.
RESTRICTED ASSETS
Certain resources set aside for repayment of debt are classified as restricted assets on the Statement of net position because their use is limited by applicable debt statutes, e.g. Rutland Center Revenue Bonds.
CAPITAL ASSETS
On the government-wide financial statements, capital assets are recorded 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 the acquisition value on the date donated. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. The School District does not capitalize book collections or works of art.

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MADISON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "I"

Capital acquisition and construction are recorded as expenditures in the governmental fund financial statements at the time of purchase (including ancillary charges), and the related assets are reported as capital assets in the governmental activities' column in the government-wide financial statements.

Depreciation is computed using the straight-line for all assets, except land, and is used to allocate the actual or estimated historical cost of capital assets over estimated useful lives.

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

Capitalization Policy

Estimated Useful Life

Land Land Improvements Buildings and Improvements Equipment Intangible Assets

All

N/A

$ 20,000.00

10 to 20 years

$ 100,000.00

20 to 60 years

$ 10,000.00

5 to 20 years

$ 100,000.00 Individually determined

DEFERRED OUTFLOWS/INFLOWS OF RESOURCES
In addition to assets, the statement of financial position will report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of resources that applies to a future period(s) and therefore will not be recognized as an outflow of resources (expense/expenditure) until then.
In addition to liabilities, the statement of financial position will report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of resources that applies to a future period(s) and therefore will not be recognized as an inflow of resources (revenue) until that time.
COMPENSATED ABSENCES
Compensated absences payable consists of vacation leave employees earned based on services already rendered.
Vacation leave of 10 days is awarded on a fiscal year basis to all full-time personnel employed on a twelve-month basis. No other employees are eligible to earn vacation leave. Vacation leave not utilized during the fiscal year may be carried over to the next fiscal year, providing such vacation leave does not exceed 20 days. Upon terminating employment, the School District pays all unused and unforfeited vacation benefits to employees. Accordingly, vacation benefits are accrued as a liability in the government-wide financial statements.
Members of the Teachers Retirement System of Georgia (TRS) may apply unused sick leave toward early retirement. The liability for early retirement will be borne by TRS rather than by the individual School Districts. Otherwise, sick leave does not vest with the employee, and no liability is reported in the School District's financial statements.
LONG-TERM LIABILITIES AND BOND DISCOUNTS/PREMIUMS
In the School District's government-wide financial statements, outstanding debt is reported as liabilities. Bond premiums and discounts and the difference between the reacquisition price and the net carrying value of refunded debt are deferred and amortized over the life of the bonds using the straight-line method. To conform to generally accepted accounting principles, bond premiums and discounts should be amortized using the effective interest method. The effect of this deviation is deemed to be immaterial to the fair presentation of the basic financial statements. Bond issuance costs are recognized as an outflow of resources (expense) in the fiscal year in which the bonds are issued.

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MADISON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "I"

In the governmental fund financial statements, the School District recognizes the proceeds of debt and premiums as other financing sources of the current period. Bond issuance costs are reported as debt service expenditures.
PENSIONS
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the pension plan's fiduciary net position and additions to/deductions from the plan's fiduciary net position have been determined on the same basis as they are reported by the plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (OPEB)
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the Georgia School Employees Postemployment Benefit Fund (School OPEB Fund) and additions to/deductions from School OPEB Fund fiduciary net position have been determined on the same basis as they are reported by School OPEB Fund. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
FUND BALANCES
Fund balance for governmental funds is reported in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent.
The School District's fund balances are classified as follows:
Nonspendable consists of resources that cannot be spent either because they are in a nonspendable form or because they are legally or contractually required to be maintained intact.
Restricted consists of resources that can be used only for specific purposes pursuant constraints either (1) externally imposed by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation.
Committed consists of resources that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board. The Board is the School District's highest level of decisionmaking authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Committed fund balance also should incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements.
Assigned consists of resources constrained by the School District's intent to be used for specific purposes but are neither restricted nor committed. The intent should be expressed by (1) the Board or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes.
Unassigned consists of resources within the general fund not meeting the definition of any aforementioned category. The general fund should be the only fund that reports a positive unassigned fund balance amount. In other governmental funds, it may be necessary to report a negative unassigned fund balance.
USE OF ESTIMATES
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.
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MADISON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "I"

PROPERTY TAXES

The Madison County Board of Commissioners adopted the property tax levy for the 2018 tax digest year (calendar year) on September 11, 2018 (levy date) based on property values as of January 1, 2018. Taxes were due on December 20, 2018 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2018 tax digest are reported as revenue in the governmental funds for fiscal year 2019. The Madison 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, 2019, for maintenance and operations amounted to $11,404,555.72.

The tax millage rate levied for the 2018 tax year (calendar year) for the School District was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

16.99 mills

Additionally, Title Ad Valorem Tax revenues, at the fund reporting level, amounted to $1,286,051.53 during fiscal year ended June 30, 2019.
SALES TAXES
Education Special Purpose Local Option Sales Tax (ESPLOST), at the fund reporting level, during the year amounted to $2,330,505.25 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. The most recent authorization expires December 31, 2022.
NOTE 3: BUDGETARY DATA
The budget is a complete financial plan for the School District's fiscal year and is based upon careful estimates of expenditures together with probable funding sources. The budget is legally adopted each year for the general fund. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds, except the various school activity (principal) accounts, is prepared and adopted by fund, function and object. The legal level of budgetary control was established by the Board at the aggregate function level. The budget for the general fund was prepared in accordance with accounting principles generally accepted in the United States of America.
The budgetary process begins with the School District's administration presenting an initial budget for the Board's review. The administration makes revisions as necessary based on the Board's guidelines, and a tentative budget is approved. After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper of general circulation in the locality, as well as the School District's website. At the next regularly scheduled meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. The approved budget is then submitted, in accordance with provisions of O.C.G.A. 20-2-167(c), to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.
The Superintendent is authorized by the Board to approve adjustments of less than 5% of the amount budgeted for expenditures in any budget function for any fund. The Superintendent will report to the Board concerning such adjustments not later than the next regular meeting of the Board. If at any time during the budget year, expenditures of funds in any budget function for any fund is anticipated to exceed by 5 percent or more the amount budgeted for that function in the Board-approved budget, the Superintendent is directed to request a budget amendment by the Board to authorize the additional anticipated expenditures. Under no circumstance is the Superintendent or other staff authorized to spend funds that exceed the total budget as approved by the Board of Education.

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MADISON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "I"

See the General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual in the Supplementary Information Section for a detail of any over/under expenditures during the fiscal year under review.
NOTE 4: DEPOSITS, CASH EQUIVALENTS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS
O.C.G.A. 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110% of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110% of the daily pool balance.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
CATEGORIZATION OF DEPOSITS
Custodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2019, School District had deposits with a carrying amount of $5,030,541.66, and a bank balance of $7,291,915.95. The bank balances insured by Federal depository insurance were $502,000.00 and the bank balances collateralized with securities held by the pledging financial institution or by the pledging financial institution's trust department or agent in the School District's name were $6,776,281.23.

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MADISON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "I"

At June 30, 2019, $13,634.72 of the School District's bank balance was exposed to custodial credit risk as follows:

Uninsured and Uncollateralized

$

-

Uninsured with collateral held by the pledging

financial institution

-

Uninsured with collateral held by the pledging financial institution's trust department or agent but not in the School District's name

13,634.72

Total

$

13,634.72

Reconciliation of cash and cash equivalents to carrying balances to carrying value of deposits:

Cash and cash equivalents Statement of Net Position Statement of Fiduciary Net Position

$ 9,507,067.13 301,120.03

Total cash and cash equivalents

9,808,187.16

Add: Deposits with original maturity of three months or more reported as investments

2,000.00

Less: Cash on hand Investment pools reported as cash and cash equivalents
Georgia Fund 1

37.52 4,779,607.98

Total carrying value of deposits - June 30, 2019

$ 5,030,541.66

CATEGORIZATION OF CASH EQUIVALENTS
The School District reported cash equivalents of $4,779,607.98 in Georgia Fund 1, a local government investment pool, which is included in the cash balances above. Georgia Fund 1 is not registered with the SEC as an investment company and does not 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, which approximates fair value. The pool is an AAAf 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, 2019, was 39 days.
Georgia Fund 1, administered by the State of Georgia, Office of the State Treasurer, is 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 the State Treasurer for the Georgia Fund 1, does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1 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 www.audits.ga.gov/SGD/CAFR.html.

