Oconee County Board of Education annual financial report for the fiscal year ended 2019 June 30 (including independent auditor's report)

OCONEE COUNTY BOARD OF EDUCATION
ANNUAL FINANCIAL REPORT FOR THE
FISCAL YEAR ENDED JUNE 30, 2019

OCONEE COUNTY BOARD OF EDUCATION
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2019
TABLE OF CONTENTS

I. Financial Section
Independent Auditor's Report Management's Discussion and Analysis Basic Financial Statements:
Government-wide Financial Statements: Statement of Net Position Statement of Activities
Fund Financial Statements: Balance Sheet Governmental Funds Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 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 General Fund Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual Statement of Fiduciary Assets and Liabilities Agency Fund
Notes to the Basic Financial Statements
II. Required Supplementary Information
Schedule of Proportionate Share of Net Pension Liability Teachers Retirement System of Georgia Schedule of Contributions Teachers Retirement System of Georgia Schedule of Proportionate Share of Net Pension Liability Public Schools
Employees Retirement System of Georgia Schedule of Proportionate Share of Net OPEB Liability School OPEB Fund Schedule of Contributions School OPEB Fund Notes to Required Supplementary Information
III. Other Supplementary Information
Schedule of Expenditures of Special Purpose Local Option Sales Tax Proceeds
IV. Single Audit Section
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 Federal Program and on Internal Control Over Compliance Required by The Uniform Guidance
Schedule of Expenditures of Federal Awards
Schedule of Findings and Questioned Costs
Schedule of Prior Audit Findings

Page 1-3 4-13
14 15 16 17 18 19 20 21 22-54
55 56 57 58 59 60
61
62 and 63
64-66 67 and 68
69-71 72

I. FINANCIAL SECTION

INDEPENDENT AUDITOR'S REPORT
To the Superintendent and Members of the Oconee County Board of Education
Watkinsville, Georgia
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 fiscal year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the Oconee County Board of Education'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 from 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 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.
200 GALLERIA PARKWAY S.E., SUITE 1700 ATLANTA, GA 30339-5946 770-955-8600 800-277-0080 FAX 770-980-4489 www.mjcpa.com Members of The American Institute of Certified Public Accountants

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 above 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, 2019, and the respective changes in financial position and the budgetary comparison for the General Fund for the fiscal year then ended in accordance with accounting principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis, the Schedule of Proportionate Share of the Net Pension Liability TRS, the Schedule of Contributions TRS, the Schedule of Proportionate Share of the Net Pension Liability PSERS, the Schedule of Proportionate Share of the Net OPEB Liability School OPEB Fund, and the Schedule of Contributions School OPEB Fund, as listed in the table of contents, 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 about 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.
2

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 schedule of expenditures of special purpose local option sales tax proceeds, as required by the Official Code of Georgia 48-8-121, and the schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards are presented for purposes of additional analysis and are not a required part of the basic financial statements.
The schedule of expenditures of special purpose local option sales tax proceeds, and the schedule of expenditures of federal awards (collectively "the supplementary information") are the responsibility of management and were derived from and relate 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 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 supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated February 24, 2020 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 solely 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 effectiveness of the Oconee County Board of Education's 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 the Oconee County Board of Education's internal control over financial reporting and compliance.
Atlanta, Georgia February 24, 2020
3

OCONEE BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019
INTRODUCTION
The District's financial statements for the fiscal year ended June 30, 2019 includes a series of basic financial statements that report financial information for the District as a whole, its funds, and its fiduciary responsibilities. The Statement of Net Position and the Statement of Activities provide financial information about all of the District's activities and present both a short term and long term view of the District's finances on a global basis. The fund financial statements provide information about all of the District's funds. Information about these funds, such as the District's General Fund, is important in its own right, but will also give insight into the District's overall soundness as reported in the Statement of Net Position and the Statement of Activities.
FINANCIAL HIGHLIGHTS
Key financial highlights for FY 2019 are as follows:
On the District-wide financial statements:
The District's net position at June 30, 2019 was $38.2 million. Net position reflects the difference between all assets and deferred outflows of resources of the District (including capital assets, net of depreciation) and all liabilities, both short term and long term, and deferred inflows of resources. The net position at June 30, 2019 of $38.2 million represented an increase of $12.0 million when compared to the prior year.
The School District had approximately $82.7 million in expenses relating to governmental activities; about $51.2 million of these expenses were offset by program specific charges for services, grants and contributions. However, general revenues (primarily property and sales taxes) of $43.5 million were adequate to provide for these programs.
As stated above, general revenues accounted for $43.5 million or about 46.0% of all revenues totaling almost $94.7 million. Program specific revenues in the form of charges for services, grants, and contributions accounted for the balance of these.
On the fund financial statements:
Among major funds, the General Fund had roughly $84.6 million in revenues and $82.6 in expenditures. The General Fund balance of $22.4 million at June 30, 2019 increased by roughly $2.0 million from the prior year.
OVERVIEW OF THE FINANCIAL STATEMENTS
These financial statements consist of three parts; management's discussion and analysis (this section), the basic financial statements including notes to the financial statements and required supplementary information. The basic financial statements include two levels of statements that
4

OCONEE BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019
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 funds reported as nonmajor funds as defined by generally accepted accounting principles.
The financial statements also include notes that explain some of the information in the statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the financial statements. Additionally, other supplementary information (not required) is also presented that further supplements understanding of the financial statements.
District-Wide Statements
Since the Oconee County Board of Education has no operations that have been classified as "Business Activities", the District-Wide financial statements are basically a consolidation of all of the District's operating funds into one column called governmental activities. In reviewing the District-Wide financial statements, a reader might ask the question, are we in a better financial position now than last year? The `Statement of Net Position' and the `Statement of Activities' provides the basis for answering this question. These financial statements include all District's assets, deferred outflows of resources, liabilities, and deferred inflow of resources and uses the accrual basis of accounting similar to the accounting used by most private-sector companies. This basis of accounting takes into account all of the current year's revenues and expenses regardless of when cash is received or paid.
These two statements report the School District's net 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, studentteacher ratios, and other factors.
5

OCONEE BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019
When analyzing District-wide financial statements, it is important to remember these statements are prepared using an economic resources measurement focus (accrual accounting) and involve the following steps to format the Statement of Net Position:
Capitalize current outlays for capital assets Depreciate capital assets Report long-term debt as a liability Calculate revenue and expense using the economic resources measurement focus and the
accrual basis of accounting Allocate net position as follows:
o Net Investment in capital assets o Restricted net position is amounts with constraints placed on the use by external
sources such as creditors, grantors, contributors or laws and regulations. o Unrestricted for no specific use
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 generally accepted accounting principles.
The District has two kinds of funds as discussed below:
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 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 Position 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 clubs, organizations and others 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 districtwide financial statements because it cannot use these assets to finance its operations.
6

OCONEE BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019
FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT AS A WHOLE
Net position, which is the difference between total assets and deferred outflows of resources, and total liabilities and deferred inflows of resources, is one indicator of the financial condition of the District. When revenues exceed expenses, the result is an increase in net position. When expenses exceed revenues, the result is a decrease in net position. The relationship between revenues and expenses can be thought of as the District's operating results. The District's net position, as measured in the Statement of Net Position is one way to measure the District's financial health, or financial position. Over time, increases or decreases in the District's net position - as measured in the Statement of Activities - are one indicator of whether its financial health is improving or deteriorating. However, the District's goal and mission is to provide success for each child's education, not to generate profits as private corporations do. For this reason, many other nonfinancial factors should be considered in assessing the overall health of the District.
In the case of the Oconee County Board of Education, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $38.2 million at June 30, 2019. To better understand the District's actual financial position and ability to deliver services in future periods, it is necessary to review the various components of the net position category. For example, of the $38.2 million of net position, almost $5.7 million was restricted for debt service. Accordingly, these funds were not available to meet the District's ongoing obligations to citizens and creditors.
In addition, the District had just over $118.5 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 position, it must be recognized that this portion of the net position is not available for future spending.
The remaining balance of unrestricted net position is $(86.0) million deficit. The negative unrestricted net position is due to the adoption of GASB 68 for pension plans and GASB 75 for other postemployment benefit plans (OPEB). The liability for the District's portion of TRS (Teacher Retirement System) pension, including related deferred outflows and inflows of resources, is $(51.7) million. The liability for the District's portion of OPEB, including related deferred outflows and inflows of resources, is $(57.7) million. The remaining balance of $23.4 million may be used to meet the District's ongoing obligations to citizens and creditors. In fiscal year 2015, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions. The provisions of this Statement establish accounting and financial reporting standards for pensions that are provided to the employees of state and local governmental employers through pension plans that are administered through trusts. In fiscal year 2018, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. The provisions of this statement establish accounting and financial reporting standards for a cost sharing multiple employer defined benefit postemployment healthcare plan, reported as an employee trust fund and administered by a Board of Community Health.
7

OCONEE BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019

Table 1 Net Position

Assets Current and Other Assets Capital Assets, Net

Governm ental Activities

FY 2019

FY 2018

$

40,698,127

143,242,665

$

41,286,881

136,482,587

Total Assets

$ 183,940,792 $ 177,769,468

Deferred Outflow s of Resources

19,854,420

14,275,308

Total Assets and Deferred Outflow s of Resources

203,795,212

192,044,776

Liabilitie s Current and Other Liabilities Long-Term Liabilities

$

17,837,074

135,778,537

$

15,453,372

144,926,631

Total Liabilities

$ 153,615,611 $ 160,380,003

Deferred Inflow s of Resources

12,017,639

5,486,812

Total Liabilities and Deferred Inflow s of Resources

165,633,250

165,866,815

Net Position

Net Investment in Capital Assets Restricted Unrestricted

$ 118,503,905 $ 115,573,358

5,683,411

3,426,321

(86,025,354)

(92,821,718)

Total Net Position

$

38,161,962

$

26,177,961

Table 1 provides a summary of the School District's net position for this fiscal year as compared to the prior fiscal year.

