MARION COUNTY BOARD OF EDUCATION BUENA VISTA, GEORGIA REPORT ON AUDIT OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS Russell W. Hinton State Auditor MARION COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION I FINANCIAL INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED SUPPLEMENTARY INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS EXHIBITS BASIC FINANCIAL STATEMENTS DISTRICT-WIDE FINANCIAL STATEMENTS A STATEMENT OF NET ASSETS 1 B STATEMENT OF ACTIVITIES 2 FUND FINANCIAL STATEMENTS C BALANCE SHEET GOVERNMENTAL FUNDS 3 D STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS 4 E RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCESOFTHEGOVERNMENTALFUNDS TO THE STATEMENT OF ACTIVITIES 5 F STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES FIDUCIARY FUNDS 7 G NOTES TO THE BASIC FINANCIAL STATEMENTS 8 SCHEDULES REQUIRED SUPPLEMENTARY INFORMATION 1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERALFUND 23 MARION COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION I FINANCIAL SCHEDULES SUPPLEMENTARY INFORMATION 2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 24 3 SCHEDULE OF STATE REVENUE 25 4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 26 5 ALLOTMENTS AND EXPENDITURES GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM 27 SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133 SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS SECTION I FINANCIAL Russell W. Hinton STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 July 29, 2009 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Marion County Board of Education INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Ladies and Gentlemen: We have audited the accompanying financial statements ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through G) of the Marion County Board of Education, as of and for the year ended June 30, 2008, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe Marion County Board ofEducation's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Marion County Board of Education's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. 2008ARL-11 In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position ofthe governmental activities, each major fund, and the aggregate remaining fund information ofthe Marion County Board ofEducation, as ofJune 30, 2008, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated July 29, 2009, on our consideration of the Marion County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose ofthat report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Management's Discussion and Analysis and the Schedule ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through vii and page 23 respectively, are not a required part ofthe basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Marion County Board of Education's basic financial statements. The accompanying supplementary information which consist of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U.S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24. Respectfully submitted, ~,\'-,1..QQ. ' - 0 ~ ~Jell W. Hinton, CPA, CGFM State Auditor RWH:as 2008ARL-11 MARION COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2008 The discussion and analysis of the Marion County Board of Education's (the "School District") financial performance provides an overall review ofthe School District's financial activities for the fiscal year ended June 30, 2008. The intent of this discussion and analysis is to look at the School District's financial performance as a whole; readers should also review the financial statements and the notes to the basic financial statements to enhance their understanding of the School District's financial performance. Financial Highlights Key financial highlights for fiscal year 2008 are as follows: The School District's financial status remained stable during fiscal year 2008. In total, net assets increased more than $900,000, which represents a moderate increase from fiscal year 2007. This total increase was due to governmental activities since the School District has no business-type activities. General revenues accounted for $5.7 million or 36.3 percent of all revenues. Program specific revenues in the form of charges for services and sales, grants and contributions accounted for $9.9 million or 63.7 percent of total revenues. Total revenues were $15.6 million. The School District had $14.7 million in expenses related to governmental activities; only $9.9 million ofthese expenses were offset by program specific charges for services, grants or contributions. General revenues and taxes of$5.7 million were adequate to provide for these programs. Among major funds, the general fund had $14.7 million in revenues and $14.1 million in expenditures. The general fund's fund balance increased from $1.2 million to $1.8 million. Using the Basic Financial Statements This annual report consists of a series of financial statements and notes to those statements. These statements are organized so the reader can understand Marion County Board of Education as a financial whole, or as an entire operating entity. The Statement ofNet Assets and Statement ofActivities provide information about the activities of the whole School District, presenting both an aggregate view ofthe School District's finances and a long-term view ofthose finances. The fund financial statements provide the next level of detail. For governmental funds, these statements tell how services were financed in the short-term as well as what remains for future spending. The fund financial statements also look at the School District's most significant funds with all other nonmajor funds, ifany, presented in total in one column. In the case ofthe Marion County Board of Education, the general fund is by far the most significant fund. MARION COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2008 Reporting the School District as a Whole Statement of Net Assets and Statement of Activities While these documents contain the large number of funds used by the School District to provide programs and activities, the view ofthe School District as a whole looks at all financial transactions and asks the question, "How did we do financially during fiscal year 2008?" The Statement ofNet Assets and the Statement ofActivities answer this question. These statements include all assets and all liabilities using the accrual basis ofaccounting similar to the accounting used by most privatesector companies. This basis of accounting takes into account all ofthe current year's revenues and expenses regardless of when cash is received or paid. These two statements report the School District's net assets and changes in those assets. This change in net assets is important because it tells the reader whether, for the School District as a whole, the financial position ofthe School District has improved or diminished. The causes ofthis change may be the result of many factors, some financial, some not. Nonfinancial factors include the School District's property tax base, facility conditions, required educational programs and other factors. In the Statement ofNet Assets and the Statement of Activities, the School District has one distinct type of activity: Governmental Activities - All of the School District's programs and services are reported here including instruction, support services, operation and maintenance of plant, pupil transportation, food service, after school program, school activity accounts and various others. Reporting the School District's Most Significant Funds Fund Financial Statements Fund financial statements provide detailed information about the School District's major funds. The School District uses many funds to account for a multitude offinancial transactions. However, these fund financial statements focus on the School District's most significant funds. The School District's major governmental funds are the General Fund, the District-wide Capital Projects Fund and the Debt Service Fund. Governmental Funds All 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 an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the School District's general government operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The relationship (or differences) between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmentalfunds is reconciled in the financial statements. 