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MADISON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "I"

CATEGORIZATION OF INVESTMENTS
At June 30, 2019, the School District had $2,000.00 invested in certificates of deposits, which are included in the categorization of deposits shown above and $68,388.41 in other types of investments. The other types of investments are categorized as follows:

Investment Type

Fair Value

Investment Maturity Less Than 1 Year

Debt Securities Mutual Bond Fund

$ 68,388.41 $

68,388.41

Fair Value of Investments
The School District measures and records its investments using fair value measurement guidelines established by generally accepted accounting principles. These guidelines recognize a three-tiered fair value hierarchy, as follows:
Level 1: Quoted prices for identical investments in active markets; Level 2: Observable inputs other than quoted market prices; and, Level 3: Unobservable inputs.
At June 30, 2019, the School District has the following investments by fair value level:
Mutual Bond Funds of $68,388.41 are valued using quoted process for identical measurements in active markets. (Level I inputs) Interest Rate Risk
Interest rate risk is the risk that changes in interest rates of debt investment will adversely affect the fair value of an investment. The School District does not have a formal policy for managing interest rate risk. Custodial Credit Risk
Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, the School District will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The School District does not have a formal policy for managing custodial credit risk.
At June 30, 2019, $68,388.41 of the School District's applicable investments were held by the investment's counterparty, not in the School District's name. Credit Quality Risk
Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. State law limits investments to those prescribed O.C.G.A. 36-83-4. The School District does not have a formal policy that would further limit its investment choices or one that addresses credit risk.
As discussed above, $68,388.41 is invested in Mutual Bond Funds, which are rated as AAA for Credit quality risks. NOTE 5: RESTRICTED ASSETS
The restricted investment balance of $68,388.41 is restricted for retirement of the Rutland Revenue Center Bonds as they mature.

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MADISON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "I"

NOTE 6: CAPITAL ASSETS

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

Balances July 1, 2018

Increases

Decreases

Balances June 30, 2019

Governmental Activities Capital Assets, Not Being Depreciated:
Land Construction in Progress

$ 1,147,402.00 $ -

- $ 996,078.80

- $ 1,147,402.00

-

996,078.80

Total Capital Assets Not Being Depreciated

1,147,402.00

996,078.80

-

2,143,480.80

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements
Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements

85,156,191.27 9,609,235.00 1,927,078.00

521,626.00 276,000.00

249,956.00
-

85,156,191.27 9,880,905.00 2,203,078.00

18,600,955.62 4,344,489.00 1,115,516.00

1,468,911.00 490,363.00 74,297.00

208,681.00
-

20,069,866.62 4,626,171.00 1,189,813.00

Total Capital Assets, Being Depreciated, Net

72,631,543.65 (1,235,945.00)

41,275.00

71,354,323.65

Governmental Activities Capital Assets - Net $ 73,778,945.65 $ (239,866.20) $ 41,275.00 $ 73,497,804.45

Current year depreciation expense by function is as follows:

Instruction Support Services
Educational Media Services General Administration School Administration Maintenance and Operation of Plant Student Transportation Services Food Services

$

32,914.00

61,132.00

25,654.00

22,008.00

190,307.00

$ 1,527,412.00
332,015.00 174,144.00

$ 2,033,571.00

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MADISON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019 NOTE 7: INTERFUND TRANSFERS

EXHIBIT "I"

Interfund transfers for the year ended June 30, 2019, consisted of the following:

Transfers to

Transfers From

General Fund

Debt Service Fund

Capital Projects Fund

$ 2,143,740.08 $ 151,630.00

The transfers above were made for the following purposes:

1. A transfer of $2,143,740.08 from the general fund to the capital projects fund was made to provide supplemental funding for capital outlay projects.

2. A transfer of $151,630.00 from the debt service fund to the capital projects fund was made to provide sales tax proceeds for supplemental funding of capital outlay projects.

NOTE 8: LONG-TERM LIABILITIES

The changes in long-term liabilities during the fiscal year for governmental activities were as follows:

Balance July 1, 2018

Additions

Governmental Activities

Balance

Deductions

June 30, 2019

Due Within One Year

General Obligation (G.O.) Bonds Unamortized Bond Premiums Financed Purchases Capital Leases Rutland Center Revenue Bonds Compensated Absences (1)

$ 16,431,000.00 $

- $ 1,256,000.00 $ 15,175,000.00 $ 1,299,000.00

497,270.60

-

46,986.20

450,284.40

46,986.20

19,662,361.55

-

748,492.25

18,913,869.30

811,508.18

13,549.35

-

68,710.33

144,839.02

71,154.14

142,755.00

-

62,000.00

80,755.00

64,480.00

150,196.54

77,697.07

142,399.30

85,494.31

-

$ 36,897,133.04 $ 77,697.07 $ 2,324,588.08 $ 34,850,242.03 $ 2,293,128.52

(1) The portion of compensated absences due within one year has been determined to be immaterial to the basic financial statements.
The School District's outstanding bonds from direct borrowings related to governmental activities of $15,175,000.00 contain a provision that in an event of default, outstanding amounts become immediately due if the School District is unable to make payment.
The School District's outstanding financed purchases related to governmental activities of $18,913,869.30 contain a provision that in an event of default, outstanding amounts become immediately due if the School District is unable to make payment. Additionally, the financed purchases contain a provision that should the School District fail to budget, appropriate, or otherwise make available funds to pay rental payments the agreement shall be deemed terminated at the end of the renewal term, and the School District shall cease to use the equipment and peaceably remove and deliver the equipment to the lessor at the School District's expense to the location(s) specified by the lessor.
GENERAL OBLIGATION DEBT OUTSTANDING
The School District's bonded debt consists of general obligation bonds that are generally callable with interest payable semiannually. Bond proceeds primarily pay for acquiring or constructing capital facilities. The School District repays general obligation bonds from voter-approved property taxes. General obligation bonds are direct obligations and pledge the full faith of the School District.

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MADISON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "I"

General Obligation bonds currently outstanding are as follows:

Description

Interest Rates

Issue Date Maturity Date

Amount Issued

Amount Outstanding

General Government - Series 2011 General Government - Refunding Series 2017

3.0259% 10/6/2011 2.27% 4/26/2017

2/1/2029 $ 16,000,000.00 $

2/1/2029

9,970,000.00

5,555,000.00 9,620,000.00

$ 25,970,000.00 $ 15,175,000.00

The following schedule details debt service requirements to maturity for the School District's total general obligation bonds payable:

Fiscal Year Ended June 30:

General Obligation Debt

Principal

Interest

Unamortized Bond Premium

2020 2021 2022 2023 2024 2025 - 2029

$

1,299,000.00 $

448,624.00

$

46,986.20

1,347,000.00

410,778.20

46,986.20

1,396,000.00

347,714.30

46,986.20

1,455,000.00

291,572.10

46,986.20

1,478,000.00

258,543.60

46,986.20

8,200,000.00

686,343.10

215,353.40

Total Principal and Interest

$

15,175,000.00 $ 2,443,575.30

$

450,284.40

REVENUE BONDS

The School District entered into a contract with the Northeast Georgia Regional Educational Service Agency (RESA), in conjunction with other School Districts to provide funding to build the Rutland Center, located in Athens Georgia. This facility was built through the sale of bonds, retirement of which was pledged by funds from various local school districts in the area. Under terms of the agreement, the various school districts pledged funds annually to retire the bonds as they become due. The obligation of the School District is absolute and unconditional so long as any of the bonds remain outstanding. Under the contract, the School District will exercise its power of taxation to the extent necessary to pay the amounts required to be paid by the contract.

