Oconee County Board of Education, annual financial report for the fiscal year ended June 30, 2013 (including independent auditor's report)

OCONEE COUNTY BOARD OF EDUCATION WATKINSVILLE, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2013
(INCLUDING INDEPENDENT AUDITOR'S REPORTS)

OCONEE COUNTY BOARD OF EDUCATION
- TABLE OF CONTENTS -
SECTION I
FINANCIAL
INDEPENDENT AUDITOR'S REPORT
REQUIRED SUPPLEMENTARY INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
EXHIBITS
BASIC FINANCIAL STATEMENTS
DISTRICT-WIDE FINANCIAL STATEMENTS STATEMENT OF NET POSITION 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
SCHEDULES
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
29

OCONEE COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

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

Page
30 32 34 35

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR 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

SECTION I FINANCIAL

Greg S. Griffin
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
October 27, 2014

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
Ladies and Gentlemen:
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Oconee County Board of Education, as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise the Board's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express
2013ARL-11

no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to 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, 2013, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As described in Note 2 to the financial statements, in 2013, the Oconee County Board of Education adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. Our opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis and the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through viii and page 29 respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Oconee County Board of Education's basic financial statements. The accompanying supplementary information, is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements.
The accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare
2013ARL-11

the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements as a whole.
Other Reporting Required by Governm ent Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated October 27, 2014, 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 in considering Oconee County Board of Education's internal control over financial reporting and compliance.
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,

GSG:as 2013ARL-11

Greg S. Griffin State Auditor

OCONEE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013
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, 2013 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 fiscal year 2013 are as follows:
On the district-wide financial statements, the assets of the School District exceeded liabilities by $102.48 million, or an increase of $5.18 million when compared to 2012.
The School District had $60.36 million in expenses relating to governmental activities; only $32.46 million of these expenses were offset by program specific charges for services, grants and contributions. However, general revenues (primarily property and sales taxes) of $33.07 million were more than adequate to provide for these programs.
As stated above, General Revenues accounted for $33.07 million or about 50% of all revenues totaling $65.54 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 17.50 mills for the 2013 school year. The Bond millage rate was 1 mill, giving the District an overall millage rate of 18.50 mills. However, without digest growth, which is limited by current economic conditions, the Board of Education could be required to increase the millage rate or reduce programs in the future.
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 Position' and 'Statement of Activities'. These statements provide information about the activities of the School District presenting both short-term and long-term information about the School District's overall financial status.
The fund financial statements focus on individual parts of the School District, reporting the School District's operation in more detail. The 'Governmental Funds' statements disclose how basic services are financed in the short-term as well as what remains for future spending. The 'Fiduciary Funds' statements provide information about the financial relationships in which the School District acts solely as a trustee or agent for the benefit of others. In the case of the Oconee County Board of Education, the General Fund, Capital Projects Funds, and Debt Service Funds are all considered to be major funds. The 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.
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OCONEE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013
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 District 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 Position' and the 'Statement of Activities' provide the basis for answering this question. These financial statements include all District's assets and liabilities and use the accrual basis of accounting similar to the accounting used by most private-sector companies. This accounting basis 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 position and any changes in net position. The change in net position 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 Position' and the 'Statement of Activities' reflect 100% of the School District's governmental activities.
Fund Financial Statements
The School District uses many funds or sub-funds to account for a multitude of financial transactions during the fiscal year. The fund financial statements presented in this report provide detail information about the School District's significant or major funds. As discussed previously, the 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.
FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT AS A WHOLE
Recall that the Statement of Net Position provides the perspective of the School District as a whole. The reader can think of the District's net position 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 $102.48 million at June 30, 2013.
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 $102.48 million of net position, $5.16 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.
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OCONEE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013

In addition, the District had $86.9 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 position is not available for future spending.

The remaining balance of unrestricted net position of $10.48 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 fiscal year 2012.

Assets Current and Other Assets Capital Assets, Net

Governmental Activities FY 2013

Table 1 Net Assets
Governmental Activities
FY 2012

Current Year to Prior Year Difference

$ 26,061,480 100,554,269

$ 33,094,904 97,300,199

$ (7,033,424) 3,254,070

Total Assets

$ 126,615,749

$ 130,395,103

$ (3,779,354)

Liabilities Current and Other Liabilities Long-Term Liabilities

$ 12,995,180 11,138,965

Total Liabilities

$ 24,134,145

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

$ 86,837,137 5,163,484
$ 10,480,983

Total Net Position

$ 102,481,604

$ 16,787,041 16,306,697
$ 33,093,738
$ 81,400,430 4,795,932
$ 11,105,003 $ 97,301,365

$ (3,791,861) (5,167,732)
$ (8,959,593)
$ 5,436,707 367,552
$ (624,020) $ 5,180,239

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OCONEE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013

Table 2 shows categorical Changes in Net Position for the current fiscal year and for prior year fiscal year 2012.

