Oconee County Board of Education, annual financial report for the fiscal year ended June 30, 2011 (including independent auditor's report)

OCONEE COUNTY BOARD OF EDUCATION WATKINSVILLE, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2011
(INCLUDING INDEPENDENT AUDITOR'S REPORTS)

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 STATEMENT OF ACTIVITIES
FUND FINANCIAL STATEMENTS BALANCE SHEET GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES FIDUCIARY FUND NOTES TO THE BASIC FINANCIAL STATEMENTS
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND

Page
i 1 2 3 4 5 7 8
24

OCONEE COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I
FINANCIAL
SUPPLEMENTARY INFORMATION
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS SCHEDULE OF STATE REVENUE SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS ALLOTMENTS AND EXPENDITURES
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM

Page
25 27 29 31

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133

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

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

I. FINANCIAL SECTION

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
March 12, 2012

Honorable Nathan Deal, 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 of the governmental activities, each major fund, and the aggregate remaining fund information of the Oconee County Board of Education, as of and for the year ended June 30, 2011, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the 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 of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit 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 Board'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.
In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Oconee County Board of Education, as of June 30, 2011, 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.

2011ARL-11

In accordance with Government Auditing Standards, we have also issued our report dated March 12, 2012, 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 of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.
Management's Discussion and Analysis and the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through viii and page 24, respectively, are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the 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 Board of Education's financial statements as a whole. The accompanying supplementary information, which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, the information is fairly stated, in all material respects, in relation to the financial statements 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,

RWH:as 2011ARL-11

Russell W. Hinton, CPA, CGFM State Auditor

Oconee County Board of Education Management's Discussion and Analysis for Fiscal Year Ended June 30, 2011
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, 2011. The intent of the discussion and analysis is to look at the School District's financial performance as a whole; readers should also review the transmittal letter, 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 FY 2011 are as follows:
On the district-wide financial statements, the assets of the School District exceeded liabilities by $93.68 million, or an increase of $5.89 million when compared to 2010.
The School District had $60.5 million in expenses relating to governmental activities; only $33.24 million of these expenses were offset by program specific charges for services, grants and contributions. However, general revenues (primarily property and sales taxes) of almost $33.17 million were more than adequate to provide for these programs.
As stated above, General Revenues accounted almost $33.17 million or about 50% of all revenues totaling $66.41 million. Program specific revenues in the form of charges for services, grants and contributions accounted for the rest.
The School District's M&O millage rate was 16.50 mills for the 2008-09 school year and continues at that rate for the 2011-12 school year. The District lowered the General Obligation bond millage rate by 2/10th of a one mill for 2006/07 and again by 2/10th of a mill for the 2007/08 school year. The current Bond millage rate is 1 mill. The District was able to reduce the Bond millage rate due to the growth in the tax digest. However without digest growth, which is either limited by current economic conditions, and/or by legislative action that adversely affects local governments ability to properly assess real property, the Board of Education may need to consider a bond millage increase in future years in order to meet debt service requirements.
The School District is in very stable financial condition despite current economic conditions. The General fund balance reflects the full accrual of contracted salaries and benefits unpaid at June 30 in full compliance of GASB 34 and 54 regulations.
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
i

Oconee County Board of Education Management's Discussion and Analysis for Fiscal Year Ended June 30, 2011
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 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 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 District's assets and liabilities and uses the accrual basis of accounting similar to the accounting used by most private-sector companies. This basis of accounting takes into account all of the current year's revenues and expenses regardless of when cash is received or paid.
These two statements report the School District's net assets and any changes in those assets. The change in net assets is important because it tells the reader that, for the School District as a whole, the financial position of the School District has improved or diminished. The causes of this change may be the results of many factors, including those not under the School District's control, such as the property tax base, facility conditions, required educational programs, student-teacher ratios, and other factors.
The 'Statement of Net Assets' and the 'Statement of Activities' reflects 100% of the School District's governmental activities.
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 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 year-end 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.
ii

Oconee County Board of Education Management's Discussion and Analysis for Fiscal Year Ended June 30, 2011

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 District's net assets as the difference between its assets (i.e., what the District owns) and its liabilities (i.e., what the District owes) at the end of a fiscal year. This balance represents one way to measure the District's financial health or its financial position. In the case of the Oconee County Board of Education, assets exceeded liabilities by $93.68 million at June 30, 2011.

To better understand the 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 $93.68 million of net assets, $3.74 million was restricted for continuation of federal programs, debt service, and completion of ongoing capital projects. Accordingly, these funds were not available to meet the District's ongoing obligations to citizens and creditors.

In addition, the District had $78.25 million (net of related debt) invested in capital assets (e.g., land, buildings, and equipment). The District uses these capital assets to provide educational services to students within geographic boundaries served by the 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 $11.69 million may be used to meet the 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 FY2010.

Assets Current and Other Assets Capital Assets, Net

Table 1 Net Assets

Governmental

Governmental

Activities

Activities

FY 2011

FY 2010

Current Year to Prior Year Difference

$ 22,520,513 95,211,906

$ 22,525,826 96,390,599

$

(5,313)

(1,178,693)

Total Assets

$ 117,732,419 $ 118,916,425

$ (1,184,006)

Liabilities Current and Other Liabilities Long-Term Liabilities

$ 7,085,313 16,961,073

$ 7,360,527 23,763,850

$

(275,214)

(6,802,777)

Total Liabilities

$ 24,046,386 $ 31,124,377

$ (7,077,991)

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

$ 78,250,833 3,742,529
$ 11,692,671

$ 73,949,777 4,423,577
$ 9,418,694

$ 4,301,056 (681,048)
$ 2,273,977

Total Net Assets

$ 93,686,033

$ 87,792,048

$ 5,893,985

iii

Oconee County Board of Education Management's Discussion and Analysis for Fiscal Year Ended June 30, 2011

Table 2 shows categorical Changes in Net Assets for the current fiscal year and for prior year FY2010.

