MONROE COUNTY BOARD OF EDUCATION FORSYTH, GEORGIA ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2020 (Including Independent Auditor's Reports) MONROE COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - Page SECTION I FINANCIAL INDEPENDENT AUDITOR'S REPORT REQUIRED SUPPLEMENTARY INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS i EXHIBITS BASIC FINANCIAL STATEMENTS GOVERNMENT-WIDE FINANCIAL STATEMENTS A STATEMENT OF NET POSITION 1 B STATEMENT OF ACTIVITIES 2 FUND FINANCIAL STATEMENTS C BALANCE SHEET GOVERNMENTAL FUNDS 3 D RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION 4 E STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS 5 F RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES 6 G STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS 7 H STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS 8 I NOTES TO THE BASIC FINANCIAL STATEMENTS 10 SCHEDULES REQUIRED SUPPLEMENTARY INFORMATION 1 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TEACHERS RETIREMENT SYSTEM OF GEORGIA 37 2 SCHEDULE OF CONTRIBUTIONS TEACHERS RETIREMENT SYSTEM OF GEORGIA 38 3 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 39 4 SCHEDULE OF CONTRIBUTIONS EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 40 5 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM OF GEORGIA 41 6 SCHEDULE OF PROPORTIONATE SHARE OF THE NET OPEB LIABILITY SCHOOL OPEB FUND 42 7 SCHEDULE OF CONTRIBUTIONS SCHOOL OPEB FUND 43 8 NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION 44 (This page left intentionally blank) MONROE COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION I FINANCIAL SCHEDULES REQUIRED SUPPLEMENTARY INFORMATION 9 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND SUPPLEMENTARY INFORMATION 10 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 11 SCHEDULE OF STATE REVENUE 12 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS Page 45 46 47 49 SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (This page left intentionally blank) SECTION I FINANCIAL (This page left intentionally blank) Greg S. Griffin STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 4-101 Atlanta, Georgia 30334-8400 INDEPENDENT AUDITOR'S REPORT The Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education and Superintendent and Members of the Monroe County Board of Education Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Monroe County Board of Education (School District), as of and for the year ended June 30, 2020, and the related notes to the financial statements, which collectively comprise the School District's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. (This page left intentionally blank) We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the School District as of June 30, 2020, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As described in Note 2 to the financial statements, in 2020, the School District early adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 84, Fiduciary Activities. The cumulative effect of GASB Statement No. 84 is described in the restatement note in the Notes to the Basic Financial Statements. Our opinions are not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis and required supplementary information listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the School District's basic financial statements. The accompanying supplementary information, as listed in the table of contents, is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by Title 2 U. S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements. The accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional (This page left intentionally blank) procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated June 15, 2021 on our consideration of the School District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the School District's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School District's internal control over financial reporting and compliance. A copy of this report has been filed as a permanent record and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24. Respectfully submitted, June 15, 2021 Greg S. Griffin State Auditor (This page left intentionally blank) MONROE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 INTRODUCTION The discussion and analysis of the Monroe County Board of Education's (School District) financial performance provides an overview of the School District's financial activities for the fiscal years ended June 30, 2020 and June 30, 2019. The intent of this discussion and analysis is to look at the School District's financial performance as a whole. Readers should also review the financial statements and the notes to the basic financial statements to enhance their understanding of the School District's financial performance. FINANCIAL HIGHLIGHTS Key financial highlights for the fiscal years 2020 and 2019 are as follows: General revenues accounts for $30.0 million in revenue or 54.0% of all revenues. Program specific revenues in the form of charges for services and sales, grants and contributions accounted for $25.5 million or 46.0% of total revenues of $55.5 million. The School District had $55.5 million in expenses related to governmental activities; however, $25.5 million of these expenses were offset by program specific charges for services, grants or contributions. General revenues (primarily taxes) of $30.0 million were adequate to provide for these programs. Among major funds, the general fund had $50.4 million in revenues and $50.5 million in expenditures. The fund balance for the general fund remained approximately the same at $3.6 million, without consideration of the restatement. OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists of three parts; management's discussion and analysis, the basic financial statements and supplementary information. The basic financial statements include two levels of statements that present different views of the School District. These include the government-wide and fund financial statements. The government-wide financial statements include the Statement of Net Position and Statement of Activities. These statements provide information about the activities of the School District presenting both short-term and long-term information about the overall financial status. The fund financial statements focus on individual parts, reporting the School District's operation in more detail. The governmental funds statements disclose how basic services are financed in the shortterm as well as what remains for future spending. The fiduciary funds statements provide information about the financial relationships in which the School District acts solely as a trustee or agent for the benefit of others. The fund financial statements reflect the School District's most significant funds. For the years ending June 30, 2020 and 2019, the general fund, the capital projects fund, and the debt service fund represent the most significant funds. The financial statements also include notes that explain some of the information in the statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the financial statements. Additionally, other supplementary information (not required) is also presented that further supplements understanding of the financial statements. i MONROE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Government-Wide Statements The government-wide statements report information about the School District as a whole using accounting methods similar to those used by private-sector companies. The Statement of Net Position includes all of the School District's assets and liabilities. All of the current fiscal year's revenues and expenses are accounted for in the Statement of Activities regardless of when cash is received or paid. The two government-wide statements report the School District's net position and how it has changed. Net position, the difference between the School District's assets, deferred outflows of resources, liabilities and deferred inflows of resources, is one way to measure the School District's overall financial health or position. Over time, increases or decreases in net position are an indication of whether its financial health is improving or deteriorating. Changes may be the result of many factors, including those not under the School District's control, such as the property tax base, facility conditions, required educational programs and other factors. In the Statement of Net Position and the Statement of Activities, the School District has one distinct type of activity: Governmental Activities All of the School District's programs and services are reported here including instruction, support services, operation and maintenance of plant, pupil transportation, food service, student activity accounts and various others. Fund Financial Statements The School District's fund financial statements provide detailed information about the most significant funds, not the School District as a whole. Some funds are required by State law and some by bond requirements. 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 the determination of financial position and change in financial position, not on income determination. These funds are reported using the modified accrual method of accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the School District's general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The relationship (or differences) between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds are reconciled to the financial statements. Fiduciary Funds - The School District is the trustee, or fiduciary, for assets that belong to others. The School District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The School District excludes these activities from the government-wide financial statements because it cannot use these assets to finance its operations. ii MONROE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT AS A WHOLE Recall that the Statement of Net Position provides the perspective of the School District as a whole. Table 1 provides a summary of the School District's net position for fiscal years 2020 and 2019. Table 1 Net Position Governmental Activities Fiscal Year Fiscal Year 2020 2019 (1) Assets Current and Other Assets Capital Assets, Net $ 19,551,304 $ 21,911,358 58,319,918 57,871,909 Total Assets 77,871,222 79,783,267 Deferred Outflows of Resources Related to Defined Benefit Pension Plans Related to OPEB Plan 11,618,883 2,734,049 7,935,611 1,613,604 Total Deferred Outflows of Resources Liabilities Current and Other Liabilities Long-Term Liabilities 14,352,932 7,334,880 85,398,787 9,549,215 7,552,891 83,946,491 Total Liabilities 92,733,667 91,499,382 Deferred Inflows of Resources Related to Defined Benefit Pension Plans Related to OPEB Plan 1,227,473 8,412,872 1,490,625 6,610,490 Total Deferred Inflows of Resources 9,640,345 8,101,115 Net Position Net Investment in Capital Assets Restricted Unrestricted (Deficit) 52,882,792 3,692,382 (66,725,032) 51,444,077 2,810,846 (64,522,938) Total Net Position $ (10,149,858) $ (10,268,015) (1) Fiscal year 2019 balances do not reflect the effects of the Restatement of Net Position. See Note 15 in the Notes to the Basic Financial Statements for additional information. iii MONROE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Table 2 shows the changes in net position for fiscal years ending June 30, 2020 and June 30, 2019. Table 2 Change in Net Position Revenues Program Revenues: Charges for Services Operating Grants and Contributions Capital Grants and Contributions Governmental Activities Fiscal Year Fiscal Year 2020 2019 (1) $ 954,264 $ 1,097,767 24,497,175 22,348,527 77,220 125,220 Total Program Revenues 25,528,659 23,571,514 General Revenues: Taxes Property Taxes For Maintenance and Operations Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Taxes Investment Earnings Miscellaneous 23,498,777 - 5,135,475 343,499 139,118 862,983 23,271,183 43,786 5,081,352 198,571 210,718 730,641 Total General Revenues 29,979,852 29,536,251 Total Revenues 55,508,511 53,107,765 Program Expenses: Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services Interest on Short-Term and Long-Term Debt 33,842,373 1,822,473 1,584,058 750,679 1,765,109 2,566,828 571,795 4,889,381 4,386,011 19,913 4,647 908,806 2,289,550 101,709 29,403,630 1,487,079 1,487,635 747,502 1,439,148 2,287,712 562,992 4,755,627 4,746,205 19,017 3,963 884,189 2,544,968 50,796 Total Expenses Increase in Net Position 55,503,332 50,420,463 $ 5,179 $ 2,687,302 (1) Fiscal year 2019 balances do not reflect the effects of the Restatement of Net Position. See Note 15 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, 2020 Program revenues, in the form of charges for services, operating grants and contributions and capital grants and contributions increased $1.9 million for governmental activities. This increase is largely due to an increase in funds earned through the State Quality Basic Education (QBE) Funding Formula from one fiscal period to the next. General revenues increased $0.4 million during fiscal year 2020 due in part to a slight increase in the local tax digest. Governmental Activities The Statement of Activities shows the cost of program services and the charges for services and grants offsetting those services. Table 3 shows the total cost of services and the net cost of services. Net cost of services can be defined as the total cost less fees generated by the activities and intergovernmental revenue provided for specific programs. The net cost reflects