Marion County Board of Education, Buena Vista, Georgia, annual financial report for the fiscal year ended 2018 June 30 (including independent auditor's reports)

MARION COUNTY BOARD OF EDUCATION
BUENA VISTA, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2018
(Including Independent Auditor's Reports)

MARION 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 NOTES TO THE BASIC FINANCIAL STATEMENTS

10

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

PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM OF GEORGIA

40

3 SCHEDULE OF PROPORTIONATE SHARE OF THE NET OPEB LIABILITY

SCHOOL OPEB FUND

41

4 SCHEDULE OF CONTRIBUTIONS TEACHERS RETIREMENT SYSTEM OF GEORGIA 42

5 SCHEDULE OF CONTRIBUTIONS SCHOOL OPEB FUND

43

6 NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION

GENERAL FUND

44

MARION COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I
FINANCIAL
SCHEDULES
REQUIRED SUPPLEMENTARY INFORMATION
7 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
SUPPLEMENTARY INFORMATION
8 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 9 SCHEDULE OF STATE REVENUE 10 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

Page
45 46 47 49

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 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
March 21, 2019

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 Marion County Board of Education
INDEPENDENT AUDITOR'S REPORT
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 Marion County Board of Education (School District), as of and for the year ended June 30, 2018, 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, 2018, 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.
Emphasis of Matter
As described in Note 2 to the financial statements, in 2018, the Marion County Board of Education adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, as amended by GASB Statement No. 85, Omnibus 2017. The School District restated beginning net position for the effect of the GASB Statement No. 75. Our opinions are not modified with respect to this matter.
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 21, 2019 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,
Greg S. Griffin State Auditor

MARION COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018

The discussion and analysis of the Marion County Board of Education's (the "School District") financial performance provides an overall review of the School District's financial activities for the fiscal year ended June 30, 2018. 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 2018 are as follows:



The School District's financial status remained stable during fiscal year 2018. In total, net

position increased $165,023 from fiscal year 2017. This total increase was due to

governmental activities since the School District has no business-type activities. This

increase was due to receiving Forest Land Protection Act (FLPA) reimbursements for 2 years

in fiscal year 2018.



General revenues accounted for $6.5 million or 38.3% of all revenues. Program specific

revenues in the form of charges for services and sales, grants and contributions accounted

for $10.5 million or 61.7% of total revenues. Total revenues were $17.0 million.



The School District had $16.9 million in expenses related to governmental activities; these

expenses were offset by $10.5 million in program specific charges for services, grants or

contributions. General revenues and taxes of $6.5 million also provided for these programs.



Among major funds, the General Fund had $15.8 million in revenues and other financing

sources and $15.3 million in expenditures and other financing uses. The General Fund's

fund balance increased from $2.4 million to $3.0 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 of Net Position and Statement of Activities provide information about the activities of the whole School District, presenting both an aggregate view of the School District's finances and a long-term view of those finances. The fund financial statements provide the next level of detail. For governmental funds, these statements tell how services were financed in the short term as well as what remains for future spending. The fund financial statements also look at the School District's most significant funds with all other non-major funds, if any, presented in total in one column. In the case of the 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 FOR THE FISCAL YEAR ENDED JUNE 30, 2018
Reporting the School District as a Whole
Statement of Net Position 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 of the School District as a whole looks at all financial transactions and asks the question, "How did we do financially during fiscal year 2018?" The Statement of Net Position and the Statement of Activities answer this question. These statements include all assets and all liabilities using 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 changes in those assets. This change in net position is important because it tells the reader whether, for the School District as a whole, the financial position of the School District has improved or diminished. The causes of this change may be the result of many factors, some financial, some not. Non-financial factors include the School District's property tax base, facility conditions, required educational programs and other factors.
In the Statement of Net Position 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 of financial 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 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 Position and the Statement of Activities) and governmental funds is reconciled in the financial statements.

MARION COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018

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 government-wide financial statements because it cannot use these assets to finance its operations.
The School District as a Whole
The perspective of the Statement of Net Position is of the School District as a whole. Table 1 provides a summary of the School District's net position for fiscal year 2018, compared to fiscal year 2017.
Table 1 Net Position

2018

2017 (1)

Current and other Assets Capital assets Total assets

$ 8,311,311 31,439,037 39,750,348

$ 6,885,282 32,095,407 38,980,689

Deferred outflows of resources

3,355,344

3,256,161

Long-term liabilities outstanding Other liabilities Total liabilties

40,830,973 1,663,840
42,494,813

28,696,279 1,778,583
30,474,862

Deferred inflows of resources

1,602,704

740,833

Net position: Net investment in capital assets Restricted Unrestricted (Deficit) Total net position

15,552,269 3,515,544
(20,059,638) $ (991,825)

16,309,461 2,909,559 (8,197,865)
$ 11,021,155

(1) Fiscal year 2017 balances do not reflect the effects of the restatement of net position. See Note 14 in the Notes to the Basic Financial Statements for additional information.

MARION COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018

Table 2 shows the changes in net position for fiscal year 2018, compared to fiscal year 2017. The total net position increased $165,023, for fiscal year 2018, compared to an $818,533 decrease for fiscal year 2017. The increase in fiscal year 2018 was due to receiving FLPA reimbursements for 2 years in fiscal year 2018. Note that the implementation of the new OPEB standard required a restatement of beginning net position. See also Note 14.
Table 2 Change in Net Position

Revenues Program Revenues: Charges for Services Operating Grants and Contributions Capital Grants and Contributions
Total Program Revenues
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 Earnings Miscellaneous Gain on sale of capital assets
Total General Revenues
Total Revenues
Program Expenses: Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Food Services Enterprise Operations Interest on Short-Term and Long-Term Debt
Total Expenses
Increase (Decrease) in Net Position Net Position, beginning of year, restated Net Position, end of year

2018

2017 (1)

$

241,387 $

9,781,097

480,676

10,503,160

231,064 9,251,059
480,161
9,962,284

3,947,145 371,279 468,080 53,183
1,197,699 58,141
402,399 25,344
6,523,270
17,026,430

3,495,522 359,631 417,172 50,081
650,116 36,313
409,326 -
5,418,161
15,380,445

9,056,676

8,749,170

395,308 880,733 196,316 410,618 1,013,878 213,239 1,399,741 1,115,068
41,417 63,285

391,968 924,603 259,746 360,815 1,001,473 207,300 1,275,261 916,716
44,285 57,666

1,103,743 142,846 828,539

1,045,402 139,195 825,378

16,861,407

16,198,978

165,023

(818,533)

(1,156,848)

11,839,688

$ (991,825) $ 11,021,155

(1) Fiscal year 2017 balances do not reflect the effects of the Restatement of Net Position. See Note 14 in the Notes to the Basic Financial Statements for additional information.

MARION COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018

Governmental Activities

Instruction comprises 53.7% 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 of services and the net cost of services. That is, it identifies the cost of these services supported by tax revenue and unrestricted state entitlements. Comparative data from fiscal year 2017, is also presented.

