Oconee County Board of Education, annual financial report for the fiscal year ended June 30, 2008 (including independent auditor's report)

OCONEE COUNTY BOARD OF EDUCATION
ANNUAL FINANCIAL REPORT FOR THE
FISCAL YEAR ENDED JUNE 30, 2008 (Including Independent Auditor's Report)

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

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

STATEMENT OF NET ASSETS

1

STATEMENT OF ACTIVITIES

2

FUND FINANCIAL STATEMENTS

BALANCE SHEET

GOVERNMENTAL FUNDS

3

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

4

RECONCILIATION OF THE STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES OF GOVERNMENTAL FUNDS

TO THE STATEMENT OF ACTIVITIES

5

STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES

FIDUCIARY FUNDS

6

NOTES TO THE BASIC FINANCIAL STATEMENTS

7

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

21

OCONEE COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I FINANCIAL

SUPPLEMENTARY INFORMATION

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

22

SCHEDULE OF STATE REVENUE

24

SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

26

ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

27

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
August 6, 2009

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 ofthe Oconee County Board ofEducation, as of and for the year ended June 30, 2008, 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 of Education'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.

2008ARL-11

In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position ofthe governmental activities, each major fund, and the aggregate remaining fund information ofthe Oconee County Board ofEducation, as ofJune 30, 2008, 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 August 6, 2009, 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 x and page 21 respectively, are not a required part ofthe basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States 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 includes the Schedule ofExpenditures ofFederal Awards as required by U.S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, andNon-Profit Organizations, are presented for purposes ofadditional analysis and are not a required part ofthe basic financial statements. Such information has been subjected to the auditing procedures applied in the audit ofthe 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,
~~... . .QQ~. .g~
Russell W. Hinton, CPA, CGFM State Auditor
RWH:as 2008ARL-ll

OCONEE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008
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, 2008. The intent of the discussion and analysis is to look at the School District's financial performance as a whole; readers should also review notes to the basic financial statements and financial statements to enhance their understanding of the School District's financial performance.
FINANCIAL HIGHLIGHTS
Key financial highlights for fiscal year 2008 are as follows:
On the District-wide financial statements, the assets of the School District exceeded liabilities by $77.4 million. Of this amount, $8.1 million is unrestricted and is available for spending at the School District's discretion which traditionally has been targeted toward the payment ofsalaries, benefits, and operational costs until the next year's local tax revenues are received.
The School District had $63.4 million in expenses relating to governmental activities; only $38.1 million ofthese expenses were offset by program specific charges for services, grants and contributions. However, general revenues (primarily property and sales taxes) o/$34.2 million were more than adequate to provide/or these programs.
As stated above, General Revenues accounted almost $34.2 million or about 48% ofall revenues totaling $72.3 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 16.5 mills/or the 2007-08 school year and continues at that rate for the 2008/09 school year. The School District lowered the General Obligation bond millage rate by 2/10th ofa one mill for 2006/07 and again by 2/10th ofa mill for the 2007/08 school year. The current bond millage rate is 1 mill. The School District was able to reduce the bond millage rate due to the growth in the tax digest. However, without digest growth, either limited by current economic conditions, or by legislative action that adversely affects local governments ability to properly assess real property, the Board ofEducation may need to consider a bond millage increase in future years in order to meet debt service requirements.
The School District is very stable financial condition despite current economic conditions and the State's continued reduction ofrevenue sources which have resulted in subsequent reductions ofalready budgeted allocations to local School Districts.
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OCONEE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008
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 fund financial statements.
The District-wide financial statements include the 'Statement of Net Assets' and 'Statement of Activities'. These statements provide information about the activities of the School District presenting both short-term and long-term information about the School District's overall financial status.
The fund financial statements focus on individual parts of the School District, reporting the School District's operation in more detail. The 'Governmental Funds' statements disclose how basic services are financed in the short-term as well as what remains for future spending. The '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 School District's assets and liabilities and use 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.
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OCONEE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008
The 'Statement of Net Assets' and the 'Statement of Activities' reflect 100% of the School District's governmental activities.
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 be 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 $77.4 million at June 30, 2008.
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 $77.4 million of net assets, $3.45 million was restricted for continuation of Federal programs and debt service. Accordingly, these funds were not available to meet the School District's ongoing obligations to citizens and creditors.
In addition, the School District had $65.85 million (net of related debt) invested in capital assets (e.g., land, buildings, and equipment). The School District uses these capital assets to provide
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OCONEE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008

educational services to students within geographic boundaries served by the School District. 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 $8.1 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 year fiscal year 2007.

Table 1 Net Assets

Governmental Activities

Fiscal

Fiscal

Net

Year2008 Year2007

Change

Assets Current and Other Assets Capital Assets, Net

$ 33,216,316 $ 43,287,296 $ -10,070,980 87.128,886 71,092,527 16,036,359

Total Assets

$ 120,345,202 $ 114,379,823 $ 5,965,379

Liabilities Current and Other Liabilities Long-Term Liabilities

$ 7,505,161 $ 7,043,410 $ 461,751 35,436.832 38,819,743 -3,382,911

Total Liabilities

$ 42,941,993 $ 45,863,153 $ -2,921,160

Net Assets Invested in Capital Assets, Net ofRelated Debt Restricted Unrestricted

$ 65,850,702 $ 54,561,154 $ 11,289,548

3,451,248

8,507,115 -5,055,867

8,101,259

5,448,401

2,652.858

Total Net Assets

$ 77,403,202 $ 68151616:Z0 $ 8,886,532

Table 2 shows categorical Changes in Net Assets for the current fiscal year and for prior year fiscal year 2007.

