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

OCONEE COUNTY BOARD OF EDUCATION WATKINSVILLE, 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

OCONEE 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

3

D

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

4

E

RECONCILIATION OF THE STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES OF GOVERNMENTAL FUNDS

TO THE STATEMENT OF ACTIVITIES

5

F

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

6

G

NOTES TO THE BASIC FINANCIAL STATEMENTS

7

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

23

OCONEE COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

24

3 SCHEDULEOFSTATEREVENUE

26

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

28

5 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

29

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

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
March 18, 2008

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Oconee County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through G) of the Oconee 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 Oconee 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 Oconee 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-11

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 Oconee 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 GovernmentAuditing Standards, we have also issued our report dated March 18, 2008, on our consideration of the Oconee 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 ix and page 23 respectively, are not a required part of the basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods 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 Oconee 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,

.

~~~~

ell W. Hinton, CPA, CGFM

State Auditor

RWH:as 2007ARL-11

OCONEE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
INTRODUCTION
This discussion and analysis of the Oconee County Board of Education's financial performance provides an overview of the School District's financial activities for the fiscal year ended June 30, 2007. The intent of the discussion and analysis is to look at the School District's financial performance as a whole; readers should also review the notes to the basic financial statements and the financial statements to enhance their understanding of the School District's financial performance.
FINANCIAL HIGHLIGHTS
Key financial highlights for fiscal year 2007 are as follows:
On the District-wide financial statements, the assets of the School District exceeded liabilities by $68.52 million. Of this amount, $5.45 million is unrestricted and is available for spending at the School District's discretion which traditionally has been targeted toward the payment of salaries, benefits, and operational costs until the next year's local tax revenues are received
The School District had $59.5 million in expenses relating to governmental activities; only $33.61 million of these expenses were offset by program specific charges for services, grants and contributions. However, general revenues (primarily property and sales taxes) of over $33.26 million were more than adequate to provide for these programs.
As stated above, General Revenues accounted for over $33.26 million or about 49% of all revenues totaling $66.87 million. Program specific revenues in the form of charges for services, grants and contributions accountedfor the rest.
The School District's M&O millage rate was 16.50 mills for the 2006 - 2007 school year and continues at that rate for the 2007 - 2008 school year. The School District lowered the General Obligation bond millage rate by 2/10th of a one mill for 2006 - 2007 and again by 2110th ofa mill for the 2007 - 2008 school year. The current Bond millage rate is 1.20 mill. The School District was able to reduce the Bond millage rate due to the growth in the tax digest.
The School District passed a third SPLOST referendum in July 2006, which is expected to raise more than $30 million over the next five years for constructing educational facilities.
OVERVIEW OF THE FINANCIAL STATEMENTS
This annual report consists of three parts; management's discussion and analysis (this section), the basic financial statements and required supplementary information. The basic financial statements include two levels of statements that present different views of the School District. These include the District-wide and the fund financial statements.
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OCONEE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
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 '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. In the case of the Oconee County Board of Education, the General Fund, Capital Projects Funds, and Debt Service Funds are all considered to be major funds. The School District has no nonmajor funds as defined by GASB Statement 34 for the purposes of this report.
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
Since the Oconee County Board of Education has no operations that have been classified as "Business Activities", the District-wide financial statements are basically a consolidation of all of the School District's operating funds into one column called governmental activities. In reviewing the District-wide financial statements, a reader might ask the question, are we in a better financial position now 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 the 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, student-teacher ratios, and other factors.
The 'Statement of Net Assets' and the 'Statement of Activities' reflects 100% of the School District's governmental activities.
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OCONEE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
Fund Financial Statements
The School District uses many funds or sub-funds to account for a multitude of financial transactions during the fiscal year. The fund financial statements presented in this report provide detail information about the School District's significant or major funds. As discussed previously, the School District has no nonmajor Funds as defined by GASB Statement 34.
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. 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 government activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds are reconciled in the financial statements.
Fiduciary Funds - The School District is the trustee, or fiduciary, for assets that belong to others and 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. The reader can think of the School District's net assets as the difference between its assets (i.e., what the School District owns) and its liabilities (i.e., what the School District owes) at the end of a fiscal year. This balance represents one way to measure the School District's financial health or its financial position. In the case of the Oconee County Board of Education, assets exceeded liabilities by $68.52 million at June 30, 2007.