Debt currently outstanding under Revenue Bonds is as follows:

Purpose

Interest Rate

Issue Date

Maturity Date

Amount Issued

Amount Outstanding

General Government - Rutland Center Revenue Bonds 4.16%

6/1/2006 8/1/2020 $ 713,000.00 $ 80,755.00

The following is a schedule of total revenue bond payments:

Fiscal Year Ended June 30:

Principal

Interest

2020 2021

$

64,480.00 $

16,275.00

3,359.00 677.00

Total Principal and Interest

$

80,755.00 $

4,036.00

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MADISON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "I"

CAPITAL LEASES

The School District has acquired various copiers under the provisions of a long-term lease agreement classified as capital leases for accounting purposes because it provides for a bargain purchase option or a transfer of ownership by the end of the lease term.

Capital leases currently outstanding are as follows:

Purpose

Interest Rate

Issue Date

Maturity Date

Amount Issued

Amount Outstanding

Ricoh Lease

2.92%

5/25/2017

6/30/2021 $

279,899.79 $

144,839.02

The following is a schedule of total capital lease payments:

Fiscal Year Ended June 30:

Principal

Interest

2020 2021

$

71,154.14

$ 3,935.14

73,684.88

1,404.40

Total Principal and Interest

$

144,839.02 $

5,339.54

OBLIGATIONS UNDER FINANCED PURCHASES

An energy efficiency lease agreement dated June 30, 2016 was executed by and between the School District, the lessee, and First Security Finance Incorporated, the lessor. The agreement authorized the borrowing of $19,823,525.48 for the purchase of energy efficiency equipment, machinery, supplies, building modifications and other energy saving items. Payments of the lease shall be made from the School District's general fund.

The following assets were acquired through an energy efficiency lease and are reflected in the capital asset note at fiscal year-end:

Buildings and Improvements Equipment Less: Accumulated Depreciation

Governmental Activities
$ 3,215,193.00 2,509,363.00 1,859,550.00

$ 3,865,006.00

Debt currently outstanding is as follows:

Purpose

Interest Rate

First Security Finance Incorporated

2.77%

Issue Date 6/30/2016

Maturity Date Amount Issued

Amount Outstanding

2/1/2033 $ 19,823,525.48 $

18,913,869.30

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MADISON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "I"

The following is a schedule of total finance purchase payments:

Fiscal Year Ended June 30:

Principal

Interest

2020 2021 2022 2023 2024 2025 - 2029 2030 - 2033

$ 811,508.18 $ 527,696.95

877,976.26

505,055.88

948,060.79

480,560.34

1,021,931.69

454,109.44

1,099,768.60

425,597.55

6,818,809.73 1,620,128.90

7,335,814.05

528,012.46

Total Principal and Interest $ 18,913,869.30 $ 4,541,161.52

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

NOTE 9: RISK MANAGEMENT INSURANCE Commercial Insurance

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; and natural disasters. Except as described below, the School District carries commercial insurance for these risks. Settled claims resulting from these insured risks have not exceeded commercial insurance coverage in any of the past three fiscal years.

UNEMPLOYMENT COMPENSATION

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 the related liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. The School District has not incurred any liabilities for unemployment compensation during the last two fiscal years.
SURETY BOND

The School District purchased a surety bond to provide additional insurance coverage as follows:

Position Covered

Amount

Superintendent

$ 1,000,000.00

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MADISON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "I"

NOTE 10: FUND BALANCE CLASSIFICATION DETAILS

The School District's financial statements include the following amounts presented in the aggregate at June 30, 2019:

Nonspendable Inventories Prepaid Assets
Restricted Continuation of Federal Programs Capital Projects Debt Service
Committed School Activity Accounts
Assigned Local Programs
Unassigned

$

92,999.11

55,955.65 $

148,954.76

$

1,118,799.37

68,388.41

2,433,968.94

3,621,156.72

590,984.51

831,996.12 3,640,903.38

Fund Balance, June 30, 2019

$ 8,833,995.49

When multiple categories of fund balance are available for expenditure, the School District will start with the most restricted category and spend those funds first before moving down to the next category with available funds.

It is the goal of the School District to achieve and maintain an unassigned fund balance in the general fund at fiscal year-end of not less than 15% of expenditures, not to exceed 15% of the total budget of the subsequent fiscal year, in compliance with O.C.G.A. 20-2-167(a)5. If the unassigned fund balance at fiscal year-end falls below the goal, the School District shall develop a restoration plan to achieve and maintain the minimum fund balance.
NOTE 11: SIGNIFICANT COMMITMENTS
COMMITMENTS UNDER CONSTRUCTION CONTRACTS

The following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2019:

Project

Unearned Executed Contracts (1)

Payments through June 30, 2019 (2)

Early Learning Center Maintenance Building

$

166,532.00 $

618,676.00

119,457.00

206,823.00

$

285,989.00 $

825,499.00

(1) The amounts described are not reflected in the basic financial statements. (2) Payments include contracts and retainages payable at year-end.

- 26 -

MADISON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "I"

NOTE 12: SIGNIFICANT CONTINGENT LIABILITIES
FEDERAL GRANTS
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. Any disallowances resulting from the grantor audit may become a liability of the School District. However, the School District believes that such disallowances, if any, will be immaterial to its overall financial position.
LITIGATION
The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable but is not believed to have a material adverse effect on the financial condition of the School District.
NOTE 13: OTHER POST-EMPLOYMENT BENEFITS (OPEB)
GEORGIA SCHOOL PERSONNEL POST-EMPLOYMENT HEALTH BENEFIT FUND
Plan Description: Certified teachers and non-certified public school employees of the School District as defined in 20-2-875 of the Official Code of Georgia Annotated (O.C.G.A.) are provided OPEB through the School OPEB Fund - a cost-sharing multiple-employer defined benefit postemployment healthcare plan, reported as an employee trust fund and administered by a Board of Community Health (Board). Title 20 of the O.C.G.A. assigns the authority to establish and amend the benefit terms of the group health plan to the Board.
Benefits Provided: The School OPEB Fund provides healthcare benefits for retirees and their dependents due under the group health plan for public school teachers, including librarians, other certified employees of public schools, regional educational service agencies and non-certified public school employees. Retiree medical eligibility is attained when an employee retires and is immediately eligible to draw a retirement annuity from Employees' Retirement System (ERS), Georgia Judicial Retirement System (JRS), Legislative Retirement System (LRS), Teachers Retirement System (TRS) or Public School Employees Retirement System (PSERS). If elected, dependent coverage starts on the same day as retiree coverage. Medicare-eligible retirees are offered Standard and Premium Medicare Advantage plan options. Non-Medicare eligible retiree plan options include Health Reimbursement Arrangement (HRA), Health Maintenance Organization (HMO) and a High Deductible Health Plan (HDHP). The School OPEB Fund also pays for administrative expenses of the fund. By law, no other use of the assets of the School OPEB Fund is permitted.
Contributions: As established by the Board, the School OPEB Fund is substantially funded on a payas-you-go basis; that is, annual cost of providing benefits will be financed in the same year as claims occur. Contributions to the School OPEB Fund from the School District were $1,709,083.00 for the year ended June 30, 2019. Active employees are not required to contribute to the School OPEB Fund.
OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB
At June 30, 2019, the School District reported a liability of $39,772,570.00 for its proportionate share of the net OPEB liability. The net OPEB liability was measured as of June 30, 2018. The total OPEB liability used to calculate the net OPEB liability was based on an actuarial valuation as of June 30, 2017. An expected total OPEB liability as of June 30, 2018 was determined using standard roll-forward techniques. The School District's proportion of the net OPEB liability was actuarially determined based on employer contributions during the fiscal year ended June 30, 2018. At June 30, 2018, the School District's proportion was 0.312931%, which was an increase of 0.004869% from its proportion measured as of June 30, 2017.

