Monroe County Board of Education, Forsyth, Georgia, annual financial report for the fiscal year ended 2014 June 30 (including independent auditor's reports)

MONROE COUNTY BOARD OF EDUCATION
FORSYTH, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2014
(Including Independent Auditor's Reports)

MONROE 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 3 4 7 8 10 11 12 13
31

MONROE 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
32 33 34 35

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY 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
May 12, 2015

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Monroe 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, each major fund, and the aggregate remaining fund information (Exhibits A through I) of the Monroe County Board of Education, of and for the year ended June 30, 2014, 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 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.
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
2014ARL-11

includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, the basic financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Monroe County Board of Education, as of June 30, 2014, 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 2014 the Monroe County Board of Education adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 65, Items Previously Reported as Assets and Liabilities. Our opinion is not modified with respect to this matter.
As discussed in Note 1 to the financial statements, in 2014, the Monroe County Board of Education restated the prior period financial statements to correct an error. Our opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis and the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through vii and page 31 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.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Monroe County Board of Education's basic financial statements. The accompanying supplementary information, consisting of Schedules 1 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.
2014ARL-11

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 Governm ent Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated May 12, 2015, on our consideration of the Monroe 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 Monroe 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:jt 2014ARL-11

Greg S. Griffin State Auditor

MONROE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014
The discussion and analysis of the Monroe 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, 2014. 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 2014 are as follows:
After the restatement disclosed in Note 2 of the Notes to the Basic Financial Statements, in total, net position increased $0.63 million which represents a 1.2 percent increase from fiscal year 2013. While the School District received an increase in property tax revenues, this increase was somewhat offset by a special item related to a change in the capitalization threshold for capital assets. The total increase in net position is due to governmental activities since the School District has no business-type activities.
General revenues accounted for $25.5 million in revenue or 57.4 percent of all revenues. Program specific revenues in the form of charges for services and sales, grants and contributions accounted for $18.9 million or 42.6 percent of total revenues of $44.4 million.
The School District had $43.8 million in expenses related to governmental activities; however, $18.9 million of these expenses were offset by program specific charges for services, grants or contributions. General revenues (primarily taxes) of $25.5 million were adequate to provide for these programs.
Among major funds, the general fund had $41.4 million in revenues and $40.6 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 Monroe 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 longerterm 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 Monroe 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 2014?" 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
i

MONROE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014
companies. This basis of accounting takes into account all of the current year's revenues and expenses regardless of when cash is received or paid.
These two statements report the School District's net position and changes in net position. This change in net position is important because it tells the reader whether, for the School District as a whole, the financial position of the School District has improved or diminished. The causes of this change may be the result of many factors, some financial, some not. Non-financial factors include the School District's property tax base, facility conditions, required educational programs and other factors.
In the Statement of Net Position and the Statement of Activities, the 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, after school program, 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 position 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 position 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 position 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 2014.
ii

MONROE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014

Assets Current and Other Assets Capital Assets, Net
Total Assets
Liabilities Current and Other Liabilities Long-Term Liabilities
Total Liabilities

Table 1 Net Position

Governmental Activities

Fiscal

Fiscal

Year 2014

Year 2013 (1)

$ 19,704,519.76 $ 48,829,805.65

20,845,063.36 49,748,184.66

68,534,325.41

70,593,248.02

9,649,707.08 5,188,762.11
14,838,469.19

9,044,089.84 8,650,967.66
17,695,057.50

Net Assets Net Invested in Capital Assets Restricted Unrestricted
Total Net Position

43,056,304.99 6,382,459.87 4,257,091.36

43,218,382.65 9,336,525.96 343,281.91

$ 53,695,856.22 $ 52,898,190.52

(1) Fiscal year 2013 balances do not reflect the effects of the restatement of Net Position. See Note 2 in the Notes to the Basic Financial Statements for additional information.
After the restatement disclosed in Note 2 of the Notes to the Basic Financial Statements, the total net position increased $0.63 million.
Table 2 shows the changes in net position for fiscal year 2013 and 2014.

iii

MONROE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014

Table 2 Change in Net Position
Revenues Program Revenues: Charges for Services and Sales Operating Grants and Contributions

Governmental Activities

Fiscal Year

Fiscal Year

2014

2013 (1)

$

880,778.04 $ 1,037,015.73

18,042,578.40

17,989,097.43

Total Program Revenues

18,923,356.44

19,026,113.16

General Revenues: Taxes Property Taxes For Maintenance and Operations Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Investment Earnings Miscellaneous
Special Items Reduction in Capital Assets (Net) Due to Change in Capitalization Policy

21,880,411.56 28,218.10

19,999,852.07 27,247.62

4,062,276.61 180,721.68 13,193.93 459,440.14

4,848,026.78 210,909.26 12,516.04 617,242.14

-1,150,955.03

Total General Revenues & Special Items

25,473,306.99

25,715,793.91

Total Revenues

44,396,663.43

44,741,907.07

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

25,891,854.83
1,253,699.51 1,536,807.11
666,964.75 961,212.82 1,949,978.14 465,992.39 4,415,709.20 3,491,586.11
22,953.60 73,654.94
455,762.86 2,347,359.88
232,961.48

25,920,991.01
1,077,329.69 1,576,329.01
686,392.20 975,298.12 1,935,596.11 488,374.42 4,466,743.41 3,250,256.62
25,091.90 130,598.80
805,140.01 2,361,093.15
10,977.04

Total Expenses

43,766,497.62

43,710,211.49

Increase in Net Position

$

630,165.81 $ 1,031,695.58

(1) Fiscal year 2013 balances do not reflect the effects of the restatement of Net Position. See Note 2 in the Notes to the Basic Financial Statements for additional information.

iv

MONROE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014

Governmental Activities
Instruction comprises 59.2 percent of governmental program expenses. Interest expense comprises less than 1 percent of governmental program expenses. Interest expense was attributable to the outstanding bonds and capital leases used 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

Total Cost of Services

Fiscal

Fiscal

Year 2014

Year 2013 (1)

Net Cost of Services

Fiscal

Fiscal

Year 2014

Year 2013 (1)

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

$ 25,891,854.83 $ 25,920,991.01 $ 14,197,358.19 $ 15,021,791.62

1,253,699.51 1,536,807.11
666,964.75 961,212.82 1,949,978.14 465,992.39 4,415,709.20 3,491,586.11 22,953.60 73,654.94

1,077,329.69 1,576,329.01
686,392.20 975,298.12 1,935,596.11 488,374.42 4,466,743.41 3,250,256.62 25,091.90 130,598.80