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 2013

FY 2012

$ 1,696,701 30,543,441 217,321
$ 32,457,463

$ 1,724,024 29,362,159 547,454
$ 31,633,637

$ 23,922,422 1,407,893 0 0 5,599,414

$ 23,987,072 1,492,261 0 0 5,464,240

Intangible Recording & Real Estate Transfer

731,095

554,426

Investment Earnings Miscellaneous

61,882 1,363,933

75,502 1,435,646

Total General Revenues Total Revenues

$ 33,086,639 $ 65,544,102

$ 33,009,147 $ 64,642,784

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

$ 38,816,722 0 1,846,099 1,071,704 955,692 165,896 1,116,141 4,882,205 339,591 4,082,570 3,393,861 155,598 162,533 0 697,955 2,318,016 359,280
$ 60,363,863

$ 39,707,224 0 1,611,171 1,065,242 1,026,166 0 1,280,171 5,058,782 333,179 4,150,173 2,954,036 136,994 305,037 0 532,826 2,240,482 625,969
$ 61,027,452

Increase in Net Position

$ 5,180,239 $ 3,615,332

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OCONEE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013

Governmental Activities

The Statement of Activities shows the cost of program services and the charges for services and grants offsetting these services. Table 3 shows, for governmental activities, the total cost of services and the net cost of services. Data are presented for the current fiscal year and for prior fiscal year fiscal year 2012. 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 2013

Total Cost of Services FY 2012

Net Cost of Services FY 2013

Net Cost of Services FY 2012

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

$38,816,722 0
1,846,099 1,071,704
955,692 165,896 1,116,141 4,882,205 339,591 4,082,570 3,393,861 155,598 162,533
0 697,955 2,318,016
359,280 $60,363,863

$39,707,224 0
1,611,171 1,065,242 1,026,166
0 1,280,171 5,058,782
333,179 4,150,173 2,954,036
136,994 305,037
0 532,826 2,240,482
625,969 $61,027,452

$16,475,841 0
1,526,441 484,441 66,288 165,896
(131,823) 3,052,258
336,219 2,068,340 2,449,160
151,527 145,273
0 697,955
59,304
359,280 $27,906,400

$ 18,379,151 0
1,305,048 592,166 181,089 0 74,119
3,015,318 302,149
1,992,789 1,985,430
124,424 238,677
0 532,826
44,660
625,969 $29,393,815

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 $65.86 million and total expenditures of $71.51 million. Included in the expenditures of $71.51 million were capital project expenditures of $4.48 million which do not constitute recurring expenditures and $8.26 million in debt service payments.
General Fund Budget Highlights
The School District's budget is prepared according to Georgia Law. The most significant budgeted fund is the General Fund.
During the course of fiscal year 2013, the School District amended its general fund budget as needed. The School District uses site-based budgeting as a part of the budget process. The budgeting systems are designed to control total site budgets but provide flexibility for site management.
For the General Fund, the final actual revenues of $58.41 million were more than the final budgeted amounts of $58.00 million, a difference of $0.41 million. This major portion of the difference demonstrates that the District underestimated its final revenues which are primarily the result of mid-year State QBE formula allotments.

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OCONEE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013

Final actual expenditures of $58.77 million are less than the final budgeted amount of $59.64 million by $864.69 thousand. 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, 2013, the School District had $100.55 million invested in capital assets, including land, buildings and furniture and equipment for its governmental activities. Table 4 reflects a summary of these balances net of accumulated depreciation for the current year and for the prior year of fiscal year 2012.

Table 4 Capital Assets at June 30
(Net of Depreciation)

Governmental Activities FY 2013

Governmental Activities FY 2012

Land

$ 4,753,482 $ 4,753,482

Construction in Progress Land Improvements

5,496,630 4,643,935

3,742,934 4,725,290

Buildings

82,763,604

81,021,093

Equipment

2,896,618

3,057,400

Total

$ 100,554,269 $ 97,300,199

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

Debt

At June 30, 2013, the School District had $16.06 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. In February of 2012, the district sold $13.5 million in new Revenue Bonds (to be repaid by the extension of the special purpose local option sales tax) for the purpose of additions, modifications and renovations to school facilities and for system-wide technology.

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.

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OCONEE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013

Table 5 Debt at June 30

Governmental Activities FY 2013

Governmental Activities FY 2012

Installment Sales Agreement General Obligation Bonds Bond Premium Total Debt Outstanding

$ 182,151 15,400,000 479,227
$ 16,061,378

$ 200,283 22,990,000 698,007
$ 23,888,290

Installment Sales Agreement General Obligation Bonds Due within One Year

22,413 4,900,000 $ 4,922,413

21,593 7,560,000 $ 7,581,593

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 Districts' 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. The District consistently ranks within the top five (5) achieving school systems in Georgia. 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

eventually bring over 2,000 jobs to the area. In addition, the county continues to experience local

commercial development centered around U.S. Highway 316, Oconee Connector, and the U.S. 10 Loop.

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. State QBE funding austerity reductions and declining local digest value required the Oconee County Board of Education to increase the M&O rate to 17.5 mills for fiscal year 2013 and reduced expenses 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 2012 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.



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

by the Board in 2006.



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 50% of the local budget

where a number of years ago the State funded closer to 60%.