- 27 -

MADISON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "I"

For the year ended June 30, 2019, the School District recognized OPEB expense of $1,798,890.00. At June 30, 2019, the School District reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

OPEB

Deferred

Deferred

Outflows of

Inflows of

Resources

Resources

Differences between expected and actual

experience

$

- $ 904,670.00

Changes of assumptions

-

6,737,665.00

Net difference between projected and actual

earnings on OPEB plan investments

53,812.00

-

Changes in proportion and differences between School District contributions and proportionate share of contributions

645,941.00

-

School District contributions subsequent to

the measurement date

1,709,083.00

-

Total

$ 2,408,836.00 $ 7,642,335.00

School District contributions subsequent to the measurement date are reported as deferred outflows of resources and will be recognized as a reduction of the net OPEB liability in the year ended June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Year Ended June 30:

OPEB

2020 2021 2022 2023 2024 2025

$ (1,355,663.00) $ (1,355,663.00) $ (1,355,663.00) $ (1,358,878.00) $ (1,107,161.00) $ (409,554.00)

- 28 -

MADISON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "I"

Actuarial assumptions: The total OPEB liability as of June 30, 2018 was determined by an actuarial valuation as of June 30, 2017 using the following actuarial assumptions and other inputs, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2018:
OPEB:

Inflation

2.75%

Salary increases

3.25% 9.00%, including inflation

Long-term expected rate of return Healthcare cost trend rate

7.30%, compounded annually, net of investment expense, and including inflation

Pre-Medicare Eligible Medicare Eligible Ultimate trend rate Pre-Medicare Eligible Medicare Eligible Year of Ultimate trend rate

7.50% 5.50%
4.75% 4.75%

Pre-Medicare Eligible

2028

Medicare Eligible

2022

Mortality rates were based on the RP-2000 Combined Mortality Table for Males or Females, as appropriate, with adjustments for mortality improvements based on Scale BB as follows:

For TRS members: The RP-2000 White Collar Mortality Table projected to 2025 with projection
scale BB (set forward 1 year for males) is used for death after service retirement and beneficiaries. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward two years for males and four years for females) is used for death after disability retirement.
For PSERS members: The RP-2000 Blue-Collar Mortality Table projected to 2025 with
projection scale BB (set forward 3 years for males and 2 years for females) is used for the period after service retirement and for beneficiaries of deceased members. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward 5 years for both males and females) is used for the period after disability retirement.

The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the pension systems, which covered the five-year period ending June 30, 2014.

The remaining actuarial assumptions (e.g., initial per capita costs, health care cost trends, rate of plan participation, rates of plan election, etc.) used in the June 30, 2017 valuation were based on a review of recent plan experience done concurrently with the June 30, 2017 valuation.

Projection of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculation.

- 29 -

MADISON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "I"

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

Asset class

Target allocation

Long-Term Expected Real Rate of Return*

Fixed income Domestic Stocks -- Large Cap Domestic Stocks -- Mid Cap Domestic Stocks -- Small Cap Int'l Stocks - Developed Mkt Int'l Stocks - Emerging Mkt Alternatives

30.00% 37.20%
3.40% 1.40% 17.80% 5.20% 5.00%

(0.50)% 9.00%
12.00% 13.50%
8.00% 12.00% 10.50%

Total

100.00%

*Net of Inflation
Discount rate: The discount rate has changed since the prior measurement date from 3.58% to 3.87%. In order to measure the total OPEB liability for the School OPEB Fund, a single equivalent interest rate of 3.87% was used as the discount rate. This is comprised mainly of the yield or index rate for 20-year tax-exempt general obligation municipal bonds with an average rating of AA or higher (3.87% per the Bond Buyers Index). The projection of cash flows used to determine the discount rate assumed that contributions from members and from the employer will be made at the current level as averaged over the last five years, adjusted for annual projected changes in headcount. Projected future benefit payments for all current plan members were projected through 2118. Based on these assumptions, the OPEB plan's fiduciary net position was projected to be available to make OPEB payments for inactive employees through year 2018. Therefore, the calculated discount rate of 3.87% was applied to all periods of projected benefit payments to determine the total OPEB liability.
Sensitivity of the District's proportionate share of the net OPEB liability to changes in the discount rate: The following presents the School District's proportionate share of the net OPEB liability calculated using the discount rate of 3.87%, as well as what the School District's proportionate share of the net OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (2.87%) or 1 percentage-point higher (4.87%) than the current discount rate:

1% Decrease (2.87%)

Current Discount Rate (3.87%)

1% Increase (4.87%)

School District's proportionate share of the

Net OPEB Liability

$

46,441,891.00 $

39,772,570.00 $

34,394,460.00

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

1% Decrease

Current Healthcare Cost Trend Rate

1% Increase

School District's proportionate share of the Net OPEB Liability

$ 33,437,120.00 $ 39,772,570.00 $ 47,869,042.00
- 30 -

MADISON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "I"

OPEB plan fiduciary net position: Detailed information about the OPEB plan's fiduciary net position is available in the Comprehensive Annual Financial Report (CAFR) which is publicly available at https://sao.georgia.gov/comprehensive-annual-financial-reports.
NOTE 14: RETIREMENT PLANS
The School District participates in various retirement plans administered by the State of Georgia, as further explained below.
TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
Plan Description: All teachers of the School District as defined in O.C.G.A 47-3-60 and certain other support personnel as defined by O.C.G.A. 47-3-63 are provided a pension through the Teachers Retirement System of Georgia (TRS). TRS, a cost-sharing multiple-employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. The Teachers Retirement System of Georgia issues a publicly available separate financial report that can be obtained at www.trsga.com/publications.
Benefits Provided: TRS provides service retirement, disability retirement, and death benefits. Normal retirement benefits are determined as 2% of the average of the employee's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. An employee is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. Ten years of service is required for disability and death benefits eligibility. Disability benefits are based on the employee's creditable service and compensation up to the time of disability. Death benefits equal the amount that would be payable to the employee's beneficiary had the employee retired on the date of death. Death benefits are based on the employee's creditable service and compensation up to the date of death.
Contributions: Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. Pursuant to O.C.G.A. 47-3-63, the employer contributions for certain full-time public school support personnel are funded on behalf of the employer by the State of Georgia Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees were required to contribute 6.00% of their annual pay during fiscal year 2019. The School District's contractually required contribution rate for the year ended June 30, 2019 was 20.90% of annual School District payroll, of which 20.81% of payroll was required from the School District and 0.09% of payroll was required from the State. For the current fiscal year, employer contributions to the pension plan were $6,196,310.00 and $25,220.16 from the School District and the State, respectively.
EMPLOYEES' RETIREMENT SYSTEM
Plan description: The Employees' Retirement System of Georgia (ERS) is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly during the 1949 Legislative Session for the purpose of providing retirement allowances for employees of the State of Georgia and its political subdivisions. ERS is directed by a Board of Trustees. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. ERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/formspubs/formspubs.
Benefits provided: The ERS Plan supports three benefit tiers: Old Plan, New Plan, and Georgia State Employees' Pension and Savings Plan (GSEPS). Employees under the old plan started membership prior to July 1, 1982 and are subject to plan provisions in effect prior to July 1, 1982. Members hired on or after July 1, 1982 but prior to January 1, 2009 are new plan members subject to modified plan provisions. Effective January 1, 2009, new state employees and rehired state employees who did not retain membership rights under the Old or New Plans are members of GSEPS. ERS members hired prior to January 1, 2009 also have the option to irrevocably change their membership to GSEPS.
- 31 -

MADISON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "I"