1,085,863.45 872,638.52 164,403.75 298,643.72 943,335.14 460,677.62
3,198,053.64 2,719,994.84
22,953.60

821,649.37 789,566.71 124,335.77 178,021.29 756,578.66 463,810.29 3,154,053.56 2,379,099.27 25,091.90
-3.47

455,762.86 2,347,359.88
232,961.48

805,140.01 2,361,093.15
10,977.04

455,762.86 190,494.37 232,961.48

799,933.39 159,192.93 10,977.04

Total Expenses

$ 43,766,497.62 $ 43,710,211.49 $ 24,843,141.18 $ 24,684,098.33

(1) Fiscal year 2013 balances do not reflect the effects of the restatement of Net Position. See Note 2 in the Notes to the Basic Financial Statements for additional information.
Although program revenues make up a majority of the revenues, the School District is still dependent upon tax revenues for governmental activities. Over 54 percent of instruction activities are supported through taxes and other general revenues; for all governmental activities general revenue support is 57 percent.

v

MONROE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014

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 $48.9 million and expenditures and other financing uses of $50.8 million. The capital projects fund had an overall decrease of $2.6 million due to the ongoing construction and renovation program. The general fund had an overall increase of $0.7 million. The increase in the general fund for the year is due mostly to an increase in property tax revenue. The debt service fund remained virtually the same.

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 2014, 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 $36.4 million exceeded the original budgeted amount of $35.3 million by $1.1 million. The actual revenues of $41.4 million were above the final budgeted amount by $5.0 million mostly due to receiving more than anticipated property tax and state revenues.

The final budgeted expenditures of $40.0 million exceeded the original budgeted amount of $39.1 million by $0.9 million. The actual expenditures of $40.6 million were above the final budgeted amount by $0.6 million.

General Fund expenditures exceeded revenues by $0.9 million. The School District has made a concerted effort to maintain fund balance in anticipation of future needs.

Capital Assets and Debt Administration

Capital Assets
At the end of fiscal year 2014, the School District had $48.8 million invested in capital position, all in governmental activities. The School District had various renovation and improvement projects during the fiscal year that accounted for additions to capital assets of $2,396,488.04. These additions to capital assets were offset by deletions to capital assets of $1,150,955.03 related to a change in the capitalization threshold and depreciation expense of $2,163,912.02. In all, capital assets decreased during the year by $919,379.01. Table 4 indicates balances at June 30, 2013 and June 30, 2014.

Table 4 Capital Assets (Net of Depreciation)

Governmental Activities

Fiscal

Fiscal

Year 2014

Year 2013

Land Construction in Progress Building and Improvements Equipment Land Improvements

$ 2,319,362.00 $ 1,287,238.60
42,504,156.07 2,378,831.09 340,217.89

2,319,362.00
43,797,238.30 3,304,408.00 327,176.36

Total

$ 48,829,805.65 $
vi

49,748,184.66

MONROE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014

Debt
At June 30, 2014, the Board had $8.29 million in bonds outstanding with $3.285 million due within one year.
Table 5 Debt at June 30

Governmental Activities

Fiscal

Fiscal

Year 2014

Year 2013

General Obligation Bonds

$

8,290,000 $

11,460,000

Current Issues

The Monroe 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, a slow decline in student enrollment (FTE), and a declining local tax digest.

The District's current millage rate remained at 15.342 mills the same as in 2013. The amount of taxes collected per mill has increased from $1,347,251 to $1,418,941 is attributable to positive changes in the digest.

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 2014 and the three years prior is as follows:

Fiscal Year 2012 Fiscal Year 2013 Fiscal Year 2014

3,833 3,884 3,820

The amended formula adjustment, the reduction in state funding, for fiscal year 2014 was $3.8 million. The school district has reduced the number of faculty and staff through normal attrition and non-tenured positions to help with the budget shortfall. Furlough days have also been added to the system calendar.

In fiscal year 2015, the Monroe County School District will adopt Governmental Accounting Standards Board Statement No. 68, Accounting and Financial Reporting for Pension. The effects of which will significantly reduce ending net position.

The Monroe 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 Jackson Daniel, Assistant Superintendent of Business Services/Chief Financial Officer at the Monroe County Board of Education, Forsyth, Georgia.
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MONROE COUNTY BOARD OF EDUCATION

MONROE COUNTY BOARD OF EDUCATION STATEMENT OF NET POSITION JUNE 30, 2014
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation)
Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Interest Payable Contracts Payable 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
Bus Replacement Continuation of Federal Programs Debt Service Permanent Funds Unrestricted
Total Net Position

EXHIBIT "A"

GOVERNMENTAL ACTIVITIES

$

2,261,361.46

12,200,069.50

2,791,875.15 1,857,017.09
239,963.27 295,722.76
58,510.53 3,606,600.60 45,223,205.05

68,534,325.41

1,833,813.95 3,860,153.37
86,107.00 340,344.00
59,934.80 2,230.96
3,467,123.00 5,188,762.11
14,838,469.19

43,056,304.99
243,961.00 532,144.66 3,297,561.00
17,906.38 6,547,978.19

$

53,695,856.22

The notes to the basic financial statements are an integral part of this statement. - 1 -

MONROE COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2014

EXHIBIT "B"

GOVERNMENTAL ACTIVITIES
Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services Interest on Short-Term and Long-Term Debt
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Sales Tax Investment Earnings Miscellaneous
Special Items Reduction in Capital Assets (Net) Due to Change in Capitalization Policy
Total General Revenues and Special Items
Change in Net Position
Net Position - Beginning of Year (Restated)

EXPENSES

PROGRAM REVENUES

OPERATING

CHARGES FOR

GRANTS AND

SERVICES

CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET POSITION

$ 25,891,854.83 $
1,253,699.51 1,536,807.11
666,964.75 961,212.82 1,949,978.14 465,992.39 4,415,709.20 3,491,586.11
22,953.60 73,654.94
455,762.86 2,347,359.88
232,961.48
$ 43,766,497.62 $

279,025.19 $ 11,415,471.45 $

29,268.00

167,836.06 664,168.59 502,561.00 662,569.10 1,006,643.00
5,314.77 1,188,387.56
771,591.27

73,654.94

572,484.85

1,584,380.66

880,778.04 $ 18,042,578.40

-14,197,358.19
-1,085,863.45 -872,638.52 -164,403.75 -298,643.72 -943,335.14 -460,677.62
-3,198,053.64 -2,719,994.84
-22,953.60 0.00
-455,762.86 -190,494.37 -232,961.48
-24,843,141.18