Table 2 Change in Net Assets

Governmental Activities

Revenues Program Revenues:
Charges for Services and Sales Operating Grants and Contributions Capital Grants and Contributions Total Program Revenues General Revenues: Property Taxes for Maintenance and Operations Debt Service Sales Taxes Special Purpose Local Option For Debt Service

FY 2011

FY 2010

$ 1,755,648 31,255,390 228,876
$ 33,239,914

$ 1,897,845 29,886,620 0
$ 31,784,465

$ 24,651,480 1,535,531 0 0 5,181,911

$ 26,283,768 1,560,390
4,762,110

Intangible Recording & Real Estate Transfer

390,402

474,891

Investment Earnings Miscellaneous Special Item: Gain on sale of assets

82,244 1,323,090
11,767

94.602 1,394,037
0

Total General Revenues Total Revenues Program Expenses

$ 33,176,425 $ 66,416,339

$ 34,569,798 $ 66,354,263

Instruction

$ 39,290,831 $ 41,190,626

Support Services

0

Pupil Services

1,576,579

1,634,757

Improvement of Instructional Services

1,067,828

1,237,432

Educational Media Services

978,732

968,022

General Administration

1,116,230

1,155,337

School Administration

5,026,829

4,704,330

Business Administration Maintenance and Operation of Plant

345,619 4,180,965

348,165 3,979,337

Student Transportation Services

2,918,842

2,588,299

Central Support Services

165,092

129,743

Other Support Services

298,175

288,756

Operations of Non-Instructional Services Enterprise Operations Food Services Interest on Short-Term/Long-Term Debt Total Expenses

0 602,372 2,218,709 735,551 $ 60,522,354

694,670 2,393,121
940,701 $ 62,253,296

Increase in Net Assets

$ 5,893,985 $ 4,100,967

iv

Oconee County Board of Education Management's Discussion and Analysis for Fiscal Year Ended June 30, 2011

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 FY2010. 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 FY 2011

Total Cost of Services FY 2010

Net Cost of Services FY 2011

Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services Interest on Shortterm & Longterm Debt Total Expenses

$ 39,290,831 0
1,576,579 1,067,828
978,732 1,116,230 5,026,829
345,619 4,180,965 2,918,842
165,092 298,175
0 602,372 2,218,709 735,551 $ 60,522,354

$ 41,190,626 0
1,634,757 1,237,432
968,022 1,155,337 4,704,330
348,165 3,979,337 2,588,299
129,743 288,756
0 694,670 2,393,121 940,701 $ 62,253,296

$ 17,136,470 0
1,191,339 542,904 107,206
(198,308) 2,762,680
320,513 1,838,066 1,854,230
148,440 210,937
0 602,372 30,061 735,530 $ 27,282,440

Net Cost of Services FY 2010
$ 21,566,959 0
1,134,505 603,939 95,711
(205,788) 1,976,519
300,501 1,211,931 1,747,000
103,113 121,696
0 694,670 177,374 940,701 $ 30,468,831

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 $66.48 million and total expenditures of $66.15 million. Included in the expenditures of $66.15 million were capital outlay expenditures of $774 thousand 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.
During the course of FY 2011, 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.

v

Oconee County Board of Education Management's Discussion and Analysis for Fiscal Year Ended June 30, 2011

For the General Fund, the final actual revenues of $59.7 million was less than the final budgeted amounts of $60.2 million, a difference of $476 thousand or less than 1%. This major portion of the difference demonstrates that the District overestimated its final revenues which are primarily the result of mid-year state budget reductions.

The final actual expenditures of $57.8 million is less than the final budgeted amount of $60.5 million by $2.7 million. This 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, 2011, the School District had $95.2 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 FY2010. 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 at June 30
(Net of Depreciation)

Governmental Activities FY 2011

Governmental Activities FY 2010

Land Construction in Progress Land Improvements Buildings Equipment

$ 4,753,482 0
4,806,645 82,434,876
3,216,903

$ 4,753,482 690,564
4,754,957 82,842,454
3,349,142

Total

$ 95,211,906

$ 96,390,599

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

Debt

At June 30, 2011, the School District had $16.96 million in debt outstanding. This debt is the result of General Obligation Bonds (repaid through a property tax levy) originally sold by the District in 1993 and 1995 (refinanced in 2004 and 2005) for the purpose of the acquisition, construction, equipping, renovating, and repairing of school facilities. In the fall of 2006, the School District sold $24 million in 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. .

All current debt will be serviced by March 2014.