the financial burden on the School District's taxpayers by each activity. Table 3 Governmental Activities Total Cost of Services Fiscal Year Fiscal Year 2020 2019 (1) Net Cost of Services Fiscal Year Fiscal Year 2020 2019 (1) Instruction $ Support Services: Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services: Enterprise Operations Food Services Interest on Short-Term and Long-Term Debt 33,842,373 $ 1,822,473 1,584,058 750,679 1,765,109 2,566,828 571,795 4,889,381 4,386,011 19,913 4,647 908,806 2,289,550 101,709 29,403,630 $ 1,487,079 1,487,635 747,502 1,439,148 2,287,712 562,992 4,755,627 4,746,205 19,017 3,963 884,189 2,544,968 50,796 15,800,042 $ 1,659,783 1,031,548 180,230 781,680 1,442,035 571,748 3,650,286 3,481,910 19,233 4,647 908,806 341,016 101,709 13,142,741 1,263,502 903,218 223,133 708,193 1,254,721 562,945 3,546,461 3,951,754 18,402 3,963 884,189 334,931 50,796 Total Expenses $ 55,503,332 $ 50,420,463 $ 29,974,673 $ 26,848,949 (1) Fiscal year 2019 balances do not reflect the effects of the Restatement of Net Position. See Note 15 in the Notes to the Basic Financial Statements for additional information. Although program revenues make up a majority of the funding, the School District is still dependent upon tax revenues for governmental activities. For 2020, 54.8% of instruction and support activities were supplemented by taxes and other general revenues compared to 54.5% in 2019. FINANCIAL ANALYSIS OF 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 $58.2 million and expenditures and other financing uses of $60.5 million. The capital projects fund had an overall v MONROE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 decrease of $2.2 million, primarily due to several ongoing capital projects. The general fund had an overall decrease of $0.1 million. The decrease in the general fund for the year is due mostly to increase in employee salary and benefit costs. General Fund Budgeting Highlights The School District's budget is prepared according to Georgia Law. The most significant budgeted fund is the general fund, funded primarily through state revenue and local property tax revenue. During the course of fiscal years 2020 and 2019, the School District amended its general fund budget as needed. For the general fund, the final budgeted revenues of $48.0 million increased from the original budgeted amount of $43.9 million. The actual amount was more than the budgeted amount by $2.4 million. The majority of the variances between final budget and actual revenue are due to increase in funds earned through the State Quality Basic Education (QBE) Funding Formula. The final budgeted expenditures of $50.2 million was more than the original budgeted amount of $45.2 million by $5.0 million. This difference was due mainly to the addition of the Federal Programs to the budget. The actual expenditures of $50.5 million was $0.3 million more than budgeted. The majority of the variances between the final budgeted expenditures and actual are due to increase in employee salary and benefit costs. CAPITAL ASSETS At the fiscal years ended June 30, 2020 and June 30, 2019, the School District had $58.3 million and $57.9 million, respectively, invested in capital assets, net of accumulated depreciation. These assets are made up of a broad range of capital assets, including land; buildings; transportation, food service and maintenance equipment. Table 4 reflects a summary of these balances, by class, net of accumulated depreciation. Table 4 Capital Assets (Net of Depreciation) Governmental Activities Fiscal Year Fiscal Year 2020 2019 Land Construction In Progress Building and Improvements Equipment Land Improvements $ 3,165,429 $ 1,688,075 47,542,094 2,748,867 3,175,453 3,165,429 2,312,641 48,800,188 2,677,554 916,096 Total $ 58,319,918 $ 57,871,908 A net increase was made in land improvements (asset category) due to the completion of the Bank Stephens Middle School Traffic and Parking Improvements project. Construction in progress decreased primarily due to the completion of several capital projects. vi MONROE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 DEBT ADMINISTRATION At June 30, 2020, the School District had $10.4 million in total debt outstanding with $2.0 million due within one year. Table 5 summarizes the long-term debt outstanding at June 30, 2020 and 2019. Table 5 Debt at June 30 Governmental Activities Fiscal Year Fiscal Year 2020 2019 Bonds Payable $ Unamortized Bond Premiums Installment Purchase Agreement Capital Leases 9,110,000 $ - 1,004,764 243,915 11,695,000 137,650 1,180,631 719,034 Total CURRENT ISSUES $ 10,358,679 $ 13,732,315 The School District remains financially stable. The operating millage rate has remained steady for several years. Fiscal year 2020 saw the full funding of the QBE formula; it has been reduced since 2003. In fiscal year 2020, the cost of employer portion of TRS pension and health insurance premiums for all employees was increased again. Along with the uncertainty regarding how School Districts will be funded in the future, it places a challenge on the Board to balance its responsibility to taxpayers and the education of the students. In December 2019, a strain of coronavirus (COVID-19) began to spread worldwide, resulting in a severe impact to the United States economy in March of 2020. The spread of COVID-19 has had a negative impact on virtually all businesses and individuals which comprise the tax base of all levels of government. We know that Monroe County Board of Education has had the QBE funding cut by $2.0 million for fiscal year 2021. Fortunately, the increase in the local tax digest has allowed for the current funding levels to hold steady. CONTACTING THE SCHOOL DISTRICT'S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overview of the School District's finances and to show the School District's accountability for the money it receives. If you have questions about this report or need additional financial information, contact Chris Johnson, CGFM, Director of Financial Services at the Monroe County Board of Education, 25 Brooklyn Ave, Forsyth, GA 31029. You may also email your questions to chris.johnson@mcschools.org. vii (This page left intentionally blank) MONROE COUNTY BOARD OF EDUCATION (This page left intentionally blank) MONROE COUNTY BOARD OF EDUCATION STATEMENT OF NET POSITION JUNE 30, 2020 ASSETS Cash and Cash Equivalents Investments Receivables, Net Taxes State Government Federal Government Other Inventories Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation) Total Assets DEFERRED OUTFLOWS OF RESOURCES Related to Defined Benefit Pension Plan Related to OPEB Plan Total Deferred Outflows of Resources LIABILITIES Accounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Contracts Payable Retainages Payable Deposits and Unearned Revenues Net Pension Liability Net OPEB Liability Long-Term Liabilities Due Within One Year Due in More Than One Year Total Liabilities DEFERRED INFLOWS OF RESOURCES Related to Defined Benefit Pension Plan Related to OPEB Plan Total Deferred Inflows of Resources NET POSITION Net Investment in Capital Assets Restricted for Continuation of Federal Programs Debt Service Capital Projects Permanent Funds Unrestricted (Deficit) Total Net Position The notes to the basic financial statements are an integral part of this statement. EXHIBIT "A" GOVERNMENTAL ACTIVITIES $ 14,520,733.71 93,188.81 1,900,249.79 2,528,015.86 402,728.99 0.05 106,387.34 4,853,503.96 53,466,413.58 77,871,222.09 11,618,883.39 2,734,049.00 14,352,932.39 881,014.04 6,164,900.88 165,498.13 74,542.50 36,282.50 12,641.80 41,356,014.00 33,684,094.00 2,037,979.96 8,320,699.22 92,733,667.03 1,227,473.00 8,412,872.00 9,640,345.00 52,882,792.35 106,387.34 1,843,091.03 1,724,710.90 18,193.02 (66,725,032.19) $ (10,149,857.55) - 1 - MONROE COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES JUNE 30, 2020 EXHIBIT "B" EXPENSES CHARGES FOR SERVICES PROGRAM REVENUES OPERATING GRANTS AND CONTRIBUTIONS CAPITAL GRANTS AND CONTRIBUTIONS NET EXPENSES AND CHANGES IN NET POSITION 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 Long-Term Debt $ 33,842,372.90 $ 1,822,473.27 1,584,057.85 750,679.41 1,765,108.88 2,566,828.00 571,795.03 4,889,380.76 4,386,010.66 19,913.00 4,646.55 908,805.81 2,289,550.17 101,709.24 471,526.90 $ 28,841.29 - 453,896.10 - 17,570,803.99 $ 162,690.33 552,509.90 570,449.00 983,428.86 1,124,793.00 47.02 1,239,094.72 798,039.38 680.00 - 1,494,638.37 - - $ 77,220.00 - - (15,800,042.01) (1,659,782.94) (1,031,547.95) (180,230.41) (781,680.02) (1,442,035.00) (571,748.01) (3,650,286.04) (3,481,909.99) (19,233.00) (4,646.55) (908,805.81) (341,015.70) (101,709.24) Total Governmental Activities $ 55,503,331.53 $ 954,264.29 $ 24,497,174.57 $ 77,220.00 (29,974,672.67) General Revenues Taxes Property Taxes For Maintenance and Operations Other Taxes Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Sales Tax Investment Earnings Miscellaneous 23,498,776.66 101.94 5,135,474.79 343,397.07 139,118.31 862,983.40 Total General Revenues 29,979,852.17 Change in Net Position 5,179.50 Net Position - Beginning of Year (Restated) (10,155,037.05) Net Position - End of Year $ (10,149,857.55) The notes to the basic financial statements are an integral part of this statement. - 2 - MONROE COUNTY BOARD OF EDUCATION BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2020 EXHIBIT "C" ASSETS Cash and Cash Equivalents Investments Receivables, Net Taxes State Government Federal Government Other Inventories GENERAL FUND CAPITAL PROJECTS FUND DEBT SERVICE FUND NONMAJOR GOVERNMENTAL FUND TOTAL $ 6,996,308.00 $ 7,523,345.68 $ 74,995.79 - 1,233,014.93 2,528,015.86 402,728.99 0.05 106,387.34 667,234.86 - 1,080.03 $ - - - $ 18,193.02 - 14,520,733.71 93,188.81 1,900,249.79 2,528,015.86 402,728.99 0.05 106,387.34 Total Assets LIABILITIES Accounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Contracts Payable Retainages Payable Deposits and Unearned Revenue Total Liabilities DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Property Taxes Unavailable Revenue - Sales Taxes Total Deferred Inflows of Resources FUND BALANCES Nonspendable Restricted Assigned Unassigned Total Fund Balances $ 11,341,450.96 $ 8,190,580.54 $ 1,080.03 $ 18,193.02 $ 19,551,304.55 $ 763,381.52 $ 6,164,900.88 165,498.13 - - 12,641.80 7,106,422.33 117,632.52 $ - 74,542.50 36,282.50 - 228,457.52 - $ - - - $ - - 881,014.04 6,164,900.88 165,498.13 74,542.50 36,282.50 12,641.80 7,334,879.85 634,321.98 - - - 239,692.22 - 634,321.98 239,692.22 - - 634,321.98 - 239,692.22 - 874,014.20 106,387.34 - 377,256.38 3,117,062.93 3,600,706.65 7,722,430.80 - 7,722,430.80 1,080.03 - 1,080.03 10,000.00 8,193.02 - 18,193.02 116,387.34 7,731,703.85 377,256.38 3,117,062.93 11,342,410.50 Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 11,341,450.96 $ 8,190,580.54 $ 1,080.03 $ 18,193.02 $ 19,551,304.55 The notes to the basic financial statements are an integral part of this statement. - 3 - MONROE COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION JUNE 30, 2020 EXHIBIT "D" Total fund balances - governmental funds (Exhibit "C") $ 11,342,410.50 Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. Land Construction in progress Buildings and improvements Equipment Land improvements Accumulated depreciation $ 3,165,429.20 1,688,074.76 77,993,245.29 9,274,050.79 6,843,571.58 (40,644,454.08) 58,319,917.54 Some liabilities are not due and payable in the current period, and, therefore, are not reported in the funds. Net pension liability Net OPEB liability $ (41,356,014.00) (33,684,094.00) (75,040,108.00) Deferred outflows and inflows of resources related to pensions/OPEB are applicable to future periods and, therefore, are not reported in the funds. Related to pensions Related to OPEB $ 10,391,410.39 (5,678,823.00) 4,712,587.39 Taxes that are not available to pay for current period expenditures are deferred in the funds. 