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OCONEE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008

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 2008

Year2007

$ 3,019,241 33,426,953
126152576

$ 2,448,315 30,946,048
2172599

Total Program Revenues

$ 3820612770 $ 3326112962

General Revenues:

Taxes

Property Taxes

For Maintenance and Operations

$ 24,540,857

For Debt Service

1,540,113

Sales Taxes

Special Purpose Local Option Sales Tax

For Debt Service

5,383,704

For Capital Projects

Other

869,196

Investment Earnings

1,324,819

Gain on Sale of Capital Assets

Miscellaneous

5492719

$ 23,179,858 1,680,111
1,630,205 3,836,768
1,263,627 1,200
12668234

Total General Revenues

$ 342208,408 $ 3322602003

Total Revenues

$ 72270J78 $ 6628712965

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

$ 40,870,211
1,392,471 1,557,982 1,140,008 1,254,477 4,495,277
616,015 4,515,049 2,778,239
146,378 219,368
827,888 2,335,588 122342688

$ 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 12492991

Total Expenses

$ 63J832639 $ 59503504

Increase in Net Assets

$ 8,886,539 $ 1,368A61

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OCONEE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008

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 year fiscal year 2007. 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.

Table 3 Governmental Activities

Total Cost of Services

Fiscal

Fiscal

Year 2008 Year 2007

Net Cost of Services

Fiscal

Fiscal

Year 2008 Year 2007

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

$ 40,870,211 $ 38,036,492 $14,846,880 $14,282,315

1,392,471 1,557,982 1,140,008 1,254,477 4,495,277
616,015 4,515,049 2,778,239
146,378 219,368

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

1,124,880 1,068,345
217,445 -45,651 2,262,409 592,780 2,444,014 1,410,683 142,680 72,730

1,029,364 826,274 341,083 185,902
2,678,713 271,613
2,704,479 1,822,841
110,221 117,708

827,888 2,335,588 1.234.688

951,119 2,216,088 1.249.991

-184,085 134,071 1,234.688

139,367 131,671 1.249.991

Total Expenses

$ 63.383.639 $ 59,503.504 $25,321.869 $ 25,891.542

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 $72.3 million and total expenditures of $82.7 million. Included in the expenditures of $82.7 million were capital outlay expenditures of $18.2 million which do not constitute recurring expenditures.

General Fund Budget Highlights

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

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OCONEE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008

During the course of fiscal year 2008, 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.

For the General Fund, the final actual revenues of $62.99 million exceeded the final budgeted amounts of $60.9 million, a difference of $2.1 million or about 3%. This major portion of the 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 $59.98 million are more than the final budgeted amount of $59.9 million by $61,666. This small difference (final actual vs. final budget) was due to a combination of expenditure controls and revenue conservation efforts.

CAPITAL ASSETS AND DEBT ADMINISTRATION

Capital Assets

At June 30, 2008, the School District had $87.12 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 year of fiscal year 2007. 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 2008

Year 2007

Land Construction in Progress Land Improvements Buildings Equipment

$ 3,742,771 11,213,344 4,705,519 64,201,017 3,266,235

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

Total

$ 87,128,886 $ 11,022,521

Additional information on the School District's Capital Assets can be found 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, 2008

Debt

At June 30, 2008, the School District had $35.44 million in debt outstanding. This debt is the result of General Obligation Bonds (repaid through a property tax levy) originally 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 2007, the School District sold $24 million in Revenue Bonds (repaid through local option sales tax) for the purpose of the acquisition of land 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 was totally 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 2008

Year2007

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

$ 278,253 34,450,000
708,579

$

517

296,020

35,950,000

1,520,000

920,081

133.125

Total Debt Outstanding

$ 35,436.832 $ 38,819.743

Debt Due Within One Year: Capital Leases General Obligation Bonds Revenue Bonds

$ $ 5,025,000

517 1,500,000 1,520,000

Total Debt Outstanding

$ 5,025.000 $ 3,020,517

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OCONEE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008
Additional information can be found on the School District's Debt obligations in the Notes to the Basic Financial Statements.
FACTORS BEARING ON THE SCHOOL DISTRICT'S FUTURE
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 The School District has implemented a new financial software accounting system for fiscal year 2009 that will improve our capacity ofaccounting and reporting in conformity with generally accepted accounting principles (GAAP).
o Local Revenue - Oconee County School District's priority on academic instruction continues to fuel the residential and economic growth of the county. New residents and businesses move into the county because of the public school system's focus on quality instructional programs.
o Oconee County generally collects above 97% of the assessed taxes. This consistent collection of property taxes has assisted the local School District to meet financial obligations. Current economic conditions and recent state legislation may adversely affect the School District's ability to maintain the current millage levy of 16.5 mills for M&O and 1 mill for debt service. The School District may need to consider reducing expenses, raising the millage rate or a combination of both approaches in order to maintain quality instructional services. Less than 18% of the local property digest consists ofcommercial, utility and retail properties.
o ELOST receipts continue to be dependent on the local businesses and the citizens' ability to spend. There has been and continues to be increased commercial development but at the same time there have been numerous business closings. The current ELOST was developed with a high ceiling but a conservative collection rate. The School District had hoped to fund pay-as-you-go projects but all current ELOST receipts are dedicated to debt service.
o Capital Improvements - The School District continues to implement the capital improvement plan approved by the Board in 2006. Current demand for new classroom space has leveled off and the School District can now focus on maintaining current buildings, planning improvements to athletic facilities and for a new central office complex.
o State Revenue - Legislation over the past years has reduced revenue sources available for education, and when coupled with poor economic conditions, the state has had to drastically reduce funding available to public schools and other state services. In addition, the state continues to enact legislation that lessens local control of the public schools and thereby creating unfunded mandates. State funds are providing no more than 55% of the local budget where a number of years ago the state funded closer to 60%.
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OCONEE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008
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, school years fiscal year 10 (2009/10) and fiscal year 11 (2010/11) will be challenging to maintain quality services if state revenue is further reduced. Though American Recovery and Reinvestment Act (ARRA) funds have been used to stabilize services and to forgo the need to implement personnel RIF policies or use operating reserves, this strategy can only be sustained so long without a consist funding mechanism for public education. 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. 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.k12.ga.us.
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OCONEE COUNTY BOARD OF EDUCATION