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OCONEE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 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 the 2014 school year (2013-14 fiscal year) if State funding for K-12 education is not restored. The challenge will be to balance revenue streams (the State not fully funding education, and little growth or decline in the local tax digest) with occurring increases in expenses (personnel, employer paid benefits, and operational costs). The long-term solution can only be found when the State fully funds the Quality Basic Education program. 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. Dan Smith, Chief Financial Officer, Oconee County Board of Education, Post Office Box 146, 34 School Street, Watkinsville, Georgia 30677. You may also email your questions to Mr. Smith at jdsmith@oconeeschools.org.
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OCONEE COUNTY BOARD OF EDUCATION

OCONEE COUNTY BOARD OF EDUCATION
STATEMENT OF NET POSITION JUNE 30, 2013

ASSETS
Cash and cash equivalents Investments Receivables:
Taxes Intergovernmental:
State Federal Inventory Deferred charges on issuance Capital assets (nondepreciable) Capital assets (net of accumulated depreciation)
Total assets
LIABILITIES
Accounts payable Salaries and benefits payable Contracts payable Accrued expenses Retainage payable Bonds payable due within one year Bonds payable due in more than one year Installment sales agreement due within one year Installment sales agreement due in more than one year
Total liabilities
NET POSITION
Net investment in capital assets Restricted for:
Continuation of federal programs Capital projects Debt service Unrestricted
Total net position

Governmental Activities

$

17,170,033

3,066,541

1,289,995

3,912,618 326,086 100,237 195,970
10,250,112 90,304,157 126,615,749

272,857 6,926,183
651,330 151,432
70,965 4,900,000 10,979,227
22,413 159,738 24,134,145

86,837,137

392,717

1,980,097

2,790,670

10,480,983

$

102,481,604

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, 2013

Functions/Programs Governmental activities:
Instruction Support services: Pupil services Improvement of instructional services Educational media services Federal grant administration 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 Position Governmental
Activities

$ 38,816,722 $

580,715 $ 21,760,166 $

- $ (16,475,841)

1,846,099

-

319,658

-

(1,526,441)

1,071,704

-

586,863

955,692

-

887,652

165,896

-

-

1,116,141

-

1,247,564

4,882,205

-

1,827,357

339,591

-

52

4,082,570

-

2,005,546

3,393,861

-

755,052

155,598

-

30

162,533

-

17,260

697,955

-

-

2,318,016

1,115,986

1,136,241

359,280

-

-

$ 60,363,863 $ 1,696,701 $ 30,543,441 $

400 1,752
400 2,590 3,320 8,684 189,649 4,041
6,485 217,321

(484,441) (66,288) (165,896) 131,823
(3,052,258) (336,219)
(2,068,340) (2,449,160)
(151,527) (145,273) (697,955) (59,304) (359,280) (27,906,400)

General revenues: Taxes: Property taxes, levied for general purposes Property taxes, levied for debt service Sales taxes: For debt service Other taxes Miscellaneous revenues Unrestricted investment earnings Total general revenues Change in net position
Net position, beginning of year Net position, end of year

23,922,422 1,407,893
5,599,414 731,095
1,363,933 61,882
33,086,639 5,180,239 97,301,365 $ 102,481,604

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

OCONEE COUNTY BOARD OF EDUCATION
BALANCE SHEET GOVERNMENTAL FUNDS
JUNE 30, 2013

ASSETS
Cash and cash equivalents Investments Receivables:
Taxes Intergovernmental:
State Federal Inventory
Total assets

General

DistrictWide Capital
Projects

Debt Service

Total Governmental
Funds

$ 12,183,189 $ -

2,509,324 $ 3,066,541

2,477,520 $ -

17,170,033 3,066,541

801,329

-

488,666

1,289,995

3,912,618 326,086 100,237
$ 17,323,459 $

-
5,575,865 $

-
2,966,186 $

3,912,618 326,086 100,237
25,865,510

LIABILITIES AND FUND BALANCES
LIABILITIES Accounts payable Salaries and benefits payable Unavailable revenue - property taxes Retainage payable Contracts payable
Total liabilities

$

269,955 $

6,926,183 356,522

-

-

7,552,660

2,902 $ -
70,965 651,330
725,197

- $ 24,084 -
24,084

272,857 6,926,183
380,606 70,965 651,330
8,301,941

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 Assigned for principal discretionary funds Unassigned
Total fund balances

100,237 -
326,086 1,500,000 1,000,000
699,921 6,144,555 9,770,799

Total liabilities and fund balances $ 17,323,459 $

4,850,668
4,850,668
5,575,865 $

2,942,102 2,942,102
2,966,186

100,237 4,850,668 2,942,102
326,086 1,500,000 1,000,000
699,921 6,144,555 17,563,569

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

Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds.