Oconee County School District's most recent rating (January 2012) by Moody's Investors Service, Inc. and Standard and Poor's Ratings Services have assigned underlying bond ratings to the 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.
vi

Oconee County Board of Education Management's Discussion and Analysis for Fiscal Year Ended June 30, 2011

Installment Sales Agreement General Obligation Bonds Bond Premium Total Debt Outstanding Debt Due within One Year General Obligation Bonds Revenue Bonds Due within One Year

Table 5

Debt at June 30

Governmental

Governmental

Activities

Activities

FY2011

FY2010

$

220,852 $

240,806

16,575,000

23,210,000

165,221

313,044

$

16,961,073 $

23,763,850

$

7,085,000 $

6,635,000

$

7,085,000 $

6,635,000

Additional Information can be found on the District's Debt obligations in the Notes to the 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:



Local Revenue Oconee County School District's priority on academic instruction continues to

attract new residents and businesses into the county because of the public school system's focus on

quality instructional programs. In February 2012, Caterpillar Inc. announced that it would begin

immediately to build a $200 million manufacturing plant on land shared by Oconee and Clarke

counties. The plant has the potential to bring over 2,000 jobs to the area.

Oconee County generally collects above 98% of the assessed taxes. This consistent collection of property taxes has assisted the local school district to meet financial obligations. Current economic conditions, a local digest that has decreased by over 4%, and recent state legislation may adversely affect the district's ability to maintain the current millage levy of 16.5 mills for M&O and 1 mill for debt service. The district will need to consider reducing permanent 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 of commercial, utility and retail properties.

Education-Special-Purpose-Local-Option-Sales-Tax (ELOST) receipts may be used to pay for specified capital improvements. 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.

The current ELOST was extended by the voters in November 2011 and therefore will continue to collect the extra one-cent on most retail goods sold in the county through December 2018. The District sold $13.5 million in bonds in January 2012. Bond proceeds will be used to fund the renovation of two current facilities, the completion of an All-Sports athletic facility and to fund system-wide technology improvements.

vii

Oconee County Board of Education Management's Discussion and Analysis for Fiscal Year Ended June 30, 2011



Capital Improvements The School District continues to implement the capital improvement plan

approved by the Board in 2006. District enrollment is expected to remain relatively consistent and

therefore no new permanent classroom space is considered necessary at this time.



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. State funds are providing no

more than 51% of the local budget where a number of years ago the state funded closer to 60%.

The upcoming General Assembly (January 2012) must carefully examine the impact, on both the citizens and the quality of services, of not adequately funding education and other state services that support education (health care, social and judicial services). Additionally, the General Assembly must follow through on analyzing the impact of tax exemptions and credits on the state's revenue streams in order to fund services and then be bold enough to take action based on the analysis in order to preserve and protect the economic stability of the State of Georgia.

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 an exceptional educational experience for our students. However, the District may find it challenging to maintain services for school year FY13 (2012/13) if state funding for K-12 education are not restored. The challenge will be to balance revenue streams (the state not fully funding education, the expiration of federal stimulus funds, and a decline in the local tax digest) with naturally occurring increases in expenses (personnel and operations).

The District has used ARRA and Federal Ed Jobs funds to stabilize services and has implemented a critical review of required personnel and services to prioritize expenses. This strategy, coupled with long-term planning has allowed the system to forgo the need to implement personnel RIF policies or exhaust the operating reserve. However, the long-term solution can only be found when the state implements consist funding for public education. The School District continues to maintain a very active process of monitoring departments and programs for efficiency and to evaluate areas to sustain 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@oconeeschools.org.

viii

OCONEE COUNTY BOARD OF EDUCATION
BASIC FINANCIAL STATEMENTS

OCONEE COUNTY BOARD OF EDUCATION
STATEMENT OF NET ASSETS JUNE 30, 2011

ASSETS
Cash and cash equivalents Receivables:
Taxes Intergovernmental:
State Federal Inventory Deferred charges Capital assets (nondepreciable) Capital assets (net of accumulated depreciation)
Total assets
LIABILITIES
Accounts payable Salaries and benefits payable Accrued interest 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 Capital projects Debt service Unrestricted
Total net assets

Governmental Activities

$

16,680,167

1,480,374

3,635,316 580,138 68,356 76,162
4,753,482 90,458,424 117,732,419

23,642
6,836,135 225,536
7,085,000 9,655,221
220,852 24,046,386

78,250,833

614,614

620,703

2,507,212

11,692,671

$

93,686,033

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

OCONEE COUNTY BOARD OF EDUCATION
STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2011

Functions/Programs Governmental activities:
Instruction Support services:
Pupil services Improvement of instructional
services Educational media services General administration School administration Business administration Maintenance and operation of facilities Student transportation services Central support services Other support services Enterprise operation Food services operation Interest on long-term debt Total governmental activities

Expenses

Charges for Services

Program Revenues Operating Grants and
Contributions

Capital Grants and Contributions

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

$ 39,290,831 $

571,616 $ 21,582,745 $

- $ (17,136,470)

1,576,579

-

385,240

-

(1,191,339)

1,067,828

-

524,924

978,732

-

871,526

1,116,230

-

1,314,538

5,026,829

-

2,264,149

345,619

-

25,106

4,180,965

2,950

2,339,949

2,918,842

-

835,736

165,092

-

16,652

298,175

-

87,238

602,372

-

-

2,218,709

1,181,082

1,007,566

735,551

-

21

$ 60,522,354 $ 1,755,648 $ 31,255,390 $

228,876 228,876

(542,904) (107,206) 198,308 (2,762,680) (320,513) (1,838,066) (1,854,230) (148,440) (210,937) (602,372) (30,061) (735,530) (27,282,440)

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 Gain on sale of capital assets Total general revenues Change in net assets
Net assets, beginning of year Net assets, end of year

24,651,480 1,535,531
5,181,911 390,402
1,323,090 82,244 11,767
33,176,425 5,893,985 87,792,048 $ 93,686,033

