MITCHELL COUNTY BOARD OF EDUCATION CAMILLA, GEORGIA ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2013 (Including Independent Auditor's Reports) MITCHELL COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION I FINANCIAL INDEPENDENT AUDITOR'S REPORT REQUIRED SUPPLEMENTARY INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS EXHIBITS BASIC FINANCIAL STATEMENTS DISTRICT-WIDE FINANCIAL STATEMENTS A STATEMENT OF NET POSITION B STATEMENT OF ACTIVITIES FUND FINANCIAL STATEMENTS C BALANCE SHEET GOVERNMENTAL FUNDS D RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION E STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS F RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES G STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS H STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS I NOTES TO THE BASIC FINANCIAL STATEMENTS SCHEDULES REQUIRED SUPPLEMENTARY INFORMATION 1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND Page i 1 2 4 5 6 7 8 9 11 27 MITCHELL COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION I FINANCIAL SCHEDULES SUPPLEMENTARY INFORMATION 2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 3 SCHEDULE OF STATE REVENUE 4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 5 ALLOTMENTS AND EXPENDITURES GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM Page 28 30 31 33 SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB 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 Greg S. Griffin STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 February 28, 2014 Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Mitchell County Board of Education INDEPENDENT AUDITOR'S REPORT Ladies and Gentlemen: Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information (Exhibits A through I) of the Mitchell County Board of Education, as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise the Board's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of Baconton Parents and Citizens for Better Education, Inc., DBA Baconton Community Charter School, which is a discretely presented component unit. Those financial statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Baconton Community Charter School is based solely on the report of other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. 2013ARL-12 An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, based on our audit and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the Mitchell County Board of Education, as of June 30, 2013, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As described in Note 2 to the financial statements, in 2013, the Mitchell County Board of Education adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 61, The Financial Reporting Entity: Omnibus - An Amendment of GASB Statements No. 14 and No. 34 and GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. Our opinion is not modified with respect to these matters. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis and the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through vii and page 27 respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. 2013ARL-12 Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Mitchell County Board of Education's basic financial statements. The accompanying supplementary information, consisting of Schedules 2 through 5, is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements. The accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated February 28, 2014, on our consideration of the Mitchell County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Mitchell County Board of Education's internal control over financial reporting and compliance. A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24. Respectfully submitted, GSG:as 2013ARL-12 Greg S. Griffin State Auditor MITCHELL COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 The discussion and analysis of the Mitchell 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, 2013. 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 to enhance their understanding of the School District's financial performance. Financial Highlights Key financial highlights for 2013 are as follows: In total, net position decreased $0.95 million which represents a 3.5 percent decrease from fiscal year 2012. This total decrease is due to governmental activities since the School District has no business-type activities. General revenues accounted for $11.9 million in revenue or 45.4 percent of all revenues. Program specific revenues in the form of charges for services and sales, grants and contributions accounted for $14.3 million or 54.6 percent of total revenues of $26.2 million. The School District had $27.1 million in expenses related to governmental activities; however, $14.3 million of these expenses were offset by program specific charges for services, grants or contributions. General revenues (primarily taxes) of $11.9 million and a healthy beginning equity were adequate to provide for these programs. Among major funds, the general fund had $24.5 million in revenues and $25.3 million in expenditures. Using the Basic Financial Statements This annual report consists of a series of financial statements and notes to those statements. These statements are organized so the reader can understand the Mitchell County Board of Education as a financial whole, or as an entire operating entity. The Statement of Net Position and Statement of Activities provide information about the activities of the whole School District, presenting both an aggregate view of the School District's finances and a longer-term view of those finances. Fund financial statements provide the next level of detail. For governmental funds, these statements tell how services were financed in the short-term as well as what remains for future spending. The fund financial statements also look at the School District's most significant funds with all other nonmajor funds presented in total in one column. The general fund is by far the most significant fund in the case of the Mitchell County Board of Education. Reporting the School District as a Whole Statement of Net Position and the Statement of Activities While these documents contain the large number of funds used by the School District to provide programs and activities, the view of the School System as a whole looks at all financial transactions and asks the question, "How did we do financially during fiscal year 2013?" The Statement of Net Position and the Statement of Activities answer this question. These statements include all assets and all liabilities using the accrual basis of accounting similar to the accounting used by most private-sector companies. This basis of accounting takes into account all of the current year's revenues and expenses regardless of when cash is received or paid. i MITCHELL COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 These two statements report the School District's net position and changes in those assets. This change in net position is important because it tells the reader whether, for the School District as a whole, the financial position of the School District has improved or diminished. The causes of this change may be the result of many factors, some financial, some not. Nonfinancial factors include the School District's property tax base, facility conditions, required educational programs and other factors. In the Statement of Net Position and the Statement of Activities, the Board has one distinct type of activity: Governmental Activities - All of the School District's programs and services are reported here including instruction, support services, operation and maintenance of plant, pupil transportation, food service, school activity accounts and various others. Reporting the School District's Most Significant Funds Fund Financial Statements Although the School District uses many funds to account for a multitude of transactions, the fund financial statements focus on the School District's most significant funds. The School District's major governmental funds are the General Fund, the Capital Projects Fund, and the Debt Service Fund. Governmental Funds Most of the School District's activities are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end available for spending in future periods. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the School District's general government operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The relationship (or differences) between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds is reconciled in the financial statements. Fiduciary Funds The School District is the trustee, or fiduciary, for assets that belong to others such as school clubs and organizations within the principals' accounts. The district is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The district excludes these activities from the district-wide financial statements because it cannot use these assets to finance its operations. The School District as a Whole The perspective of the Statement of Net Position is of the School District as a whole. Table 1 provides a summary of the School District's net position for fiscal year 2013. ii MITCHELL COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Assets Current and Other Assets Capital Assets, Net Total Assets Liabilities Current and Other Liabilities Long-Term Liabilities Total Liabilities Net Position Net Investments in Capital Assets Restricted Unrestricted Total Net Position Table 1 Net Position (In Thousands) $ $ $ $ $ $ Governmental Activities Fiscal Fiscal Year 2013 Year 2012 9,773 $ 29,520 39,293 $ 10,993 30,082 41,075 2,189 $ 11,180 13,369 $ 2,052 12,145 14,197 18,340 $ 5,450 2,134 25,924 $ 17,937 6,031 2,910 26,878 Total net position decreased $0.9 million. Table 2 shows the changes in net position for fiscal year 2012 and 2013. iii MITCHELL COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Table 2 Change in Net Position (In Thousands) Revenues Program Revenues: Charges for Services and Sales $ Operating Grants and Contributions Capital Grants and Contributions Governmental Activities Fiscal Year Fiscal Year 2013 2012 248 $ 14,032 0 279 13,697 153 Total Program Revenues $ 14,280 $ 14,129 General Revenues: Taxes Property Taxes For Maintenance and Operations Other Taxes Sales Taxes Special Purpose Local Option Sales Tax For Debt Service For Capital Projects Local Option Sales Tax for M/O Other Taxes Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous $ 7,804 $ 7,479 13 12 1,264 332 2,053 89 56 300 1,260 667 2,452 55 191 164 509 Total General Revenues $ 11,911 $ 12,789 Total Revenues $ 26,191 $ 26,918 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 Services Food Services Interest on Short-Term and Long-Term Debt $ 18,401 $ 17,043 969 438 371 390 1,266 234 1,588 1,356 165 136 881 360 352 369 1,232 231 1,581 1,263 216 125 52 1,478 300 50 1,358 332 Total Expenses $ 27,144 $ 25,393 Increase in Net Position $ -953 $ 1,525 iv MITCHELL COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Governmental Activities Instruction comprises 67.8 percent of governmental program expenses. Interest expense comprises 1.1 percent of governmental program expenses. Interest expense was attributable to the outstanding bonds for capital projects. The Statement of Activities shows the cost of program services and the charges for services and grants offsetting those services. Table 3 shows, for governmental activities, the total cost of services and the net cost of services. That is, it identifies the cost of these services supported by tax revenue and unrestricted State entitlements. Table 3 Governmental Activities (In Thousands) Total Cost of Services Fiscal Fiscal Year 2013 Year 2012 Net Cost of Services Fiscal Fiscal Year 2013 Year 2012 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 Services Food Services Interest on Short-Term and Long-Term Debt $ 18,401 $ 17,043 $ 969 438 371 390 1,266 234 1,588 1,356 165 136 881 360 352 369 1,232 231 1,581 1,263 216 125 52 1,478 300 50 1,358 332 8,686 $ 805 279 54 -107 522 231 867 886 164 123 52 3 300 7,915 622 154 54 -104 448 200 785 552 196 111 50 -50 332 Total Expenses $ 27,144 $ 25,393 $ 12,865 $ 11,265 Although program revenues make up a majority of the revenues, the School District is still dependent upon tax revenues for governmental activities. Over 47.2 percent of instruction activities are supported through taxes and other general revenues; for all governmental activities general revenue support is 47.40 percent. The School District's Funds The School District's governmental funds are accounted for using the modified accrual basis of accounting. Total governmental funds had revenues and other financing sources of $26.17 million and expenditures and other financing uses of $27.55 million. The general fund had an overall decrease of $0.75 million. The capital projects fund had an overall decrease of $0.67 million. The debt service fund stayed relatively the same. v MITCHELL COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 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 2013, the School District amended its general fund budget as needed. The School District uses site-based budgeting. The budgeting systems are designed to tightly control total site budgets but provide flexibility for site management. For the General Fund, the final budgeted revenues of $23.8 million exceeded the original budgeted amount of $23.7 million by $0.1 million. The actual revenues of $24.5 million were above the final budgeted amount by $0.7 million. The final budgeted expenditures of $25.9 million exceeded the original budgeted amount of $25.3 million by $0.6 million. The actual expenditures of $25.3 million were under the final budgeted amount by $0.6 million. General Fund revenues were $0.75 million less than expenditures. The School District had made a concerted effort to raise fund balance in anticipation of this loss, and this result is evidence of their work. Capital Assets and Debt Administration Capital Assets At the end of fiscal year 2013, the School District had $29.5 million invested in capital assets, all in governmental activities. Table 4 indicates balances at June 30, 2013. Table 4 Capital Assets (Net of Depreciation, in Thousands) Governmental Activities Fiscal Fiscal Year 2013 Year 2012 Land $ Land Improvements Construction In Progress Building and Improvements Equipment 4,975 $ 732 435 22,959 419 4,975 801 295 23,492 519 Debt Total $ 29,520 $ 30,082 At June 30, 2013, the Board had $11.2 million in bonds outstanding with $1.0 million due within one year. vi MITCHELL COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 General Obligation Bonds Table 5 Debt at June 30 (in Thousands) Governmental Activities Fiscal Fiscal Year 2013 Year 2012 $ 11,180 $ 12,145 Current Issues The Mitchell County School District has faced severe financial challenges in recent years but has remained relatively stable and financially sound. The financial challenges have included rising costs in employee benefits, the continued state formula allotment reductions, and a slow decline in student enrollment (FTE). The School District's current millage rate has remained at 14.984 mills since 2011. Student enrollment is a factor in the State's education funding formula. According to the State's funding formula, student enrollment is converted to a "Full Time Equivalent (FTE)" count. As student enrollment and FTE decrease so does State funding. The student enrollment for fiscal year 2013 and the three years prior is as follows: Fiscal Year 2010 Fiscal Year 2011 Fiscal Year 2012 Fiscal Year 2013 2,428 2,389 2,298 2,361 The amended formula adjustment, the reduction in state funding, for fiscal year 2013 was $1.6 million. The School District has reduced the number of faculty and staff through normal attrition and nontenured positions to help with the budget shortfall. The Mitchell County School District recognizes its responsibility to the taxpayers in overseeing the spending of Federal, state and local funds. The School District is striving to maintain sound fiscal management while emphasizing student achievement. Contacting the Board's Financial Management This financial report is designed to provide our citizens, taxpayers, investors, and creditors with a general overview of the Board's finances and to show the Board's accountability for the money it receives. If you have questions about this report or need additional information, contact Mrs. Luci Conine, Director of Business/Finance at the Mitchell County Board of Education, 108 S. Harney Street, Camilla, Georgia, 31730. vii MITCHELL COUNTY BOARD OF EDUCATION MITCHELL COUNTY BOARD OF EDUCATION STATEMENT OF NET POSITION JUNE 30, 2013 EXHIBIT "A" ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net Interest Taxes State Government Federal Government Local Other Inventories Prepaid Items Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation) Total Assets LIABILITIES Accounts Payable Salaries and Benefits Payable Short-Term Debt Retainages Payable Deposits and Unearned Revenues Long-Term Liabilities Due Within One Year Due in More Than One Year Total Liabilities NET POSITION Net Investment in Capital Assets Restricted for Continuation of Federal Programs Debt Service Capital Projects Unrestricted PRIMARY GOVERNMENT GOVERNMENTAL ACTIVITIES COMPONENT UNIT BACONTON COMMUNITY CHARTER SCHOOL $ 553,231.73 $ 7,060,260.64 43,824.97 547,295.05 1,248,224.73 246,013.90 15,622.05 58,904.10 5,409,984.79 