Cost

123,660,768

Less accumulated depreciation

(23,106,499)

Other long-term assets are not available to pay for current-period expenditures and, therefore, are unavailable 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

(15,400,000) (479,227) 195,970 (151,432) (182,151)

100,554,269 380,606
(16,016,840)

Net position of governmental activities

$ 102,481,604

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, 2013

REVENUES Property taxes Sales taxes Other taxes State funds Federal funds Charges for services Investment earnings Miscellaneous Total revenues
EXPENDITURES Current: Instruction Support services: Pupil services Improvement of instructional services Educational media services Federal grant administration 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
Excess (deficiency) of revenues over (under) expenditures
OTHER FINANCING SOURCES (USES) Proceeds from sale of capital assets Transfers in Transfers out Total other financing sources (uses)
Net changes in fund balance
FUND BALANCE, beginning of year
FUND BALANCE, end of year

General

$

23,852,792 $

-

690,664

27,537,920

3,234,179

1,696,700

33,238

1,363,933

58,409,426

District Wide
Capital Projects
- $ 383,678 24,082 407,760

Debt Service

Total Governmental
Funds

1,401,577 $ 5,599,414
40,431 -
4,562 -
7,045,984

25,254,369 5,599,414 731,095
27,921,598 3,234,179 1,696,700 61,882 1,363,933 65,863,170

38,064,618
1,846,099 1,069,634
942,382 165,896 1,106,443 4,868,783 229,993 4,037,570 3,130,215 134,659 128,927 697,955 2,318,016
-
18,132 12,032 58,771,354

(361,928)

56,546 -
(540,786) (484,240)

(846,168)

10,616,967

$

9,770,799 $

-
4,229 7,625 4,469,757
4,481,611

-
-
7,590,000 668,778
8,258,778

(4,073,851)

(1,212,794)

934,874
934,874
(3,138,977)
7,989,645
4,850,668 $

540,786 (934,874) (394,088)
(1,606,882)
4,548,984
2,942,102 $

38,064,618
1,846,099 1,069,634
946,611 165,896 1,114,068 4,868,783 229,993 4,037,570 3,130,215 134,659 128,927 697,955 2,318,016 4,469,757
7,608,132 680,810
71,511,743
(5,648,573)
56,546 1,475,660 (1,475,660)
56,546
(5,592,027)
23,155,596
17,563,569

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, 2013

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

$ 5,307,907 (1,988,179)

The net effect of the sale of fixed assets is to decrease net assets

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

Property taxes GSFIC Funding

$

75,946

(395,014)

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

$ 7,590,000 18,132 218,780 (92,398)

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

$

102,750

Change in net position - governmental activities

$

(5,592,027)
3,319,728 (65,658)
(319,068)
7,734,514 102,750
5,180,239

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, 2013

Cash Funds held for others

ASSETS LIABILITIES

Agency Fund

$

145,262

$

145,262

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, 2013
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.
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 Position and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of 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.
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.
- 8 -

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 type:
Agency Fund accounts for assets held by the School District as an agent for various 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.
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.
- 9 -

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 position available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
New Accounting Pronouncements
In fiscal year 2013, the School District adopted the Governmental Accounting Standards Board (GASB) Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources and Net Position. The provisions of this Statement establish financial reporting standards for the presentation of deferred outflows of resources and deferred inflows of resources and their effects on a government's net position.
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.
Investments
COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate 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,
- 10 -

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services, (7) Repurchase agreements, and (8) Obligations of other political subdivisions of the State of Georgia.
The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks. Receivables Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. Property Taxes The Oconee County Board of Commissioners fixed the property tax levy for the 2012 tax digest year (calendar year) on August 7, 2012 (levy date). Taxes were due on November 15, 2012 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2012 tax digest are reported as revenue in the governmental funds for fiscal year 2013. The Oconee County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2013, for maintenance and operations amounted to $23,852,792 and for school bonds amounted to $1,401,577. 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.
- 11 -

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Tax millage rates levied for the 2012 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

17.50 mills 1.00 mills

Total

18.50 mills

Sales Taxes

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $5,599,414 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, 2013

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 Policy

Estimated 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 Position.

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, 2013
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Budgetary Data
The budget is a complete financial plan for the School District's fiscal year, and is based upon careful estimates of expenditures together with probable funding sources. The budget is legally adopted each year for the general, debt service, and capital projects funds. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds, except the various school activity (principal) accounts, is prepared and adopted by fund, function and object. The legal level of budgetary control was established by the Board at the aggregate function level. The budget for the General Fund was prepared in accordance with accounting principles generally accepted in the United States of America.
See Schedule 1 - General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual for a detail of any over/under expenditures during the fiscal year under review.
Net Position
The School District's net position in the District-wide Statements is classified as follows:
Net investment in capital assets - 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 net investment in capital assets.
Restricted net position - This represents resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation of Federal programs, debt service and capital projects in accordance with restrictions imposed by external third parties.
Unrestricted net position - Unrestricted net position represents resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes.
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:
- 14 -

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Fund Balance (Continued)
(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.
Flow Assumptions - When both restricted and unrestricted amounts of fund balance are available for use for expenditures incurred, it is the School District's policy to use restricted amounts first and then unrestricted amounts as they are needed. For unrestricted amounts of fund balance, it is the School District's policy to use fund balance in the following order:
Committed Assigned Unassigned
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, 2013, all deposits were secured by surety bond, insurance or collateral as specified above.
- 15 -

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013

Note 3: DEPOSITS AND INVESTMENTS (Continued)
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.
INVESTMENTS The School District's investments as of June 30, 2013, are presented below.