21,880,411.56 28,218.10
4,062,276.61 180,721.68 13,193.93 459,440.14
-1,150,955.03 25,473,306.99
630,165.81 53,065,690.41

Net Position - End of Year

$

53,695,856.22

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

MONROE COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2014
ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories
Total Assets
LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES LIABILITIES
Accounts Payable Salaries and Benefits Payable Contracts Payable Retainages Payable Deposits and Unearned Revenue
Total Liabilities DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - Property Taxes FUND BALANCES
Nonspendable Restricted Committed Unassigned
Total Fund Balances
Total Liabilities, Deferred Inflows of Resources, and Fund Balances

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

$ 2,016,509.62 $ 242,792.70

5,582,407.29

6,599,755.83

2,451,922.95 1,857,017.09
239,963.27 295,722.76
58,510.53

339,952.20

$ 12,502,053.51

7,182,500.73

$

637,980.71 $ 1,195,833.24

3,860,153.37

340,344.00

59,934.80

2,230.96

4,500,365.04

1,596,112.04

1,085,867.94

58,510.53 717,595.13 229,610.26 5,910,104.61
6,915,820.53

5,586,388.69 5,586,388.69

$ 12,502,053.51 $ 7,182,500.73

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

EXHIBIT "C"

DEBT SERVICE
FUND

NONMAJOR GOVERNMENTAL
FUND

TOTAL

$

2,059.14

$

$ 2,261,361.46

17,906.38

12,200,069.50

2,791,875.15 1,857,017.09
239,963.27 295,722.76
58,510.53

$

2,059.14 $

17,906.38 $ 19,704,519.76

$

$

2,059.14

2,059.14

$

2,059.14 $

$ 1,833,813.95 3,860,153.37 340,344.00 59,934.80 2,230.96
6,096,477.08

1,085,867.94

10,000.00 7,906.38
17,906.38

68,510.53 6,313,949.34
229,610.26 5,910,104.61
12,522,174.74

17,906.38 $ 19,704,519.76

- 5 -

MONROE COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION JUNE 30, 2014

EXHIBIT "D"

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

$ 12,522,174.74

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

$ 2,319,362.00 1,287,238.60 3,456,350.21
62,454,213.05 7,092,725.86
-27,780,084.07

48,829,805.65

Taxes that are not available to pay for current period expenditures are deferred in the funds.

1,085,867.94

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 Accrued Interest Payable Capital Leases Payable
Total Long-Term Liabilities

$ -8,290,000.00 -86,107.00
-365,885.11

-8,741,992.11

Net Position of Governmental Activities (Exhibit "A")

$ 53,695,856.22

The notes to the basic financial statements are an integral part of this statement. - 7 -

MONROE COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2014

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

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

$ 21,797,614.02 $ 180,721.68
14,606,664.08 3,435,914.32 880,778.04 5,969.14 459,440.14

4,062,276.61 7,195.26

41,367,101.42

4,069,471.87

23,787,206.58
1,253,699.51 1,536,807.11
666,964.75 908,708.63 1,949,978.14 459,695.19 4,072,129.76 3,036,880.70
22,953.60 73,654.94 455,762.86 2,335,972.47
40,560,414.24
806,687.18

591,358.70
7,019.76 3,816.12 207,015.30
2,396,488.04 180,498.52 5,508.70
3,391,705.14 677,766.73

-92,595.07 -92,595.07 714,092.11 6,201,728.42

92,595.07 -3,380,417.28 -3,287,822.21 -2,610,055.48 8,196,444.17

Fund Balances - Ending

$ 6,915,820.53 $ 5,586,388.69

The notes to the basic financial statements are an integral part of this statement. - 8 -

EXHIBIT "E"

DEBT SERVICE
FUND

NONMAJOR GOVERNMENTAL
FUND

TOTAL

$

21,797,614.02

4,242,998.29

14,606,664.08

3,435,914.32

880,778.04

$

0.49 $

29.04

13,193.93

459,440.14

0.49

29.04

45,436,602.82

3,170,000.00 210,416.28
3,380,416.28
-3,380,415.79

0.00
0.00 29.04

24,378,565.28
1,253,699.51 1,536,807.11
666,964.75 915,728.39 1,949,978.14 463,511.31 4,279,145.06 3,036,880.70
22,953.60 73,654.94 455,762.86 2,335,972.47 2,396,488.04
3,350,498.52 215,924.98
47,332,535.66
-1,895,932.84

3,380,417.28
3,380,417.28 1.49
2,057.65

29.04 17,877.34

3,473,012.35 -3,473,012.35
0.00 -1,895,932.84 14,418,107.58

$

2,059.14 $

17,906.38 $

12,522,174.74

- 9 -

MONROE 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, 2014

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
Reduction in Capital Assets (Net) due to change in capitalization policy
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 Capital Lease Payments
Total Long-Term Debt Repayments
Some items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in Governmental Funds. These activities consist of:
Net Increase in Accrued Interest
Change in Net Position of Governmental Activities (Exhibit "B")

$ -1,895,932.84

$ 2,396,488.04 -2,163,912.02

232,576.02 -1,150,955.03

111,015.64

$ 3,170,000.00 180,498.52

3,350,498.52

-17,036.50

$

630,165.81

The notes to the basic financial statements are an integral part of this statement. - 10 -

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

MONROE COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUNDS JUNE 30, 2014

EXHIBIT "G"

PRIVATE PURPOSE TRUSTS

AGENCY FUNDS

$

23,290.31 $

88,419.15

$

88,419.15

$

23,290.31

The notes to the basic financial statements are an integral part of this statement. - 11 -

MONROE COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FIDUCIARY FUNDS YEAR ENDED JUNE 30, 2014
ADDITIONS Investment Earnings Interest
DEDUCTIONS Total Deductions Change in Net Position
Net Position - Beginning
Net Position - Ending

EXHIBIT "H"

PRIVATE PURPOSE TRUSTS

$

5.62

0.00 5.62 23,284.69

$

23,290.31

The notes to the basic financial statements are an integral part of this statement. - 12 -

MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

NOTE 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Monroe 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.
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 Monroe 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.
Fund Financial Statements:
The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds. All remaining governmental funds are aggregated and reported as nonmajor 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) and Bond Proceeds 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.

- 13 -

MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

The School District reports the following fiduciary fund types:
Private Purpose Trust fund reports trust arrangements under which principal and income may be extended to provide scholarships for students who attended Mary Persons High School.
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, and grants. 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 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 longterm debt which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources.
The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, 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.
RESTATEMENT OF PRIOR YEAR NET POSITION/FUND BALANCE
For fiscal year 2014, the School District made a prior period adjustment to correct an error, which require the restatement of the June 30, 2013, net position in Governmental Activities and fund balance in the General Fund. The result is an increase in Net Position and Fund Balance at July 1, 2013 of $167,499.89. These changes are in accordance with generally accepted accounting principles.