To better understand the School District's actual financial position and ability to deliver services in future periods, the reader will need to review the various components of the net asset category. For example, of the $68.52 million of net assets, $8.51 million was restricted for continuation of Federal programs, debt service, and completion of ongoing capital projects. Accordingly, these funds were not available to meet the School District's ongoing obligations to citizens and creditors.
In addition, the School District had $54.56 million (net of related debt) invested in capital assets (e.g., land, buildings, and equipment). The School District uses these capital assets to provide educational services to students within geographic boundaries served by the School District.
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OCONEE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007

Because of the very nature and on-going use of the assets being reported in this component of net assets, it must be recognized that this portion of the net assets is not available for future spending.

The remaining balance of unrestricted net assets of $5.45 million may be used to meet the School District's ongoing obligations to citizens and creditors. The funds are used to meet payroll and operational costs through the month of September; after which, local tax revenues are received and permit the infusion of cash necessary to operate the school system. Table 1 provides a summary of the School District's net assets for the current fiscal year and for prior fiscal year 2006.

Table 1 Net Assets

Governmental Activities

Fiscal

Fiscal

Net

Year 2007

Year 2006

Change

Assets Current and Other Assets Capital Assets, Net

$ 43,287,296 $ 14,502,235 $ 28,785,061

71,092,527

69,310,411

1,782,116

Total Assets

$114,379,823 $ 83,812,646 $ 30,567,177

Liabilities Current and Other Liabilities Long-Term Liabilities

$ 7,043,410 $ 5,706,600 $ 1,336,810

38,819,743

16,957.837

21,861,906

Total Liabilities

$ 45,863,153 $ 22,664,437 $ 23,198,716

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

$ 54,561,154 8,507,115 5,448,401

$ 52,545,755 4,406,125 4,196,329

$ 2,015,399 4,100,990 1,252,072

Total Net Assets

$ 68,516,610 $ 61,148,209 $ 1,368,~61

Table 2 shows categorical Changes in Net Assets for the current fiscal year and for prior fiscal year 2006.

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OCONEE 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

$ 2,448,315 30,946,048 217,599

$ 1,962,818 26,893,706 117,102

Total Program Revenues

$ 33,611,962

$ 28,973,626

General Revenues: Taxes Property Taxes For Maintenance and Operations For Debt Service Sales Taxes Special Purpose Local Option Sales Tax For Debt Service For Capital Projects Intangible Recording Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Gain on Sale of Capital Assets Miscellaneous Special Item Gain on Sale of Land

$ 23,179,858 1,680,111
1,630,205 3,836,768
1,263,627 1,200
1,668,234

$ 17,736,149 1,631,170
3,431,150 1,866,892
846,230
936,349 417,728
1,220,991
10,000

Total General Revenues and Special Item

$ 33,260,003

$ 28,096,659

Total Revenues

$ 66,871,965

$ 57,070,285

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

$ 38,036,492
1,224,969 1,180,083 1,152,205 1,178,896 4,301,470
280,473 4,435,577 2,965,296
116,198 214,647
951,119 2,216,088 1,249,991

$ 33,633,772
1,049,685 865,704
1,099,115 1,130,504 3,701,946
189,294 3,853,914 2,093,840
22,847 191,460
732,661 2,209,821
572,252

Total Expenses

$ 59,503,504 $ 51,346,815

Increase in Net Assets

$ 7,368!461

$ 5,723A70

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OCONEE 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. Data are presented for the current fiscal year and for prior fiscal year 2006. 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 costs reflect the financial burden on the School District's taxpayers by each activity. Local taxpayers' burden decreased from 43.57% of the total budget in 2006 to 43.51 % for 2007.

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

$ 38,036,492 $ 33,633,772 $ 14,282,315 $ 13,161,419

Support Services

Pupil Services

1,224,969 1,049,685 1,029,364

822,914

Improvement oflnstructional Services

1,180,083

865,704

826,274

521,937

Educational Media Services

1,152,205 1,099,115

341,083

535,922

General Administration

1,178,896 1,130,504

185,902

336,290

School Administration

4,301,470 3,701,946 2,678,713 2,451,070

Business Administration

280,473

189,294

271,613

189,294

Maintenance and Operation of Plant

4,435,577 3,853,914 2,704,479 2,334,308

Student Transportation Services

2,965,296 2,093,840 1,822,841 1,041,980

Central Support Services

116,198

22,847

110,221

22,847

Other Support Services

214,647

191,460

117,708

123,761

Operations ofNon-Instructional Services

Enterprise Operations

951,119

732,661

139,367

-22,308

Food Services

2,216,088 2,209,821

131,671

281,503

Interest on Short-Term and Long-Term Debt 1,249,991

572,252 1,249,991

572,252

Total Expenses

$ 59,503.504$ 51,346.815 $ 25,891.542 $ 22,373.189

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 almost $65.79 million and total expenditures of $64.39 million.

General Fund Budget Highlights

The School District's budget is prepared according to Georgia Law. The most significant budgeted fund is the General Fund.

During the course of fiscal year 2007, the School District amended its general fund budget as needed. The School District uses site-based budgeting as a part of the budget process. The budgeting systems are designed to control total site budgets but provide flexibility for site management.

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

For the General Fund, the final actual revenues of $57.78 million exceeded the final budgeted amounts of $54.99 million, a difference of $2.79 million or about 5%. A portion of this difference demonstrates that the School District underestimated its final revenues which are primarily the result of property exchanges that occurred due to the population increase of the county. The remaining portion is the result of across-the-board savings in programs from budgets not being completely spent.

The final actual expenditures of $56.00 million exceeded the final budgeted amount of $54.88 million by $1.12 million. This difference (final actual vs. final budget) was due primarily to expenditures for expenses within the area of direct instructional services and the inclusion of the principals' accounts in our financial statements, but not in the original budget.

CAPITAL ASSETS AND DEBT ADMINISTRATION

Capital Assets

At June 30, 2007, the School District had $71.09 million invested in capital assets, including land, buildings and furniture and equipment for its governmental activities. Table 4 reflects a summary of these balances net of accumulated depreciation for the current year and for the prior fiscal year 2006. Oconee County School District began a capital project building campaign that includes additions at one elementary and two middle schools, as well as the construction of one new elementary school.

Table 4 Capital Assets (Net of Depreciation)

Governmental Activities

Fiscal

Fiscal

