Meriwether County Board of Education, Greenville, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2003

MERIWETHER COUNTY BOARD OF EDUCATION
GREENVILLE, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

MERIWETHER COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

3

B

STATEMENT OF ACTIVITIES

4

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

5

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

6

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

7

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

9

G

NOTES TO THE BASIC FINANCIAL STATEMENTS

10

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

27

MERIWETHER COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

28

3 SCHEDULE OF STATE REVENUE

30

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

32

5 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

33

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133

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

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

SECTION I FINANCIAL

RUSSELL W. HINTON
STATE AUDITOR (404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400
March 1, 2004

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Meriwether County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through G) of the Meriwether County Board ofEducation, as ofand for the year ended June 30, 2003, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Meriwether County Board of Education's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General 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 ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.
As discussed in Note 2 to the financial statements, management has not:

2003-34ARL-21

* Recorded land at historical costs nor maintained a detailed listing ofequipment items in accordance with accounting principles generally accepted in the United States of America. Accounting principles generally accepted in the United States of America require that capital assets be recorded at historical costs and detailed listing of equipment items be maintained.
* Properly recorded school activity (principals) account agency funds maintained at the individual schools in the fiduciary fund (which comprise the aggregate remaining fund information) as appropriate. Accounting principles generally accepted in the United States ofAmerica require that the assets and liabilities ofthese agency funds be reflected in these financial statements as fiduciary funds rather than including these agency fund amounts in the governmental activities and general fund.
The aggregate effects on the financial statements of these variances or omissions have not been determined, but are believed to be material.
In our opinion, because of the effects of the matters discussed in the preceding paragraph, the financial statements referred to above do not present fairly, in conformity with accounting principles generally accepted in the United States ofAmerica, the financial position ofthe aggregate remaining fund information of the Meriwether County Board of Education, as of June 30, 2003, and the changes in financial position thereof for the year then ended.
In addition, in our opinion, except for the effects of not properly recognizing capital assets in the governmental activities, as described in the third paragraph, the financial statements referred to above present fairly, in all material respects, the financial position ofthe governmental activities of the Meriwether County Board of Education, as of June 30, 2003, and the changes in financial position thereoffor the year then ended in conformity with accounting principles generally accepted in the United States of America.
In addition, in our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position ofthe general fund, district-wide capital projects fund and the debt service fund of the Meriwether County Board of Education, as of June 30, 2003, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
As described in Note 2, the Meriwether County Board ofEducation has implemented a new financial reporting model as required by provisions of Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments, as of June 30, 2003.
In accordance with Government Auditing Standards, we have also issued our report dated March 1, 2004, on our consideration of the Meriwether County Board of Education's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
2003-34ARL-21

Management's Discussion and Analysis and the Schedule ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through ix and page 27 respectively, are not a required part of the basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Meriwether County Board ofEducation's basic financial statements. The accompanying supplementary information which consist of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U.S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
A copy ofthis report has been filed as a permanent record in the office ofthe State Auditor and made available to the press ofthe State, as provided for by Official Code of Georgia Annotated section 506-24.
Respectfully submitted,
w~

RWH:as 2003-34ARL-21

State Auditor

MERIWETHER COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
Introduction
The discussion and analysis of Meriwether County Board of Education's financial performance provides an overall review of the School District's financial activities for the fiscal year ended June 30, 2003. 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 notes to the basic financial statements and the financial statements to enhance their understanding of the School District's financial performance. The reader should also note that this fiscal year (fiscal year 2003) is the School District's first year of implementation of GASB Statement #34, the new reporting model.
Financial Highlights
Key financial highlights for fiscal year 2003 are as follows:
The School District implemented GASB 34 for fiscal year 2003. Due to this being the implementation year, many comparisons are not available that will be available in fiscal year 2004.
On the District-wide financial statements, the assets of the School District exceeded liabilities by $17.6 million. Of this amount, $0.4 million is unrestricted and is available for spending at the School District's discretion.
The School District has $38.7 million in expenses relating to governmental activities; only $24.7 million ofthese expenses are offset by program specific charges for services, grants and contributions. General revenues (primarily property and sales taxes) of $11.4 million were inadequate to provide for these programs. The remainder came from reserves to sustain the School District's operations.
As stated above, general revenues accounted for $11.4 million or 31 % of all revenues totaling $36.1 million. Program specific revenues in the form of charges for services, grants and contributions accounted for the rest.
OVERVIEW OF THE FINANCIAL STATEMENTS
This annual report consists of three parts: management's discussion and analysis (this section), the basic financial statements and required supplementary information. The basic financial statements include two levels of statements that present different views of the School District. These include the District-wide and fund financial statements.

MERIWETHER COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
The District-wide financial statements include the 'Statement of Net Assets' and 'Statement of Activities'. These statements provide information about the activities of the School District presenting both short-term and long-term information about the School District's overall financial status.
The fund financial statements focus on individual parts ofthe School District, reporting the School District's operation in more detail. The 'Governmental Funds' statements disclose how basic services are financed in the short-term as well as what remains for future spending. The fund financial statements reflect the School District's most significant funds. In the case ofthe Meriwether County School District, the General Fund, District-wide Capital Projects Fund and Debt Service Fund are the most significant funds.
The financial statements also include notes that explain some of the information in the statements and provide more detailed data. The statements are followed by a section ofrequired supplementary information that further explains and supports the financial statements. Additionally, other supplementary information (not required) is also presented that further supplements understanding of the financial statements.
District-wide Statements
Since Meriwether County School District has no operations that have been classified as "Business Activities", the District-wide financial statements are basically a consolidation of all of the School District's operating funds into one column called governmental activities. In reviewing the Districtwide financial statements, a reader might ask the question, are we in a better financial position than last year? The 'Statement of Net Assets' and the 'Statement of Activities' provides the basis for answering this question. These financial statements include all School District's assets and liabilities and uses the accrual basis of accounting similar to the accounting used by most private-sector companies. This basis of accounting, takes into account all of the current year's revenues and expenses regardless of when cash is received or paid.
These two statements report the School District's net assets and any changes in those assets. The change in net assets is important because it tells the reader that, for the School District as a whole, the financial position ofthe School District has improved or diminished. The causes ofthis change may be the results of many factors, including those not under the School District's control, such as the reduction in state funding, property tax base, facility conditions, required educational programs and other factors.
The 'Statement of Net Assets' and the 'Statement of Activities' reflects the School District's governmental activities.
11

MERIWETHER COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
Fund Financial Statements The School District uses many funds to account for a multitude offinancial transactions during the fiscal year. However, the fund financial statements presented in this report provide detail information about only the School District's significant or major funds. Governmental Funds - The School District's activities are reported in governmental funds, which focus on how money flows into and out ofthose funds and the balances left at year-end available for spending in future periods. These funds are reported using the modified accrual method of accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view ofthe School District's general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The difference between governmental activities (reported in the Statement ofNet Assets and the Statement ofActivities) and governmental funds is reconciled in the financial statements. FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT AS A WHOLE Recall that the Statement ofNet Assets provides the perspective of the School District as a whole. Table 1 provides a summary of the School District's net assets for this fiscal year. Since this is the first year the School District has prepared financial statements following GASB Statement 34, net assets comparisons to fiscal year 2002 are not available.
111

MERIWETHER COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003

Table 1 Net Assets (in Thousands)

Governmental Activities Fiscal Year 2003

Assets Current and Other Assets Capital Assets, Net

$ 5,834 38,321

Total Assets

$ 44,155

Liabilities Current and Other Liabilities Long-Term Liabilities

$ 4,453 22,067

Total Liabilities

$ 26,520

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

$ 16,254 989 392

Total Net Assets

$ 17,635

Table 2 shows the Changes in Net Assets for this fiscal year. Since this is the first year the School District has prepared financial statements following GASB Statement 34, revenue and expense comparisons to fiscal year 2002 are not available.