OCONEE COUNTY BOARD OF EDUCATION
STATEMENT OF NET ASSETS JUNE 30, 2008

ASSETS
Cash and cash equivalents Investments Receivables:
Taxes Intergovernmental:
State Federal Inventory Deferred charges Capital assets (nondepreciable) Capital assets (net of accumulated depreciation)
Total assets
LIABILITIES
Salaries and benefits payable Accrued interest payable Retainage payable Bonds payable due within one year Bonds payable due in more than one year Installment sales agreement due in more than one year
Total liabilities
NET ASSETS
Invested in capital assets, net of related debt Restricted for:
Continuation of federal programs Debt service Unrestricted
Total net assets
The accompanying notes are an integral part of these financial statements.

Governmental Activities

$

26,698,088

178,368

1,570,267

4,120,587 203,223 119,157
326,626 14,956,115 72,172,771 120,345,202

6,364,608 428,910 711,643
5,025,000 30,133,579
278,253 42,941,993

65,850,702

354,557

3,096,691

8,101,259

$

77,403,209

OCONEE COUNTY BOARD OF EDUCATION
STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2008

Functions/Pro1;1;rams

Governmental activities:

Instruction

$

Support services:

Pupil services

Improvement of instructional

services

Educational media services

General administration

School administration

Business adminstration

Maintenance and operation of facilities

Student transportation services

Central support services

Other support services

Enterprise operation

Food services operation

Interest on long-term debt

Total governmental activities

$

Exeenses
40,870,211
1,392,471
1,557,982 1,140,008 1,254,477 4,495,277
616,015 4,515,049 2,778,239
146,378 219,368 827,888 2,335,588 1,234,688 63,383,639

Charges for Services

Program Revenues Operating Grants and
Contributions

Capital Grants and Contributions

$

522,390 $ 24,366,029 $ 1,134,912

2,208

265,383

13,903 62,604
450,426
34,958 7,512
643,718 1,281,522

475,734 851,161 1,300,128 1,767,731
6,572 1,989,636 1,000,266
2,729 146,638 368,255 886,691

8,798
14,711 16,663 46,441 359,778
969
33,304

$ 3,019,241 $ 33,426,953 $ 1,615,576

Net (Expense) Revenue and Changes in
Net Assets Governmental
Activities
$ (14,846,880)
(I, 124,880)
(1,068,345) (217,445) 45,651
(2,262,409) (592,780)
(2,444,014) (1,410,683)
(142,680) (72,730) 184,085 (134,071) (1,234,688) (25,321,869)

General revenues: Taxes: Property taxes, levied for general purposes Property taxes, levied for debt service Sales taxes: For debt service Other Miscellaneous revenues Unrestricted investment earnings Total general revenues Change in net assets
Net assets, beginning of year Net assets, end of year
The accompanying notes are an integral part of these financial statements.

24,540,857 1,540,113
5,383,704 869,196 549,719
1,324,819 34,208,408 8,886,539 68,516,670 $ 77,403,209

2

OCONEE COUNTY BOARD OF EDUCATION
BALANCE SHEET GOVERNMENTAL FUNDS
JUNE 30, 2008

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

General

DistrictWide Capital
Projects

$ 10,493,348 $ 13,980,280 $ 178,368

671,226
4,120,587 203,223 119,157

$ 15,785,909 $ 13,980,280 $

Debt Service
2,224,460
899,041

Total Governmental
Funds
$ 26,698,088 178,368
1,570,267
4,120,587 203,223 119,157

3,123,501 $ 32,889,690

$ 6,364,608 $ 172,760
6,537,368

$ 711,643
711,643

$ 26,810 26,810

6,364,608 711,643 199,570
7,275,821

119,157 178,368
235,400

8,715,616

13,268,637

9,248,541

13,268,637

$ 15,785,909 $ 13,980,280 $

3,096,691
3,096,691 3,123,501

I 19,157 178,368 3,096,691 235,400
8,715,616 13,268,637
25,613,869

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

101,200,043

Less accumulated depreciation

(14,071,157)

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

(34,450,000)

Bond premium, net of amortization

(708,579)

Bond issuance costs, net of amortization

326,626

Accrued interest

(428,910)

Installment sales agreement

(278,253)

87,128,886 199,570
(35,539,116)

Net assets of governmental activities The accompanying notes are an integral part of these financial statements.