Total net position increased $12.0 million in fiscal year 2019 from the prior year due to an increase in total assets of approximately $6.2 million. There was a decrease in liabilities and deferred inflows and outflows of resources of approximately $5.8 million primarily due to a decrease in net OPEB liability ($4.8), construction contracts payable ($1.5), retainage payable ($1.0), and an increase in net pension liability ($1.5).

8

OCONEE BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019

Table 2 Change in Net Position

Revenues Program Revenues: Charges for Services and Sales Operating Grants and Contributions Capital Grants and Contributions Total Program Revenues
General Revenues: Property Taxes, Maintenance and Operations Property Taxes, Debt Service Sales Taxes Intangible Recording & Real Estate Transfer Investment Earnings
Total General Revenues
Total Revenues
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 Miscellaneous non-instructional services Food Services Interest on Short-Term and Long-Term Debt
Total Expenses

Governmental Activities

FY 2019

FY 2018

$

4,917,993

$

4,026,687

43,969,297

41,553,084

2,262,680

173,011

$

51,149,970

$

45,752,782

$

34,369,394

$

31,487,362

-

113,666

7,841,764

7,385,809

882,781

927,842

423,364

224,881

$

43,517,303

$

40,139,560

$

94,667,273

$

85,892,342

$

53,475,560

$

52,831,328

2,556,720 1,249,124 1,358,494
7,535 578,863 5,931,772 520,630 6,826,954 5,401,588 790,825
-

2,593,907 1,234,861 1,112,698
735,165 5,855,246
565,881 5,916,592 4,119,662
795,116 4,000

1,128,276 2,416,778
440,153

796,830 2,395,830
509,948

$

82,683,272

$

79,467,064

Increase in Net Position

$

11,984,001

$

6,425,278

9

OCONEE BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019

Cost of Providing Services

The Statement of Activities shows the cost of program services and the charges for services and grants offsetting these services. Table 3 shows, for governmental activities, the total cost of services and the net cost of services. Net cost of services can be defined as the total cost less fees generated by the activities and intergovernmental revenue provided for specific programs. The net cost reflects the financial burden on the School District's taxpayers by each activity as compared to the prior fiscal year.
Table 3 Cost of Services

Total Cost of Services

FY 2019

FY 2018

Net Cost of Services

FY 2019

FY 2018

Instruction

$ 53,475,560

Support Services

Pupil Services

2,556,720

Improvement of Instructional Services

1,249,124

Educational Media Services

1,358,494

Federal Grant Administration

7,535

General Administration

578,863

School Administration

5,931,772

Business Administration

520,630

Maintenance and Operation of Plant

6,826,954

Student Transportation Services

5,401,588

Central Support Services

790,825

Other Support Services

-

Operations of Non-Instructional Services

Miscellaneous non-instructional services

1,128,276

Food Services

2,416,778

Interest on Short-Term and Long-Term Debt

440,153

$ 52,831,328
2,593,907 1,234,861 1,112,698
735,165 5,855,246 565,881 5,916,592 4,119,662 795,116
4,000
796,830 2,395,830
509,948

Total Expenses

$ 82,683,272 $ 79,467,064

$ 17,331,773 $ 17,882,803

2,307,504 812,750 275,249 7,535 (899,975)
3,684,002 518,383
4,026,846 3,938,528
724,145 -

2,363,266 773,996 86,009 (780,610)
3,822,626 565,881
3,473,197 3,218,417
784,251 4,000

(1,778,358) 139,899 440,153

796,275 214,223 509,948

$ 31,528,434 $ 33,714,282

Expenses increased about $3.2 million from the prior year, while net costs of services decreased about $2.2 million from the prior year. The increase in expenses is primarily due to the increase in benefit costs and the opening of a new elementary school. The decrease in the net cost of services is primarily due to the increase in state funding resulting from growth in the student population. Also, Capital Grants and Contributions Revenue increased approximately $2.1 million due to an increase in state capital outlay funding for capital projects.
10

OCONEE BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019
FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT'S FUNDS Information about the School District's governmental funds is presented starting on Page 16 of this report. Governmental funds are accounted for using the modified accrual basis of accounting. The governmental funds had total revenues of $94.5 million and total expenditures of approximately $92.1 million in fiscal year 2019. Total governmental fund balances of $28.4 million at June 30, 2019, an increase of $2.4 million from the prior year primarily due to general fund. 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 2019, the School District amended its General Fund budget as needed. The School District budget is adopted at the aggregate level and maintained at the program, function, object, and site levels to facilitate budgetary control. The budgeting systems are designed to control the total budget, but provide flexibility to meet the ongoing programmatic needs. The budgeting systems are also designed to control total site budgets but provide flexibility for site management as well. For the General Fund, the final actual revenues of $84.6 million were more than the final budget by approximately $2.8 million. The District does not include revenues in the final budget for school activity accounts. For the General Fund, the final actual expenditures of approximately $82.6 million were more than the final budget by $78 thousand. The District does not include expenditures in the final budget for the school activity accounts.
11

OCONEE BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019

CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets

At fiscal year ended June 30, 2019, the School District had $143.2 million invested in capital assets, net of accumulated depreciation, all in governmental activities. These assets are made up of a broad range of items including buildings; land; land improvements; and food service, transportation and maintenance equipment. Table 4 reflects a summary of these balances, net of accumulated depreciation, as compared to the prior fiscal year.

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

Governmental Activities

FY 2019

FY 2018

Land Construction in Progress Land Improvements Buildings and Improvements Equipment

$

5,796,851

$

3,166,791

6,903,019

120,507,670

6,868,334

5,796,851 23,405,207
4,646,452 98,007,037
4,627,040

Total

$

143,242,665

$

136,482,587

Additional information about the School District's Capital Assets can be found in Note 6 to the Financial Statements.
Long Term Debt

At June 30, 2019, the School District had just over $24.0 million in bond and other debt outstanding. Table 5 summarizes the School District's debt as compared to the prior fiscal year.

Table 5 Change in Long Term Debt

Governmental Activities

FY 2019

FY 2018

General Obligation Bonds Bond Premiums Unamortized Compensated Absences Installment Sales Agreeement
Total

$

22,740,000

$

22,740,000

1,128,415

1,573,873

138,731

136,436

34,693

61,932

$

24,041,839

$

24,512,241

12

OCONEE BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019
Additional information about the School District's debt can be found in Note 10 to the Financial Statements.
FACTORS BEARING ON THE DISTRICT'S FUTURE
Currently known circumstances that are expected to have a significant effect on financial position or results of operations in future years are as follows:
The School District is financially stable. Oconee County School Districts' priority on academic instruction continues to attract new residents into the county due to the school system's focus on quality instructional programs. The District consistently ranks within the top ten (10) achieving school systems in Georgia.
Oconee County continues to maintain a stable collection of the assessed taxes. This consistent collection of property taxes has assisted the local school district to meet financial obligations.
The School District plans to fund additional capital outlays with the one percent local sales tax revenue and state capital outlay grants.
The Oconee County School System will remain optimistic about the ability to maximize all of the financial resources to provide an exceptional educational experience for our students. The challenge will be to balance revenue streams with occurring increases in expenses (student growth, personnel, employer paid benefits, and operational costs). In spite of these challenges, the School District will continue to be a good steward of tax dollars while providing a quality educational opportunity.
CONTACTING THE SCHOOL DISTRICT'S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizen's 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 Saranna Charping, CFO, at the Oconee County Board of Education, P.O. Box 146, 34 School Street, Watkinsville, Georgia 30677. You may also email your questions to scharping@oconeeschools.org.
13

BASIC FINANCIAL STATEMENTS

OCONEE COUNTY BOARD OF EDUCATION
STATEMENT OF NET POSITION JUNE 30, 2019

ASSETS
Cash and cash equivalents Receivables:
Taxes Intergovernmental Other Inventory Prepaid items Capital assets (nondepreciable) Capital assets (depreciable, net of accumulated depreciation)
Total assets
DEFERRED OUTFLOWS OF RESOURCES Pension related items OPEB related items
Total deferred outflows of resources
LIABILITIES
Accounts payable Salaries and benefits payable Accrued interest payable Construction contracts payable Retainage payable Installment sales agreement, due within one year Bonds payable, due within one year Bonds payable, due in more than one year Compensated absences, due within one year Compensated absences, due in more than one year Net pension liability Net OPEB liability
Total liabilities
DEFERRED INFLOWS OF RESOURCES Pension related items OPEB related items
Total deferred inflows of resources
NET POSITION
Net investment in capital assets Restricted for:
Debt service Unrestricted
Total net position
The accompanying notes are an integral part of these financial statements.
14

Governmental Activities

$

32,381,004

1,391,715 6,587,221
292,384 32,982 12,821
8,963,642 134,279,023 183,940,792

16,538,647 3,315,773
19,854,420

1,618,265 9,564,281
294,325 648,891 186,761
34,693 5,365,000 18,503,415
124,858 13,873
66,060,250 51,200,999 153,615,611
2,179,323 9,838,316 12,017,639

118,503,905

5,683,411

(86,025,354)

$

38,161,962

OCONEE COUNTY BOARD OF EDUCATION
STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2019

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

Operations of non-instructional services:

Miscellaneous non-instructional services

Food services operation

Interest on long-term debt

Total governmental activities

$

Expenses
53,475,560
2,556,720
1,249,124 1,358,494
7,535 578,863 5,931,772 520,630 6,826,954 5,401,588 790,825
1,128,276 2,416,778
440,153 82,683,272

Charges for Services

Program Revenues Operating Grants and
Contributions

Capital Grants and Contributions

$

608,910 $ 33,925,262 $ 1,609,615

-

249,216

-

196,998 -

435,285 1,083,245
1,477,192 2,235,771
2,247 2,582,018
919,810 13,090

1,089 -
1,646 11,999
21,092 543,250 53,590

2,893,025

-

13,609

1,219,060

1,051,029

6,790

-

-

-

$ 4,917,993 $ 43,974,165 $ 2,262,680

Net (Expense) Revenue and
Changes in Net Position Governmental
Activities
$ (17,331,773)
(2,307,504)
(812,750) (275,249)
(7,535) 899,975 (3,684,002) (518,383) (4,026,846) (3,938,528) (724,145)
1,778,358 (139,899) (440,153) (31,528,434)