- 14 -

MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

Governmental Activities: Net Position, July 1, 2013, as previously reported

$ 52,898,190.52

Correction of an error

167,499.89

Net Position, July 1, 2013, as restated

$ 53,065,690.41

General Fund: Fund Balance, July 1, 2013, as previously reported $ 14,250,607.69

Correction of an error

167,499.89

Net Position, July 1, 2013, as restated

$ 14,418,107.58

NEW ACCOUNTING PRONOUNCEMENTS
In fiscal year 2014, the School District adopted the Governmental Accounting Standards Board (GASB) Statement No. 65, Items Previously Reported as Assets and Liabilities. The provisions of this Statement establish accounting and financial reporting standards that reclassify, as deferred outflows or inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows or inflows of resources, certain items that were previously reported as assets and liabilities.
FUTURE ACCOUNTING PRONOUNCEMENTS
In fiscal year 2015, the School District will adopt Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions. The provisions of this Statement establish accounting and financial reporting standards for pensions that are provided to the employees of state and local governmental employers through pension plans that are administered through trusts. Implementation of this Statement will require the School District to record a liability for its proportionate share of the Net Pension Liability of pension plans in which it participates. Actuarial estimates are currently being made to determine the School District's liability, the effects of which are believed to be material.
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 interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
1. Obligations issued by the State of Georgia or by other states,
2. Obligations issued by the United States government, - 15 -

MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

3. Obligations fully insured or guaranteed by the United States government or a United States government agency,
4. Obligations of any corporation of the United States government,
5. Prime banker's acceptances,
6. The local government investment pool (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 risks, custodial 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 Monroe County Board of Commissioners adopted the property tax levy for the 2013 tax digest year (calendar year) on October 15, 2013 (levy date) based on property values as of January 1, 2013. Taxes were due on December 20, 2013 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2013 tax digest are reported as revenue in the governmental funds for fiscal year 2014. The Monroe 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, 2014, for maintenance and operations amounted to $21,057,489.43.
The tax millage rate levied for the 2013 tax year (calendar year) for the Monroe County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

15.342 mills

Additionally, Title Ad Valorem Tax revenues, at the fund reporting level, amounted to $711,906.49 during fiscal year ended June 30, 2014.
SALES TAXES
Local Option Sales Tax revenue, at the fund reporting level, during the fiscal year amounted to $4,062,276.61 and is to be used for capital outlay for education purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.
INVENTORIES
Food Inventories
On the basic financial statements, inventories of donated food commodities used in the preparation 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

- 16 -

MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

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 Policy

Estimated Useful Life

Land Land Improvements Buildings Portable Buildings Buildings and Improvements Equipment, Excluding Vehicles Buses Vehicles Intangible Assets

All

All

$

25,000.00

$

25,000.00

$

25,000.00

$

25,000.00

$

25,000.00

$

25,000.00

$

25,000.00

N/A 15 years 40 Years 10 Years
20 to 40 years 5 to 15 years 8 to 14 Years 5 to 10 years 5 to 50 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 5 to 50 years.
DEFERRED OUTFLOWS/INFLOWS OF RESOURCES
In addition to assets, the statement of net position and/or the balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of resources that applies to a future period and therefore will not be recognized as an outflow of resources (expense/expenditure) until then. The School District did not have any items that qualified for reporting in this category for the year ended June 30, 2014.
In addition to liabilities, the statement of net position and/or the balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of resources that applies to a future period and therefore will not be recognized as an inflow of resources (revenue) until that time. The School District has only one type of item, which arises only under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds
- 17 -

MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

balance sheet. The governmental funds report unavailable revenues from property taxes and this amount is deferred and will be recognized as an inflow of resources in the period in which the amounts become available.
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 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. 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.
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 bus replacement, 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.
- 18 -

MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

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, 2014, are as follows:

Nonspendable Inventories Permanent Funds Principal
Restricted Bus Replacement Continuation of Federal Programs Capital Projects Debt Service Permanent Funds
Committed School Activity Accounts
Unassigned

$

58,510.53

10,000.00 $

68,510.53

$

243,961.00

473,634.13

2,204,779.83

3,383,668.00

7,906.38

6,313,949.34

229,610.26 5,910,104.61

Fund Balance, June 30, 2014

$ 12,522,174.74

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. 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, function and object. The legal level of budgetary control was established by the Board at the aggregate fund level. The budget for the General Fund was prepared in accordance with accounting principles generally accepted in the United States of America.
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.

- 19 -

MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

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.

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, 2014, the School District had deposits with a carrying amount of $2,465,373.49, which includes $92,302.57 in Certificates of Deposit that are reported as Investments, and a bank balance of $2,880,337.57. The bank balances insured by Federal depository insurance were $527,917.31.

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.

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MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

The School District's deposits by custodial risk category at June 30, 2014, are as follows:

Custodial Credit Risk Category

Bank Balance

1

$

0.00

2

0.00

3

2,352,420.26

Total

$ 2,352,420.26

CATEGORIZATION OF INVESTMENTS
At June 30, 2014, the carrying value of the School District's total investments was $12,200,069.50, which is materially the same as fair value. This includes $92,302.57 invested in Certificates of Deposit, which are collateralized in the same manner as other cash deposits. Investments of $12,107,766.93 consisted entirely of funds invested in the Georgia Fund 1 (local government investment pool) administered by the State of Georgia, Office of the State Treasurer which 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 and does not operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share. The pool is an AAAf rated investment pool by Standard and Poor's. The weighted average maturity for Georgia Fund 1 on June 30, 2014, was 62 days.
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

- 21 -

MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

NOTE 6: CAPITAL ASSETS
The following is a summary of changes in the Capital Assets during the fiscal year:

Balances July 1, 2013

Increases

Decreases

Balances June 30, 2014

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

$ 2,319,362.00 $

$

0.00

1,287,238.60

0.00 $

2,319,362.00 1,287,238.60

Total Capital Assets Not Being Depreciated

2,319,362.00

1,287,238.60

0.00

3,606,600.60

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

62,263,587.32 8,903,404.70 3,575,474.93

354,557.55 671,898.61
82,793.28

163,931.82 2,482,577.45
201,918.00

62,454,213.05 7,092,725.86 3,456,350.21

18,466,349.02 5,598,996.70 3,248,298.57

1,538,021.35 566,854.24 59,036.43

54,313.39 1,451,956.17
191,202.68

19,950,056.98 4,713,894.77 3,116,132.32

Total Capital Assets, Being Depreciated, Net

47,428,822.66

-1,054,662.58

1,150,955.03

45,223,205.05

Governmental Activity Capital Assets - Net

$ 49,748,184.66 $

232,576.02 $ 1,150,955.03 $ 48,829,805.65

Current year depreciation expense by function is as follows:

Instruction

Support Services

General Administration

$

Business Administration

Maintenance and Operation of Plant

Student Transportation Services

Food Services

$ 1,513,289.55

45,484.43 2,481.08
136,564.14 454,705.41

639,235.06 11,387.41

$ 2,163,912.02

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MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

NOTE 7: INTERFUND TRANSFERS
Interfund transfers for the year ended June 30, 2014, consisted of the following:

Transfer to

Transfers From

District-wide

General

Capital

Fund

Projects

District-wide Capital Projects Debt Service Fund

$

92,595.07

$ 3,380,417.28

Total

$

92,595.07 $ 3,380,417.28

Transfers are used to move (1) property tax revenues collected by the General Fund to the Districtwide Capital Projects Fund as required match or supplemental funding source for capital construction projects, and (2) in addition, transfers are used to move Special Purpose Local Option Sales Tax collected in the Capital Projects Fund as needed for repayment of bond debt principal and interest.
NOTE 8: RISK MANAGEMENT
The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation.
The School District has obtained commercial insurance for risk of loss associated with assets. 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, crime and automobile risks. Payment of excess insurance for the system varies by line of coverage.
The School District is self-insured with regard to unemployment compensation claims. A premium is charged when needed by the General Fund to each user program on the basis of the percentage of that fund's payroll to total payroll in order to cover estimated claims budgeted by management based on known claims and prior experience. The School District accounts for claims 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.

- 23 -

MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

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

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

2013 $ 2014 $

0.00 $ 0.00 $

18,952.00 $ 5,992.00 $

18,952.00 $ 5,992.00 $

0.00 0.00

The School District participates in the Georgia Education Workers' Compensation Trust, a public entity risk pool organized on December 1, 1991, 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 Trust for its general worker's compensation insurance coverage. Specific excess of loss insurance coverage is provided through an agreement by the Trust with the Safety National Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $1 million loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided with limits of $2 million. The Trust covers the first $1 million of each Employers liability claim with Safety National providing additional Employers Liability limits up to a $2 million per occurrence maximum. Safety National Casualty Company also provides $2 million in aggregate coverage to the Trust, attaching at 110% of the loss fund and based on the Fund's annual normal premium.
The School District has purchased surety bonds to provide additional insurance coverage as follows:

Position Covered

Amount

Superintendent All Employees

$

50,000.00

$

100,000.00

NOTE 9: SHORT-TERM DEBT
The School District issues tax anticipation notes in advance of property tax collections, depositing the proceeds in its General Fund. This short-term debt is to provide cash for operations until property tax collections are received by the School District. Article IX, Section V, Paragraph V of the Constitution of the State of Georgia limits the aggregate amount of short-term debt to 75 percent of the total gross income from taxes collected in the preceding year and requires all short-term debt to be repaid no later than December 31 of the calendar year in which the debt was incurred.
Short-term debt activity for the fiscal year is as follows:

Beginning Balance

Issued

Redeemed

Ending Balance

Tax Anticipation Notes $

0.00 $ 3,000,000.00 $ 3,000,000.00 $

0.00

NOTE 10: LONG-TERM LIABILITIES CAPITAL LEASES
The Monroe County Board of Education entered into a lease agreement for the purchase of computer equipment. This lease agreement qualifies as a capital lease for accounting purposes, and, therefore, have been recorded at the present value of the future minimum lease payments as of the date of its inception.
- 24 -

MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

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

Purpose

Interest Rates

Amount

General Government - Series 2007 General Government - Series 2013

2.87% $ 2.00%

3,285,000.00 5,005,000.00

$ 8,290,000.00

The changes in Long-Term Liabilities during the fiscal year ended June 30, 2014, were as follows:

Balance July 1, 2013

Additions

Governmental Activities

Balance

Deductions

June 30, 2014

Due Within One Year

G.O. Bonds

$ 11,460,000.00 $

0.00 $ 3,170,000.00 $ 8,290,000.00 $ 3,285,000.00

Capital Leases

546,383.63

180,498.52

365,885.11

182,123.00

$ 12,006,383.63 $

0.00 $ 3,350,498.52 $ 8,655,885.11 $ 3,467,123.00

At June 30, 2014, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30:

Capital Leases

Principal

Interest

2015 2016

$

182,123.00 $

183,762.11

3,292.97 1,653.86

Total Principal and Interest Fiscal Year Ended June 30:

$

365,885.11 $

4,946.83

General Obligation Debt

Principal

Interest

2015 2016 2017 2018 2019 2020

$ 3,285,000.00 $ 965,000.00 980,000.00
1,000,000.00 1,020,000.00 1,040,000.00

104,152.00 92,226.00 72,633.00 52,867.00 31,000.00 10,400.00

Total Principal and Interest

$ 8,290,000.00 $

363,278.00

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MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

NOTE 11: ON-BEHALF PAYMENTS
The School District has recognized revenues and costs in the amount of $1,874,513.17 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.
Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Certificated Personnel In the amount of $1,736,616.00
Paid to the Teachers' Retirement System of Georgia For Teachers' Retirement System (TRS) Employer's Cost In the amount of $32,022.17
Office of the State Treasurer Paid to the Public School Employees' Retirement System For Public School Employees' Retirement (PSERS) Employer's Cost In the amount of $105,875.00
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 12: SPECIAL ITEMS
In fiscal year 2014, the School District changed their capital asset capitalization policy to increase the capitalization threshold to $25,000.00. This resulted in a $1,150,955.03 disposal of capital assets reported as a special item loss on the Statement of Activities.