Year 2007

Year 2006

Land Construction in Progress Land Improvements Buildings Equipment

$ 2,623,853 2,189,208 4,478,320 58,620,172 3,180,974

$ 1,912,556 1,186,498 4,550,565
58,695,704 2,965,088

Total

$ 71,092,527 $ 69,310,411

Additional information on the School District's Capital Assets can be found in the Notes to the Basic Financial Statements.

Debt

At June 30, 2007, the School District had $38.82 million in debt outstanding. This debt is primarily the result of General Obligation Bonds (repaid through a property tax levy) originally

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

sold by the School District in 1993 and 1995 (refinanced in 2004 and 2005) for the purpose of the acquisition, construction, equipping, renovating, and repairing of school facilities. In the fall of 2006, the School District sold $24 million in General Obligation Bonds (repaid through local option sales tax) for the purpose of the acquisition ofland for future schools, construction of new classrooms, renovations of current facilities, a new elementary school, and other facilities as approved by the Board of Education.

In early spring of 2003, Oconee County School District, along with assistance from the Georgia General Assembly, created the Oconee County Public Facilities Authority and sold $8,000,000 in Revenue bonds (repaid with SPLOST proceeds) for the purpose of the construction and equipping of North Oconee High School and, if funds were still available, constructing and repairing other school facilities. The debt for these bonds will be serviced by April 2008.

All current debt will be serviced by December 2021.

Oconee County School District's most recent rating (November 2006) by Moody's Investors Service, Inc and Standard and Poor's Ratings Services have assigned underlying bond ratings to the School District of "Aa2" and "AA+", respectively. Part of the basis for the ratings is the inclusion of the bond indebtedness in the State Aid Intercept Program. Table 5 summarizes the School District's debt.

Table 5 Debt at June 30

Governmental Activities

Fiscal

Fiscal

Year 2007

Year 2006

Capital Leases Installment Sales Agreement General Obligation Bonds Revenue Bonds Bond Premium Claims Payable

$

517

296,020

35,950,000

1,520,000

920,081

133,125

$ 562,837
13,395,000 3,000,000

Total Debt Outstanding

$ 38,819,743 $ 16,957.837

Debt Due within One Year:

Capital Leases General Obligation Bonds Revenue Bonds

$

517

1,500,000

1,520.000

$ 151,293 1,445,000 1,480,000

Due within One Year

$ 3,020.517 $ 3,076.293

Additional Information can be found on the School District's Debt obligations in the Notes to the Basic Financial Statements.

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OCONEE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
CURRENT ISSUES
Currently known facts, decisions or conditions that are expected to have a significant effect on financial positions or results of operations in future years are as follows:
o State Revenue - New state revenue growth may not be sufficient to overcome major weaknesses in the state education budget. For example:
o The amended formula acijustments that were imposed in fiscal year 2002 were only partially restored for fiscal year 2008, have continued forward and are expected to be continued into fiscal year 2009. The partial restoration (formula acijustment) came at the same time the General Assembly passed pay raises for certified employees, bus drivers and food service workers, increases in the employer's portion ofhealth insurance premiums, and mandated lower of class sizes in grades K-8.
o 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, education local option sales taxes and anticipated annual receipts ofcapital outlay funds from the State of Georgia Department ofEducation. The School District regularly monitors anticipated capital outlay needs.
o Oconee County School Districts' priority on academic instruction continues to fuel the residential and economic growth of the county. New residents move into the county because of the public school system's focus on quality instructional programs. As a result, commercial development has increased to provide services to the increased population of the county. However, only 16% of the digest is comprised of commercial, utility and retail properties.
Despite these challenges, the Oconee County Board of Education is strong financially and we remain optimistic about the ability of the School District to maximize all of the financial resources to provide a quality education to our students. However, the School District is maintaining a very active process of monitoring departments and programs for efficiency and to evaluate areas to increase services without additional personnel or operational costs. Raising local property taxes may be needed to off-set state revenue short falls but is not the only strategy being evaluated.
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 Mr. Randy Morrison, Assistant Superintendent for Financial Operations, Oconee County Board of Education, Post Office Box 146, 34-B School Street, Watkinsville, Georgia 30677. You may also email your questions to Mr. Morrison at rmorrison@oconee.k 12.ga.us.
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OCONEE COUNTY BOARD OF EDUCATION

OCONEE COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2007

EXHIBIT "A"

ASSETS
Cash and cash equivalents Investments Receivables:
Taxes Intergovernmental:
State Federal Other Inventory Deferred charges Capital assets (nondepreciable) Capital assets (net of accumulated depreciation)
Total assets
LIABILITIES
Accounts payable Salaries and benefits payable Contracts payable Accrued interest payable Retainage payable Bonds payable due within one year Bonds payable due in more than one year Capital leases due within one year Installment sales agreement due in more than one year Claims payable due in more than one year
Total liabilities
NET ASSETS
Investment in capital assets, net of related debt Restricted for:
Continuation of federal programs Capital projects Debt service Unrestricted
Total net assets

Governmental Activities

$

35,812,263

912,249

1,948,209

3,811,268 226,686 67,824 84,677 424,120
4,813,061 66,279,466 $ 114,379,823

$

193,231

5,970,720

295,320

449,012

135,127

3,020,000

35,370,081

517

296,020

133,125

$

45,863,153

$

54,561,154

280,847

3,800,070

4,426,198

5,448,401

$

68,516,670

The accompanying notes are an integral part of these financial statements. - 1-

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

EXHIBIT"B"

Functions/Programs 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 Enterprise operation Food services operation Interest on long-term debt Total governmental activities

Expenses

Program Revenues

Operating

Capital

Charges for

Grants and

Grants and

Services

Contributions Contributions

Net (Expense) Revenue and Changes in Net Assets Governmental
Activities

$ 38,036,492 $

165,103 $ 23,589,074

$ -14,282,315

1,224,969

5,112

190,493

-1,029,364

1,180,083 1,152,205 1,178,896 4,301,470
280,473 4,435,577 2,965,296
116,198 214,647 951,119 2,216,088 1,249,991 $ 59,503,504 $