874,014.20 Long-term liabilities are not due and payable in the current period and therefore are not reported as liabilities in the funds. Bonds payable Capital leases payable Installment sales agreement $ (9,110,000.00) (243,915.38) (1,004,763.80) (10,358,679.18) Net position of governmental activities (Exhibit "A") $ (10,149,857.55) The notes to the basic financial statements are an integral part of this statement. - 4 - MONROE COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2020 EXHIBIT "E" GENERAL FUND CAPITAL PROJECTS FUND DEBT SERVICE FUND NONMAJOR GOVERNMENTAL FUND TOTAL REVENUES Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous $ 23,677,315.97 $ 343,397.07 21,284,948.25 3,246,494.91 954,264.29 39,842.86 862,795.90 - $ 4,895,782.57 99,067.27 187.50 - $ 90.08 - - $ 23,677,315.97 - 5,239,179.64 - 21,284,948.25 - 3,246,494.91 - 954,264.29 118.10 139,118.31 - 862,983.40 Total Revenues 50,409,059.25 4,995,037.34 90.08 118.10 55,404,304.77 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 30,631,669.83 1,768,695.05 1,522,242.38 720,763.79 1,364,231.14 2,460,627.86 515,911.94 4,378,367.41 3,948,546.51 19,913.00 4,646.55 908,805.81 2,259,810.40 - - 254,472.47 315,457.08 120.00 237,504.42 612,052.52 2,317,404.99 650,985.70 38,405.91 - 13.50 - - 2,585,000.00 204,932.53 - 30,886,142.30 - 1,768,695.05 - 1,522,242.38 - 720,763.79 - 1,679,688.22 - 2,460,627.86 - 516,045.44 - 4,615,871.83 - 4,560,599.03 - 19,913.00 - 4,646.55 - 908,805.81 - 2,259,810.40 - 2,317,404.99 - 3,235,985.70 - 243,338.44 Total Expenditures 50,504,231.67 4,426,403.09 2,789,946.03 - 57,720,580.79 Revenues over Expenditures (95,172.42) 568,634.25 (2,789,855.95) 118.10 (2,316,276.02) OTHER FINANCING SOURCES (USES) Transfers In Transfers Out - - 2,789,842.53 - (2,789,842.53) - - 2,789,842.53 - (2,789,842.53) Total Other Financing Sources (Uses) - (2,789,842.53) 2,789,842.53 - - Net Change in Fund Balances (95,172.42) (2,221,208.28) (13.42) 118.10 (2,316,276.02) Fund Balances - Beginning (Restated) 3,695,879.07 9,943,639.08 1,093.45 18,074.92 13,658,686.52 Fund Balances - Ending $ 3,600,706.65 $ 7,722,430.80 $ 1,080.03 $ 18,193.02 $ 11,342,410.50 The notes to the basic financial statements are an integral part of this statement. - 5 - MONROE COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2020 EXHIBIT "F" Net change in fund balances total - governmental funds (Exhibit "E") Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of capital assets is allocated over their estimated useful lives as depreciation expense. Capital outlay Depreciation expense The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, donations, and disposals) is to decrease net position. Taxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of premiums, discounts and the difference between the carrying value of refunded debt and the acquisition cost of refunded debt when debt is first issued. These amounts are deferred and amortized in the Statement of Activities. Amortization of bond premium Bond principal retirements Capital lease payments Installment sales agreement payments District pension contributions are reported as expenditures in the governmental funds when made. However, they are reported as deferred outflows of resources in the Statement of Net Position because the reported net pension/OPEB liability is measured a year before the District's report date. Pension/OPEB expense, which is the change in the net pension/OPEB liability adjusted for changes in deferred outflows and inflows of resources related to pensions/OPEBs, is reported in the Statement of Activities. Pension expense OPEB expense $ (2,316,276.02) $ 3,086,949.44 (2,620,710.10) 466,239.34 (18,230.32) 61,254.85 $ 137,650.40 2,585,000.00 475,118.54 175,867.16 3,373,636.10 $ (1,598,010.45) 36,566.00 (1,561,444.45) Change in net position of governmental activities (Exhibit "B") $ 5,179.50 The notes to the basic financial statements are an integral part of this statement. - 6 - MONROE COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS JUNE 30, 2020 ASSETS Cash and Cash Equivalents NET POSITION Held in Trust for Private Purposes EXHIBIT "G" PRIVATE PURPOSE TRUSTS $ 97,373.90 $ 97,373.90 The notes to the basic financial statements are an integral part of this statement. - 7 - MONROE COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS YEAR ENDED JUNE 30, 2020 ADDITIONS Investment Earnings Interest DEDUCTIONS Scholarships Change in Net Position Net Position - Beginning Net Position - Ending EXHIBIT "H" PRIVATE PURPOSE TRUSTS $ 124.55 500.00 (375.45) 97,749.35 $ 97,373.90 The notes to the basic financial statements are an integral part of this statement. - 8 - (This page left intentionally blank) MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2020 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 board elected by the voters and a Superintendent appointed by the Board. The School District is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity. NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying financial statements of the School District have been prepared in conformity with generally accepted accounting principles (GAAP) as prescribed by the Governmental Accounting Standards Board (GASB). GASB is the accepted standard-setting body for governmental accounting and financial reporting principles. The most significant of the School District's accounting policies are described below. BASIS OF PRESENTATION The School District's basic financial statements are collectively comprised of the government-wide financial statements, fund financial statements and notes to the basic financial statements. The government-wide statements focus on the School District as a whole, while the fund financial statements focus on major funds. Each presentation provides valuable information that can be analyzed and compared between years and between governments to enhance the information's usefulness. GOVERNMENT-WIDE STATEMENTS: The Statement of Net Position and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. The Statement of Net Position presents the School District's non-fiduciary assets, deferred outflows of resources, deferred inflows of resources and liabilities, with the difference reported as net position. Net position is reported in three categories as follows: 1. Net investment in capital assets consists of the School District's total investment in capital assets, net of accumulated depreciation, and reduced by outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of net investment in capital assets. 2. Restricted net position consists of resources for which the School District is legally or contractually obligated to spend in accordance with restrictions imposed by external third parties or imposed by law through constitutional provisions or enabling legislation. 3. Unrestricted net position consists of resources not meeting the definition of the two preceding categories. Unrestricted net position often has constraints on resources imposed by management which can be removed or modified. 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. - 10 - MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2020 EXHIBIT "I" 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 financial statements are presented for governmental and fiduciary funds. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. All remaining governmental funds are aggregated and reported as nonmajor funds. The School District reports the following major governmental funds: The general fund is the School District's primary operating fund. It accounts for and reports all financial resources not accounted for and reported in another fund. The capital projects fund accounts for and reports financial resources including Education Special Purpose Local Option Sales Tax (ESPLOST) and bond proceeds that are restricted, committed or assigned for capital outlay expenditures, including the acquisition or construction of capital facilities and other capital assets. The debt service fund accounts for and reports financial resources that are restricted, committed, or assigned including taxes (sales) legally restricted for the payment of general long-term principal and interest. All other governmental funds not meeting the criteria established for major funds are presented in the nonmajor governmental column of the fund financial statements. The School District reports the following fiduciary fund type: Private purpose trust funds are used to report all trust arrangements, other than those properly reported elsewhere, in which principal and income benefit individuals, private organizations or other governments. BASIS OF ACCOUNTING The basis of accounting determines when transactions are reported on the financial statements. The government-wide and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes 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. - 11 - MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2020 EXHIBIT "I" 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, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues. NEW ACCOUNTING PRONOUNCEMENTS In fiscal year 2020, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 95, Postponement of the Effective Dates of Certain Authoritative Guidance. The primary objective of this statement is to provide temporary relief to governments and other stakeholders in light of the COVID-19 pandemic. That objective is accomplished by postponing the effective dates of certain provisions in statements and Implementation Guides that first became effective or are scheduled to become effective for period beginning after June 15, 2018, and later. In fiscal year 2020, the School District early adopted Governmental Accounting Standards Board (GASB) Statement No. 84, Fiduciary Activities. This statement establishes criteria for identifying fiduciary activities of all state and local governments. The focus of the criteria generally is on (1) whether a government is controlling the assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component units and postemployment benefit arrangements that are fiduciary activities. An activity meeting the criteria should be reported in a fiduciary fund in the basic financial statements. Governments with activities meeting the criteria should present a statement of fiduciary net position and a statement of changes in fiduciary net position. The cumulative effect of GASB No. 84 is described in the restatement note. CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of cash on hand, demand deposits, investments in the State of Georgia local government investment pool (Georgia Fund 1) and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated (O.C.G.A.) 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations. INVESTMENTS The School District can invest its funds as permitted by O.C.G.A. 36-83-4. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Investments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. All other investments are reported at fair value. For accounting purposes, certificates of deposit are classified as investments if they have an original maturity greater than three months when acquired. - 12 - MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2020 EXHIBIT "I" 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. 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 (calculated on the first-in, first-out basis). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used. CAPITAL ASSETS On the government-wide financial statements, capital assets are recorded at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at the acquisition value on the date donated. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. The School District does not capitalize book collections or works of art. Capital acquisition and construction are recorded as expenditures in the governmental fund financial statements at the time of purchase (including ancillary charges), and the related assets are reported as capital assets in the governmental activities column in the government-wide financial statements. Depreciation is computed using the straight-line for all assets, except land, and is used to allocate the actual or estimated historical cost of capital assets over estimated useful lives. Capitalization thresholds and estimated useful lives of capital assets reported in the government-wide statements are as follows: 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 DEFERRED OUTFLOWS/INFLOWS OF RESOURCES In addition to assets, the statement of financial position will 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(s) and therefore will not be recognized as an outflow of resources (expense/expenditure) until then. - 13 - MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2020 EXHIBIT "I" In addition to liabilities, the statement of financial position will 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(s) and therefore will not be recognized as an inflow of resources (revenue) until that time. LONG-TERM LIABILITIES AND BOND DISCOUNTS/PREMIUMS In the School District's government-wide financial statements, outstanding debt is reported as liabilities. Bond premiums and discounts and the difference between the reacquisition price and the net carrying value of refunded debt are deferred and amortized over the life of the bonds using the straight-line method. To conform to generally accepted accounting principles, bond premiums and discounts should be amortized using the effective interest method. The effect of this deviation is deemed to be immaterial to the fair presentation of the basic financial statements. Bond issuance costs are recognized as an outflow of resources in the fiscal year in which the bonds are issued. In the governmental fund financial statements, the School District recognizes the proceeds of debt and premiums as other financing sources of the current period. Bond issuance costs are reported as debt service expenditures. PENSIONS For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the pension plan's fiduciary net position and additions to/deductions from the plan's fiduciary net position have been determined on the same basis as they are reported by the plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (OPEB) For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the Georgia School Employees Postemployment Benefit Fund (School OPEB Fund) and additions to/deductions from School OPEB Fund fiduciary net position have been determined on the same basis as they are reported by School OPEB Fund. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. FUND BALANCES Fund balance for governmental funds is reported in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. The School District's fund balances are classified as follows: Nonspendable consists of resources 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 consists of resources that can be used only for specific purposes pursuant constraints either (1) externally imposed by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation. Committed consists of resources that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board. The Board is the School District's highest level of decisionmaking authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. 