Table 3 Governmental Activities

Total Cost of Services

Fiscal

Fiscal

Year 2018

Year 2017 (1)

Net Cost of Services

Fiscal

Fiscal

Year 2018

Year 2017 (1)

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

$

9,056,676 $

8,749,170 $ (2,267,016) $ (2,342,826)

395,308 880,733 196,316 410,618 1,013,878 213,239 1,399,741 1,115,068
41,417 63,285

391,968 924,603 259,746 360,815 1,001,473 207,300 1,275,261 916,716
44,285 57,666

(225,975) (756,997)
(17,297) 87,510 (646,204) (209,871) (902,274) (724,997) (40,811) (62,285)

(263,311) (813,600)
(85,520) 28,140 (646,795) (204,431) (783,631) (517,301) (43,215) (57,666)

142,846 1,103,743
828,539

139,195 1,045,402
825,378

(101,321) (142,846) (347,863)

(139,195) (22,126)
(345,217)

Total Expenses

$ 16,861,407 $ 16,198,978 $ (6,358,247) $ (6,236,694)

(1) Fiscal year 2017 balances do not reflect the effects of the Restatement of Net Position. See Note 14 in the Notes to the Basic Financial Statements for additional information.

Although program revenues make up a majority of the revenues, the School District is still dependent upon tax revenues for governmental activities. Over 25.0% of instruction activities are supported through taxes and other general revenues; for all governmental activities general revenue support is 37.7%.

MARION COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018

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 $17.3 million and expenditures and other financing uses of $16.1 million. There was an increase in fund balance of approximately $65 thousand in the Capital Projects Fund. A transfer was made to cover local cost for our fiscal year 2019 State Capital Outlay project. The fund balance of the General Fund had an increase of approximately $560 thousand mainly due to receiving FLPA reimbursements for 2 years in fiscal year 2018. There was an increase in fund balance of approximately $560 thousand in the Debt Service Fund. This was because SPLOST III funds are being accumulated for sinking fund payments due annually in January.
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 2018, 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 $14.20 million to $14.57 million, while budgeted expenditures increased from $14.72 million to $15.11 million. Budgeted revenues increased due to the mid-term adjustment of the QBE allotment and receiving 2 years' FLPA reimbursement in fiscal year 2018. Budgeted expenditures increased due to adjustments to federal programs and amounts related to school activity funds.

The School District is a strategic waiver system. One is our waivers is the state's 65% rule for Minimum Direct Classroom Expenditures.

Capital Assets and Debt Administration Capital Assets

At the end of fiscal year 2018, the School District had $31.44 million invested in capital assets, all in governmental activities. Table 4 indicates balances at June 30, 2018. Capital asset comparisons to fiscal year 2017 are also included.

Table 4 Capital Assets (Net of Depreciation)

Land Land improvements Buildings and improvements Equipment
Total

Fiscal Year 2018 Fiscal Year 2017

$

581,159 $

581,159

891,264

959,139

28,854,101

29,462,444

1,112,513

1,092,665

$ 31,439,037 $ 32,095,407

MARION COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018

Debt Long-Term Liabilities

At fiscal year ended June 30, 2018, the School District had $40.49 million in long-term liabilities outstanding. Table 5 summarizes the School District's liabilities as compared to the prior fiscal year.

Table 5 Long-term Liabilities

Restated

Balance

July 1, 2017

Governmental Activities:

Bonds payable

$ 15,310,000 $

Capital leases

475,946

Net pension liability

12,910,333

Net OPEB liability

12,656,375

Governmental activities

Long-term liabilities $ 41,352,654 $

Additions
- $ 180,954 1,652,735 1,693,835
3,527,524 $

Reductions

Balance June 30, 2018

- $ (80,132) (2,855,067) (1,459,934)

15,310,000 $ 576,768
11,708,001 12,890,276

(4,395,133) $ 40,485,045 $

Due Within One Year
76,976
-
76,976

Current Issues

The Marion County Board of Education's current operating millage rate is 14.99 mills. The bond millage rate is 1.751 mills. Management and the Board of Education hope to hold this level for a few years so as not to place a hardship on the property owners in Marion County.

SPLOST revenues and school bond ad valorem taxes will be used to service debt for the 2010B and 2010C bonds along with Federal subsidy payments.

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 information, contact Cathy Wiggins, Director of Finance, 1697 Pineville Road, Buena Vista, Georgia 31803. You may also email your questions to cwiggins@marion.k12.ga.us.

MARION COUNTY BOARD OF EDUCATION

MARION COUNTY BOARD OF EDUCATION STATEMENT OF NET POSITION JUNE 30, 2018
ASSETS
Cash and Cash Equivalents Investments Receivables, Net
Taxes State Government Federal Government Inventories Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation)
Total Assets
DEFERRED OUTFLOWS OF RESOURCES
Related to Defined Benefit Pension Plans Related to OPEB Plan
Total Deferred Outflows of Resources
LIABILITIES
Accounts Payable Salaries and Benefits Payable Interest Payable Unearned Revenue Net Pension Liability Net OPEB Liability Long-Term Liabilities
Capital Leases Due Within One Year Capital Leases Due in More Than One Year Bonds Due in More Than One Year
Total Liabilities
DEFERRED INFLOWS OF RESOURCES
Related to Defined Benefit Pension Plans Related to OPEB Plan
Total Deferred Inflows of Resources
NET POSITION
Net Investment in Capital Assets Restricted for
Continuation of Federal Programs Capital Projects Debt Service Unrestricted (Deficit)
Total Net Position

EXHIBIT "A"

GOVERNMENTAL ACTIVITIES

$

3,957,291

2,733,404

334,490 1,025,127
241,424 19,575
581,159 30,857,878

39,750,348

2,063,767 1,291,577
3,355,344

72,586 1,436,814
345,928 154,440 11,708,001 12,890,276
76,976 499,792 15,310,000
42,494,813

621,142 981,562
1,602,704

15,552,269
269,862 105,766 3,139,916 (20,059,638)

$

(991,825)

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

- 1 -

MARION COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2018

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 For Debt Services Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Debt Services Other Sales Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Gain on sale of capital assets Miscellaneous
Total General Revenues
Change in Net Position
Net Position - Beginning of Year, Restated
Net Position - End of Year

EXPENSES

CHARGES FOR SERVICES

$

9,056,676 $

395,308 880,733 196,316 410,618 1,013,878 213,239 1,399,741 1,115,068
41,417 63,285

142,846 1,103,743
828,539

$

16,861,407 $

139,618
74,216 -
27,553
-
241,387

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

$

6,650,042 $

169,333 123,736 179,019 498,128 367,674
3,368 423,251 390,071
606 1,000

974,869
-

$

9,781,097 $

- $
-
480,676
480,676

(2,267,016)
(225,975) (756,997)
(17,297) 87,510 (646,204) (209,871) (902,274) (724,997) (40,811) (62,285)
(142,846) (101,321) (347,863)
(6,358,247)

3,947,145 371,279 16,626
468,080 36,557
1,197,699 58,141 25,344
402,399
6,523,270
165,023
(1,156,848)

$

(991,825)

- 3 -

MARION COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2018

EXHIBIT "C"

ASSETS
Cash and Cash Equivalents Investments Receivables, Net
Taxes State Government Federal Government Inventories

GENERAL FUND

CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$

3,029,809 $

105,766 $

821,716 $

3,957,291

136,855

-

2,596,549

2,733,404

264,632 1,025,127
241,424 19,575

-

69,858

334,490

-

-

1,025,127

-

-

241,424

-

-

19,575

Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Unearned Revenue
Total Liabilities
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - Property Taxes
FUND BALANCES
Nonspendable Restricted Assigned Unassigned
Total Fund Balances