Under the old plan, the new plan, and GSEPS, a member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60 or 30 years of creditable service regardless of age. Additionally, there are some provisions allowing for early retirement after 25 years of creditable service for members under age 60.
Retirement benefits paid to members are based upon the monthly average of the member's highest 24 consecutive calendar months, multiplied by the number of years of creditable service, multiplied by the applicable benefit factor. Annually, postretirement cost-of-living adjustments may also be made to members' benefits provided the members were hired prior to July 1, 2009. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension, at reduced rates, to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.
Contributions: Member contributions under the old plan are 4% of annual compensation, up to $4,200.00, plus 6% of annual compensation in excess of $4,200.00. Under the old plan, the state pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these state contributions are included in the members' accounts for refund purposes and are used in the computation of the members' earnable compensation for the purpose of computing retirement benefits. Member contributions under the new plan and GSEPS are 1.25% of annual compensation. The School District's contractually required contribution rate, actuarially determined annually, for the year ended June 30, 2019 was 24.78% of annual covered payroll for old and new plan members and 21.78% for GSEPS members. The rates include the annual actuarially determined employer contribution rate of 24.66% of annual covered payroll of new and old plan members and 21.66% for GSEPES members, plus a 0.12% adjustment for the HB 751 one-time benefit adjustment of 3% to retired state employees. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employer contributions to the pension plan were $16,160.00 for the current fiscal year.
PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM (PSERS)
Plan description: PSERS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly in 1969 for the purpose of providing retirement allowances for public school employees who are not eligible for membership in the Teachers Retirement System of Georgia. The ERS Board of Trustees, plus two additional trustees, administers PSERS. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. PSERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/formspubs/formspubs.
Benefits provided: A member may retire and elect to receive normal monthly retirement benefits after completion of ten years of creditable service and attainment of age 65. A member may choose to receive reduced benefits after age 60 and upon completion of ten years of service.
Upon retirement, the member will receive a monthly benefit of $15.00, multiplied by the number of years of creditable service. Death and disability benefits are also available through PSERS. Additionally, PSERS may make periodic cost-of-living adjustments to the monthly benefits. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contribution, the member forfeits all rights to retirement benefits.
Contributions: The general assembly makes an annual appropriation to cover the employer contribution to PSERS on behalf of local school employees (bus drivers, cafeteria workers, and maintenance staff). The annual employer contribution required by statute is actuarially determined and paid directly to PSERS by the State Treasurer in accordance with O.C.G.A. 47-4-29(a) and 60(b). Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.

- 32 -

MADISON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "I"

Individuals who became members prior to July 1, 2012 contribute $4 per month for nine months each fiscal year. Individuals who became members on or after July 1, 2012 contribute $10 per month for nine months each fiscal year. The State of Georgia, although not the employer of PSERS members, is required by statute to make employer contributions actuarially determined and approved and certified by the PSERS Board of Trustees. The current fiscal year contribution by the State of Georgia was $60,609.00.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

At June 30, 2019, the School District reported a liability of $45,378,864.00 for its proportionate share of the net pension liability, consisting of $45,273,992.00 for TRS and $104,872.00 and ERS.
The TRS net pension liability reflected a reduction for support provided to the School District by the State of Georgia for certain public school support personnel. The amount recognized by the School District as its proportionate share of the net pension liability, the related State of Georgia support, and the total portion of the net pension liability that was associated with the School District were as follows:

School District's proportionate share of the net pension liability

$ 45,273,992.00

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

176,526.00

Total

$ 45,450,518.00

The net pension liability for TRS and ERS was measured as of June 30, 2018. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2017. An expected total pension liability as of June 30, 2018 was determined using standard roll-forward techniques. The School District's proportion of the net pension liability was based on contributions to TRS and ERS during the fiscal year ended June 30, 2018.
At June 30, 2018, the School District's TRS proportion was 0.243905%, which was an increase of 0.002481% from its proportion measured as of June 30, 2017. At June 30, 2018, the School District's ERS proportion was 0.002551%, which was a decrease of 0.000322% from its proportion measured as of June 30, 2017.
At June 30, 2019, the School District did not have a PSERS liability for a proportionate share of the net pension liability because of a Special Funding Situation with the State of Georgia, which is responsible for the net pension liability of the plan. The amount of the State's proportionate share of the net pension liability associated with the School District is $406,902.00.
The PSERS net pension liability was measured as of June 30, 2018. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2017. An expected total pension liability as of June 30, 2018 was determined using standard roll-forward techniques. The State's proportion of the net pension liability associated with the School District was based on actuarially determined contributions paid by the State during the fiscal year ended June 30, 2018.
For the year ended June 30, 2019, the School District recognized pension expense of $4,334,372.00 for TRS, ($4,782.00) for ERS and $94,213.00 for PSERS and revenue of ($41,040.00) for TRS and $94,213.00 for PSERS. The revenue is support provided by the State of Georgia. For TRS the State of Georgia support is provided only for certain support personnel.

- 33 -

MADISON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "I"

At June 30, 2019, the School District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

TRS Deferred Outflows of Resources

Deferred Inflows of Resources

ERS

Deferred

Deferred

Outflows of

Inflows of

Resources Resources

Differences between expected and actual experience

$ 2,997,202.00 $ 93,311.00 $ 3,262.00 $

-

Changes of assumptions

683,168.00

-

4,941.00

-

Net difference between projected and actual earnings on pension plan investments

-

1,237,879.00

-

2,417.00

Changes in proportion and differences between School District contributions and proportionate share of contributions

533,829.00

715,997.00

-

20,749.00

School District contributions subsequent to the measurement date

6,196,310.00

-

16,160.00

-

Total

$ 10,410,509.00 $ 2,047,187.00 $ 24,363.00 $ 23,166.00

The School District contributions subsequent to the measurement date for TRS and for ERS are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ended June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year Ended June 30:

TRS

ERS

2020 2021 2022 2023 2024

$ 2,226,730.00 $ (9,879.00)

$ 1,060,448.00 $

13.00

$ (1,229,994.00) $ (4,017.00)

$ 58,446.00 $ (1,080.00)

$ 51,382.00 $

-

Actuarial assumptions: The total pension liability as of June 30, 2018 was determined by an actuarial valuation as of June 30, 2017, using the following actuarial assumptions, applied to all periods included in the measurement:

Teachers Retirement System:

Inflation

2.75%

Salary increases

3.25% 9.00%, average, including inflation

Investment rate of return

7.50%, net of pension plan investment expense, including inflation

Post-retirement mortality rates were based on the RP-2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males) for service requirements and dependent beneficiaries. The RP-2000 Disabled Mortality table with future mortality improvement projected to 2025 with Society of Actuaries' projection scale BB (set forward two years for males and four years for females) was used for the death after disability retirement. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB.
- 34 -

MADISON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "I"

The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014.
Employees' Retirement System:

Inflation

2.75%

Salary increases

3.25% 7.00%, including inflation

Investment rate of return

7.30%, net of pension plan investment expense, including inflation

Post-retirement mortality rates were based on the RP-2000 Combined Mortality Table with future
mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB and set
forward 2 years for both males and females for service retirements and dependent beneficiaries. The RP- 2000 Disabled Mortality Table with future mortality improvement projected to 2025 with Society
of Actuaries' projection scale BB and set back 7 years for males and set forward 3 years for females
was used for death after disability retirement. There is a margin for future mortality improvement in
the tables used by the System. Based on the results of the most recent experience study adopted by the Board on December 17, 2015, the numbers of expected future deaths are 9-12% less than the
actual number of deaths that occurred during the study period for service retirements and
beneficiaries and for disability retirements. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB.

The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014.
Public School Employees Retirement System:

Inflation

2.75%

Salary increases

N/A

Investment rate of return

7.30%, net of pension plan investment expense, including inflation

Post-retirement mortality rates were based on the RP-2000 Blue-Collar Mortality Table projected to 2025 with projection scale BB (set forward 3 years for males and 2 years for females) for the period after service retirements and for dependent beneficiaries. The RP-2000 Disabled Mortality projected to 2025 with projection scale BB (set forward 5 years for both males and females) was used for death after disability retirement. There is a margin for future mortality improvement in the tables used by the System. Based on the results of the most recent experience study adopted by the Board on December 17, 2015, the numbers of expected future deaths are 9-11% less than the actual number of deaths that occurred during the study period for healthy retirees and 9-11% less than expected under the selected table for disabled retirees. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB.
The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014.