24,109,867.78 $ 39,293,229.74 $ 242,752.00 436,637.00 5,277.00 283,333.00 50,235.00 744,135.00 1,762,369.00 $ 740,441.11 $ 1,429,859.37 18,896.10 1,005,000.00 10,175,000.00 $ 13,369,196.58 $ 26,126.00 308,641.00 290,200.00 7,630.00 32,925.00 91,693.00 757,215.00 $ 18,339,852.57 $ 324,848.13 3,743,000.27 1,382,007.98 2,134,324.21 669,752.00 335,402.00 Total Net Position $ 25,924,033.16 $ 1,005,154.00 The notes to the basic financial statements are an integral part of this statement. - 1 - MITCHELL COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2013 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 COMPONENT UNIT Baconton Community Charter School General Revenues Taxes Property Taxes For Maintenance and Operations Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Debt Services For Capital Projects Local Option Sales Tax Other Sales Tax Investment Earnings Miscellaneous Total General Revenues Change in Net Position Net Position - Beginning of Year Net Position - End of Year EXPENSES CHARGES FOR SERVICES $ 18,400,678.15 $ 968,882.69 438,139.03 370,713.40 390,434.37 1,266,329.31 233,599.36 1,587,859.38 1,356,247.65 164,729.91 136,170.60 52,135.14 150.00 1,478,245.87 300,264.59 $ 27,144,579.45 $ 131,409.55 3,961.00 112,606.21 247,976.76 $ 5,008,016.00 The notes to the basic financial statements are an integral part of this statement. - 2 - EXHIBIT "B" PROGRAM REVENUES OPERATING GRANTS AND CONTRIBUTIONS CAPITAL GRANTS AND CONTRIBUTIONS NET (EXPENSES) REVENUES AND CHANGES IN NET POSITION PRIMARY COMPONENT GOVERNMENT UNIT GOVERNMENTAL BACONTON COMMUNITY ACTIVITIES CHARTER SCHOOL $ 9,583,683.27 $ 163,985.59 159,022.71 316,713.23 497,401.06 744,246.74 2,262.51 716,877.37 470,412.15 1,245.96 13,549.77 1,362,172.17 $ 14,031,572.53 $ 0.00 $ -8,685,585.33 -804,897.10 -279,116.32 -54,000.17 106,966.69 -522,082.57 -231,336.85 -867,021.01 -885,835.50 -163,483.95 -122,620.83 -52,135.14 -150.00 -3,467.49 -300,264.59 0.00 $ -12,865,030.16 $ 2,480,431.00 $ 50,000.00 $ -2,477,585.00 $ 7,803,808.94 13,024.71 1,264,106.93 331,613.77 2,053,097.63 89,361.33 55,799.59 300,485.42 $ $ 11,911,298.32 $ $ -953,731.84 $ 26,877,765.00 $ 25,924,033.16 $ 2,096,094.00 2,096,094.00 -381,491.00 1,386,645.00 1,005,154.00 - 3 - MITCHELL COUNTY BOARD OF EDUCATION BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2013 EXHIBIT "C" ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net Interest Taxes State Government Federal Government Local Inventories Total Assets GENERAL FUND DISTRICTWIDE CAPITAL PROJECTS FUND DEBT SERVICE FUND TOTAL $ 517,167.11 $ 34,929.75 $ 1,134.87 $ 553,231.73 2,089,938.13 1,405,014.56 3,565,307.95 7,060,260.64 432,342.35 1,248,224.73 246,013.90 15,622.05 58,904.10 114,952.70 43,824.97 43,824.97 547,295.05 1,248,224.73 246,013.90 15,622.05 58,904.10 $ 4,608,212.37 $ 1,554,897.01 $ 3,610,267.79 $ 9,773,377.17 LIABILITIES AND FUND BALANCES LIABILITIES Accounts Payable Salaries and Benefits Payable Retainages Payable Deposits and Deferred Revenue Total Liabilities FUND BALANCES Nonspendable Restricted Assigned Unassigned Total Fund Balances Total Liabilities and Fund Balances $ 719,180.66 $ 1,429,859.37 18,313.31 $ 2,167,353.34 $ 21,260.45 18,896.10 40,156.55 $ 740,441.11 1,429,859.37 18,896.10 18,313.31 $ 2,207,509.89 $ 58,904.10 265,944.03 $ 1,514,740.46 $ 3,610,267.79 60,184.01 2,055,826.89 58,904.10 5,390,952.28 60,184.01 2,055,826.89 $ 2,440,859.03 $ 1,514,740.46 $ 3,610,267.79 $ 7,565,867.28 $ 4,608,212.37 $ 1,554,897.01 $ 3,610,267.79 $ 9,773,377.17 The notes to the basic financial statements are an integral part of this statement. - 4 - MITCHELL COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION JUNE 30, 2013 EXHIBIT "D" Total Fund Balances - Governmental Funds (Exhibit "C") Amounts reported for Governmental Activities in the Statement of Net Position are different because: Capital Assets used in Governmental Activities are not financial resources and therefore are not reported as assets in governmental funds. These assets consist of: Land Construction in Progress Land Improvements Buildings Equipment Accumulated Depreciation Total Capital Assets Taxes that are not available to pay for current period expenditures are deferred in the governmental funds. Property Taxes Long-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of: Bonds Payable Net Position of Governmental Activities (Exhibit "A") $ 7,565,867.28 $ 4,974,958.89 435,025.90 1,835,373.14 37,191,157.90 2,437,886.20 -17,354,549.46 29,519,852.57 18,313.31 -11,180,000.00 $ 25,924,033.16 The notes to the basic financial statements are an integral part of this statement. - 5 - MITCHELL COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2013 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 Dues and Fees Interest Total Expenditures Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending GENERAL FUND DISTRICTWIDE CAPITAL PROJECTS FUND DEBT SERVICE FUND TOTAL $ 7,798,520.34 2,142,458.96 $ 10,131,926.68 3,899,645.86 247,976.76 5,629.38 300,485.42 $ 24,526,643.40 $ 331,613.77 $ 2,714.16 $ 1,264,106.93 47,456.05 7,798,520.34 3,738,179.66 10,131,926.68 3,899,645.86 247,976.76 55,799.59 300,485.42 334,327.93 $ 1,311,562.98 $ 26,172,534.31 $ 17,021,596.34 $ 17,021,596.34 968,882.69 438,139.03 370,713.40 345,452.10 1,266,329.31 233,599.36 1,587,859.38 1,210,670.33 164,729.91 136,170.60 52,135.14 150.00 1,478,245.87 $ 1,006,391.70 968,882.69 438,139.03 370,713.40 345,452.10 1,266,329.31 233,599.36 1,587,859.38 1,210,670.33 164,729.91 136,170.60 52,135.14 150.00 1,478,245.87 1,006,391.70 $ 965,000.00 2,364.38 298,503.96 965,000.00 2,364.38 298,503.96 $ 25,274,673.46 $ 1,006,391.70 $ 1,265,868.34 $ 27,546,933.50 $ -748,030.06 $ -672,063.77 $ 45,694.64 $ -1,374,399.19 3,188,889.09 2,186,804.23 3,564,573.15 8,940,266.47 $ 2,440,859.03 $ 1,514,740.46 $ 3,610,267.79 $ 7,565,867.28 The notes to the basic financial statements are an integral part of this statement. - 6 - MITCHELL 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, 2013 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 Taxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. 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 Position. In the current year, these amounts consist of: Bond Principal Retirements $ -1,374,399.19 $ 514,308.17 -1,076,954.13 -562,645.96 18,313.31 965,000.00 Change in Net Position of Governmental Activities (Exhibit "B") $ -953,731.84 The notes to the basic financial statements are an integral part of this statement. - 7 - MITCHELL COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS JUNE 30, 2013 EXHIBIT "G" ASSETS Cash and Cash Equivalents Investments Total Assets PRIVATE PURPOSE TRUSTS AGENCY FUNDS $ 11,695.22 $ 51,030.83 10,000.00 $ 21,695.22 $ 51,030.83 LIABILITIES Funds Held for Others NET POSITION Held in Trust for Private Purposes $ 51,030.83 $ 21,695.22 Total Liabilities and Net Position $ 21,695.22 $ 0.00 The notes to the basic financial statements are an integral part of this statement. - 8 - MITCHELL COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS YEAR ENDED JUNE 30, 2013 ADDITIONS Contributions Donors Investment Earnings Interest Total Additions DEDUCTIONS Scholarships Change in Net Position Net Position - Beginning Net Position - Ending EXHIBIT "H" PRIVATE PURPOSE TRUSTS $ 1,000.00 82.38 $ 1,082.38 $ 2,250.00 $ -1,167.62 22,862.84 $ 21,695.22 The notes to the basic financial statements are an integral part of this statement. - 9 - (This page left intentionally blank) MITCHELL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2013 EXHIBIT "I" NOTE 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY REPORTING ENTITY The Mitchell County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity. DISCRETELY PRESENTED COMPONENT UNIT The non-profit organization, Baconton Parents and Citizens for Better Education, Inc., operates a charter school, Baconton Community Charter School. The Baconton Community Charter School (Charter School) is a legally separate tax-exempt component unit of Mitchell County Board of Education (School District). The Charter School was created through a contract between the School District and the Charter School whereby all State funding associated with the students attending the Charter School and certain specified local funds are turned over to the Charter School to cover the costs of operations. Because the major portion of the funding for the Charter School comes through the School District, the School District is considered financially accountable for the Charter School. The financial activities of the Charter School have been presented discretely because they provide services to third-parties outside the School District. Separate audited financial statements are available by contacting the Charter School. 