$

4,717,422 $

105,766 $

3,488,123 $

8,311,311

$

72,586 $

- $

1,436,814

-

154,440

-

1,663,840

-

- $

72,586

-

1,436,814

-

154,440

-

1,663,840

70,025

-

8,201

78,226

19,575 250,287 244,035 2,469,660
2,983,557

105,766
-
105,766

3,479,922
-
3,479,922

19,575 3,835,975
244,035 2,469,660
6,569,245

Total Liabilities, Deferred Inflows of Resources, and Fund Balances

$

4,717,422 $

105,766 $

3,488,123 $

8,311,311

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

- 4 -

MARION COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION JUNE 30, 2018

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.
Land Buildings and improvements Equipment Land improvements Accumulated depreciation
Some liabilities are not due and payable in the current period, and, therefore, are not reported in the funds.
Net pension liability Net OPEB Liability
Deferred Outflows and Inflows of Resources related to pensions are applicable to future periods and, therefore, are not reported in the governmental funds.
Related to pensions Related to OPEB
Taxes that are not available to pay for current period expenditures are deferred in the funds.
Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consists of:
Bonds payable Accrued interest payable Capital leases payable

$

6,569,245.00

$

581,159.00

35,023,789.00

3,452,893.00

1,760,941.00

(9,379,745.00)

31,439,037.00

$ (11,708,001.00) (12,890,276.00)

(24,598,277.00)

$

1,442,625.00

310,015.00

1,752,640.00 78,226.00

$ (15,310,000.00) (345,928.00) (576,768.00)

(16,232,696.00)

Net Position of Governmental Activities (Exhibit "A")

$

(991,825.00)

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

- 5 -

MARION COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2018

EXHIBIT "E"

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 Central Support Services Other Support Services Enterprise Operations Food Services Operation
Debt Services Principal Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Capital Lease Sale of Capital Assets 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

$

3,942,942 $

32,745

16,626

9,049,680

1,924,515

241,387

1,935

402,399

15,612,229

- $

365,357 $

4,308,299

-

471,892

504,637

-

-

16,626

-

-

9,049,680

-

480,676

2,405,191

-

-

241,387

-

56,206

58,141

-

-

402,399

-

1,374,131

16,986,360

8,242,669
389,570 870,294 196,785 404,843 968,339 210,488 1,347,805 1,152,950
41,748 63,285 142,846 1,033,013
80,132 12,590
15,157,357
454,872
180,954 25,344 -
(100,000)
106,298
561,170
2,422,387

-
34,633 -
-
34,633
(34,633)
100,000 -
100,000
65,367
40,399

-
-
812,551
812,551
561,580
-
-
561,580
2,918,342

8,242,669
389,570 870,294 196,785 404,843 968,339 210,488 1,382,438 1,152,950
41,748 63,285 142,846 1,033,013
80,132 825,141
16,004,541
981,819
180,954 25,344
100,000 (100,000)
206,298
1,188,117
5,381,128

Fund Balances - Ending

$

2,983,557 $

105,766 $

3,479,922 $

6,569,245

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

- 6 -

MARION 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, 2018

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

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 capital assets is allocated over their estimated useful lives as depreciation expense.

Capital outlay

$

Depreciation expense

Taxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds.

The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of premiums, discounts and the difference between the carrying value of refunded debt and the acquisition cost of refunded debt when debt is first issued. These amounts are deferred and amortized in the Statement of Activities.

Capital leases issued

$

Capital lease payments

District pension contributions are reported as expenditures in the governmental funds when made. However, they are reported as deferred outflows of resources in the Statement of Net Position because the reported net pension/OPEB liability is measured a year before the District's report date. Pension/OPEB expense, which is the change in the net pension/OPEB liability adjusted for changes in deferred outflows and inflows of resources related to pensions/OPEBs, is reported in the Statement of Activities.

Pension expense

$

OPEB expense

Some items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. These activities consist of:

Accrued Interest on Issuance of Debt

EXHIBIT "F"

$

1,188,117

240,919 (897,289)

(656,370) 10,125

(180,954) 80,132

(100,822)

129,629 (402,258)

(272,629)

(3,398)

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

$

165,023

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

- 7 -

ASSETS Cash and Cash Equivalents Investments
Total Assets LIABILITIES Funds Held for Others

MARION COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUNDS JUNE 30, 2018

EXHIBIT "G"

AGENCY FUNDS

$

10,015

30,800

$

40,815

$

40,815

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

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MARION COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

Exhibit "H

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
Reporting Entity
The Marion County Board of Education (the "School District") was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 positon often has constraints on resources imposed by management which can be removed or modified.

- 10 -

MARION COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

Exhibit "H

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Government-wide Statements (Continued)
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include: (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
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 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 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 (property and sales) legally restricted for the payment of general longterm principal and interest.
The School District reports the following fiduciary fund type:
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.

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MARION COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

Exhibit "H

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Basis of Accounting
The basis of accounting determines when transactions are reported in the financial statements. The government-wide governmental activities and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants, and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis 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 60 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 long-term debt, 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 position available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.

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MARION COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

Exhibit "H

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Basis of Accounting (Continued)
The State of Georgia reimburses the School System for teachers' salaries and operating costs through the Quality Basic Education (QBE) Formula Earnings program. State of Georgia law defines the formula driven grant that determines the cost of an academic school year and the State of Georgia's share in this cost. Generally, teachers are contracted for the school year (July 1 June 30) and paid over a 12-month contract period, generally September 1 through August 31. In accordance with the requirements of the enabling legislation of the QBE program, the State of Georgia reimburses the School System over the same 12-month period in which teachers are paid, funding the academic school year expenditures. At June 30, the amount of teachers' salaries incurred but not paid until July and August of the subsequent year are accrued as the State of Georgia has only postponed the final payment of their share of the cost until the subsequent appropriations for cash management purposes. By June 30 of each year, the State of Georgia has a signed appropriation that includes this final amount, which represents the State of Georgia's intent to fund this final payment. Based on guidance in GASB Statement No. 33, paragraph 74, the State of Georgia recognizes its QBE liability for the July and August salaries at June 30, and the School System recognizes the same QBE as a receivable and revenue, consistent with symmetrical recognition.
New Accounting Pronouncements
In fiscal year 2018, the School District adopted GASB Statement No. 75, Accounting and Financial Reporting for Post-employment Benefits Other than Pensions. This statement establishes standards for recognizing and measuring liabilities, deferred outflows of resources, deferred inflows of resources, and expense/expenditures. For defined benefit OPEB, this statement identifies the methods and assumptions that are required to be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service. Note disclosure and required supplementary information requirements about defined benefit OPEB also are addressed. The adoption of this statement has a significant impact on the School District's financial statements. As noted in the Restatement of Net Position note disclosure, the School District restated beginning net position for the cumulative effect of this accounting change.
In fiscal year 2018, the School District adopted GASB Statement No. 81, Irrevocable Split-Interest Agreements. This statement requires that a government that receives resources pursuant to an irrevocable split-interest agreement recognize assets, liabilities, and deferred inflows of resources at the inception of the agreement. Furthermore, this statement requires that a government recognize assets representing its beneficial interests in irrevocable split-interest agreements that are administered by a third party, if the government controls the present service capacity of the beneficial interests. This statement requires that a government recognize revenue when the resources become applicable to the reporting period. The adoption of this statement does not have a significant impact on the School District's financial statements.
In fiscal year 2018, the School District adopted GASB Statement No. 85, Omnibus 2017. The objective of this statement is to address practice issues that have been identified during implementation and application of certain GASB Statements. This statement addresses a variety of topics including issues related to blending component units, goodwill, fair value measurement and application, and postemployment benefits (pensions and other post-employment benefits [OPEB]). The adoption of this statement does not have a significant impact on the School District's financial statements.