iv

MERIWETHER COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003

Table 2 Change in Net Assets
(in Thousands)
Revenues Program Revenues: Charges for Services and Sales Operating Grants and Contributions
Total Program Revenues
General Revenues: Taxes Property Taxes For Maintenance and Operations For Debt Service Sales Taxes Special Purpose Local Option Sales Tax Intangible Recording Tax Real Estate Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Total Revenues
Program Expenses Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Community Services Food Services Interest on Short-Term and Long-Term Debt
Total Expenses
Decrease in Net Assets
V

Governmental Activities Fiscal Year 2003

$

768

23,913

$ 24,681

$ 6,072 1
1,611 156 30
2,802 16
688
$ 11,376
$ 36,057
$ 22,584
1,452 1,063
514 1,000 1,971
323 4,736 1,457
41 360
7 16 1,846 1,286
$ 38,656
$ 2,599

MERIWETHER COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003

Governmental Activities

The Statement of Activities shows the cost of program services and the charges for services and grants offsetting these services. Table 3 shows, for governmental activities, the total cost ofservices and the net cost of services. Net cost of services can be defined as the total cost less fees generated by the activities and intergovernmental revenue provided for specific programs. Since this is the first year the School District has prepared financial statements following GASB Statement 34, cost of service comparisons to fiscal year 2002 is not available.

Table 3 Governmental Activities
(in Thousands)

Total Cost of Services Fiscal Year 2003

Net Cost of Services Fiscal Year 2003

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

$ 22,584
1,452 1,063
514 1,000 1,971
323 4,736 1,457
41 360
7 16 1,846 1,286

$ 5,326
828 561 119 248 1,059 323 3,730 340
41 28
7 16 63 1,286

Total Expenses

$ 38,656 $ 13,975

Vl

MERIWETHER COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT'S FUNDS
The School District's governmental funds are accounted for using the modified accrual basis of accounting. The governmental funds had total revenues and other financing sources of$37.2 million and total expenditures and other financing uses of $38.4 million.
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 2003, the School District amended its general fund budget as needed.
For the General Fund, the actual revenues and other financing sources of$34.9 million exceeded the original budgeted amount of $29.7 million by $5.2 million. This difference (actual vs. original budget) was primarily due to unbudgeted state and Federal revenues in the original budget of $4.0 million. In addition, sales tax revenues were over original budget by $0.2 million, charges for services were over original budget by $0.5 million, and miscellaneous revenues were over original budget by $0.6 million.
The actual revenues and other financing sources of $34.9 million exceeded the final budgeted amounts by $0.9 million. Conservative budgeting for property taxes, sales taxes and state funds more than offset any shortfall in other revenue categories.
The final budgeted expenditures and other financing uses of $34.4 million exceeded the original budgeted amount of $29.7 million by $4.7 million. This difference was due to reductions in state funding of $1.744 million and increases in Federal funding.
The School District used financial reserves to balance its fiscal year 2003 budget, General Fund expenditures and other financing exceeded revenues and other financing sources by $1.0 million. This resulted in a deficit situation and will require the School District to find additional funding sources in succeeding budgets.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
At fiscal year end June 30, 2003, the School District had $38.3 million invested in capital assets, all in governmental activities. Table 4 reflects a summary of these balances net of accumulated depreciation. Since this is the first year the School District has prepared financial statements following GASB Statement 34, capital assets comparisons to fiscal year 2002 are not available.
Vll

MERIWETHER COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003

Table 4 Capital Assets (Net of Depreciation, in Thousands)

Land Construction in Progress Buildings and Improvements Equipment Land Improvements
Total

Governmental Activities Fiscal Year 2003
$ 2,897 2,895
27,746 4,391 392
$ 38,321

The School District will be completing the Construction in Progress in the early part of fiscal year 2004. The major projects are the completion of George Washington Elementary School and the Gym at Manchester High School. There is an additional renovation planned for the near future.

Debt

At fiscal year end June 30, 2003, the School District had $12.4 million in bonds outstanding and $9.6 million in other long-term debt. This is a reduction of$841 thousand from the previous year. Table 5 summarizes the School District's debt for general obligation bonds, intergovernmental contract and capital leases.

Table 5 Debt at June 30 (in Thousands)

Governmental Activities

Fiscal

Fiscal

Year 2003 Year 2002

General Obligation Bonds Capital Leases Meriwether County Public Facilities Authority
Intergovernmental Contract

$ 12,430 1,052
8,585

$ 12,945 1,253
8,710

Total

$ 22!067 $ 22!908

At June 30, 2003, the School District's assigned bond ratings were "Aa2" and "AA" as determined by Moody's Investors Services, Inc. and Standard and Poor's Rating Services.

vm

MERIWETHER COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
Current Issues Meriwether County is a fringe ofthe Greater Atlanta Area and the Greater Columbus Area. It is fifty miles from Atlanta and fifty miles from Columbus. It is poised for growth over the next decade. The School District has made extraordinary efforts to upgrade facilities with the replacement of five aging elementary schools with three state ofthe art elementary schools. The School District has also replaced one of its two high schools and extensively upgraded the other high school. While these capital projects have put a strain on the fiscal integrity of the School District, recent untimely "austerity" reductions in state funding has been devastating to the system's reserves. To address this deficit situation, the School District has begun a process of revenue enhancements and staff reduction through attrition to restore the financial integrity to the School District. Contacting the Board's Financial Management This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overview ofthe School District's finances and to show the School District's accountability for the money it receives. If you have questions about this report or need additional financial information contact Jim Mabon, Financial Director at Meriwether County Board ofEducation, P. 0. Box 70, 2100 Gaston Street, Greenville, Georgia 30222 or email atjmabon@meriwether.kl2.ga.us.
lX

MERIWETHER COUNTY BOARD OF EDUCATION

MERIWETHER COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30. 2003
Cash and Cash Equivalents Investments Accounts Receivable. Net
Taxes State Government Federal Government Other Inventories Capital Assets Land Construction in Progress Land Improvements Buildings and Building Improvements Equipment Less: Accumulated Depreciation
Total Assets
LIABILITIES
Accounts Payable Salaries Payable Retainages Payable Deposits and Deferred Revenues Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Bus Replacement Continuation of Federal Programs Debt Service Unrestricted
Total Net Assets
Total Liabilities and Net Assets

EXHIBIT"A"

GOVERNMENTAL ACTIVITIES

$

873,080

782,108

997,243 2,450,593
558,360 111,026
61,830

2,896,659 2,895,276
399,947 33,939,744 15,849,284 -17,660,399

$ ======4=4=15=4=7=5=1

$

1,319,910

3,006,085

54,306

72,906

922,282 21 144 564

$

26,520,053

$

16,253,665

99,742 165,359 723,939 391,993

$

17 634,698

$ ======44==15=4=7=5=1

The notes to the basic financial statements are an integral part of this statement. -3-

MERIWETHER COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30 2003

EXHIBIT"B"

EXPENSES

PROGRAM REVENUES

OPERATING

CHARGES FOR

GRANTS AND

SERVICES

CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

GOVERNMENTAL ACTIVITIES

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

$ 22,583,800 $
1,451,750 1,062,977
513,829 999,654 1,971,151 323,221 4,736,335 1,456,931
41,333 360,199
7,321 15,709 1,845,946 1,285,640
38,655,796 $

578,228 $
448 189,374 768 050 $

16,679,791 $ 623,690 502,203 394,365 751,884 911,842
1,006,563 1,116,983
332,178
1,593,346
23912845 $