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. - 14 - MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2020 EXHIBIT "I" Assigned consists of resources 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 or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes. Unassigned consists of resources within the general fund not meeting the definition of any aforementioned category. The general fund should be the only fund that reports a positive unassigned fund balance amount. In other governmental funds, it may be necessary to report a negative unassigned fund balance. USE OF ESTIMATES The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. PROPERTY TAXES The Monroe County Board of Commissioners adopted the property tax levy for the 2019 tax digest year (calendar year) on September 20, 2019 (levy date) based on property values as of January 1, 2019. Taxes were due on December 20, 2019 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2019 tax digest are reported as revenue in the governmental funds for fiscal year 2020. 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, 2020, for maintenance and operations amounted to $21,837,520.67. The tax millage rate levied for the 2019 tax year (calendar year) for the School District was as follows (a mill equals $1 per thousand dollars of assessed value): School Operations 15.669 mills Additionally, Title Ad Valorem Tax revenues, at the fund reporting level, amounted to $1,839,795.30 during fiscal year ended June 30, 2020. SALES TAXES Education Special Purpose Local Option Sales Tax (ESPLOST), at the fund reporting level, during the year amounted to $4,895,782.57 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years. NOTE 3: BUDGETARY DATA The budget is a complete financial plan for the School District's fiscal year and is based upon careful estimates of expenditures together with probable funding sources. The budget is legally adopted each year for the general, debt service, and capital projects funds. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds except the various school activity (principal) accounts is prepared and adopted by fund, 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 - 15 - MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2020 EXHIBIT "I" District's website. At the next regularly scheduled meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. The approved budget is then submitted, in accordance with provisions of O.C.G.A. 20-2-167(c), to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end. See the General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual in the Supplementary Information Section for a detail of any over/under expenditures during the fiscal year under review. NOTE 4: DEPOSITS AND CASH EQUIVALENTS COLLATERALIZATION OF DEPOSITS O.C.G.A. 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110% of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110% of the daily pool balance. Acceptable security for deposits consists of any one of or any combination of the following: (1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia, (2) Insurance on accounts provided by the Federal Deposit Insurance Corporation, (3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia, (4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia, (5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose, (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, 2020, School District had deposits with a carrying amount of $4,917,214.22, and a bank balance of $5,112,637.81. The bank balances insured by Federal depository insurance were $636,498.01 and the bank balances collateralized with securities held by the pledging financial institution in the School District's name were $212,974.43. - 16 - MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2020 EXHIBIT "I" At June 30, 2020, $4,263,165.37 of the School District's bank balance was exposed to custodial credit risk as follows: Uninsured and Uncollateralized $ - Uninsured with collateral held by the pledging financial institution - Uninsured with collateral held by the pledging financial institution's trust department or agent but not in the School District's name 4,263,165.37 Total $ 4,263,165.37 Reconciliation of cash and cash equivalents balances to carrying value of deposits: Cash and cash equivalents Statement of Net Position Statement of Fiduciary Net Position $ 14,520,733.71 97,373.90 Total cash and cash equivalents 14,618,107.61 Add: Deposits with original maturity of three months or more reported as investments 93,188.81 Less: Cash on hand Investment pools reported as cash and cash equivalents Georgia Fund 1 270.00 9,793,812.20 Total carrying value of deposits - June 30, 2020 $ 4,917,214.22 CATEGORIZATION OF CASH EQUIVALENTS The School District reported cash equivalents of $9,793,812.20 in Georgia Fund 1, a local government investment pool, which is included in the cash balances above. Georgia Fund 1 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, which approximates fair value. The pool is an AAAf rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2020 was 38 days. Georgia Fund 1, administered by the State of Georgia, Office of the State Treasurer, is not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office of the State Treasurer for the Georgia Fund 1, 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, which is publicly available at https://www.sao.georgia.gov/comprehensive-annual-financial-reports. - 17 - MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2020 EXHIBIT "I" NOTE 5: CAPITAL ASSETS The following is a summary of changes in the capital assets for governmental activities during the fiscal year: Balances July 1, 2019 Increases Decreases Transfers Balances June 30, 2020 Governmental Activities Capital Assets, Not Being Depreciated: Land Construction in Progress $ 3,165,429.20 $ - $ - $ - $ 3,165,429.20 2,312,641.27 2,464,963.43 18,230.32 (3,071,299.62) 1,688,074.76 Total Capital Assets Not Being Depreciated 5,478,070.47 2,464,963.43 18,230.32 (3,071,299.62) 4,853,503.96 Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements 77,388,607.21 8,652,064.78 4,376,910.04 621,986.01 - 28,588,418.92 5,974,510.97 3,460,814.09 1,862,732.70 550,673.20 207,304.20 - 604,638.08 77,993,245.29 - - 9,274,050.79 - 2,466,661.54 6,843,571.58 - - 30,451,151.62 - - 6,525,184.17 - - 3,668,118.29 Total Capital Assets, Being Depreciated, Net 52,393,838.05 (1,998,724.09) - 3,071,299.62 53,466,413.58 Governmental Activities Capital Assets - Net $ 57,871,908.52 $ 466,239.34 $ 18,230.32 $ - $ 58,319,917.54 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 $ 39,421.71 2,481.08 272,305.82 430,326.61 $ 1,868,991.56 744,535.22 7,183.32 $ 2,620,710.10 NOTE 6: INTERFUND TRANSFERS INTERFUND TRANSFERS Interfund transfers for the year ended June 30, 2020, consisted of the following: Transfers to Transfers From Capital Projects Fund Debt Service Fund $ 2,789,842.53 Transfers are used to move Education Special Purpose Local Option Sales Tax collected in the capital projects fund as needed for repayment of bond debt principal and interest. - 18 - MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2020 EXHIBIT "I" NOTE 7: 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% 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 $ - $ 4,500,000.00 $ 4,500,000.00 $ - NOTE 8: LONG-TERM LIABILITIES The changes in long-term liabilities during the fiscal year for governmental activities were as follows: General Obligation (G.O.) Bonds Unamortized Bond Premiums Installment Sales Agreement Capital Leases Balance July 1, 2019 Additions Governmental Activities Balance Deductions June 30, 2020 Due Within One Year $ 11,695,000.00 $ 137,650.40 1,180,630.96 719,033.92 - $ 2,585,000.00 $ 9,110,000.00 $ 1,750,000.00 - 137,650.40 - - - 175,867.16 1,004,763.80 156,259.62 - 475,118.54 243,915.38 131,720.34 $ 13,732,315.28 $ - $ 3,373,636.10 $ 10,358,679.18 $ 2,037,979.96 GENERAL OBLIGATION DEBT OUTSTANDING The School District's bonded debt consists of general obligation bonds that are generally callable with interest payable semiannually. Bond proceeds primarily pay for acquiring or constructing capital facilities. The School District repays general obligation bonds from voter-approved property taxes. General obligation bonds are direct obligations and pledge the full faith and credit of the School District. The School District had no unused line of credit or outstanding notes from direct borrowings and direct placements related to governmental activities as of June 30, 2020. In the event the entity is unable to make the principal and interest payments using proceeds from the Education Special Purpose Local Option Sales Tax (ESPLOST), the debt will be satisfied from a direct annual ad valorem tax levied upon all taxable property within the School District. Additional security is provided by the State of Georgia Intercept Program which allows for state appropriations entitled to the School District to be transferred to the Debt Service Account Custodian for the payment of debt. Of the total amount originally authorized, $2,890,000.00 remains unissued. General obligation bonds currently outstanding are as follows: Description Interest Rate Issue Date Maturity Date Amount Issued Amount Outstanding General Government - Series 2019 2.02% 3/26/2019 8/1/2024 $ 9,110,000.00 $ 9,110,000.00 - 19 - MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2020 EXHIBIT "I" The following schedule details debt service requirements to maturity for the School District's total general obligation bonds payable: Fiscal Year Ended June 30: General Obligation Debt Principal Interest 2021 2022 2023 2024 2025 $ 1,750,000.00 $ 166,347.00 1,785,000.00 127,943.50 1,820,000.00 94,233.00 1,860,000.00 57,065.00 1,895,000.00 19,139.50 Total Principal and Interest $ 9,110,000.00 $ 464,728.00 INSTALLMENT SALES AGREEMENT The Monroe County Board of Education entered into an agreement date October 31, 2016, with the Georgia Municipal Association, Inc. for the acquisition of land as well as financing for the parking lot at the Fine Arts Center with a total of $1,600,000.00. Under the terms of agreement, the School District will make monthly payments through October 30, 2026. The School District's outstanding installment sales agreement related to governmental activities contains a provision that in the event of default, the lessor will take possession of the land and parking lot. The debt currently outstanding, associated with this agreement is as follows: Description Interest Rate Issue Date Maturity Date Amount Issued Amount Outstanding Installment Sales Agreement 2.489% 10/31/2016 10/30/2026 $ 1,600,000.00 $ 1,004,763.80 The following is a schedule of total installment sales agreement payments: Fiscal Year Ended June 30: Principal Interest 2021 2022 2023 2024 2025 2026 - 2027 $ 156,259.62 $ 160,248.87 164,339.96 168,501.98 172,837.29 182,576.08 24,940.26 20,951.01 16,859.92 12,697.90 8,362.59 4,267.21 Total Principal and Interest $ 1,004,763.80 $ 88,078.89 CAPITAL LEASES The School District has acquired buses and technology equipment under the provisions of various long-term lease agreements classified as capital leases for accounting purposes because they provide for a bargain purchase option or a transfer of ownership by the end of the lease term. - 20 - MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2020 EXHIBIT "I" The following assets were acquired through capital leases and are reflected in the capital asset note at fiscal year-end: Governmental Activities Equipment $ Less: Accumulated Depreciation 908,836.95 223,601.84 $ Capital leases currently outstanding are as follows: Purpose Interest Rates Issue Date Maturity Date 685,235.11 Amount Issued Amount Outstanding Chromebooks Laptops 0.00% 1.90% 6/7/2018 6/21/2018 8/5/2020 $ 9/5/2021 379,764.00 $ 443,250.00 21,625.45 222,289.93 $ 823,014.00 $ 243,915.38 The following is a schedule of total capital lease payments: Fiscal Year Ended June 30: Principal 2021 2022 $ 131,720.34 $ 112,195.04 Total Principal and Interest $ 243,915.38 $ Interest 4,240.36 2,140.21 6,380.57 NOTE 9: RISK MANAGEMENT INSURANCE The School District is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors or omissions; job related illness or injuries to employees; and natural disasters. Georgia School Boards Association Risk Management Fund The School District participates in the Georgia School Boards Association Risk Management Fund (the Fund), a public entity risk pool organized on August 1, 1994, to develop and administer a plan to reduce risk of loss on account of general liability, motor vehicle liability, errors and omissions liability, cyber risk and property damage, including safety engineering and other loss prevention and control techniques, and to administer the Fund including the processing and defense of claims brought against members of the Fund. The School District pays an annual contribution to the Fund for coverage. Reinsurance is provided to the Fund through agreements by the Fund with insurance companies according to their specialty for property (including coverage for flood and earthquake), machinery breakdown, general liability, errors and omissions, crime, cyber risk and automobile risks. Reinsurance limits and retentions vary by line of coverage. WORKERS' COMPENSATION Georgia Education Workers' Compensation Trust The School District participates in the Georgia Education Workers' Compensation