- 13 -

MARION COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

Exhibit "H

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
New Accounting Pronouncements (Continued)
In fiscal year 2018, the School District adopted GASB Statement No. 86, Certain Debt Extinguishment Issues. The primary objective of this statement is to improve consistency in accounting and financial reporting for in-substance defeasance of debt by providing guidance for transactions in which cash and other monetary assets acquired with only existing resources--resources other than the proceeds of refunding debt--are placed in an irrevocable trust for the sole purpose of extinguishing debt. This statement also improves accounting and financial reporting for prepaid insurance on debt that is extinguished and notes to financial statements for debt that is defeased in substance. The adoption of this statement does not have a significant impact on the School District's financial statements.
Cash and Cash Equivalents
Composition of Deposits 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.
Investments
Composition of 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.
The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks.
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.

- 14 -

MARION COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

Exhibit "H

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Inventories
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 (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.
Capital Assets
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 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.
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:

Land Construction in Progress Land Improvements Buildings and Improvements Equipment Intangible Assets
Deferred Outflows/Inflows of Resources

Capitalization Policy
All All $ 5,000 5,000 5,000 100,000

Estimated Useful Life
N/A N/A 15 to 80 Years 10 to 80 Years 5 to 14 Years 15 to 80 Years

In addition to assets, the statement of financial position and/or balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of resources that applies to future period(s) and, therefore, will not be recognized as an outflow of resources (expense/expenditure) until then.

- 15 -

MARION COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

Exhibit "H

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Deferred Outflows/Inflows of Resources (Continued)
In addition to liabilities, the statement of financial position and/or balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of resources that applies to future period(s) and so will not be recognized as an inflow of resources (revenue) until that time.
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 in the fiscal year in which the bonds are issued.
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.
Post-employment 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.

- 16 -

MARION COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

Exhibit "H

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Fund Balance
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 Amounts that are not in spendable form (e.g., inventory and prepaid items) or are legally or contractually required to be maintained intact (e.g., permanent fund principal).
Restricted Amounts that can be spent only on specific purposes stipulated by law through constitutional provisions or enabling legislation or by the external providers of those resources (e.g., grants or donations).
Committed Amounts that can only be used for the specific purposes determined by a formal action of the Board. Commitments may be changed or lifted only by referring to the formal action of the Board that imposed the constraint originally (e.g., the Board's commitment in connection with future construction projects).
Assigned Amounts intended to be used by the government for specific purposes. Intent can be expressed by the Board of Education or by a designee to whom the Board of Education delegates authority. In governmental funds other than the General Fund, assigned fund balance represents the amount that is not restricted or committed. This indicates the resources in other governmental funds are, at a minimum, intended to be used for the purpose of that fund.
Unassigned Amounts within the General Fund not meeting the definition of any aforementioned category. The General Fund is the only fund that reports positive unassigned fund balance. In other governmental funds, it may be necessary to report a negative unassigned fund balance.
The responsibility for designating funds to specific classification is as follows:
Committed Fund Balance The Board of Education 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. Funds should be committed prior to the end of the fiscal year, although the exact amount may be determined in the subsequent fiscal year.
Assigned Fund Balance The Board of Education has authorized the Superintendent as the official authorized to assign fund balance to a specific purpose in accordance with the School District's policy.
When restricted and unrestricted fund balances are both available for expenditure when the expenditure is incurred, the restricted fund balance is considered to be expended first.
When an expenditure is incurred for purposes for which amounts in any of the unrestricted fund balance classifications (committed, assigned or unassigned) could be used, the School District considers that committed amounts are to be reduced first, followed by assigned amounts, and then by unassigned amounts.

- 17 -

MARION COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

Exhibit "H

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
Property Taxes
The Marion County Board of Commissioners adopted the property tax levy for the 2017 tax digest year (calendar year) on August 30, 2017 (levy date), based on property values as of January 1, 2017. Taxes were due on December 20, 2017 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2017 tax digest are reported as revenue in the governmental funds for fiscal year 2018. 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, 2018, for maintenance and operations and debt service, amounted to $3,690,270 and $343,978, respectively.
The tax millage rates levied for the 2017 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
Total

14.990 mills 1.751 mills
16.741 mills

Additionally, Title Ad Valorem Tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2018, for maintenance and operations and debt service, amounted to $252,672 and $21,379, respectively.
Sales Taxes
Education Special Purpose Local Option Sales Tax (ESPLOST), at the fund reporting level, during the year amounted to $468,080, 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 reauthorized at least every five years.
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, debt service, and capital projects funds. 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. The legal level of budgetary control was established by the Board at the aggregate fund level. The budget for the General Fund was prepared in accordance with accounting principles generally accepted in the United States of America.

- 18 -

MARION COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

Exhibit "H

Note 3: BUDGETARY DATA (CONTINUED)
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 no more than 5% of the amount budgeted for expenditures in any budget function for any fund. The Superintendent shall report any such adjustments to the Board. If expenditure of funds in any fund is anticipated to be more than 5% of the budgeted amount, the Superintendent shall request Board approval for the budget amendment. Under no circumstances is the Superintendent or other staff person authorized to spend funds that exceed the total budget without approval by the Board.
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
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,

- 19 -

MARION COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

Exhibit "H

Note 4: DEPOSITS (CONTINUED)

Collateralization of Deposits (Continued)

(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 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 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, 2018, The School District had deposits with a carrying value of $4,134,961, and bank balances were $4,441,298, including $167,655, classified as certificates as deposit. The bank balances insured by Federal depository insurance were $482,410.

At June 30, 2018, $3,958,889 of the School District's bank balance was exposed to custodial credit risk as follows:

Category 1 Uninsured and Uncollateralized, Category 2 Uninsured with collateral held by the pledging financial institution, or Category 3 Uninsured with collateral held by the pledging financial institution's trust
department or agent, but not in the School District's name.

The School District's deposits by custodial credit risk category at June 30, 2018, are as follows:

Custodial Credit Risk Category

Bank Balance

1

$

-

2

-

3

3,958,889

$ 3,958,889

- 20 -

MARION COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

Exhibit "H

Note 4: DEPOSITS (CONTINUED)

Categorization of Investments

At June 30, 2018, the School District had the following investments:

Investment Ameris Bank Certificate of Deposit Ameris Bank Certificate of Deposit Deutsche Bank repurchase Fidelity Institutional Government
(money market mutual fund)

Maturities May 14, 2019 February 1, 2019 January 28, 2027
26-day weighted average

Rating* N/A N/A N/A
AAAm

Fair Value $ 30,800
136,855 2,113,343
483,206 $ 2,764,204

*Rating as per Standard & Poor's
Fair Value Measurements 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.
The School District has the following recurring fair value measurements as of June 30, 2018:
Money market mutual funds of $483,206, which are valued using market observable information for identical or similar instruments in the market. (Level 2 inputs)
Repurchase agreement of $2,113,343, which is valued using a matrix pricing model.
Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments 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.
As of June 30, 2018, $2,596,549 of the School District's applicable investments were uninsured, and are held by either the counterparty or the counterparty's trust department or agent 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 by 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.

- 21 -

MARION COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

Exhibit "H

Note 4: DEPOSITS (CONTINUED)

Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The School District does not have a formal policy for managing concentration of credit risk. More than 5% of the School District's investments are in a Fidelity Institutional Government money market mutual fund, the Deutsche Bank repurchase and one certificate of deposit. The money market mutual fund represents 17% of the School District's total investments, the repurchase agreement represents 76% of the School District's total investments and the certificate of deposit maturing on February 1, 2019, represents 5% of the School District's total investments.