-5,325,781
-828,060 -560,774 -119,464 -247,770 -1,059,309 -323,221 -3,729,772 -339,948
-41,333 -28,021
-6,873 -15,709 -63,226 -1 285 640
-13,974,901

General Revenues Taxes Property Taxes For Maintenance and Operations For Debt Services Sales Taxes Special Purpose Local Option Sales Tax For Debt Services Intangible Recording Tax Real Estate Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous

$

6,071,820

665

1,611,152 156,041 30,016
2,802,138 16,168
688 351

Total General Revenues

$ _ _ _1a.,;1..:3:.:.7..=.6Lac3-=.51'-

Change in Net Assets

$

-2,598,550

Net Assets - Beginning of Year

Net Assets - Ending of Year

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

MERIWETHER COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30. 2003

EXHIBIT"C"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 828,631 $
338,268
303,228 2,450,593
558,360 111,026
61,830

34,087 $
20,219

10,362 $
423,621
290,048

873,080 782,108
593,276 2,450,593
558,360 111,026
61 830

Total Assets

$ 4,651,936 $

54,306 $ 724,031 $ 5,430,273

LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Salaries Payable Retainages Payable Deposits and Deferred Revenue
Total Liabilities
FUND BALANCES
Reserved for: Bus Replacement Continuation of Federal Programs Debt Service Inventories
Unreserved Deficit Reported in: General Fund
Total Fund Balances

$ 1,319,910
3,006,085
$
72,906
$ 4,398,901 $

$

99,742

103,529

61,830

-12,066 $ $ 253,035 $

54,306 54 306

$ 1,319,910
3,006,085 54,306 72,906
$ 4,453,207

$ $ 724,031

99,742 103,529 724,031
61,830

0
0 $

724,031 $

-12 066 977 066

Total Liabilities and Fund Balances

$ 4,651,936 $

54 306 $ 724,031 $ 5,430,273

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

MERIWETHER COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30. 2003

EXHIBIT"D"

Total Fund Balances - Governmental Funds (Exhibit "C")

$

977,066

Amounts reported for Governmental Activities in the Statement of Net Assets are different because:

Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of:

Land Construction in Progress Land Improvements Buildings Equipment Accumulated Depreciation
Total Capital Assets

$

2,896,659

2,895,276

399,947

33,939,744

15,849,284

-17,660,399

38,320,511

Some of the School District's property tax revenues will be collected after year end but are not available soon enough to pay for the current period's expenditures.

403,967

Long-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of:

Intergovernmental Contract Bonds Payable Capital Leases
Total Long-Term Liabilities

$ -8,585,000 -12,430,000 -1,051 846

-22,066,846

Net Assets of Governmental Activities (Exhibit "A")

$ 17,634,698

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

MERIWETHER COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30. 2003

EXHIBIT"E"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Community Services Food Services Operation
Capital Outlay Debt Services
Principal Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Transfers In Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 6,558,836 186,057
22,175,536 4,539,447 768,050 8,724 $ 688,351
$ 34,925,001 $

$

706 $

1,611,152

1,149

6,295

1149 $ 1,618,153 $

6,559,542 1,797,209 22,175,536 4,539,447
768,050 16,168
688,351
36,544,303

$ 22,605,611

$

1,451,750

1,062,977

513,829

1,010,624

1,971,151

322,471

$

750

2,153,339

1,631,051

41,333

360,199

7,321

15,709

1,828,727

11,445 $ 675,858

201,101 66694

640,000 1,218,946

$ 35,255,332 $ 675,858 $ 1,859,696 $

$

-330,331 $ -674 709 $ -241,543 $

22,605,611
1,451,750 1,062,977
513,829 1,010,624 1,971,151
323,221 2,153,339 1,631,051
41,333 360,199
7,321 15,709 1,828,727 687,303
841,101 1,285,640
37,790,886
-1,246,583

$ 502,972 $

$

-718 473

$

-718,473 $

502,972 $

$ -1,048,804 $ -171,737 $

1,301,839

171 737

215,501 $
215,501 $ -26,042 $ 750,073

718,473 -718 473
0 -1,246,583 2,223,649

Fund Balances - Ending

$

253,035 $

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

-7-

0 $

724,031 $===9=7=7=0=6=6

MERIWETHER COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30. 2003

EXHIBIT"F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:
Capital Outlay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense
Because some property taxes will not be collected for several months after the School District's fiscal year ends, they are not considered "available" revenues.
Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of:
Intergovernmental Contract Payments Bond Principal Retirements Capital Lease Payments
Total Long-Term Debt Repayments

$ -1,246,583

$

992,935

-2,698,946

-1,706,011 -487,057

$

125,000

515,000

201 101

841 101

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

$ -2,598,550

The notes to the basic financial statements are an integral part of this statement. -9-

MERIWETHER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"G"

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Meriwether County Board ofEducation (School District) was established under the laws ofthe State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Meriwether County Board of Education.
District-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities of the overall School District. 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 ofActivities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support ofthe School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients ofgoods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds. Eliminations have been made to minimize the double counting of internal activities. 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:
- 10 -

MERIWETHER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"G"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund.
District-wide Capital Projects Fund accounts for financial resources including Bond Proceeds and grants from Georgia State Financing and Investment Commission to be used for the acquisition, construction or renovation of major capital facilities.
Debt Service Fund accounts for taxes (property and sales) legally restricted for the payment of general long-term principal, interest and paying agent's fees.
BASIS OF ACCOUNTING
The basis ofaccounting determines when transactions are reported on the financial statements. The District-wide governmental, 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 sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt which is recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds ofgeneral long-term liabilities and acquisitions under capital leases are reported as other financing sources.

- 11 -

MERIWETHER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "G"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.

Although "school activity account" agency funds are maintained at the individual schools, the assets and liabilities are reflected in the governmental activities within the general fund in these financial statements. To conform to generally accepted accounting principles, these accounts should be reflected as fiduciary funds.

A substantial number of personnel of the School District were employed for a one hundred and ninety day period beginning in August 2002 and ending in early June 2003. Employment contracts for these employment periods typically specify that compensation be paid in twelve equal monthly payments beginning in September 2002 and ending in August 2003. State grants to fund the State's share of these contracts are disbursed to the School District in the same twelve month period. In accordance with generally accepted accounting principles, salary and fringe benefit costs and the related revenue from the State to fund these contracts are recorded in the fiscal period covered by these financial statements.

RESTATEMENT OF PRIOR YEAR FUND BALANCE - GENERAL FUND

In prior years, the financial activities of the School District's School Food Services Fund, Lottery Programs and Federal Programs were reported as Special Revenue Funds. These funds had a combined fund balance of $227,113 at July 1, 2002. For fiscal year 2003, these funds have been reported as part of the General Fund. In addition, governmental fund activity from the various school activity accounts, which were not reported in the prior year's financial statements, have been reported within the General Fund for fiscal year ended June 30, 2003. The governmental fund activity ofthe various school activity accounts had a fund balance of$183,310 at July 1, 2002. This change is in accordance with generally accepted accounting principles.

General Fund Balance July 1, 2002

$ 891,416

Add Funds Consolidated with General Fund: School Food Services Fund School Activity Account - Governmental Activity

227,113 183,310

General Fund Balance July 1, 2002 (Restated)

$ 1,301,839

- 12 -

MERIWETHER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "G"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CHANGES IN ACCOUNTING PRINCIPLES

The Meriwether County Board of Education has implemented a new financial reporting model as required by provisions of Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments, as of June 30, 2003.