$ 77,403,209

3

OCONEE COUNTY BOARD OF EDUCATION
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2008

REVENUES Property ta,ces Sales ta,ces Other taxes State funds Federal funds Charges for services Investment earnings Miscellaneous Tot al 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 Total expenditures

General

$

24,567,439 $

861,877 30,891,179
2,644,879 3,019,241
461,489 549,719 62,995,823

District Wide
Capital Projects
$
1,496,306
756,368 2,252,674

Debt Service

Total Governmental
Funds

1,528,358 $ 5,383,704
7,319
106,962 7,026,343

26,095,797 5,383,704 869,196
32,387,485 2,644,879 3,019,241 1,324,819 549,719 72,274,840

38,921,208
1,392,471 1,557,982 1,137,506 1,251,591 4,491,093
273,386 4,501,840 2,709,832
146,102 209,895 827,888 2,335,588 193,549
18,284 10,718 59,978,933

2,886 240,396
18,027,728 4,000
18,275,010

3,020,000 1,451,574 4,471,574

38,921,208
1,392,471 1,557,982 1,137,506 1,254,477 4,491,093
513,782 4,501,840 2,709,832
146,102 209,895 827,888 2,335,588 18,221,277
3,038,284 1,466,292 82,725,517

Excess (deficiency) of revenues over (under) expenditures

3,016,890

(16,022,336)

2,554,769

( I0,450,677)

OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total other financing sources (uses)
Net changes in fund balance
FUND BALANCE, beginning of year
FUND BALANCE, end of year

(500,000) (500,000)

4,384,276 4,384,276

(3,884,276) (3,884,276)

2,516,890

(11,638,060)

(1,329,507)

6,731,651

24,906,697

4,426,198

$

9,248,541 $

13,268,637 $

3,096,691 $

4,384,276 (4,384,276)
(10,450,677) 36,064,546 25,613,869

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

4

OCONEE COUNTY BOARD OF EDUCATION
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, 2008

Amounts reported for governmental activities in the statement of activities are different because:

Net change in fund balances - total governmental funds

$

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. This is the amount by which capital outlays exceeded depreciation expense in the current period.

Capital outlay Depreciation expense

$ 17,580,867 (1,544,508)

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 Jong-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.

(10,450,677)
16,036,359 (4,662)

Principal payments - bonds Principal payments - capital leases Claims paid Principal payments - installment sales agreement Bond premiun amortization expense Bond issuance costs amortization expense

$ 3,020,000 517
133,125 17,767
211,502 (97,494)

Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds.

Change in accrued interest

$

20,102

$

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

3,285,417
20,102 8,886,539

5

OCONEE COUNTY BOARD OF EDUCATION
STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES FIDUCIARY FUND JUNE 30, 2008

Cash Funds held for others

ASSETS LIABILITIES

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

Agency Fund

$

245,696

$

245,696

6

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008
Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
Reporting Entity
The Oconee County Board ofEducation (the "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 ofthe 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 of the 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 ofthe Oconee County Board of Education.
District-wide Statements: The Statement of Net Assets and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting ofinternal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement ofActivities 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 ofthe School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
7

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements ofa particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, 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 of the School District, except those resources required to be accounted for in another fund.
District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST), Bond Proceeds and grants from Georgia State Financing and Investment Commission to be used for the acquisition, construction or renovation of major capital facilities.
Debt Service Fund accounts for taxes (property and sales) legally restricted for the payment ofgeneral long-term principal, interest and paying agent's fees.
The School District reports the following fiduciary fund types:
Agency Funds account for assets held by the School District as an agent for various funds, governments or individuals.
Basis of Accounting
The basis ofaccounting determines when transactions are reported on the financial statements. The Districtwide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis ofaccounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations.
8

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 of general long-term liabilities and acquisitions under capital leases are reported as other financing sources.
The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
Cash and Cash Equivalents
COMPOSITION OF DEPOSITS Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities ofthree 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 of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(I) Obligations issued by the State of Georgia or by other states,
(2) Obligations issued by the United States government,
9

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(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, OfficeofTreasury 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 receivables.

Property Taxes

The Oconee County Board of Commissioners fixed the property tax levy for the 2007 tax digest year (calendar year) on July 23, 2007 (levy date). Taxes were due on November 15, 2007 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2007 tax digest are reported as revenue in the governmental funds for fiscal year 2008. 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 oftaxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2008, for maintenance and operations amounted to $24,557,274 and for school bonds amounted to $1,528,358.

Tax millage rates levied for the 2007 tax year (calendar year) for the Oconee County Board of Education were as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations School Bonds

16.50 mills 1.00 mills

Total

17.50 mills

10

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES {Continued)

Sales Taxes

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $5,383,704 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 ofdonated food commodities used in the preparation ofmeals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.

Capital Assets

Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time ofpurchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives ofthe assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art.

