Murray County Board of Education, Chatsworth, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2007

MURRAY COUNTY BOARD OF EDUCATION CHATSWORTH, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

MURRAY COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

1

B

STATEMENT OF ACTIVITIES

2

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

4

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

7

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

8

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

10

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

11

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

13

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

29

MURRAY COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

30

3 SCHEDULEOFSTATEREVENUE

32

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

33

5 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

35

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
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
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133

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

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

MURRAY COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTIONV MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES

SECTION I FINANCIAL

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
July 22, 2008

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Murray County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) of the Murray County Board of Education, as of and for the year ended June 30, 2007, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe Murray County Board ofEducation's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Murray County Board of Education's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.

2007ARL-1 l

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 ofthe Murray County Board ofEducation, as ofJune 30, 2007, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued our report dated July 22, 2008, on our consideration of the Murray County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose ofthat report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.

Management's Discussion and Analysis and the Schedule ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through viii and page 29 respectively, are not a required part ofthe basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States ofAmerica. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it.

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Murray County Board of Education's basic financial statements. The accompanying supplementary information which consist of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.

A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24.

Respectfully submitted,

.

--k -+?.. .,_00__ ~-~

Rl:ell w. Hinton, CPA, CGFM

State Auditor

RWH:gp 2007ARL-11

MURRAY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
INTRODUCTION
Our discussion and analysis of the Murray County School District's financial performance provides an overview of the School District's financial activities for the fiscal years ended June 30, 2007 and June 30, 2006. The intent of this discussion and analysis is to look at the School District's financial performance as a whole; readers should also review the notes to the basic financial statements and financial statements to enhance their understanding of the School District's financial performance.
FINANCIAL HIGHLIGHTS
Key financial highlights for the fiscal years 2007 and 2006 are as follows:
On the District-wide financial statements, the assets of the School District exceeded liabilities by $60.6 million and $59.8 million, respectively, for the fiscal years ended June 30, 2007 and June 30, 2006. Of these amounts $1,173,875 and $6,573,542, respectively, for fiscal years 2007 and 2006 are available for spending at the School District's discretion.
The School District had $68.8 million and $58.8 million, respectively, in expenses for the fiscal years ended June 30, 2007 and June 30, 2006 relating to governmental activities. Only $45.6 million and $44.7 million of the above mentioned expenses for 2007 and 2006 were offset by program specific charges for services, grants and contributions. General revenues (primarily property and sales taxes) totaling $24.0 million and $22.2 million, respectively, for 2007 and 2006 were adequate to provide for these programs.
As stated above, general revenues accounted for $24.0 million or 34.5% of all revenues totaling $69.7 million for fiscal year 2007 and $22.2 million or 33.2% of all revenues totaling $66.9 million for fiscal year 2006. Program specific revenues in the form of charges for services, grants and contributions accounted for the rest.
OVERVIEW OF THE FINANCIAL STATEMENTS
This annual report consists of three parts; management's discussion and analysis, the basic financial statements and required supplementary information. The basic financial statements include two levels of statements that present different views of the School District. These include the District-wide and fund financial statements.
The District-wide financial statements include the Statement of Net Assets and Statement of Activities. These statements provide information about the activities of the School District presenting both short-term and long-term information about the School District's overall financial status.
The fund financial statements focus on individual parts of the School District, reporting the School District's operation in more detail. The Governmental Funds statements disclose how basic services are financed in the short-term as well as what remains for future spending. The

MURRAY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
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. In the case of the Murray County School District, the General Fund, District-wide Capital Projects Fund, and Debt Service Fund are the most significant funds.
The financial statements also include notes that explain some of the information in the statements and provide more detailed data. The statements are followed by a section 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.
DISTRICT-WIDE STATEMENTS
The District-wide financial statements are basically a consolidation of all of the School District's operating funds into one column called governmental activities. In reviewing the District-wide financial statements, a reader might ask the question, are we in a better financial position than last year? The Statement of Net Assets and the Statement of Activities provides the basis for answering this question. These financial statements include all School District's assets and liabilities and uses the accrual basis of accounting similar to the accounting used by most private-sector companies. This basis of accounting takes into account all of the current year's revenues and expenses regardless of when cash is received or paid.
These two statements report the School District's net assets and any changes in those assets. The change in net assets is important because it tells the reader that, for the School District as a whole, the financial position of the School District has improved or diminished. The causes of this change may be the results 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.
The Statement of Net Assets and the Statement of Activities reflects the School District's governmental activities.
FUND FINANCIAL STATEMENTS
The School District uses many funds to account for a multitude of financial transactions during the fiscal year. However, the fund financial statements presented in this report provide detail information about only the School District's significant or major funds.
Governmental Funds: Most of the School District's activities are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at yearend available for spending in future periods. These funds are reported using the modified accrual method of accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the School District's general government operations and the basic services it provides.
ii

MURRAY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007

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 differences between governmental activities (reported in the Statement of Net Assets 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, such as school clubs and organizations within the principals' accounts. The School District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The School District excludes these activities from the District-wide financial statements because it cannot use these assets to finance its operations.

FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT AS A WHOLE

Recall that the Statement of Net Assets provides the perspective of the School District as a whole. Table 1 provides a summary of the School District's net assets for fiscal years 2007 and 2006.

Table 1 Net Assets

Governmental Activities

Fiscal

Fiscal

Year2007

Year2006

Assets Current and Other Assets Capital Assets, Net

$ 31,699,404 $ 18,588,806

56,000,616

56,318,256

Total Assets

$ 87,700,020 $ 74,907,062

Liabilities Current and Other Liabilities Long-Term Liabilities

$ 8,197,581 $ 11,248,821

18,854,752

3,854,752

Total Liabilities

$ 27,052,333 $ 15,103.573

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

$ 51,566,741 7,907,071 1,173,875

$ 49,021,338 4,208,609 6.573,542

Total Net Assets

$ 60.647.687 $ 52.803_489

Table 2 shows the Changes in Net Assets for fiscal years ending June 30, 2007 and June 30, 2006.

lll

MURRAY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007

Table 2 Change in Net Assets

Revenues Program Revenues: Charges for Services and Sales Operating Grants and Contributions Capital Grants and Contributions

Governmental Activities

Fiscal

Fiscal

Year 2007

Year 2006

$ 2,187,766 42,834,445 610,320

$ 2,272,725 39,350,432 3,051,602

Total Program Revenues

$ 45,632,531 $ 44,674,759

General Revenues:

Taxes

Property Taxes

For Maintenance and Operations

$

For Debt Service

Railroad Cars

Sales Taxes

Special Purpose Local Option Sales Tax

For Capital Projects

Intangible Recording Tax

Grants and Contributions not Restricted to

Specific Programs

Investment Earnings

Miscellaneous

13,784,634 16
4,346,686 120,793
4,794,041 307,754 683,022

$ 12,599,733 249
15,091
4,681,318 95,109
4,134,906 374,841 335,014

Total General Revenues

$ 24,036,946 $ 22,236,261

Total Revenues

$ 69,669.477 $ 66,911.020

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

$ 45,389,926
2,507,484 2,210,346 1,368,405
414,355 3,421,324
336,604 4,088,585 2,926,573 1,338,915
172,007
4,446,518 204,238