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 Mitchell County Board of Education. District-wide Statements: The Statement of Net Position and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs. Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. - 11 - MITCHELL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2013 EXHIBIT "I" 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. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds. The School District reports the following major governmental funds: General Fund is the School District's primary operating fund. It accounts for and reports all financial resources not accounted for and reported in another fund. District-wide Capital Projects Fund accounts for and reports financial resources including Education Special Purpose Local Option Sales Tax (ESPLOST) that are restricted, committed or assigned to the expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets. Debt Service Fund accounts for and reports financial resources that are restricted, committed, or assigned including taxes (sales) legally restricted for the payment of general long-term principal and interest. The School District reports the following fiduciary fund types: Private Purpose Trust funds reports trust arrangements under which principal and income benefit a student selected for scholarship. Agency funds account for assets held by the School District as an agent for various funds, governments or individuals. BASIS OF ACCOUNTING The basis of accounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary 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. The School District considers all intergovernmental revenues to be available if they are collected within 120 days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities are reported as other financing sources. - 12 - MITCHELL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2013 EXHIBIT "I" 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, both restricted and unrestricted resources are available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues. NEW ACCOUNTING PRONOUNCEMENTS In fiscal year 2013, the School District adopted the Governmental Accounting Standards Board (GASB) Statement No. 60, Accounting and Financial Reporting for Service Concession Arrangements. The provisions of this Statement establish accounting and financial reporting standards for governments who enter into Service Concession Arrangements (SCA) with other governmental or nongovernmental entities. As of June 30, 2013, the School District has not entered into any arrangements that meet the qualifications to be reported as a SCA in accordance with this standard. In fiscal year 2013, the School District adopted the Governmental Accounting Standards Board (GASB) Statement No. 61, The Financial Reporting Entity: Omnibus - An Amendment of GASB Statements No. 14 and No. 34. The provisions of this Statement modify certain requirements for inclusion of component units in the financial reporting entity. The effects of the adoption of this statement did not change the reporting of the School District's discretely presented component unit, Baconton Community Charter School. There were no other applicable reporting changes for the School District. In fiscal year 2013, the School District adopted the Governmental Accounting Standards Board (GASB) Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. The provisions of this Statement incorporate certain accounting and financial reporting guidance into authoritative GASB literature. In fiscal year 2013, the School District adopted the Governmental Accounting Standards Board (GASB) Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources and Net Position. The provisions of this Statement establish financial reporting standards for the presentation of deferred outflows of resources and deferred inflows of resources and their effects on a government's net position. The School District changed its presentation of net assets to net position for fiscal year 2013. There were no other applicable reporting changes for the School District. 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. Official Code of Georgia Annotated Section 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations. INVESTMENTS Composition of Investments Investments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interestearning 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 and equity investments are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following: - 13 - MITCHELL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2013 EXHIBIT "I" 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 Georgia Fund 1 administered by the State of Georgia, Office of the State Treasurer, 7. Repurchase agreements, and 8. Obligations of other political subdivisions of the State of Georgia. The School District does not have a formal policy regarding investment policies that address credit quality risks, custodial credit risks, concentration of credit risks, interest rate risks, or foreign currency risks. RECEIVABLES Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. PROPERTY TAXES The Mitchell County Board of Commissioners adopted the property tax levy for the 2012 tax digest year (calendar year) on September 20, 2012 (levy date) based on property values as of January 1, 2012. Taxes were due on December 20, 2012 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2012 tax digest are reported as revenue in the governmental funds for fiscal year 2013. The Mitchell County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2013, for maintenance and operations amounted to $7,654,419.57. The tax millage rate levied for the 2012 tax year (calendar year) for the Mitchell County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value): School Operations 14.984 mills Additionally, Title Ad Valorem Tax revenues, at the fund reporting level, amounted to $131,076.06 during fiscal year ended June 30, 2013. SALES TAXES Local Option Sales Tax revenue, at the fund reporting level, during the fiscal year amounted to $2,053,097.63 and was recorded in the General Fund. Local Option Sales Tax is to be used for the maintenance and operation of the School District. Education Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $1,595,720.70 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. - 14 - MITCHELL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2013 EXHIBIT "I" INVENTORIES Food Inventories On the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used. CAPITAL ASSETS Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District. Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide statements are as follows: Capitalization Estimated Policy Useful Life Land Land Improvements Buildings and Improvements Equipment Intangible Assets $ 50,000.00 $ 50,000.00 $ 50,000.00 $ 50,000.00 $ 50,000.00 N/A 15 years 15 to 40 years 4 to 12 years 15 years Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives, with the exception of intangible assets which are amortized. Amortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, copyrights and internally generated software is computed using the straight-line method over the estimated useful lives of the assets, generally 15 years. GENERAL OBLIGATION BONDS The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide and fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. To conform to generally accepted accounting principles, bond premiums and discounts, as well as bond issuance costs should be amortized over the life of the bonds on the District-wide statements. The effect of this deviation is deemed to be immaterial to the fair presentation of the basic financial statements. In addition, general obligation bonds have been issued to refund existing general obligation bonds. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Position. - 15 - MITCHELL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2013 EXHIBIT "I" NET POSITION The School District's net position in the District-wide Statements is classified as follows: Net investment in capital assets - This represents the School District's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of net investment in capital assets. Restricted net position - This represents resources for which the School District is legally or contractually obligated to spend resources for continuation of Federal Programs, debt service, and capital projects in accordance with restrictions imposed by external third parties. Unrestricted net position - Unrestricted net position represents resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes. FUND BALANCES The School District's fund balances are classified as follows: Nonspendable - Amounts that cannot be spent either because they are in a nonspendable form or because they are legally or contractually required to be maintained intact. Restricted - Constraints are placed on the use of resources are either (1) externally imposed conditions by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation. Committed - Amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board of Education. The Board of Education is the School District's highest level of decision-making authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Committed fund balance also should incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements. Assigned - Amounts that are constrained by the School District's intent to be used for specific purposes, but are neither restricted nor committed. The intent should be expressed by (1) the Board of Education or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes. Unassigned - The residual classification for the General Fund. This classification represents fund balances that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the General Fund. Fund Balances of the Governmental Funds at June 30, 2013, are as follows: Nonspendable Inventories Restricted Continuation of Federal Programs $ Capital Projects Debt Service Assigned School Activity Accounts Unassigned $ 265,944.03 1,382,007.98 3,743,000.27 58,904.10 5,390,952.28 60,184.01 2,055,826.89 Fund Balance, June 30, 2013 $ 7,565,867.28 - 16 - MITCHELL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2013 EXHIBIT "I" It is the goal of the School District to achieve and maintain a committed, assigned, and unassigned fund balance in the general fund at fiscal year end of not less than 10% of expenditures, not to exceed 15% of the total budget of the subsequent fiscal year, in compliance with Official Code of Georgia Annotated Section 20-2-167(a)5. If the unassigned fund balance at fiscal year end falls below the goal, the School District shall develop a restoration plan to achieve and maintain the minimum fund balance. When multiple categories of fund balance are available for expenditure, the School District will start with the most restricted category and spend those funds first before moving down to the next category with available funds. USE OF ESTIMATES The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. NOTE 3: BUDGETARY DATA The budget is a complete financial plan for the School District's fiscal year, and is based upon careful estimates of expenditures together with probable funding sources. The budget is legally adopted each year for the general, debt service, and capital projects funds. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds is prepared and adopted by fund and function. The legal level of budgetary control was established by the Board at the aggregate fund and function level. The budget for the General Fund was prepared in accordance with accounting principles generally accepted in the United States of America. The budgetary process begins with the School District's administration presenting an initial budget for the Board's review. The administration makes revisions as necessary based on the Board's guidelines and a tentative budget is approved. After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper of general circulation in the locality, as well as the School District's website. At the next regularly scheduled meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. The approved budget is then submitted, in accordance with provisions of Official Code of Georgia Annotated section 20-2-167(c), to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end. See Schedule 1 - General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget to Actual for a detail of any over/under expenditures during the fiscal year under review. NOTE 4: DEPOSITS AND INVESTMENTS COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (O.C.G.A.) 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 of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. Section 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 percent of the daily pool balance. At June 30, 2013, $144,571.50 of deposits were not secured by surety bond, insurance or collateral as specified above. The School District is working with the affected financial institutions to ensure appropriate levels of collateral are maintained for all of the School District's deposits. - 17 - MITCHELL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2013 EXHIBIT "I" Acceptable security for deposits consists of any one of or any combination of the following: 1. Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia, 2. Insurance on accounts provided by the Federal Deposit Insurance Corporation, 3. Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia, 4. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia, 5. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose, 6. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and 7. Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association. CATEGORIZATION OF DEPOSITS Custodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2013, the bank balances were $1,875,966.96. The amounts exposed to custodial credit risk are classified into three categories as follows: Category 1 Category 2 - Category 3 - Uncollateralized, Cash collateralized with securities held by the pledging financial institution, or Cash collateralized with securities held by the pledging financial institution's trust department or agent but not in the School District's name. The School District's deposits by custodial risk category at June 30, 2013, are as follows: Custodial Credit Risk Category Bank Balance 1 $ 144,571.50 2 0.00 3 598,008.71 Total $ 742,580.21 - 18 - MITCHELL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2013 EXHIBIT "I" CATEGORIZATION OF INVESTMENTS The School District's investments as of June 30, 2013, are presented below. All investments are presented by investment type and debt securities are presented by maturity. Investment Type Fair Value Investment Maturity Less than 1 Year Debt Securities U. S. Treasuries $ U. S. Agencies Implicitly Guaranteed Municipal Obligation 2,470.89 $ 121,998.78 3,293,286.75 2,470.89 121,998.78 3,293,286.75 $ 3,417,756.42 $ 3,417,756.42 Investment Pools Office of State Treasurer Georgia Fund 1 3,642,504.22 Total Investments $ 7,060,260.64 The Georgia Fund 1, formerly referred to as LGIP, administered by the State of Georgia, Office of the State Treasurer is not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office of the State Treasurer for the Georgia Fund 1 (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1 is disclosed in the State of Georgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at http://www.audits.ga.gov/SGD/cafr.html. The Primary Liquidity Portfolio consists of Georgia Fund 1 which is not registered with the SEC as an investment company but does operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share. The pool is an AAAm rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2013, was 43 days. Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investment will adversely affect the fair value of an investment. The School District does not have a formal policy for managing interest rate risk. Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, the School District will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The School District does not have a formal policy for managing custodial credit risk for investments. At June 30, 2013, $3,417,756.42 of the School District's applicable investments were (1) uninsured and unregistered, with securities held by the counterparty's trust department or agent in the name of the School District and (2) uninsured or unregistered, with securities held by the counterparty, or by its trust department or agent, but not in the School District's name. - 19 - MITCHELL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2013 EXHIBIT "I" Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The School District does not have a formal policy for managing custodial credit risk. The investments subject to credit quality risk are reflected below: Rated Debt Investments Quality Ratings Fair Value AAA A Unrated Debt Securities U. S. Treasuries U. S. Agencies Implicitly Guaranteed Municipal Obligation Totals by Quality Ratings $ 2,470.89 $ 121,998.78 3,293,286.75 $ 3,417,756.42 $ 2.86 $ $ 3,293,286.75 2.86 $ 3,293,286.75 $ 2,468.03 121,998.78 124,466.81 Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The School District does not have a formal policy for managing concentration of credit risk. More than 5% of the School District's investments are in Municipal Bonds. This investment is 47%, respectively, of the School District's total