Investment Type

Maturities

Rating

Fair Value

Concentration

Federal Home Loan - MTG Corp Note Federal Home Loan - MTG Corp
Medium Tem Note

10 years

AAA $

500,855

17%

3 years

AAA

2,365,640

83%

Total

2,866,495

100%

Other Certificate of Deposits

200,046

Total Investments

$

3,066,541

Certificates of deposits noted above were considered in the collateralization of deposits disclosure.

- 16 -

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013
Note 3: DEPOSITS AND INVESTMENTS (Continued) INTEREST RATE RISK Interest rate risk is the risk that changes in interest rates of debt investment will adversely affect the fair value of an investment. The School District does not have a formal policy for managing interest rate risk. The School District's investments in obligations of the United States Government and United States Government Agencies had ratings of AAA, respectively, by Moody's. CUSTODIAL CREDIT RISK Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, the School District will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The School District does not have a formal policy for managing custodial credit risk. CREDIT QUALITY RISK Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The School District does not have a formal policy for managing credit quality risk. CONCENTRATION OF CREDIT RISK Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The School District does not have a formal policy for managing concentration of credit risk. Investments in Federal Home Loans represent 93 percent of total investments. Note 4: NON-MONETARY TRANSACTIONS The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their federally assigned value. See Note 2 - Inventories
- 17 -

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013

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, 2012

Increases

Decreases

Balance June 30,
2013

$ 4,753,482 $

- $

- $ 4,753,482

3,742,934

2,982,291

(1,228,595)

5,496,630

8,496,416

2,982,291

(1,228,595)

10,250,112

96,831,763 7,568,569 5,694,869
110,095,201

3,239,561 314,650 -
3,554,211

(170,756) (68,000)
-
(238,756)

99,900,568 7,815,219 5,694,869
113,410,656

(15,810,670) (4,511,169)
(969,579) (21,291,418)

(1,458,592) (448,232) (81,355)
(1,988,179)

132,298 40,800
173,098

(17,136,964) (4,918,601) (1,050,934) (23,106,499)

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

88,803,783 $ 97,300,199 $

1,566,032

(65,658)

90,304,157

4,548,323 $ (1,294,253) $ 100,554,269

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

$ 1,581,142
2,070 9,081 2,073 13,422 17,200 45,000 263,646 20,939 33,606 $ 1,988,179

- 18 -

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013

Note 6: INTERFUND TRANSFERS Interfund transfers for the year ended June 30, 2013, consisted of the following:

Transfers From

Debt Service

Transfers To

Fund

District - Wide Capital Projects Fund $

934,874 $

Debt Service Fund

-

General Fund 540,786

Transfers are used to move SPLOST funds from the Debt Service Fund to the District-wide Capital Projects Fund for capital outlay projects and to move funds from the General Fund and District-wide Capital Projects Fund to the Debt Service Fund to pay debt service.

Note 7: 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, 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:

2012 2013

Beginning of Year

Claims and Changes in Estimates

Claims Paid

End of Year

$

-$

7,260 $

7,260 $

-

$

-$

6,624 $

6,624 $

-

- 19 -

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013

Note 7: 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 8: 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 Gereral Government - Series 2012

Interest Rates 3.16%
1.50% - 4.00%

Amounts $ 1,900,000
13,500,000 $ 15,400,000

- 20 -

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013

Note 8: LONG - TERM DEBT (Continued)

The changes in Long-Term Debt during the fiscal year ended June 30, 2013, were as follows:

In s tallmen t Sales
Agreement

Governmental Activities

General

Obligation

Bond

Bonds

Premium

Total

Balance July 1, 2012

$ 200,283

A d d itio n s :

G.O. Bonds

-

G.O. Bonds Premium

-

Ded u ctio n s : Debt Retired Bond Premium Amortized

18,132 -

$ 22,990,000 $ 698,007 $ 23,888,290

-

-

-

-

-

-

7,590,000 -

218,780

7,608,132 218,780

Balance June 30, 2013

$ 182,151 $ 15,400,000 $ 479,227 $ 16,061,378

Due within One Year

$ 22,413 $ 4,900,000 $

- $ 4,922,413

Intentionally Left Blank

- 21 -

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013

Note 8: LONG - TERM DEBT (Continued)

At June 30, 2013, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30

Installment Sales Agreement

Principal

Interest

2014 2015 2016 2017 2018 2019-2021

$

22,413 $

7,311

23,506

6,493

24,327

5,515

25,420

4,503

26,513

2,894

59,972

2,365

Total

$

182,151 $

29,081

Fiscal Year Ended June 30
2014 2015 2016 2017 2018
Total

General Obligation Bonds

Principal

Interest

$

4,900,000 $

2,500,000

2,575,000

2,650,000

2,775,000

353,745 233,360 183,360 111,360
48,125

$ 15,400,000 $

929,950

- 22 -

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013

Note 9: ON-BEHALF PAYMENTS

The School District has recognized revenues and costs in the amount of $3,483,237 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.

Georgia Department of Education Paid the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $ 3,320,700

Georgia Department of Education Paid the Teachers Retirement System For Teachers Retirement (TRS) In the amount of $37,031

Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $125,506

Note 10: 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.