$ 39,888,807
2,049,894 1,746,841 1,085,765
360,257 2,917,295
283,775 3,526,741 1,487,488 1,178,010
122,516
3,790,182 324,623

Total Expenses

$ 68,825,280 $ 58,762,194

Increase in Net Assets

$

844.127 $ 8.148.826

IV

MURRAY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007

GOVERNMENTAL ACTIVITIES

The Statement of Activities shows the cost of program services and the charges for services and grants offsetting these services. Table 3 shows, for governmental activities, the total cost 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

Fiscal

Year 2007 Year 2006

Net Cost of Services

Fiscal

Fiscal

Year 2007 Year 2006

Instruction

$ 45,389,926 $ 39,888,807 $ 12,039,353 $

Support Services

Pupil Services

2,507,484 2,049,894 1,933,529

Improvement of Instructional Services

2,210,346 1,746,841 1,072,678

Educational Media Services

1,368,405 1,085,765

475,779

General Administration

414,355

360,257 -709,189

School Administration

3,421,324 2,917,295 1,849,199

Business Administration

336,604

283,775

346,590

Maintenance and Operation of Plant

4,088,585 3,526,741 1,871,706

Student Transportation Services

2,926,573 1,487,488 2,493,054

Central Support Services

1,338,915 1,178,010 1,334,962

Other Support Services

172,007

122,516

43,656

Operations of Non-Instructional Services

Food Services

4,446,518 3,790,182

237,195

Interest on Short-Term and Long-Term Debt

204,238

324,623

204,238

6,928,333
1,574,600 765,163 381,353 -616,227
1,581,635 283,775
1,448,324 555,536
1,178,010 41,363
-359,053 324,623

Total Expenses

$ 68,825.280$ 58,762.194 $ 23,192.750 $ 14,087.435

FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT'S FUNDS

The School District's governmental funds are accounted for using the modified accrual basis of accounting. The governmental funds had total revenues of $69.3 million and total expenditures of $71.8 million for fiscal year 2007 and total revenues of $67.3 million and total expenditures of $70.0 million for fiscal year 2006.

GENERAL FUND BUDGETING HIGHLIGHTS

The School District's budget is prepared according to Georgia Law. The most significant budgeted fund is the General Fund. During the course of fiscal years 2007 and 2006, the School District amended its general fund budget as needed.

During fiscal year 2007, the General Fund had final actual revenues totaling $64.5 million, which exceeded the original budgeted amounts of $61.9 million by $2.6 million. This difference (final actual vs. original budget) was primarily due to an increase in state revenues over original

V

MURRAY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
budget by $0.9 million and actual revenue from various sources, primarily school activity accounts, over original budget by $1.7 million.
During fiscal year 2006, the General Fund had final actual revenues totaling $59.6 million, which exceeded the original budgeted amounts of $57.3 million by $2.3 million. This difference (final actual vs. original budget) was primarily due to an increase in State revenues over original budget by $0.8 million and actual revenue from various sources, primarily school activity accounts, over original budget by $1.6 million.
The actual revenues for fiscal years 2007 and 2006 totaling $64.5 million $59.6 million, respectively, exceeded the final budgeted amount by $1.8 million and $1.3 million.
Final actual expenditures and other financing uses during fiscal year 2007 totaling $66.2 million represented a decrease from the original budgeted amount of $66.8 million. The decrease in actual expenditures versus original budget expenditures totaling $0.6 million was due primarily to a decrease in actual instructional expenses as compared to expenses projected in the original budget.
Final actual expenditures and other financing uses during fiscal year 2006 totaling $59.2 million represented a decrease from the original budgeted amount of $61. 7 million. The decrease in actual expenditures versus original budget expenditures totaling $0.6 million was due primarily to a decrease in actual instructional expenses as compared to expenses projected in the original budget.
General fund expenditures and other financing uses exceeded revenues resulting in a deficit of $1,760,917 for the fiscal year 2007.
General fund revenues exceeded expenditures and other financing uses resulting in a surplus of $308,435 for the fiscal year 2006.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
At the fiscal years ended June 30, 2007 and June 30, 2006, the School District had $56.0 million and $56.3 million, respectively, invested in capital assets, all in governmental activities. Table 4 reflects a summary of these balances net of accumulated depreciation.
VI

MURRAY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007

Table 4 Capital Assets (Net of Depreciation)

Governmental Activities

Fiscal

Fiscal

Year 2007

Year 2006

Land Construction in Progress Buildings and Improvements Equipment Land Improvements

$ 1,396,981 9,870,000
41,243,105 2,793,894 696,636

$ 1,396,981 24,974,004 27,053,462 2,261,381 632,428

Total

$ 56,000.616 $ 56,318.256

Due to the ongoing growth in the county, the School District has numerous construction projects including new buildings, additions and renovations.

Debt

In June 2007, the School District issued $15,000,000 of five-year general obligation bonds. Interest is payable semi-annually in October and April. The first principal payment is due October 2008. Table 5 summarizes the School District's debt for general obligation bonds.

Table 5 Debt at June 30

Bond Rating

Bond Issue

Fiscal Year 2007

Fiscal Year 2006

Aa2

2002 Bonds

$ 3,110,000 $ 6,210,000

Aa2

2005 Bonds

445,000

645,000

Aaa

2007 Bonds

15,000,000

Total Bonds Payable Less Current Portion

$ 18,555,000 3,555,000

$ 6,855,000 3,300,000

Long-Term Bonds

$ 15,000,000 $ 3,555.000

CURRENT ISSUES

Currently known facts, decisions or conditions that are expected to have a significant effect on financial positions or results of operations.

Vil

MURRAY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
ELOST - In March 2007, the voters of the School District approved the continuation of the one percent Education Local Option Sales Tax and for the raising of not more than $30,000,000 for a period of twenty consecutive calendar quarters beginning July 2007. The primary purpose of this ELOST will allow the School District to fund the acquisition of land, construct and equip our new comprehensive high school, construct a new roof and related facilities at Murray County High School and perform various technology enhancements and facility upgrades system-wide.
Economic Slowdown - Increases in total State funding for education have been minimal and as a result more pressure is being placed on the local school districts to prioritize its educational programs and provide additional local funding. The School District continues to provide an increasing amount of local monies to meet various mandated educational requirements. Additional costs to the School District will be required with the continued implementation of House Bill 1187, which mandates lower teacher to student ratios, requiring additional teachers and additional classrooms. Despite these challenges, the Murray County School District remains optimistic about the ability of the School District to maximize all of the financial resources to provide a quality education to our students.
Capital Improvements - The School District plans capital improvements as future capital needs arise due to increased student population and facility repair and maintenance needs. Specific capital expenditure plans are formalized in conjunction with individual general obligation bond issues and anticipated annual receipts of capital outlay funds from the State of Georgia Department of Education. The School District regularly monitors anticipated capital outlay needs.
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 Murray County Board of Education, 715 Chestnut Street, Chatsworth, GA 30705.
Vlll

