Pierce County Board of Education, Blackshear, Georgia, annual financial report for the fiscal year ended 2014 June 30 (including independent auditor's reports)

PIERCE COUNTY BOARD OF EDUCATION
BLACKSHEAR, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2014
(Including Independent Auditor's Reports)

PIERCE COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S REPORT

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET POSITION

B

STATEMENT OF ACTIVITIES

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET POSITION

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

G

STATEMENT OF FIDUCIARY NET POSITION

FIDUCIARY FUNDS

H NOTES TO THE BASIC FINANCIAL STATEMENTS

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 3 SCHEDULE OF STATE REVENUE 4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 5 ALLOTMENTS AND EXPENDITURES
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM

Page
i
1 2 4 5 6 7 8 9
25 26 27 28 29

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PIERCE COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133
SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

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SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
May 10, 2016

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Pierce County Board of Education
INDEPENDENT AUDITOR'S REPORT
Ladies and Gentlemen:
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) of the Pierce County Board of Education, as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the Board's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
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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.
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 basic 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 Pierce County Board of Education, as of June 30, 2014, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As described in Note 2 to the financial statements, in 2014 the Pierce County Board of Education adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 65, Items Previously Reported as Assets and Liabilities. The School District restated beginning Net Position for the cumulative effect of this accounting change. Our opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis and the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through viii and page 25 respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Pierce County Board of Education's basic financial statements. The accompanying supplementary information, consisting of Schedules 2 through 5, is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements.
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The accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated May 10, 2016, on our consideration of the Pierce County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Pierce County Board of Education's internal control over financial reporting and compliance.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated Section 50-6-24.
Respectfully submitted,

GSG:er 2014ARL-11

Greg S. Griffin State Auditor

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PIERCE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014
INTRODUCTION
The discussion and analysis of the Pierce County Board of Education's financial performance provides an overall review of the School District's financial activities for the fiscal year ended June 30, 2014. The intent of this discussion and analysis is to look at the School District's financial performance as a whole; readers should also review the notes to the basic financial statements to enhance their understanding of the School District's financial performance.
Financial Highlights
Key financial highlights for 2014 are as follows:
In total, net position increased $2.1 million after a restatement of beginning net position of $0.14 million which represents a six percent increase from fiscal year 2013. This total increase is due to governmental activities since the School District has no business-type activities.
General revenues accounted for $13.21 million in revenue or 35.7 percent of all revenues. Program specific revenues in the form of charges for services and sales, grants and contributions accounted for $23.82 million or 64.3 percent of total revenues of $37.04 million.
The School District had $34.79 million in expenses related to governmental activities; however, $23.82 million of these expenses were offset by program specific charges for services, grants or contributions. General revenues (primarily taxes) of $13.21 million were more than adequate to provide for these programs.
Among major funds, the general fund had $34.36 million in revenues and $33.83 million in expenditures.
Using the Basic Financial Statements
This annual report consists of a series of financial statements and notes to those statements. These statements are organized so the reader can understand the Pierce County Board of Education as a financial whole, or as an entire operating entity.
The Statement of Net Position and Statement of Activities provide information about the activities of the whole School District, presenting both an aggregate view of the School District's finances and a longerterm view of those finances. Fund financial statements provide the next level of detail. For governmental funds, these statements tell how services were financed in the short-term as well as what remains for future spending. The fund financial statements also look at the School District's most significant funds. The general fund is by far the most significant fund in the case of the Pierce County Board of Education.
Reporting the School District as a Whole
Statement of Net Position and the Statement of Activities
While these documents contain the large number of funds used by the School District to provide programs and activities, the view of the School System as a whole looks at all financial transactions and asks the question, "How did we do financially during fiscal year 2014?" The Statement of Net Position and the Statement of Activities answer this question. These statements include all assets, deferred outflows of resources, all liabilities and deferred inflows of resources using the accrual basis of accounting similar to the accounting used by most private-sector companies. The accrual basis of
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PIERCE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014
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 the change in the net position. This change in net position is important because it tells the reader whether, 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 result of many factors, some financial, some not. Non-financial factors include the School District's property tax base, facility conditions, required educational programs and other factors.
In the Statement of Net Position and the Statement of Activities, the Board has one distinct type of activity:
Governmental Activities - All of the School District's programs and services are reported here including instruction, support services, operation and maintenance of plant, pupil transportation, food service, summer school, school activity accounts and various others.
Reporting the School District's Most Significant Funds
Fund Financial Statements
Although the School District uses many funds to account for a multitude of transactions, the fund financial statements focus on the School District's most significant funds. The School District's major governmental funds are the General Fund, the Capital Projects Fund, and the Debt Service Fund.
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 an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the School District's general government operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The relationship (or differences) between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds is reconciled in the financial statements.
Fiduciary Funds - The School District is the trustee, or fiduciary, for assets that belong to others such as school clubs and organizations within the principals' accounts. The School District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The School District excludes these activities from the District-wide financial statements because it cannot use these assets to finance its operations.
The School District as a Whole
The perspective of the Statement of Net Position is of the School District as a whole. Table 1 provides a summary of the School District's net position for fiscal year 2014 and the comparative amount for fiscal year 2013.
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PIERCE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014