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

Capitalization Policy

Estimated Useful Life

Land Land Improvements Buildings and Improvements All Equipment

All $25,000 $25,000
$5,000

NIA 70 years 70 years 5 to 25 years

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

11

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued}
General Obligation Bonds
The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide financial statements, bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are reported as deferred charges and amortized over the term of the debt.
In the fund financial statements, the School district recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld :from the actual debt proceeds received, are reported as debt service expenditures. 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 continuation of Federal programs and 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, 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 ofGeorgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a period longer than ten days a sum ofmoney which has not been secured by surety bond, by guarantee ofinsurance, or by collateral. The aggregate ofthe face value ofsuch surety bond and the market value of securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe securities pledged to secure a pool of public funds shall be not less than 110 percent ofthe daily pool balance. At June 30, 2008, all deposits were secured by surety bond, insurance or collateral as specified above.
12

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

Note 3: DEPOSITS AND INVESTMENTS

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 ofindebtedness or other direct obligations ofthe United States or of the State ofGeorgia,

(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities ofthe State of Georgia,

(5) Bonds ofany public authority created by the laws ofthe State ofGeorgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,

(6) Industrial revenue bonds and bonds ofdevelopment authorities created by the laws ofthe State of Georgia, and

(7) Bonds, bills, notes, certificates ofindebtedness, or other obligations ofa 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 INVESTMENTS

The School District's investments as ofJune 30, 2008, are presented below. All investments are presented

by investment type.

Fair

Investment Type

Value

Other Investments U.S. Treasury Money Market Funds

$ 178.368

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 Poors and Aaa by Moodys. The weighted average maturity of the fund is approximately 60 days.

Note 4: NON-MONETARY TRANSACTIONS

The School District receives food commodities from the United States Department ofAgriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their federally assigned value. See Note 2 - Inventories
13

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

Note 5: CAPITAL ASSETS

The following is a summary of changes in the capital assets during the fiscal year:

Capital assets not being depreciated Land Construction in progress Total capital assets not being depreciated
Capital assets being depreciated Buildings and improvements Equipment Land improvements Total capital assets being depreciated
Less accumulated depreciation for Buildings and improvements Equipment Land improvements Total accumulated depreciation
Total capital assets being depreciated, net
Total governmental activities capital assets, net

Balance July 1, 2007

Increases

Decreases

Balance June 30,
2008

$ 2,623,853 $ 1,118,918 $

$ 3,742,771

211891208

1019322491

(1 19082355}

1112131344

4,813,061

12,051,409

(1,908,355)

14,956,115

67,944,809 5,856,973 5,057,167
78,858,949

6,665,196 471,018 301,599
7,437,813

(52,834) (52,834)

74,610,005 6,275,157 5,358,766
86,243,928

(9,324,637) (2,675,999)
(57818471 021579,4831

(1,084,351) (385,757) (741400}
0,5441508}

52,834 52 834

(l 0,408,988) (3,008,922)
(653 22471 O4107lz157}

6612791466

5,8931305

72,172,771

$ 71,092,527 $ 17,944,714 $ (1,908,355) $ 87,128,886

Current year depreciation expense by function is as follows.
Instruction Support Seivices
Educational Media Seivices School Administration Business Administration Maintenance and Operations of Facilities Student Transportation Seivices Central Support Services Food Seivices Operation

$ 1,171,472
9,081 15,185 17,200 47,937 248,256
1,000 34,377 $ 1,544,508

14

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

Note 6: INTERFUND TRANSFERS

lnterfund transfers for the year ended June 30, 2008, consisted of the following:

Transfers From

Transfers To District-wide Capital Projects
Total governmental funds

General

Debt

Fund

Service

$ 500,000 $ 3,884,276

$ 500,000 $ 3,884,276

Note 7: RISK MANAGEMENT

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

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

The School District has obtained commercial insurance for all losses related to acts of God. The School District has not experienced any losses related to this risk in the past three years.

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:

Beginning of Year

Claims and Changes in Estimates

Claims Paid

End of Year

2007

$

2008

$

$

3,945 $

3,945 $

$

75 $

75 $

The School District participates in the Georgia School Boards Association Workers' Compensation Fund (the "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
15

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

Note 7: RISK MANAGEMENT (Continued)

potential losses sustained by the Fund in excess of $400,000 loss per occurrence, up to $1,000,000.

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

Position Covered

Amount

Superintendent

$100,000

Note 8: 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, therefore, have been recorded at the present value ofthe future minimum lease payments as of the date of their inception.

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 ofthe agreement, the School District will make annual payments through July 15, 2020.

COMPENSATED ABSENCES Compensated absences represent obligations ofthe School District relating to employees' rights to receive compensation for future absences based upon service already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. Typically, the General Fund is the fund used to liquidate this long-term debt. The School District uses the vesting method to compute compensated absences. This balance was immaterial to the financial statements for the current year.

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

Purpose General Government - Refunding -Series 2004 General Government - Refunding -Series 2005 General Government - Series 2006

Interest Rates 3.16% 2.60%
4.00% - 5.00%

Amounts $ 9,115,000
1,335,000 24,000,000 $ 34,450,000

16

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

Note 8: LONG - TERM DEBT (Continued)

The changes in Long-Term Debt during the fiscal year ended June 30, 2008, were as follows:

Governmental Funds

Installment

General

Capital

Sales

Obligation

Revenue

Bond

Claims

Leases

Agreement

Bonds

Bonds

Premium

Pa~able

Total

Balance July I, 2007

$

Additions:

Deductions: Debt Retired Bond Premium Amortized

Balance June 30, 2008

$

517 $ 296,020 $ 35,950,000 $ 1,520,000 $ 920,081 $ 133,125 $ 38,819,743

517

17,767

1,500,000

1,520,000

- $ 278,253 $ 34,450,000 $

211,502 $ 708,579 $

133,125

3,171,409 211,502

$ 35,436,832

Due within One Year

$

( 1) Paid during current year.