Note 5: NON-MONETARY TRANSACTIONS

The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their federally assigned value. See Note 2 Inventories.

Note 6: CAPITAL ASSETS

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

Beginning Balance

In creas es

Decreases Transfers

Ending Balance

Governmental activities:

Capital assets, not being depreciated:

Land

$

Total

581,159 $ 581,159

- $

- $

- $ 581,159

-

-

-

581,159

Capital assets, being depreciated: Buildings and improvements Equipment Land improvements
Total

35,014,289 3,564,514 1,745,844 40,324,647

9,500 216,322 15,097 240,919

(327,943)
(327,943)

-

35,023,789

-

3,452,893

-

1,760,941

-

40,237,623

Less accumulated depreciation for: Buildings and improvements Equipment Land improvements Total

(5,551,845) (2,471,849)
(786,705) (8,810,399)

(617,843) (196,474) (82,972) (897,289)

327,943
327,943

-

(6,169,688)

-

(2,340,380)

-

(869,677)

-

(9,379,745)

Total capital assets, being depreciated, net

31,514,248

(656,370)

-

-

30,857,878

Governmental activities capital assets, net

$ 32,095,407 $ (656,370) $

- $

- $ 31,439,037

- 22 -

MARION COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

Exhibit "H

Note 6: CAPITAL ASSETS (CONTINUED)
Current year depreciation expense by function is as follows:
Instruction Support Services
General Administration School Administration Maintenance and Operations Student Transportation Food Services

$ 1,095 23,213 23,320 126,872

$ 680,311
174,500 42,478

Total Depreciation Expense Note 7: INTERFUND TRANSFERS

$ 897,289

Interfund Transfers

Interfund transfers for the year ended June 30, 2018, consisted of the following:

Transfers To

Transfers From General Fund

District-wide Capital Projects Fund

$

100,000

Transfers are used to move property tax revenues collected by the general fund to the capital projects fund as a required match or supplemental funding source for capital construction projects.

Note 8: LONG-TERM LIABILITIES

Changes in Long-term Liabilities

The changes in long-term liabilities during the fiscal year ended June 30, 2018, for governmental activities were as follows:

Qualified School Construction Bonds
Build America Bonds Capital Leases Net Pension Liability Net OPEB Liability
Total

Beginning Balance

Increases

Decreases

Ending Balance

Due Within One Year

$ 7,595,000 $

- $

- $ 7,595,000 $

7,715,000

-

-

7,715,000

475,946

180,954

(80,132)

576,768

12,910,333 1,652,735

(2,855,067) 11,708,001

12,656,375 1,693,835

(1,459,934) 12,890,276

$ 41,352,654 $ 3,527,524 $ (4,395,133) $ 40,485,045 $

76,976 76,976

- 23 -

MARION COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

Exhibit "H

Note 8: LONG-TERM LIABILITIES (CONTINUED)
Changes in Long-term Liabilities (Continued)
Section 1521 of the American Recovery and Reinvestment Act (ARRA) of 2009 (QSCB) and Section 1531 (BAB) provides for a source of capital at no or at nominal interest rates for costs incurred by School Districts in connection with the construction, rehabilitation or repair of a public school facility or for the acquisition of land where a school will be built. Investors receive Federal income tax credits at prescribed tax credit rates in lieu of interest, which essentially allows School Districts to borrow without incurring interest costs.
When the stated interest rate on the QSCB and the BAB results in interest payments that exceed the supplemental interest payments discussed in the preceding paragraph, the School District may apply for a direct cash subsidy payment from the U.S. Treasury which is intended to reduce the stated interest rate to a nominal percentage. To qualify for this subsidy the School District is required to periodically file appropriate documents with the Internal Revenue Service. These subsidy payments do not include the amount of any supplemental interest paid on a QSCB or BAB. The interest subsidy received by the School District in fiscal year 2018 was $480,676, which funded all but $331,875 of interest expense due on the QSCB and BAB.
Qualified School Construction Bonds (QSCB) and Build America Bonds (BAB)
Debt currently outstanding Qualified School Construction Bonds and Build America Bonds are as follows:

Pu rp o s e

Interest Rates

Issue Date

Maturity Date

Amount Is s u ed

Amount Ou ts tan d in g

QSCB - Series 2010B

5.05%

September 2, 2010 February 1, 2027 $

BAB - Series 2010C 5.168% - 5.768% September 2, 2010 February 1, 2040

$

7,595,000 $ 7,715,000 15,310,000 $

7,595,000 7,715,000 15,310,000

The following is a schedule of total QSCB and BAB payments:

Fiscal Year Ending June 30
2019 2020 2021 2022 2023 2024-2028 2029-2033 2034-2038 2039-2042
Total Principal and Interest

Principal

$

-

-

-

-

-

8,075,000

2,645,000

3,155,000

1,435,000

$ 15,310,000

Interest
$ 812,551 812,551 812,551 812,551 812,551
3,679,209 1,751,026
968,261 124,877
$ 10,586,127

- 24 -

MARION COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

Exhibit "H

Note 8: LONG-TERM LIABILITIES (CONTINUED)

Capital Leases

The School District has acquired land improvements and buses under the provisions of various long-term lease agreements classified as capital leases for accounting purposes because they provide for a bargain purchase option or a transfer of ownership by the end of the lease term.

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

Governmental

Activities

Land Improvements

$ 395,820

Equipment

363,032

Less: Accumulated Depreciation

(90,191)

$ 668,661

Capital leases currently outstanding are as follows:

Purpose

Interest Rates

Issue Date

Maturity Date

Amount Issued

Water Tower Buses Buses

2.50% 3.20% 3.12%

July 8, 2013 March 1, 2053 $

August 10, 2015 August 10, 2019

July 6, 2017

July 6, 2022

395,820 182,078 180,954

$ 758,852

The following is a schedule of capital lease payments:

Amount Outstanding
$ 360,340 73,923
142,505
$ 576,768

Fiscal Year Ending June 30

Capital Leases Principal Interest

2019 2020 2021 2022 2023 2024-2028 2029-2033 2034-2038 2039-2043 2044-2048 2049-2050353
Total Principal and Interest

$ 76,976 $ 13,379

79,368

12,152

43,089

10,887

44,393

9,583

7,288

8,240

39,297

38,343

44,524

33,116

50,445

27,195

57,155

20,485

64,756

12,884

69,477

4,279

$ 576,768 $ 190,543

- 25 -

MARION COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

Exhibit "H

Note 9: 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 natural disasters.

The School District has obtained commercial insurance for risk of loss 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 natural disasters. The School District has not experienced any losses related to this risk in the past three years.

The School District has purchased additional insurance coverage for all employees and board members in the amount of $250,000 for dishonesty, and $100,000 for forgery, alterations, theft, disappearance, destruction, and robbery.

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

Position Covered Superintendent Board Chair

Amount

$

50,000

$

12,000

Note 10: OPERATING LEASES
The School District leases copiers and a postage meter under the provisions of one or more long-term lease agreements classified as operating leases for accounting purposes. Rental expenditures under the terms of the operating leases totaled $30,021 for governmental activities for the year ended June 30, 2018. The following future minimum lease payments were required under operating leases at June 30, 2018:

Fiscal Year Ending June 30

Governmental Activities

2019 2020 2021 2022

$ 36,504 22,020 14,550 6,483
$ 79,557

The School District, a lessor, leases excess office space to various private companies and accounts for these leases as operating leases.