NOTE 13: SIGNIFICANT COMMITMENTS
The following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2014, together with funding available:

Project

Unearned Executed Contracts

Funding Available From State

Banks Stephens Middle School Renovation

$

496,021.00 $

582,736.00

The amounts described in this note are not reflected in the basic financial statements.
NOTE 14: 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 15: SUBSEQUENT EVENTS
Subsequent to June 30, 2014, general obligation debt previously authorized by voters was issued in the amount of $7,495,000.00, for the purpose of providing funds to the Board to pay or to be applied toward the cost of (i) acquiring miscellaneous new equipment, fixtures and furnishings for the school system, including technology equipment and safety and security equipment, (ii) adding to, renovating,
- 26 -

MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

repairing, improving, and equipping existing school buildings and school system facilities, (iii) acquiring band instruments and equipment, text books and library books for the school system, (iv) acquiring school buses, vehicles, and transportation and maintenance equipment, (v) constructing and equipping new instructional, arts and athletic facilities including a new fine arts center, (vi) constructing and equipping new school facilities, and (vii) acquiring land for future schools and facilities, and for the purposes of payment of a portion of the interest on such debt and the expenses incident to accomplishing the foregoing.
NOTE 16: 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, 2012, contributions also vary based on years of service. On average, members with five years or more of service as of January 1, 2012, 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, 2012, 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 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 "payas-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, 2014:

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MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

For certificated teachers, librarians and regional educational service agencies and certain other eligible participants:

July 1, 2013 - June 30, 2014 $945.00 per member per month For non-certificated school personnel: July 1, 2013 - June 30, 2014 $596.20 per member per month

No additional contribution was required by the Board for fiscal year 2014 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

2014 2013 2012

100% 100% 100%

$ 4,196,067.46 $ 3,891,672.82 $ 3,594,822.53

NOTE 17: 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.
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

- 28 -

MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

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, 2014, were 6.00% of annual salary. Employer contributions required for fiscal year 2014 were 12.28% of annual salary as required by the June 30, 2011, actuarial valuation.
Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2014 2013 2012

100% 100% 100%

$ 2,539,284.15 $ 2,372,775.35 $ 2,149,563.22

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.

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MONROE COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2014

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 Food Services Operation
Capital Outlay
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING USES
Operating Transfers To Other Funds
Net Change in Fund Balances
Fund Balances - Beginning (Restated)
Adjustments
Fund Balances - Ending

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

VARIANCE OVER/UNDER

$ 19,838,222.00 $ 19,838,222.00 $ 21,797,614.02 $ 1,959,392.02

200,000.00

200,000.00

180,721.68

-19,278.32

11,948,509.00

11,972,369.00

14,606,664.08

2,634,295.08

2,732,311.91

3,688,740.48

3,435,914.32

-252,826.16

556,256.16

645,884.16

880,778.04

234,893.88

8,913.10

8,913.10

5,969.14

-2,943.96

50,790.00

50,790.00

459,440.14

408,650.14

35,335,002.17

36,404,918.74

41,367,101.42

4,962,182.68

23,635,074.00
1,131,081.00 1,167,141.00
663,251.00 834,202.00 1,943,958.00 497,678.00 3,783,724.00 2,647,979.00
33,200.00 6,563.00
2,747,070.48 10,000.00
39,100,921.48
-3,765,919.31

24,117,447.00
1,183,713.00 1,583,451.00
663,346.00 864,037.00 1,948,213.00 497,678.00 3,784,277.00 2,663,625.00
33,200.00 82,465.00
2,533,693.55 10,000.00
39,965,145.55
-3,560,226.81

23,787,206.58
1,253,699.51 1,536,807.11
666,964.75 908,708.63 1,949,978.14 459,695.19 4,072,129.76 3,036,880.70
22,953.60 73,654.94 455,762.86 2,335,972.47
40,560,414.24
806,687.18

330,240.42 0.00
-69,986.51 46,643.89 -3,618.75 -44,671.63 -1,765.14 37,982.81 -287,852.76 -373,255.70 10,246.40
8,810.06 -455,762.86 197,721.08
10,000.00
-595,268.69
4,366,913.99

-3,765,919.31 5,036,204.63
35,870.83

-3,560,226.81 5,035,978.63
896,174.93

-92,595.07 714,092.11 6,201,728.42

-92,595.07 4,274,318.92 1,165,749.79
-896,174.93

$ 1,306,156.15 $ 2,371,926.75 $ 6,915,820.53 $ 4,543,893.78

Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual
(1) Original and Final Budget amounts do not include the budgeted revenues or expenditures of the various principal accounts. The actual revenues and expenditures of the various principal accounts are $605,193.11 and $590,505.11, respectively.
The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 31 -

MONROE COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2014

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 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
Other Programs Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Improving Teacher Quality State Grants Title I Grants to Local Educational Agencies Twenty-First Century Community Learning Centers
Total Other Programs
Total U. S. Department of Education

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

* 10.553 * 10.555

N/A

N/A

$

(2) 2,236,367.07 (1)
2,236,367.07

* 84.027

N/A

* 84.173

N/A

84.048

N/A

84.367

N/A

* 84.010

N/A

84.287

N/A

695,285.92 28,457.00
723,742.92
40,284.76 143,727.30 751,677.50 278,337.74 1,214,027.30 1,937,770.22

Total Expenditures of Federal Awards

$

4,174,137.29

N/A = Not Available

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 $122,934.63.
(2) Expenditures for the funds earned the School Breakfast Program ($335,508.68) were not maintained separately and are included in the 2013 National School Lunch Program.

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

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

The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Monroe 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.

- 32 -

MONROE COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2014
AGENCY/FUNDING
GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle Grades (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities - Category II Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program Twenty Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Mid-term Adjustment Hold-Harmless Amended Formula Adjustment Categorical Grants Pupil Transportation Regular Nursing Services Vocational Supervisors DCH Direct Payment (1) Other State Programs Food Services Math and Science Supplements Pupil Transportation - State Bonds Teachers' Retirement Technology to Support Digital Learning Vocational Education
Office of the State Treasurer Public School Employees' Retirement

(1) Payments to the Georgia Department of Community Health by the Georgia Department of Education on behalf of the School District are reported separately in the schedule above, however, the payments are part of the Quality Basic Education revenue allotments for the School District.

See notes to the basic financial statements.