investments. NOTE 5: NON-MONETARY TRANSACTIONS The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories NOTE 6: CAPITAL ASSETS The following is a summary of changes in the Capital Assets during the fiscal year: Governmental Activities Capital Assets, Not Being Depreciated: Land Construction Work In Progress Balances July 1, 2012 Increases Decreases Balances June 30, 2013 $ 4,974,958.89 295,181.42 $ 435,025.90 $ $ 4,974,958.89 295,181.42 435,025.90 Total Capital Assets, Not Being Depreciated $ 5,270,140.31 $ 435,025.90 $ 295,181.42 $ 5,409,984.79 Capital Assets, Being Depreciated: Buildings and Improvements Equipment Land Improvements $ 36,816,694.21 $ 2,437,886.20 1,835,373.14 374,463.69 $ 0.00 $ 37,191,157.90 2,437,886.20 1,835,373.14 Less: Accumulated Depreciation: Buildings and Improvements Equipment Land Improvements 13,323,934.18 1,919,110.14 1,034,551.01 907,905.17 100,291.42 68,757.54 14,231,839.35 2,019,401.56 1,103,308.55 Total Capital Assets, Being Depreciated, Net $ 24,812,358.22 $ -702,490.44 $ 0.00 $ 24,109,867.78 Governmental Activity Capital Assets - Net $ 30,082,498.53 $ -267,464.54 $ 295,181.42 $ 29,519,852.57 - 20 - MITCHELL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2013 EXHIBIT "I" Current year depreciation expense by function is as follows: Instruction Support Services General Administration Student Transportation Services $ $ 30,989.28 100,291.42 945,673.43 131,280.70 $ 1,076,954.13 NOTE 7: RISK MANAGEMENT The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation. The School District has obtained commercial insurance for risk of loss associated with automobile risks. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years. The School District 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, motor vehicle 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), general liability (including coverage for sexual harassment, molestation and abuse), errors and omissions, and crime. 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: Claims and Beginning of Year Changes in Claims End of Year Liability Estimates Paid Liability 2012 $ 0.00 $ 7,577.00 $ 7,577.00 $ 0.00 2013 $ 0.00 $ 38,869.00 $ 38,869.00 $ 0.00 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 of workers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Fund for its Workers' Compensation insurance coverage. Excess insurance coverage is provided through an agreement by the Fund with the Safety National Casualty Corporation to provide coverage for potential losses sustained by the Fund in excess of $550 thousand loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided by Safety National Casualty Corporation to provide coverage for potential losses sustained by the Fund in excess of $550 thousand loss per occurrence, up to $2 million. - 21 - MITCHELL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2013 EXHIBIT "I" The School District has purchased surety bonds to provide additional insurance coverage as follows: Position Covered Amount Superintendent Finance Director Bookkeepers Principals School Food Cashiers $ 30,000.00 $ 5,000.00 $ 5,000.00 $ 5,000.00 $ 5,000.00 NOTE 8: LONG-TERM DEBT GENERAL OBLIGATION DEBT OUTSTANDING General Obligation Bonds currently outstanding are as follows: Purpose Interest Rates Amount General Government - QZAB - Series 2001 0.00% General Government - Refunding - Series 2003 3.18% General Government - Series 2007 3.55% - 3.625% General Government - Series 2008 3.527% $ 3,620,000.00 435,000.00 340,000.00 6,785,000.00 $ 11,180,000.00 The changes in Long-Term Debt during the fiscal year ended June 30, 2013, were as follows: Balance July 1, 2012 Additions Governmental Funds Deductions Balance June 30, 2013 Due Within One Year G. O. Bonds $ 12,145,000.00 $ 0.00 $ 965,000.00 $ 11,180,000.00 $ 1,005,000.00 At June 30, 2013, payments due by fiscal year which includes principal and interest for these items are as follows: Fiscal Year Ended June 30: General Obligation Debt Principal Interest 2014 2015 2016 2017 2018 2019 $ 1,005,000.00 $ 4,745,000.00 1,215,000.00 1,310,000.00 1,400,000.00 1,505,000.00 265,464.96 231,194.86 191,516.10 148,663.06 102,459.36 53,081.36 Total Principal and Interest $ 11,180,000.00 $ 992,379.70 NOTE 9: ON-BEHALF PAYMENTS The School District has recognized revenues and costs in the amount of $1,290,810.59 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies. - 22 - MITCHELL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2013 EXHIBIT "I" Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Certificated Personnel In the amount of $1,214,220.00 Paid to the Teachers' Retirement System of Georgia For Teachers' Retirement System (TRS) Employer's Cost In the amount of $38,690.59 Office of State Treasurer Paid to the Public School Employees' Retirement System For Public School Employees' Retirement (PSERS) Employer's Cost In the amount of $37,900.00 Funds paid to the Georgia Department of Community Health by the Georgia Department of Education on behalf of the School District are reported as part of the Quality Basic Education revenue allotments on Schedule 3 - Schedule of State Revenue. NOTE 10: SIGNIFICANT CONTINGENT LIABILITIES Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position. The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the basic financial statements. NOTE 11: POST-EMPLOYMENT BENEFITS GEORGIA SCHOOL PERSONNEL POST-EMPLOYMENT HEALTH BENEFIT FUND Plan Description. The Georgia School Personnel Post-employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Benefit Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (O.C.G.A.) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board). The Department of Community Health, which includes the School OPEB Fund, issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts. Funding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. For members with fewer than five years of service as of January 1, 2013, contributions also vary based on years of service. On average, members with five years or more of service as of January 1, 2013, pay approximately 25 percent of the cost of the health insurance coverage. In accordance with the Board resolution dated December 8, 2011, for members with fewer than five years of service as of January 1, 2013, the State provides a premium subsidy in retirement that ranges from 0% for fewer than 10 years of service to 75% (but no greater than the subsidy percentage offered to active employees) for 30 or more years of service. The subsidy for eligible dependents ranges from 0% to 55% (but no greater than the subsidy percentage offered to dependents of active employees minus 20%). No subsidy is - 23 - MITCHELL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2013 EXHIBIT "I" available to Medicare eligible members not enrolled in a Medicare Advantage Option. The Board of Community Health sets all member premiums by resolution and in accordance with the law and applicable revenue and expense projections. Any subsidy policy adopted by the Board may be changed at any time by Board resolution and does not constitute a contract or promise of any amount of subsidy. Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected "pay-as-you-go" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30, 2013: For certificated teachers, librarians and regional educational service agencies and certain other eligible participants: July 2012 - February 2013 March 2013 - June 2013 $912.34 per member per month $937.34 per member per month For non-certificated school personnel: July 2012 - June 2013 $446.20 per member per month No additional contribution was required by the Board for fiscal year 2013 nor contributed to the School OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the School plan for other post-employment benefits and are subject to appropriation. The School District's combined active and retiree contributions to the health insurance plans, which equaled the required contribution, for the current fiscal year and the preceding two fiscal years were as follows: Fiscal Year Percentage Contributed Required Contribution 2013 2012 2011 100% 100% 100% $ 2,328,463.80 $ 1,763,791.66 $ 1,867,789.15 NOTE 12: RETIREMENT PLANS TEACHERS' RETIREMENT SYSTEM OF GEORGIA (TRS) Plan Description. The TRS is a cost-sharing multiple-employer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS. 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. - 24 - MITCHELL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2013 EXHIBIT "I" On October 25, 1996, the Board created the Supplemental Retirement Benefits Plan of the Georgia Teachers' Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1, 1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits. TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service. Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 30 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available. Funding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 10 years of service. If a member terminates with less than 10 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2013, were 6.00% of annual salary. Employer contributions required for fiscal year 2013 were 11.41% of annual salary as required by the June 30, 2010, actuarial valuation. The employer contribution rate will increase to 12.28% effective July 1, 2013. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows: Fiscal Year Percentage Contributed Required Contribution 2013 2012 2011 100% 100% 100% $ 1,240,897.12 $ 1,111,632.92 $ 1,181,572.92 PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM (PSERS) Bus drivers, lunchroom personnel, and maintenance and custodial personnel are members of the Public School Employees' Retirement System of Georgia. The System is funded by contributions by the employees and by the State of Georgia. The School District makes no contribution to this plan. - 25 - (This page left intentionally blank) MITCHELL COUNTY BOARD OF EDUCATION GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2013 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 Total Expenditures Net Change in Fund Balances Fund Balances - Beginning Adjustments Fund Balances - Ending NONAPPROPRIATED BUDGETS ORIGINAL (1) FINAL (1) ACTUAL AMOUNTS VARIANCE OVER/UNDER $ 7,512,000.00 $ 7,512,000.00 $ 7,798,520.34 $ 286,520.34 2,325,000.00 2,325,000.00 2,142,458.96 -182,541.04 9,772,254.50 9,794,879.50 10,131,926.68 337,047.18 3,876,480.00 4,032,104.00 3,899,645.86 -132,458.14 133,550.00 133,550.00 247,976.76 114,426.76 3,000.00 3,000.00 5,629.38 2,629.38 32,000.00 29,000.00 300,485.42 271,485.42 $ 23,654,284.50 $ 23,829,533.50 $ 24,526,643.40 $ 697,109.90 $ 16,262,422.67 $ 16,805,091.41 $ 17,021,596.34 $ -216,504.93 839,121.00 541,189.74 363,983.00 506,098.00 1,312,540.00 265,600.00 1,738,818.00 1,377,423.50 503,026.59 29,838.00 1,560,506.00 875,758.00 540,022.92 364,108.00 507,897.00 1,308,354.08 265,600.00 1,728,100.00 1,388,562.50 503,026.59 28,789.00 1,560,506.00 968,882.69 438,139.03 370,713.40 345,452.10 1,266,329.31 233,599.36 1,587,859.38 1,210,670.33 164,729.91 136,170.60 52,135.14 150.00 1,478,245.87 -93,124.69 101,883.89 -6,605.40 162,444.90 42,024.77 32,000.64 140,240.62 177,892.17 338,296.68 -107,381.60 -52,135.14 -150.00 82,260.13 $ 25,300,566.50 $ 25,875,815.50 $ 25,274,673.46 $ 601,142.04 $ -1,646,282.00 $ -2,046,282.00 $ -748,030.06 $ 1,298,251.94 3,188,889.09 3,188,889.09 3,188,889.09 0.00 12,519.36 -12,519.36 $ 1,542,607.09 $ 1,155,126.45 $ 2,440,859.03 $ 1,285,732.58 Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual (1) Original and Final Budget amounts do not include the actual revenues ($237,147.14) or expenditures ($234,378.27) of the various principal accounts. The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. See notes to the basic financial statements. - 27 - MITCHELL COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2013 SCHEDULE "2" FUNDING AGENCY PROGRAM/GRANT Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program Total Child Nutrition Cluster Other Programs Pass-Through From Georgia Department of Education Food Services Fresh Fruit and Vegetable Program Total U. S. Department of Agriculture Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants Total Special Education Cluster Title I, Part A Cluster Pass-Through From Georgia Department of Education Title I Grants to Local Educational Agencies Pass-Through From Pelham City Schools Title I Grants to Local Educational Agencies Total Title I, Part A Cluster Other Programs Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Education Jobs Fund Improving Teacher Quality State Grants Migrant Education - State Grant Program Rural Education Total Other Programs Total U. S. Department of Education Defense, U. S. Department of Direct Department of the Air Force R.O.T.C. Program CFDA NUMBER PASSTHROUGH ENTITY ID NUMBER EXPENDITURES IN PERIOD * 10.553 * 10.555 N/A (2) N/A $ 1,405,141.85 (1) $ 1,405,141.85 10.582 N/A 47,396.27 $ 1,452,538.12 84.027 84.173 N/A $ 562,114.17 N/A 24,480.00 $ 586,594.17 * 84.010 * 84.010 N/A $ 1,458,623.73 (3) N/A 1,964.00 $ 1,460,587.73 84.048 84.410 * 84.367 84.011 84.358 N/A $ 40,659.00 N/A 929.00 N/A 301,716.81 N/A 44,037.81 N/A 58,189.78 $ 445,532.40 $ 2,492,714.30 $ 80,617.48 Total Expenditures of Federal Awards N/A = Not Available $ 4,025,869.90 - 28 - MITCHELL COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2013 SCHEDULE "2" Notes to the Schedule of Expenditures of Federal Awards (1) Includes the Federally assigned value of donated commodities for the Food Donation Program in the amount of $84,145.25. (2) Expenditures for the funds earned on the School Breakfast Program ($341,402.76) were not maintained separately and are included in the 2013 National School Lunch Program. (3) Includes Federal Assistance of $196,121.00, provided to subrecipients. Major Programs are identified by an asterisk (*) in front of the CFDA number. The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Mitchell County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. See notes to the basic financial statements. - 29 - MITCHELL COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2013 AGENCY/FUNDING GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program Education, Georgia Department of Quality Basic Education (1) Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle Grades (6-8) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Amended Formula Adjustment Categorical Grants Nursing Services Other State Programs Food Services Math and Science Supplements Move on When Ready Preschool Handicapped Program Pupil Transportation - State Bonds Teachers' Retirement Vocational Education Office of the State Treasurer Public School Employees' Retirement OTHER Rural School and Community Trust Annenberg Grant Albany State University Net-Q Programs (1) Payments to the Georgia Department of Community Health by the Georgia Department of Education on behalf of the School District in the amount of $1,214,220.00 are included as part of the Quality Basic Education revenue allotments. above. See notes to the basic financial statements. - 30 - SCHEDULE "3" GOVERNMENTAL FUND TYPE GENERAL FUND $ 334,546.54 996,120.00 12,421.00 1,982,416.00 111,024.00 865,867.00 55,606.00 480,220.00 914,289.00 818,417.00 575,948.00 1,265,369.00 143,539.00 286,228.00 100,786.00 23,203.00 254,059.00 79,159.00 44,530.00 397,727.00 591,950.00 571,208.00 -1,636,108.00 52,755.00 36,366.00 70,266.88 100.00 52,781.00 414,137.00 38,690.59 86,905.67 37,900.00 40,000.00 33,500.00 $ 10,131,926.68 MITCHELL COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS YEAR ENDED JUNE 30, 2013 SCHEDULE "4" PROJECT ORIGINAL ESTIMATED COST (1) CURRENT ESTIMATED COSTS (2) AMOUNT EXPENDED IN CURRENT YEAR (3) (4) AMOUNT EXPENDED IN PRIOR YEARS (3) (4) TOTAL COMPLETION COST EXCESS PROCEEDS NOT EXPENDED ESTIMATED COMPLETION DATE SPLOST II The renovation, repairing, improving, and equipping of Mitchell County Elementary School, Mitchell-Baker High School, and other buildings and facilities useful or desirable in connection therewith, and/or the repayment of the principal of certain Mitchell County School District, Georgia General Obligation Qualified Zone Academy Bonds, if issued, due in 2014 and bearing interest at the rate of zero percent (0%) per annum, $ 3,620,000.00 $ 609,283.46 $ 0.00 $ 609,283.46 $ 0.00 $ 0.00 6/30/2014 SPLOST III The acquiring, constructing and equipping a new elementary school; $ 4,137,228.15 $ 14,821,065.56 $ 271,791.96 $ 14,549,273.60 $ 14,821,065.56 Completed rehabilitating, repairing, renovating, extending and improving existing schools and related facilities useful or desirable in connection therewith, including without limitation, additional classrooms, roof replacements and repairs, mechanical system repairs and replacements, wiring and infrastructure modifications, renovations and improvements to physical education and athletic facilities; 1,447,597.00 1,522,513.74 605,068.30 917,445.44 6/30/2014 acquiring and installing system-wide instructional and administrative technology, safety and security equipment; 0.00 211,438.16 35,838.70 175,599.46 6/30/2014 acquiring vocational, fine arts, physical education and athletic equipment; 0.00 38,085.00 38,085.00 0.00 6/30/2014 acquisition of school buses and maintenance and transportation facilities and equipment; 0.00 27,767.64 10,244.97 17,522.67 6/30/2014 acquiring any necessary property, both real and person and acquiring any necessary or desirable rights in connection therewith; 0.00 0.00 0.00 0.00 6/30/2014 and to fund the payment of principal and interest on the Series 2003 Bonds commencing on September 1, 2008 through March 1, 2013. 