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

34,369,394 7,841,764
882,781 418,496 43,512,435 11,984,001 26,177,961 $ 38,161,962

15

OCONEE COUNTY BOARD OF EDUCATION
BALANCE SHEET GOVERNMENTAL FUNDS
JUNE 30, 2019

ASSETS
Cash and cash equivalents Receivables:
Taxes Intergovernmental Other Due from other funds Prepaid items Inventory

General

District-Wide Capital Projects

$

26,343,611 $

46,042 $

760,623 6,396,276
292,384
12,821 32,982

-
835,652 -

Total assets

$

LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES

LIABILITIES

Accounts payable

$

Salaries and benefits payable

Construction contracts payable

Retainage payable

Due to other funds

Total liabilities
DEFERRED INFLOWS OF RESOURCES Deferred inflow resources - intergovernmental revenues Deferred inflow resources - property taxes

33,838,697 $
1,618,265 $ 9,564,281
-
11,182,546
1,500 247,229

881,694 $
- $ 648,891 186,761 -
835,652
-

Total deferred inflows of resources
FUND BALANCES Nonspendable:
Inventory Prepaid items Restricted for: Capital projects Debt service Assigned for: Appropriation for next year's budget Unassigned
Total fund balances
Total liabilities, deferred inflows of resources and fund balances

248,729

32,982 12,821
-
1,481,449 20,880,170
22,407,422

$

33,838,697 $

-
46,042 46,042
881,694 $

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

Debt Service
5,991,351
631,092 190,945
-

Total Governmental
Funds

$

32,381,004

1,391,715 6,587,221
292,384
835,652 12,821 32,982

6,813,388 $

41,533,779

- $ 835,652
835,652
-
-

1,618,265 9,564,281
648,891 186,761 835,652
12,853,850
1,500 247,229
248,729

-
5,977,736
5,977,736
6,813,388 $

32,982 12,821
46,042 5,977,736
1,481,449 20,880,170 28,431,200
41,533,779

16

OCONEE COUNTY BOARD OF EDUCATION
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION
JUNE 30, 2019

Total fund balances - governmental funds

$

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

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

Cost Less accumulated depreciation

$

180,474,012

(37,231,347)

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

Property taxes Intergovernmental revenues

$

247,229

1,500

The net pension liability and related deferrals are not due and payable in the current period and, therefore, are not reported in the governmental funds.

Net pension liability Pension related deferred outflows of resources Pension related deferred inflows of resources

$

(66,060,250)

16,538,647

(2,179,323)

The net OPEB liability and related deferrals are not due and payable in the current period and, therefore, are not reported in the governmental funds.

Net OPEB liability OPEB related deferred outflows of resources OPEB related deferred inflows of resources

$

(51,200,999)

3,315,773

(9,838,316)

Long-term liabilities and related items are not due and payable in the current period and, therefore, are not

reported in the governmental funds.

Bonds payable

$

(22,740,000)

Premium, net of amortization

(1,128,415)

Accrued interest

(294,325)

Compensated absences

(138,731)

Installment sales agreement

(34,693)

Net position of governmental activities

$

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

28,431,200 143,242,665
248,729 (51,700,926) (57,723,542)
(24,336,164) 38,161,962

17

OCONEE COUNTY BOARD OF EDUCATION
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2019

REVENUES Property taxes Sales taxes Other taxes State funds Federal funds Investment income Charges for services 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 Miscellaneous non-instructional services 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) Transfers in Transfers out Proceeds from sale of capital assets Total other financing sources (uses)
Net change in fund balances

General

$

34,278,792 $

-

882,781

41,316,074

2,822,941

404,586

2,024,968

2,893,025

84,623,167

District Wide
Capital Projects
- $ 106,403 13,910 120,313

Debt Service

Total Governmental
Funds

- $ 7,841,764
1,909,452
4,868
9,756,084

34,278,792 7,841,764 882,781
43,331,929 2,822,941 423,364 2,024,968 2,893,025
94,499,564

55,314,976
2,641,789 1,277,544 1,397,300
7,535 598,821 6,115,351 539,060 5,755,458 4,699,518 707,377 1,115,373 2,402,168
-
27,239 2,631
82,602,140
2,021,027
19,332 -
3,500 22,832
2,043,859

-
38 1,034,517 251,670 7,360,069
8,646,294
(8,525,981)
6,596,682 -
6,596,682
(1,929,299)

-
-
882,980 882,980
8,873,104
(6,616,014)
(6,616,014)
2,257,090

55,314,976
2,641,789 1,277,544 1,397,300
7,535 598,821 6,115,351 539,098 6,789,975 4,951,188 707,377 1,115,373 2,402,168 7,360,069
27,239 885,611 92,131,414
2,368,150
6,616,014 (6,616,014)
3,500 3,500
2,371,650

FUND BALANCES, beginning of year

20,363,563

1,975,341

FUND BALANCES, end of year

$

22,407,422 $

46,042 $

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

3,720,646 5,977,736 $

26,059,550 28,431,200

18

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, 2019

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. The amount by which capital outlays exceeded depreciation in the current period is as follows:

Capital outlay Depreciation expense

$

10,516,283

(3,712,892)

In the statement of activities, only the gain or loss on the disposal of capital assets is reported. However, in the governmental funds, the proceeds from the sale increase financial resources. Thus, the change in net position differs from the change in fund balance by the net book value of the assets disposed.

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

Property taxes Intergovernmental revenue

$

90,602

(60,555)

In the governmental funds, current year expenditures related to pension and OPEB plans are comprised solely of amounts contributed to the plans for the current year. However, in the statement of activities, expenses related to pension and OPEB plans include amounts that do not require the use of current financial resources. This amount represents the difference in the required accounting treatment of pensions, OPEB and related items.

Pension related items OPEB related items

$

2,421,126

(69,302)

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 position. This amount is the net effect of these differences in the treatment of long-term debt and related items.

2,371,650 6,803,391
(43,313) 30,047
2,351,824

Principal payments - installment sales agreement

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.

Amortization of bond premium Change in compensated absences

$

445,458

(2,295)

Change in net position of governmental activities

$

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

27,239
443,163 11,984,001

19

OCONEE COUNTY BOARD OF EDUCATION
GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (GAAP BASIS)
FOR THE FISCAL YEAR ENDED JUNE 30, 2019

REVENUES Property taxes Other taxes State funds Federal funds Charges for services Investment income Miscellaneous
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 plant Student transportation services Central support services Other support services Miscellaneous non-instructional services Food services operation Debt service: Principal payments Interest Total expenditures
Excess (deficiency) of revenues over (under) expenditures
OTHER FINANCING SOURCES Transfers in Proceeds from sale of capital assets Total other financing sources
Net change in fund balances
FUND BALANCES, beginning of year
FUND BALANCES, end of year

Budget Original

Final

$

32,672,724 $

34,222,724 $

700,000

940,000

39,839,642

40,989,642

2,916,331

3,227,982

1,159,970

1,159,970

17,000

397,000

381,199

861,199

77,686,866

81,798,517

56,409,904
2,796,307 1,248,643 1,356,503
91,791 793,896 5,674,633 638,139 5,887,645 3,951,157 809,842
4,000 -
2,525,183
30,000 10,000 82,227,643
(4,540,777)

56,054,276
2,738,781 1,297,411 1,356,303
53,541 795,647 5,673,138 638,139 5,863,424 4,674,542 809,842
4,000 -
2,525,183
30,000 10,000 82,524,227
(725,710)

-

-

-

-

-

-

(4,540,777)

(725,710)

20,363,563

20,363,563

$ 15,822,786 $ 19,637,853 $

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

Actual

Variance With Final Budget

34,278,792 $ 882,781
41,316,074 2,822,941 2,024,968 404,586 2,893,025 84,623,167

56,068 (57,219) 326,432 (405,041) 864,998
7,586 2,031,826 2,824,650

55,314,976
2,641,789 1,277,544 1,397,300
7,535 598,821 6,115,351 539,060 5,755,458 4,699,518 707,377
1,115,373 2,402,168
27,239 2,631 82,602,140
2,021,027

739,300
96,992 19,867 (40,997) 46,006 196,826 (442,213) 99,079 107,966 (24,976) 102,465 4,000 (1,115,373) 123,015
2,761 7,369 (77,913)
2,746,737

19,332 3,500 22,832
2,043,859
20,363,563
22,407,422 $

19,332 3,500
22,832
2,769,569
-
2,769,569

20

OCONEE COUNTY BOARD OF EDUCATION
STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES AGENCY FUND JUNE 30, 2019

Cash Total assets
Funds held for others Total liabilities

ASSETS LIABILITIES

Club and Athletics
Fund

$

184,922

$

184,922

$

184,922

$

184,922

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

21

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019
Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
Reporting Entity
The Oconee County Board of Education (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 government-wide financial statements, fund financial statements and notes to the basic financial statements of the Oconee County Board of Education.
Government-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.
In the Statement of Net Position, equity is reported as net position and consists of net investment in capital assets, amounts restricted by outside parties for specific purposes and unrestricted amounts.
22

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for all financial resources of the School District, except those resources required to be accounted for in another fund.
District-Wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST) projects, 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 special purpose local option sales) legally restricted for the payment of general long-term debt principal, interest and paying agent's fees.
The School District also reports the following fund types:
Agency Fund accounts for assets held by the School District as an agent for various individual school clubs and activities.
Basis of Accounting/Measurement Focus
The basis of accounting determines when transactions are reported on the financial statements. The District-wide governmental activities and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Agency funds are custodial in nature and do not present results of operations or have a measurement focus. 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.
23