- 33 -

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

741,731.47

941,757.00 109,338.00 2,302,579.00 355,457.00 996,406.00 202,313.00 1,963,688.00 2,012,998.00 383,726.00 1,975,277.00 893,402.00
72,811.00 142,421.00
27,149.00 340,051.00 105,107.00
63,144.00
441,157.00 668,582.00 774,954.00 106,789.00 -3,786,776.00
624,744.00 68,615.00 19,604.00
1,736,616.00
58,573.00 17,837.41 32,029.00 32,022.17 19,000.00 57,687.03
105,875.00
$ 14,606,664.08

MONROE COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2014

SCHEDULE "4"

PROJECT

ORIGINAL ESTIMATED
COST (1)

(ii) Constructing & Equipping new fine arts and athletic facilities

including a new fine arts center

$

(iii) Adding to, renovating, repairing, improving and equipping existing school buildings and school system facilities

(iv) Acquiring miscellaneous new equipment, fixtures, and furnishings for the school system, including technology equipment and safety and security equipment

8,435,000.00 $ 8,255,000.00 3,525,000.00

(v) Acquiring school buses, vehicles and transportation and maintenance equipment

2,375,000.00

(vi) Acquiring band instruments and equipment, text books and library books for the school system

537,500.00

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED IN PRIOR YEARS (3)

TOTAL COMPLETION
COST (3)

EXCESS PROCEEDS NOT
EXPENDED

9,090,000.00 $

34,030.00 $ 23,470.00 $ 9,032,500.00 $

0.00

11,750,000.00

1,461,508.21

10,288,491.79

3,525,000.00 2,375,000.00
537,500.00

710,001.74 687,148.61 439,918.02

2,814,998.26 1,687,851.39
97,581.98

ESTIMATED COMPLETION
DATE Delayed (4) Ongoing (5)
Ongoing
Ongoing
Ongoing

(vii) Acquiring land for future schools and facilities, with the maximum cost of the projects described in items (i)-(vii) payable from said tax being $ 27,800,000

1,000,000.00

1,000,000.00

1,000,000.00

Ongoing (6)

(VIII) Paying any general obligation debt of the School District issued in conjunction with the continuation of such sales and use tax

3,500,000.00

850,000.00

210,416.28

639,583.72

Ongoing

(ix) Paying expenses incidental to accomplishing the foregoing

1,200,000.00

1,500,000.00

23,380.00

1,476,620.00

Ongoing (7)

$ 28,827,500.00 $

30,627,500.00 $ 3,566,402.86 $ 23,470.00 $ 27,037,627.14 $

0.00

(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 Monroe 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. Adjustments in the amount of $22,392,978.98 reduced previous years expenditures, for completed projects funded from various sources including previous SPLOST referendums, to more accurately reflect ongoing projects funded at least in part with the current referendum. This reduction when added to the amount expended in previous years noted above will tie to the amount reported in prior year audit of $22,450,020.02.
(4) Construction of the Fine Arts Center will begin in early 2015.
(5) Renovations existing school facilities are ongoing. The MP Gymnasium renovation was complete late in 2013. Renovation of Banks Stephens Middle School Campus commenced in April, 2014, and is nearing completion. The Hubbard Elementary Campus is slated for renovation summer of 2015.
(6) All costs associated with the purchase of the Monroe County Education Center campus (formerly Monroe Academy), including principal and interest on debt, are included in the acquisition of land. This project was retired in February of 2013.
(7) All architect's fees for SPLOST projects are reported in the expenses incidental accomplishing the foregoing.

See notes to the basic financial statements.

- 34 -

MONROE COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2014

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 High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category II 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
TOTAL QBE FORMULA FUNDS

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) (2) (3)

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

$

1,387,347.00 $ 1,549,620.06 $ 7,297.73 $ 1,556,917.79

160,496.00

209,023.60

669.07

209,692.67

3,399,566.00

3,892,774.22

74,734.57

3,967,508.79

516,574.00

358,691.09

1,205.23

359,896.32

1,496,926.00

1,807,477.34

16,255.28

1,823,732.62

298,389.00 2,918,348.00 2,972,575.00
568,870.00 2,911,230.00
1,305,381.00 108,930.00 215,702.00 40,046.00

300,902.86 2,576,653.63 4,009,407.83
632,065.52
2,742,624.47 986,514.00
400,226.96 84,214.69

1,892.42 71,420.67 161,546.66 41,979.45
208,243.84 11,973.70
42,304.56

302,795.28 2,648,074.30 4,170,954.49
674,044.97
2,950,868.31 998,487.70
442,531.52 84,214.69

$

18,300,380.00 $ 19,550,196.27 $ 639,523.18 $ 20,189,719.45

503,366.00 91,450.00

604,649.52

48,689.55

653,339.07 115,326.10

$

18,895,196.00 $ 20,154,845.79 $ 688,212.73 $ 20,958,384.62

(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.

- 35 -

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
May 12, 2015

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Monroe 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 auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Monroe County Board of Education as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise Monroe County Board of Education's basic financial statements and have issued our report thereon dated May 12, 2015.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered Monroe County Board of Education's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Monroe County Board of Education's internal control. Accordingly, we do not express an opinion on the effectiveness of the Monroe County Board of Education's internal control.
Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying Schedule of Findings and Questioned Costs, we identified a certain deficiency in internal control over financial reporting that we consider to be a material weakness.

2014YB-41

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. We consider the deficiency described in the accompanying Schedule of Findings and Questioned Costs as item 2014-002 to be a material weakness.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Monroe 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.
We noted certain matters that we have reported to management of Monroe County Board of Education in a separate letter dated May 12, 2015.
Monroe County Board of Education's Response to Findings
Monroe County Board of Education's response to the findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. Monroe County Board of Education's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.
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:jt 2014YB-41

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
May 12, 2015

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Monroe 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 Monroe 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, 2014. Monroe 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 Monroe 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 Monroe 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 Monroe County Board of Education's compliance.
2014SA-40

Opinion on Each Major Federal Program
In our opinion, the Monroe 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, 2014.
Other Matters
The results of our auditing procedures disclosed an instances of noncompliance, which is required to be reported in accordance with OMB Circular A-133 and which is described in the accompanying Schedule of Findings and Questioned Costs as items 2014-001. Our opinion on each major federal program is not modified with respect to this matters.
Monroe County Board of Education's response to the noncompliance findings identified in our audit is described in the accompanying schedule of findings and questioned costs. Monroe County Board of Education's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.
Report on Internal Control over Compliance
Management of Monroe 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 Monroe 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 Monroe 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 and therefore, material weaknesses or significant deficiencies may exist that were not identified. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, we identified certain a deficiency in internal control over compliance, as described in the accompanying Schedule of Findings and Questioned Costs as items 2014-001 that we consider to be a significant deficiency.
2014SA-40

Monroe County Board of Education's response to the internal control over the compliance findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. Monroe County Board of Education's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.
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:jt 2014SA-40

Greg S. Griffin State Auditor

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

MONROE COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2014

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER

AUDITEE'S RESPONSE/STATUS

FS-7021-12-01 FS-7021-12-02 FS-7021-12-03 FS-7021-12-04 FS-7021-12-05 FS-7021-12-06 FS-7021-13-01 FS-7021-13-02 FS-7021-13-03 FS-7021-13-04 FS-7021-13-05

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

SEE AUDITOR'S COMMENTS
(1)
(1) (2)

AUDITOR'S COMMENTS
(1) Previously reported corrective action plan was implemented by the School District with the exception of Monthly/Quarterly Reports and inadequate separation of duties. Deficiencies of this nature, that are not deemed significant deficiencies or material weaknesses and do not require reporting in the audit report in accordance with Statements on Auditing Standards (SAS) 122 or Governmental Auditing Standards (Yellow Book), will be communicated in a management letter.
(2) Previously reported corrective action plan was implemented by the School District with the exception of inadequate separation of duties. A deficiency of this nature, that is not individually deemed a significant deficiency or a material weakness and does not require reporting in the audit report in accordance with Statements on Auditing Standards (SAS) 122 or Governmental Auditing Standards (Yellow Book), will be communicated in a management letter.