- 26 -

MARION COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

Exhibit "H

Note 10: OPERATING LEASES (CONTINUED)

Lease terms vary and extend through June 30, 2022. Rental revenues under these operating leases during the year ended June 30, 2018 were $67,043. Minimum future rentals to be received under operating leases are as follows:

Fiscal Year Ending June 30
2019 2020 2021 2022

Payments

$

10,800

10,800

10,800

9,600

$

42,000

Note 11: SIGNIFICANT CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. 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.
Note 12: OTHER POST-EMPLOYMENT BENEFITS
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 O.C.G.A. are provided OPEB through the School OPEB Fund - a cost-sharing multiple-employer defined benefit post-employment 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.

- 27 -

MARION COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

Exhibit "H

Note 12: OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)

Georgia School Personnel Post-Employment Health Benefit Fund (Continued)

Contributions. As established by the Board, the School OPEB Fund is substantially funded on a pay-asyou-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 $490,553 for the year ended June 30, 2018. 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, 2018, the School District reported a liability of $12,890,276 for its proportionate share of the net OPEB liability. The net OPEB liability was measured as of June 30, 2017. The total OPEB liability used to calculate the net OPEB liability was based on an actuarial valuation as of June 30, 2016. An expected total OPEB liability as of June 30, 2017, 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, 2017. At June 30, 2017, the School District's proportion was 0.091746%, which was an increase of 0.006347% from its proportion measured as of June 30, 2016.

For the year ended June 30, 2018, the School District recognized OPEB expense of $892,811. At June 30, 2018, the School District reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Changes in assumptions
Net difference between projected and actual earnings on OPEB plan investments
Changes in proportion and differences between School District contributions and proportianate share of contributions
School District contributions subsequent to the measurement date
Total

OPEB

Deferred

Deferred

Outflows of Inflows of

Resources

Resources

$

- $ 981,562

3,770

-

797,254

-

490,553 $ 1,291,577

$ 981,562

- 28 -

MARION COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

Exhibit "H

Note 12: OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)

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

School District contributions subsequent to the measurement date of $490,553 are reported as deferred outflows of resources and will be recognized as a reduction of the net OPEB liability in the year ending June 30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Fiscal Year Ending June 30
2019 2020 2021 2022 2023 2024 Thereafter

OPEB

$

(32,206)

(32,206)

(32,206)

(32,206)

(33,148)

(18,566)

-

Actuarial assumptions. The total OPEB liability as of June 30, 2017, was determined by an actuarial valuation as of June 30, 2016 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, 2017:

OPEB:

Inflation
Salary increases
ERS JRS LRS TRS PSERS Long-term expected rate of return Healthcare cost trend rate Pre-Medicare Eligible Medicare Eligible Ultimate trend rate Pre-Medicare Eligible Medicare Eligible Year of Ultimate trend rate

2.75%
3.25% 7.00%, average, including inflation 4.50%, including inflation None 3.25 9.00%, including inflation N/A 3.88%, compounded annually, net of investment expense, and including inflation
7.75% 5.75%
5.00% 5.00% 2022

- 29 -

MARION COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

Exhibit "H

Note 12: OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)
OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB (Continued)
Mortality rates were based on the RP-2000 Combined Mortality Table for Males or Females, as appropriate, with adjustments for mortality improvements based on Scale BB as follows:
For ERS, JRS and LRS members: The RP-2000 Combined Mortality Table projected to 2025 with projection scale BB and set forward two years for both males and females is used for the period after service retirement and for dependent beneficiaries. The RP-2000 Disabled Mortality Tables projected to 2025 with projection scale BB (set back seven years for males and set forward three years for females) is used for the period after disability retirement.
For TRS members: The RP-2000 White Collar Mortality projected to 2025 with projection scale BB (set forward one 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 three years for males and two 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 five years for both males and females) is used for the period after disability retirement.
The actuarial assumptions used in the June 30, 2016 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.
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.
Additionally, there was a change that affected measurement of the total OPEB liability since the prior measurement date. The methodology used to determine employee and retiree participation in the School OPEB Fund is based on their current or last employer payroll location. Current and former employees of public school districts, libraries, regional educational service agencies and community colleges are allocated to the School OPEB Fund irrespective of retirement system affiliation. In addition, the discount rate increased from 3.07% to 3.58%.

- 30 -

MARION COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

Exhibit "H

Note 12: OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)

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

The long-term expected rate of return on OPEB plan investments was determined using a log-normal

distribution analysis in which best-estimate ranges of expected future real rates of return (expected

nominal returns, net of investment expense and the assumed rate of inflation) are developed for each

major asset class. These ranges are combined to produce the long-term expected rate of return by

weighting the expected future real rates of return by the target asset allocation percentage and by

adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for

each major asset class are summarized in the following table:

Long-Term

Expected

Target

Real Rate of

Asset Class

Allocation

Return*

Local Government Investment Pool

100.00%

*Rate shown is net of the 2.75% assumed rate of inflation.

1.13%

Discount rate. In order to measure the total OPEB liability for the School OPEB Fund, a single equivalent interest rate of 3.58% 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 (3.56% 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 2115. 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 2029. Therefore, the calculated discount rate of 3.58% 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 3.58%, as well as what the School District's proportionate share of the net OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (2.58%) or 1 percentage-point higher (4.58%) than the current discount rate:

School District's proportionate share of the OPEB liablity discount rate

1% Decrease (2.58%)

Current Discount Rate
(3.58%)

1% Increase (4.58%)

$ 15,304,894 $ 12,890,276 $ 10,984,654

- 31 -

MARION COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

Exhibit "H

Note 12: OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)
OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB (Continued)
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:

School District's proportionate share of the OPEB liablity healthcare cost trend rate

1% Decrease

Current Healthcare Cost Trend Rate

1% Increase

$ 10,684,570 $ 12,890,276 $ 15,762,101

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 13: 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 47-3-60 of the Official Code of Georgia Annotated (O.C.G.A.) and certain other support personnel as defined by 47-3-63 are provided a pension through the Teachers Retirement System of Georgia (TRS). TRS, a cost-sharing multiple- employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. The Teachers Retirement System of Georgia issues a publicly available separate financial audit 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. Eligibility for disability and death benefits requires 10 years of service. 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.

- 32 -

MARION COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

Exhibit "H

Note 13: RETIREMENT PLANS (CONTINUED)
Teachers Retirement System of Georgia (TRS) (Continued)
Contributions. Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. 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% of their annual pay during fiscal year 2018. The School District's contractually required contribution rate for the year ended June 30, 2018, was 16.81% of annual School District payroll. The current year contribution was $1,291,887.
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, administer 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 10 years of creditable service and attainment of age 65. A member may choose to receive reduced benefits after age 60 and upon completion of 10 years of service.
Upon retirement, the member will receive a monthly benefit of $14.75, multiplied by the number of years of creditable service. Death and disability benefits are also available through PSERS. Additionally, PSERS may make periodic cost-of-living adjustments to the monthly benefits. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contribution, the member forfeits all rights to retirement benefits.
Contributions. The general assembly makes an annual appropriation to cover the employer contribution to PSERS on behalf of local school employees (bus drivers, cafeteria workers, and maintenance staff). The annual employer contribution required by statute is actuarially determined and paid directly to PSERS by the State Treasurer in accordance with O.C.G.A. 47-4-29(a) and 60(b). Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.
Individuals who became members prior to July 1, 2012, contribute $4 per month for nine months each fiscal year. Individuals who became members on or after July 1, 2012, contribute $10 per month for nine months each fiscal year. The State of Georgia, although not the employer of PSERS members, is required by statute to make employer contributions actuarially determined and approved and certified by the PSERS Board of Trustees. The current year fiscal year contribution was $24,209.