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the School District considers most revenues to be available if they are collected within 60 days of the end of the current fiscal period; however, intergovernmental revenues reported in the governmental funds are considered to be available if they are collected within 120 days after year-end.
Property taxes, sales taxes, intergovernmental revenue, 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, claims and judgments, compensated absences, and other long-term liabilities, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general longterm liabilities and capital leases are reported as other financing sources.
Revenue from grants and donations is recognized in the year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year when the resources are required to be used or the year when use is first permitted, matching requirements, in which the School District must provide local resources to be used for a specified purpose, and expenditure requirements, in which the resources are provided to the School District on a reimbursement basis.
The State of Georgia reimburses the School District for teachers' salaries and operating costs through the Quality Basic Education (QBE) Formula Earnings program. State of Georgia law defines the formula driven grant that determines the cost of an academic school year and the State of Georgia's share in this cost. Generally teachers are contracted for the school year (July 1 June 30) and paid over a twelve month contract period, generally September 1 through August 31. In accordance with the requirements of the enabling legislation of the QBE program, the State of Georgia reimburses the School District over the same twelve month period in which teachers are paid, funding the academic school year expenditures. At June 30, the amount of teachers' salaries incurred but not paid until July and August of the subsequent year are accrued as the State of Georgia has only postponed the final payment of their share of the cost until the subsequent appropriations for cash management purposes. By June 30 of each year, the State of Georgia has a signed appropriation that includes this final amount, which represents the State of Georgia's intent to fund this final payment. Based on guidance in Government Accounting Standards Board (GASB) Statement No. 33, paragraph 74, the State of Georgia recognizes its QBE liability for the July and August salaries at June 30, and the School District recognizes the same QBE as a receivable and revenue, consistent with symmetrical recognition.
24

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019
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.
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 authorizes 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, (6) The Local Government Investment Pool administered by the State Treasurer of the State
of Georgia, (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 investments that addresses credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks.
25

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Receivables and Payables

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 are reported net of an allowance for uncollectible receivables when necessary.

Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year as well as all other outstanding balances between funds is reported as "due to/from other funds."

Property Taxes

The Oconee County Tax Commissioner levied the property tax for the 2018 tax digest year (calendar year) on August 7, 2018 (levy date). Taxes were due on November 15, 2018 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2018 tax digest are reported as revenue in the governmental funds for fiscal year 2019. 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, 2019, for maintenance and operations amounted to $31,901,693.

The Georgia Constitution, Article VIII, Section VI, Paragraph I requires the board of education of each school system to annually certify to its fiscal authority or authorities a school tax not greater than 20 mills per dollar for the support and maintenance of education. The Oconee County Board of Education is in compliance with this law. Tax millage rates levied for the 2018 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 Maintenance and Operations

17.0 mills

Additionally, Title Ad Valorem Tax revenues, at the fund reporting level, amounted to $2,377,099 for the General Fund during the fiscal year ended June 30, 2019.

26

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Sales Taxes
Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $7,841,764 was authorized by local referendum and the sales tax must be re-authorized at least every five years.
Inventories
CONSUMABLE SUPPLIES On the basic financial statements, consumable supplies are reported at cost (first-in, first-out). The School District uses the consumption method to account for the consumable supplies inventory whereby an asset is recorded when supplies are purchased and expenses/expenditures are recorded at the time the supplies are consumed.
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.
Prepaid Items
Payments made to vendors for services that will benefit periods subsequent to June 30, 2019, are recorded as prepaid items using the consumption method.
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 acquisition 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. Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives.
27

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide

statements are as follows:

Capitalization Estimated

Policy

Useful Life

Land Land Improvements Buildings and Improvements All Equipment Intangible Assets

All

N/A

$

25,000

70 years

$

25,000 15 to 70 years

$

5,000 5 to 25 years

$

25,000 15 to 20 years

Deferred Outflows/Inflows of Resources

In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense) until then. The Board has seven (7) items that qualify for reporting in this category which occurs only in the governmental activities. Governmental Activities report (1) a deferred outflow of resources for the Board's actual contributions to the pension plan during the fiscal year ended June 30, 2019 which are subsequent to the measurement date of the net pension liability and will be recognized in fiscal year 2020; (2) a deferred outflow of resources for experience gains or losses related to the pension plan which will be amortized over the remaining service period; (3) a deferred outflow of resources for the changes in actuarial assumptions which will be amortized over the remaining service period; (4) a deferred outflow of resources for the change in the Board's proportionate share based on actual contributions towards the pension plan, which will be amortized over the remaining service period; (5) a deferred outflow of resources for the Board's actual contributions to the OPEB plan during the fiscal year ended June 30, 2019 which are subsequent to the measurement date of the net OPEB liability and will be recognized in fiscal year 2020; (6) a deferred outflow of resources for the net difference between projected and actual investment earnings on the OPEB assets, which will be amortized over a five year period; and (7) a deferred outflow of resources for the change in the Board's proportionate share based on actual contributions towards the OPEB plan, which will be amortized over the remaining service period.

28

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The District has one type of deferred inflow under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from property taxes and intergovernmental revenues and these amounts are deferred and will be recognized as an inflow of resources in the period in which the amounts become available. The Board has four (4) items that qualify for reporting in this category which occurs only in the governmental activities. Governmental Activities report (1) a deferred inflow of resources for the net difference between projected and actual investment earnings on the pension assets, which will be amortized over a five year period; (2) a deferred inflow of resources for experience gains or losses from periodic studies by the actuary for both pension and OPEB, which will be amortized over the remaining service period; (3) a deferred inflow of resources for the change in the Board's proportionate share based on actual contributions towards the pension plan, which will be amortized over the remaining service period; and (4) a deferred inflow of resources for the changes in actuarial assumptions in relation to the OPEB plan which will be amortized over the remaining service period.
General Obligation Bonds
The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In addition, general obligation bonds have been issued to refund existing general obligations bonds. Bond issuance costs are recognized in the financial statements during the fiscal year bonds are issued. General obligation bonds are direct obligations and pledge the full faith and credit of the government.
In the fund financial statements, the face amount of debt issued and any related premium, is reported as other financing sources. Issuance costs, whether or not withheld from actual proceeds, are reported as debt service expenditures.
In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are expensed when incurred.
29

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019 Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, deferred outflows of resources, liabilities and deferred inflows of resources, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Compensated Absences All 12 month personnel of Oconee County Board of Education shall earn 15 annual vacation days per year from July 1 through June 30. Annual vacation leave will be credited to 12-month employees at the rate of 1.25 days per month, for a total of 15 days per year between July 1 and June 30. Employees may carryforward a maximum of 7.5 vacation days at July 1 of each year. Accrued vacation compensated absences are shown as long-term liabilities on the statement of net position. A fund liability is accrued only for the matured portion of compensated absences at fiscal year end.
Pensions
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Teachers Retirement System of Georgia (TRS) and additions to/deductions from TRS's fiduciary net position have been determined on the same basis as they are reported by TRS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Public School Employees Retirement System of Georgia (PSERS) and additions to/deductions from PSERS's fiduciary net position have been determined on the same basis as they are reported by PSERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
30

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Other Postemployment benefits (OPEB)
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the Georgia School Employees Postemployment Benefit Fund (School OPEB Fund) and additions to/deductions from the School OPEB Fund's fiduciary net position have been determined on the same basis as they are reported by the School OPEB Fund. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
Fund Equity
Fund equity at the governmental fund financial reporting level is classified as "fund balance." Fund equity for all other reporting is classified as "net position."
Fund Balance Generally, fund balance represents the difference between the assets, liabilities and deferred inflows of resources 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 the extent to which the School District is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. Fund balances are classified as follows:
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.
Restricted Fund balances are reported as restricted when there are limitations imposed on their use either through the enabling legislation adopted by the School District or through external restrictions imposed by creditors, grantors or laws or regulations of other governments.
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 Board of Education through the adoption of a resolution. Only the Board of Education may modify or rescind the commitment, also through a resolution.
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 Board of Education has authorized the Superintendent or his or her designee to assign fund balances.
31

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019 Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 unassigned 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
Net Position Net position represents the difference between assets and deferred outflows of resources, and liabilities and deferred inflows of resources in reporting which utilizes the economic resources measurement focus. Net investment in capital assets, consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowing used (i.e., the amount that the School District has spent) for the acquisition, construction or improvement of those assets. Net position is reported as restricted using the same definition as used for restricted fund balance as described in the section above. All other net position is reported as unrestricted.
The School District applies restricted resources first when an expense is incurred for purposes for which both restricted and unrestricted net position is available.
Note 3: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY The School District adopts an annual budget for the General Fund and Debt Service Fund. The budget is prepared in accordance with provisions of the Quality Basic Education Act, OCGA Section 20-2-167 and in accordance with U.S. generally accepted accounting principles. The legal level of budgetary control was established by the Board and the aggregate function level. After the Board of Education has tentatively adopted the budget, such budget is advertised at least one time in a local newspaper of general circulation. At the next regular meeting of the Board after advertisement, the budget is revised as necessary and adopted as the final budget.
32

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019
Note 3: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (Continued)
The following functions had excesses of actual expenditures over appropriations in the amount shown for the fiscal year ended June 30, 2019:

General Fund: Support services: Educational media services School Administration Student transportation services Miscellaneous non-instructional services:

$

40,997

442,213

24,976

1,115,373

The excess of expenditures over budget that are noted above were primarily funded by greater than anticipated revenues.
Note 4: DEPOSITS AND INVESTMENTS
INVESTMENTS At June 30, 2019, the School District's investments consist of funds in the amount of $7,042,402 which are on deposit in the Georgia Fund 1, the State of Georgia investment pool created by OCGA 36-83-8, which is a stable asset value investment pool which follows Standard and Poor's criteria for AAAf rated money market funds and is regulated by the Georgia Office of the State Treasurer. The pool is not registered with the SEC as an investment company. The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($1 per share value). The asset value is calculated weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and determines participants' shares sold and redeemed based on $1 per share. The pool also adjusts the value of its investments to fair value as of year-end and the School District's investment in the Georgia Fund 1 is reported at fair value. The School District considers amounts held in Georgia Fund 1 as cash equivalents for financial statement presentation.
At June 30, 2019, the School District's investment in the Georgia Fund 1 is rated AAAf and the Georgia Fund 1 has a weighted average maturity of 39 days. The Georgia Fund 1 is an investment pool which does not meet the criteria of GASB Statement No. 79 and is thus valued at fair value in accordance with GASB Statement No. 31. As a result, the School District does not disclose the investment in the Georgia Fund 1 within the fair value hierarchy.