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

OCONEE COUNTY BOARD OF EDUCATION
BALANCE SHEET GOVERNMENTAL FUNDS
JUNE 30, 2011

ASSETS
Cash and cash equivalents Receivables:
Taxes Intergovernmental:
State Federal Inventory
Total assets
LIABILITIES AND FUND BALANCES
LIABILITIES Accounts payable Salaries and benefits payable Deferred revenue
Total liabilities
FUND BALANCES Nonspendable for inventory Restricted for capital projects Restricted for debt service Restricted for continuance of federal programs Assigned for future debt service Assigned for appropriation of fund balance for next year's budget Unassigned
Total fund balances Total liabilities and fund balances

General

DistrictWide Capital
Projects

Debt Service

Total Governmental
Funds

$ 14,031,410 $

620,703 $ 2,028,054 $

16,680,167

966,155

-

514,219

1,480,374

3,635,316 580,138 68,356

-

-

3,635,316

-

-

580,138

-

-

68,356

$ 19,281,375 $

620,703 $ 2,542,273 $

22,444,351

$

23,642 $

6,836,135

556,788

7,416,565

68,356 -
580,138 1,500,000 3,000,000 6,716,316 11,864,810 $ 19,281,375 $

- $ -
-

- $ 35,061
35,061

23,642 6,836,135
591,849
7,451,626

620,703
620,703 620,703 $

2,507,212 2,507,212 2,542,273

68,356 620,703 2,507,212 580,138 1,500,000 3,000,000 6,716,316 14,992,725

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 Less accumulated depreciation

114,642,871 (19,430,965)

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 Bond premium, net of amortization Bond issuance costs, net of amortization Accrued interest
Installment sales agreement

(16,575,000) (165,221) 76,162 (225,536)
(220,852)

95,211,906 591,849
(17,110,447)

Net assets of governmental activities

$ 93,686,033

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

OCONEE COUNTY BOARD OF EDUCATION

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2011

REVENUES Property taxes Sales taxes Other taxes State funds Federal funds Charges for services Investment earnings Miscellaneous Total revenues

General

$

24,725,619

-

368,093

26,841,362

4,642,904

1,755,648

75,663

1,323,090

59,732,379

District Wide
Capital Projects

Debt Service

Total Governmental
Funds

$

-

$

1,539,504 $

26,265,123

-

5,181,911

5,181,911

-

22,309

390,402

-

-

26,841,362

-

-

4,642,904

-

-

1,755,648

1,374

5,207

82,244

-

-

1,323,090

1,374

6,748,931

66,482,684

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

37,749,545
1,576,579 1,065,758
969,651 1,114,157 5,013,631
243,078 4,115,865 2,667,790
164,092 264,295 602,372 2,218,709
-
19,954 10,375 57,795,851

-
19,383 755,064
774,447

-
-
6,635,000 949,238
7,584,238

37,749,545
1,576,579 1,065,758
969,651 1,114,157 5,013,631
243,078 4,135,248 2,667,790
164,092 264,295 602,372 2,218,709 755,064
6,654,954 959,613
66,154,536

Excess (deficiency) of revenues over (under) expenditures

1,936,528

(773,073)

(835,307)

328,148

OTHER FINANCING SOURCES (USES) Proceeds from sale of capital assets Total other financing sources (uses)

11,767

-

11,767

-

-

11,767

-

11,767

Net changes in fund balance

1,948,295

(773,073)

(835,307)

339,915

FUND BALANCE, beginning of year

9,916,515

- 1,393,776

3,342,519

14,652,810

FUND BALANCE, end of year

$

11,864,810

$

620,703

$

2,507,212 $

14,992,725

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, 2011

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

$ 770,246 (1,948,939)

Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in Property taxes

The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. This amount is the net effect of these differences in the treatment of long-term debt and related items.

Principal payments - bonds Principal payments - installment sales agreement Bond premium amortization expense Bond issuance costs amortization expense

$ 6,635,000 19,954
147,823 (68,141)

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

$

339,915

(1,178,693) (78,112)

6,734,636
76,239 $ 5,893,985

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

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OCONEE COUNTY BOARD OF EDUCATION
STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES FIDUCIARY FUND JUNE 30, 2011

Cash Funds held for others

ASSETS LIABILITIES

Agency Fund

$

142,218

$

142,218

The accompanying notes are an integral part of these financial statements. 7

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
Reporting Entity
The Oconee County Board of Education (the "School District") was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
Blended Component Unit Oconee County Public Facilities Authority The Oconee County Public Facilities Authority (the "Authority") was created by House Bill No. 938 during the 2003 session of the Georgia General Assembly. The purpose of the Authority is to provide buildings, facilities, and services for the benefit of the Oconee County School District. The Authority consists of five members who are appointed by the Oconee County School District. The Oconee County Public Facilities Unit, per HB 938, ended on 12/31/2010 and as such they are no longer an entity. The Authority had zero income and zero expenses for the year then ended June 30, 2011.
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 of the 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 of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
8

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
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 of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, 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 of general long-term principal, interest and paying agent's fees.
The School District reports the following fiduciary fund types:
Agency Fund accounts for assets held by the School District as an agent for various funds, governments or individuals.
Basis of Accounting
The basis of accounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
9