11 MARION COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2008 Fiduciary Funds The School District is the trustee, or fiduciary, for assets that belong to others, such as school clubs and organizations within the school activity 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 District-wide financial statements because it cannot use these assets to finance its operations. The School District as a Whole The perspective ofthe Statement ofNet Assets is ofthe School District as a whole. Table 1provides a summary of the School District's net assets for fiscal year 2008, compared to fiscal year 2007. Table 1 Net Assets Governmental Activities Fiscal Fiscal Year 2008 Year 2007 Assets Current and Other Assets Capital Assets, Net $ 4,997,177 10,520,430 $ 4,294,699 10,413,103 Total Assets $ 15,517,607 $ 14,707,802 Liabilities Long-Term Liabilities Outstanding Other Liabilities $ 2,819,424 $ 2,981,162 1,629,290 1,565,928 Total Liabilities $ 4,448,714 $ 4,547,090 Net Assets Invested in Capital Assets, Net of Related Debt Restricted Unrestricted $ 7,715,006 1,757,261 1,596,626 $ 7,431,941 1,753,811 974,960 Total Net Assets $ 11,068,893 $ 10,160,712 Table 2 shows the changes in net assets for fiscal year 2008 compared to fiscal year 2007. The total net assets increased over $900,000 for fiscal year 2008, compared to a $1.1 million increase for fiscal year 2007. 111 MARION COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2008 Table 2 Change in Net Assets Revenues Program Revenues: Charges for Services and Sales Operating Grants and Contributions Capital Grants and Contributions Governmental Activities Fiscal Fiscal Year2008 Year 2007 $ 278,462 9,595,752 72,452 $ 813,792 9,796,099 2582742 Total Program Revenues $ 929462666 $ 1028682633 General Revenues: Taxes Property Taxes For Maintenance and Operations $ For Debt Service Sales Taxes Other Taxes Grants and Contributions not Restricted to Specific Programs Investment Income Miscellaneous Gain on Sale of Capital Assets 3,359,824 408,570 474,491 93,899 776,733 98,448 448,253 $ 2,659,905 339,002 470,726 82,821 991,115 78,633 172858 Total General Revenues $ 526602218 $ 426402060 Total Revenues $ 1526062884 $ 1550K693 Program Expenses Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Services Maintenance and OJ?erations Student Transportation Other Support Services Operations of Non-Instructional Services Food Service Operations Enterprise Operations Interest on Long-Term Debt $ 8,519,217 415,887 206,236 318,130 818,811 962,866 73,119 1,095,405 910,032 51,940 949,827 257,760 119,473 $ 8,441,113 322,013 258,315 324,344 791,865 940,373 79,110 1,069,993 877,652 53,643 895,533 114,633 1932937 Total Expenses $ 1426982703 $ 14362524 Increase in Net Assets $ 908,181 $ 1,146,169 Net Assets, Beginning of Year 10J602712 92014543 Net Assets, End of Year $ 11,068,893 $ 10,160,712 lV MARION COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2008 Governmental Activities Instruction comprises 58.0 percent of governmental program expenses. The Statement of Activities shows the cost of program services and the charges for services and grants offsetting those services. Table 3 shows, for governmental activities, the total cost ofservices and the net cost ofservices. That is, it identifies the cost ofthese services supported by tax revenue and unrestricted State entitlements. Comparative data from fiscal year 2007 is also presented. Table 3 Governmental Activities Total Cost of Services Fiscal Fiscal Year 2008 Year 2007 Net Cost of Services Fiscal Fiscal Year 2008 Year 2007 Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Services Maintenance and Operations Student Transportation Other Support Services Operations of Non-Instructional Services Food Service Operations Enterprise Operations Interest on Long-Term Debt $ 8,519,217 $ 8,441,113 $ 1,730,746 $ 794,514 415,887 206,236 318,130 818,811 962,866 73,119 1,095,405 910,032 51,940 322,013 258,315 324,344 791,865 940,373 79,110 1,069,993 877,652 53,643 289,827 148,438 136,854 290,931 487,983 70,295 625,023 433,448 51,908 196,005 183,319 144,935 336,249 510,625 78,977 625,263 207,800 52,890 949,827 257,760 119.473 895,533 114,633 193.937 109,351 257,760 119.473 54,744 114,633 193.937 Total Expenses $ 14,698.703 $ 14,362.524 $ 4,752.037 $ 3,493.891 Although program revenues make up a majority of the revenues, the School District is still dependent upon tax revenues for governmental activities. Over 20.3 percent ofinstruction activities are supported through taxes and other general revenues; for all governmental activities general revenue support is 32.3 percent. The School District's Funds The School District's governmental funds are accounted for using the modified accrual basis of accounting. Total governmental funds had revenues and other financing sources of $16.4 million and expenditures and other financing uses of$15.8 million. There was an increase in fund balance ofapproximately $100,000 in the District-wide Capital Projects Fund due to a transfer from the Debt Service Fund after the 2002 Bond debt service requirements were satisfied. The fund balance ofthe General Fund had an increase of almost $600,000 due to a reduction in staff and increase in tax revenue. There was a decrease in fund balance ofover $90,000 in the Debt Service Fund due to the final payment on the 2002 General Obligation Bonds. V MARION COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2008 General Fund Budgeting Highlights The School District's budget is prepared according to Georgia law. The most significant budgeted fund is the General Fund. During the course of fiscal year 2008, the School District amended its general fund budget as needed. The School District uses function-based budgeting. The budgeting systems are designed to tightly control total function budgets but provide flexibility for site management. For the General Fund, budgeted revenues increased from $13.77 million to $13.84 million while budgeted expenditures increased from $13 .67 million to $13 .68 million. These changes were caused by the increase in tax revenue and the significant increase in transportation fuel and general operating energy costs. In order to better align the School District's expenditures with the 65 percent rule, positions and job assignments were considered. This resulted in the realization of the possibility of operating two schools instead of three because of the drastic decline in enrollment over the last five years. The