33

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019 Note 4: DEPOSITS AND INVESTMENTS (Continued) CUSTODIAL CREDIT RISK Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, the School District will not be able to recover deposits or will not be able to recover collateral securities that are in the possession of an outside party. State statutes require all deposits and investments (other than federal or state government instruments) amounts that exceed standard depository insurance limits are required to be collateralized either (1) individually by the financial institutions through pledged obligations of the U.S. Government, obligations backed by the full faith and credit of the U.S. Government, obligations of the State of Georgia or other states, or obligations of counties, municipalities, or public authorities of the State of Georgia, or (2) participation in the State of Georgia Secure Deposit Program. As of June 30, 2019, the financial institution holding some of the District's deposits is a participant in the State of Georgia Secure Deposit Program, which is administered by the Office of the State Treasurer, requires participating banks holding deposits of public funds to pledge collateral at varying rates depending on the tier assigned by the State. As of June 30, 2019, the School District's cash accounts were insured and/or collateralized as defined by GASB Standards. Note 5: NON-MONETARY TRANSACTIONS The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. For the year ended June 30, 2019, the commodities usage is recorded at their federally assigned value of $155,451.
34

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

Note 6: CAPITAL ASSETS

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

Balances June 30, 2018

Increases

Decreases

Transfers

Balances June 30, 2019

Governmental activities:

Capital assets, not

being depreciated:

Land

$

Construction in

progress

Total

5,796,851 $
23,405,207 29,202,058

- $
3,161,292 3,161,292

- $

- $

-

(23,399,708)

-

(23,399,708)

5,796,851
3,166,791 8,963,642

Capital assets, being depreciated: Building improvements Equipment
Land improvements
Total
Less accumulated depreciation for: Building improvements Equipment
Land improvements
Total

123,803,509 11,322,604 6,116,464 141,242,577
(25,796,472) (6,695,564) (1,470,012) (33,962,048)

3,147,899 3,344,950
862,142 7,354,991

(423,961) (62,945) (486,906)

(2,507,100) (1,101,257)
(104,535) (3,712,892)

421,562 22,031 443,593

21,859,834 -
1,539,874 23,399,708
-

148,811,242 14,243,593 8,455,535 171,510,370
(28,303,572) (7,375,259) (1,552,516) (37,231,347)

Total capital assets, being depreciated, net

107,280,529

3,642,099

(43,313)

23,399,708

134,279,023

Governmental activities capital assets, net

$ 136,482,587 $

6,803,391 $ (43,313) $

- $ 143,242,665

35

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

Note 6: CAPITAL ASSETS (Continued)

Depreciation expense was charged to functions as follows:

Instruction

$

Support services:

Improvement of instructional services

General administration

School Administration

Maintenance and operation of facilities

Student transportation services

Central Support Services

Operations of non-instructional services:

Food services

Other enterprise operations

$

3,058,822
2,070 3,128 22,802 40,083 445,384 101,839
25,861 12,903
3,712,892

Note 7: INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS Interfund receivables/payables as of June 30, 2019, consisted of the following:

Interfund Payable Debt Service

Interfund Receivable

Total

District-Wide Capital Projects $ 835,652

The interfund balance above represents expenditures incurred by the District-Wide Capital Projects Fund for certain capital projects, which will be repaid with future collections of sales tax or bond proceeds.

Interfund transfers for the year ended June 30, 2019, consisted of the following:

Transfers Out Debt Service Fund Debt Service Fund

Transfers In District-Wide Capital Projects Fund General Fund

Total $ 6,596,682
19,332 $ 6,616,014

Transfers are used to move SPLOST proceeds from Debt Service Fund to District-Wide Capital Projects Fund to fund SPLOST projects as allowed in the referendum. Transfers are also used to move unrestricted funds from the Debt Service Fund to the General Fund.

36

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019
Note 8: RISK MANAGEMENT

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

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 no 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 expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.

There were no changes in the unemployment compensation claims liability during the last two fiscal years.

The School District pays an annual premium to the Fund for its general insurance coverage. The School District has purchased surety bonds to provide additional insurance coverage as follows:

Position Covered

Amount

Superintendent Driver Education

$100,000 $10,000

Note 9: OPERATING LEASES

Oconee County Board of Education is committed under various leases for equipment. These leases are considered for accounting purposes to be operating leases. Lease expenditures for the year totaled approximately $193,885. Future minimum lease payments on these leases are as follows:

Year ending June 30,
2020 2021 2022 2023 Total

$ 175,779 84,135 39,176 6,524
$ 305,614

37

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019
Note 10: 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 June 15, 2020.

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

Purpose

Interest Rates

Outstanding Balance at June 30, 2019

General Government - Series 2017

2.50% - 4.00%

$ 22,740,000

The changes in long-term obligations during the fiscal year ended June 30, 2019, were as follows:

Governmental activities: General obligation bonds Unamortized bond premium
Bonds payable, net

B e ginning Balance

Additions

Re ductions

Ending Balance

Due Within One Year

$ 22,740,000 $ 1,573,873 24,313,873

- $

- $ 22,740,000 $ 5,365,000

-

(445,458)

1,128,415

-

-

(445,458)

23,868,415

5,365,000

Compensated absences Installment Sales Agreement Net pension liability Net OPEB liability Governmental activity
Long-term liabilities

136,436 61,932 64,513,879 56,050,909

366,748 -
10,451,520 2,808,205

(364,453) (27,239) (8,905,149) (7,658,115)

$ 145,077,029 $ 13,626,473 $ (17,400,414) $

138,731 34,693 66,060,250 51,200,999
141,303,088 $

124,858 34,693
-
5,524,551

For governmental activities, the net pension liability, net OPEB liability and compensated absences are being liquidated primarily by the General Fund.
In February 2017, the Oconee County School District issued $22,740,000 of General Obligation Bonds Series 2017. The 2017 bonds were issued to (i) finance certain capital outlay projects, (ii) paying capitalized interest and (iii) paying the cost of issuing the Series 2017 Bonds. Interest on the Bonds is payable semiannually, on March 1 and September 1 of each year, commencing September 1, 2017.

38

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019
Note 10: LONG TERM DEBT (Continued)

At June 30, 2019, payments due by fiscal year, which includes principal and interest, for these items are as follows:

Fiscal Year Ending June 30

Installment Sales Agreement

Principal

Interest

Total

2020

$

Total

$

34,693 $ 34,693 $

597 $ 597 $

35,290 35,290

Fiscal Year Ending June 30

Principal

General Obligation Bonds Interest

2020

$

2021

2022

2023

Total $

5,365,000 $ 5,575,000 5,800,000 6,000,000
22,740,000 $

882,975 $ 668,375 445,375 240,000
2,236,725 $

Total
6,247,975 6,243,375 6,245,375 6,240,000
24,976,725

Note 11: SIGNIFICANT COMMITMENTS

The following is an analysis of significant outstanding construction or renovation contracts executed by the District as of June 30, 2019:

Project North Oconee High School HVAC Oconee County High School Field Lighting

Amount

$

701,643

45,324

$

746,967

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

39

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019 Note 12: ON-BEHALF PAYMENTS
The School District has recognized revenues and costs in the amount of $187,184 for retirement contributions paid on the School District's behalf by the following State Agencies.
Georgia Department of Education Paid to the Teachers Retirement District for Teachers Retirement (TRS) in the amount of $51,203
State Treasurer of the State of Georgia Paid to the Public School Employees Retirement System for Public School Employees Retirement (PSERS) Employer's Cost in the amount of $135,981
Note 13: 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 14: RETIREMENT PLANS
GENERAL INFORMATION ABOUT THE TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
Plan description: All teachers of the District as defined in 47-3-60 of the Official Code of Georgia Annotated (O.C.G.A.) and certain other support personnel as defined by 47-3-63 are provided a pension through the Teachers Retirement System of Georgia (TRS). TRS, a cost-sharing multiple-employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. TRS issues a publicly available financial report that can be obtained at www.trsga.com/publications.
40

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019
Note 14: RETIREMENT PLANS (Continued)

Benefits provided: TRS provides service retirement, disability retirement, and death benefits. Normal retirement benefits are determined as 2% of the average of the employee's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. An employee 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. Ten years of service is required for disability and death benefits eligibility. Disability benefits are based on the employee's creditable service and compensation up to the time of disability. Death benefits equal the amount that would be payable to the employee's beneficiary had the employee retired on the date of death. Death benefits are based on the employee's creditable service and compensation up to the date of death.

Contributions: Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. Pursuant to O.C.G.A. 47-3-63, the employer contributions for certain full-time public school support personnel are funded on behalf of the employer by the State of Georgia. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees were required to contribute 6.00 % of their annual pay during fiscal year 2019. The School District's contractually required contribution rate for the year ended June 30, 2019 was 20.90% of annual school district payroll. District contributions to TRS were $9,437,857 for the year ended June 30, 2019.

PENSION LIABILITIES, PENSION EXPENSE, AND DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES RELATED TO PENSIONS

At June 30, 2019, the District reported a liability for its proportionate share of the net pension liability that reflected a reduction for support attributable to those personnel funded on behalf of the District by the State of Georgia. The amount recognized by the District as its proportionate share of the net pension liability, the related State of Georgia funding, and the total portion of the net pension liability that was associated with the District were as follows:

District's proportionate share of the net pension liability State of Georgia's proportionate share of the net pension liability associated with the District Total

$ 66,060,250
291,611 $ 66,351,861

The net pension liability was measured as of June 30, 2018. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2017. An expected total pension liability as of June 30, 2018 was determined using standard roll-forward techniques. The District's proportion of the net pension liability was based on contributions to TRS during the fiscal year ended June 30, 2018. At June 30, 2018, the District's proportion was 0.355887%, which was an increase of 0.008764% from its proportion measured as of June 30, 2017.