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The School District uses funds to report on its financial position and the results of its operations.
Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. 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 State of Georgia reimburses the School System for teachers' salaries and operating costs through the Quality Basic Education Formula Earnings program (QBE). Generally teachers are contracted for the school year (July 1 June 30) and paid over a twelve month contract period, generally September 1 through August 31. In accordance with the respective rules and regulations of the QBE program, the State of Georgia reimburses the School System over the same twelve month period in which teachers are paid. At June 30, the amount of teachers' salaries incurred but not paid until July and August of the subsequent year are accrued. Since the State of Georgia recognizes its QBE liability for the July and August salaries at June 30, the School System recognizes the same QBE as a receivable and revenue, consistent with symmetrical recognition.
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 of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the School District to deposit its funds in one or more solvent banks or insured Federal savings and loan associations.
10

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 interestearning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(1) Obligations issued by the State of Georgia or by other states, (2) Obligations issued by the United States government, (3) Obligations fully insured or guaranteed by the United States government or a United
States government agency, (4) Obligations of any corporation of the United States government, (5) Prime banker's acceptances, (6) The Local Government Investment Pool administered by the State of Georgia, Office
of State Treasurer, (7) Repurchase agreements, and (8) Obligations of other political subdivisions of the State of Georgia.
The School District does not have a formal policy regarding investment policies that address credit risks, custodial 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 2010 tax digest year (calendar year) on July 27, 2010 (levy date). Taxes were due on November 15, 2010 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2010 tax digest are reported as revenue in the governmental funds for fiscal year 2011. The Oconee County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the
11

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2011, for maintenance and operations amounted to $24,725,619 and for school bonds amounted to $1,539,504.

The Georgia Constitution, Article VIII, Section VI, Paragraph I requires the board of education of each school system to annually certify to its fiscal authority or authorities a school tax not greater than 20 mills per dollar for the support and maintenance of education. The Oconee County Board of Education is in compliance with this law. Tax millage rates levied for the 2010 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

Sales Taxes

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $5,181,911 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.

Inventories

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

Capital Assets

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

12

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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

Capitalization Estimated

Policy

Useful Life

Land Land Improvements Buildings and Improvements All Equipment Intangible Assets

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

N/A 70 years 15 to 70 years 5 to 25 years 15 to 20 years

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

General Obligation Bonds

The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. 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 effective interest 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.

New Accounting Pronouncements

In fiscal year 2011, the School District adopted the Governmental Accounting Standards Board (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. The provisions of this Statement establish accounting and financial reporting standards for all governments that report governmental funds. It establishes criteria for classifying fund balances into specifically defined classifications and clarifies definitions for governmental funds.

Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.

13

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Fund Balance
Generally, the fund balance represents the difference between assets and liabilities under the current financial resources measurement focus of accounting. In the fund financial statements, governmental funds report fund balance classifications that comprise a hierarchy based primarily on extent to which the School Board is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. Fund balances are classified as follows:
(1) Nonspendable Fund balances are reported as nonspendable when amounts cannot be spent because they are either (a) not in spendable form (i.e., items that are not expected to be converted to cash) or (b) legally or contractually required to be maintained intact.
(2) Restricted Fund balances are reported as restricted when there are limitations imposed on their use either through enabling legislation adopted by the School District or through external restrictions imposed by creditors, grantors or laws or regulations of other governments.
(3) Committed Fund balances are reported as committed when they can be used only for specific purposes pursuant to constraints imposed by formal action of the School District Board through the adoption of a resolution. Only the School District Board may modify or rescind the commitment.
(4) Assigned Fund balances are reported as assigned when amounts are constrained by the School District's intent to be used for specific purposes, but are neither restricted nor committed. Through resolution, the School District Board has authorized the School District's finance committee or the School District's finance director to assign funds.
(5) Unassigned Fund balances are reported as unassigned as the residual amount when the balances do not meet any of the above criterion. The School District reports positive unassigned fund balance only in the general fund. Negative fund balances may be reported in all funds.
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 of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of 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.
14

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
Note 3: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a period longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (OCGA 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 percent of the daily pool balance. At June 30, 2011, all deposits were secured by surety bond, insurance or collateral as specified above.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
Note 4: NON-MONETARY TRANSACTIONS
The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their federally assigned value. See Note 2 - Inventories
15

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

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

Balance July 1, 2010

Increases

Decreases

Balance June 30,
2011

$ 4,753,482 $ 690,564
5,444,046

- $ -
-

- $ (690,564)
(690,564)

4,753,482 -
4,753,482

95,873,384 7,109,276 5,562,769
108,545,429

1,027,506 301,204 132,100
1,460,810

(116,850)
-
(116,850)

96,900,890 7,293,630 5,694,869
109,889,389

(13,030,930) (3,760,134) (807,812)
(17,598,876)

(1,435,084) (433,443) (80,412)
(1,948,939)

116,850
116,850

(14,466,014) (4,076,727)
(888,224) (19,430,965)

Total capital assets being depreciated, net
Total governmental activities capital assets, net

90,946,553 $ 96,390,599 $

(488,129) (488,129) $

-

90,458,424

(690,564) $ 95,211,906

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

$ 1,556,468
2,070 9,081 2,073 13,198 34,400 45,717 251,052 1,000 33,880 $ 1,948,939

16

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

Note 6: RISK MANAGEMENT

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

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

The School District has 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

2010 2011

$

11,854 $

11,443 $ 21,647 $

$

1,650 $

8,203 $

9,853 $

1,650 -

17

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

Note 6: RISK MANAGEMENT (Continued)

The School District pays an annual premium to the Fund for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Fund with the Safety National Casualty Corporation to provide coverage for potential losses sustained by the Fund in excess of $400,000 loss per occurrence, up to $1,000,000.