25,479 146,432
7,295 3,768
811,752 1,283,374

353,809 785,643 992,994 1,476,325
8,860 1,723,803
921,088 $ 5,977
96,939
801,043

2,448,315 $ 30,946,048 $

217,599 217,599 $

-826,274 -341,083 -185,902 -2,678,713 -271,613 -2,704,479 -1,822,841 -110,221 -117,708 -139,367 -131,671 -1,249,991 -25,891,542

General revenues: Taxes: Property taxes, levied for general purposes Property taxes, levied for debt service Sales taxes: For debt service For capital projects Other taxes Unrestricted investment earnings Other
Special items: Rutland psychoeducational facility Land Donation Gain on sale of capital assets Total general revenues and special items Change in net assets
Net assets, beginning of year Net assets, end of year

$ 22,368,193 1,680,111
1,630,205 3,836,768
811,665 1,263,627 1,636,937

31,297

1,200

$ 33,260,003

$

7,368,461

61,148,209

$ 68,516,670

The accompanying notes are an integral part of these financial statements. -2-

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

EXHIBIT"C"

ASSETS
Cash and cash equivalents Investments Receivables:
Taxes Intergovernmental:
State Federal Other Inventory
Total assets
LIABILITIES AND FUND BALANCES
LIABILITIES Accounts payable Salaries and benefits payable Retainage payable Contracts payable Deferred revenue
Total liabilities
FUND BALANCES Reserved for:
Inventory Capital projects Debt service Federal programs Unreserved, undesignated: Reported in:
General fund Capital project fund Debt service fund
Total fund balances Total liabilities and fund balances

General

$

7,625,411 $

312,249

971,324

3,811,268 226,686 53,164 84,677

$

13,084,779 $

Capital Projects
25,337,144 $
25,337,144 $

Debt Service

Total Governmental
Funds

2,849,708 $ 600,000

35,812,263 912,249

976,885

1,948,209

14,660

3,811,268 226,686 67,824 84,677

4,441,253 $

42,863,176

$

193,231

5,970,720

$

189,177

$

6,353,128 $

135,127 295,320
$
430,447 $

$
15,055 15,055 $

193,231 5,970,720
135,127 295,320 204,232
6,798,630

$

84,677

$

84,677

312,249 $

799,200

1,111,449

$

4,304,810

4,304,810

196,170

196,170

6,138,555

24,107,497

121,388

6,138,555 24,107,497
121,388

$

6,731,651 $

24,906,697 $

4,426,198 $

36,064,546

$

13,084,779 $

25,337,144 $

4,441,253

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.

Cost

$

83,672,010

Less accumulated depreciation

-12,579,483

Other long-term assets are not available to pay for current-period expenditures and, therefore, are deferred in the funds. Property taxes

Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds.

Bonds

$

-37,470,000

Bond premium, net of amortization

-920,081

Bond issuance costs, net of amortization

424,120

Accrued interest

-449,012

Capital leases

-517

Installment sales agreement

-296,020

Other long-term debt

-133,125

71,092,527 204,232
-38,844,635

Net assets of governmental activities

$

68,516,670

The accompanying notes are an integral part of these financial statements. -3 -

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

EXHIBIT "D"

REVENUES Property taxes Sales taxes Other 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 facilities Student transportation services Central support services Other support services Enterprise Operations Food services operation Capital outlay Debt service: Principal retirement Interest and fees Bond issuance cost Total expenditures
Excess (deficiency) ofrevenues over (under) expenditures
OTHER FINANCING SOURCES (USES) Capital contributions Installment sales agreement Proceeds from sale of capital assets Operating transfers in Operating transfers out Bonds issued Premium on bonds sold Total other financing sources (uses)
Net changes in fund balance
FUND BALANCE, beginning of year
FUND BALANCE, end of year

General

$

21,646,504

$

811,665

28,932,426

2,231,221

2,448,315

393,285

1,316,932

$

57,780,348

$

District Wide
Capital Projects
3,836,768
732,941 5,672
4,575,381

Debt Service

Total Governmental
Funds

$

1,665,056 $

1,630,205

137,401

$

3,432,662 $

23,311,560 5,466,973 811,665
28,932,426 2,231,221 2,448,315 1,263,627 1,322,604 65,788,391

$

36,544,346

$

1,224,969 1,172,558 1,142,816 1,030,521 4,286,285
247,975 4,143,188 2,723,614
I 15,198 I 80,270 951,119 2,216,088
19,561

4,799 207

$

56,003,514

$

$

1,776,834

$

$

$

314,333

1,200

-29,828

$

285,705

$

$

2,062,539

$

4,669,112

$

6,731,651

$

215,663

$

7,525 308
15,250

245,374 10,900

3,062,145

557,521

$

47,220

456,618

4,618,524

$

2,943,313 824,053
3,767,366 $

-43,143

$

-334,704 $

31,297

$

$

-336,595

22,632,566

990,582

23,317,850

$

23,274,707

$

1,631,990

24,906,697

$

366,423 1,367,434 1,733,857 $ 1,399,153 $ 3,027,045 4,426,198 $

36,760,009
1,224,969 1,180,083 1,143,124 1,045,771 4,286,285
247,975 4,388,562 2,734,514
115,198 180,270 951,119 2,216,088 3,081,706
3,505,633 871,480 456,618
64,389,404
1,398,987
31,297 314,333
1,200 366,423 -366,423 24,000,000 990,582 25,337,412
26,736,399
9,328,147
36,064,546

The accompanying notes are an integral part of these financial statements.
-4-

OCONEE COUNTY BOARD OF EDUCATION

EXHIBIT "E"

RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS

TO THE STATEMENT OF ACTIVITIES

FOR THE FISCAL YEAR ENDED JUNE 30, 2007

Net change in fund balances - total governmental funds
Amounts reported for governmental activities in the statement of activities are different because:
Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. In the current period these amounts are:
Capital outlay Depreciation expense
Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds.
Property taxes
The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. This amount is the net effect of these differences in the treatment of long-term debt and related items.
Principal payments - bonds Principal payments - capital leases Principal payments - installment sales agreement Claims payable Issuance of installment sales agreement Issuance of general obligation debt Accrued interest Bond premium Bond premium amortization expense Bond issuance costs Bond issuance costs amortization expense

$

26,736,399

$

3,233,995

-1,451,879

1,782,116 736,744

$

2,925,000

562,320

18,313

-133,125

-314,333

-24,000,000

-449,012

-990,582

70,501

456,618

-32,498

-21,886,798

$

7,368,461

The accompanying notes are an integral part of these financial statements. -5-

OCONEE COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS JUNE 30, 2007

Cash

ASSETS

Funds held for others

LIABILITIES

EXHIBIT "F"

Agency Fund

$

198,754

$

I 98,754

The accompanying notes are an integral part of these financial statements.
-6-

OCONEE COUNTY BOARD OF EDUCATION

EXHIBIT "G"

NOTES TO THE BASIC FINANCIAL STATEMENTS

JUNE 30, 2007

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
Reporting Entity
The Oconee 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.
Blended Component Unit - Oconee County Public Facilities Authority The Oconee County Public Facilities Authority (the "Authority") was created by House Bill No. 938 during the 2003 session of the Georgia General Assembly. The purpose of the Authority is to provide buildings, facilities, and services for the benefit ofthe Oconee County School District. The Authority consists of five members who are appointed by the Oconee County School District.