The provisions of GASB Statement No. 34 require the inclusion of a Statement ofNet Assets. The elements comprising Net Assets - Beginning include the following:

General Fund (Restated) July 1, 2002 Capital Projects Fund Debt Service Fund

$ 1,301,839 171,737 750,073

Governmental Funds (Restated) July 1, 2002 Capital Assets Accumulated Depreciation Property Tax Revenue Timing Differences Bonds Payable Capital Leases Payable Intergovernmental Contract Payable

$ 2,223,649 54,987,975 -14,961,453 891,024 -12, 945,000 -1,252,947 -8,710,000

Net Assets Beginning (See Exhibit "B")

$ 20,233,248

CASH AND CASH EQUIVALENTS

COMPOSITION OF DEPOSITS Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the Board to deposit its funds in one or more solvent banks or insured Federal savings and loan associations.

INVESTMENTS

COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among

- 13 -

MERIWETHER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "G"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
( 1) Obligations issued by the State of Georgia or by other states,
(2) Obligations issued by the United States government,
(3) Obligations fully insured or guaranteed by the United States government or a United States government agency,
(4) Obligations of any corporation of the United States government,
(5) Prime banker's acceptances,
(6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services,
(7) Repurchase agreements, and
(8) Obligations of other political subdivisions of the State of Georgia.
RECEIVABLES
Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.
PROPERTY TAXES
The Meriwether County Board of Commissioners fixed the property tax levy for the 2002 tax digest year (calendar year) on September 26, 2002 (levy date). Taxes were due on December 20, 2002 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2002 tax digest are reported as revenue in the governmental funds for fiscal year 2003. The Meriwether County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% oftaxes collected as a fee for tax collection and remits the balance oftaxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2003, for maintenance and operations amounted to $6,558,836 and for school bonds amounted to $706.

- 14 -

MERIWETHER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"G"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The tax millage rate levied for the 2002 tax year (calendar year) for the Meriwether County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

16.672 mills

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $1,611,152 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.

INVENTORIES

FOOD INVENTORIES On the basic financial statements, inventories of donated food commodities used in the preparation ofmeals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.

CAPITAL ASSETS

Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase. The Capital Assets land value is reported in the Statement of Net Assets at fair market value. To conform to generally accepted accounting principles, land should be reported at historical cost in the basic financial statements. Additionally, a detailed listing of equipment items were not maintained to support equipment assets on the basic financial statements. Donated capital assets are recorded at fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost ofnormal maintenance and repairs that do not add to the value of assets or materially extend the useful lives ofthe assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art.

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

- 15 -

MERIWETHER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "G"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Capitalization Policy

Estimated Useful Life

Land Land Improvements Buildings and Improvements All Equipment

$

5,000

NIA

$

5,000

20 years

$

5,000 7 to 40 years

$

5,000 5 to 15 years

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

GENERAL OBLIGATION BONDS

The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. Bond issuance costs are recognized in the financial statements during the fiscal year bonds are issued. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Assets.

DEFICIT FUND BALANCES

The fund reporting a deficit fund balance at June 30, 2003, is as follows:

Fund Type/Fund Name

Deficit Balance

General Fund

$====1"='2.==06==6

To fund this deficit, the School District plans to eliminate sixteen certified positions, increase the millage rate by at least one mill, and obtain funding to cover the expenditures/expenses related to the "Student Information System."

Note 3: DEPOSITS AND INVESTMENTS

COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum ofmoney which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. If a depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool

- 16 -

MERIWETHER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "G"

Note 3: DEPOSITS AND INVESTMENTS
balance. OCGA Section 45-8-11 (b) provides an officer holding public funds may, in his discretion, waive the requirement for security in the case of operating funds placed in demand deposit checking accounts.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
CATEGORIZATION OF DEPOSITS At June 30, 2003, the bank balances were $2,281,555. The amounts of the total bank balances are classified into three categories of credit risk:
Category 1 - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the School District or by the School District's agent in the School District's name.
Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name.
Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the School District's name.)

- 17 -

MERIWETHER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "G"

Note 3: DEPOSITS AND INVESTMENTS

The School District's deposits are classified by risk category at June 30, 2003, as follows:

Risk Category

Bank Balance

1

$ 276,394

2

1,807,163

3

197 998

Total

$ 2,281,555

CATEGORIZATION OF INVESTMENTS

At June 30, 2003, the carrying value ofthe School District's total investments was $769,659 which is

materially the same as fair value. This investment consisted entirely of funds invested in the Local

Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal

Services which are not required to be categorized since the School District did not own any specific

identifiable securities in the pool. The investment policy ofthe State of Georgia, Office ofTreasury

and Fiscal Services for the Local Government Investment Pool (Primary Liquidity Portfolio) does

not provide for investment in derivatives or similar investments. A description of the Primary

Liquidity Portfolio is as follows:

The Primary Liquidity Portfolio consists of Georgia Fund 1, which is a combination local and state government investment pool, and Fund 6. Georgia Fund 1 is a stable net asset value investment pool which follows Standard and Poor's criteria for AAAm rated money market funds. The pool is not registered with the SEC as an investment company but does operate Georgia Fund 1 in a manner consistent with Rule 2a-7 of the Investment Company Act of 1940. The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($1.00 per share value). Net asset value is calculated daily and reported to the rating agency to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and values participant's shares sold and redeemed at the pool's share price, $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost. The pool does not issue any legally binding guarantees to support the value of the shares. Participation in the pool is voluntary and deposits consist of funds from local governments; operating and trust funds of Georgia's state agencies, colleges and universities; and current operating funds of the State of Georgia's General Fund.

Investments in Georgia Fund 1 and Fund 6 are directed toward short-term instruments such as U.S. Treasury obligations, securities issued or guaranteed as to principal and interest by the U. S. Government or any of its agencies or instrumentalities, banker's acceptances and repurchase agreements. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2003, was 30 days. The average investment duration for Fund 6 on June 30, 2003, was 0.39 years.

- 18 -

MERIWETHER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"G"

Note 4: NON-MONETARY TRANSACTIONS

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

Note 5: CAPITAL ASSETS

The following is a summary of changes in the Capital Assets during the fiscal year:

Governmental Activities Capital Assets, Not Being Depreciated:
Land Construction in Progress
Total Capital Assets Not Being Depreciated
Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements
Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements
Total Capital Assets, Being Depreciated, Net
Governmental Activity Capital Assets - Net

Balances July I, 2002

Increases

Balances Decreases June 30, 2003

$ 2,896,659 9,775,268
$12,671,927

$ 470,368 $ 470,368

$ 7,350,360 $ 7,350,360

$ 2,896,659 2,895,276
$ 5,791,935

$27,929,840 14,386,208 0

$ 6,009,904 1,463,076 399,947

$33,939,744 15,849,284 399,947

5,536,163 9,425,290
0
$27,354,595
$40,026,522

657,878 2,033,069
7 999
$ 5,173,981
$ 5,644,349

$ 7,350,360

6,194,041 11,458,359
7 999
$32,528,576
$38,320,511

Capital assets being acquired under capital leases as of June 30, 2003, are as follows:

Governmental Funds

Equipment Less: Accumulated Depreciation

$ 435,456 43 547

$ 391,909

Current year depreciation expense by function is as follows:

- 19 -

MERIWETHER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "G"

Note 5: CAPITAL ASSETS

Instruction Support Services
General Administration Maintenance and Operation of Plant Student Transportation Services Food Services
Note 6: RESTRICTED ASSETS