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

Position Covered

Amount

Superintendent

$100,000

Note 7: LONG TERM DEBT

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

COMPENSATED ABSENCES Compensated absences represent obligations of the 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 - Series 2006

Interest Rates 3.16%
4.00% - 5.00%

Amounts $ 5,560,000
11,015,000 $ 16,575,000

18

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

Note 7: LONG TERM DEBT (Continued)

The changes in Long-Term Debt during the fiscal year ended June 30, 2011, were as follows:

In s t allmen t Sales
Agreement

Governmental Activities

General

Obligation

Bond

Bonds

Premium

Total

Balance July 1, 2010

$ 240,806 $ 23,210,000 $ 313,044 $ 23,763,850

A d d itio n s :

Ded u ctio n s : Debt Retired Bond Premium Amortized

19,954 -

6,635,000 -

147,823

6,654,954 147,823

Balance June 30, 2011

$ 220,852 $ 16,575,000 $ 165,221 $ 16,961,073

Due within One Year

$

-$

(1)

7,085,000 $

(1) Paid during current year.

- $ 7,085,000

At June 30, 2011, 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

2012 2013 2014 2015 2016 2017-2021

$

-$

-

20,774

8,755

21,593

7,874

22,413

6,959

23,506

6,004

132,566

14,242

Total

$

220,852 $

43,834

Fiscal Year Ended June 30

Unamortized Bond
Premium

General Obligation Bonds

Principal

Interest

2012 2013 2014

$

108,849 $

7,085,000 $

726,446

56,372

7,560,000

404,856

-

1,930,000

60,988

Total

$

165,221 $ 16,575,000 $

1,192,290

19

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
Note 8: ON-BEHALF PAYMENTS The School District has recognized revenues and costs in the amount of $172,093 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 $105,395
Georgia Department of Education Paid the Teachers Retirement System For Teachers Retirement (TRS) In the amount of $30,389
Office of State Treasurer Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $36,309
Note 9: 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.
20

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
Note 10: 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 costsharing 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 On October 25, 1996, the Board created the Supplemental Retirement Benefits Plan of the Georgia Teachers Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1, 1997, all members and retired former members in TRS are eligible to participate in the SRBPTRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits.
TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service.
Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. Early retirement benefits are reduced by the lesser of onetwelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 30 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lumpsum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available.
FUNDING POLICY TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2011, were 5.53% of annual salary. The member contribution rate will increase to 6.00% effective July 1, 2012. Employer contributions required for fiscal year 2011 were 10.28% of annual salary as required by the June 30, 2008, actuarial valuation. The employer contribution rate increased to 11.41% effective July 1, 2012.
21

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

Note 10: RETIREMENT PLANS (Continued)

Fiscal Year 2011 2010 2009

Percentage Contributed
100% 100% 100%

Required Contribution $ 3,656,160 $ 3,555,074 $ 3,392,275

DEFINED CONTRIBUTION PLAN

In 1993, Oconee County Board of Education began an employer paid 403(b) annuity plan for all employees. The plan includes the group of employees covered under the Public School Employees' Retirement System (PSERS) and for other employees who are covered under Georgia Teacher Retirement System whose 403(b) contributions are in lieu of Social Security. Recognizing that PSERS was a limited defined contribution and defined benefit plan which did not provide for an adequate retirement for this group of employees, it was the Board's desire to supplement the retirement of this group.

The Board selected Cannon Financial Strategist/Lincoln National Life Insurance (Lincoln Alliance) as the provider of this plan. For each employee, the Board contributes to the plan an amount equal to 4.5 percent of the employee's pay.

The employee becomes vested in the plan at inception. Employees hired at the time the plan was implemented are vested upon enrollment.

Funds accumulated in the employer paid accounts are only available to the employee upon severance from employment with Oconee County Board of Education.

Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year 2011 2010 2009

Amount Contributed $ 1,637,152 $ 1,700,968 $ 1,701,393

Note 11: POST-EMPLOYMENT 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 post-employment healthcare plan administered by the Department of Community 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

22

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

Note 11: POST-EMPLOYMENT BENEFITS (Continued)

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%) of the cost of health insurance coverage.

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, 2011, was as follows:

Certified Teachers July 2010 April 201121.955%
May 2011 June 2011 1.429%

of covered payroll for August May Coverage of covered payroll for June July Coverage

Non-Certificated Employees

$162.72 per month for July December $218.20 per month for January - May $246.20 per month for June

No additional contribution was required by the Board of Community Health for fiscal year 2011 nor contributed to GRHBF to prefund retire benefits. Such additional contribution amounts are determined annually by the Board of Community Health in accordance with the State plan for other post-employment benefits and are subject to appropriation.

The School District's contribution to the health insurance plans for the fiscal year ended June 30, 2011, was $5,629,317, which equaled the required contribution.

The School District's contribution to the health insurance plans, which equaled the required contribution, for the fiscal year ended June 30, 2011, 2010, and 2009 were $5,629,317, $5,389,118, and $4,075,229, respectively.

Note 12: SUBSEQUENT EVENTS

In November 2011, the citizens of Oconee County voted to pass a referendum to extend the current Educational Local Option Sales Tax beginning January 1, 2013, and ending on December 31, 2017. The estimated Educational Local Option Sales Tax revenue over this five year period is $33,000,000. The referendum allows for several projects including but not limited to paying debt service, renovations and/or additions to current facilities and system-wide technology advancements. The referendum also allows the Oconee County Board of Education to sell up to $13,500,000 in bonds to forward fund certain projects. The sale of General Obligation Bond Series 2012 was authorized by the Oconee County Board of Education on January 23, 2012, in the amount of $13,500,000 and occurred on February 1, 2012.