MURRAY COUNTY BOARD OF EDUCATION

MURRAY COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2007
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories Capital Assets Land Construction in Progress Land Improvements Buildings Equipment Less: Accumulated Depreciation
Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Contracts Payable Retainages Payable Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Continuation of Federal Programs Debt Service Capital Projects Permanent Funds Unrestricted
Total Net Assets
Total Liabilities and Net Assets
The notes to the basic financial statements are an integral part of this statement. - 1-

EXHIBIT"A"

GOVERNMENTAL ACTIVITIES

$

5,726,105.29

18,169,687.26

1,439,235.09 4,874,840.40 1,381,072.67
10,879.72 97,582.79

1,396,981.00 9,870,000.36 2,029,804.88 51,097,564.09 7,477,597.33 -15,871,331.27

$ ==8=7=,7=0=0=,0=19=.6=1=

$

10,391.71

7,474,600.64

596,329.20

116,258.80

3,702,245.66 15,152,506.77

$ 27,052,332.78

$ 51,566,741.00
745,172.00 3,790,823.51 3,323,537.41
47,538.13 1 173 874.78
$ 60,647,686.83

$ ==8=7=7,=00==,0=1=9=61=

MURRAY COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2007

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 Food Services Interest on Short-Term and Long-Term Debt
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations For Debt Services Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Intangible Recording Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Change in Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year

EXPENSES

CHARGES FOR SERVICES

$ 45,389,926.08 $
2,507,483.70 2,210,346.13 1,368,404.87
414,355.04 3,421,323.61
336,604.29 4,088,584.68 2,926,573.27 1,338,914.90
172,007.40
4,446,517.58 204,238.62
$ 68,825,280.17 $

1,026,251.42
1,161,514.89 2,187,766.31

The notes to the basic financial statements are an integral part of this statement. -2-

EXHIBIT "B"

PROGRAM REVENUES

OPERATING

CAPITAL

GRANTS AND

GRANTS AND

CONTRIBUTIONS CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

$ 32,082,669.43 $
573,955.08 1,137,080.41
892,626.00 1,123,024.39 1,569,719.40
-9,985.18 2,207,180.63
99,390.71
128,351.39
3,030,432.25
$ 42,834,444.51 $

241,652.83 $
587.79 519.32 2,405.09 9,697.77 334,129.00 3,952.58
17,375.32
610 319.70 $

-12,039,352.40
-1,933,528.62 -1,072,677.93
-475,778.87 709,188.67 -1,849,199.12 -346,589.47 -1,871,706.28 -2,493,053.56 -1,334,962.32 -43,656.01
-237,195.12 -204,238.62
-23, 192,749.65

$

13,784,633.74

16.38

4,346,685.93 120,793.22
4,794,041.00 307,754.16 683,022.08

$

24,036,946.51

$

844,196.86

59,803,489.97

$ ===60=,6=4=7=,6=86==83=

-3-

MURRAY COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2007

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

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

$ 5,930,804.70 228,027.26 $ 17,918,532.90

300,413.78 4,874,839.00 1,381,074.10
10,879.69 97,582.79

767,488.46

Total Assets

$ 12,823,621.32 $ 18,686,021.36

LIABILITIES AND FUND BALANCES
LIABILITIES
Cash Overdraft Accounts Payable Salaries and Benefits Payable Contracts Payable Retainages Payable
Total Liabilities
FUND BALANCES
Reserved for: Continuation of Federal Programs Debt Service Inventories Capital Projects Permanent Funds
Unreserved Designated for Student Activities Undesignated Reported in: General Fund Capital Projects
Total Fund Balances
Total Liabilities and Fund Balances

$

$

10,391.71

7,474,600.64

$ 7,484,992.35 $

229,383.69
596,329.20 116,258.80 941 971.69

$

647,589.00

$ 3,790,550.26

97,583.00

13,890,225.41

545,504.50

4,047,952.47

63,274.00

$ 5,338,628.97 $ 17 744 049.67

$ 12,823,621.32 $ 18,686,021.36

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

EXHIBIT"C"

DEBT SERVICE
FUND

NONMAJOR GOVERNMENTAL
FUND

TOTAL

$

273.25 $

24,411.03 $ 23,127.10

5,955,488.98 18,169,687.26
1,067,902.24 4,874,839.00 1,381,074.10
10,879.69 97 582.79

$

273.25 $

47 538.13 $=====31=,5=5=7=,4=54==06=

$

229,383.69

10,391.71

7,474,600.64

596,329.20

116,258.80

$

8,426,964.04

$

273.25

$

$

273.25 $

$ 47,538.13
47 538.13 $

647,589.00 3,790,823.51
97,583.00 13,890,225.41
47,538.13
545,504.50
4,047,952.47 63,274.00
23,130,490.02

$

273.25 $

47 538. 13 $ =====31=,5=5=7=,4=54==06=

-5-

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MURRAY COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2007

EXHIBIT"D"

Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Assets are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of:
Land Construction in Progress Land Improvements Buildings Equipment Accumulated Depreciation
Total Capital Assets
Some of the School District's property tax revenues will be collected after year-end but are not available soon enough to pay for the current period's expenditures.
Long-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of:
Bonds Payable Capital Leases
Total Long-Term Liabilities
Net Assets of Governmental Activities (Exhibit "A")

$ 23,130,490.02

$ 1,396,981.00 9,870,000.36 2,029,804.88
51,097,564.09 7,477,597.33
-15,871,331.27

56,000,616.39

371,332.85

$ -18,555,000.00 -299,752.43

-18,854,752.43

$ 60,647,686.83

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

MURRAY COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2007

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 Food Services Operation
Capital Outlay Debt Services
Principal Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Proceeds of Long-Term Capital Related Debt Premiums on Bonds Sold Transfers In Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

$ 13,581,613.95 120,793.22 $
40,300,739.09 7,352,918.43 2,187,766.31 173,254.80 767,591.22

4,346,685.93 276,190.70
133,498.15 33 011.00

$ 64,484,677.02 $ 4,789,385.78

$ 42,679,482.81

2,291,345.91 2,201,579.29 1,368,404.87
406,609.40 3,385,451.88
336,604.29 $ 3,958,742.90 2,815,131.04 1,279,962.39
172,007.40 4,241,051.49

217,800.00 2,733,794.56

142,166.06 15 789.75

$ 65,294,329.48 $ 2,951,594.56

$ -809,652.46 $ 1,837,791.22

$ 15,000,000.00

17,205.00

951,264.57

$ -951,264.57

-62 211.12

$ -951,264.57 $ 15,906,258.45

$ -1,760,917.03 $ 17,744,049.67

7,099,546.00

0.00

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

$ 5,338,628.97 $ 17,744,049.67

EXHIBIT"E"

DEBT SERVICE
FUND

NONMAJOR GOVERNMENTAL
FUND

TOTAL

$

16.38

411.03 $

$

427.41 $

$ 13,581,630.33

4,467,479.15

40,576,929.79

7,352,918.43

2,187,766.31

590.18

307,754.16

800,602.22

590.18 $ 69,275,080.39

$
$ 3,300,000.00 204,238.63
$ 3,504,238.63 $ $ -3,503,811.22 $

0.00 $ 42,679,482.81
2,291,345.91 2,201,579.29 1,368,404.87
406,609.40 3,385,451.88
554,404.29 3,958,742.90 2,815,131.04 1,279,962.39
172,007.40 4,241,051.49 2,733,794.56
3,442,166.06 220,028.38
0.00 $ 71,750,162.67
590.18 $ -2,475,082.28