School District will continue to monitor expenditures in order to maintain compliance with the 65 percent rule. Capital Assets and Debt Administration Capital Assets At the end of fiscal year 2008, the School District had $10.5 million invested in capital assets, all in governmental activities. Table 4 indicates balances at June 30, 2008. Capital asset comparisons to fiscal year 2007 are also included. Table 4 Capital Assets (Net of Depreciation) Governmental Activities Fiscal Fiscal Year 2008 Year 2007 Land Land Improvements Buildings and Improvements Equipment $ 598,276 542,435 8,603,391 776,328 $ 98,276 597,042 8,827,101 890,684 Total $ l01520A30 $ 10Al31103 Vl MARION COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2008 Debt Long-Term Liabilities At fiscal year ended June 30, 2008, the School District had $2.8 million in Long-Term Liabilities outstanding. Table 5 summarizes the School District's liabilities as compared to the prior fiscal year. Governmental Activities Bonds Payable Capital Leases Governmental Activities Long-Term Liabilities Current Issues Table 5 Long-Term Liabilities Balance July 1, 2007 Additions Reductions Balance June 30, 2008 Due Within One Year $ 2,755,000 $ 525,000 $ 590,000 $ 2,690,000 $ 980,000 226,162 96,738 129,424 65,623 $ 2,981,162 $ 525,000 $ 686,738 $ 2,812,424 $ 1,045,623 The Marion County Board of Education's current operating millage is 14.886 mills. The School District is declining in enrollment. Our 2002 FTE was 1699. Our October 2008 FTE count was 1377. While our tax revenue has increased, overall expenses have steadily increased. It is becoming apparent that we need to operate smaller or fewer schools. The School District will continue to face challenges from the implementation ofthe A+ Education Reform Act, which mandates lower teacher to student ratios. The School District will also continue to be impacted by the remedial actions required for underperforming schools and students under the No Child Left Behind Act. The School District will continue to maximize resources to provide quality education opportunities for all of the System's students. Contacting the School District's Financial Management This financial report is designed to provide our citizens, taxpayers, investors, and creditors with a general overview ofthe 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 information, contact Cathy Wiggins, Director of Finance, 1697 Pineville Road, Buena Vista, Georgia, 31803. You may also email your questions to cwiggins@marion.kl2.ga.us. vu MARION COUNTY BOARD OF EDUCATION MARION COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2008 ASSETS Cash and cash equivalents Investments Receivables: Taxes Intergovernmental: State Federal Interest Other Inventory Prepaid items Deferred charges Capital assets (nondepreciable) Capital assets (net of accumulated depreciation) Total assets LIABILITIES Accounts payable Salaries and benefits payable Accrued interest payable Deferred revenue Bonds payable due within one year Bonds payable due in more than one year Capital leases due within one year Capital leases due in more than one year Total liabilities . NET ASSETS Invested in capital assets, net of related debt Restricted for: Continuation of federal programs Capital projects Debt service Unrestricted Total net assets EXHIBIT"A" Governmental Activities $ 2,574,682 1,000,000 171,489 923,734 232,332 10,068 4,065 28,185 38,622 14,000 598,276 9,922,154 $ 15,517,607 $ 174,888 1,372,640 44,809 36,953 980,000 1,710,000 65,623 63,801 $ 4,448,714 $ 7,715,006 178,148 676,069 903,044 1,596,626 $ 11,068,893 The accompanying notes are an integral part of these financial statements. - 1- MARION COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2008 EXHIBIT"B" Functions/Programs Governmental activities: Instruction Support services: Pupil services Improvement of instructional services Educational media services General administration School administration Business administration Maintenance and operation of plant Student transportation services Other support services Enterprise operations Food service operations Interest on long-term debt Total governmental activities Expenses Program Revenues Operating Capital Charges for Grants and Grants and Services Contributions Contributions Net (Expense) Revenue and Changes In Net Assets Governmental Activities $ 8,519,217 $ 117,915 $ 6,670,556 $ -1,730,746 415,887 126,060 -289,827 206,236 57,798 318,130 181,276 818,811 527,880 962,866 474,883 73,119 2,824 1,095,405 14,254 456,128 910,032 404,132 $ 51,940 32 257,760 949,827 146,293 694,183 119,473 $ 14,698,703 $ 278,462 $ 9,595,752 $ 72,452 72,452 -148,438 -136,854 -290,931 -487,983 -70,295 -625,023 -433,448 -51,908 -257,760 -109,351 -119,473 $ -4,752,037 General revenues: Taxes: Property taxes, levied for maintenance and operations Property taxes, levied for debt service Sales taxes: For debt service Intangible taxes Transfer taxes Railroad equipment tax Grants and contributions not restricted to specific programs Unrestricted investment earnings Miscellaneous Total general revenues Change in net assets Net assets, beginning of year Net assets, end of year $ 3,359,824 408,570 474,491 42,681 40,168 11,050 776,733 98,448 448,253 $ 5,660,218 $ 908,181 10,160,712 $ 11,068,893 The accompanying notes are an integral part of these financial statements. -2- MARION COUNTY BOARD OF EDUCATION BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2008 EXHIBIT"C" ASSETS Cash and cash equivalents Investments Receivables: Taxes Intergovernmental: State Federal Interest Other Prepaid items Inventory Total assets LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable Salaries and benefits payable Deferred revenue Total liabilities FUND BALANCES Reserved for: Continuation of federal programs Inventory Prepaid items Unreserved, reported in: General Fund Designated for student activities Undesignated Capital projects fund, undesignated Debt service fund, undesignated Total fund balances Total liabilities and fund balances General Capital Projects Debt Service Total Governmental Funds $ 1,046,829 $ 709,028 $ 818,825 $ 2,574,682 1,000,000 1,000,000 85,606 85,883 171,489 923,734 923,734 232,332 232,332 10,068 10,068 4,065 4,065 38,622 38,622 28,185 28,185 $ 3,369,441 $ 709,028 $ 904,708 $ 4,983,177 $ 141,929 $ 1,372,640 51,751 $ 1,566,320 $ 32,959 32,959 $ . .s_ _ _.,...1.