Trust (the 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 workers' compensation insurance coverage. - 21 - MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2020 EXHIBIT "I" 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 $1.0 million loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided with limits of $2.0 million. The Trust covers the first $1.0 million of each Employers Liability claim with Safety National providing additional Employers Liability limits up to a $2.0 million per occurrence maximum. Safety National Casualty Company also provides $2.0 million in aggregate coverage to the Trust, attaching at 107% of the loss fund and based on the Fund's annual normal premium. UNEMPLOYMENT COMPENSATION The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the general fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. Changes in the unemployment compensation claims liability during the last two fiscal years are as follows: Beginning of Year Liability Claims and Changes in Estimates Claims Paid End of Year Liability 2019 $ - $ - $ - $ - 2020 $ - $ 4,057.00 $ 4,057.00 $ - SURETY BOND The School District purchased a surety bond to provide additional insurance coverage as follows: Position Covered Amount Superintendent $ 50,000.00 - 22 - MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2020 EXHIBIT "I" NOTE 10: FUND BALANCE CLASSIFICATION DETAILS The School District's financial statements include the following amounts presented in the aggregate at June 30, 2020: Nonspendable Inventories Permanent Funds Principal Restricted Capital Projects Debt Service Permanent Funds Assigned School Activity Accounts Unassigned $ 106,387.34 10,000.00 $ $ 5,880,419.80 1,843,091.03 8,193.02 116,387.34 7,731,703.85 377,256.38 3,117,062.93 Fund Balance, June 30, 2020 $ 11,342,410.50 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. It is the goal of the School District to achieve and maintain a committed, assigned, and unassigned fund balance in the general fund at fiscal year-end of not less than 4% of budgeted expenditures, not to exceed 15% of the total budget of the subsequent fiscal year, in compliance with O.C.G.A. 20-2-167(a)5. If the unassigned fund balance at fiscal year-end falls below the goal, the School District shall develop a restoration plan to achieve and maintain the minimum fund balance. NOTE 11: SIGNIFICANT COMMITMENTS COMMITMENTS UNDER CONSTRUCTION CONTRACTS The following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2020: Project Unearned Executed Contracts (1) Payments through June 30, 2020 (2) Hubbard Middle School Demolition $ 96,095.00 $ 388,325.00 (1) The amounts described are not reflected in the basic financial statements. (2) Payments include contracts and retainages payable at year end. - 23 - MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2020 EXHIBIT "I" OPERATING LEASES The School District leases copiers under the provisions of one or more long-term lease agreements classified as operating leases for accounting purposes. Rental expenditures under the terms of the operating leases totaled $50,846.47 for governmental activities for the year ended June 30, 2020. The following future minimum lease payments were required under operating leases at June 30, 2020: Year Ending Governmental Funds 2021 2022 2023 2024 $ 51,176.64 48,147.22 26,719.05 6,927.76 Total $ 132,970.67 NOTE 12: SIGNIFICANT CONTINGENT LIABILITIES FEDERAL GRANTS Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. Any disallowances resulting from the grantor audit may become a liability of the School District. However, the School District believes that such disallowances, if any, will be immaterial to its overall financial position. LITIGATION 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 have a material adverse effect on the financial condition of the School District. NOTE 13: OTHER POST-EMPLOYMENT BENEFITS (OPEB) GEORGIA SCHOOL PERSONNEL POST-EMPLOYMENT HEALTH BENEFIT FUND Plan Description: Certified teachers and non-certified public school employees of the School District as defined in 20-2-875 of the Official Code of Georgia Annotated (O.C.G.A.) are provided OPEB through the School OPEB Fund - a cost-sharing multiple-employer defined benefit postemployment healthcare plan, reported as an employee trust fund and administered by a Board of Community Health (Board). Title 20 of the O.C.G.A. assigns the authority to establish and amend the benefit terms of the group health plan to the Board. Benefits Provided: The School OPEB Fund provides healthcare benefits for retirees and their dependents due under the group health plan for public school teachers, including librarians, other certified employees of public schools, regional educational service agencies and non-certified public school employees. Retiree medical eligibility is attained when an employee retires and is immediately eligible to draw a retirement annuity from Employees' Retirement System (ERS), Georgia Judicial Retirement System (JRS), Legislative Retirement System (LRS), Teachers Retirement System (TRS) or Public School Employees Retirement System (PSERS). If elected, dependent coverage starts on the same day as retiree coverage. Medicare-eligible retirees are offered Standard and Premium Medicare Advantage plan options. Non-Medicare eligible retiree plan options include Health Reimbursement Arrangement (HRA), Health Maintenance Organization (HMO) and a High Deductible Health Plan (HDHP). The School OPEB Fund also pays for administrative expenses of the fund. By law, no other use of the assets of the School OPEB Fund is permitted. - 24 - MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2020 EXHIBIT "I" Contributions: As established by the Board, the School OPEB Fund is substantially funded on a pay-asyou-go basis; that is, annual cost of providing benefits will be financed in the same year as claims occur. Contributions to the School OPEB Fund from the School District were $934,807.00 for the year ended June 30, 2020. Active employees are not required to contribute to the School OPEB Fund. OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB At June 30, 2020, the School District reported a liability of $33,684,094.00 for its proportionate share of the net OPEB liability. The net OPEB liability was measured as of June 30, 2019. The total OPEB liability used to calculate the net OPEB liability was based on an actuarial valuation as of June 30, 2018. An expected total OPEB liability as of June 30, 2019 was determined using standard roll-forward techniques. The School District's proportion of the net OPEB liability was actuarially determined based on employer contributions during the fiscal year ended June 30, 2019. At June 30, 2019, the School District's proportion was 0.274476%, which was an increase of 0.003796% from its proportion measured as of June 30, 2018. For the year ended June 30, 2020, the School District recognized OPEB expense of $898,294.00. At June 30, 2020, the School District reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Outflows of Resources OPEB Deferred Inflows of Resources Differences between expected and actual experience $ - $ 3,664,479.00 Changes of assumptions 1,169,782.00 4,748,393.00 Net difference between projected and actual earnings on OPEB plan investments 73,354.00 - Changes in proportion and differences between School District contributions and proportionate share of contributions 556,106.00 - School District contributions subsequent to the measurement date 934,807.00 - Total $ 2,734,049.00 $ 8,412,872.00 - 25 - MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2020 EXHIBIT "I" School District contributions subsequent to the measurement date are reported as deferred outflows of resources and will be recognized as a reduction of the net OPEB liability in the year ended June 30, 2021. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Year Ended June 30: OPEB 2021 2022 2023 2024 2025 2026 $ (1,512,023.00) $ (1,512,023.00) $ (1,514,844.00) $ (1,298,411.00) $ (657,313.00) $ (119,016.00) Actuarial assumptions: The total OPEB liability as of June 30, 2019 was determined by an actuarial valuation as of June 30, 2018 using the following actuarial assumptions and other inputs, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2019: OPEB: Inflation 2.50% Salary increases 3.00% - 8.75%, including inflation Long-term expected rate of return Healthcare cost trend rate Pre-Medicare Eligible 7.30%, compounded annually, net of investment expense, and including inflation 7.250% Medicare Eligible Ultimate trend rate 5.375% Pre-Medicare Eligible Medicare Eligible Year of Ultimate trend rate 4.75% 4.75% Pre-Medicare Eligible Medicare Eligible 2028 2022 Mortality rates were based on the RP-2000 Combined Mortality Table for Males or Females, as appropriate, with adjustments for mortality improvements based on Scale BB as follows: For TRS members: The RP-2000 White Collar Mortality Table projected to 2025 with projection scale BB (set forward 1 year for males) is used for death after service retirement and beneficiaries. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward two years for males and four years for females) is used for death after disability retirement. For PSERS members: The RP-2000 Blue-Collar Mortality Table projected to 2025 with projection scale BB (set forward 3 years for males and 2 years for females) is used for the period after service retirement and for beneficiaries of deceased members. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward 5 years for both males and females) is used for the period after disability retirement. - 26 - MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2020 EXHIBIT "I" The actuarial assumptions used in the June 30, 2018 valuation were based on the results of an actuarial experience study for the pension systems, which covered the five-year period ending June 30, 2014, and adopted by the pension Board on December 17, 2015. The next experience study for TRS will be for the period ending June 30, 2018. The remaining actuarial assumptions (e.g., initial per capita costs, health care cost trends, rate of plan participation, rates of plan election, etc.) used in the June 30, 2018 valuation were based on a review of recent plan experience done concurrently with the June 30, 2018 valuation. Projection of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculation. The long-term expected rate of return on OPEB plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected nominal returns, net of investment expense and the assumed rate of inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. During fiscal year 2018, the School OPEB fund updated their investment strategy to a more long-term approach. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Asset class Target allocation Long-Term Expected Real Rate of Return* Fixed income Domestic Stocks -- Large Cap Domestic Stocks -- Small Cap Int'l Stocks - Developed Mkt Int'l Stocks - Emerging Mkt Alternatives 30.00% 46.20% 1.30% 12.40% 5.10% 5.00% (0.10)% 8.90% 13.20% 8.90% 10.90% 12.00% Total 100.00% *Net of Inflation Discount rate: The discount rate has changed since the prior measurement date from 3.87% to 3.58%. In order to measure the total OPEB liability for the School OPEB Fund, a single equivalent interest rate of 3.58% was used as the discount rate. This is comprised mainly of the yield or index rate for 20-year tax-exempt general obligation municipal bonds with an average rating of AA or higher (3.50% per the Bond Buyers Index). The projection of cash flows used to determine the discount rate assumed that contributions from members and from the employer will be made at the current level as averaged over the last five years, adjusted for annual projected changes in headcount. Projected future benefit payments for all current plan members were projected through 2119. Based on these assumptions, the OPEB plan's fiduciary net position was projected to be available to make OPEB payments for inactive employees through year 2026. Therefore, the calculated discount rate of 3.58% was applied to all periods of projected benefit payments to determine the total OPEB liability. - 27 - MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2020 EXHIBIT "I" Sensitivity of the School District's proportionate share of the net OPEB liability to changes in the discount rate: The following presents the School District's proportionate share of the net OPEB liability calculated using the discount rate of 3.58%, as well as what the School District's proportionate share of the net OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (2.58%) or 1 percentage-point higher (4.58%) than the current discount rate: 1% Decrease (2.58%) Current Discount Rate (3.58%) 1% Increase (4.58%) School District's proportionate share of Net OPEB Liability $ 39,152,035.00 $ 33,684,094.00 $ 29,236,169.00 Sensitivity of the School District's proportionate share of the net OPEB liability to changes in the healthcare cost trend rates: The following presents the School District's proportionate share of the net OPEB liability, as well as what the School District's proportionate share of the net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower or 1percentage-point higher than the current healthcare cost trend rates: 1% Decrease Current Healthcare Cost Trend Rate 1% Increase School District's proportionate share of Net OPEB Liability $ 28,375,281.00 $ 33,684,094.00 $ 40,426,690.00 OPEB plan fiduciary net position: Detailed information about the OPEB plan's fiduciary net position is available in the Comprehensive Annual Financial Report which is publicly available at https://sao.georgia.gov/comprehensive-annual-financial-reports. NOTE 14: RETIREMENT PLANS The School District participates in various retirement plans administered by the State of Georgia, as further explained below. TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS) Plan Description: All teachers of the School District as defined in O.C.G.A. 47-3-60 and certain other support personnel as defined by O.C.G.A. 47-3-63 are provided a pension through the Teachers Retirement System of Georgia (TRS). TRS, a cost-sharing multiple-employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. The Teachers Retirement System of Georgia issues a publicly available separate financial report that can be obtained at www.trsga.com/publications. Benefits Provided: TRS provides service retirement, disability retirement, and death benefits. Normal retirement benefits are determined as 2% of the average of the employee's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. An employee is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. Ten years of service is required for disability and death benefits eligibility. Disability benefits are based on the employee's creditable service and compensation up to the time of disability. Death benefits equal the amount that would be payable to the employee's beneficiary had the employee retired on the date of death. Death benefits are based on the employee's creditable service and compensation up to the date of death. Contributions: Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. Pursuant to O.C.G.A. 47-3-63, the employer contributions for certain full-time public school support personnel are funded on behalf of the employer by the State of Georgia. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional - 28 - MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2020 EXHIBIT "I" amount to finance any unfunded accrued liability. Employees were required to contribute 6.00% of their annual pay during fiscal year 2020. The School District's contractually required contribution rate for the year ended June 30, 2020 was 21.14% of annual School District payroll, of which 21.07% of payroll was required from the School District and 0.07% of payroll was required from the State. For the current fiscal year, employer contributions to the pension plan were $5,245,228.71 and $16,508.59 from the School District and the State, respectively. EMPLOYEES' RETIREMENT SYSTEM Plan Description: The Employees' Retirement System of Georgia (ERS) is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly during the 1949 Legislative Session for the purpose of providing retirement allowances for employees of the State of Georgia and its political subdivisions. ERS is directed by a Board of Trustees. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. ERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/financials. Benefits Provided: The ERS Plan supports three benefit tiers: Old Plan, New Plan, and Georgia State Employees' Pension and Savings Plan (GSEPS). Employees under the old plan started membership prior to July 1, 1982 and are subject to plan provisions in effect prior to July 1, 1982. Members hired on or after July 1, 1982 but prior to January 1, 2009 are new plan members subject to modified plan provisions. Effective January 1, 2009, new state employees and rehired state employees who did not retain membership rights under the Old or New Plans are members of GSEPS. ERS members hired prior to January 1, 2009 also have the option to irrevocably change their membership to GSEPS. Under the old plan, the new plan, and GSEPS, a member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60 or 30 years of creditable service regardless of age. Additionally, there are some provisions allowing for early retirement after 25 years of creditable service for members under age 60. Retirement benefits paid to members are based upon the monthly average of the member's highest 24 consecutive calendar months, multiplied by the number of years of creditable service, multiplied by the applicable benefit factor. Annually, postretirement cost-of-living adjustments may also be made to members' benefits, provided the members were hired prior to July 1, 2009. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension, at reduced rates, to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS. Contributions: Member contributions under the old plan are 4% of annual compensation, up to $4,200.00, plus 6% of annual compensation in excess of $4,200.00. Under the old plan, the state pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these state contributions are included in the members' accounts for refund purposes and are used in the computation of the members' earnable compensation for the purpose of computing retirement benefits. Member contributions under the new plan and GSEPS are 1.25% of annual compensation. The School District's required contribution rate for the year ended June 30, 2020 was 24.66% of annual covered payroll for old and new plan members and 21.64% for GSEPS members. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employer contributions to the pension plan were $21,868.68 for the current fiscal year. PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM (PSERS) Plan Description: PSERS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly in 1969 for the purpose of providing retirement allowances for public school employees who are not eligible for membership in the Teachers Retirement System of Georgia. The ERS Board of Trustees, plus two additional trustees, administers - 29 - MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2020 EXHIBIT "I" PSERS. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. PSERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/financials. Benefits Provided: A member may retire and elect to receive normal monthly retirement benefits after completion of ten years of creditable service and attainment of age 65. A member may choose to receive reduced benefits after age 60 and upon completion of ten years of service. Upon retirement, the member will receive a monthly benefit of $15.25, multiplied by the number of years of creditable service. Death and disability benefits are also available through PSERS. Additionally, PSERS may make periodic cost-of-living adjustments to the monthly benefits. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contribution, the member forfeits all rights to retirement benefits. Contributions: The general assembly makes an annual appropriation to cover the employer contribution to PSERS on behalf of local school employees (bus drivers, cafeteria workers, and maintenance staff). The annual employer contribution required by statute is actuarially determined and paid directly to PSERS by the State Treasurer in accordance with O.C.G.A. 47-4-29(a) and 60(b). Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Individuals who became members prior to July 1, 2012 contribute $4 per month for nine months each fiscal year. Individuals who became members on or after July 1, 2012 contribute $10 per month for nine months each fiscal year. The State of Georgia, although not the employer of PSERS members, is required by statute to make employer contributions actuarially determined and approved and certified by the PSERS Board of Trustees. The current fiscal year contribution was $132,830.00. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2020, the School District reported a liability of $41,356,014.00 for its proportionate share of the net pension liability for TRS ($41,219,178.00) and ERS ($136,836.00). The TRS net pension liability reflected a reduction for support provided to the School District by the State of Georgia for certain public school support personnel. The amount recognized by the School District as its proportionate share of the net pension liability, the related State of Georgia support, and the total portion of the net pension liability that was associated with the School District were as follows: School District's proportionate share of the net pension liability $ 41,219,178.00 State of Georgia's proportionate share of the net pension liability associated with the School District 159,120.00 Total $ 41,378,298.00 The net pension liability for TRS and ERS was measured as of June 30, 2019. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2018. An expected total pension liability as of June 30, 2019 was determined using standard roll-forward techniques. The School District's proportion of the net pension liability was based on contributions to TRS and ERS during the fiscal year ended June 30, 2019. At June 30, 2019, the School District's TRS proportion was 0.191693%, which was a decrease of 0.000527% from its proportion measured as of June 30, 2018. At June 30, 2019, the School District's ERS proportion was 0.003316%, which was an increase of 0.000119% from its proportion measured as of June 30, 2018. - 30 - MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2020 EXHIBIT "I" At June 30, 2020, the School District did not have a PSERS liability for a proportionate share of the net pension liability because of a Special Funding Situation with the State of Georgia, which is responsible for the net pension liability of the plan. The amount of the State's proportionate share of the net pension liability associated with the School District is $739,659.00. The PSERS net pension liability was measured as of June 30, 2019. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2018. An expected total pension liability as of June 30, 2019 was determined using standard roll-forward techniques. The State's proportion of the net pension liability associated with the School District was based on actuarially determined contributions paid by the State during the fiscal year ended June 30, 2019. For the year ended June 30, 2020, the School District recognized pension expense of $6,770,215.00 for TRS, $59,053.00 for ERS and $228,102.00 for PSERS and revenue of $35,812.00 for TRS and $228,102.00 for PSERS. The revenue is support provided by the State of Georgia. For TRS the State of Georgia support is provided only for certain support personnel. At June 30, 2020, the School District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: TRS Deferred Outflows of Resources Deferred Inflows of Resources ERS Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual experience $ 2,323,323.00 $ 12,220.00 $ 4,557.00 $ - Changes of assumptions 3,955,518.00 - 2,408.00 - Net difference between projected and actual earnings on pension plan investments - 981,554.00 - 4,259.00 Changes in proportion and differences between School District contributions and proportionate share of contributions 62,978.00 229,440.00 3,002.00 - School District contributions subsequent to the measurement date 5,245,228.71 - 21,868.68 - Total $ 11,587,047.71 $ 1,223,214.00 $ 31,835.68 $ 4,259.00 The School District contributions subsequent to the measurement date for TRS and for ERS are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ended June 30, 2021. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year Ended June 30: TRS ERS 2021 2022 2023 2024 $ 2,140,817.00 $ 8,383.00 $ 334,585.00 $ (2,400.00) $ 1,304,632.00 $ (839.00) $ 1,338,571.00 $ 564.00 - 31 - MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2020 EXHIBIT "I" Actuarial assum ptions: The total pension liability as of June 30, 2019 was determined by an actuarial valuation as of June 30, 2018, using the following actuarial assumptions, applied to all periods included in the measurement: Teachers Retirement System: Inflation Salary increases Investment rate of return Post-retirement benefit increases 2.50% 3.00% 8.75%, average, including inflation 7.25%, net of pension plan investment expense, including inflation 1.50% semi-annually Post-retirement mortality rates were based on the RP-2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males) for service retirements and dependent beneficiaries. The RP-2000 Disabled Mortality Table with future mortality improvement projected to 2025 with Society of Actuaries' projection scale BB (set forward two years for males and four years for females) was used for the death after disability retirement. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB. The actuarial assumptions used in the June 30, 2018 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014, with the exception of the assumed investment rate of return. Employees' Retirement System: Inflation 2.75% Salary increases 3.25% - 7.00%, including inflation Investment rate of return 7.30%, net of pension plan investment expense, including inflation Post-retirement mortality rates were based on the RP-2000 Combined Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB and set forward 2 years for both males and females for service retirements and dependent beneficiaries. The RP-2000 Disabled Mortality Table with future mortality improvement projected to 2025 with Society of Actuaries' projection scale BB and set back 7 years for males and set forward 3 years for females was used for death after disability retirement. There is a margin for future mortality improvement in the tables used by the System. Based on the results of the most recent experience study adopted by the Board on December 17, 2015, the numbers of expected future deaths are 9-12% less than the actual number of deaths that occurred during the study period for service retirements and beneficiaries and for disability retirements. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB. - 32 - MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2020 EXHIBIT "I" The actuarial assumptions used in the June 30, 2018 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014, with the exception of the assumed investment rates of return. Public School Employees Retirement System: Inflation 2.75% Salary increases N/A Investment rate of return 7.30%, net of pension plan investment expense, including inflation Post-retirement benefit increases 1.50% semi-annually Post-retirement mortality rates were based on the RP-2000 Blue-Collar Mortality Table projected to 2025 with projection scale BB (set forward 3 years for males and 2 years for females) for the period after service retirements and for dependent beneficiaries. The RP-2000 Disabled Mortality projected to 2025 with projection scale BB (set forward 5 years for both males and females) was used for death after disability retirement. There is a margin for future mortality improvement in the tables used by the System. Based on the results of the most recent experience study adopted by the Board on December 17, 2015, the numbers of expected future deaths are 9-11% less than the actual number of deaths that occurred during the study period for healthy retirees and 9-11% less than expected under the selected table for disabled retirees. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB. The actuarial assumptions used in the June 30, 2018 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014, with the exception of the assumed investment rate of return. The long-term expected rate of return on TRS, ERS and PSERS pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Asset class Fixed income Domestic large stocks Domestic small stocks International developed market stocks International emerging market stocks Alternative Total * Rates shown are net of assumed rate of inflation. TRS Target allocation 30.00% 51.00% 1.50% 12.40% 5.10% - 100.00% ERS/PSERS Target allocation 30.00% 46.20% 1.30% 12.40% 5.10% 5.00% 100.00% Long-term expected real rate of return* (0.10)% 8.90% 13.20% 8.90% 10.90% 12.00% - 33 - MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2020 EXHIBIT "I" Discount rate: The discount rate used to measure the total TRS pension liability was 7.25%. The discount rate used to measure the total ERS and PSERS pension liability was 7.30%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the TRS, ERS and PSERS pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the School District's proportionate share of the net pension liability to changes in the discount rate: The following presents the School District's proportionate share of the net pension liability calculated using the discount rate of 7.25% and 7.30%, as well as what the School District's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.25% and 6.30%) or 1-percentage-point higher (8.25% and 8.30%) than the current rate: Teachers Retirement System: 1% Decrease (6.25%) Current Discount Rate (7.25%) 1% Increase (8.25%) School District's proportionate share of the net pension liability $ 66,910,791.00 $ 41,219,178.00 $ 20,091,545.00 Employees' Retirement System: 1% Decrease (6.30%) Current Discount Rate (7.30%) 1% Increase (8.30%) School District's proportionate share of the net pension liability $ 194,456.00 $ 136,836.00 $ 87,715.00 Pension plan fiduciary net position: Detailed information about the pension plan's fiduciary net position is available in the separately issued TRS, ERS and PSERS financial report which is publicly available at www.trsga.com/publications and http://www.ers.ga.gov/financials. - 34 - MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2020 EXHIBIT "I" NOTE 15: RESTATEMENT OF PRIOR YEAR NET POSITION For fiscal year 2020, the School District made prior period adjustments due to the adoption of GASB Statement No, 84, as described in "New Accounting Pronouncements," which requires the restatement of the June 30, 2019 net position in governmental activities and fund balance in the general fund and fiduciary funds. These changes are in accordance with generally accepted accounting principles. Net Position, July 1, 2019 as previously reported $ (10,268,014.79) Prior Period Adjustment - Implementation of GASB No. 84: School Activity Account Reclassification 112,977.74 Net Position, July 1, 2019, as restated $ (10,155,037.05) Fund Balance (General Fund), July 1, 2019, as previously reported $ 3,582,901.33 Prior Period Adjustment - Implementation of GASB No. 84: School Activity Account Reclassification Fund Balance (General Fund), July 1, 2019, as restated 112,977.74 $ 3,695,879.07 Net Position (Fiduciary Funds), July 1, 2019 as previously reported $ Prior Period Adjustment - Implementation of GASB No. 84: Restatement for Custodial Funds Beginning Net Position 112,977.74 (112,977.74) Net Position (Fiduciary Funds), July 1, 2019, as restated $ - NOTE 16: TAX ABATEMENTS Monroe County enters into property tax abatement agreements with local businesses for the purpose of attracting or retaining businesses within their jurisdictions. The abatements may be granted to any business located within or promising to relocate to Monroe County. For the fiscal year ended June 30, 2020, Monroe County abated property taxes due to the School District that were levied on September 20, 2019 and due on December 20, 2019 totaling $94,770.64. The amount abated is due to a single tax abatement agreement with the Monroe County Industrial Development Authority and Encore Plastics Southeast, LLC. NOTE 17: SUBSEQUENT EVENTS On September 8, 2020 the Monroe County Board of Education voted to issue a $5,500,000.00 Tax Anticipation Note with a due date of December 31, 2020. - 35 - (This page left intentionally blank) MONROE COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TEACHERS RETIREMENT SYSTEM OF GEORGIA FOR THE YEAR ENDED JUNE 30 SCHEDULE "1" Year Ended School District's proportion of the net pension liability School District's proportionate share of the net pension liability State of Georgia's proportionate share of the net pension liability associated with the School District Total School District's covered payroll 2020 2019 2018 2017 2016 2015 0.191693% $ 0.192220% $ 0.191634% $ 0.192562% $ 0.194108% $ 0.198660% $ 41,219,178.00 $ 35,680,149.00 $ 35,615,769.00 $ 39,727,688.00 $ 29,551,016.00 $ 25,098,071.00 $ 159,120.00 $ 41,378,298.00 $ 23,490,186.66 139,402.00 $ 35,819,551.00 $ 22,984,172.62 251,459.00 $ 35,867,228.00 $ 22,175,353.84 496,385.00 $ 40,224,073.00 $ 21,393,966.39 292,453.00 $ 29,843,469.00 $ 20,821,711.00 323,928.00 $ 25,421,999.00 $ 20,678,210.00 School District's proportionate share of the net pension liability as a percentage of its covered payroll Plan fiduciary net position as a percentage of the total pension liability 175.47% 155.24% 160.61% 185.70% 141.92% 121.37% 78.56% 80.27% 79.33% 76.06% 81.44% 84.03% This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. - 37 - MONROE COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS TEACHERS RETIREMENT SYSTEM OF GEORGIA FOR THE YEAR ENDED JUNE 30 SCHEDULE "2" Year Ended 2020 2019 2018 2017 2016 2015 (1) 2014 (1) 2013 (1) 2012 (1) 2011 (1) Contractually required contribution Contributions in relation to the contractually required contribution Contribution deficiency (excess) School District's covered payroll Contributions as a percentage of covered payroll $ 5,245,228.71 $ $ 4,888,974.76 $ $ 3,848,600.70 $ $ 3,139,455.22 $ $ 3,013,891.51 $ $ 2,738,055.10 $ $ 2,539,284.15 $ $ 2,372,775.35 $ $ 2,149,563.22 $ $ 2,114,589.55 $ 5,245,228.71 $ 4,888,974.76 $ 3,848,600.70 $ 3,139,455.22 $ 3,013,891.51 $ 2,738,055.10 $ 2,539,284.15 $ 2,372,775.35 $ 2,149,563.22 $ 2,114,589.55 $ - $ 24,891,484.71 - $ 23,490,186.66 - $ 22,984,172.62 - $ 22,175,353.84 - $ 21,393,966.39 - $ 20,821,711.00 - $ 20,678,210.00 - $ 20,795,577.00 - $ 20,910,148.05 - $ 20,569,937.26 21.07% 20.81% 16.74% 14.16% 14.09% 13.15% 12.28% 11.41% 10.28% 10.28% (1) For years 2015 and earlier, the contribution amounts included payments made on-behalf of the School District employees by the Georgia Department of Education. - 38 - MONROE COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA FOR THE YEAR ENDED JUNE 30 SCHEDULE "3" Year Ended 2020 2019 2018 2017 2016 2015 School District's proportion of the net pension liability School District's proportionate share of the net pension liability School District's covered payroll School District's proportionate share of the net pension liability as a percentage of its covered payroll Plan fiduciary net position as a percentage of the total pension liability 0.003316% $ 0.003197% $ 0.000000% $ 0.000000% $ 0.000349% $ 0.002270% $ 136,836.00 $ 131,430.00 $ 129,150.00 $ - $ 14,139.00 $ 85,139.00 $ 83,592.00 81,552.96 78,003.96 7,984.46 47,990.46 163.70% 161.16% 165.57% 0.00% 177.08% 177.41% 76.74% 76.68% 76.33% 72.34% 76.20% 77.99% This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. - 39 - MONROE COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA FOR THE YEAR ENDED JUNE 30 SCHEDULE "4" Year Ended Contractually required contribution Contributions in relation to the contractually required contribution Contribution deficiency (excess) School District's covered payroll Contributions as a percentage of covered payroll 2020 $ 2019 $ 2018 $ 2017 $ 2016 $ 2015 $ 21,868.68 $ 20,714.04 $ 20,233.32 $ 19,352.76 $ - $ 1,753.44 $ 21,868.68 $ 20,714.04 $ 20,233.32 $ 19,352.76 $ - $ 1,753.44 $ - $ - $ - $ - $ - $ - $ 88,680.96 83,592.00 81,552.96 78,003.96 7,984.46 24.66% 24.78% 24.81% 24.81% 0.00% 21.96% This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. - 40 - MONROE COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM OF GEORGIA FOR THE YEAR ENDED JUNE 30 SCHEDULE "5" Year Ended School District's proportion of the net pension liability School District's proportionate share of the net pension liability 2020 2019 2018 2017 2016 2015 0.00% $ - 0.00% $ - 0.00% $ - 0.00% $ - 0.00% $ - 0.00% $ - State of Georgia's proportionate share of the net pension liability associated with the School District Total School District's covered payroll School District's proportionate share of the net pension liability as a percentage of its covered payroll Plan fiduciary net position as a percentage of the total pension liability $ 739,659.00 $ 739,659.00 $ 1,569,727.12 $ 723,381.00 $ 723,381.00 $ 1,446,184.38 $ 657,570.00 $ 657,570.00 $ 1,234,909.83 $ 854,291.00 $ 854,291.00 $ 1,332,623.23 $ 520,150.00 $ 520,150.00 $ 1,369,387.64 $ 458,285.00 $ 458,285.00 $ 2,064,334.96 N/A 85.02% N/A 85.26% N/A 85.69% N/A 81.00% N/A 87.00% N/A 88.29% This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. - 41 - MONROE COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY SCHEDULE OF PROPORTIONATE SHARE OF THE NET OPEB LIABILITY SCHOOL OPEB FUND FOR THE YEAR ENDED JUNE 30 SCHEDULE "6" Year Ended 2020 2019 2018 School District's proportion of the net OPEB liability School District's proportionate share of the net OPEB liability State of Georgia's proportionate share of the net OPEB liability associated with the School District 0.274476% $ 33,684,094.00 $ - 0.270680% $ 34,402,597.00 $ - 0.270494% $ 38,004,298.00 $ - Total School District's covered-employee payroll $ 33,684,094.00 $ 34,402,597.00 $ 38,004,298.00 $ 22,693,079.89 $ 20,647,717.12 $ 21,690,661.74 School District's proportionate share of the net OPEB liability as a percentage of its covered- employee payroll Plan fiduciary net position as a percentage of the total OPEB liability 148.43% 166.62% 175.21% 4.63% 2.93% 1.61% This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. - 42 - MONROE COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS SCHOOL OPEB FUND FOR THE YEAR ENDED JUNE 30 SCHEDULE "7" Year Ended Contractually required contribution Contributions in relation to the contractually required contribution Contribution deficiency (excess) School District's covered-employee payroll Contributions as a percentage of covered- employee payroll 2020 2019 2018 2017 $ 934,807.00 $ $ 1,478,242.00 $ $ 1,402,911.00 $ $ 1,410,380.00 $ 934,807.00 $ 1,478,242.00 $ 1,402,911.00 $ 1,410,380.00 $ - $ 23,743,399.44 - $ 22,693,079.89 - $ 20,647,717.12 - $ 21,690,661.74 3.94% 6.51% 6.79% 6.50% This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. - 43 - MONROE COUNTY BOARD OF EDUCATION NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED JUNE 30, 2020 SCHEDULE "8" Teachers Retirement System Changes of assumptions: In 2010 and later, the expectation of retired life mortality was changed to the RP 2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. In 2010, assumed rates of salary increase were adjusted to more closely reflect actual and anticipated experience. On November 18, 2015, the Board adop- ted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, disability, withdrawal and salary increases. The expectation of retired life mortality was changed to RP 2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males). On May 15, 2019, the Board adopted recommended changes from the smoothed valuation interest rate methodology that has been in effect since June 30, 2009, to a constant interest rate method. In conjunction with the methodology, the long-term assumed rate of return in assets (discount rate) has been changed from 7.50% to 7.25%, and the assumed annual rate of inflation has been reduced from 2.75% to 2.50%. Employees' Retirement System