$

62,211.12

$

62,211.12

$ -3,441,600.10 $

3,441,873.35

$ 15,000,000.00 17,205.00
1,013,475.69 -1,013,4 75.69

$ 15,017,205.00

590.18 $ 12,542,122.72

46 947.95

10,588,367.30

$

273.25 $

47 538.13 $ 23,130,490.02

-9-

MURRAY COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2007

EXHIBIT "F"

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

$ 12,542,122.72

$ 1,166,997.73 -1,484,636.27

-317,638.54 177,546.62

-15,000,000.00

$ 3,300,000.00 142,166.06

3,442,166.06

$ ==84=4=,1=9=6.=8=6

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

MURRAY COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS JUNE 30, 2007
ASSETS Cash and Cash Equivalents Accounts Receivable, Net
Other
Total Assets
LIABILITIES Funds Held for Others

EXHIBIT "G"
AGENCY FUNDS
$ 176,193.51 322.08
$ 176,515.59
$ 176,515.59

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

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MURRAY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Murray County Board ofEducation (School District) was established under the laws ofthe State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Murray County Board of Education.
District-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support ofthe School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients 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 ofinternal activities. Separate statements for each category (governmental and fiduciary) are presented. 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.
- 13 -

MURRAY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT"H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund.
District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST), Bond Proceeds and grants from Georgia State Financing and Investment Commission to be used for the acquisition, construction or renovation ofmajor capital facilities.
Debt Service Fund accounts for taxes (property and sales) legally restricted for the payment of general long-term principal, interest and paying agent's fees.
The School District reports the following fiduciary fund type:
Agency funds account for assets held by the School District as an agent for various funds, governments or individuals.
BASIS OF ACCOUNTING
The basis ofaccounting determines when transactions are reported on the financial statements. The District-wide governmental 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 ofwhen the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis ofaccounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, which are recognized
- 14 -

MURRAY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT"H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds ofgeneral long-term liabilities and acquisitions under capital leases are reported as other financing sources.
The School District funds certain programs by a combination ofspecific 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.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorize the School District to deposit its funds in one or more solvent banks or insured Federal savings and loan associations.
INVESTMENTS
COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code ofGeorgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(1) Obligations issued by the State of Georgia or by other states,
(2) Obligations issued by the United States government,
(3) Obligations fully insured or guaranteed by the United States government or a United States government agency,
(4) Obligations of any corporation of the United States government,
(5) Prime banker's acceptances,

- 15 -

MURRAY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services,

(7) Repurchase agreements, and

(8) Obligations of other political subdivisions of the State of Georgia.

The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration ofcredit risks, interest rate risks or foreign currency risks.

RECEIVABLES

Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.

PROPERTY TAXES

The Murray County Board ofCommissioners fixed the property tax levy for the 2006 tax digest year (calendar year) on October 1, 2006 (levy date). Taxes were due on December 1, 2006 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2006 tax digest are reported as revenue in the governmental funds for fiscal year 2007. The Murray County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% oftaxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2007, for maintenance and operations amounted to $13,581,613.95 and for school bonds amounted to $16.38.

The tax millage rate levied for the 2006 tax year (calendar year) for the Murray County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

15.5 mills

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $4,346,685.93 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.

- 16 -

MURRAY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT"H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INVENTORIES

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

CAPITAL ASSETS

Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value ofassets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works ofart. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District.

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

Capitalization Policy

Estimated Useful Life

Land Land Improvements Buildings Building Improvements Equipment

$ 50,000.00 $ 25,000.00 $ 50,000.00 $ 25,000.00 $ 25,000.00

NIA 15 years 60 years 15 years 5 to 12 years

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

- 17 -

MURRAY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL OBLIGATION BONDS
The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. Bond issuance costs are recognized in the financial statements during the fiscal year bonds are issued. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Assets.
NET ASSETS
The School District's net assets in the District-wide Statements are classified as follows:
Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net ofoutstanding 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 invested in capital assets, net of related debt.
Restricted net assets - These represent resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation of Federal programs, debt service and capital projects in accordance with restrictions imposed by external third parties.
Unrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes.
Note 3: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee ofinsurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. Ifa depository elects the pooled method (OCGA 45-8-13 .1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool 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,
- 18 -

MURRAY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 3: DEPOSITS AND INVESTMENTS

(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 ofthe State of Georgia, and

(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.

CATEGORIZATION OF DEPOSITS At June 30, 2007, the bank balances were $16,101,278.96. The amounts ofthe total uninsured bank balances are classified into three categories of custodial credit risk:

Category 1 - Uncollateralized, Category 2 - Cash collateralized with securities held by the pledging financial institution, or Category 3 - Cash collateralized with securities held by the pledging financial institution's
trust department or agent but not in the School District's name.

The School District's uninsured deposits are classified by custodial credit risk category at June 30, 2007, as follows:

Custodial Credit Risk Category

Bank Balance

1

$

0.00

2

15,685,771.81

3

0.00

Total

$15,685. 771.81

- 19 -

MURRAY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 3: DEPOSITS AND INVESTMENTS

CATEGORIZATION OF INVESTMENTS The School District's investments as of June 30, 2007, are presented below. All investments are presented by investment type and debt securities are presented by maturity.

Investment Type

Fair Value

Investment Maturity
1- 5 Years

Debt Securities U.S. Agencies Implicitly Guaranteed

$ 3,103,627.90 $ 3,103,627.90

Investment Pools Office of Treasury and Fiscal Services Georgia Fund 1

6,799,405.00

Total Investments

$ 9,903,032.90

The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services is not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy ofthe State of Georgia, Office of Treasury and Fiscal Services for the Local Government Investment Pool (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. Additional information on the Local Government Investment Pool is disclosed in the State of Georgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at http://www.audits.state.ga.us/internet/searchRpts.html.

The Primary Liquidity Portfolio consists of Georgia Fund 1 which is not registered with the SEC as an investment company but does operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share. The pool is an AAAm rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2007, was 15 days.

Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investment will adversely affect the fair value ofan investment. The School District does not have a formal policy for managing interest rate risk.

- 20 -

MURRAY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 3: DEPOSITS AND INVESTMENTS

Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event ofthe failure ofthe counterparty to a transaction, the School District will not be able to recover the value ofthe investment or collateral securities that are in the possession of an outside party. The School District does not have a formal policy for managing custodial credit risk.

At June 30, 2007, $3,103,627.90 ofthe School District's applicable investments were uninsured, are not registered in the name of the School District and are held by either the counterparty or the counterparty's trust department or agent, but not in the School District's name.

Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The School District does not have a formal policy for managing credit quality risk.