41

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019
Note 14: RETIREMENT PLANS (Continued)

PENSION LIABILITIES, PENSION EXPENSE, AND DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES RELATED TO PENSIONS (Continued)

For the year ended June 30, 2019, the District recognized pension expense of $7,016,732 and revenue of $30,874 for support provided by the State of Georgia for certain support personnel. At June 30, 2019, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Differences between expected and actual experience
Changes in assumption

Deferred Outflows of Resources

$

4,373,282

996,825

Deferred Inflows of Resources

$

136,152

-

Net difference between projected and actual earnings on pension plan investments
Changes in proportion and differences between District contributions and proportionate share of contributions
District contributions subsequent to the measurement date
Total

-

1,806,215

1,730,683

236,956

9,437,857

-

$ 16,538,647 $ 2,179,323

42

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019
Note 14: RETIREMENT PLANS (Continued)

PENSION LIABILITIES, PENSION EXPENSE, AND DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES RELATED TO PENSIONS (Continued)

District contributions subsequent to the measurement date of $9,437,857 are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ending June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year ending June 30: 2020 2021 2022 2023 2024 Total

$ 3,698,460 2,170,129 (1,326,781) 286,849 92,810
$ 4,921,467

Actuarial assumptions: The total pension liability as of June 30, 2018 was determined by an actuarial valuation as of June 30, 2017 using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation Salary increases
Investment rate of return
Postretirement benefit increases

2.75% 3.25 9.00%, average, including inflation 7.50%, net of pension plan investment expense, including inflation 1.50% semi-annually

Postretirement mortality rates were based on the RP-2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males) for service requirements and dependent beneficiaries. The RP-2000 Disabled Mortality table with future mortality improvement projected to 2025 with Society of Actuaries' projection scale BB (set forward two years for males and four years for females) was used for the death after disability retirement. Rates of mortality in active service were based on the RP2000 Employee Mortality Table projected to 2025 with projection scale BB.
The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014.

43

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019
Note 14: RETIREMENT PLANS (Continued)

PENSION LIABILITIES, PENSION EXPENSE, AND DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES RELATED TO PENSIONS (Continued)

The long-term expected rate of return on pension plan investments was determined using a lognormal distribution analysis in which best-estimate ranges of expected future real rates of return (expected nominal returns, net of pension plan investment expense and the assumed rate of inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset class
Fixed income Domestic large equities Domestic mid equities Domestic small equities International developed market equities International emerging market equities
Total
* Rates shown are net of the 2.75% assumed rate of inflation

Target allocation
30.00% 39.80 3.70 1.50 19.40 5.60
100.00%

Long-term expected real rate of return*
(.50)% 9.00 12.00 13.50 8.00 12.00

Discount rate: The discount rate used to measure the total pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that Plan member contributions will be made at the current contribution rate and that employer and State of Georgia contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current Plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

44

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019
Note 14: RETIREMENT PLANS (Continued)

PENSION LIABILITIES, PENSION EXPENSE, AND DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES RELATED TO PENSIONS (Continued)

Sensitivity of the District's proportionate share of the net pension liability to changes in the discount rate: The following presents the District's proportionate share of the net pension liability calculated using the discount rate of 7.50%, as well as what the District's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate:

District's proportionate share of the net pension liability

1% Decrease (6.50%)
$ 110,273,473

Current discount rate
(7.50%)
$ 66,060,250

1% Increase (8.50%)
$ 29,626,304

Pension plan fiduciary net position: Detailed information about the pension plan's fiduciary net position is available in the separately issued TRS financial report which is publically available at www.trsga.com/publications.
GENERAL INFORMATION ABOUT THE PUBLIC SCHOOLS EMPLOYEES RETIREMENT SYSTEM (PSERS)
Plan description: PSERS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly in 1969 for the purpose of providing retirement allowances for public school employees who are not eligible for membership in the Teachers Retirement System of Georgia. The ERS Board of Trustees, plus two additional trustees, administers PSERS. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. PSERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/financials.
Benefits provided: A member may retire and elect to receive normal monthly retirement benefits after completion of ten years of creditable service and attainment of age 65. A member may choose to receive reduced benefits after age 60 and upon completion of ten years of service.
Upon retirement, the member will receive a monthly benefit of $15.00, multiplied by the number of years of creditable service. Death and disability benefits are also available through PSERS. Additionally, PSERS may make periodic cost-of-living adjustments to the monthly benefits. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contribution, the member forfeits all rights to retirement benefits.

45

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019
Note 14: RETIREMENT PLANS (Continued)

GENERAL INFORMATION ABOUT THE PUBLIC SCHOOLS EMPLOYEES RETIREMENT SYSTEM (PSERS) (Continued)

Contributions: The general assembly makes an annual appropriation to cover the employer contribution to PSERS on behalf of local school employees (bus drivers, cafeteria workers, and maintenance staff). The annual employer contribution required by statute is actuarially determined and paid directly to PSERS by the State Treasurer in accordance with O.C.G.A. 47-4-29(a) and 60(b). Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.

Individuals who became members prior to July 1, 2012 contribute $4 per month for nine months each fiscal year. Individuals who became members on or after July 1, 2012 contribute $10 per month for nine months each fiscal year. The State of Georgia, although not the employer of PSERS members, is required by statute to make employer contributions actuarially determined and approved and certified by the PSERS Board of Trustees.

Pension Liabilities and Pension Expense

At June 30, 2019, the District did not have a liability for a proportionate share of the net pension liability because of the related State of Georgia support. The amount of the State's proportionate share of the net pension liability associated with the District is as follows:

State of Georgia's proportionate share of the Net Pension Liability associated with the District

$ 727,902

The net pension liability was measured as of June 30, 2018. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2017. An expected total pension liability as of June 30, 2018 was determined using standard roll-forward techniques. The State's proportion of the net pension liability associated with the District was based on actuarially determined contributions paid by the State during the fiscal year ended June 30, 2018.

For the year ended June 30, 2019, the District recognized pension expense of $168,536 and revenue of $168,536 for support provided by the State of Georgia.

46

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019
Note 14: RETIREMENT PLANS (Continued)

GENERAL INFORMATION ABOUT THE PUBLIC SCHOOLS EMPLOYEES RETIREMENT SYSTEM (PSERS) (Continued)

Actuarial assumptions: The total pension liability was determined by an actuarial valuation as of June 30, 2017, using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation Salary increase Investment rate of return

2.75% N/A 7.30%, net of pension plan
investment expense, including inflation

Postretirement mortality rates were based on the RP-2000 Blue-Collar Mortality Table projected to 2025 with projection scale BB (set forward 3 years for males and 2 years for females) for the period after service retirements and for dependent beneficiaries. The RP-2000 Disabled Mortality projected to 2025 with projection scale BB (set forward 5 years for both males and females) was used for death after disability retirement. There is a margin for future mortality improvement in the tables used by the System. Based on the results of the most recent experience study adopted by the Board on December 17, 2015, the numbers of expected future deaths are 9-11% less than the actual number of deaths that occurred during the study period for healthy retirees and 9-11% less than expected under the selected table for disabled retirees. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB.
The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014.

47

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019
Note 14: RETIREMENT PLANS (Continued)

GENERAL INFORMATION ABOUT THE PUBLIC SCHOOLS EMPLOYEES RETIREMENT SYSTEM (PSERS) (Continued)

The long-term expected rate of return on pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset class Fixed income Domestic large stocks Domestic mid stocks Domestic small stocks International developed market stocks International emerging market stocks Alternatives
Total

Target allocation
30.00% 37.20 3.40 1.40 17.80 5.20 5.00
100.00%

Long-term expected real rate of return*
(.50)% 9.00 12.00 13.50 8.00 12.00 10.50

* Rates shown are net of the 2.75% assumed rate of inflation

Discount rate: The discount rate used to measure the total pension liability was 7.30%. This was a decrease from the prior year's discount rate, which was 7.50%. The projection of cash flows used to determine the discount rate assumed that Plan member contributions will be made at the current contribution rate and that employer and State of Georgia contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current Plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

48

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019
Note 15: POSTEMPLOYMENT BENEFITS
GEORGIA SCHOOL PERSONNEL EMPLOYEES POSTEMPLOYMENT HEALTH BENEFIT FUND
Plan Description. The District participates in the State of Georgia School Employees Postemployment Benefit Fund (School OPEB Fund), which is an other postemployment benefit (OPEB) plan administered by the State of Georgia Department of Community Health (DCH). Certified teachers and non-certified employees of the District as defined in 20-2-875 of the Official Code of Georgia Annotated (O.C.G.A.) are provided OPEB through the School OPEB Fund - a costsharing multiple-employer defined benefit postemployment healthcare plan, reported as an employee trust fund of the State of Georgia and administered by a Board of Community Health (DCH Board). Title 20 of the O.C.G.A. assigns the authority to establish and amend the benefit terms of the group health plan to the DCH Board. The School OPEB Fund is included in the State of Georgia Comprehensive Annual Financial Report which is publicly available and can be obtained at https://sao.georgia.gov/comprehensive-annual-financial-reports.
Benefits. The School OPEB Fund provides healthcare benefits for retirees and their dependents due under the group health plan for public school teachers, including librarians, other certified employees of public schools, regional educational service agencies, and non-certified public school employees. Retiree medical eligibility is attained when an employee retires and is immediately eligible to draw a retirement annuity from Employees' Retirement System (ERS), Georgia Judicial Retirement System (JRS), Legislative Retirement System (LRS), Teachers Retirement System (TRS) or Public School Employees Retirement System (PSERS). If elected, dependent coverage starts on the same day as retiree coverage. Medicare-eligible retirees are offered Standard and Premium Medicare Advantage plan options. Non-Medicare eligible retiree plan options include Health Reimbursement Arrangement (HRA), Health Maintenance Organization (HMO) and a High Deductible Health Plan (HDHP). The School OPEB Fund also pays for administrative expenses of the fund. By law, no other use of the assets of the School OPEB Fund is permitted.
Contributions. As established by the Board of Community Health, the School OPEB Fund is substantially funded on a pay-as-you-go basis; that is, annual cost of providing benefits will be financed in the same year as claims occur. Contributions required and made to the School OPEB Fund from the District were $2,286,311 for the year ended June 30, 2019. Active employees are not required to contribute to the School OPEB Fund.
49

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019
Note 15: POSTEMPLOYMENT BENEFITS (Continued)

OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB

At June 30, 2019, the District reported a liability of $51,200,999 for its proportionate share of the net OPEB liability. The net OPEB liability was measured as of June 30, 2018. The total OPEB liability used to calculate the net OPEB liability was based on an actuarial valuation as of June 30, 2017. An expected total OPEB liability as of June 30, 2018 was determined using standard roll-forward techniques. The District's proportion of the net OPEB liability was actuarially determined based on employer contributions to the School OPEB Fund during the fiscal year ended June 30, 2018. At June 30 2018, the District's proportion was 0.402850%, which was an increase of 0.003910% from its proportion measured as of June 30, 2017.