Note 11: SIGNIFICANT COMMITMENTS

The following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2013, together with funding available:

Project Colham Ferry Elementary School Oconee County High School Field House

Unearned Contracts $ 428,029
819,602 $ 1,247,631

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

- 23 -

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013
Note 12: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
Plan Description. The TRS is a cost-sharing multiple employer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS. 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.
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 SRBP-TRS 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 one-twelfth 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 lump-sum 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. Members become fully vested after 10 years of service. If a member terminates with less than 10 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. 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, 2013, were 6.00% of annual salary. Employer contributions required for fiscal year 2013 were 11.41% of annual salary as required by the June 30, 2010, actuarial valuation. The employer contribution rate will increase to 12.28% effective July 1, 2013.
- 24 -

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013

Note 12: RETIREMENT PLANS (Continued)
Fiscal Year 2013 2012 2011

Percentage Contributed
100% 100 100

Required Contribution $ 4,036,942
3,772,203 3,656,160

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 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 2013 2012 2011

Amount Contributed $ 1,619,972 1,666,794 1,637,152

Note 13: POST-EMPLOYMENT BENEFITS
Georgia Retiree Health Benefit Fund
Plan Description. The Georgia School Personnel Post-employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Benefit Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (O.C.G.A.) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board). The Department of Community Health, which includes the School OPEB Fund, issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.

- 25 -

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013

Note 13: POST-EMPLOYMENT BENEFITS (Continued)

Funding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. For members with fewer than five years of service as of January 1, 2012, contributions vary based on years of service. On average members with five years or more of service as of January 1, 2012, pay approximately 25 percent of the cost of the health insurance coverage. In accordance with the Board resolution dated December 8, 2011, for members with fewer than five years of service as of January 1, 2012, the State provides a premium subsidy in retirement that ranges from 0% for fewer than 10 years of service to 75% (but no greater than the subsidy percentage offered to active employees) for 30 or more years of service. The subsidy for eligible dependents ranges from 0% to 55% (but no greater than the subsidy percentage offered to dependents of active employees minus 20%). No subsidy is available to Medicare eligible members not enrolled in a Medicare Advantage Option. The Board of Community Health sets all member premiums by resolution and in accordance with the law and applicable revenue and expense projections. Any subsidy policy adopted by the Board may be changed at any time by Board resolution and does not constitute a contract or promise of any amount of subsidy.

Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected "pay-as-yougo" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.

The combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30, 2013:

For certificated teachers, librarians and regional educational service agencies and certain other eligible participants:

July 2012 - February 2013 March 2013 - June 2013

$912.34 per member per month $937.34 per member per month

For non-certificated school personnel:

July 2012 -June 2013

$446.20 per member per month

No additional contribution was required by the Board for fiscal year 2013 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.

- 26 -

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013

Note 13: POST-EMPLOYMENT BENEFITS (Continued)

The School District's combined active and retiree contributions to the health insurance plans, which equaled the required contribution, for the current fiscal year and the preceding two fiscal years were as follows.

Fiscal Year

Percentage Contributed

Required Contribution

2013 2012 2011

100% 100% 100%

$ 5,529,041 $ 5,816,448 $ 5,629,317

- 27 -

(This page left intentionally blank)

OCONEE COUNTY BOARD OF EDUCATION
GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2013

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

Nonappropriated

Budget

Original

Final

Actual

Variance With Final Budget

$ 25,217,593 $ 25,217,593 $ 24,543,456 $

26,363,058

26,582,876

27,537,920

2,627,772

3,003,634

3,234,179

1,750,836

1,750,836

1,696,700

64,846

64,846

33,238

1,380,991

1,380,991

1,363,933

57,405,096

58,000,776

58,409,426

(674,137) 955,044 230,545 (54,136) (31,608) (17,058) 408,650

EXPENDITURES Current:
Instruction Support services:
Pupil services Improvement of instructional services Educational media services Federal grant administration 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

38,026,063
1,660,741 1,057,291 1,041,314
1,336,618 5,534,114
311,472 4,461,965 2,680,742
161,161 369,479 675,104 2,315,892
19,614 11,516 59,663,086

37,898,826
1,922,057 1,239,745 1,005,654
1,292,455 5,270,686
338,655 4,212,763 3,081,457
149,963 206,659 675,104 2,310,892
19,614 11,516 59,636,046

38,064,618
1,846,099 1,069,634
942,382 165,896 1,106,443 4,868,783 229,993 4,037,570 3,130,215 134,659 128,927 697,955 2,318,016
18,132 12,032 58,771,354

(165,792)
75,958 170,111 63,272 (165,896) 186,012 401,903 108,662 175,193 (48,758)
15,304 77,732 (22,851) (7,124)
1,482 (516) 864,692

Excess (deficiency) of revenues over (under) expenditures
OTHER FINANCING SOURCES (USES) Proceeds from sale of capital assets Transfers out Total other financing uses

(2,257,990)
(600,000) (600,000)

(1,635,270)
(600,000) (600,000)

(361,928)
56,546 (540,786) (484,240)

1,273,342
56,546 59,214 115,760

Net change in fund balances

(2,857,990)

(2,235,270)

(846,168)

1,389,102

FUND BALANCE, beginning of year

10,616,967

10,616,967

10,616,967

-

FUND BALANCE, end of year

$

7,758,977 $ 8,381,697 $

9,770,799 $

1,389,102

Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual
The accompanying schedule of revenues, expenditures and changes in fund Balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund finncial statements.