$

5,564

2,799 2,390,827
283,818 15 938

$ 2,698.946

Special Purpose Local Option Sales Tax (SPLOST), Georgia State Financing and Investment Commission (GSFIC) funds and property tax levied specifically for retirement of outstanding bond principal, interest and paying agent's fees (Debt Service Funds) are reported as restricted assets in the Statement of Net Assets because their use is limited by applicable bond covenants or statutory prov1s10ns. Restricted assets at June 30, 2003, were as follows:

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

District-wide Capital Projects GSFIC

Debt Service Funds

$

10,362

$

23,113

$

423,621

$

4,243

Note 7: INTERFUND TRANSFERS

Interfund transfers for the year ended June 30, 2003, consisted of the following:

Transfer to
District-wide Capital Projects
Debt Service Funds
Total

Transfers From General Fund
$ 502,972 215,501
$====7ce==l8'='=4===7ce==3

- 20 -

MERIWETHER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"G"

Note 7: INTERFUND TRANSFERS

Transfers are used to move property tax revenues collected by the General Fund to (1) the Districtwide Capital Projects Fund as required match or supplemental funding source for capital construction projects, and to (2) move funds to the Debt Service Fund for payment of bonds.
Note 8: RISK MANAGEMENT

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

The School District has obtained commercial insurance for risk of loss associated with motor vehicles. The School District has neither significantly reduced coverage for this risk nor incurred losses (settlements) which exceeded the School District's insurance coverage in any ofthe past three years.

The School District participates in the Georgia School Boards Association Risk and Insurance Management System, a public entity risk pool organized on July 1, 1994, to develop and administer a plan to reduce risk of loss on account of general liability or property damage, including safety engineering and other loss prevention and control techniques, and to administer one or more groups of self-insurance funds, including the processing and defense of claims brought against members of the system. The School District pays an annual premium to the system for its general insurance coverage. Additional coverage is provided through agreements by the system with other companies according to their specialty for property, boiler and machinery (including coverage for flood and earthquake) and general liability (including coverage for sexual harassment, molestation and abuse). Payment of excess insurance for the system varies by line of coverage.

The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.

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

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

2002 2003

$

0 $

13,962 $

13,962 $

0

$

0 $

I 180 $

1 180 $

0

The School District participates in the Georgia School Boards Association Workers' Compensation Fund, a public entity risk pool organized on July 1, 1992, to develop, implement, and administer a program ofworkers' compensation self-insurance for its member organizations. The School District

- 21 -

MERIWETHER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "G"

Note 8: RISK MANAGEMENT

pays an annual premium to the Fund for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Fund with the United States Fidelity and Guaranty Company to provide coverage for potential losses sustained by the Fund in excess of $350,000.00 loss per occurrence, up to $1,000,000.00.

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

Position Covered

Amount

Superintendent All Other Employees

$ 50,000 $ 50,000

Note 9: SHORT-TERM DEBT

The School District issues tax anticipation notes in advance of property tax collections, depositing the proceeds in its General Fund. This short-term debt is to provide cash for operations until property tax collections are received by the School District. Article IX, Section V, Paragraph V of the Constitution ofthe State of Georgia limits the aggregate amount ofshort-term debt to 75 percent ofthe total gross income from taxes collected in the preceding year and requires all short-term debt to be repaid no later than December 31 of the calendar year in which the debt was incurred.

Short-term debt activity for the fiscal year is as follows:

Beginning Balance

Issued

Redeemed

Ending Balance

Tax Anticipation Notes

$======0 $ 1,850,000 $ 1,850,000 $======0

Note 10: LONG-TERM DEBT

CAPITAL LEASES The Meriwether County Board of Education has entered into various lease agreements as lessee for school buses, fuel tanks, HVAC and electrical and lighting retrofits. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of the future minimum lease payments as of the date of their inception.

INTERGOVERNMENTAL CONTRACT The Meriwether County Board of Education entered into a contract with the Meriwether County Public Facilities Authority, dated October 1, 1999, for the financing of the construction of various school facilities. Under the terms ofthe contract, the Authority issued $8,810,000 (less discount and issuance costs of$229,391) in revenue bonds on behalf ofthe School District to finance the costs of acquiring, constructing, furnishing and equipping a new elementary school to be owned by the School District and the costs of making renovations and modifications to existing schools owned by

- 22 -

MERIWETHER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"G"

Note 10: LONG-TERM DEBT

the School District . The School District has contractually agreed to make semi-annual payments, from April 1, 2000 through October 1, 2026, to the Authority sufficient to retire principal and interest on the bonds. The obligation ofthe School District is absolute and unconditional so long as any ofthe bonds remain outstanding. Under the contract, the Board of Education agreed to levy an annual tax on all property within the boundaries of the School District, at such rates, within any limits prescribed by law, as may be necessary to make payments required by the contract.

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

Purpose

Interest Rates

Amount

General Government - Series 1996

3.65%- 7.0% $ 12,430,000

The changes in Long-Term Debt during the fiscal year ended June 30, 2003, were as follows:

Balance July 1, 2002
Deductions Debt Retired
Balance June 30, 2003
Portion ofLong-Term Debt Due within One Year

Capital Leases

Governmental Funds Intergovernmental Contract Meriwether County Public Facilities Authori!X

General Obligation
Bonds

$ 1,252,947 $ 8,710,000 $ 12,945,000

Total $ 22,907,947

201,101 $ 1,051,846

125,000 $ 8,585,QQ0

515,000 $ 12 430,QQQ

841,101 $22,066,846

$ 212,282 $ 130,000 $ 580,000 $ 922,282

At June 30, 2003, payments due by fiscal year which includes principal and interest for these items are as follows:

- 23 -

MERIWETHER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"G"

Note 10: LONG-TERM DEBT

Fiscal Year Ended June 30
2004 2005 2006 2007 2008 2009 - 2013 2014 - 2018 2019 - 2023 2024 - 2027
Total Principal and Interest
Fiscal Year Ended June 30
2004 2005 2006 2007 2008 2009 - 2013 2014 - 2018 2019-2023 2024 - 2027
Total Principal and Interest

Cagital Leases

Princigal

Interest

$ 212,282 171,808 136,902 144,874 134,810 251,170

$ 55,513 43,685 33,492 25,519 17,490 17,329

Intergovernmental Contract

Meriwether County

Public Facilities Authority

Princigal

Interest

$ 130,000 135,000 140,000 145,000 170,000
1,290,000 1,790,000 2,355,000 2,430,000

$ 473,360 467,330 460,935 454,165 446,520
2,063,030 1,650,467 1,069,087
294,548

$ 1,051.846

$ 193.028

$ 8,585.000 $ 7,379.442

General Obligation

Debt

Princigal

Interest

$ 580,000 655,000 740,000 780,000 830,000
5,000,000 3,845,000

$ 715,447 674,847 628,997 577,198 522,598
1,902,093 432,025

$ 12,430.000 $ 5,453.205

Note 11: ON-BEHALF PAYMENTS

The School District has recognized revenues and costs in the amount of $370,375 for health insurance and retirement contributions paid on the Board's behalf by the following State Agencies.

Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $298,382

Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $71,993

- 24-

MERIWETHER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"G"

Note 12: SIGNIFICANT CONTINGENT LIABILITIES

Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.

The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance ofroutine School District operations. The ultimate disposition ofthese proceedings is not presently determinable, but is not believed to be material to the basic financial statements.

Note 13: ACCUMULATED EMPLOYEES' LEAVE

The School District's administrative staff and certain other full-time employees earn one day per month ofannual leave. Annual leave may be accumulated to a maximum often days and an amount based on unused leave, up to the maximum accumulation, is paid at the current rate of pay to employees upon retirement or termination of employment.