23

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, 2011

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

Nonappropriated

Budget

Original

Final

Actual

Variance With Final Budget

$ 25,682,524 $ 25,682,524 $ 25,093,712 $

26,291,364

26,520,240

26,841,362

3,999,017

4,085,917

4,642,904

1,903,290

1,903,290

1,755,648

75,773

75,773

75,663

1,941,163

1,941,163

1,323,090

59,893,131

60,208,907

59,732,379

(588,812) 321,122 556,987 (147,642)
(110) (618,073) (476,528)

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 Debt service: Principal retirement Interest and fiscal charges Total expenditures

38,710,720
1,445,710 1,736,423
878,022 1,200,012 4,694,685
287,912 4,525,923 2,240,113
139,103 533,803 1,048,344 2,368,484
20,722 52,813 59,882,789

39,348,819
1,449,710 1,367,312
878,022 1,252,205 4,694,685
287,912 4,525,923 2,549,290
139,103 533,803 1,048,344 2,368,484
20,722 52,813 60,517,147

37,749,545
1,576,579 1,065,758
969,651 1,114,157 5,013,631
243,078 4,115,865 2,667,790
164,092 264,295 602,372 2,218,709
19,954 10,375 57,795,851

1,599,274
(126,869) 301,554 (91,629) 138,048 (318,946)
44,834 410,058 (118,500) (24,989) 269,508 445,972 149,775
768 42,438 2,721,296

Excess (deficiency) of revenues over (under) expenditures

10,342

(308,240)

1,936,528

2,244,768

OTHER FINANCING SOURCES (USES) Proceeds from sale of capital assets Transfers in Transfers out Total other financing uses

38,293 (400,000) (361,707)

38,293 (400,000) (361,707)

11,767 -
11,767

11,767 (38,293) 400,000 373,474

Net change in fund balances

(351,365)

(669,947)

1,948,295

2,618,242

FUND BALANCE, beginning of year

9,916,515

9,916,515

9,916,515

-

FUND BALANCE, end of year

$ 9,565,150 $ 9,246,568 $ 11,864,810 $

2,618,242

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. 24

OCONEE COUNTY BOARD OF EDUCATION
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2011

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 - Cash National School Lunch Program - Commodities (1)
Total Child Nutrition Cluster
Pass-Through From Office of the State Treasurer School and Roads - Grants to States
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 Grants to States - American Recovery and Reinvestment Act
Total Special Education Cluster
Title I, Part A Cluster Pass-Through From Georgia Department of Education Title I, Part A Title I Grants to Local Education Agencies ARRA - Title I Grants to Local Education Agencies
Total Title I, Part A Cluster
Other Programs Pass-Through From Georgia Department of Education Title II Improving Teacher Quality State Grants Education Technology State Grants
Total Title II
Title III English Language Acquisition Grant

CFDA Number

PassThrough
Entity ID
Number

Expenditures In Period

10.553 10.555 10.555
10.665

N/A $ N/A N/A
N/A

- (2) 2,027,470
157,771 2,185,241
109 2,185,350

84.027

N/A

84.173

N/A

84.391

N/A

84.010

N/A

84.389

N/A

84.367

N/A

84.318

N/A

84.365

N/A

1,064,152 40,860
504,376 1,609,388
445,072 82,811 527,883
142,340 3,917
146,257
19,948

25

OCONEE COUNTY BOARD OF EDUCATION
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2011

Funding Agency Program/Grant

CFDA Number

PassThrough Entity
ID Number

Expenditures In Period

Title IV Safe and Drug Free Schools And Communities

84.186

N/A $

3,299

Vocational Education-Basic Grants to States Career and Technical Education

84.048

N/A

53,977

Education Jobs Fund

84.410

N/A

1,322,642

Total U. S. Department of Education

3,683,394

Total Expenditures of Federal Awards

$

5,868,744

N/A = Not Available

Notes to the Schedule of Expenditures of Federal Awards

(1) 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 of the Oconee County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements. 26

OCONEE COUNTY BOARD OF EDUCATION
SCHEDULE OF STATE REVENUE FOR THE FISCAL YEAR ENDED JUNE 30, 2011

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 Primary Grades - Early Intervention (4-5) Program Middle Grades (6-8) Program Students with Disabilities High School General Education (9-12) Program Vocational Laboratory (9-12) Program 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 Regular Nursing Services Vocational Supervisors Food Services Vocational Education Amended Formula Adjustment Other State Programs Preschool Handicapped Program Pupil Transportation - State Bonds

Governmental Fund Types
General Fund

$

1,934,991

5,007

4,834,874

73,629

2,618,373

48,697

4,395,138

3,449,644

3,616,681

1,077,320

1,874,679

438,589

324,656

196,735

694,998

215,326

119,967

933,923 1,452,625 1,545,337

701,057 108,931
29,270 80,172 78,736 -4,577,069
140,462 228,876 26,641,624

27

OCONEE COUNTY BOARD OF EDUCATION
SCHEDULE OF STATE REVENUE FOR THE FISCAL YEAR ENDED JUNE 30, 2011

Agency/Funding Grants On Behalf Payments On Behalf Payments - Health Insurance On Behalf Payments - Teachers Retirement On Behalf Payments - Public School Employees Retirement
Dual Enrollment Other Grants from Georgia Department of Education
Virtual Schools Grant Other Grants from Georgia Department of Education
Math & Science Supplement Other Grants from Georgia Department of Education
Move on When Ready Grant Other Grants from Georgia Department of Education
Total State Funds