The Oconee County Public Facilities Authority is a component unit ofthe Oconee County Board of Education and, as such, the Authority's financial activity has been blended with the Oconee County Board of Education's basic financial statements.
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 Oconee 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 ofinternal 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.

-7-

OCONEE COUNTY BOARD OF EDUCATION

EXHIBIT "G"

NOTES TO THE BASIC FINANCIAL STATEMENTS

JUNE 30, 2007

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Program revenues include (a) charges paid by the recipients ofgoods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds, 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.
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) and Bond Proceeds to be used for the acquisition, construction or renovation of major capital facilities.
Debt Service Fund accounts for taxes (property and sales) legally restricted for the payment of general long-term principal, interest and paying agent's fees.
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 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 of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.

-8-

OCONEE COUNTY BOARD OF EDUCATION

EXHIBIT "G"

NOTES TO THE BASIC FINANCIAL STATEMENTS

JUNE 30, 2007

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds ofgeneral long-term liabilities, acquisitions under an installment sales agreement 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. Georgia Laws OCGA 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 of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code 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,
-9-

OCONEE COUNTY BOARD OF EDUCATION

EXHIBIT "G"

NOTES TO THE BASIC FINANCIAL STATEMENTS

JUNE 30, 2007

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(2) Obligations issued by the United States government,
(3) Obligations fully insured or guaranteed by the United States government or a United States government agency,
(4) Obligations of any corporation of the United States government,
(5) Prime banker's acceptances,
(6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services,
(7) Repurchase agreements, and
(8) Obligations of other political subdivisions of the State of Georgia.
The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks.
Receivables
Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivab1es.
Property Taxes
The Oconee County Board ofCommissioners fixed the property tax levy for the 2006 tax digest year (calendar year) on July 25, 2006 (levy date). Taxes were due on November 15, 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 Oconee County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2007, for maintenance and operations amounted to $21,627,948 and for school bonds amounted to $1,598,953.
Tax millage rates levied for the 2006 tax year (calendar year) for the Oconee County Board of Education were as follows (a mill equals $1 per thousand dollars of assessed value):

- 10 -

OCONEE COUNTY BOARD OF EDUCATION

EXHIBIT "G"

NOTES TO THE BASIC FINANCIAL STATEMENTS

JUNE 30, 2007

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES {Continued)

School Operations School Bonds

16.50 mills 1.20 mills

17.70mills

Sales Taxes

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $5,466,973 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.

Inventories

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

Capital Assets

Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (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:

- 11 -

OCONEE COUNTY BOARD OF EDUCATION

EXHIBIT "G"

NOTES TO THE BASIC FINANCIAL STATEMENTS

JUNE 30, 2007

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES {Continued)

Capitalization Policy

Estimated Useful Life

Land Land Improvements Buildings and Improvements All Equipment

All

NIA

$

25,000

70 years

$

25,000

70 years

$

5,000 5 to 25 years

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

General Obligation Bonds

The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. Bond issuance costs are recognized in the financial statements during the fiscal year bonds are issued. In addition, general obligation bonds have been issued to refund existing general obligation bonds. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net 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 ofmoney which has not

- 12 -

OCONEE COUNTY BOARD OF EDUCATION

EXHIBIT "G"

NOTES TO THE BASIC FINANCIAL STATEMENTS

JUNE 30, 2007

Note 3: DEPOSITS AND INVESTMENTS
been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. 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,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,

(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
CATEGORIZATION OF DEPOSITS At June 30, 2007, the bank balances were $38,189,407. The amounts of the 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
by its trust department or agent in the School District's name, 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.

- 13 -

OCONEE COUNTY BOARD OF EDUCATION

EXHIBIT "G"

NOTES TO THE BASIC FINANCIAL STATEMENTS

JUNE 30, 2007

Note 3: DEPOSITS AND INVESTMENTS

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

2

34,539,740

3

0

Total

$ 34,539,740

CATEGORIZATION OF INVESTMENTS The School District's investment as ofJune 30, 2007, is presented below. Investments are presented by investment type.

Investment Type

Fair Value

Other Investments U.S. Treasury Money Market Funds

$====3==1=2,"""'24==9

The U. S. Treasury Money Market funds are in a Treasury Portfolio Fund managed by Fidelity Investments. The Treasury Portfolio Fund is rated AAAm by Standard and Poor's and Aaa by Moody's. The weighted average maturity of the fund is approximately 13 days.

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:

- 14 -

OCONEE COUNTY BOARD OF EDUCATION

EXHIBIT "G"

NOTES TO THE BASIC FINANCIAL STATEMENTS

JUNE 30, 2007

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

$ 1,912,556 $ 711,297

1,186,498

1,917,545 $

$ 2,623,853

914 835

2,189,208

Total Capital Assets Not Being Depreciated $ 3,099,054 $ 2,628,842 $ 914 835 $ 4,813,061

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements

$ 66,989,351 $ 5,385,940 5,057,167

955,458 564,530 $

$ 67,944,809

93,497

5,856,973

5,057,167

Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements

8,293,647 2,420,852
506,602

1,030,990 348,644 72 245

93,497

9,324,637 2,675,999
578 847

Total Capital Assets, Being Depreciated, Net $ 66,211,357 $

68 109 $

0 $ 66,279,466

Governmental Activity Capital Assets - Net $ 69,310,411 $ 2,696,951 $ 914 835 $ 71,092,527

Current year depreciation expense by function is as follows:

Instruction Support Services
Educational Media Services School Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Food Services

$ 1,114,438
9,082 15,185 47,015 230,782