Note 14: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school systems are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.24% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2003 2002 2001

100% 100% 100%

$ 1,839,867 $ 1,754,083 $ 1,996,217

- 25 -

MERIWETHER COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30. 2003

SCHEDULE "1"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Community Services Food Services Operation
Capital Outlay Debt Service
Total Expenditures
Excess of Revenues (over) under Expenditures
OTHER FINANCING USES
Other Uses
Net Change in Fund Balances
Fund Balances - Beginning Adjustments

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

$

6,532,254 $

6,532,254 $

21,076,833 1,629,000 274,000 26,000 117,100

19,332,920 5,188,704 254,000 16,000 2,683,994

$

29,655,187 $

34,007,872 $

6,558,836 186,057
22,175,536 4,539,447 768,050 8,724 688 351
34,925,001

$

18,506,756 $

21,557,825 $

809,749 606,709 559,585 671,306 2,063,719 477,505 2,074,800 1,528,283
52,604 195,616

1,574,966 1,292,249
559,492 870,036 2,068,719 277,505 2,090,800 1,660,651
52,604 549,670

2,138,100

1,651,540 8,000

$

29,684.732 $

34,214,057 $

$

-29,545 $

-206,185 $

22,605,611
1,451,750 1,062,977
513,829 1,010,624 1,971,151
322,471 2,153,339 1,631,051
41,333 360,199
7,321 15,709 1,828,727 11,445 267 795
35,255,332
-330,331

-230,800

$

-29,545 $

-436,985 $

1,186,141 -2,432,394

1,209,905 -2,250,034

-718 473
-1,048,804
1,301,839 0

Fund Balances - Ending

$

-1,275,798 $

-1 477114 $==="2=5=3=,0=35=

Notes to the Schedule of Revenues. Expenditures and Changes in Fund Balances Budget and Actual (1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the various principal accounts.

See notes to the basic financial statements.

- 27 -

MERIWETHER COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30. 2003

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food and Nutrition Program Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Food and Nutrition Program Food Distribution Program (1)
Total U. S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Individuals with Disabilities Education Act Part B - Special Education Capacity Building Improvement Flow Through Preschool
Total Special Education Cluster
Other Programs Pass-Through From Georgia Department of Education Elementary and Secondary Education Act Title I Even Start Grants to Local Educational Agencies School Improvement Title II Enhancing Education Through Technology Improving Teacher Quality Title VI Innovative Education Program Strategies Rural and Low Income Schools Safe and Drug-Free Schools and Communities Vocational Education - Basic Grants to States High School Program Basic Grant
Total U. S. Department of Education

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

10.553 10.555

N/A N/A $
$

(2) 1,725,267 (3)
1,725,267

10.550

N/A $

103 461 1,828,728

84.027 84.027 84.173

N/A $ N/A N/A
$

18,034 589,174
62 501
669,709

84.213 * 84.010
84.010
84.318 84.367
84.298 84.358 84.186
84.048

N/A N/A N/A
NIA N/A
N/A N/A N/A
N/A
$

240,873 1,412,775 (3)
14,978
98,363 251,551
74,546 (3) 104,556 (3)
28,898
77 860 (3)
2,974,109

- 28 -

MERIWETHER COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30. 2003

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Health and Human Services, U. S. Department of Direct Rural Health Services Outreach

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

93.912

$ _ _ _....;..18=6=6=3'--'-1

Total Federal Financial Assistance N/A = Not Available

$ ===4='=98=9=,4=6=8

Notes to the Schedule of Expenditures of Federal Awards

(1) The amounts shown for the Food Distribution Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year.
(2) Expenditures for the funds earned on the School Breakfast Program ($338,804) were not maintained separately and are included in the 2003 National School Lunch Program.
(3) Expenditures for this program include State, and/or Other Funds. Expenditures are not maintained by fund source.

Major Programs are identified by an asterisk (*) in front of the CFDA number.

The School District did not provide Federal Assistance to any Subrecipient.

The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Meriwether County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the basic financial statements.

See notes to the basic financial statements.

- 29-

MERIWETHER COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 2003
AGENCY/FUNDING
GRANTS Education. Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV Category V Gifted Student - Category VI Remedial Education Program Alternative Education Program Special Education Itinerant Special Education Supplemental Speech Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Bus Replacement Sparsity - Alternative Program Nursing Services Principal Supplements Vocational Supervisors Mid-term Adjustment Hold - Harmless Education Equalization Funding Grant Food Services Austerity Reduction Other State Programs Extended Day - Agriculture
Extended Day- Technology I Career
Extended Year -Agriculture Grades 4-8 Statewide After School Program Health Insurance K-3 Statewide Reading Program
- 30 -

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

976,403

141,944

2,077,302

599,859

1,017,150

386,786

2,069,846

1,630,756

566,762

188,981 1,496,118 1,987,861
263,800 143,683 207,733
62,993 155,605
2,086 7,819 345,192 109,114 76,034

513,879 816,679 988,593

876,171 172,971
34,095 89,423 15,808 22,799 377,019 2,426,031 138,096 -478,576
5,836 27,449
2,381 40,560 298,382 61,372

MERIWETHER COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 2003
AGENCY/FUNDING
GRANTS Education, Georgia Department of Other State Programs Mentor Teachers Preschool Handicapped Program Technology/ Career High Schools That Work Technology/ Career Other - Youth Apprenticeship Lottery Program Computers in the Classroom
Georgia Institute of Technology Student Information System
Office of School Readiness Pre-Kindergarten Program
Office of Treasury and Fiscal Services Public School Employees Retirement
CONTRACT Human Resources, Georgia Department of Family Connection
OTHER Community Affairs, Georgia Department of Local Assistance Grants

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

2,490

55,453

8,000

1,900

4,506

29,371

993,528

71,993

50,000

15 500

$ ===2=2=1,=75=-'=53=6=

See notes to the basic financial statements.

- 31 -

MERIWETHER COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30. 2003

SCHEDULE "4"

PROJECT
Providing for the retirement of 1998 through 2002 calendar year annual payments in the amount of $5,616,331 for the principal and interest on previously incurred general obligation bond debt issued in November, 1996
Additional construction costs related to the construction of a new North Elementary School, a new North High School, a new South Elementary School and equipping the facilities and certain repairs, equipping and renovations lo existing facilities and paying the expenses incident thereto
Paying the principal and interest on the Meriwether County School District General Obligation School Bonds, Series 1996, the maximum amount of the debt to be paid is not to exceed $6,500,000
Acquiring the school buildings and facilities financed with the proceeds of the Meriwether County Public Facilities Revenue Bonds, Series 1999, by making the payments required under the Intergovernmental Contract, dated as of October 1, 1999, between the Authority and the School District, the maximum amount of obligations to be paid under the Contract will not exceed $3,010,000
(i) Acquiring, constructing and equipping a new elementary school; (ii) Adding to, renovating, repairing, improving and equipping existing school buildings and facilities; and (iii) Acquiring any property necessary and desirable therefor, both real and personal, the maximum amount of projects to be funded will not exceed $1,410,000

ORIGINAL ESTIMATED
COST(1)

CURRENT ESTIMATED
COST(2l

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED
IN PRIOR YEARS (3)

PROJECT STATUS

$

5,616,331 $

5,616,331 $

369,955 $ 5,072,473 Completed

2,383,669

38,515,248

387,881

38,127,367 Completed

6,500,000

6,500,000

884,955

Ongoing

3,010,000

3,010,000

238,143

Ongoing

1,410,000

1,410,000

653,870

Ongoing

$ 18,920,000 $ 55,051,579 $

2,534,804 $ 43,199,840

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

See notes to the basic financial statements.