- 1 -

MONROE COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2014
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS FA-7021-13-01 Partially Resolved See Corrective Action/Responses CORRECTIVE ACTION/RESPONSES ELIGIBILITY Inadequate Controls over Eligibility Determinations Significant Deficiency Nonmaterial Noncompliance U.S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) Finding Control Number: FA-7021-13-01 The Board implemented the following steps to ensure applications supporting free and reduced price meal eligibility were securely stored and available to support reimbursement claims during the fiscal year ended June 30, 2014: All applications received for free and reduced price meals are stored in a locked file cabinet. Applications supporting free and reduced price meals are reconciled to the Master List of eligible recipients. Approved applications on file may not leave the System's School Nutrition Office without approval of the Director. This finding is pending a review from Georgia Department of Education.
- 2 -

SECTION IV FINDINGS AND QUESTIONED COSTS

MONROE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014

I SUMMARY OF AUDITOR'S RESULTS

Financial Statements

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

Unmodified

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

Yes None Reported

Noncompliance material to financial statements noted:

No

Federal Awards

Internal Control over major programs:

Material weakness identified?

No

Significant deficiency identified?

Yes

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)?

Yes

Identification of major programs:

CFDA Numbers

Name of Federal Program or Cluster

10.553, 10.555 84.010 84.027, 84.173

Child Nutrition Cluster Title I Grants to Local Education Agencies Special Education Cluster

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

$300,000.00

Auditee qualified as low-risk auditee?

No

- 1 -

MONROE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS 2014-002 Improper Reporting of On-Behalf Payments for Fringe Benefits

Control Category: Internal Control Impact:

Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Material Weakness

Description: The School District did not properly record on-behalf payments for fringe benefits.

Criteria: Provisions of Governmental Accounting Standards Board Statement No. 24 states that an employer government should recognize revenue and expenditures or expenses for on-behalf payments for fringe benefits.

Condition: Payments to the Georgia Department of Community Health in the amount of $1,736,616.00 made by the Georgia Department of Education on behalf of the School District for employee health insurance was not reported as revenue in accordance with GASB Statement No. 24. Instead, the School District recorded this balance as a liability in error. An adjustment was proposed by the auditors and accepted by management to properly reflect the balance as revenue.

Cause: In discussing this deficiency with School District management, they indicated that instructions for recording these on-behalf payments issued by the Georgia Department of Education were not properly followed due to a misunderstanding of the application of the instructions. Also, an oversights occurred during the final analysis and review of the prepared financial statements.

Effect or Potential Effect: A material misstatement was included in the financial statements presented for audit.

Recommendation: The School District should provide training related to recording financial transactions and strengthen monitoring controls to ensure that transactions are being processed as intended.

Views of Responsible Officials and Corrective Action Plans: We concur with this finding. The Board currently does not have on-behalf activity required to be reported in accordance with GASB Statement No. 24, other than that paid to Georgia Department of Community Health by the Georgia Department of Education on-behalf of the School District for employee health insurance. Effective for the fiscal year ending June 30, 2015, the Georgia Department of Education no longer makes payments on-behalf of the School District for employee health insurance. No further action deemed necessary by the Board to resolve this issue.

Contact Person: Janet Howard

Title:

Accounting and Audit Manager

Telephone:

(478) 994-2031

Fax:

(478) 994-3364

E-mail:

janet.howard@mcschools.org

- 2 -

MONROE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FA 2014-001 Insufficient Equipment Listing and Deletion Detail

Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title:

Equipment and Real Property Management Significant Deficiency Nonmaterial Noncompliance U. S. Department of Agriculture Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555)

Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over equipment and real property management as it relates to the Child Nutrition Cluster.

Criteria: 7 CFR 3016.32 (d)(1) states, "Property records must be maintained that include a description of the property, a serial number or other identification number, the source of property, who holds title, the acquisition date and cost of the property, percentage of Federal participation in the cost of the property, the location, use and condition of the property, the location, use and condition of the property, and any ultimate disposition date including the date of disposal and sales price of the property. A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years."

Condition: The School District did not maintain an adequate equipment listing for the Child Nutrition Cluster including information regarding the equipment's condition of the property, source of funding, who holds title, percentage of Federal participation in regards to cost, and any ultimate disposition data. Additionally, the School District has not conducted a proper biennial physical inventory. The following issues were noted during a sample of eleven Child Nutrition Cluster equipment items:

Two items were found to have been disposed in a previous year but never removed from the Child Nutrition Cluster equipment listing.
Two other equipment items had been relocated but never updated on the Child Nutrition Cluster equipment listing.

Questioned Cost: N/A

Cause: In discussing these deficiencies with School District management, Child Nutrition Cluster staff do not appear adequately trained in the area of equipment and real property management. Management also indicated that limited staffing contributed to the issues noted with the physical inventory of Child Nutrition Cluster equipment.

Effect or Potential Effect: Failure to maintain a proper equipment listing and/or to perform a physical inventory resulted in noncompliance with Federal grant requirements.

- 3 -

MONROE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

Recommendation: The School District should provide training to School Food Service personnel responsible for administering the Child Nutrition Cluster program. Management should develop and maintain an equipment listing including information on each piece of equipment's cost, acquisition date, location date, serial number, percentage of Federal participation, who holds title, use and condition of property, and ultimate disposal data. In addition, an inventory of equipment items on this listing should be conducted at least once every two fiscal years in order to ensure that information on the listing remains valid.

Views of Responsible Officials and Corrective Action Plans: We concur with this finding. The Board has revised its procedures to ensure adequate internal controls over equipment and real property management as it relates to the Child Nutrition Cluster (CNC). A physical count of each school's CNC inventory will be conducted with follow-up and corrections made to property records as required by 7 CFR 3016.32 (d) (1).

Contact Person: Sandy Peppers

Title:

School Nutrition Bookkeeper

Telephone:

(478) 994-2031

Fax:

(478) 994-3364

E-mail:

sandy.peppers@mcschools.org

- 4 -