-$

- $ 5,025,000 $

(I)

$

$

$ 5,025,000

At June 30, 2008, payments due by fiscal year which includes principal and interest for these items are as

follows:

Fiscal Year

Installment Sales Agreement

Ended June 30

Principal

Interest

2009 2010 2011 2012 2013 2014-2018 2019-2021

$

$

18,314

11,194

19,133

10,415

19,953

9,602

20,774

8,755

117,259

29,819

82,820

5,259

Total

$

278,253 $

75,044

Fiscal Year Ended June 30
2009 2010 2011 2012 2013 2014
Total

Unamortized Bond
Premium

General Obli~ation Bonds

Principal

Interest

$

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

7,560,000

404,856

1,930,000

60,988

$

708,579 $

34,450,000 $

4,775,098

17

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

Note 9: ON-BEHALF PAYMENTS

The School District has recognized revenues and costs in the amount of$1,181,446 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 $1,143,926

Georgia Department of Education Paid the Teachers Retirement System For Te~chers Retirement (TRS) In the amount of $30,172

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 $7,348

Note 10: SIGNIFICANT COMMITMENTS

The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2008, together with funding available:

Project Malcom Bridge Middle School Addition High Shoal Elementary School Oconee County Elementary School Renovation Oconee County High School Auxiliary Gym

Unearned Executed Contracts
36,187 1,043,249
75,000 70,667 $ 1,225,103

Funding Available From State $ 177,480
$ 177,480

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

Note 11: SIGNIFICANT CONTINGENT LIABILITIES

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

The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the basic financial statements.
18

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

Note 12: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

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

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

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$ 3,156,711 $ 2,917,259 $ 2,649,336

Note 13: POSTEMPLOYMENT BENEFITS

Georgia Retiree Health Benefit Fund

Plan Description. The School District contributes to the Georgia Retiree Health Benefit Fund ("GRHBF"), a cost-sharing multiple-employer defined benefit postemployment healthcare plan administered by the Department ofCommunity Health. GRHBF provides health insurance benefits to eligible retirees and their qualified beneficiaries. Pursuant to Title 45, Chapter 18 of the Official Code of Georgia Annotated, the authority to establish and amend the benefit provisions of the plan is assigned to the Board of Community Health. The Department of Community Health issues a publicly available financial report that includes financial statements and required supplementary information for GRHBF. That report may be obtained from the Department of Community Health at 2 Peachtree Street, Atlanta, Georgia 30303.

Funding Policy. The contribution requirements of plan members and participating employers are established and may be amended by the Board of Community Health. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately twenty-five percent (25%) ofthe cost ofhealth insurance coverage.

19

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

Note 13: POSTEMPLOYMENT BENEFITS

Participating employers are statutorily required to contribute in accordance with the employer contribution rate established by the Board of Community Health. This contribution rate is established to fund both the active and retired employee health insurance plans based on projected pay-as-you-go financing requirements. The employer contribution rates for the combined active and retiree plans for the fiscal year ended June 30, 2008, was as follows:

Teachers Non-Certificated Employees

18.534% of state-based salaries $162.72 per month

The School District's contribution to the health insurance plans for the fiscal year ended June 30, 2008, was $5,367,274, which equaled the required contribution.

20

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, 2008

REVENUES Taxes State funds Federal funds Charges for services Investment earnings Miscellaneous
Total revenues

Nonappropriated

Budget

Original

Final

Actual

Variance With Final Budget

$ 24,777,918 $ 24,777,918 $

29,425,217

29,462,622

2,321,070

2,582,078

2,045,855

2,045,855

321,970

321,970

1,722,326

1,722,326

60,614,356

60,912,769

25,429,316 $ 30,891,179
2,644,879 3,019,241
461,489 549,719 62,995,823

651,398 1,428,557
62,801 973,386 139,519 (1,172,607) 2,083,054

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 fiscal charges
Total expenditures

38,887,671
1,215,547 1,457,669 1,258,026 1,319,914 4,673,779
286,751 4,446,830 2,771,932
112,434 220,040 951,120 2,413,235 60,000
60,074,948

38,913,669
1,275,855 1,439,902 1,258,026 1,320,521 4,673,779
286,751 4,446,830 2,545,105
112,434 220,040 951,120 2,413,235 60,000
59,917,267

38,921,208
1,392,471 1,557,982 1,137,506 1,251,591 4,491,093
273,386 4,501,840 2,709,832
146,102 209,895 827,888 2,335,588 193,549
18,284 10,718 59,978,933

(7,539)
(116,616) (118,080) 120,520
68,930 182,686
13,365 (55,010) (164,727) (33,668) 10,145 123,232 77,647 (133,549)
(18,284) (10,718) (61,666)

Excess of revenues over expenditures
OTHER FINANCING USES Transfers out Total other financing uses

539,408
(200,000) (200,000)

995,502
(200,000) (200,000)

3,016,890
(500,000) (500,000)

2,021,388
(300,000) (300,000)

Net change in fund balances

339,408

795,502

2,516,890

1,721,388

FUND BALANCE, beginning of year

6,731,651

6,731,651

6,731,651

FUND BALANCE, end of year

$ 7,071,059 $ 7,527,153 =$====9=,2=4=8,=54=1= $

1,721,388

Notes to the Scheudle of Revenues, Expenditures and Changes in Fund Balances Budget and Actual

The accompanying schedule of revenues, expenditures and changes in fund Balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund finncial statements.

See notes to the basic financial statements.