The investments subject to credit quality risk are reflected below:

Rated Debt Investments

Fair Value

Quality Ratings AAA

Debt Securities U.S. Agencies Implicitly Guaranteed

$ 3.103.627.90 $ 3,103,627.90

Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The School District does not have a formal policy for managing concentration of credit risk. More than 5% of the School District's investments are in U. S. Agencies. This investment is 31 % of the School District's total investments.

Note 4: NON-MONETARY TRANSACTIONS

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

Note 5: CAPITAL ASSETS

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

- 21 -

MURRAY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 5: CAPITAL ASSETS

Balances July 1. 2006

Increases

Balances Decreases June 30. 2007

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

$ 1,396,981.00 24.974.003.62 $

$ 1,396,981.00 3,437.12 $15,107,440.38 9.870,000.36

Total Capital Assets Not Being Depreciated $26,370,984.62 $ 3,437.12 $15,107,440.38 $11,266.981.36

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements

$35,990,123.71 $15,107,440.38 $ 6,470,053.87 1,007,543.46 1,873,787.73 156,017.15

0.00 $51,097,564.09 7,477,597.33 2,029,804.88

Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements

8,936,662.00 4,208,673.00 1.241.360.00

917,797.66 475,030.36
91.808.25

9,854,459.66 4,683,703.36 1.333,168.25

Total Capital Assets, Being Depreciated, Net $29.947.270.31 $14.786.364.72 $_ _~0=.0~0 $44.733.635.03

Governmental Activity Capital Assets - Net $56.318.254,93 $14.789.801.84 $15.107.440.38 $56.000.616.39

Capital assets being acquired under capital leases as of June 30, 2007, are as follows:

Governmental Funds

Equipment Less: Accumulated Depreciation

$ 737,136.00 147,427.20

$ 589,708.80

Current year depreciation expense by function is as follows:

Instruction Support Services
Improvements of Instructional Services General Administration School Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Food Services

$ 956,788.82

$ 3,159.60 2,791.56 12,928.30 52,129.42
342,192.52 21,246.70

434,448.10 93,399.35

$ 1,484,636.27

-22 -

MURRAY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 6: RESTRICTED ASSETS

Special Purpose Local Option Sales Tax (SPLOST), general obligation bond proceeds, the corpus of the Fred L. and Minnie B. Dunn Trust Fund, property tax levied specifically for retirement of outstanding bond principal, interest and paying agent's fees (Debt Service Funds) are restricted assets in the Statement ofNet Assets because their use is limited by applicable bond covenants or statutory prov1s1ons. Restricted assets at June 30, 2007, were as follows:

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

District-wide Capital Projects

Bond

SPLOST

Proceeds

Debt Service Funds

Permanent Fund

$
$ 257,053.92
$ 3,103,627.90 $14,814,905.00

273.25 $

24,411.03

$ 23,127.10

Note 7: INTERFUND TRANSFERS

Interfund transfers for the year ended June 30, 2007, consisted of the following:

Transfer to

Transfers From

District-wide

General

Capital

Fund

Projects

District-wide Capital Projects Debt Service Fund

$ 951,264.57 $ 62,211.12

Total

$ 951,264.57 $ 62,211.12

Transfers are used to (1) move property tax revenues collected by the General Fund to the Districtwide Capital Projects Fund as required match or supplemental funding source for capital construction projects, and (2) move sales tax collected by the District-wide Capital Projects Fund to the Debt Service Fund as required for payment of bond related debt.

Note 8: RISK MANAGEMENT

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

- 23 -

MURRAY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT"H"

Note 8: RISK MANAGEMENT

The School District has obtained commercial insurance for risk ofloss associated with torts, assets, errors or omissions and acts ofGod. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years.

For claims filed prior to fiscal year 2002, the School District has designated an independent contractor to operate a risk management program for Workers' Compensation. The School District's General Fund reimburses claims paid by the contractor. During the year under review, the School District's General Fund incurred expenditures of$10,027.28 for claims and related expenses incurred by the contractor.

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

Beginning ofYear Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

2006 2007

$

0.00 $ 14,777.00 $ 14,777.00 $

0.00

$

0.00 $ 10,027.28 $ 10,027.28 $

0.00

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. The School District has not incurred any liabilities for unemployment compensation during the past two fiscal years.

The School District participates in the Georgia Education Workers' Compensation Trust, a public entity risk pool organized on December I, 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 insurance coverage. Additional insurance coverage is provided through an agreement by the Trust with the Midwest Employers Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $500,000.00 loss per occurrence, up to $2,000,000.00.

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

Position Covered

Amount

All Employees

$ 25,000.00

-24-

MURRAY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT"H"

Note 9: LONG-TERM DEBT

CAPITAL LEASES The Murray County Board ofEducation entered into a lease agreement for the acquisition ofbuses. This lease agreement qualifies as a capital lease for accounting purposes and therefore, has been recorded at the present value of the future minimum lease payments as of the date of its inception.

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

Purpose

Interest Rates

Amount

General Government - Series 2002 General Government - Series 2005 General Government - Series 2007

2.40% - 3.10% 3.385%
3.75% - 4.25%

$ 3,110,000.00 445,000.00
15,000,000.00

$18,555,000.00

The changes in Long-Term Debt during the fiscal year ended June 30, 2007, were as follows:

Governmental Funds

General

Capital

Obligation

Leases

Bonds

Total

Balance July 1, 2006

$ 441,918.49 $ 6,855,000.00 $ 7,296,918.49

Additions G.O. Bonds

15,000,000.00 15,000,000.00

Deductions Debt Retired

142,166.06 3,300,000.00 3,442,166.06

Balance June 30, 2007

$ 299,752.43 $18,555,000.00 $18,854,752.43

Portion of Long-Term Debt Due within One Year

$ 147,245.66 $ 3,555,000.00 $ 3,702,245.66

At June 30, 2007, payments due by fiscal year which includes principal and interest for these items are as follows:

- 25 -

MURRAY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT"H"

Note 9: LONG-TERM DEBT

Fiscal Year Ended June 30

Capital Leases

Principal

Interest

2008 2009

$ 147,245.66 $ 10,710.15

152,506.77

5,449.04

Total Principal and Interest

$ 299,752.43 $ 16,159.19

Fiscal Year Ended June 30

General Obligation

Debt

Principal

Interest

2008 2009 2010 2011 2012 2013 - 2017 2018

$ 3,555,000.00 $ 1,750,000.00 1,500,000.00 2,000,000.00 2,250,000.00 6,500,000.00 1,000,000.00

537,886.01 571,312.50 508,500.00 438,500.00 353,500.00 765,000.00 21,250.00

Total Principal and Interest

$18,555,000.00 $ 3,195,948.51

Note 10: SIGNIFICANT COMMITMENTS

The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2007, together with funding available:

Project

Unearned Executed Contracts

Funding Available From State

050-705-019 and 060-705-021 Murray County High School New Roof

$ 139,485.39 $ 333,375.80 1,238,478.54

$ 1,:rz:z,963.93 $ 333,375,80

The amounts described in this note are not reflected in the basic financial statements.