- 35 -

MADISON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "I"

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

Asset class

TRS Target allocation

ERS/PSERS Target
allocation

Long-term expected real rate of return*

Fixed income Domestic large stocks Domestic mid stocks Domestic small stocks International developed market stocks International emerging market stocks Alternative

30.00% 39.80%
3.70% 1.50% 19.40% 5.60%
-

30.00% 37.20%
3.40% 1.40% 17.80% 5.20% 5.00%

(0.50)% 9.00% 12.00% 13.50% 8.00% 12.00% 10.50%

Total

100.00%

100.00%

* Rates shown are net of the 2.75% assumed rate of inflation
Discount rate: The discount rate used to measure the total TRS pension liability was 7.50%. The discount rate used to measure the total ERS and PSERS pension liability was 7.30%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the TRS, ERS and PSERS pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
Sensitivity of the School District's proportionate share of the net pension liability to changes in the discount rate: The following presents the School District's proportionate share of the net pension liability calculated using the discount rate of 7.50% and 7.30%, as well as what the School District's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50% and 6.30%) or 1-percentage-point higher (8.50% and 8.30%) than the current rate:

Teachers Retirement System:
School District's proportionate share of the net pension liability

1% Decrease (6.50%)

Current Discount Rate (7.50%)

1% Increase (8.50%)

$ 75,575,257.00 $

45,273,992.00 $ 20,304,208.00

Employees' Retirement System:
School District's proportionate share of the net pension liability

1% Decrease (6.30%)

Current Discount Rate (7.30%)

1% Increase (8.30%)

$

149,166.00 $

104,872.00 $

67,133.00

- 36 -

MADISON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "I"

Pension plan fiduciary net position: Detailed information about the pension plan's fiduciary net position is available in the separately issued TRS, ERS and PSERS financial report which is publicly available at www.trsga.com/publications and www.ers.ga.gov/formspubs/formspubs.html.
DEFINED CONTRIBUTION PLAN

The Madison County Board of Education participates in an employer paid 403(b) annuity plan for the group of employees covered under the Public School Retirement System (PSERS). Recognizing that PSERS was a limited defined contribution and defined benefit plan which did not provide for an adequate retirement for this group of employees, it was the Board's desire to supplement the retirement for this group.

The Board has selected Horace Mann, Inc. as the provider of this plan. For each employee covered under PSERS, the Board contributes to the plan, an amount equal to the employees' contribution up to an amount of $25.00 per pay period.

The employee becomes vested in the plan with 3 years of experience. Employees who had already achieved 3 years of experience at the time the plan was implemented were vested upon enrollment.

Funds accumulated in the employer paid accounts are only available to the employee upon termination of employment and 3 years of service to Madison County Board of Education. If an employee terminates employment prior to achieving 3 years of service, funds paid on behalf of the non-vested employee are credited back to the Board.

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

Fiscal Year

Percentage Contributed

Required Contribution

2019 2018 2017
NOTE 15: SPECIAL ITEM

100%

$

100%

$

100%

$

8,550.00 9,575.00 9,975.00

During fiscal year 2019, the School District disposed of various pieces of partially depreciated equipment. These items were removed from the capital assets records at their net carrying values which totaled $41,275.00. This loss is reflected as a special item on the Statement of Activities.
NOTE 16: DEFICIT FUND BALANCE OF INDIVIUDAL FUNDS

Funds reporting a deficit fund balance at the fiscal year end, are as follows:

Fund Type/Fund Name

Deficit Balance

Governmental/Capital Projects

$

(576,947.59)

The deficit balance in capital projects fund at the end of fiscal year 2019 is due to contracts and retainages payable on the financial statements. These expenses to pave the parking lot at Madison County High School, renovate the Madison County Board of Education Central Office into an Early Learning Center, and construct a new Maintenance Building were not recorded timely. Therefore, the standard procedure of transferring funds from the general fund at year-end to cover any deficit balance in the capital projects fund did not occur. The School District plans to reimburse the capital projects fund at the end of fiscal year 2020.

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

SCHEDULE "1"

Year Ended

School District's proportion of the
net pension liability

School District's proportionate share of the net pension liability

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

Total

School District's covered payroll

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

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

2019 2018 2017 2016 2015

0.243905% $ 45,273,992.00 $ 0.241424% $ 44,869,394.00 $ 0.243759% $ 50,290,200.00 $ 0.248691% $ 37,860,735.00 $ 0.244083% $ 30,836,668.00 $

176,526.00 $ 45,450,518.00 $ 29,189,264.92 347,731.00 $ 45,217,125.00 $ 27,748,803.90 493,290.00 $ 50,783,490.00 $ 27,006,458.77 371,161.00 $ 38,231,896.00 $ 26,509,053.95 322,791.00 $ 31,159,459.00 $ 25,174,644.54

155.10% 161.70% 186.22% 142.82% 122.49%

80.27% 79.33% 76.06% 81.44% 84.03%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available.

- 39 -

MADISON COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
FOR THE YEAR ENDED JUNE 30

SCHEDULE "2"

Year Ended

School District's proportion of the net pension liability

School District's proportionate share of
the net pension liability

School District's covered payroll

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

Plan fiduciary net position as a
percentage of total pension liability

2019 2018 2017 2016 2015

0.002551% $ 0.002873% $ 0.004186% $ 0.002650% $ 0.002578% $

104,872.00 $ 116,682.00 $ 198,015.00 $ 107,362.00 $
96,691.00 $

65,074.96 70,467.42 97,338.00 60,496.35 60,249.18

161.16% 165.58% 203.43% 177.47% 160.49%

76.68% 76.33% 72.34% 76.20% 77.99%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available.

- 40 -

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

SCHEDULE "3"

Year Ended

School District's proportion of the net
pension liability

School District's proportionate share of
the net pension liability

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

2019 2018 2017 2016 2015

0.00% $ 0.00% $ 0.00% $ 0.00% $ 0.00% $

-

$

-

$

-

$

-

$

-

$

406,902.00 $ 371,670.00 $ 421,739.00 $ 312,089.00 $ 290,547.00 $

Total

School District's covered payroll

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

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

406,902.00 $

934,999.96

371,670.00 $ 1,056,617.43

421,739.00 $

785,453.18

312,089.00 $

921,333.18

290,547.00 $

911,014.07

N/A

85.26%

N/A

85.69%

N/A

81.00%

N/A

87.00%

N/A

88.29%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available.

- 41 -

`

MADISON COUNTY BOARD OF EDUCATION

SCHEDULE "4"

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF PROPORTIONATE SHARE OF THE NET OPEB LIABILITY

SCHOOL OPEB FUND

FOR THE YEAR ENDED JUNE 30

Year Ended
2019 2018

School District's proportion of the net OPEB liability

School District's proportionate share of the net OPEB liability

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

Total

School District's covered-employee
payroll

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

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

0.312931% $ 39,772,570.00 $ 0.308062% $ 43,282,587.00 $

-

$ 39,772,570.00 $ 24,453,209.60

-

$ 43,282,587.00 $ 22,349,881.76

162.65% 193.66%

2.93% 1.61%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available.

- 42 -

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

SCHEDULE "5"

Year Ended

Contractually required contribution (1)

Contributions in relation to the contractually required
contribution (1)

Contribution deficiency (excess)

School District's covered payroll

Contribution as a percentage of covered
payroll

2019

$

6,196,310.00 $

2018

$

4,887,673.00 $

2017

$

3,929,398.30 $

2016

$

3,816,393.00 $

2015

$

3,452,094.39 $

2014

$

3,091,446.35 $

2013

$

2,946,510.09 $

2012

$

2,631,750.52 $

2011

$

2,650,270.70 $

2010

$

2,492,597.02 $

6,196,310.00 $ 4,887,673.00 $ 3,929,398.30 $ 3,816,393.00 $ 3,452,094.39 $ 3,091,446.35 $ 2,946,510.09 $ 2,631,750.52 $ 2,650,270.70 $ 2,492,597.02 $

-

$

29,773,979.00

-

$

29,189,264.92

-

$

27,748,803.90

-

$

27,006,458.77

-

$

26,509,053.95

-

$

25,174,644.54

-

$

25,823,927.17

-

$

25,592,822.72

-

$

25,780,843.39

-

$

25,590,767.86

20.81% 16.74% 14.16% 14.13% 13.02% 12.28% 11.41% 10.28% 10.28%
9.74%

(1) For years 2015 and earlier, the contribution amount includes payments made on-behalf of the School District employees by the State of Georgia.