- 32 -

MERIWETHER COUNTY BOARD OF EDUCATION GENERAL FUND- QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30. 2003

SCHEDULE "5"

DESCRIPTION

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

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

Direct Instructional Programs

Kindergarten Program

$

Kindergarten Program-Early Intervention Program

Primary Grades (1-3) Program

Primary Grades-Early Intervention (1-3) Program

Upper Elementary Grades (4-5) Program

Upper Elementary Grades-Early Intervention (4-5)

Program

Middle Grades (6-8) Program

Middle School (6-8) Program

High School General Education (9-12) Program

Vocational Laboratory (9-12) Program

Students with Disabilities

Category I

Category II

Category Ill

Category IV

Category V

Gifted Student - Category VI

Remedial Education Program

Alternative Education Program

1,053,100 $
175,880 2,258,009
691,262 1,112,559

1,060,957 $
30,434 2,987,277
476,602 1,066,908

427,450

333,992

2,300,253 1,782,880
626,168 4,457,862
229,523 78,348
171 499

2,950,238 2,924,225
891,866
16,365 1,299,396 2,247,021
206,591 107,768 146,647 205,116 303 715

21,995 $
84,089
44,053
575 113,659 131,467
49,476
318 10,054
9,665 1,670 1,836 5,401
275 15,734

1,082,952 30,434
3,071,366 476,602
1,110,961
333,992 575
3,063,897 3,055,692
941,342
16,683 1,309,450 2,256,686
208,261 109,604 152,048 205,391 319,449

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

$

15,364,793 $ 17,255,118 $

490,267 $

17,745,385

Media Center Program Staff and Professional Development

379,762 84 229

469,224 21 816

21,666 69,595

490,890 91,411

TOTAL QBE FORMULA FUNDS

$

15,828,784 $ 17,746,158 $

581,528 $ =====1=8;;.32=7:i;,6=8=6

(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State budget austerity reduction.

See notes to the basic financial statements.

- 33 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

RUSSELL W. HINTON
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400
March 1, 2004

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Meriwether County Board of Education
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Meriwether County Board of Education as of and for the year ended June 30, 2003, which collectively comprise Meriwether County Board of Education's basic financial statements and have issued our report thereon dated March 1, 2004. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general-purpose financial statements. 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.
Compliance
As part of obtaining reasonable assurance about whether Meriwether County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination 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 ofnoncompliance that are required to be reported under Government Auditing Standards.

2003-34YB-40

Internal Control Over Financial Reporting
In planning and performing our audit, we considered Meriwether County Board of Education's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. However, we noted certain matters involving the internal control over financial reporting and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over financial reporting that, in ourjudgment, could adversely affect Meriwether County Board of Education's ability to record, process, summarize and report financial data consistent with assertions ofmanagement in the financial statements. Reportable conditions are described in the accompanying Schedule ofFindings and Questioned Costs as items FS-6991-03-01, FS-6991-03-02, FS-6991-03-04, FS-6991-03-05, FS-6991-03-06, FS-6991-03-07 and FS-6991-0308.
A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, ofthe reportable conditions described above, we consider items FS-6991-0304 and FS-6991-03-08 to be material weaknesses.
This report is intended solely for the information and use of the management, members of the Meriwether County Board of Education, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
___R_espectfully submitted,

RWH:as 2003-34YB-40

State Auditor

RUSSELL W. HINTON
STATE AUDITOR (404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400
March 1, 2004

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Meriwether County Board of Education
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULARA-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of Meriwether County Board of Education with the types of compliance requirements described in the US. Office ofManagement and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to its major Federal program for the year ended June 30, 2003. Meriwether County Board of Education's major Federal program is identified in the Summary of Auditor's Results Section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements oflaws, regulations, contracts and grants applicable to its major Federal program is the responsibility of Meriwether County Board of Education's management. Our responsibility is to express an opinion on Meriwether County Board of Education's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types ofcompliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining,

2003SA-10

on a test basis, evidence about the Meriwether County Board ofEducation's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Meriwether County Board of Education's compliance with those requirements.
In our opinion, the Meriwether County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to its major Federal program for the year ended June 30, 2003.
Internal Control Over Compliance
The management of Meriwether County Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered Meriwether County Board of Education's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with 0MB Circular A-133.
Our consideration ofthe internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level of risk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses.
This report is intended solely for the information and use of the management, members of the Meriwether County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
~~b:~

RWH:as 2003SA-10

'Jssell W. Hinton State Auditor

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

MERIWETHER COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2003

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-6991-01-02 FS-6991-02-01 FS-6991-02-02

Further Action Not Warranted Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented

SECTION IV FINDINGS AND QUESTIONED COSTS

MERIWETHER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003

I SUMMARY OFAUDITOR'S RESULTS

1. Type of Report Issued on the Financial Statements The auditor's opinion on the Meriwether County Board of Education's financial statements was qualified for various departures from generally accepted accounting principles.

2. Reportable Conditions in Internal Control Disclosed by the Audit of the Financial Statements The audit report for the Meriwether County Board ofEducation disclosed financial statement reportable conditions related to the following control categories.

Budget Preparation/Execution Cash and Cash Equivalents Employee Compensation General Ledger

Capital Assets Expenditures/Liabilities/Disbursements Revenues/Receivables/Receipts

Of the reportable conditions described above, Expenditures/Liabilities/Disbursements, Revenues/Receivables/Receipts and Capital Assets are considered to be material weaknesses.

3. Noncompliance Material to the Financial Statements The audit of the Meriwether County Board of Education disclosed no instances of noncompliance that were deemed to be material to the financial statements.

4. Reportable Conditions in Internal Control Over Major Programs The audit report for the Meriwether County Board of Education did not disclose any reportable conditions in internal control over its major program.

5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Meriwether County Board ofEducation's report on compliance with requirements applicable to its major program was unqualified.

6. Audit Findings Required to be Reported by Section .510(a) of 0MB Circular A-133 The Meriwether County Board of Education's audit did not disclose audit findings required to be reported by section .510(a) of 0MB Circular A-133.

7. Major Programs The Federal award audited as a major program is as follows: 84.010 Elementary and Secondary Education Act - Title I - Grants to Local Educational Agencies

8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.