Changes of benefit terms: A new benefit tier was added for members joining the System on and after July 1, 2009. A one-time 3% payment was granted to certain retirees and beneficiaries effective July 2016. $RQHWLPHSD\PHQWZDVJUDQWHGWRFHUWDLQUHWLUHHVDQGEHQHILFLDULHVHIIHFWLYH-XO\ Changes of assumptions: On December 17, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, withdrawal and salary increases. On March 15, 2018, the Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for the June 30, 2017 actuarial valuation. In addition, based on the Board's new funding policy, the assumed investment rate of return was further reduced by 0.10% from 7.40% to 7.30% as of the June 30, 2018 measurement date. Public School Employees Retirement System Changes of assumptions: In 2010 and later, the expectation of retired life mortality was changed to the RP 2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were DGMXVWHGWRPRUHFORVHO\UHIOHFWDFWXDOH[SHULHQFH On December 17, 2- 015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement and withdrawal. The expectation of retired life mortality was changed to the RP 2000 Blue Collar Mortality Table projected to 2025 with projection scale BB (set forward 3 years for males and 2 years for females). On March 15, 2018, the Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for June 30, 2017 actuarial valuation. In addition, based on the Board's new funding policy, the assumed investment rate of return was further reduced by 0.10% from 7.40% to 7.30% as of the June 30, 2018 measurement date. School OPEB Fund Changes of benefit terms: There have been no changes in benefit terms. Changes in assumptions: The June 30, 2017 actuarial valuation was revised, for various factors, including the methodology used to determine how employees and retirees were assigned to each of the OPEB Funds and anticipated participation percentages. Current and former employees of State organizations (including technical colleges, community service boards and public health departments) are now assigned to State OPEB fund based on their last employer payroll location; irrespective of retirement affiliation. The discount rate was updated from 3.07% as of June 30, 2016 to 3.58% as of June 30, 2017 to 3.87% as of June 30, 2018, and back to 3.58% as of June 30, 2019. - 44 - MONROE COUNTY BOARD OF EDUCATION GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2020 SCHEDULE "9" 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 Total Expenditures Net Change in Fund Balances Fund Balances - Beginning Adjustments NONAPPROPRIATED BUDGETS ORIGINAL (1) FINAL (1) ACTUAL AMOUNTS VARIANCE OVER/UNDER $ 22,800,000.00 $ 22,800,000.00 $ 23,677,315.97 $ 215,000.00 215,000.00 343,397.07 20,423,442.00 19,948,342.28 21,284,948.25 79,445.00 3,932,698.29 3,246,494.91 16,000.00 737,146.55 954,264.29 120,000.00 120,000.00 39,842.86 295,000.00 295,000.00 862,795.90 43,948,887.00 48,048,187.12 50,409,059.25 877,315.97 128,397.07 1,336,605.97 (686,203.38) 217,117.74 (80,157.14) 567,795.90 2,360,872.13 29,683,780.50 1,482,279.00 1,055,956.00 762,166.00 1,380,179.00 2,426,383.50 527,268.00 4,059,297.00 3,822,686.00 23,400.00 - 45,223,395.00 (1,274,508.00) 3,548,814.53 66,632.75 31,099,053.48 1,576,284.00 1,604,259.00 768,856.36 1,383,579.00 2,359,480.16 527,268.00 4,209,297.00 3,822,686.00 23,950.00 - 2,849,162.05 50,223,875.05 (2,175,687.93) 3,662,537.11 106,718.78 30,631,669.83 1,768,695.05 1,522,242.38 720,763.79 1,364,231.14 2,460,627.86 515,911.94 4,378,367.41 3,948,546.51 19,913.00 4,646.55 908,805.81 2,259,810.40 50,504,231.67 (95,172.42) 3,695,879.07 - 467,383.65 - (192,411.05) 82,016.62 48,092.57 19,347.86 (101,147.70) 11,356.06 (169,070.41) (125,860.51) 4,037.00 (4,646.55) (908,805.81) 589,351.65 (280,356.62) 2,080,515.51 33,341.96 (106,718.78) Fund Balances - Ending $ 2,340,939.28 $ 1,593,567.96 $ 3,600,706.65 $ 2,007,138.69 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 $755,900.57 and $751,702.32, respectively. The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. See notes to the basic financial statements. - 45 - MONROE COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2020 SCHEDULE "10" FUNDING AGENCY PROGRAM/GRANT Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program Total Child Nutrition Cluster Other Programs Pass-Through From Georgia Department of Education Food Services Child Nutrition Discretionary Grants Limited Availability Total U. S. Department of Agriculture Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Grants to States Preschool Grants Total Special Education Cluster Other Programs Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Supporting Effective Instruction State Grants Supporting Effective Instruction State Grants Title I Grants to Local Educational Agencies Title I Grants to Local Educational Agencies Total Other Programs Total U. S. Department of Education Defense, U. S. Department of Direct Department of the Army R.O.T.C. Program CFDA NUMBER PASSTHROUGH ENTITY ID NUMBER EXPENDITURES IN PERIOD 10.553 10.555 205GA324N1099 $ 205GA324N1099 339,068.38 1,895,333.72 2,234,402.10 10.579 205GA324N8503 3,698.31 2,238,100.41 84.027 84.027 84.173 H027A180073 H027A190073 H173A190081 84.048 84.367 84.367 84.010 84.010 V048A190010 S367A180001 S367A190001 S010A180010 S010A190010 169,012.00 631,609.03 30,389.00 831,010.03 32,470.20 13,297.00 112,010.43 44,019.00 719,972.29 921,768.92 1,752,778.95 12.UNKNOWN 66,765.64 Total Expenditures of Federal Awards $ 4,057,645.00 Notes to the Schedule of Expenditures of Federal Awards Note 1. Basis of Presentation The accompanying schedule of expenditures of federal awards (the "Schedule") includes the federal award activity of the Monroe County Board of Education (the "Board") under programs of the federal government for the year ended June 30, 2020. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Board, it is not intended to and does not present the financial position or changes in net position of the Board. Note 2. Summary of Significant Accounting Policies Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Note 3. Indirect Cost Rate The Board has elected not to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance. See notes to the basic financial statements. - 46 - MONROE COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2020 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 School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Principal Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Amended Formula Adjustment Categorical Grants Pupil Transportation Regular Nursing Services Other State Programs Food Services Hygiene Products in Georgia Schools Math and Science Supplements Preschool Disability Services Pupil Transportation - State Bonds Teachers Retirement Vocational Education Office of the State Treasurer Public School Employees Retirement See notes to the basic financial statements. SCHEDULE "11" GOVERNMENTAL FUND TYPE GENERAL FUND $ 841,770.62 1,182,422.00 282,771.00 2,391,836.00 400,085.00 1,325,644.00 328,997.00 2,355,642.00 2,141,403.00 807,609.00 3,691,726.00 1,250,526.00 106,125.00 176,546.00 41,491.00 420,846.00 118,637.00 80,508.00 1,211.00 722,819.00 818,177.00 869,533.00 (307,303.00) 659,977.00 81,865.00 52,898.00 1,152.00 65,668.44 64,861.00 77,220.00 16,508.59 82,946.60 132,830.00 $ 21,284,948.25 - 47 - (This page left intentionally blank) MONROE COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS YEAR ENDED JUNE 30, 2020 SCHEDULE "12" PROJECT ORIGINAL ESTIMATED COST (1) CURRENT ESTIMATED COSTS (2) AMOUNT EXPENDED IN CURRENT YEAR (3) AMOUNT EXPENDED IN PRIOR YEARS (3) TOTAL COMPLETION COST EXCESS PROCEEDS NOT EXPENDED ESTIMATED COMPLETION DATE 2019 SPLOST (i) Acquiring miscellaneous new equipment, fixtures and furnishings for the school system, including technology equipment, software and safety and security equipment; $ 4,200,000.00 $ 4,200,000.00 $ 567,121.28 $ 73,868.34 $ (ii) Adding to, renovating, repairing, improving and equipping existing school buildings and school system facilities; 1,550,000.00 1,550,000.00 603,062.50 296,255.73 (iii) Acquiring band instruments and equipment, text books and library books for the school system, including electronic media; (iv) Acquiring school buses, vehicles, and transportation and maintenance equipment; (v) Constructing and equipping new school facilities, including instructional, fine arts and athletic facilities; (vi) Acquiring land for future schools and facilities; (vii) Paying any general obligation debt of the School District issued in conjunction with the continuation of such sales and use tax including associated interest; and (viii) Paying expenses incidental to accomplishing the foregoing. 1,200,000.00 1,200,000.00 2,800,000.00 2,800,000.00 2,200,000.00 - 2,200,000.00 - 12,000,000.00 12,000,000.00 50,000.00 50,000.00 135,486.68 194,494.91 - 2,651,144.34 - - 16,000.00 - - $ - - - - April 2024 - April 2024 - April 2024 - April 2024 - April 2024 - April 2024 - April 2024 - April 2024 $ 24,000,000.00 $ 24,000,000.00 $ 4,151,309.71 $ 386,124.07 $ - $ - (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. See notes to the basic financial statements. - 49 - (This page left intentionally blank) SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS (This page left intentionally blank) Greg S. Griffin STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 4-101 Atlanta, Georgia 30334-8400 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 The Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education and Superintendent and Members of the Monroe County Board of Education We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Monroe County Board of Education (School District), as of and for the year ended June 30, 2020, and the related notes to the financial statements, which collectively comprise the School District's basic financial statements, and have issued our report thereon dated June 15, 2021. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the School District's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the School District's internal control. Accordingly, we do not express an opinion on the effectiveness of the School District's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. (This page left intentionally blank) Compliance and Other Matters As part of obtaining reasonable assurance about whether the School District's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the School District's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School District's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Respectfully submitted, June 15, 2021 Greg S. Griffin State Auditor (This page left intentionally blank) Greg S. Griffin STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 4-101 Atlanta, Georgia 30334-8400 INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE The Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education and Superintendent and Members of the Monroe County Board of Education Report on Compliance for Each Major Federal Program We have audited the Monroe County Board of Education's (School District) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2020. The School District's major federal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs. Management's Responsibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor's Responsibility Our responsibility is to express an opinion on compliance for each of the School District's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the School District's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the School District's compliance. (This page left intentionally blank) Opinion on Each Major Federal Program In our opinion, the School District complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2020. Report on Internal Control over Compliance Management of the School District is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the School District's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the School District's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Respectfully submitted, June 15, 2021 Greg S. Griffin State Auditor (This page left intentionally blank) SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS (This page left intentionally blank) MONROE COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2020 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported. (This page left intentionally blank) SECTION IV FINDINGS AND QUESTIONED COSTS (This page left intentionally blank) MONROE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2020 I SUMMARY OF AUDITOR'S RESULTS Financial Statements Type of auditor's report issued: Governmental Activities; All Major Funds; Aggregate Remaining Fund Information Unmodified Internal control over financial reporting: Material weakness identified? Significant deficiency identified? No None Reported Noncompliance material to financial statements noted: No Federal Awards Internal Control over major programs: Material weakness identified? Significant deficiency identified? No None Reported Type of auditor's report issued on compliance for major programs: All major programs Unmodified Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)? No Identification of major programs: CFDA Numbers Name of Federal Program or Cluster 10.553, 10.555 84.010 Child Nutrition Cluster Title I Grants to Local Educational Agencies Dollar threshold used to distinguish between Type A and Type B programs: Auditee qualified as low-risk auditee? $750,000.00 No II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.