- 43 -

MADISON COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF CONTRIBUTIONS EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
FOR THE YEAR ENDED JUNE 30

SCHEDULE "6"

Year Ended

Contractually required contribution

Contributions in relation to the contractually required
contribution

Contribution deficiency (excess)

2019

$

16,160.00 $

16,160.00 $

-

2018

$

16,145.00 $

16,145.00 $

-

2017

$

17,482.70 $

17,482.70 $

-

2016

$

24,062.00 $

24,062.00 $

-

2015

$

13,285.00 $

13,285.00 $

-

2014

$

11,122.25 $

11,122.25 $

-

2013

$

8,929.88 $

8,929.88 $

-

2012

$

5,483.46 $

5,483.46 $

-

2011

$

4,884.49 $

4,884.49 $

-

2010

$

4,612.57 $

4,612.57 $

-

School District's covered payroll

Contribution as a percentage of covered
payroll

$

65,211.96

$

65,074.96

$

70,467.42

$

97,338.00

$

60,496.35

$

60,249.18

$

59,932.89

$

47,145.31

$

46,916.43

$

44,313.16

24.78% 24.81% 24.81% 24.72% 21.96% 18.46% 14.90% 11.63% 10.41% 10.41%

- 44 -

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

SCHEDULE "7"

Year Ended

Contractually required contribution

Contributions in relation to the contractually required
contribution

Contribution deficiency (excess)

School District's covered-employee
payroll

Contribution as a percentage of covered-
employee payroll

2019 2018 2017

$ 1,709,083.00 $ $ 1,621,890.00 $ $ 1,606,260.00 $

1,709,083.00 $ 1,621,890.00 $ 1,606,260.00 $

-

$ 27,110,973.68

-

$ 24,453,209.60

-

$ 22,349,881.76

6.30% 6.63% 7.19%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available.

- 45 -

MADISON COUNTY BOARD OF EDUCATION NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED JUNE 30, 2019

SCHEDULE "8"

Teachers Retirement System
Changes of assumptions: On November 18, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, disability, withdrawal and salary increases. The expectation of retired life mortality was changed to RP-2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males).
In 2010 and later, the expectation of retired life mortality was changed to the RP-2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. In 2010, assumed rates of salary increase were adjusted to more closely reflect actual and anticipated experience.
Employees' Retirement System
Changes of benefit terms: A new benefit tier was added for members joining the System on and after July 1, 2009. A one-time 3% payment was granted to certain retirees and beneficiaries effective July 2016. A one-time 3% payment was granted to certain retirees and beneficiaries effective July 2017.
Changes of assumptions: On March 15, 2018, the Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for the June 30, 2017 actuarial valuation. In addition, based on the Board's new funding policy, the assumed investment rate of return was further reduced by 0.10% from 7.40% to 7.30% as of the June 30, 2018 measurement date.
On December 17, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, disability, withdrawal and salary increases.
Public School Employees Retirement System
Changes of assumptions: On March 15, 2018, the Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for June 30, 2017 actuarial valuation. In addition, based on the Board's new funding policy, the assumed investment rate of return was further reduced by 0.10% from 7.40% to 7.30% as of the June 30, 2018 measurement date.
On December 17, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement and withdrawal. The expectation of retired life mortality was changed to the RP-2000 Blue Collar Mortality Table projected to 2025 with projection scale BB (set forward 3 years for males and 2 years for females).
In 2010 and later, the expectation of retired life mortality was changed to the RP-2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience.
School OPEB Fund
Changes of benefit terms: There have been no changes in benefit terms.
Changes in assumptions: June 30, 2017 valuation: The June 30, 2017 actuarial valuation was revised, for various factors, including the methodology used to determine how employees and retirees were assigned to each of the OPEB Funds and anticipated participation percentages. Current and former employees of State organizations (including technical colleges, community service boards and public health departments) are now assigned to the State OPEB fund based on their last employer payroll location: irrespective of retirement affiliation.
The discount rate was updated from 3.58% as of June 30, 2017 to 3.87% as of June 30, 2018.

- 46 -

MADISON COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2019

SCHEDULE "9"

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 Food Services Operation
Capital Outlay Debt Service
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Transfers to Other Funds Sale or Compensation for Loss of Capital Assets
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning
Adjustments

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

VARIANCE OVER/UNDER

$

11,903,643.00 $

11,903,643.00 $

12,690,607.25 $

130,000.00

130,000.00

248,871.30

38,003,406.00

38,261,406.00

39,247,610.23

2,510,500.00

2,510,500.00

5,658,901.61

654,900.00

654,900.00

1,584,275.14

600.00

600.00

110,408.05

762,474.00

880,530.00

2,363,627.60

53,965,523.00

54,341,579.00

61,904,301.18

786,964.25 118,871.30 986,204.23 3,148,401.61 929,375.14 109,808.05 1,483,097.60
7,562,722.18

36,673,227.70
2,975,312.27 1,042,782.24
965,063.86 825,690.84 3,408,710.14 706,806.50 4,081,112.29 2,171,045.79 269,308.90 436,180.00
3,254,000.00
473,341.00 -
57,282,581.53
(3,317,058.53)
(545,000.00) 275,000.00
(270,000.00)
(3,587,058.53)
6,706,745.53
(10,429.20)

38,564,172.01
3,135,571.27 1,316,383.95
965,364.30 898,992.84 3,440,328.19 706,806.50 4,218,202.29 2,291,568.09 266,308.90 501,430.00
3,254,000.00
555,341.00 -
60,114,469.34
(5,772,890.34)
(545,000.00) 275,000.00
(270,000.00)
(6,042,890.34)
6,787,687.57
(962,094.70)

36,594,533.69
3,288,019.49 1,190,398.04
981,484.62 922,684.06 3,433,608.89 950,959.58 3,596,712.10 2,721,784.88 385,478.71 652,158.09 482,270.11 3,220,250.05
69,514.49 78,489.06
58,568,345.86
3,335,955.32
(2,143,740.08) -
(2,143,740.08)
1,192,215.24
5,784,758.90
-

1,969,638.32
(152,448.22) 125,985.91 (16,120.32) (23,691.22)
6,719.30 (244,153.08) 621,490.19 (430,216.79) (119,169.81) (150,728.09) (482,270.11)
33,749.95 485,826.51 (78,489.06)
1,546,123.48
9,108,845.66
(1,598,740.08) (275,000.00)
(1,873,740.08)
7,235,105.58
(1,002,928.67)
962,094.70

Fund Balances - Ending

$

3,109,257.80 $

(217,297.47) $

6,976,974.14 $

7,194,271.61

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

(1) Original and Final Budget amounts do not include the budgeted revenues or expenditures of certain programs. The actual revenues and expenditures of these programs were as follows:

Revenues

Expenditures

Principal Accounts Vocational Education Title VI-B Title III Family Connection

$

1,006,116.86 $

42,505.22

123,458.79

25,382.93

62,491.93

961,674.73 42,505.22
102,588.80 25,382.93 48,986.04

$

1,259,955.73 $

1,181,137.72

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.

- 47 -

MADISON COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2019

SCHEDULE "10"

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 Services State Administrative Expenses for Child Nutrition
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 Grants to States Preschool Grants
Total Special Education Cluster
Other Programs Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Education for Homeless Children and Youth Education for Homeless Children and Youth English Language Acquisition State Grants English Language Acquisition State Grants Migrant Education - State Grant Program Migrant Education - State Grant Program Rural Education Rural Education Student Support and Academic Enrichment Program Student Support and Academic Enrichment Program Supporting Effective Instruction State Grants Supporting Effective Instruction State Grants Title I Grants to Local Educational Agencies Title I Grants to Local Educational Agencies Twenty-First Century Community Learning Centers Twenty-First Century Community Learning Centers
Total Other Programs
Total U. S. Department of Education

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

10.553 10.555

195GA324N1099 $ 195GA324N1099

690,204.47 2,559,899.50
3,250,103.97

10.560

185GA904N2533

2,901.00 3,253,004.97

84.027 84.027 84.173

H027A170073 H027A180073 H173A180081

84.048 84.196 84.196 84.365 84.365 84.011 84.011 84.358 84.358 84.424A 84.424A 84.367 84.367 84.010 84.010 84.287 84.287

V048A180010 S196A170011 S196A180011 S365A170010 S365A180010 S011A170011 S011A180011 S365B170010 S365B180010 S424A170011 S424A180011 S367A170001 S367A180001 S010A170010 S010A180010 S287C170010 S287C180010

250,634.98 615,894.41
48,074.14
914,603.53
42,505.22 10,774.45 32,946.78
4,382.92 21,000.01 19,484.17 22,510.05 19,787.79 82,801.01
4,080.71 80,738.64 23,984.70 146,463.00 171,266.69 1,057,829.81 78,402.04 224,210.61
2,043,168.60
2,957,772.13

Total Expenditures of Federal Awards

$

6,210,777.10

Notes to the Schedule of Expenditures of Federal Awards
Note 1. Basis of Presentation
The accompanying schedule of expenditures of federal awards (the "Schedule") includes the federal award activity of the Madison County Board of Education (the "Board") under programs of the federal government for the year ended June 30, 2019. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Board, it is not intended to and does not present the financial position or changes in net position of the
Note 2. Summary of Significant Accounting Policies
Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement.
Note 3. Indirect Cost Rate
The Board has elected not to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance.