21

OCONEE COUNTY BOARD OF EDUCATION
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2008

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)
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
Title I Grants to Local Educational Agencies
Improving Teacher Quality State Grants
State Grants for Innovative Programs
English Language Acquisition Grant

CFDA Number

PassThrough Entity
ID Number

Expenditures In Period

10.553 10.555
10.550

NIA $ NIA
NIA

(2) 1,879,476 1,879,476
152,833 2,032,309

84.027

NIA

84.173

NIA

982,285 37,098
1,019,383

84.010

NIA

84.367

NIA

84.298

NIA

84.365

NIA

414,712 152,134
7,280 31,399

22

OCONEE COUNTY BOARD OF EDUCATION
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2008

Funding Agency Program/Grant
Title IV Safe and Drug Free Schools And Communities

CFDA Number
84.186

PassThrough Entity
ID Number
NIA

Expenditures In Period
16,647

Vocational Education-Basic Grants to States Career and Technical Education

84.048

NIA

34,990

Total U.S. Department of Education

1,676,545

National Science Foundation Pass-Through From University of Georgia Partnership for Reform in Science and Mathematics

47.076

NIA

218,140

Total Expenditures of Federal Awards

$

3,926,994

NIA= Not Available

Notes to the Schedule ofExpenditures of Federal Awards
(I) The amounts shown for the Food Donation Program represent 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 were not maintained separately and are included in the National School Lunch Program.
The School District did not provide Federal Assistance to any Subrecipient.

The accompanying schedule of expenditures of Federal awards includes the Federal grant activity ofthe Oconee County Board ofEducation 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.

23

OCONEE COUNTY BOARD OF EDUCATION
SCHEDULE OF STATE REVENUE FOR THE FISCAL YEAR ENDED JUNE 30, 2008

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 Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities 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 Vocational Supervisors Food Services Vocational Education Amended Formula Adjustment Other State Programs National Teacher Certification Preschool Handicapped Program

Governmental .

Fund Types

Capital

General

Projects

Fund

Fund

$ 2,043,717 $ 58,132
4,928,825 139,160
2,229,753 52,316
4,087,706
3,756,737 1,235,384 2,664,970 l,893,123
112,527 334,542 191,312 685,808 214,442 118,546
913,562 1,378,430 1,599,931
762,664 119,270 20,000 124,873 17,327 131,506 99,515 (576,215)
186,517 93,212 29,617,592

Total
$ 2,043,717 58,132
4,928,825 139,160
2,229,753 52,316
4,087,706
3,756,737 1,235,384 2,664,970 1,893,123
112,527 334,542 191,312 685,808 214,442 118,546
913,562 1,378,430 1,599,931
762,664 119,270 20,000 124,873 17,327 131,506 99,515 (576,215)
186,517 93,212 29,617,592

24

OCONEE COUNTY BOARD OF EDUCATION
SCHEDULE OF STATE REVENUE FOR THE FISCAL YEAR ENDED JUNE 30, 2008

Agency/Funding Grants On Behalf Payments On Behalf Payments - Health Insurance On Behalf Payments -Teachers Retirement On Behalf Payments - Public School Employees Retirement
Middle School Summer Remedial Program Other Grants from Georgia Department of Education
Virtual Schools Grant Other Grants from Georgia Department of Education
Graduation Coaches Other Grants from Georgia Department ofEducation
Capital Outlay Grants: Georgia State Financing and Investment Commission
Total State Funds See notes to the basic financial statements.

Governmental

Fund Types

Capital

General

Projects

Fund

Fund

Total

$ 1,143,926 $ 30,172 7,348
1,181,446

$ 1,143,926 30,172 7,348
1,181,446

1,924 1,924

1,924 1,924

2,250 2,250

2,250 2,250

87,967 87,967

87,967 87,967

1,496,306 1,496,306

1,496,306 1,496,306

$ 30,891,179 $ 1,496,306 $ 32,387,485

25

OCONEE COUNTY BOARD OF EDUCATION
SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008

Project

Original Estimated
Cost(!)

Current Estimated Costs(2)

Expended In Current Year (3)(4)

Expended In Prior Years (3) (4)

Project Status

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.

24,000,000

31,225,094

4,124,154

25,361,553 Ongoing

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.

38,000,000

38,000,000

15,206,931

1,666,494 Ongoing

$ 62,000,000 $ 69,225,094 $ 19,331,085 $ 27,028,047

(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 project(s). Includes all cost from project inception to completion.
(3) The voters of Oconee 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 to provide advance funding for the above project(s) as follows:

Prior Years Current Year Total

$ 862,234 37,240
$ 899,474

See notes to the basic financial statements.
26

OCONEE COUNTY BOARD OF EDUCATION
SCHEDULE OF QUALITY BASIC EDUCATION PROGRAM (QBE) ALLOTMENTS AND EXPENDITURES BY PROGRAM GENERAL FUND FOR THE FISCAL YEAR ENDED JUNE 30, 2008

Description

Allotments From Georgia Department of Education (1 )(2)

Eligible QBE Program Costs

Salaries

Operations

Total

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

Gifted Student - Category VI

Remedial Education Program

Alternative Education Program

English Speakers of Other Languages (ESOL)