- 33 -

MARION COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

Exhibit "H

Note 13: RETIREMENT PLANS (CONTINUED)

Pension Liabilities, Pension Expense, Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

At June 30, 2018, the School District reported a liability of $11,708,001 for its proportionate share of the net pension liability for TRS.

The net pension liability was measured as of June 30, 2017. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2016. An expected total pension liability as of June 30, 2017, was determined using standard roll-forward techniques. The School District's proportion of the net pension liability was based on contributions to TRS during the fiscal year ended June 30, 2017.

At June 30, 2017, the School District's TRS proportion was 0.062996%, which was an increase of 0.000419% from its proportion measured as of June 30, 2016.

At June 30, 2018, 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 $142,951.

The PSERS net pension liability was measured as of June 30, 2017. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2016. An expected total pension liability as of June 30, 2017, 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, 2017.

For the year ended June 30, 2018, the School District recognized pension expense of $1,131,146 for TRS, $28,810 for PSERS and revenue of $28,810 for PSERS. The revenue is support provided by the State of Georgia.

At June 30, 2018, the School District reported deferred outflows of resources and deferred inflows of resources related to pension from the following sources:

TRS

Deferred

Deferred

Outflows of

Inflows of

Resources

Resources

Differences between expected and actual experience

$ 437,951 $ 44,185

Changes in assumptions

256,654

-

Net difference between projected and actual earnings on pension plan investments

-

80,571

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

77,275

496,386

School District contributions subsequent to the measurement date

1,291,887

-

Total

$ 2,063,767 $ 621,142

- 34 -

MARION COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

Exhibit "H

Note 13: RETIREMENT PLANS (CONTINUED)
Pension Liabilities, Pension Expense, Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued)
School District contributions subsequent to the measurement date of $1,291,887 for TRS are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ending June 30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Fiscal Year Ending June 30
2019 2020 2021 2022 2023 Thereafter

TRS $ (227,274)
458,202 216,073 (304,767)
8,504 -

Actuarial Assumptions: The total pension liability as of June 30, 2017, was determined by an actuarial valuation as of June 30, 2016, using the following actuarial assumptions, applied to all periods included in the measurement:
Teachers Retirement System

Inflation
Salary increases Investment rate of return

2.75%
3.25 9.00%, average, including inflation 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 death after disability retirement. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB.

The actuarial assumptions used in the June 30, 2016 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 Salary increases
Investment rate of return

2.75% N/A
50%, net of pension plan investment expense, including inflation

- 35 -

MARION COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

Exhibit "H

Note 13: RETIREMENT PLANS (CONTINUED)

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

Actuarial Assumptions (Continued):

Post-retirement mortality rates were based on the RP-2000 Blue-Collar Mortality Table projected to 2025 with projection scale BB (set forward three years for males and two 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 five 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, 2016 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014.

The long-term expected rate of return on TRS 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 asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset Class

TRS Targe t Allocation

PSERS Targe t Allocation

Long-te rm e xpe cte d real rate of re turn*

Fixed Income Domestic large stocks Domestic mid stocks Domestic small stocks International developed market stocks International emerging market stocks Alternative
Total

30.00% 39.80% 3.70% 1.50% 19.40% 5.60% 0.00% 100.00%

30.00% 37.20% 3.40% 1.40% 17.80% 5.20% 5.00% 100.00%

-0.50% 9.00% 12.00% 13.50% 8.00% 12.00% 10.50%

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

- 36 -

MARION COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

Exhibit "H

Note 13: RETIREMENT PLANS (CONTINUED)

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

Discount Rate: The discount rate used to measure the total TRS and PSERS pension liability was 7.50%. 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 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%, 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%) or 1-percentage-point higher (8.50%) than the current rate:

School District's proportionate share of the net pension liablity

Decrease (6.50%)
$ 19,214,203

Discount Rate (7.50%)
$ 11,708,001

Increase (8.50%)
$ 5,524,577

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

Note 14: CHANGE IN ACCOUNTING PRINCIPLE PRIOR PERIOD ADJUSTMENT

In fiscal year 2018, the School District adopted GASB Statement No. 75, Accounting and Financial Reporting for Post-employment Benefits Other than Pensions. The provisions of these statements establish accounting and financial reporting standards for post-employment benefits for retired employees of state and local governmental employers through pension plans that are administered through trusts. Implementation of this statement required the School District to record a liability for its proportionate share of the Net OPEB Liability of the School OPEB Fund. The following adjustment was required to net position of governmental activities to record the net pension liability as of July 1, 2017:

Net Position, Governmental Activities, previously reported

$ 11,021,155

Deferred outflows, contributions subsequent to measurement date

478,372

Proportionate share of Net School OPEB liability

(12,656,375)

Net Position, Governmental Activities, as restated

$ (1,156,848)

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MARION 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
2018 2017 2016 2015

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

0.062996% $ 0.062577% $ 0.065672% $ 0.068161% $

11,708,001 $ 12,910,333 $
9,997,910 $ 8,611,243 $

-$ -$ -$ -$

Total
11,708,001 12,910,333
9,997,910 8,611,243

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

$

7,451,451

$

6,883,616

$

6,958,471

$

6,953,819

157.12% 187.55% 143.68% 123.83%

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 -

MARION 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 "2"

Year Ended
2018 2017 2016 2015

School District's proportion of the net
pension liability

School District's proportionate share of the net pension liability

0.00% $

-

0.00% $

-

0.00% $

-

0.00% $

-

State of Georgia's proprotionate share of the net pension liaibility
associated with the School District

$

142,951 $

$

162,208 $

$

107,498 $

$

98,846 $

Total
142,951 162,208 107,498
98,846

School District's covered payroll

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

$

407,062

N/A

$

371,411

N/A

$

335,232

N/A

$

340,799

N/A

Plan fiduciary net position as a
percentage of the total pension liability
85.69% 81.00% 87.00% 88.29%

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

- 40 -

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

SCHEDULE "3"

Year Ended

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

2018

0.091746% $

12,890,276 $

-

$

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

12,890,276 $

7,750,486

166.32%

1.61%

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

- 41 -

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

SCHEDULE "4"

Year Ended

Contractually required contribution

Contributions in relation to the contractually required
contribution

Contribution deficiency (excess)

School District's covered payroll

2018

$

2017

$

2016

$

2015

$

1,291,887 $ 1,063,322 $
982,292 $ 915,039 $

1,291,887 $ 1,063,322 $
982,292 $ 915,039 $

-$ -$ -$ -$

7,685,229 7,451,451 6,883,616 6,958,471

Contribution as a percentage of covered
payroll
16.81% 14.27% 14.27% 13.15%

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

- 42 -

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

SCHEDULE "5"

Contractually required

Year Ended

contribution

Contributions in relation to the contractually required
contribution

Contribution deficiency (excess)

School District's covered-employee
payroll

2018

$

2017

$

490,553 $ 478,372 $

490,553 $ 478,372 $

-$ -$

7,865,573 7,750,486

Contributions as a percentage of covered-employee
payroll
6.24% 6.17%

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

- 43 -

MARION COUNTY BOARD OF EDUCATION NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED JUNE 30, 2018

SCHEDULE "6"

Teachers Retirement System
Changes of assumptions: In 2010 and later, the expectation of retired life mortality was changed to the RP 2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. In 2010, assumed rates of salary increase were adjusted to more closely reflect actual and anticipated experience.
On November 18, 2015, the Board adop- ted 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).
Public School Employees Retirement System
Changes of assumptions: In 2010 and later, the expectation of retired life mortality was changed to the RP 2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience.
On Decem- ber 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).
School OPEB Fund
Changes of benefit terms: In the June 30, 2010 actuarial valuation, there was a change of benefit terms to require Medicare-eligible recipients to enroll in a Medicare Advantage plan to receive the State subsidy.
Changes in assumptions: In the revised June 30, 2017 actuarial valuation, there was a change relating to employee allocation. Employees were previously allocated based on their Retirement System membership, and currently employees are allocated based on their current employer payroll location. Additionally, there were changes to the discount rate and an increase in the investment rate of return due to a longer-term investment strategy.
In the June 30, 2015 actuarial valuation, decremental and underlying inflation assumptions were changed to reflect the Retirement Systems' experience studies.
In the June 30, 2012 actuarial valuation, a data audit was performed and data collection procedures and assumptions were changed.