See notes to the basic financial statements.

- 48 -

MADISON COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2019
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 Career, Technical and Agricultural Education (9-12) Program Students with Disabilities Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) State Health Benefit Plan Employer Holiday Media Center Program 20 Days Additional Instruction Staff and Professional Development Principal Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Charter System Adjustment Categorical Grants Pupil Transportation Regular Nursing Services Vocational Supervisors Education Equalization Funding Grant Other State Programs Career, Technical and Agricultural Education Program Food Services Math and Science Supplements Preschool Disability Services Pupil Transportation - State Bus Allotment School Safety Grant Teachers Retirement
Office of the State Treasurer Public School Employees Retirement
CONTRACT Human Resources, Georgia Department of Family Connection
See notes to the basic financial statements.

SCHEDULE "11"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

594,331.23

1,380,847.00 615,660.00
3,321,966.00 1,541,491.00 1,766,791.00 1,196,839.00 3,651,272.00 2,745,394.00 1,007,106.00 6,457,715.00 1,533,209.00
313,198.00 242,061.00 426,853.00 (316,575.00) 639,579.00 187,300.00 110,280.00
1,956.00
802,771.00 1,281,768.00 1,328,223.00
475,818.00
744,844.00 101,124.00
14,246.60 6,322,207.00
152,193.47 80,058.00 19,098.84
153,617.00 154,440.00
51,607.00 25,220.16
60,609.00
62,491.93
$ 39,247,610.23

- 49 -

(This page left intentionally blank)

MADISON COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2019

SCHEDULE "12"

PROJECT

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3) (4)

AMOUNT EXPENDED IN PRIOR YEARS (3) (4)

TOTAL COMPLETION
COST

EXCESS PROCEEDS NOT
EXPENDED

2006 SPLOST

(I) The acquisition, construction, equipping and furnishing

of new school building and facilities, including, but

not limited to, a new middle school,

(ii) the addition, renovation and repair and improvement

of existing school buildings and facilities, including,

but not limited to, the existing middle school, other

schools, transportation facilities and administrative

offices,

(iii) the acquisition and purchase of systemwide

technology and safety equipment, including, but not

limited to, computer hardware and software and

security and safety equipment,

(iv) the acquisition and purchase of school vehicles,

including, but not limited to, school buses and

maintenance vehicles,

(v) the acquisition of any property necessary and desirable

therefore, bother real and personal.

$ 10,000,000.00 $ 23,094,137.00 $

79,936.25 $ 21,673,639.21 $

- $

-

2011 SPLOST

(i) Acquiring, constructing and equipping new schools

and facilities, including physical education/athletic facilities,

(ii) adding to, renovating, repairing, improving, and

equipping existing school buildings and school system

facilities (including physical education/athletic facilities

and parking lots), but not limited to construction and

renovation of facilities at Madison County High School

and Comer Elementary School,

(iii) acquiring miscellaneous new equipment, fixtures and

furnishings for the school system, including technology

equipment and safety and security equipment,

(iv) acquiring school buses and transportation and

maintenance equipment,

(v) acquiring text books for the school system,

(vi) acquiring a portion of a psycho-educational facility,

(vii) paying portion of the principal and interest due on the

School District's Series 2006 General Obligation Bonds,

the maximum amount of such payments not to exceed

$3,718,537.00.

(viii) paying a portion of the debt service on the General

Obligation Debt of the School District, the maximum

amount of such payments not to exceed $10,000,000.00.

(ix) paying expenses incident to accomplishing the

foregoing.

14,300,000.00

31,800,807.00

336,240.50

29,897,972.25

-

-

2018 SPLOST

(i) Paying a portion of principal and interest due on out-

standing Madison County School District (Georgia) General

Obligation Bonds, Series 2011, the maximum amount of

debt service to be paid shall not exceed $9,500,000.00.

9,500,000.00

9,500,000.00

-

-

-

-

(ii) acquiring a portion of a psycho-educational facility,

68,000.00

68,000.00

-

-

-

-

(iii) acquiring technology improvements, including safety and

security improvements, computer technology hardware and

software, and infrastructure,

500,000.00

500,000.00

-

-

-

-

(iv) adding to, renovating, repairing, improving, furnishing,

and equipping existing school buildings and other buildings

and facilities useful and desirable in connection therewith,

including, but not limited to, additional classrooms, and

transportation facilities,

3,432,000.00

3,432,000.00

995,196.19

-

-

-

(v) acquiring, constructing and equipping new school

buildings and facilities useful and desirable in connection

therewith, including, but not limited to, fine arts facilities,

1,500,000.00

1,500,000.00

-

-

-

-

(vi) acquiring any necessary or desirable property, both real

and personal, the maximum amount of the projects to be

paid with sales and use tax proceeds will be $15,000,000.00.

-

-

-

-

-

-

2018 SPLOST Totals

15,000,000.00

15,000,000.00

995,196.19

-

-

-

ESTIMATED COMPLETION
DATE
6/30/2020
6/30/2030 6/30/2024 6/30/2024 6/30/2024 6/30/2024 6/30/2024 6/30/2024

$ 39,300,000.00 $ 69,894,944.00 $ 1,411,372.94 $ 51,571,611.46 $

- $

-

(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 Madison 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 Current Year Total

$ 6,636,774.79 478,047.19
$ 7,114,821.98

See notes to the basic financial statements.

- 51 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

Greg S. Griffin
STATE AUDITOR
(404) 656-2174

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

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON
COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

The Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education
and Superintendent and Members of the Madison County Board of Education
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Madison County Board of Education (School District), as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the School District's basic financial statements, and have issued our report thereon dated March 30, 2020.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the School District's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the School District's internal control. Accordingly, we do not express an opinion on the effectiveness of the School District's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and Other Matters
As part of obtaining reasonable assurance about whether the School District's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the 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.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the School District's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School District's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Respectfully submitted,

March 30, 2020

Greg S. Griffin State Auditor

Greg S. Griffin
STATE AUDITOR
(404) 656-2174

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

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE

The Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education
and Superintendent and Members of the Madison County Board of Education
Report on Compliance for Each Major Federal Program
We have audited the Madison County Board of Education (School District) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2019. The School District's major federal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs.
Management's Responsibility
Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of the School District's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the School District's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the School District's compliance.

Opinion on Each Major Federal Program
In our opinion, the School District complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2019.
Report on Internal Control over Compliance
Management of the School District is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the School District's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the School District's internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
Respectfully submitted,

March 30, 2020

Greg S. Griffin State Auditor

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

MADISON COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2019
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
No matters were reported.
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
No matters were reported.

SECTION IV FINDINGS AND QUESTIONED COSTS

MADISON COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2019

I SUMMARY OF AUDITOR'S RESULTS

Financial Statements

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

Unmodified

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

No None Reported

Noncompliance material to financial statements noted:

No

Federal Awards

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

No None Reported

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

Unmodified

Any audit findings disclosed that are required to be reported in

accordance with 2 CFR 200.516(a)?

No

Identification of major programs:

CFDA Numbers

Name of Federal Program or Cluster

84.010 84.027, 84.173

Title I Grants to Local Educational Agencies Special Education Cluster

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

$750,000.00

Auditee qualified as low-risk auditee?

Yes

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported.

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.