1,000 34 377

$ 1,451,879

Note 6: RESTRICTED ASSETS

Special Purpose Local Option Sales Tax (SPLOST) and general obligation bond proceeds are restricted assets in the Statement of Net Assets because their use is limited by applicable bond covenants or statutory provisions. Restricted assets at June 30, 2007, were as follows:

- 15 -

OCONEE COUNTY BOARD OF EDUCATION

EXHIBIT "G"

NOTES TO THE BASIC FINANCIAL STATEMENTS

JUNE 30, 2007

Note 6: RESTRICTED ASSETS

Capital Projects Bond Proceeds

Debt Service Funds

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

$
$ 25,337,144
$

2,849,708 600,000

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

Debt Service Fund

$

29,828 $==3=36-,5"=9==5

Transfers are used to move property tax revenues collected by the General Fund and SPLOST revenues collected by the District-wide Capital Projects Fund for the payment of debt in the Debt Service Fund.

Note 8: RISK MANAGEMENT

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

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

The School District has elected to self-insure for all losses related to acts ofGod. The School District has not experience any losses rated to this risk in the last past three years.

- 16 -

OCONEE COUNTY BOARD OF EDUCATION

EXHIBIT "G"

NOTES TO THE BASIC FINANCIAL STATEMENTS

JUNE 30, 2007

Note 8: RISK MANAGEMENT

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

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

2006 2007

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

$

1 116 $

318 $

1 434 $

0

$

0 $

3 945 $

3 945 $

0

The School District participates in the Georgia School Boards Association Workers' Compensation Fund, a public entity risk pool organized on July 1, 1992, to develop, implement, and administer a program ofworkers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Fund for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Fund with the Safety National Casualty Corporation to provide coverage for potential losses sustained by the Fund in excess of $400,000 loss per occurrence, up to $1,000,000.

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

Position Covered

Amount

Superintendent

$ 100,000

Note 9: LONG-TERM DEBT

CAPITAL LEASES The Oconee County Board of Education has entered into various lease agreements as lessee for copiers. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value ofthe future minimum lease payments as ofthe date oftheir inception.

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

- 17 -

OCONEE COUNTY BOARD OF EDUCATION

EXHIBIT "G"

NOTES TO THE BASIC FINANCIAL STATEMENTS

JUNE 30, 2007

Note 9: LONG-TERM DEBT

Purpose

Interest Rates

Amount

General Government - Refunding - Series 2004 General Government - Refunding - Series 2005 Revenue Bonds - Series 2003 General Government - Series 2006

3.16% 2.60% 2.45% 4.00% - 5.00%

$ 9,330,000 2,620,000 1,520,000
24,000,000

$ 37A7010Q0

INSTALLMENT SALES AGREEMENT The Oconee County Board of Education entered into an agreement dated June 1, 2006, with the Northeast Georgia Regional Educational Service Agency for the construction and subsequent lease of the Rutland Center. Under the terms of the agreement, the School District will make annual payments through July 15, 2020.

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

Capital Leases

Installment Sales
Agreement

Governmental Funds

General

Obligation Revenue

Bonds

Bonds

Bond Premium

Claims Paxable

Total

Balance July I, 2006

$ 562,837 $

0 $13,395,000 $ 3,000,000 $

0 $

0 $16,957,837

Additions Installment Sales Agreement G.O.Bonds G.O. Bonds Premium Other Long-Term Debt

314,333 24,000,000

990,582

133,125

314,333 24,000,000
990,582 133,125

Deductions Debt Retired Bond Premium Amortized

562,320

18,313 1,445,000 1,480,000

70,501

3,505,633 70,501

Balance June 30, 2007

$

511 $ 226 Q2Q $35 25Q QQO $ I 520 000 $ 220 081 $ mm $38 812 z43

Portion ofLong-Term Debt

Due within One Year

$

517 $

0 $ 1,500,000 $ 1,520,000 $

0 $

0 $ 3,020,517

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

- 18 -

OCONEE COUNTY BOARD OF EDUCATION

EXHIBIT "G"

NOTES TO THE BASIC FINANCIAL STATEMENTS

JUNE 30, 2007

Note 9: LONG-TERM DEBT

Fiscal Year Ended June 30
2008 2009 2010 2011 2012 2013 - 2017 2018 - 2021
Total Principal and Interest

Capital Leases

Principal

Interest

Installment Sales Agreement

Principal

Interest

$

517 $

0 $

17,766 $ 18,314 19,133 19,953 112,613 108,241

11,945 11,194 10,415 9,602 34,601 9 233

$

517 $

0 $

296,020 $

86,990

Fiscal Year Ended June 30
2008 2009 2010 2011 2012 2013 - 2014
Total Principal and Interest

Unamortized Bond
Premium

General Obligation Bonds

Principal

Interest

$

211,502 $ 1,500,000 $ 1,433,098

211,502

5,025,000

1,392,894

184,030

6,215,000

1,212,390

147,823

6,635,000

977,524

108,849

7,085,000

726,446

56 375

9,490,000

465,844

$

920,081 $ 35,950,000 $ 6,208,196

Fiscal Year Ended June 30
2008

Revenue Bonds

Principal

Interest

$ 1,520,000 $

37,240

Note 10: ON-BEHALF PAYMENTS

The School District has recognized revenues and costs in the amount of $874,933 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.

Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $840,251

Georgia Department of Education Paid the Teachers Retirement System For Teachers Retirement (TRS) In the amount of $26,991

- 19 -

OCONEE COUNTY BOARD OF EDUCATION

EXHIBIT "G"

NOTES TO THE BASIC FINANCIAL STATEMENTS

JUNE 30, 2007

Note 10: ON-BEHALF PAYMENTS

Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $7,691

Note 11: SIGNIFICANT COMMITMENTS

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

Project

Unearned Executed Contracts

North Oconee High School Stadium Oconee County Middle School Administration
and Classroom Addition Malcom Bridge Middle School Addition Colham Ferry Elementary School Rocky Branch Elementary School Addition

$ 892,581
1,767,714 72,000
279,000 1,743,044

$ 4,754,339

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

Note 12: SIGNIFICANT CONTINGENT LIABILITIES

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

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

Note 13: 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

- 20-

OCONEE COUNTY BOARD OF EDUCATION

EXHIBIT "G"

NOTES TO THE BASIC FINANCIAL STATEMENTS

JUNE 30, 2007

Note 13: RETIREMENT PLANS

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 ofTrustees in accordance with State statute afld 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%

$ 2,917,259 $ 2,649,336 $ 2,452,546

- 21 -

(This page left intentionally blank)

OCONEE COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2007

SCHEDULE "1"

REVENUES Taxes State funds Federal funds Charges for services Investment earnings Miscellaneous
Total revenues
EXPENDITURES Current:
Instruction Support services: Pupil services Improvement of instructional services Educational media services General administration School administration Business administration Maintenance and operation of plant Student transportation services Central support services Other support services Enterprise operations Food services operation