2,415,174.85 2,415,174.90 431,712.00 1,983,462.90 2,415,174.90 Completed Totals SPLOST III $ 8,000,000.00 $ 19,036,045.00 $ 1,392,740.93 $ 17,643,304.07 $ 17,236,240.46 $ 0.00 SPLOST IV The retiring outstanding general obligation debt of the Mitchell School District previously incurred and issued with respect to capital outlay projects in the principal and interest amount of $6,994,298, comprised of portions of the Mitchell School District's Series 2003, 2007, and 2008 general obligation bonds coming due in the years 2014 through 2018; $ 6,994,298.00 $ 0.00 $ 0.00 $ 0.00 $ 6/30/2018 Making system-wide technology improvements, including but not limited to, the acquisition and installation of instruction technology, security, and information systems hardware and associated software and accessories, and infrastructure at all schools and selected other facilities; 2,520,646.00 298,862.38 298,862.38 0.00 6/30/2017 and replacing, purchasing, or upgrading capital equipment including, but not limited to, desks, chairs, copiers, tables, school buses, security equipment and laboratory equipment. 0.00 0.00 0.00 0.00 6/30/2017 Totals SPLOST IV $ 9,514,944.00 $ 298,862.38 $ 298,862.38 $ 0.00 $ 0.00 $ 0.00 $ 21,134,944.00 $ 19,944,190.84 $ 1,691,603.31 $ 18,252,587.53 $ 17,236,240.46 $ 0.00 - 31 - MITCHELL COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS YEAR ENDED JUNE 30, 2013 SCHEDULE "4" (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 Mitchell County approved the imposition of a 1% sales tax to fund the above projects and retire associated debt. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects. (4) The Series 1994 Bonds were retired through the sale of Series 2003 Refunding Bond Issue. The School District will utilize the SPLOST proceeds budgeted for this project, plus any excess SPLOST proceeds to retire the Series 2003 Refunding Bond Issue. See notes to the basic financial statements. - 32 - MITCHELL COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2013 SCHEDULE "5" DESCRIPTION Direct Instructional Programs Kindergarten Program Kindergarten Program-Early Intervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle 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 III Category IV Category V Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) TOTAL DIRECT INSTRUCTIONAL PROGRAMS Media Center Program Staff and Professional Development ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) (2) (3) ELIGIBLE QBE PROGRAM COSTS SALARIES OPERATIONS TOTAL $ 1,207,950.00 $ 617,031.58 $ 6,971.38 $ 624,002.96 21,383.00 2,434,516.00 2,086,776.44 26,022.22 2,112,798.66 149,783.00 175.46 175.46 1,083,038.00 961,616.34 10,182.84 971,799.18 84,458.00 591,678.00 1,155,401.00 1,006,410.00 687,732.00 1,568,935.00 170,619.00 344,701.00 125,070.00 28,806.00 1,117,401.72 1,505,835.85 480,419.88 47,932.18 327,621.43 707,627.89 123,378.54 37,177.16 70,580.31 229,675.38 67,305.38 98,542.68 26,386.77 61,688.94 37,794.22 5,432.11 2,102.21 1,143,788.49 1,567,524.79 518,214.10 47,932.18 327,621.43 707,627.89 123,378.54 37,177.16 76,012.42 229,675.38 67,305.38 100,644.89 $ 10,660,480.00 $ 8,479,098.22 $ 176,580.69 $ 8,655,678.91 313,312.00 55,058.00 297,551.54 3,275.83 32,176.06 35,050.39 329,727.60 38,326.22 TOTAL QBE FORMULA FUNDS $ 11,028,850.00 $ 8,779,925.59 $ 243,807.14 $ 9,023,732.73 (1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State amended formula adjustment. (3) Allotments do not include the State Health payments made by GDOE to the Department of Community Health for the certified employees. See notes to the basic financial statements. - 33 - SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS Greg S. Griffin STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 February 28, 2014 Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Mitchell County Board of Education INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Ladies and Gentlemen: We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Mitchell County Board of Education as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise Mitchell County Board of Education's basic financial statements and have issued our report thereon dated February 28, 2014. Our report includes a reference to other auditors who audited the financial statements of the discretely presented component unit, as described in our report on Mitchell County Board of Education's financial statements. This report does not include the results of other auditors' testing of internal control over financial reporting or compliance and other matters that are reported on separately by those auditors. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Mitchell County Board of Education's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Mitchell County Board of Education's internal control. Accordingly, we do not express an opinion on the effectiveness of the Mitchell County Board of Education's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. 2013YB-11 Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether Mitchell County Board of Education's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Respectfully submitted, GSG:as 2013YB-11 Greg S. Griffin State Auditor Greg S. Griffin STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 February 28, 2014 Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Mitchell County Board of Education INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133 Ladies and Gentlemen: Report on Compliance for Each Major Federal Program We have audited Mitchell County Board of Education's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2013. Mitchell County Board of Education's major Federal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs. Management's Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its Federal programs. Auditor's Responsibility Our responsibility is to express an opinion on compliance for each of Mitchell County Board of Education's major Federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Mitchell County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major Federal program. However, our audit does not provide a legal determination of Mitchell County Board of Education's compliance. 2013SA-10 Opinion on Each Major Federal Program In our opinion, the Mitchell County Board of Education complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2013. Report on Internal Control over Compliance Management of Mitchell County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Mitchell County Board of Education's internal control over compliance with the types of requirements that could have a direct and material effect on each major Federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major Federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Mitchell County Board of Education's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a Federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a Federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a Federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose. Respectfully submitted, GSG:as 2013SA-10 Greg S. Griffin State Auditor SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS MITCHELL COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2013 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported. SECTION IV FINDINGS AND QUESTIONED COSTS MITCHELL COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2013 I SUMMARY OF AUDITOR'S RESULTS Financial Statements Type of auditor's report issue: Governmental Activities; General Fund; Capital Projects Fund; Debt Service Fund; Aggregate Remaining Fund Information, Discretely Presented Component Unit Unmodified Internal control over financial reporting: Material weakness identified? Significant deficiency identified? No None Reported Noncompliance material to financial statements noted: No Federal Awards Internal Control over major programs: Material weakness identified? Significant deficiency identified? No None Reported Type of auditor's report issued on compliance for major programs: All major programs Unmodified Any audit findings disclosed that are required to be reported in accordance with OMB Circular A-133, Section 510(a)? No Identification of major programs: CFDA Numbers Name of Federal Program or Cluster 10.553, 10.555 84.010 84.367 Child Nutrition Cluster Title I, Part A Cluster Improving Teacher Quality State Grants Dollar threshold used to distinguish between Type A and Type B programs: $300,000.00 Auditee qualified as low-risk auditee? No II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.