See notes to the basic financial statements.

- 29 -

OCONEE COUNTY BOARD OF EDUCATION
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 (Restricted for Management Use Only)

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)
Subtotal Child Nutrition Cluster
Total U. S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Title I, Part A Cluster Pass-Through From Georgia Department of Education Title I, Part A 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
Title III English Language Acquisition Grant

CFDA Number

PassThrough Entity
ID Number

Expenditures In Period

10.553 10.555 10.555

N/A $ N/A N/A

- (2) 1,968,450
216,400
2,184,850
2,184,850

84.027

N/A

84.173

N/A

84.010

N/A

84.367

N/A

84.365

N/A

1,167,773 13,130
1,180,903
665,486 665,486
159,070 45,190

- 30 -

OCONEE COUNTY BOARD OF EDUCATION
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 (Restricted for Management Use Only)

Funding Agency Program/Grant

CFDA Number

PassThrough Entity
ID Number

Expenditures In Period

Vocational Education-Basic Grants to States Career and Technical Education

84.048

N/A $

41,949

Total U. S. Department of Education

2,092,598

Total Expenditures of Federal Awards

$

4,277,448

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.

- 31 -

OCONEE COUNTY BOARD OF EDUCATION
SCHEDULE OF STATE REVENUE FOR THE FISCAL YEAR ENDED JUNE 30, 2013

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 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 Pupil Transportation Nursing Services Vocational Supervisors Food Services Vocational Education Amended Formula Adjustment Preschool Handicapped Program

Governmental

Fund Types

Capital

General

Projects

Fund

Fund

Total

$

1,958,648 $

103,695

4,574,234

162,154

2,483,531

53,332

4,346,683

3,324,370

1,176,694

2,504,955

444,021

321,874

172,250

715,377

213,735

129,107

1,004,935 1,471,555 1,614,810

657,383 108,931
28,123 70,490 70,147 (4,813,423) 177,504 23,075,115

- $ -
-

1,958,648 103,695
4,574,234 162,154
2,483,531 53,332
4,346,683 3,324,370 1,176,694 2,504,955
444,021 321,874 172,250 715,377 213,735 129,107
1,004,935 1,471,555 1,614,810

-

657,383

-

108,931

-

28,123

-

70,490

-

70,147

-

(4,813,423)

-

177,504

-

23,075,115

- 32 -

OCONEE COUNTY BOARD OF EDUCATION
SCHEDULE OF STATE REVENUE FOR THE FISCAL YEAR ENDED JUNE 30, 2013

Agency/Funding Grants Total Quality Basic Education Formula Earnings (State and Local Funds) Special Education Programs
QBE Allotment (Operating Costs) Special Education Programs
QBE Contra Account (Debit) Special Education Programs
Capital Outlay Grants Misc.
Other Grants From Georgia Department of Education Pupil Transportation - State Bonds Math And Science Supplement Move on When Ready Grant
Total State Funds

Governmental

Fund Types

Capital

General

Projects

Fund

Fund

Total

5,094,404 5,094,404
100,331 100,331
(1,008,184) (1,008,184)

-

5,094,404

-

5,094,404

-

100,331

-

100,331

-

(1,008,184)

-

(1,008,184)

-

383,678

-

383,678

383,678 383,678

228,659 47,395 200
276,254
$ 27,537,920 $

-
383,678 $

228,659 47,395 200
276,254
27,921,598

See notes to the basic financial statements.

- 33 -

OCONEE COUNTY BOARD OF EDUCATION
SCHEDULE OF APPROVED LOCAL OPTION SALES TAX (ELOST) PROJECTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013

Original

Estimated

Cost(1)

2006 Referendum - ELOST III Projects Providing funds to pay the costs of:

1. Acquiring real property (improved or unimproved) for future school sites;

$ 1,000,000

2. Acquiring, constructing and equipping a new elementary school;

$ 10,914,803

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

$ 21,972,577

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.

$ 4,112,620

Current Estimated Costs(2)
$ 815,747 $ 11,222,896
$ 12,448,266 $ 4,321,620

Expended In Current Year (3) (4)

$

-

$

-

$ 279,318

$

285,280

Expended In Prior Years (3) (4)

$

815,747

$ 11,222,896

$ 11,549,696 $ 4,036,340

Total Completion
Cost

$

815,747

$ 11,222,896

$

-

$ 4,321,620

TOTAL - ELOST III

$ 38,000,000 $ 28,808,529 $

564,598 $ 27,624,679 $ 16,360,263

2012 Referendum - ELOST IV Projects

Providing funds to pay the costs of:

1. Adding to, renovating, repairing, improving and equipping existing educational buildings,

properties and facilities of the School District, including, without limitation, athletic facilities,

concession areas, road improvements, heating and air systems, classrooms and technology

infrastructure and equipment;

$

2. Retiring that portion of the School District's series 2006 general obligation bonds maturing

April 1, 2012, at a maximum cost of $3,000,000;

$

3. Paying expenses incident thereto (including capitalized interest);

$

4. And, to the extent there are funds available, acquiring real property (improved or

unimproved) for future school sites; constructing additional new schools and administrative

facilities and purchasing school buses and equipment for the Maintenance Department;

$

5. Payment of principal and interest on bonds not to exceed $16,000,000; and

$

6. Paying up to $1,000,000 in debt service due July 1, 2013 and January 1, 2014 on the School

District's 2004 general obligation bonds.