For the year ended June 30, 2019, the District recognized OPEB expense of $2,355,613. At June 30, 2019, the District reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Net difference between projected and actual earnings on OPEB plan investments

Deferred Outflows of Resources

Deferred Inflows of Resources

$

69,275 $

-

Differences between expected and actual experience

Changes in proportion and differences between

District contributions and proportionate share of

contributions

Changes in plan assumptions

District contributions subsequent to the

measurement date

Total

$

-

1,164,621

960,187 -

8,673,695

2,286,311

-

3,315,773 $ 9,838,316

50

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019
Note 15: POSTEMPLOYMENT BENEFITS (Continued)
District contributions subsequent to the measurement date of $2,286,311 are reported as deferred outflows of resources and will be recognized as a reduction of the net OPEB liability in the year ended June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Year ending June 30: 2020 2021 2022 2023 2024 2025 Total

$ (1,705,385) (1,705,385) (1,705,385) (1,709,524) (1,427,016) (556,159)
$ (8,808,854)

Actuarial assumptions:

The total OPEB liability as of June 30, 2018 was determined by an actuarial valuation as of June 30, 2017 using the following actuarial assumptions and other inputs, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2018:

Inflation Salary Increases

2.75% 3.25-9.00%, including inflation

Long-term expected rate of return
Healthcare cost trend rate: Pre-Medicare eligible Medicare eligible
Ultimate trend rate Pre-Medicare eligible Medicare eligible
Year of ultimate trend rate Pre-Medicare Eligible Medicare Eligible

7.3%, compounded annually, net of investment expense, and including inflation
7.50% 5.50%
4.75% 4.75%
2028 2022

51

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019 Note 15: POSTEMPLOYMENT BENEFITS (Continued) Mortality rates were based on the RP-2000 Combined Mortality Table for Males or Females, as appropriate, with adjustments for mortality improvements based on Scale BB as follows:
For TRS Members: The RP-2000 White Collar Mortality Table projected to 2025 with projection scale BB (set forward 1 year for males) was used for death after service retirement and beneficiaries. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward 2 years for males and four years for females) was used for death after disability retirement.
For PSERS Members: The RP-2000 Blue Collar Mortality Table projected to 2025 with projection scale BB (set forward 3 years for males and 2 years for females) was used for the period after service retirement and for beneficiaries of deceased members. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward 5 years for both males and females) was used for the period after disability retirement.
The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the pension system, which covered the five-year period ending June 30, 2014. Projection of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the District and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculation.
52

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019
Note 15: POSTEMPLOYMENT BENEFITS (Continued)
The long-term expected rate of return on OPEB plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected nominal returns, net of investment expense and the assumed rate of inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset class
Fixed income Domestic Stocks - Large Cap Domestic Stocks - Mid Cap Domestic Stocks - Small Cap Int'l Stocks - Developed Mkt Int'l Stocks - Emerging Mkt Alternatives
Total

Target allocation
30.00% 37.20 3.40 1.40 17.80 5.20 5.00
100.00%

Long-Term Expected Real Rate of Return*
(0.50)% 9.00 12.00 13.50 8.00 12.00 10.50

Discount rate:
The discount rate has changed since the prior measurement date from 3.58% to 3.87%. In order to measure the total OPEB liability for the School OPEB Fund, a single equivalent interest rate of 3.87% was used as the discount rate. This is comprised mainly of the yield or index rate for 20 year tax-exempt general obligation municipal bonds with an average rating of AA or higher (3.87% per the Bond Buyer Index). The projection of cash flows used to determine the discount rate assumed that the current sharing of costs between the employer and the member will continue and that contributions from the employer will be made at the current level as averaged over the last five years, adjusted for annual projected changes in headcount. Projected future benefit payments for all current plan members were projected through 2118. Based on these assumptions, the OPEB plan's fiduciary net position was projected to be available to make OPEB payments for inactive employees through year 2018. Therefore, the calculated discount rate of 3.87% was applied to all periods of projected benefit payments to determine the total OPEB liability.

53

OCONEE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019
Note 15: POSTEMPLOYMENT BENEFITS (Continued)
Sensitivity of the District's proportionate share of the net OPEB liability to changes in the discount rate:

The following presents the District's proportionate share of the net OPEB liability calculated using the discount rate of 3.87%, as well as what the District's proportionate share of the net OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (2.87%) or 1-percentage-point higher (4.87%) than the current rate:

School District's proportionate share

of the net OPEB liability

$

1% Decrease (2.87%)

Current discount rate
(3.87%)

59,786,712 $ 51,200,999 $

1% Increase (4.87%) 44,277,518

Sensitivity of the District's proportionate share of the net OPEB liability to changes in the healthcare cost trend rate:

The following presents the School District's proportionate share of the net OPEB liability, as well as what the School District's proportionate share of the net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower or 1-percentage-point higher than the current healthcare trend rates:

School District's proportionate share of

the net OPEB liability

$

1% Decrease

Current Healthcare cost
trend rate

43,045,092 $ 51,200,999 $

1% Increase 61,623,947

Note 16: TAX ABATEMENTS

For the year ended June 30, 2019, School District property tax revenues were reduced by $516,493 under agreements entered into by Oconee County Industrial Development Authority. Under the agreements, taxes on both real property and personal property are reduced based on jobs created and investments made by the corporation to whom the incentives were offered as long as the corporation meets certain investment targets.

54

II. REQUIRED SUPPLEMENTARY INFORMATION

OCONEE COUNTY BOARD OF EDUCATION
REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY
TEACHERS RETIREMENT SYSTEM OF GEORGIA FOR THE FISCAL YEAR ENDED JUNE 30

District's proportion of the net pension liability District's proportionate share of the net pension liability

2019 0.355887%

2018 0.347123%

2017 0.343671%

2016 0.341933%

2015 0.346482%

$ 66,060,250 $ 64,513,879 $ 70,903,159 $ 52,055,904 $ 43,773,431

State of Georgia's proportionate share of the net pension liability associated with the District

291,611

528,194

944,492

610,787

470,099

Total

$ 66,351,861 $ 65,042,073 $ 71,847,651 $ 52,666,691 $ 44,243,530

District's covered payroll

$ 42,388,441 $ 39,857,744 $ 37,697,316 $ 36,092,996 $ 35,348,046

District's proportionate share of the net pension liability as a percentage of its covered payroll

155.84%

161.86%

188.09%

144.23%

123.84%

Plan fiduciary net position as a percentage of the total pension liability

80.27%

79.33%

76.06%

81.44%

84.03%

Note: Schedule is intended to show information for the last 10 fiscal years. Additional years will be displayed as they become available.

55

OCONEE COUNTY BOARD OF EDUCATION
REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS
TEACHERS RETIREMENT SYSTEM OF GEORGIA FOR THE FISCAL YEAR ENDED JUNE 30

Contractually required contributions

2019

2018

2017

2016

$

9,437,857 $

7,125,497 $

5,687,700 $

5,379,407 $

Contributions in relation to the contractually required contributions

9,437,857

7,125,497

5,687,700

5,379,407

Contribution deficiency (excess)

$

- $

- $

- $

- $

District's covered payroll

45,157,211

42,388,441

39,857,744

37,697,316

Contributions as a percentage of covered payroll

20.90%

16.81%

14.27%

14.27%

Note: Schedule is intended to show information for the last 10 fiscal years. Additional years will be displayed as they become available.

2015 4,746,229 $

2014 4,340,740

4,746,229 - $
36,092,996

4,340,740 -
35,348,046

13.15%

12.28%

56

OCONEE COUNTY BOARD OF EDUCATION
REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY PUBLIC SCHOOLS EMPLOYEES RETIREMENT SYSTEM OF GEORGIA
FOR THE FISCAL YEAR ENDED JUNE 30

District's proportion of the net pension liability

2019 0.000000%

2018 0.000000%

2017 0.000000%

2016 0.000000%

2015 0.000000%

District's proportionate share of the net pension liability

$

-

$

-

$

-

$

-

$

-

State of Georgia's proportionate share of the net pension liability associated with the District

727,902

661,654

946,208

606,841

530,173

Total

$

727,902

$

661,654 $

946,208

$

606,841

$

530,173

District's covered-employee payroll

$

2,458,766

$

2,363,263 $

2,274,156

$

1,747,927

$

1,677,933

District's proportionate share of the net pension liability as a percentage of its covered-

employee payroll

N/A

N/A

N/A

N/A

N/A

Plan fiduciary net position as a percentage of the total pension liability

85.26%

85.69%

81.00%

87.00%

88.29%

Note: Schedule is intended to show information for the last 10 fiscal years. Additional years will be displayed as they become available.