- 1-

MERIWETHER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
I SUMMARY OF AUDITOR'S RESULTS
9. Low Risk Auditee The Meriwether County Board of Education qualified as a low risk auditee as defined by Section .530 of 0MB Circular A-133.
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
BUDGET PREPARATION/EXECUTION Deficit Fund Balance Reportable Condition Finding Control Number: FS-6991-03-01
At June 30, 2003, the General Fund ofthe Meriwether County Board ofEducation reported a deficit fund balance in the amount of $12,066 which is considered to be an irregularity in accordance with O.C.G.A. 20-2-67. This condition occurred because management approved expenditures in excess of funds available in the General Fund. The School District should establish appropriate policies and procedures designed to ensure that in future periods the School District does not report a deficit.
Management's Response:
The Meriwether County Board has implemented the appropriate procedures and has put into place several austerity steps to correct this situation. Among these steps are Staff Reductions through attrition, freezes or reductions in most areas of spending and an Ad Valorem Tax increase.
CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS GENERAL LEDGER Inadequate Internal Control Procedures Reportable Condition Finding Control Number: FS-6991-03-02
Our examination of the principal's accounts disclosed weaknesses in internal control as discussed below:
Cash and Cash Equivalents
(1) The bank reconciliation function is not separated from the record keeping and voucher payment functions.
(2) Bank reconciliations were not reconciled to the total cash listed on the general ledger as presented for audit.
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MERIWETHER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS GENERAL LEDGER Inadequate Internal Control Procedures Reportable Condition Finding Control Number: FS-6991-03-02
Revenues/Receivables/Receipts
(1) Deposit preparation was not separated from the record keeping and cash custody functions.
(2) Based on a sample of 50 items, twenty-five receipts did not contain supporting documentation.
Expenditures/Liabilities/Disbursements
(1) The check writing function was not separated from the record keeping or processing of signed checks.
(2) Based on a sample of 100 vouchers, the following deficiencies were noted:
(1) Thirteen vouchers were approved for payment subsequent to the preparation of the related check.
(2) Fifty vouchers contained "Local School Purchase Orders" dated and approved the same date as the related check.
(3) Fifty vouchers were approved and paid without having properly executed "Local School Purchase Orders."
(4) Seventeen vouchers were approved and paid without having proper evidence of the receipt of goods.
General Ledger
(1) The detailed general ledger and subsidiary ledgers for the principal accounts at one school were missing and were not available for audit.
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MERIWETHER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS GENERAL LEDGER Inadequate Internal Control Procedures Reportable Condition Finding Control Number: FS-6991-03-02
These deficiencies were a result ofmanagement's decision to limit the number ofadministrative staff made responsible for accounting functions and failure to ensure established controls were functioning as designed. Management should implement procedures to ensure that the key accounting functions of custody, record keeping and authorization be segregated. Additionally, controls should be revised and monitored to provide reasonable assurance that transactions are processed according to established procedures.
Management's Response:
Management has recognized these weaknesses in certain personnel areas and has made permanent replacements. In addition, intensive training and supervision has been implemented in the remaining areas of concern and weakness.
CASH AND CASH EQUIVALENTS Failure to Properly Segregate Debt Service Funds Nonmaterial Noncompliance Finding Control Number: FS-6991-03-03
The School District maintained $450,000 of debt service tax collection moneys within the general operating checking account. This combining ofdebt service and non-debt service funds is a violation ofArticle IX, Section V, Paragraph VI ofthe Constitution ofthe State ofGeorgia which provides in part as follows:
"The proceeds ofthis tax, together with any other moneys collected for this purpose, shall be placed in a sinking fund to be used exclusively for paying the principal ofand interest on such bonded debt. Such moneys shall be held and keep separate and apart from all other revenues collected".
Management should transfer these debt service funds plus applicable interest to a separate debt service bank account.
Management's Response:
Management recognizes this as a bookkeeping error. It has implemented the appropriate procedures to prevent it from re-occurring in the future.
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MERIWETHER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Failure to Record Agency Funds Reportable Condition - Material Weakness Nonmaterial Noncompliance Finding Control Number: FS-6991-03-04
The School District failed to properly record school activity (principals) account agency funds maintained at the individual schools in the fiduciary fund, which comprises the aggregate remaining fund information, as required by generally accepted accounting principles. This omission ofmaterial amounts, by the School District's management, is considered to be a financial irregularity in accordance with O.C.G.A. 20-2-67 and results in the basic financial statements ofthe School District being incomplete and not in accordance with generally accepted accounting principles. The School District should establish appropriate policies and procedures designed to ensure that all of the financial activity related to fiduciary funds ofthe various school activity accounts are reported within the basic financial statements as required by generally accepted accounting principles.
Management's Response:
Management recognizes this weakness and has implemented additional controls to correct this finding and to prevent its re-occurrence.
EMPLOYEE COMPENSATION Inadequate Internal Controls Reportable Condition Finding Control Number: FS-6991-03-05
A review ofthe School District's internal control policies and procedures for employee compensation noted deficiencies in employee payroll records and personnel files. Testing of25 employee payroll records and personnel files revealed the following conditions:
(1) Approved annual and sick leave records were not maintained and were not available to support leave used for fifteen employees.
(2) Approved timesheets for ten "non-certified" employees were not maintained and were not available to support payments made to the employees.
(3) The personnel files for four employees contained inadequate documentation to support the employee's rate of pay, which resulted in un-supported supplemental payments made to the employees.
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MERIWETHER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
EMPLOYEE COMPENSATION Inadequate Internal Controls Reportable Condition Finding Control Number: FS-6991-03-05
These conditions occurred because the School District failed to adequately implement and monitor procedures to ensure that payments made to employees are based on approved timesheets and approved rates of pay that are adequately documented in the employees' personnel file. In addition, the School District failed to implement procedures to ensure that approved annual and sick leave records exist prior to the processing of employee payroll transactions. The School District should implement strong internal control policies and procedures to ensure that employee payroll records and personnel files are properly maintained and that all payments made to employees are supported by properly approved annual and sick leave records, timesheets, and rate of pay documentation.
Management's Response:
We recognize this weakness and corrective measures have been implemented to prevent its reoccurrence in the future. Copies of all time sheets from "non-certified employees" are collected by the Personnel Department to verify their completion.
EMPLOYEE COMPENSATION Unauthorized Salary Increase Reportable Condition Amount: $5,000 Finding Control Number: FS-6991-03-06
During the year under review, the Assistant Superintendent of Human Resources authorized a salary increase of $5,000 for himself in excess ofhis contract amount. This salary increase did not have the proper approval from the Superintendent and Board of Education. This condition occurred because management failed to provide adequate internal controls to ensure that all amounts paid to system employees are adequately documented and properly approved. Management should implement procedures to ensure that a salary schedule or some other form of written documentation is maintained on file that both authorizes and supports amounts paid to all system employees. Subsequent to June 30, 2003, the Board requested reimbursement of$5,000 through monthly payroll deductions for deposit to the General Fund.
Management's Response:
We recognize this weakness and corrective measures have been implemented to prevent its reoccurrence in the future.
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MERIWETHER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL LEDGER Inadequate Accounting Procedures Reportable Condition Finding Control Number: FS-6991-03-07
A review of the School District's internal control policies and procedures noted deficiencies in providing for adequate internal control over the journal entry process. Journal entries were not supported by adequate documentation or explanations and were not reviewed and approved by someone independent of the journal entry process. This condition was the result of management's failure to develop adequate internal controls over the journal entry process. The School District should review the accounting procedures in place, design procedures which would enhance segregation ofduties and proper internal controls relative to the journal entry process and implement those procedures to strengthen the internal control over the accounting functions.
Management's Response:
We recognize this weakness and corrective measures have been implemented to prevent its reoccurrence in the future. The funds in question have been returned to the Board and documentation deficiencies have been corrected.
CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Reportable Condition - Material Weakness Finding Control Number: FS-6991-03-08
A review of the School District's Capital Assets policies and procedures and the related Capital Assets records noted material deficiencies as discussed below:
(1) The Capital Assets records were incomplete and did not provide a detailed and accurate listing to support assets recorded as "Equipment".
(2) The land value reported by the School District represents current fair market value in fiscal year 2003 and not historical cost as required by generally accepted accounting principles. This condition results in a material misstatement in the basic financial statements of the School District.
(3) Assets acquired under capital leases were not recorded at the present value of the future minimum lease payments at the inception of the lease as required by generally accepted accounting principles.
(4) Equipment with values less than the $5,000 capitalization threshold was recorded within the Capital Assets records.
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MERIWETHER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Reportable Condition - Material Weakness Finding Control Number: FS-6991-03-08
(5) Equipment with a total value of$76,238 which meets the $5,000 capitalization threshold was omitted from the Capital Assets records.
(6) The depreciable life ofthe "Buildings," which is used for calculating depreciation, exceeded the limits as stated in the School District's policy. In addition, several of the significant assets, such as Buildings, are fully depreciated and are still in use. Assets which are still in use should not be fully depreciation.
(7) A complete physical inventory of the School District's Capital Assets was not performed in fiscal year 2003.
Management's Response: We recognize this weakness and corrective measures have been implemented to prevent its reoccurrence in the future. These errors have been corrected in the systems Fixed Asset System. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.
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