$

27,353,853 3,000,000 711,892
14,666,925
1,000,000

$ 27,500,000
$ 1,800,000 $ 268,945

$

-

$ 14,666,925

$ 1,000,000

$ 4,472,354

$

-

$

-

$

-

$

295,360

$

-

$ 3,845,085

$ 1,800,000

$

268,945

$

-

$

-

$

-

$

-

$ 1,800,000

$

268,945

$

-

$

-

$

-

TOTAL - ELOST IV

$ 46,732,670 $ 45,235,870 $ 4,767,714 $ 5,914,030 $ 2,068,945

Estimated Completion
Date
FY 2009 FY 2007
FY 2014 FY 2013 FY 2014
FY 2018 FY 2012 FY 2012
FY 2018 FY 2018 FY 2014 FY 2018

TOTAL - ELOST III and ELOST IV

$ 84,732,670 $ 74,044,399 $ 5,332,312 $ 33,538,709 $ 18,429,208

(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax. (2) The School District's current estimate of total cost for the projects. Includes all cost from project inception to completion. (3) The voters of 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

FY 2018

See notes to the basic financial statements.

- 34 -

OCONEE COUNTY BOARD OF EDUCATION
SCHEDULE OF QUALITY BASIC EDUCATION PROGRAMS (QBE) ALLOTMENTS AND EXPENDITURES BY PROGRAM GENERAL FUND FOR THE FISCAL YEAR ENDED JUNE 30, 2013

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)

2,439,402 $ 2,685,583 $

110,632

-

5,709,468

6,266,413

175,957

183,894

3,108,349

3,831,074

60,769

-

5,373,207

6,588,909

4,193,678

6,430,364

1,429,571

1,385,232

5,162,891

-

-

245,983

-

156,327

-

3,230,251

-

105,951

2,990,119

2,049,659

560,922

-

400,754

225,668

219,582

205,088

56,817 $ 119
217,433 783
70,169 -
218,178 251,151 109,503
11,968 7,574 46,930
30,196 4,289 2,949 8,270

2,742,400 119
6,483,846 184,677
3,901,243 -
6,807,087 6,681,515 1,494,735
257,951 163,901 3,277,181 105,951 2,079,855
4,289 228,617 213,358

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

31,935,301

33,590,396

1,036,329

34,626,725

Media Center Program Staff and Professional Development

885,072 160,275

787,174 -

102,485 -

889,659 90,250

TOTAL QBE FORMULA FUNDS

$

32,980,648 $ 34,377,570 $ 1,138,814 $ 35,606,634

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

See notes to the basic financial statements.

- 35 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

Greg S. Griffin
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
October 27, 2014

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, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Oconee County Board of Education as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise Oconee County Board of Education's basic financial statements and have issued our report thereon dated October 27, 2014.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered Oconee County Board of Education's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Oconee County Board of Education's internal control. Accordingly, we do not express an opinion on the effectiveness of the Oconee County Board of Education's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

2013YB-10

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Oconee County Board of Education's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
We noted certain matters that we have reported to management of Oconee County Board of Education in a separate letter dated October 27, 2014.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, not to provide an opinion on the effectiveness of the Oconee County Board of Education's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Oconee County Board of Education's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Respectfully submitted,

GSG:as 2013YB-10

Greg S. Griffin State Auditor

Greg S. Griffin
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
October 27, 2014

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 FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133
Ladies and Gentlemen:
Report on Compliance for Each Major Federal Program
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, 2013. 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.
Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its Federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of Oconee County Board of Education's major Federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and 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 on compliance for each major Federal program. However, our audit does not provide a legal determination of Oconee County Board of Education's compliance.
2013SA-10

Opinion on Each Major Federal Program
In our opinion, the Oconee County Board of Education complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2013.
Report on Internal Control over Compliance
Management of Oconee County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Oconee County Board of Education's internal control over compliance with the types of requirements that could have a direct and material effect on each major Federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major Federal program and to test and report on internal control over compliance in accordance with 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. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a Federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.
Respectfully submitted,

GSG:as 2013SA-10

Greg S. Griffin State Auditor

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

OCONEE COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2013

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-7081-12-01

Previously Reported Corrective Action Implemented

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.

SECTION IV FINDINGS AND QUESTIONED COSTS

OCONEE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2013

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

Unmodified

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

No None Reported

Noncompliance material to financial statements noted:

No

Federal Awards

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

No None Reported

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

Unmodified

Any audit findings disclosed that are required to be reported in

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

No

Identification of major programs:

CFDA Numbers

Name of Federal Program or Cluster

84.027, 84.173

Special Education Cluster

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.