57

OCONEE COUNTY BOARD OF EDUCATION
REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF NET OPEB LIABILITY
SCHOOL OPEB FUND FOR THE FISCAL YEAR ENDED JUNE 30

District's proportion of the net OPEB liability District's proportionate share of the net OPEB liability District's covered-employee payroll District's proportionate share of the net OPEB liability as a percentage of its coveredemployee payroll Plan fiduciary net position as a percentage of the total OPEB liability

2019 0.402850%

2018 0.398940%

$ 51,200,999 $ 56,050,909

$ 33,968,564 $ 32,293,538

150.73% 2.93%

173.57% 1.61%

Note: Schedule is intended to show information for the last 10 fiscal years. Additional years will be displayed as they become available

58

OCONEE COUNTY BOARD OF EDUCATION
REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS SCHOOL OPEB FUND
FOR THE FISCAL YEAR ENDED JUNE 30

Contractually required contributions

2019

2018

$

2,286,311 $

2,087,933

Contributions in relation to the contractually required contributions

2,286,311

2,087,933

Contribution deficiency (excess)

$

- $

-

District's covered-employee payroll

32,651,028

33,968,564

Contributions as a percentage of covered-employee payroll

7.00%

6.15%

Note: Schedule is intended to show information for the last 10 fiscal years. Additional years will be displayed as they become available.

59

OCONEE COUNTY BOARD OF EDUCATION
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
Teachers Retirement System of Georgia: Changes of assumptions : In 2010 and later, the expectation of retired life mortality was changed to the RP2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. In 2010, assumed rates of salary increase were adjusted to more closely reflect actual and anticipated experience. On November 18, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, disability, withdrawal and salary increases. The expectation of retired life mortality was changed to RP-2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males). Public Schools Employees Retirement System of Georgia: Changes of assumptions : In 2010 and later, the expectation of retired life mortality was changed to the RP-2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience.
On December 17, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement and withdrawal. The expectation of retired life mortality was changed to the RP-2000 Blue Collar Mortality Table projected to 2025 with projection scale BB (set forward 3 years for males and 2 years for females).
On March 15, 2018, the Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for June 30, 2017 actuarial valuation. In addition, based on the Board's new funding policy, the assumed investment rate of return was further reduced by 0.10% from 7.40% to 7.30% as of the June 30, 2018 measurement date. School OPEB Fund: Changes in assumptions : In the revised June 30, 2017 actuarial valuation, there was a change relating to employee allocation. Employees were previously allocated based on their Retirement System membership, and currently employees are allocated based on their current employer payroll location.
In the June 30, 2015 actuarial valuation, decremental and underlying inflation assumptions were changed to reflect the Retirement Systems' experience studies.
In the June 30, 2012 actuarial valuation, a data audit was performed and data collection procedures and assumptions were changed.
60

III. OTHER SUPPLEMENTARY INFORMATION

OCONEE COUNTY BOARD OF EDUCATION

SCHEDULE OF EXPENDITURES OF
SPECIAL PURPOSE LOCAL OPTION SALES TAX PROCEEDS FOR THE FISCAL YEAR ENDED JUNE 30, 2019

Project

Original Estimated Cost(1)

Current Estimated Cost(2)

Expended In Current Year (3)

Expended In Prior Years (3)

2017 Referendum - ESPLOST V Projects:

Acquiring, constructing and equipping new schools,

administrative and service facilities and or additions to,

renovations of, repairs to, improvements to, and

equipment for existing educational, administrative and

services buildings, properties, and facilities of the

School District, including, without limitation, athletic

facilities, transportation facilities, and educational

facilities; heating and air systems; technology

infrastructure;

$ 40,000,000 $ 40,000,000 $ 7,323,761 $

Acquiring real and personal property for future school or administrative and services facility sites and school buses;

4,500,000

3,700,000

251,670

Paying expenses incidental thereto;

500,000

1,300,000

-

20,681,439
1,057,644 1,276,556

Total Completion
Cost

Project Status

$

28,005,200 Ongoing

1,309,314 1,276,556

Ongoing Ongoing

Total ESPLOST V expenditures Total ESPLOST expenditures

$ 45,000,000 $ $ 45,000,000 $

45,000,000 $ 45,000,000 $

7,575,431 $ 7,575,431 $

23,015,639 $ 23,015,639 $

30,591,070 30,591,070

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

61

IV. SINGLE AUDIT SECTION

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
To the Superintendent and Members of the Oconee County Board of Education
Watkinsville, Georgia 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 the Oconee County Board of Education (the "District") as of and for the fiscal year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the District's basic financial statements, and have issued our report thereon dated February 24, 2020. Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the District'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 District's internal control. Accordingly, we do not express an opinion on the effectiveness of the District'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 a 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.
200 GALLERIA PARKWAY S.E., SUITE 1700 ATLANTA, GA 30339-5946 770-955-8600 800-277-0080 FAX 770-980-4489 www.mjcpa.com Members of The American Institute of Certified Public Accountants

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 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 the District'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. 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, and not to provide an opinion on the effectiveness of the entity'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 entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Atlanta, Georgia February 24, 2020
63

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE
To the Superintendent and Members of the Oconee County Board of Education
Watkinsville, Georgia
Report on Compliance for Each Major Federal Program
We have audited the Oconee County Board of Education (the "District") compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the District's major federal programs for the year ended June 30, 2019. The District'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 federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of the District'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 the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance 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 District'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 the District's compliance.
200 GALLERIA PARKWAY S.E., SUITE 1700 ATLANTA, GA 30339-5946 770-955-8600 800-277-0080 FAX 770-980-4489 www.mjcpa.com Members of The American Institute of Certified Public Accountants

Opinion on Each Major Federal Program
In our opinion, the District 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, 2019.
Report on Internal Control Over Compliance
Management of the District 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 the District'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 the Uniform Guidance, 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 District'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 a 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.
65

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 the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Atlanta, Georgia February 24, 2020
66

OCONEE COUNTY BOARD OF EDUCATION
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2019

Federal Grantor/Pass-Through Grantor/Program Title
U. S. DEPARTMENT OF AGRICULTURE: Passed through Georgia Department of Education: Child Nutrition Cluster School Breakfast Program - Cash Assistance National School Lunch Program: Non-Cash Assistance - Commodities (1) Cash Assistance Total Child Nutrition Cluster
Passed through Office of State Treasurer: Forest Service Schools and Roads Cluster School and Roads - Grants to States Total Forest Service Schools and Roads Cluster
Passed through Georgia Department of Education: Food Services Commercial Warehouse and Storage
Total U. S. Department of Agriculture
U. S. DEPARTMENT OF EDUCATION Passed through the Georgia Department of Education: Title I, Part A Title I Programs - Improving Academic Achievement of the Disadvantaged Title I Programs - Improving Academic Achievement of the Disadvantaged Total Title I, Part A
Passed through Georgia Department of Education (continued): Title II-A - Improving Teacher Quality Title II-A - Improving Teacher Quality Subtotal
Special Education Cluster (IDEA) Title VI-B Preschool Title VI-B High Cost Fund Pool Title VI-B Flowthrough Title VI-B Flowthrough Total Special Education Cluster (IDEA)

Federal CFDA Number

Pass Through Entity Identifying
Number

Total Expenditures

10.553
10.555 10.555

195GA324N1099 $
195GA324N1100 195GA324N1100

162,859
155,451 636,736 955,046

10.665

486Forest

43

43

10.560

185GA904N2533

4,611 959,700

84.010 84.010

S010A170010 S010A180010

16,557 390,575 407,132

84.367 84.367
84.173 84.173 84.027 84.027

S367A170001 S367A180001

14,711 84,236 98,947

H173A180081 H173A180081 H027A170073 H027A180073

39,157 20,620 216,204 965,492 1,241,473
(Continued)

67

OCONEE COUNTY BOARD OF EDUCATION
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2019

Federal Grantor/Pass-Through Grantor/Program Title

Federal CFDA Number

Pass Through Entity Identifying
Number

Total Expenditures

U. S. DEPARTMENT OF EDUCATION (Continued):

Title III - Immigrant Title III - Immigrant Title III - Limited English Proficient Title III - Limited English Proficient

84.365 84.365 84.365 84.365

S365A170010 S365A180010 S365A170010 S365A180010

372 4,438 7,676 28,614 41,100

Vocational Education - Perkins IV - Reserve - Perkins Carryover Vocational Education - Perkins Plus Reserve Vocational Education - Perkins IV - Program Improvement Total Vocational Education

84.048 84.048 84.048

V048A180010 V048A180010 V048A180010

1,702 11,609 30,465 43,776

Title IV - Part A Student Support and Academic Enrichment Title IV - Part A Student Support and Academic Enrichment

84.424 84.424

S424A170011 S424A180011

574 30,239 30,813

Total Passed Through Georgia Department of Education

1,863,240

Total U. S. Department of Education

1,863,240

Total Expenditures of Federal Awards

$

2,822,940

Notes to the Schedule of Expenditures of Federal Awards:
(1) The amounts shown for the Food Distribution Program represents the federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the system during the current fiscal year.

(2) The 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.

(3) The School District did not utilize the 10% de minimis indirect cost rate.

(4) The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards . Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of the financial statements.

68

OCONEE COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2019

SECTION I SUMMARY OF AUDITOR'S RESULTS

Financial Statements Type of report the auditor issued on whether the financial statements audited were prepared in accordance with GAAP:

Unmodified

Internal control over financial reporting: Material weaknesses identified?

yes X no

Significant deficiencies identified?

yes X none reported

Noncompliance material to financial statements noted?

yes X no

Federal Awards Internal Control over major federal programs: Material weakness(es) identified?

yes X no

Significant deficiency(ies) identified?

yes X none reported

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

Unmodified

Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)?

yes X no

Identification of major federal programs: CFDA Number 84,027, 84.173

Name of Federal Program or Cluster Special Education Cluster (IDEA)

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

$750,000

Auditee qualified as low-risk auditee?

X yes

no

69

OCONEE COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2019

None reported.

SECTION II FINANCIAL STATEMENT FINDINGS AND RESPONSES

70

OCONEE COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2019

None reported.

SECTION III FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS

71

None reported.

OCONEE COUNTY BOARD OF EDUCATION SCHEDULE OF PRIOR AUDIT FINDINGS FOR THE YEAR ENDED JUNE 30, 2019
STATUS OF PRIOR YEAR FINDINGS

72