2,451,174 $ 2,580,726 $

63,875

51,384

5,842,098

6,680,329

169,477

244,644

2,656,549

3,688,546

78,034

182,877

4,891,602

5,609,012

4,515,259

6,566,162

1,473,326

1,045,440

3,165,510

20,331

157,966

2,641,068

2,208,725 131,653 401,632 221,056

2,474,530 37,765
481,913 237,836

99,490 $
410,530 1,800
229,718 847
292,975 412,534 156,951
12,520 25,498
1,224 20,373
547 6,378
269

2,680,216 51,384
7,090,859 246,444
3,918,264 183,724
5,901,987 6,978,696 1,202,391
20,331 170,486 2,666,566
1,224 2,494,903
38,312 488,291 238,105

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

28,269,970

32,700,529

1,671,654

34,372,183

Media Center Program Staffand Professional Development

818,168 142,881

904,595

128,585

1,033,180 111,753

TOTAL QBE FORMULA FUNDS

$

29,231,019 $ 33,605,124 $ 1,800,239 $ 35,517,116

(I) 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.

27

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
August 6, 2009

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 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 of Oconee County Board of Education as of and for the year ended June 30, 2008, which collectively comprise Oconee County Board of Education's basic financial statements and have issued our report thereon dated August 6, 2009. 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 of Education'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 of expressing 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.
Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified a certain deficiency in internal control over financial reporting that we consider to be a significant deficiency.
2008YB-30

A control deficiency exists when the design or operation ofa control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the Oconee County Board of Education's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Oconee County Board of Education's financial statements that is more than inconsequential will not be prevented or detected by the Oconee County Board of Education's internal control. We consider item FS-7081-08-01 in the accompanying Schedule ofFindings and Questioned Costs to be a significant deficiency in internal control over financial reporting.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement ofthe financial statements will not be prevented or detected by the 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 and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, we believe that the significant deficiency described above is not a material weakness.
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 August 6, 2009.
Oconee County Board ofEducation's response to the findings identified in our audit is described in the accompanying Schedule ofManagement's Responses. We did not audit Oconee County Board of Education's response and, accordingly, we express no opinion on it.
2008YB-30

This report is intended solely for the information and use of management, members ofthe Oconee County Board of Education, others within the entity, 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,

RWH:as 2008YB-30

~W-~
Russell W. Hinton, CPA, CGFM State Auditor

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
August 6, 2009

Honorable Sonny Perdue, Governor Members of the General Assembly Members ofthe State Board of Education
and Superintendent and Members ofthe 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, 2008. 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 ofStates, 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

2008SA-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, 2008.
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 of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the 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 of compliance 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.
2008SA-10

This report is intended solely for the information and use of 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,

RWH:as 2008SA-10

Russ 1W. Hinton, CPA, CGFM State Auditor

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, 2008
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.

SECTION IV FINDINGS AND QUESTIONED COSTS

OCONEE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008
I SUMMARY OF AUDITOR'S RESULTS
1. Type of Report Issued on the Financial Statements The auditor's opinion on the Oconee County Board of Education's financial statements was unqualified.
2. Significant Deficiencies in Internal Control Disclosed by the Audit ofthe Financial Statements The audit report for the Oconee County Board of Education disclosed a financial statement significant deficiency related to the following control category.
Capital Assets
The significant deficiency described above is not considered to be a material weakness.
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 .510(a) ofOMB Circular A-133 The Oconee County Board ofEducation's audit did not disclose audit findings required to be reported by section .510(a) of OMB Circular A-13 3.
7. Major Programs Federal awards audited as major programs are as follows: 84.010 Title I Grants to Local Educational Agencies 84.027 Special Education - Grants to States 84.173 Special Education - Preschool Grants
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 of 0MB Circular A-133.
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OCONEE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CAPITAL ASSETS Inadequate Reporting of Capital Assets Significant Deficiency Finding Control Number: FS-7081-08-01

Condition:

The School District failed to adequately maintain internal controls over financial reporting to ensure the completeness of capital assets activity.

Criteria:

Chapter 37 Fixed Assets of the Financial Management for Georgia Local Units of Administration provides that School Districts must establish fixed assets policies, define system requirements, implement a fixed assets system and maintain fixed assets inventory records.

Questioned Cost: NIA

Information:

The School District did not capitalize current year acquisitions of capital assets consisting ofland ($1,118,918), Construction in Progress ($142,138) and Buildings and Building Improvements ($482,432) in accordance with its capital assets policy. The School District made correcting entries to record the land acquisition and construction in progress.

Cause:

The School District did not implement accounting procedures to ensure the completeness of capital assets and related activity.

Effect:

The failure ofthe School District to maintain a complete and accurate capital assets listing can lead to inaccurate internal and external reporting, as well as noncompliance with generally accepted accounting principles.

Recommendation:

The School District should review its capital assets records and make appropriate adjustments to ensure that capital assets records conform to its approved capital assets policy and generally accepted accounting principles.

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.

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SECTIONV MANAGEMENT'S RESPONSES

OCONEE COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2008
Finding Control Number: FS-7081-08-01
We concur with this finding. As assets are purchased they will be captured and placed into inventory. A minimum of once a quarter, the Assistant Superintendent for Financial Operations and the system's part-time CPA will review purchases with objects 71 xxx through 75xxx and capture any assets that need to be capitalized. The asset list will be reconciled during the annual year-end closing procedures to verify that assets have been captured, capitalized and depreciated.
Contact Person: Randall Morrison, Assistant Superintendent for Financial Operations Telephone: (706) 769-5130, extension 1109, Fax: (706) 769-3500 Email: rmorrison@oconee.k 12.ga.us