- 44 -

MARION COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2018

SCHEDULE "7"

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 Central Support Services Other Support Services Enterprise Operations Food Services Operation
Debt Service
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Capital Lease Proceeds from Sale of Capital Assets Transfers in Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

VARIANCE OVER/UNDER

$

3,464,214 $

24,000

-

8,605,701

1,995,033

109,124

100

3,500

14,201,672

3,464,214 $ 24,000 -
8,798,302 2,171,889
109,124 100
3,500
14,571,129

3,942,942 $ 32,745 16,626
9,049,680 1,924,515
241,387 1,935
402,399
15,612,229

478,728 8,745
16,626 251,378 (247,374) 132,263
1,835 398,899
1,041,100

7,789,242
438,079 815,848 274,489 461,477 1,063,046 211,397 1,306,178 1,108,608
66,490 67,500
1,113,287
-
14,715,641
(513,969)
4,100 5,000 (5,000)
4,100
(509,869)
2,422,387

8,192,971
443,943 830,668 288,489 461,056 1,063,046 211,397 1,306,434 1,033,911
64,990 69,268
1,148,287
-
15,114,460
(543,331)
4,100 72,868 (72,868)
4,100
(539,231)
2,422,387

8,242,669
389,570 870,294 196,785 404,843 968,339 210,488 1,347,805 1,152,950
41,748 63,285 142,846 1,033,013 92,722
15,157,357
454,872
180,954 25,344 -
(100,000)
106,298
561,170
2,422,387

(49,698)
54,373 (39,626) 91,704 56,213 94,707
909 (41,371) (119,039) 23,242
5,983 (142,846) 115,274
(92,722)
(42,897)
998,203
180,954 21,244 (72,868) (27,132)
102,198
1,100,401
-

Fund Balances - Ending

$

1,912,518 $

1,883,156 $

2,983,557 $

1,100,401

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 the various school activity accounts. The actual revenues and expenditures of the various principal accounts are $489,918 and $495,865, respectively.
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.

- 45 -

MARION COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2018

SCHEDULE "8"

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 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 Career and Technical Education - Basic Grants to States Supporting Effective Instruction State Grants Migrant Education - State Grant Program Migrant Education - State Grant Program Rural Education Rural Education Title I Grants to Local Educational Agencies Title I Grants to Local Educational Agencies Striving Readers Student Support and Academic Enrichment Pass-Through From Southwest Georgia Regional Educational Services Agency Title III - Limited English Proficient
Total Other Programs
Total U. S. Department of Education

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

10.553 10.555

18185GA324N1099 $ 18185GA324N1100

299,107 704,938
1,004,045

84.027 84.027 84.173

H027A160073 H027A170073 H173A160081

84.048 84.048 84.367 84.011 84.011 84.358 84.358 84.010 84.010 84.371 84.424
84.365

V048A160010 V048A170010 S367A170001 S011A160011 S011A170011 S358B160010 S358B170010 S010A160010 S010A170010-17A S371C170002-17C S424A170011
S365A170010

1,682 292,211
6,602
300,495
1,090 21,927
1,027 12,472
2,411 446
23,677 9,223
589,503 3,616
11,877
1,678
678,947
979,442

Total Expenditures of Federal Awards

$

1,983,487

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 Marion County Board of Education (the "Board") under programs of the federal government for the year ended June 30, 2018. 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 protion 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 Board.

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, as applicable, either the cost principles in OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments, or the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, wherein certain types of expenditures are not allowable or are limited as to reimbursement. 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.

- 46 -

MARION COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2018
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 Grades (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) 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 Amended Formula Adjustment Categorical Grants Pupil Transportation Regular Nursing Services Sparsity Vocational Supervisors Education Equalization Funding Grant Other State Programs Food Services Math and Science Supplements Preschool Handicapped Program Vocational Education
Office of the State Treasurer Public School Employees Retirement

SCHEDULE "9"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

298,569

343,370 215,212 1,047,588 314,610 451,456 188,996 759,446 964,518 217,717 826,598 150,902 213,299
64,844 72,898 159,585 51,101 26,324
544
370,942 327,168 361,088 (138,578)
369,504 45,000 26,672 8,252
1,197,699
24,612 10,642 17,948 36,945
24,209

$

9,049,680

See notes to the basic financial statements.

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MARION COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2018

SCHEDULE "10"

PROJECT
2012 SPLOST Improving school facilities, purchasing school buses, school equipment, and acquiring safety and security equipment.
Making system-wide technology improvements, including, but not limited to, the acquisition and installation of instruction technology, security, and information systems hardware and associated software and accessories, and infrastructure at all schools and selected other facilities
To retire a portion of the principal and interest on the School District's previously incurred general obligation Series 2010B and 2010C Bonds coming due in the years 2013 through 2018

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

ESTIMATED COMPLETION
DATE

$

750,000 $

750,000 $

- $

- $

- $

-

Complete

400,000

400,000

-

-

-

-

Complete

2,250,000

2,250,000

-

185,924

-

-

Complete

$
2017 SPLOST To retire a portion of the principal and interest on the School District's previously incurred general obligation Series 2010B and 2010C Bonds coming due in the years 2018 through 2023
(i) Making system-wide technology improvements, including, but not limited to, the acquisition and installation of instruction technology, security, and information system hardware and associated software and accessories, and infrastructure at all schools and selected other facilities; (ii) Improving school facilities, purchasing school buses, school equipment, and acquiring safety and security equipment

3,400,000 $

3,400,000 $

2,500,000

2,500,000

500,000

500,000

- $

185,924 $

- $

-

-

-

-

-

December 2022

-

-

-

-

December 2022

$

3,000,000 $

3,000,000 $

- $

- $

- $

-

(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. (4) $812,551 Interest paid on bonds in FY2018; $480,676 from Federal Subsidy; $331,756 from property taxes; $119 from sales taxes. (5) Sinking Fund Payment of $493,944 made in January, 2018; $444,716 from sales taxes; $49,228 from property taxes.

See notes to the basic financial statements

- 49 -

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
March 21, 2019

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 Marion County Board of Education
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
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 Marion County Board of Education (School District), as of and for the year ended June 30, 2018, 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 21, 2019.
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,
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
March 21, 2019

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 Marion County Board of Education
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE
Report on Compliance for Each Major Federal Program
We have audited the Marion County Board of Education's (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, 2018. 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, 2018.
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,
Greg S. Griffin State Auditor

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, 2018
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

MARION COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2018

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 Number

Name of Federal Program or Cluster

10.553, 10.555

Child Nutrition Cluster

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

$750,000

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.