- 26-

MURRAY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 11: SIGNIFICANT CONTINGENT LIABILITIES

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

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

Note 12: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

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

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.28% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2007 2006 2005

100% 100% 100%

$ 3,400,417.53 $2,763,557.03 $2,813,722.01

- 27 -

(This page left intentionally blank)

MURRAY COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2007

SCHEDULE "1"

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

NONAPPROPRIATED BUDGETS

ORIGINAL

FINAL

ACTUAL AMOUNTS

$ 13,661,614.00 $ 13,661,614.00 $ 13,581,613.95

120,793.22

39,425,297.80

39,506, 186.80

40,300,739.09

7,261,659.89

7,979,190.27

7,352,918.43

1,223,795.00

1,226,295.00

2,187,766.31

210,000.00

210,000.00

173,254.80

90,000.00

90,000.00

767,591.22

$ 61,872,366.69 $ 62,673,286.07 $ 64,484.677.02

$ 44,261,047.00 $ 44,126,733.71 $ 42,679,482.81

1,777,951.00 1,642,295.46 1,336,682.00
286,609.69 3,096,022.00
455,565.00 3,839,866.00 3,232,467.00 1,315,511.00
286,699.54 4,141,739.00

2,088,683.65 2,308,824.24 1,336,982.00
483,482.34 3,102,691.00
455,565.00 3,971,766.00 3,327,309.00 1,315,511.00
234,626.54 4,143,289.00

2,291,345.91 2,201,579.29 1,368,404.87
406,609.40 3,385,451.88
336,604.29 3,958,742.90 2,815,131.04 1,279,962.39
172,007.40 4,241,051.49
157,955.81

$ 65,672,454.69 $ 66,895,463.48 $ 65.294.329.48

$ -3.800,088.00 $ -4,222,177.41 $

-809,652.46

$

205,000.00 $

205,000.00

-1,105,250.00

-1.105,250.00 $

-951.264.57

$

-900,250.00 $

-900,250.00 $

-951,264.57

$ -4,700,338.00 $ -5, 122,427.41 $ -1,760,917.03

8,643,761.50

8,643,761.50

7,099,546.00

Fund Balances - Ending

$ 3,943,423.50 $ 3,521,334.09 $ 5,338,628.97

Notes to the Schedule of Revenues. Expenditures and Changes in Fund Balances Budget and Actual
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.

- 29 -

MURRAY COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2007

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Food Donation (1) Pass-Through From Office of Treasury and Fiscal Services National Forest Reserve Funds
Total U. S. Department of Agriculture
Education, U.S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Other Programs Pass-Through From Georgia Department of Education Comprehensive School Reform Demonstration Education for Homeless Children and Youth English Language Acquisition Grants Enhancing Education Through Technology Program Improving Teacher Quality State Grants Mathematics and Science Partnerships Migrant Education Reading First State Grants Safe and Drug-Free Schools and Communities - State Grants State Grants for Innovative Programs Title I Grants to Local Educational Agencies Vocational Education - Basic Grants to States
Total U. S. Department of Education
Defense, U. S. Department of Direct Department of the Air Force R.O.T.C. Program
Total Federal Financial Assistance
NIA= Not Available

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

. 10.553 . 10.555

NIA

(2)

NIA $ 3,773,955.76

$ 3,773,955.76

10.550 10.665

NIA

205,179.79

NIA

(3)

$ 3,979,135.55

. 84.027 . 84.173

NIA $ 1,044,206.63

NIA

75117.00

$ 1,119,323.63

84.332 84.196 84.365
. 84.318 84.367 84.366
. 84.011 84.357 84.186 84.298 84.010 84.048

NIA

188,638.34

NIA

11,458.77

NIA

34,575.77

NIA

207,376.02

NIA

338,078.11

NIA

16,800.00

NIA

3,625.64

NIA

608,874.12

NIA

30,692.24

NIA

22,101.87

NIA

1,818,600.23

NIA

88,276.38

$ 4,488,421.12

$

45 643.57

$ ==8,=51=3=,2=0=0.=24=

- 30 -

MURRAY COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2007

SCHEDULE "2"

Notes to the Schedule of Expenditures of Federal Awards
(1) The amount shown for the Food Donation Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year.
(2) Expenditures for the funds earned on the School Breakfast Program ($656,976.00) were not maintained separately and are included in the 2007 National School Lunch Program.
(3) Funds earned on this program in the amount of $25,471.11 do not require reporting of expenditures.
Major Programs are identified by an asterisk (*) in front of the CFDA number.
The School District did not provide Federal Assistance to any Subrecipient.
The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Murray County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 31 -

MURRAY COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2007

SCHEDULE "3"

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 Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Bus Replacement State Bond Sparsity Nursing Services Principal Supplements Vocational Supervisors Education Equalization Funding Grant Food Services Vocational Education Amended Formula Adjustment Other State Programs Graduation Coaches K-3 Statewide Reading Program Middle School Remediation Grant National Teacher Certification Preschool Handicapped Program Special Education Low Incidence Grant
Georgia State Financing and Investment Commission Reimbursement on Construction Projects
Human Resources, Georgia Department of Family Connection

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

TOTAL

$ 1,278,756.67

$ 1,278,756.67

2,223,409.00 654,221.00
5,181,053.00 1,718,574.00 2,372,472.00
793,192.00 4,621,281.00 3,664,158.00 1,198,974.00 3,498,958.00
866,191.00 62,884.00
348,969.00 518,758.00 787,246.00 243,176.00 153,475.00
912,903.00 1,432,701.00 2,041,817.00
730,674.00 84,129.00
250,000.00 10,000.00
147,420.00 26,023.00 18,859.00
4,485,084.00 209,987.39 115,848.00 -707,549.00
26,864.30 119,804.73
6,297.00 22,578.00 51,633.00 80,889.00

2,223,409.00 654,221.00
5,181,053.00 1,718,574.00 2,372,472.00
793,192.00 4,621,281.00 3,664, 158.00 1,198,974.00 3,498,958.00
866,191.00 62,884.00
348,969.00 518,758.00 787,246.00 243,176.00 153,475.00
912,903.00 1,432,701.00 2,041,817.00
730,674.00 84,129.00
250,000.00 10,000.00
147,420.00 26,023.00 18,859.00
4,485,084.00 209,987.39 115,848.00 -707,549.00
26,864.30 119,804.73
6,297.00 22,578.00 51,633.00 80,889.00

$ 276,190.70
49,029.00

276,190.70 49,029.00

See notes to the basic financial statements.

$ 40,300,739.09 $ 276,190.70 $ 40,576,929.79
- 32-

MURRAY COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2007

SCHEDULE "4"

PROJECT

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3) (4)

AMOUNT EXPENDED
IN PRIOR YEARS (3) (4)

PROJECT STATUS

Purchase of computers and technology equipment for all schools in the School District.

$ 1,340,509.00 $

1,634,050.14 $

388,216.14 $ 1,245,834.00 Ongoing

The construction and equipping of a new elementary school in Murray County; the construction and equipping of a new middle school in Murray County; the renovation and equipping of the old rock building on the Bagley Middle School campus for use as a central office for the Board of Education; the acquisition of land for new schools; the construction of infrastructure to provide access and services to school facilities; the construction and equipping of a second new elementary school; and System-wide renovations; improvements and technology upgrades.