Governmental Fund Types
General Fund

$

105,395

30,389

36,309

172,093

3,169 3,169

900 900

23,476 23,476

100 100
$ 26,841,362

See notes to the basic financial statements. 28

OCONEE COUNTY BOARD OF EDUCATION
SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011

2002 Referendum - ELOST II Projects 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.

Original Estimated Cost(1)

Current Estimated Costs(2)

Expended In Current Year (3) (4)

Expended In Prior Years (3) (4)

Percent of Project
Completion

TOTAL - ELOST II

$ 24,000,000 $ 35,879,801

$ 35,879,801

100%

2006 Referendum - ELOST III Projects
Providing funds to pay the costs of:
1. Acquiring real property (improved or unimproved) for future school sites;
2. Acquiring, constructing and equipping a new elementary school; 3. 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 4. 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 principal amount of $24,000,000 for the above purpose.

$ 1,000,000 $ 10,914,803
$ 21,972,577 $ 4,112,620

$ 815,747 $ 11,222,896
$ 11,448,737 $ 4,112,620

$ 761,076 $ 949,238

$ 815,747 $ 11,222,896
$ 10,266,108 $ 2,536,352

100% 100%
96% 85%

TOTAL - ELOST III

$ 38,000,000 $ 27,600,000 $ 1,710,314 $ 24,841,103

96%

TOTAL - ELOST II and ELOST III

$ 62,000,000 $ 63,479,801 $ 1,710,314 $ 60,720,904

98%

(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax. (2) The School District's current estimate of total cost for the project(s). Includes all cost from project inception to completion. (3) The voters of Oconee County approved the imposition of a 1% sales tax to fund the above projects and retire associated debt. Amounts expended for
these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects. (4) In addition to the expenditures shown above, the School District has incurred interest to provide advance funding for the above project(s) as follows:

Prior Years Current Year Total

899,474 -
899,474

See notes to the basic financial statements. 29

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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, 2011

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)

2,380,304 $ 2,250,287 $

47,584 $ 2,297,871

7,483

-

-

-

5,947,336

6,243,955

140,000

6,383,955

96,398

189,096

232

189,328

3,186,965

4,143,338

87,152

4,230,490

68,700

-

44

44

5,328,149

6,018,647

151,159

6,169,806

4,411,405

5,844,008

154,607

5,998,615

1,355,116

1,312,046

84,696

1,396,742

4,188,537

-

-

-

-

55,808

1,565

57,373

-

148,186

11,337

159,523

-

2,359,908

24,677

2,384,585

-

55,172

-

55,172

2,230,419

2,259,359

12,131

2,271,490

503,571

-

181

181

407,739

382,992

2,016

385,008

243,745

179,874

273

180,147

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

30,355,867

31,442,676

717,654

32,160,330

Media Center Program Staff and Professional Development

866,805 149,863

809,396 -

78,278 -

887,673 58,020

TOTAL QBE FORMULA FUNDS

$

31,372,535 $ 32,252,072 $ 795,932 $ 33,106,023

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

See notes to the basic financial statements. 31

II. COMPLIANCE AND INTERNAL CONTROL REPORTS SECTION

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
March 12, 2012

Honorable Nathan Deal, 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 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, 2011, which collectively comprise Oconee County Board of Education's basic financial statements and have issued our report thereon dated March 12, 2012. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
Management of Oconee County Board of Education is responsible for establishing and maintaining effective 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.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis.

2011YB-10

Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Oconee County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
We noted a certain matter that we have reported to management of Oconee County Board of Education in a separate letter dated March 12, 2012.
This report is intended solely for the information and use of management, members of the 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 2011YB-10

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
March 12, 2012

Honorable Nathan Deal, 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 REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
Ladies and Gentlemen:
Compliance
We have audited Oconee County Board of Education's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2011. Oconee County Board of Education's major Federal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs. 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 of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Oconee County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. 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 compliance requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2011.

2011SA-10

Internal Control Over Compliance
Management of Oconee County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to Federal programs. In planning and performing our audit, we considered Oconee County Board of Education's internal control over compliance with the requirements that could have a direct and material effect on a major Federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Oconee County Board of Education's internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a Federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a Federal program will not be prevented, or detected and corrected, on a timely basis.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, 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.
This report is intended solely for the information and use of management, members of the 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 2011SA-10

Russell W. Hinton, CPA, CGFM State Auditor

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

OCONEE COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2011
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.

IV. FINDINGS AND QUESTIONED COSTS SECTION

OCONEE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2011

I SUMMARY OF AUDITOR'S RESULTS

Financial Statements

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

Unqualified

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

No None Reported

Noncompliance material to financial statements noted:

No

Federal Awards

Internal Control over major programs: Material weakness identified? Significant deficiency identified?

No None Reported

Type of auditor's report issued on compliance for major programs: All major programs

Unqualified

Any audit findings disclosed that are required to be reported in

accordance with OMB Circular A-133, Section 510(a)?

No

Identification of major programs: CFDA Numbers

Name of Federal Program or Cluster

84.010, 84.389 84.027, 84.173, 84.391 84.410

Title I, Part A Cluster Special Education Cluster Education Jobs Fund

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

$300,000.00

Auditee qualified as low-risk auditee?

Yes

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

No matters were reported. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.