=664~ $ 1,664 $ 174,888 1,372,640 53,415 1,600,943 $ 149,963 28,185 38,622 $ 149,963 28,185 38,622 96,926 1,489,425 $ 676,069 $ 903,044 96,926 1,489,425 676,069 903,044 $ 1,803,121 ~$_ _ _6_7_6~,0_69_ $ 903,044 $ 3,382,234 $ 3,369,441 $ 709,028 =$==9=04:=!i:,7=08= Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and are not reported in the funds. Cost $ 16,506,916 Less accumulated depreciation -5,986,486 Other long-term assets are not available to pay for current-period expenditures and are deferred in the funds. Property taxes Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds. Bonds $ -2,690,000 Bond issuance costs, net of amortization 14,000 Accrued interest -44,809 Capital leases -129,424 10,520,430 16,462 -2,850,233 Net assets of governmental activities $ 11,068,893 The accompanying notes are an integral part of these financial statements. -3- MARION COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 EXHIBIT"D" REVENUES Property taxes Sales taxes Other taxes State funds Federal funds Charges for services Investment earnings Miscellaneous Total revenues EXPENDITURES Current: Instruction Support Services: Pupil services Improvement of instructional services Educational media services General administration School administration Business administration Maintenance and operation of plant Student transportation services Other support services Enterprise operations Food services operation Capital outlay Debt service: Principal retirement Interest and fees Bond issuance cost Total expenditures Excess of revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Proceeds from bonds Operating transfers in Operating transfers out Total other financing sources (uses) Net change in fund balances FUND BALANCE, beginning of year FUND BALANCE, end of year General $ 3,361,591 74,191 11,050 8,817,931 1,627,006 278,462 59,233 448,253 $ 14,677,717 District - Wide Capital Projects Debt Service Total Governmental Funds $ 408,713 $ 3,770,304 483,149 557,340 11,050 8,817,931 1,627,006 278,462 $ 12,369 26,846 98,448 448,253 $ 12,369 $ 918,708 $ 15,608,794 $ 8,147,138 $ 121,766 404,323 156,920 318,130 817,101 962,866 73,119 1,059,807 804,651 51,940 257,760 901,362 3,564 49,316 44,858 511,937 96,738 9,763 $ 14,061,618 $ $ 17,000 748,441 $ $ 616,099 $ -736,072 $ $ 8,268,904 407,887 206,236 318,130 817,101 962,866 73,119 1,104,665 804,651 51,940 257,760 901,362 511,937 590,000 686,738 111,557 121,320 17,000 701,557 $ 15,511,616 217,151 $ 97,178 $ $ -25,000 $ -25,000 $ $ 591,099 $ 1,212,022 $ 1,803,121 $ 525,000 333,310 $ 858,310 $ 122,238 $ 553,831 676,069 $ $ -308,310 -308,310 $ -91, 159 $ 994,203 903,044 $ 525,000 333,310 -333,310 525,000 622,178 2,760,056 3,382,234 The accompanying notes are an integral part of these financial statements. -4- MARION COUNTY BOARD OF EDUCATION RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF THE GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2008 EXHIBIT"E" Net change in fund balances - total governmental funds $ Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. The net effect of the amount by which capital outlay exceeded depreciation expense is to increase net assets. Capital outlay Depreciation expense $ 541,637 -434 310 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. Property taxes Issuance of long-term debt provides current financial resources to governmental funds, while repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. This amount is the net effect of these differences in the treatment of long-term debt and related items. Principal payments - bonds Principal payments - capital leases Issuance of general obligation debt Bond issuance costs Bond issuance costs amortization expense $ 590,000 96,738 -525,000 17,000 -3,000 Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Change in accrued interest $ 622,178 107,327 -1,909 175,738 4847 908,181 The accompanying notes are an integral part of these financial statements. -5- (This page left intentionally blank) MARION COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES FIDUCIARY FUNDS JUNE 30, 2008 ASSETS Cash Investments Total assets LIABILITIES Funds held for others EXHIBIT"F" Agency Fund $ 1,666 30,392 $ 32,058 $ 32,058 The accompanying notes are an integral part of these financial statements. -7- MARION COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "G" Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY Reporting Entity The Marion County Board ofEducation (School District) was established under the laws ofthe State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity. Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The School District's basic financial statements are collectively comprised of the District-Wide financial statements, fund financial statements and notes to the basic financial statements of the Marion County Board of Education. District-Wide Statements The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting ofinternal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support ofthe School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs. Program revenues include (a) charges paid by the recipients ofgoods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. Fund Financial Statements The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting ofinternal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. -8- MARION COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "G" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The School District reports the following major governmental funds: The General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund. The District-Wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST), and Bond Proceeds to be used for the acquisition, construction or renovation of major capital facilities. The Debt Service Fund accounts for taxes (property and sales) legally restricted for the payment of general long-term principal, interest and paying agent's fees. The School District reports the following fiduciary fund type: Agency Funds account for assets held by the School District as an agent for various funds, governments or individuals. Basis of Accounting The basis ofaccounting determines when transactions are reported in the financial statements. The District-Wide governmental activities and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis ofaccounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis ofaccounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available ifthey are collected within 60 days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, which are recognized as -9- MARION COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "G" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources. The School District funds certain programs by a combination ofspecific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues. Cash and Cash Equivalents Composition of Deposits - Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities ofthree months or less from the date ofacquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the School District to deposit its funds in one or more solvent banks or insured Federal savings and loan associations. Investments Composition oflnvestments - Investments made by the School District in nonparticipating interestearning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following: (1) Obligations issued by the State of Georgia or by other states, (2) Obligations issued by the United States government, (3) Obligations fully insured or guaranteed by the United States government or a United States government agency, (4) Obligations of any corporation of the United States government, (5) Prime bankers' acceptances, (6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services, (7) Repurchase agreements, and (8) Obligations of other political subdivisions of the State of Georgia. The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration ofcredit risks, interest rate risks or foreign currency risks. - 10 - MARION COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "G" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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. Property Taxes The Marion County Board ofCommissioners fixed the property tax levy for the 2007 tax digest year (calendar year) on September 13, 2007 (levy date). Taxes were due on December 20, 2007 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2007 tax digest are reported as revenue in the governmental funds for fiscal year 2008. The Marion 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, 2008, for maintenance and operations and debt service, amounted to $3,361,591 and $408,713, respectively. Tax millage rates levied for the 2007 tax year (calendar year) for the Marion County Board of Education were as follows (a mill equals $1 per thousand dollars of assessed value): School Operations School Bonds 15.00 mills 1.75 mills 16.75 mills Sales Taxes Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $474,491 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years. Inventories Food Inventories - On the basic financial statements, inventories ofdonated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used. - 11 - MARION COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "G" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Capital Assets Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-Wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value ofassets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works ofart. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District. Capitalization thresholds and estimated useful lives of capital assets reported in the District-Wide statements are as follows: Capitalization Policy Estimated Useful Life Land Land Improvements Buildings and Improvements Equipment All NIA $ 5,000 15 to 80 years $ 5,000 10 to 80 years $ 5,000 8 to 14 years Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives. General Obligation Bonds The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide and fund financial statements, the School District recognizes bond issuance costs and refunding gains on bond debt issuance during the year bonds are issued. Issuance costs and gains, whether or not withheld from the actual debt proceeds received, are reported as expenditures. To conform to generally accepted accounting principles, bond issuance costs and refunding gains should be deferred and amortized over the life of the bonds using the straight-line method. The effect ofthis deviation is deemed to be immaterial to the fair presentation of the basic financial statements. General obligation bonds are direct obligations and pledge the full faith and credit ofthe government. The outstanding amount ofthese bonds is recorded in the Statement of Net Assets. Net Assets The School District's net assets in the District-Wide Statements are classified as follows: - 12 - MARION COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT"G" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Invested in Capital Assets, Net of Related Debt -This represents the School District's total investment in capital assets, net of outstanding debt obligations related to those capital assets. Restricted Net Assets - These represent resources for which the School District is legally or contractually obligated to spend for bus replacement, continuation ofFederal programs, debt service and capital projects in accordance with restrictions imposed by external third parties. Unrestricted Net Assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes. Reserved Fund Balances Reserves represent those portions of fund balance equity that are legally segregated for a specific future use. Note 3: DEPOSITS AND INVESTMENTS Collateralization of Deposits - Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than 10 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 percent of the public funds being secured after the deduction ofthe amount ofdeposit insurance. Ifa depository elects the pooled method (OCGA 45-813.1), the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 percent 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 - 13 - MARION COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "G" Note 3: DEPOSITS AND INVESTMENTS (7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association. Categorization of Deposits -At June 30, 2008, the bank balances were $4,115,830. The amount of the total uninsured bank balances are classified into three categories of custodial credit risk: Category 1 - Uncollateralized, Category 2 - Cash collateralized with securities held by the pledging financial institution, or Category 3 - Cash collateralized with securities held by the pledging financial institution's trust department or agent, but not in the School District's name. The School District's uninsured deposits are classified by custodial credit risk category at June 30, 2008, as follows: Custodial Credit Risk Category Bank Balance 1 $ 9,198 2 0 3 3,985,139 Total $ 3,994.337 As ofJune 30, 2008, the School District's deposits held at one financial institution were not properly insured and collateralized as defined by GASB pronouncements and the official code ofthe State of Georgia in the amount of$9,198. However, the State ofGeorgia provides for a 10-day grace period within which the excess funds can be withdrawn or additional collateral may be pledged. The School District withdrew the excess funds within the 10-day grace period. Categorization of Investments At June 30, 2008, the School System had the following investments: Investment Maturities Fair Value Certificate of deposit Certificate of deposit May 12, 2009 September 18, 2008 $ 30,392 1,000,000 $ 1,030,392 - 14 - MARION COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT"G" Note 4: NON-MONETARY TRANSACTIONS The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories Note 5: CAPITAL ASSETS Capital assets being acquired under capital leases as of June 30, 2008, are as follows: Governmental Funds Buildings and Improvements Equipment Less: Accumulated Depreciation $ 177,918 287,465 117,400 $===3===4==-7,==98.,,,.3 The following is a summary of changes in the capital assets during the fiscal year: Balances July 1, 2007 Increases Decreases Balances June 30, 2008 Governmental Activities Capital Assets, Not Being Depreciated: Land $ 98,276 $ 500,000 $ 0 $ 598,276 Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements $ 12,404,579 $ 2,014,708 1,447,716 3,937 $ 37,700 0 $ 12,408,516 2,052,408 1,447,716 Less Accmhulated Depreciation for: Buildings and Improvements Equipment Land Improvements 3,577,478 1,124,024 850,674 227,647 152,056 54,607 3,805,125 1,276,080 905,281 Total Capital Assets, Being Depreciated, Net $ 10,314,827 $ -392,673 $ 0 $ 9,922,154 Governmental Activity Capital Assets - Net $ lQ,413,103 $ 101,321 $ Q $ lQ,520,430 - 15 - MARION COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "G" Note 5: CAPITAL ASSETS Current year depreciation expense by function is as follows: Instruction Support Services General Administration Maintenance and Operation of Plant Student Transportation Services Food Services $ 250,314 $ 1,710 6,440 127.381 135,531 48,465 Note 6: INTERFUND TRANSFERS $===4-34-,3="1==0 Interfund transfers for the year ended June 30, 2008, consisted of the following: Transfer to Transfers From General Debt Service Fund Fund District-wide Capital Projects $ 25,000 $======3==08""'.3="1==0 Transfers are used to move property tax revenues collected by the General Fund to the District-Wide Capital Projects Fund as required match or supplemental funding source for capital construction projects and to move Special Purpose Local Option Sales Tax revenues to the District-Wide Capital Projects Fund. Note 7: RISK MANAGEMENT The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees and acts of God. The School District has obtained commercial insurance for risk ofloss associated with torts, assets, errors or omissions, and job related illness or injuries to employees. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years. The School District has elected to self-insure for all potential losses of property related to acts of God. The School District has not experienced any losses related to this risk in the past three years. The School District has purchased surety bonds to provide additional insurance coverage as follows: - 16 - MARION COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "G" Note 7: RISK MANAGEMENT Position Covered Amount Superintendent Board Chairman Each Principal Each Lunchroom Manager $ 50,000 $ 12,000 $ 2,000 $ 1,000 Note 8: LONG-TERM DEBT Capital Leases The Marion County Board of Education has entered into various lease agreements as lessee for buildings and buses. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of the future minimum lease payments as of the date oftheir inception. General Obligation Bonds Outstanding General obligation bonds currently outstanding are as follows: Purpose Interest Rates Amount General Government - Series 2008 General Government - Series 2002 General Government - Refunding - Series 1998 2.50% 3.56% 4.05% - 4.65% $ 525,000 365,000 1,800.000 $ 2,690.000 Changes in Long-Term Debt The changes in long-term debt during the fiscal year ended June 30, 2008, were as follows: - 17 - MARION COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "G" Note 8: LONG-TERM DEBT Governmental Funds General Capital Obligation Leases Bonds Total Balance July 1, 2007 $ 226,162 $ 2,755,000 $ 2,981,162 Additions General Obligation Bonds 525,000 525,000 Deductions Debt Retired 96,738 590,000 686,738 Balance June 30, 2008 $ 129,424 $ 2,690.000 $ 2,819.424 Portion of Long-Term Debt Due within One Year $ 65,623 $ 980,000 $ 1,045,623 Scheduled Maturities of Long-Term Debt At June 30, 2008, payments due by fiscal year which includes principal and interest for these items are as follows: Fiscal Year Ended June 30 Ca12ital Leases Princi12al Interest 2009 2010 2011 $ 65,623 $ 31,145 32,656 5,859 3,094 1 584 Total Principal and Interest $ 129,424 $ 10,537 Fiscal Year Ended June 30 General Obligation Debt Princi12al Interest 2009 2010 2011 2012 2013 2014 $ 980,000 $ 102,638 435,000 74,518 290,000 58,378 310,000 45,328 330,000 31,223 345,000 16,043 Total Principal and Interest $ 2,690.000 $ 328,128 - 18 - MARION COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT"G" Note 9: ON-BEHALF PAYMENTS The School District has recognized revenues and costs in the amount of $323,321 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies. Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance ofNon-Certified Personnel In the amount of $321,729 Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $1,592 Note 10: SIGNIFICANT CONTINGENT LIABILITIES Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position. Note 11: POSTEMPLOYMENT BENEFITS Georgia Retiree Health Benefit Fund Plan Description. The School District contributes to the Georgia Retiree Health Benefit Fund ("GRHBF"), a cost-sharing multiple-employer defined benefit postemployment healthcare plan administered by the Department ofCommunity Health. GRHBF provides health insurance benefits to eligible retirees and their qualified beneficiaries. Pursuant to Title 45, Chapter 18 ofthe Official Code ofGeorgia Annotated, the authority to establish and amend the benefit provisions ofthe plan is assigned to the Board of Community Health. The Department of Community Health issues a publicly available financial report that includes financial statements and required supplementary information for GRHBF. That report may be obtained from the Department ofCommunity Health at 2 Peachtree Street, Atlanta, Georgia 30303. Funding Policy. The contribution requirements of plan members and participating employers are established and may be amended by the Board of Community Health. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately twenty-five percent (25%) of the cost of health insurance coverage. - 19 - MARION COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "G" Note 11: POSTEMPLOYMENT BENEFITS Participating employers are statutorily required to contribute in accordance with the employer contribution rate established by the Board of Community Health. This contribution rate is established to fund both the active and retired employee health insurance plans based on projected pay-as-you-go financing requirements. The employer contribution rates for the combined active and retiree plans for the fiscal year ended June 30, 2008, were as follows: Teachers Non-Certificated Employees 18.534% of state-based salaries $162.72 per month The School District's contribution to the health insurance plans for the fiscal year ended June 30, 2008, was $1,264,800, which equaled the required contribution. Note 12: RETIREMENT PLAN Plan Description - Substantially all teachers, administrative and clerical personnel employed by local school systems are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing, multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors' benefits for its members in accordance with state statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report which can be obtained from the Georgia Department of Audits and Accounts. Contributions Required and Made -Employees of the School District who are covered by TRS are required by state statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with state statute and as advised by their independent actuary. The required employer contribution rate is 9.28% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows: Fiscal Year Percentage Contributed Required Contribution 2008 2007 2006 100% 100% 100% $ 714,805 $ 766,339 $ 697,896 - 20- MARION COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "G" Note 13: SUBSEQUENT EVENT The voters of Marion County approved, in the general election held on November 4, 2008, the issuance of $21,435,000 in general obligation bonds and authorized the reimposition of a 1% sales tax, for a period beginning January 1, 2013, not to exceed 20 calendar quarters, and to raise no more than $2,800,000. The proceeds ofthe bonds are to be used, in whole or in part, to acquire, construct, and equip a new middle/high school, for renovating, extending, repairing and equipping existing schools, acquisition of system-wide technology, and purchase ofbuses. - 21 - (This page left intentionally blank) MARION COUNTY BOARD OF EDUCATION GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2008 SCHEDULE "1" REVENUES Property taxes Sales taxes Other taxes State funds Federal funds Charges for services Investment earnings Miscellaneous Total revenues EXPENDITURES Current: Instruction Support services: Pupil services Improvement of instructional services Educational media services General administration School administration Business administration Maintenance and operation of plant Student transportation services Other support services Enterprise operations Food services operations Debt service: Principal retirement Interest and fiscal charges Total expenditures Excess of revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total other financing sources (uses) Net change in fund balances FUND BALANCE, beginning of year FUND BALANCE, end of year Budget Ori!!inal !1! Final !1) Actual Variance With Final Budget $ 3,427,815 $ 3,427,815 $ 3,361,591 $ 74,191 11,050 8,399,200 8,455,362 8,817,931 1,635,864 