22,000,000.00 28,565,655.00 1,527,334.08 24,996,551.00 Ongoing

Costs of acquiring land for and constructing and equipping a new comprehensive high school, which may include middle school classrooms and facilities; a new roof and related facilities at Murray County High School; renovations and improvements to existing schools; new middle school classrooms, facilities and renovations; renovations and improvements to the old rock school building on the Ninth Grade Academy Campus; system-wide renovations, improvements, and technology upgrades and equipment.

30,000,000.00 30,000,000.00

885,374.00

Ongoing

$ 53,340,509.00 $ 60,199,705.14 $ 2,800,924.22 $ 26,242,385.00

(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax.

(2) The School District's current estimate of total cost for the projects. Includes all cost from project inception to completion.

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

(4) In addition to the expenditures shown above, the School District has incurred interest to provide advance funding for the above projects as follows:

Prior Years

$ 1,558,130.71

Current Year Total

204,236.63 $ 1,762,367.34

See notes to the basic financial statements.

- 33 -

(This page left intentionally blank)

MURRAY COUNTY BOARD OF EDUCATION GENERAL FUND- QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES BY PROGRAM YEAR ENDED JUNE 30, 2007

SCHEDULE "5"

DESCRIPTION
Direct Instructional Programs Kindergarten Program Kindergarten Program-Early Intervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV CategoryV Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL)
TOTAL DIRECT INSTRUCTIONAL PROGRAMS
Media Center Program Staff and Professional Development

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

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

$

2,503,821.00 $ 2,206,721.37 $ 76,327.97 $ 2,283,049.34

721,604.00

1,099,837.00

7,901.46

1,107,738.46

5,790,720.00

5,675,557.12

282,131.46

5,957,688.58

1,915,470.00

2,556,028.96

17,838.44

2,573,867.40

2,667,654.00

3,144,973.50

110,295.07

3,255,268.57

873,405.00 5,174,421.00 4,065,863.00 1,338,463.00 3,976,831.00
997,436.00 66,884.00
388,821.00 574 287.00

972,433.35 5,283,096.99 5,028,035.61 1,177,020.70
2,766,531.48 1,249,709.01
414,918.51 789,270.68 452,924.39 177,067.75 345,030.25 455,757.65

6,135.15 229,245.19 166,888.98 151,861.87
5,896.81 16,597.38 235,114.88
7,177.22 43,357.34 28,677.68
563.29 4,698.96 1 773.74

978,568.50 5,512,342.18 5,194,924.59 1,328,882.57
5,896.81 2,783, 128.86 1,484,823.89
422,095.73 832,628.02 481,602.07 177,631.04 349,729.21 457,531.39

$

31,055,680.00 $ 33,794,914.32 $ 1,392,482.89 $ 35,187,397.21

882,359.00 174 089.00

1,039,653.57 72661.17

257,113.48 100,458.20

1,296,767.05 173 119.37

TOTAL QBE FORMULA FUNDS

$

32,112,128.00 $ 34,907,229.06 $ 1,750,054.57 $ 36,657,283.63

(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State amended formula adjustment.

See notes to the basic financial statements.

- 35 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
July 22, 2008

Honorable Sonny Perdue, Governor Members ofthe General Assembly Members of the State Board of Education
and Superintendent and Members of the Murray County Board of Education
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information ofMurray County Board ofEducation as of and for the year ended June 30, 2007, which collectively comprise Murray County Board of Education's basic financial statements and have issued our report thereon dated July 22, 2008. 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.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Murray County Board ofEducation's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose ofexpressing an opinion on the effectiveness of the Murray County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Murray County Board of Education's internal control over financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified certain deficiencies in internal control over financial reporting that we consider to be significant deficiencies.
2007YB-30

A control deficiency exists when the design or operation ofa control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affect the Murray County Board of Education's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Murray County Board ofEducation's financial statements that is more than inconsequential will not be prevented or detected by the Murray County Board ofEducation's internal control. We consider items FS-7051-07-01 and FS-7051-07-02 in the accompanying Schedule ofFindings and Questioned Costs to be significant deficiencies in internal control over financial reporting.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement ofthe financial statements will not be prevented or detected by the Murray County Board of Education's internal control.
Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph ofthis section and would not necessarily disclose all deficiencies in internal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, we believe that none of the significant deficiencies described above are material weaknesses.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Murray County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
We noted certain matters that we have reported to management of Murray County Board of Education in a separate letter dated July 22, 2008.
Murray County Board of Education's response to the findings identified in our audit is described in the accompanying Schedule ofManagement's Responses. We did not audit Murray County Board of Education's response and, accordingly, we express no opinion on it.
2007YB-30

This report is intended solely for the information and use of the management, members of the Murray County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.

Respectfully submitted,

.....

~&:!~~to~~~

State Auditor

RWH:gp 2007YB-30

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
[2]

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Murray County Board of Education
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133
Ladies and Gentlemen:
Compliance
We have audited the compliance ofMurray County Board of Education with the types ofcompliance requirements described in the U.S. Office of Management and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 2007. Murray County Board of Education's major Federal programs are identified in the Summary of Auditor's Results Section ofthe accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of Murray County Board of Education's management. Our responsibility is to express an opinion on Murray County Board of Education's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types 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 Murray County Board ofEducation's compliance with those requirements and performing such other procedures as we considered necessary in the

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circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Murray County Board of Education's compliance with those requirements.
In our opinion, the Murray County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each ofits major Federal programs for the year ended June 30, 2007. The results ofour auditing procedures disclosed an instance ofnoncompliance with those requirements, which is required to be reported in accordance with 0MB Circular A-133 and which is described in the accompanying Schedule of Findings and Questioned Costs as item FA-7051-07-01.
Internal Control Over Compliance
The management of Murray County Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered Murray County Board of Education's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose ofexpressing our opinion on compliance, but not for the purpose ofexpressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Murray County Board of Education's internal control over compliance.
Our consideration of the internal control over compliance was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in the Board's internal control that might be significant deficiencies or material weaknesses as defined below. However, as discussed below, we identified a certain deficiency in internal control over compliance that we consider to be a significant deficiency.
A control deficiency in an entity's internal control over compliance exists when the design or operation ofa control does not allow management or employees, in the normal course ofperforming their assigned functions, to prevent or detect noncompliance with a type ofcompliance requirement of a Federal program on a timely basis. A significant deficiency is a control deficiency, or combination ofcontrol deficiencies, that adversely affects the entity's ability to administer a Federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a Federal program that is more than inconsequential will not be prevented or detected by the entity's internal control. We consider the deficiency in internal control over compliance described in the accompanying Schedule ofFindings and Questioned Costs as item FA-7051-07-01 to be a significant deficiency.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a Federal program will not be prevented or detected by the entity's internal control. We do not consider the deficiency described in the accompanying Schedule of Findings and Questioned Costs to be a material weakness.
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Murray County Board of Education's response to the findings identified in our audit is described in the accompanying Schedule ofManagement's Responses. We did not audit Murray County Board of Education's response and, accordingly, we express no opinion on it.
This report is intended solely for the information and use of the management, members of the Murray County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
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~Jssell W. Hinton, CPA, CGFM State Auditor
RWH:gp 2007SA-40

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

MURRAY COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2007

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-7051-04-02 FS-7051-05-01 FS-7051-06-01 FS-7051-06-02

Partially Resolved - See Corrective Action/Responses Further Action Not Warranted Partially Resolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented

CORRECTIVE ACTION/RESPONSES

EMPLOYEE COMPENSATION EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures Finding Control Number: FS-7051-04-02

During fiscal year 2005, the Murray County Board of Education discontinued following the recommendations of Live Oak Consulting regarding health insurance.

CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures over School Activity Accounts Finding Control Number: FS-7051-06-01

We are currently unable to increase the number of our administrative staffto provide for additional separation of duties. We continue to provide additional training for all principals and school level bookkeepers. In addition, we have updated our existing accounting manual and will be providing a copy to all our school sites.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.

SECTION IV FINDINGS AND QUESTIONED COSTS

MURRAY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

I SUMMARY OF AUDITOR'S RESULTS

1. Type of Report Issued on the Financial Statements The auditor's opinion on the Murray County Board of Education's financial statements was unqualified.

2. Significant Deficiencies in Internal Control Disclosed by the Audit ofthe Financial Statements The audit report for the Murray County Board of Education disclosed financial statement significant deficiencies related to the following control categories.

Cash and Cash Equivalents Revenues/Receivables/Receipts

Expenditures/Liabilities/Disbursements

None of the significant deficiencies described above are considered to be material weaknesses.

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

4. Significant Deficiencies in Internal Control Over Major Programs The audit report for the Murray County Board of Education disclosed a significant deficiency in internal control over major programs for the following compliance requirement.

Matching, Level of Effort and Earmarking

The significant deficiency described above is not considered to be a material weakness.

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

6. Audit Findings Required to be Reported by Section .51 0(a) of 0MB Circular A-133 The Murray County Board of Education's audit disclosed an audit finding required to be reported by section .510(a) of 0MB Circular A-133. This audit finding is included in section IV of this report.

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MURRAY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

I SUMMARY OF AUDITOR'S RESULTS

7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food Services - School Breakfast Program 10.555 Food Services - National School Lunch Program 84.027 Special Education - Grants to States 84.173 Special Education - Preschool Grants 84.357 Reading First State Grants 84.367 Improving Teacher Quality State Grants

8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00.

9. Low Risk Auditee The Murray County Board ofEducation qualified as a low risk auditee as defined by Section .530 of 0MB Circular A-133.

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures over School Activity Accounts Significant Deficiency Finding Control Number: FS-7051-07-01

Condition:

This is a repeat finding (FS-7051-06-01 and FS-7051-05-01) from the years ended June 30, 2006, and June 30, 2005, respectively. The accounting procedures of the School District were insufficient to provide for adequate internal controls over the school activity accounts.

Criteria:

The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are processed according to established procedures.

Questioned Cost: NIA

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MURRAY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures over School Activity Accounts Significant Deficiency Finding Control Number: FS-7051-07-01

Information:

Cash and Cash Equivalents The bank reconciliation function was not separated from the record keeping and voucher payment functions. Also, one bank statement reconciliation did not contain approval signatures.

Revenues/Receivables/Receipts Based on a review of seventy items, the following deficiencies were noted: Seventeen receipts did not include documentation to determine whether the receipts were deposited in a timely manner.

Expenditures/Liabilities/Disbursements Based on a review of seventy items, the following deficiencies were noted: Three contained a purchase order that was dated after the invoice date, and eight purchase orders did not have the amount or description. It was also noted that school bookkeepers have access to a signature stamp with the principal's signature for use when the principal is not available.

Cause:

These deficiencies were a result of management's failure to ensure that internal controls were established, implemented and functioning at the school level.

Effect:

Errors and/or irregularities may not be detected in a timely manner.

Recommendation:

Management should revise and monitor controls to provide reasonable assurance that transactions are processed according to established procedures.

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MURRAY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EXPENDITURES/LIABILITIES/DISBURSEMENTS Undocumented/Improper Procurement Card Expenditures Significant Deficiency Finding Control Number: FS-7051-07-02

Condition:

School District personnel did not ensure that purchases made with the Board's procurement cards were properly documented and/or authorized.

Criteria:

The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are processed according to established procedures.

Questioned Cost: $1,867.38

Information:

Forty-one (41) Office Depot purchase card transactions were tested and twelve ofthe transactions indicated that the purchases were made in the store with the purchasing card; however, the log sheet was not completed as required by the School District.

Cause:

These deficiencies were a result of management's failure to ensure that internal controls were established, implemented and functioning with regard to the procurement cards.

Effect:

Errors and/or irregularities may not be detected in a timely manner.

Recommendation: The School District should establish policies and procedures to ensure that procurement cards are appropriately utilized for approved purposes.

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MURRAY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

MATCHING, LEVEL OF EFFORT AND EARMARKING Excess Administrative Costs Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Reading First State Grants (CFDA 84.357) Finding Control Number: FA-7051-07-01

Condition:

The School District exceeded the allowable 3.5% of the approved grant award for planning and administrative costs for the Reading First State Grant (CFDA 84.357) program.

Criteria:

Requirements included in 20 United States Code (USC) 6362 state that a School District may not spend more than 3.5% for planning and administration of the grant.

Questioned Cost: $14,569.54

Information:

The School District exceeded the allowable 3.5% of the approved grant award for planning and administrative costs for the Reading First State Grant (CFDA 84.357) program.

Cause:

Management failed to implement controls for monitoring compliance with Federal guidelines to ensure that the amount of expenditures charged for planning and administrative purposes were within legal requirements.

Effect:

Failure to monitor planning and administrative expenditures for compliance results in noncompliance with the requirements of the Federal grant.

Recommendation:

The School District should review the Federal compliance procedures in place, design procedures which enhance monitoring compliance with Federal requirements and implement those procedures to strengthen the internal control over the grant. The Georgia Department of Education should review this matter to determine if a reclaim of grant funds is appropriate.

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SECTIONV MANAGEMENT'S RESPONSES

MURRAY COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2007
Finding Control Number: FS-7051-07-01
We concur with this finding. We continue to provide additional training for all principals and school level bookkeepers regarding internal control procedures. Certain employees in various school level accounting positions have changed. It is our anticipation that due to the revisions and additional monitoring of these controls that this finding will not reoccur.
Finding Control Number: FS-7051-07-02
We concur with this finding. The School District has implemented additional internal control procedures to avoid any undocumented purchases with the Board's procurement cards. These procedures will ensure that expenditures are utilized only for appropriate purposes.
Finding Control Number: FA-7051-07-01
We concur with this finding. The School District has reviewed the Federal compliance procedures in place and designed procedures to enhance monitoring compliance with Federal requirements and implemented those procedures to strengthen the internal control over Federal grants.
Contact Person: Steve Loughridge, Director of Finance Phone: (706) 695-4531 Fax: (706) 695-8425 E-mail Address: steve.loughridge@murray.k12.ga.us