Capital outlay Debt service: Principal retirement Interest and fiscal charges
Total expenditures
Excess of revenues over (under) expenditures
OTHER FINANCING SOURCES (USES) Proceeds from sale of capital assets Installment sales agreement Transfers out Total other financing sources (uses)
Net change in fund balances
FUND BALANCE, beginning of year
FUND BALANCE, end of year

Nonappropriated

Budgets

Original

Final

Actual

$ 21,576,574 $ 21,576,574 $

27,401,638

27,500,098

2,175,979

2,256,313

1,413,199

1,413,199

259,890

259,890

1,990,000

1,990,000

$ 54,817,280 $ 54,996,074 $

22,458,169 28,932,426
2,231,221 2,448,315
393,285 1,316,932 57,780,348

Variance With Final Budget

$

881,595

1,432,328

-25,092

1,035,116

133,395

-673,068

$

2,784,274

$ 35,574,403 $ 35,786,399 $ 36,544,346

$

1,312,269 971,561
1,071,431 1,144,720 4,157,030
273,901 4,179,177 2,840,930
115,024 148,879 676,685 2,196,264

1,304,126 1,018,204 1,071,431 1,145,781 4,177,377
273,901 4,179,177 2,802,601
115,024 133,879 676,685 2,196,264

1,224,969 1,172,558 1,142,816 1,030,521 4,286,285
247,975 4,143,188 2,723,614
I 15,198 180,270 951,119 2,216,088
19,561

4,799

207

$ 54,662,274 $ 54,880,849 $ 56,003,514

$

$

155,006 $

115,225 $

1,776,834

$

-757,947
79,157 -154,354
-71,385 115,260 -108,908 25,926 35,989
78,987 -174
-46,391 -274,434
-19,824 -19,561
-4,799 -207
-1,122,665
1,661,609

$
$ -430,832 $ -430,832 $ -430,832 $ -430,832 $

1,200

$

314,333

-29,828

285,705

$

$

-275,826 $ -315,607 $

2,062,539

$

$ 4,669,112 $ 4,669,112 $ 4,669,112

$

$ 4,393,286 $ 4,353,505 $ 6,731,651

$

1,200 314,333 401,004 716,537
2,378,146
0
2,378,146

Notes to the Schedule of Revenues, Ex11enditures 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.

- 23 -

OCONEE COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE FISCAL 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 English Language Acquisition Grants Enhancing Education Through Technology Program Improving Teacher Quality State Grants Migrant Education 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
Total Federal Financial Assistance
NIA= Not Available

CFDA Number

PassThrough
Entity JD
Number

Expenditures In Period

* 10.553 * 10.555
10.550 10.665

NIA

NIA

$

$

(2) 1,975,997
1,975,997

NIA NIA
$

112,819 (3) 2,088,816

84.027 84.173
84.365 84.318 84.367 84.011 84.186 84.298 84.010 84.048

NIA

$

NIA

$

841,570 35,567
877,137

NIA NIA NIA NIA NIA NIA NIA NIA
$
$

15,617 20
152,354 10,108 15,405 7,462
433,242 43,154
1,554,499
3,643,315

- 24 -

OCONEE COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2007

SCHEDULE "2"

Notes to the Schedule of Expenditures of Federal Awards
(I) 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 ($82,427) were not maintained separately and are included in the 2007 National School Lunch Program.
(3) Funds earned on the National Forest Reserve Funds program, in the amount of $379 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 Oconee 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.

- 25 -

OCONEE COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE
FOR THE FISCAL YEAR ENDED JUNE 30, 2007

SCHEDULE "3"

Agency/Funding Grants Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle Grades (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category III Category IV Category V Program for Intellectually Gifted Students - 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 Bus Replacement Sparsity Nursing Services Principal Supplements Vocational Supervisors Food Services Vocational Education Amended Formula Adjustment Other State Programs Graduation Coaches K-8 Statewide Reading and Math Grants Middle School Summer Remedial Program National Teacher Certification Preschool Handicapped Program

GOVERNMENT AL FUND TYPE GENERAL FUND

$

2,018,962

19,929

4,442,003

135,647

2,083,418

132,277

3,908,750

3,731,025

1,157,930

134,837 156,103 1,377,409 477,086 281,116 1,508,498 102,220 329,020 143,608 639,614 203,901 112,868

849,422 1,314,663 1,583,471

801,199 67,599 20,000 124,369 20,347 18,859 127,272 99,664
-597, 124

68,965

64,799

2,030

176,561

68,876

$

27,907,193

- 26 -

OCONEE COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE
FOR THE FISCAL YEAR ENDED JUNE 30, 2007

SCHEDULE "3"

Agency/Funding Grants On Behalf Payments On Behalf Payments - Health Insurance On BehalfPayments - Teachers Retirement On Behalf Payments - Public School Employees Retirement
Pupil Transportation - State Bonds Other Grants from Georgia Department of Education
Virtual Schools Grant Other Grants from Georgia Department of Education
Total State Funds

GOVERNMENTAL FUND TYPE GENERAL FUND

$

840,251

26,991

7,691

$

874,933

$

150,000

$

300

$

28,932,426

See notes to the basic financial statements.

- 27 -

OCONEE COUNTY BOARD OF EDUCATION

SCHEDULE "4"

SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

FOR THE FISCAL YEAR ENDED JUNE 30, 2007

Project
Providing funds to pay a portion of the costs of constructing and equipping a second high school in the School District and to the extent there are sufficient funds available, to provide funds for the costs of constructing new educational facilities and adding to, modifying, renovating, repairing, improving and equipping existing educational buildings, properties and facilities of the School District, including the acquisition of any necessary real property, making system-wide technology improvements, and paying expenses incident to any of the foregoing.
$
Providing funds to pay the costs of acquiring real property (improved or unimproved) for future school sites; acquiring, constructing and equipping a new elementary school; adding to, renovating, repairing, improving and equipping existing educational buildings, properties and facilities of the School District, including, without limitation, athletic facilities, road improvement and technology infrastructure and equipment, and to the extent there are additional funds available, constructing additional new schools and administrative facilities, and pay expenses incident thereto, including the payment of any capitalized interest, at a cost of approximately $38,000,000 and the issuance of general obligation debt of Oconee County School District, in one or more series, in the aggregate principal amount of $24,000,000 for the above purpose.
$

Original Estimated
Cost(!)

Current Estimated Costs(2)

Expended In Current Year (3) (4)

Expended In Prior Years (3) (4)

Project Status

24,000,000 $ 31,225,094 $ 1,903,822 $ 23,457,73I Ongoing

38,000,000

38,000,000

1,666,494

Ongoing

62,000,000 $ 69,225,094 $ 3,570,316 $ 23,457,731

(I) 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 ofOconee County approved the imposition of a I% 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 expense to provide advance funding for the above projects as follows:

Prior Years Current Year

$

432,017

430,217

$

862,234

See notes to the basic financial statements.

- 28 -

OCONEE COUNTY BOARD OF EDUCATION SCHEDULE OF QUALITY BASIC EDUCATION PROGRAMS (QBE)
ALLOTMENTS AND EXPENDITURES BY PROGRAM GENERAL FUND