1,645,052 1,627,006 257,754 257,754 278,462 38,750 38,750 59,233 12,590 12,590 448,253 $ 13,771,973 $ 13,837,323 $ 14,677,717 $ -66,224 74,191 11,050 362,569 -18,046 20,708 20,483 435 663 840,394 $ 8,014,543 $ 8,004,681 $ 8,147,138 $ 502,978 154,991 313,371 770,480 961,287 100,322 1,081,476 820,678 53,000 894,958 495,411 158,989 313,371 770,864 961,287 100,322 1,101,769 823,678 53,000 901,208 404,323 156,920 318,130 817,101 962,866 73,119 1,059,807 804,651 51,940 257,760 901,362 96,738 9763 $ 13,668,084 $ 13,684,580 $ 14,061,618 $ $ 103,889 $ 152,743 $ 616,099 $ $ 4,500 $ 4,500 $ -4 500 -4,500 $ -25,000 $ 0 $ 0 $ -25,000 $ $ 103,889 $ 152,743 $ 591,099 $ $ 1,212,022 $ 1,212,022 $ 1,212,022 $ $ 1,315,911 $ 1,364,765 $ 1,803,121 $ -142,457 91,088 2,069 -4,759 -46,237 -1,579 27,203 41,962 19,027 1,060 -257,760 -154 -96,738 -9 763 -377,038 463,356 -4,500 -20,500 -25,000 438,356 0 438,356 Notes to the Schedule of Revenues, Exeenditures and Changes in Fund Balances - Budget and Actual (1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the various school activity accounts. The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. See notes to the basic financial statements. -23- MARION COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 SCHEDULE "2" Funding Agency Program/Grant CFDA Number PassThrough Entity ID Number Expenditures In Period Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program 10.553 10.555 NIA NIA $ (1) 808,396 Total Child Nutrition Cluster $ 808,396 Other Programs Pass-Through From Georgia Department of Education Food Donation (2) 10.550 N/A 45722 Total U. S. Department of Agriculture $ 854118 Education, U.S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants 84.027 84.173 N/A $ N/A 283,464 7204 Total Special Education Cluster $ 290,668 Other Programs Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States English Language Acquisition Grants Improving Teacher Quality State Grants Migrant Education Rural Education Safe and Drug-Free Schools and Communities - State Grants State Grants for Innovative Programs Title I Grants to Local Educational Agencies 84.048 NIA 84.365 N/A 84.367 NIA 84.011 NIA 84.358 NIA 84.186 N/A 84.298 NIA 84.010 NIA 18,558 1,344 107,642 21,309 48,525 7,566 2,739 481 716 Total U. S. Department of Education $ 980 067 Total Expenditures of Federal Awards $ 1,834,185 N/A = Not Available Notes to the Schedule of Expenditures of Federal Awards (1) Expenditures for the funds earned on the School Breakfast Program in the amount of ($192,540) were not maintained separately and are included in the 2008 National School Lunch Program. (2) The amount disclosed for the Food Donation Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year. Major Programs are identified by an asterisk (*) in front of the CFDA number. The School District did not provide Federal Assistance to any Subrecipient. The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Marion County Board of Education and is presented on the modified accrual basis of accounting used in the presentation of the fund financial statements. See notes to the basic financial statements. - 24- MARION COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Agency/Funding Grants Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle Grades (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Program for Intellectually Gifted Students - Category VI Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Pupil Transportation Bus Replacement Sparsity Nursing Services Mid-term Adjustment Hold-Harmless Vocational Supervisors Education Equalization Funding Grant Food Services Vocational Education Amended Formula Adjustment Other State Programs Graduation Coaches Graduation Coaches - Middle School Health Insurance Middle School Summer Remedial Program National Teacher Certification Preschool Handicapped Program Virtual Schools Office of Treasury and Fiscal Services Public School Employees Retirement See notes to the basic financial statements. - 25 - SCHEDULE "3" Governmental Fund Type General Fund $ 276,460 466,574 22,429 1,004,432 108,409 415,571 133,570 789,256 778,635 562,882 662,810 179,040 84,114 150,385 49,274 27,125 348,043 382,303 372,899 368,011 72,452 35,802 43,062 252,008 8,663 776,733 47,244 36,891 -130,791 59,156 42,096 321,729 1,443 27,014 40,565 50 1,592 $ 8,817,931 MARION COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS YEAR ENDED JUNE 30, 2008 SCHEDULE "4" PROJECT Provide funds to pay or to be applied toward the cost of adding to, renovating, improving, expanding, furnishing and equipping existing schools and facilities, including additional classrooms, technology improvements, and security system installation; and acquiring, constructing and equipping of physical education facilities, including softball and soccer fields, the maximum of such projects not to exceed $2,500,000. Provide funds to pay or to be applied toward the cost of (1) renovating, extending, repairing, and equipping existing schools, including roofs and HVAC; renovating, extending, repairing, and equipping existing athletic facilities, including baseball field lights, baseball and softball field dugouts and tennis concessions; acquiring and installing system-wide instructional and administrative technology, safety and security equipment; renovating, extending, repairing and equipping the bus shop; renovating, extending, equipping, and repairing the sewage treatment plant; acquisition of school buses, transportation equipment and maintenance equipment; acquisition of fine arts, vocational, instructional, and athletic equipment; acquiring any necessary property therefore, both real and personal; and paying expenses incident to accomplishing the foregoing; and (2) retiring the Marion County School District General Obligation Refunding Bonds, Series 1998 - the maximum of such projects not to exceed $2,500,000. ORIGINAL ESTIMATED COST (1) CURRENT ESTIMATED COSTS (2) AMOUNT EXPENDED IN CURRENT YEAR (3) AMOUNT EXPENDED IN PRIOR YEARS(3) PROJECT STATUS $ 2,500,000 $ 2,500,000 $ 19,224 $ 1,967,186 Ongoing 2,500,000 2,500,000 Ongoing $ 5,000,000 $ 5,000,000 $ 19,224 $==1=,9=6=7=,1=86= (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 Marion 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. See notes to the basic financial statements. - 26- MARION COUNTY BOARD OF EDUCATION SCHEDULE OF QUALITY BASIC EDUCATION PROGRAMS {QBE) ALLOTMENTS AND EXPENDITURES BY PROGRAM GENERAL FUND FOR THE FISCAL YEAR ENDED JUNE 30, 2008 SCHEDULE "5" Description Direct Instructional Funds: Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle Grades (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV Gifted Student - Category VI Alternative Education Program TOTAL DIRECT INSTRUCTIONAL PROGRAMS Media Center Program Staff and Professional Development TOTAL QBE FORMULA FUNDS Allotments From Georgia Department of Education (1) (2) Eligible QBE Pro9ram Costs Salaries Operations Total $ 538,031 $ 488,798 $ 27,545 54,592 1,139,808 1,310,177 113,415 93,733 485,215 602,256 150,849 108,470 911,646 1,122,647 902,781 1,131,011 625,765 347,554 763,041 36,435 257,279 366,763 12,748 192,621 104,984 95,797 82,057 $ 5,946,514 $ 6,119,504 $ 171,713 30,846 281,289 9,680 23,284 14,632 53,967 73,293 21,954 $ 498,478 54,592 1,333,461 93,733 616,888 108,470 1,176,614 1,204,304 369,508 1,836 520 36,435 257,279 366,763 12,748 106,820 82,577 199,166 $ 6,318,670 19,279 300,568 32,768 $ 6,149,073 $ 6,400,793 $ 218,445 $ 6,652,006 (1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the state amended formula adjustment. See notes to the basic financial statements. -27- SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS Russell W. Hinton STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 July 29, 2009 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Marion County Board of Education REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Ladies and Gentlemen: We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Marion County Board ofEducation as of and for the year ended June 30, 2008, which collectively comprise Marion County Board of Education's basic financial statements and have issued our report thereon dated July 29, 2009. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered Marion County Board ofEducation's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose ofexpressing an opinion on the effectiveness of the Marion County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Marion County Board of Education's internal control over financial reporting. A control deficiency exists when the design or operation ofa control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affect the Marion County Board ofEducation's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted 2008YB-10 accounting principles such that there is more than a remote likelihood that a misstatement of the Marion County Board ofEducation's financial statements that is more than inconsequential will not be prevented or detected by the Marion County Board of Education's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement ofthe financial statements will not be prevented or detected by the Marion County Board of Education's internal control. Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph ofthis section and would not necessarily disclose all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Compliance and Other Matters As part of obtaining reasonable assurance about whether Marion County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we have reported to management of Marion County Board of Education in a separate letter dated July 29, 2009. This report is intended solely for the information and use of management, members of the Marion County Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, RWH:as 2008YB-10 Ru ell W. Hinton, CPA, CGFM State Auditor Russell W. Hinton STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 July 29, 2009 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Marion County Board of Education REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULARA-133 Ladies and Gentlemen: Compliance We have audited the compliance ofMarion County Board ofEducation with the types of compliance requirements described in the U.S. Office of Management and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 2008. Marion County Board of Education's major Federal programs are identified in the Summary of Auditor's Results Section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of Marion County Board of Education's management. Our responsibility is to express an opinion on Marion County Board of Education's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Marion County Board ofEducation's compliance with those requirements and performing such other procedures as we considered necessary in the 2008SA-10 circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Marion County Board of Education's compliance with those requirements. In our opinion, the Marion County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each ofits major Federal programs for the year ended June 30, 2008. Internal Control Over Compliance The management of Marion County Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered Marion County Board ofEducation's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose ofexpressing our opinion on compliance, but not for the purpose ofexpressing an opinion on the effectiveness ofinternal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Marion County Board of Education's internal control over compliance. A control deficiency in an entity's internal control over compliance exists when the design or operation ofa control does not allow management or employees, in the normal course ofperforming their assigned functions, to prevent or detect noncompliance with a type of compliance requirement of a Federal program on a timely basis. A significant deficiency is a control deficiency, or combination ofcontrol deficiencies, that adversely affects the entity's ability to administer a Federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a Federal program that is more than inconsequential will not be prevented or detected by the entity's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a Federal program will not be prevented or detected by the entity's internal control. Our consideration of the internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. 2008SA-10 This report is intended solely for the information and use of management, members of the Marion County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, ~~-~ Russell W. Hinton, CPA, CGFM State Auditor RWH:as 2008SA-10 SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS MARION COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS FS-6961-06-02 FS-6961-07-01 FS-6961-07-02 FS-6961-07-03 Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS F A-6961-04-01 FA-6961-04-02 Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented SECTION IV FINDINGS AND QUESTIONED COSTS MARION COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008 I SUMMARY OF AUDITOR'S RESULTS 1. Type of Report Issued on the Financial Statements The auditor's opinion on the Marion County Board ofEducation's financial statements was unqualified. 2. Significant Deficiencies in Internal Control Disclosed by the Audit ofthe Financial Statements The audit report for the Marion County Board ofEducation did not disclose any significant deficiencies related to the financial statements. 3. Noncompliance Material to the Financial Statements The audit of the Marion County Board of Education disclosed no instances of noncompliance that were deemed to be material to the financial statements. 4. Significant Deficiencies in Internal Control Over Major Programs The audit report for the Marion County Board ofEducation did not disclose any significant deficiencies in internal control over major programs. 5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Marion County Board ofEducation's report on compliance with requirements applicable to major programs was unqualified. 6. Audit Findings Required to be Reported by Section .510(a) of 0MB Circular A-133 The Marion County Board ofEducation's audit did not disclose audit findings required to be reported by section .510(a) ofOMB Circular A-133. 7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food Services - School Breakfast Program 10.555 Food Services - National School Lunch Program 84.027 Special Education - Grants to States 84.173 Special Education - Preschool Grants 8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000. 9. Low Risk Auditee The Marion County Board of Education did not qualify as a low risk auditee as defined by Section .530 ofOMB Circular A-133. - 1- MARION COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008 II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported. -2-