FOR THE FISCAL YEAR ENDED JUNE 30, 2007

SCHEDULE "5"

Description
Direct Instructional Funds: 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 III 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

$

2,360,171 $ 2,461,566 $

111,856 $ 2,573,422

26,839

102,424

162

102,586

5,211,401

6,048,445

351,045

6,399,490

178,480

310,508

2,136

312,644

2,452,206

3,326,657

198,590

3,525,247

165,753

201,506

J,114

202,620

4,644,322

5,743,366

201,917

5,945,283

4,408,134

6,761,111

364,424

7,125,535

1,367,563

1,174,530

453,507

1,628,037

2,868,963

21,413

1,315

22,728

277,907

5,629

283,536

2,100,23 I

18,736

2,118,967

8,756

5,292

14,048

-887

564

-323

1,758,010

1,583,294

14,754

1,598,048

107,149

34,956

2,353

37,309

389,048

477,653

28,249

505,902

163,281

159,477

198

159,675

$

26,101,320 $ 30,792,913 $ 1,761,841 $ 32,554,754

754,973 135,221

881,088

139,593

1,020,681

TOTAL QBE FORMULA FUNDS

$

26,991,514 $ 31,674,001 $ 1,901,434 $ 33,575,435

(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.

- 29 -

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
March 18, 2008

Honorable Sonny Perdue, Governor Members ofthe General Assembly Members ofthe State Board of Education
and Superintendent and Members of the Oconee 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 ofOconee County Board ofEducation as ofand for the year ended June 30, 2007, which collectively comprise Oconee County Board of Education's basic financial statements and have issued our report thereon dated March 18, 2008. We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Oconee 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 Oconee County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Oconee County Board of Education's internal control over financial reporting.
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 Oconee County Board ofEducation's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted
2007YB-10

accounting principles such that there is more than a remote likelihood that a misstatement of the Oconee County Board ofEducation's financial statements that is more than inconsequential will not be prevented or detected by the Oconee County Board of Education's internal control.
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 Oconee 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 or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Oconee 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 Oconee County Board of Education in a separate letter dated March 18, 2008.
This report is intended solely for the information and use of the management, members of the Oconee 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,
~~n~..c ~ . ~ State Auditor
RWH:as 2007YB-10

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
March 18, 2008

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Oconee 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 of Oconee County Board of Education with the types of compliance requirements described in the U.S. Office ofManagement and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each ofits major Federal programs for the year ended June 30, 2007. Oconee County Board ofEducation's major Federal programs are identified in the Summary of Auditor's Results Section of the 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 Oconee County Board of Education's management. Our responsibility is to express an opinion on Oconee County Board of Education's compliance based on our audit.
We conducted our audit ofcompliance 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 Oconee County Board ofEducation's compliance with those requirements and performing such other procedures as we considered necessary in the

2007SA-10

circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Oconee County Board of Education's compliance with those requirements.
In our opinion, the Oconee 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.
Internal Control Over Compliance
The management of Oconee 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 Oconee County Board ofEducation'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 ofinternal control over compliance. Accordingly, we do not express an opinion on the effectiveness ofthe Oconee County Board of Education's internal control over compliance.
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.
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.
Our consideration ofthe internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above.
2007SA-10

This report is intended solely for the information and use of the management, members of the Oconee 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,
~u\.4~ Russell W. Hinton, CPA, CGFM State Auditor
RWH:as 2007SA-10

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

OCONEE 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

AUDITEE'S RESPONSE/STATUS

SEE AUDITOR'S COMMENTS

FS-7081-05-01 Further Action Not Warranted

FS-7081-06-01 Further Action Not Warranted

(1)

FS-7081-06-02 Further Action Not Warranted

(1)

AUDITOR'S COMMENTS

(1) Findings/internal control deficiencies ofthis nature, that are not deemed significant deficiencies or material weaknesses and do not require reporting in the audit report in accordance with Statements on Auditing Standards (SAS) 112 or Governmental Auditing Standards (Yellow Book), will be communicated in a management letter in subsequent periods.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER

AUDITEE'S RESPONSE/STATUS

FA-7081-06-01 Previously Reported Corrective Action Implemented

SECTION IV FINDINGS AND QUESTIONED COSTS

OCONEE 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 Oconee County Board ofEducation's financial statements was unqualified.
2. Significant Deficiencies in Internal Control Disclosed by the Audit ofthe Financial Statements The audit report for the Oconee County Board ofEducation did not disclose any significant deficiencies related to the financial statements.
3. Noncompliance Material to the Financial Statements The audit of the Oconee 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 Oconee County Board of Education did not disclose any significant deficiencies in internal control over major programs.
5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Oconee County Board ofEducation's report on compliance with requirements applicable to major programs was unqualified.
6. Audit Findings Required to be Reported by Section .5 lO(a) of 0MB Circular A-133 The Oconee County Board ofEducation's audit did not disclose audit findings required to be reported by section .510(a) ofOMB Circular A-133.
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
8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.
9. Low Risk Auditee The Oconee County Board ofEducation qualified as a low risk auditee as defined by Section .530 ofOMB Circular A-133.
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OCONEE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007 II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.
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