Table 1

Net Position

Governmental Activities

Fiscal

Fiscal

Year 2014

Year 2013(1)

Assets Current and Other Assets Capital Assets, Net

$ 15,208,245.91 $ 16,577,277.70 32,181,113.77 29,780,814.80

Total Assets

47,389,359.68 46,358,092.50

Liabilities Current and Other Liabilities Long-Term Liabilities

3,886,470.64 6,477,426.96

3,474,551.59 7,960,092.81

Total Liabilities

10,363,897.60 11,434,644.40

Net Position Net Investment in Capital Assets Restricted Unrestricted

28,002,171.03 2,723,244.24 6,300,046.81

27,280,878.55 2,187,869.01 5,454,700.54

Total N et Position $ 37,025,462.08 $ 34,923,448.10

(1) Fiscal Year 2013 comparative totals have not been restated for the effects of the adoption of GASB 65.
Total Net Position increased $2.1 million. Revenues exceeded expenditures by $2.25 million. However, the adoption of GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, required the restatement of the June 30, 2013, net position in Governmental Activities. The result is a decrease in Net Position at July 1, 2013, of $144,000.
Table 2 shows the changes in net position for fiscal year 2013 and 2014.

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PIERCE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014

Table 2 Change in Net Position

Revenues Program Revenues: Charges for Services and Sales Operating Grants and Contributions Capital Grants and Contributions

Governmental Activities

Fiscal Year

Fiscal Year

2014

2013 (1)

$

543,813.51 $

555,751.81

21,642,164.06

21,478,771.70

1,634,078.00

228,658.50

Total Program Revenues

23,820,055.57

22,263,182.01

General Revenues: Taxes Property Taxes For Maintenance and Operations For Debt Services Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Sales Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous

7,008,954.96 99.10
1,596,141.00 98,625.18
3,379,095.02 14,230.18
1,117,846.68

7,216,435.91 -68.74
1,712,995.80 89,450.47
3,138,677.00 22,858.15
922,709.42

Total General Revenues

13,214,992.12

13,103,058.01

Total Revenues

37,035,047.69

35,366,240.02

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

21,592,362.65
1,708,203.54 1,213,778.12
586,442.71 819,261.99 1,883,927.36 162,321.03 2,244,151.17 1,414,645.92 148,560.54
82,541.07
855,595.35 1,887,801.77
189,516.55

19,430,570.96
1,504,104.74 1,186,909.17
646,624.89 706,622.48 1,898,502.63 170,341.43 2,372,176.80 1,264,622.04 315,218.50
84,536.41
849,725.98 1,966,210.44
213,142.48

Total Expenses

34,789,109.77

32,609,308.95

Increase in Net Position

$ 2,245,937.92 $ 2,756,931.07

(1) Fiscal Year 2013 comparative totals have not been restated for the effects of the adoption of GASB 65.

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PIERCE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014

Governmental Activities
Instruction comprises 62.0 percent of governmental program expenses. Interest expense comprises 0.5 percent of governmental program expenses. Interest expense was attributable to the outstanding debt for capital projects.
The Statement of Activities shows the cost of program services and the charges for services and grants offsetting those services. Table 3 shows, for governmental activities, the total cost of services and the net cost of services. That is, it identifies the cost of these services supported by tax revenue and unrestricted State entitlements.

Table 3 Governmental Activities

Total Cost of Services

Fiscal

Fiscal

Year 2014

Year 2013

Net Cost of Services

Fiscal

Fiscal

Year 2014

Year 2013

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

$ 21,592,362.65 $ 19,430,570.96 $ 4,969,690.82 $ 4,049,651.30

1,708,203.54 1,213,778.12
586,442.71 819,261.99 1,883,927.36 162,321.03 2,244,151.17 1,414,645.92 148,560.54
82,541.07

1,504,104.74 1,186,909.17
646,624.89 706,622.48 1,898,502.63 170,341.43 2,372,176.80 1,264,622.04 315,218.50
84,536.41

1,455,575.21 335,193.01 77,689.52 180,755.33 910,579.10 162,326.98 981,315.79 732,546.19 148,566.78

1,292,017.94 305,177.58 163,881.03 25,550.73 945,810.84 170,362.45
1,280,472.12 609,348.26 315,245.64 65.21

855,595.35 1,887,801.77
189,516.55

849,725.98 1,966,210.44
213,142.48

-592,852.64 1,418,151.56
189,516.55

849,725.98 125,675.38 213,142.48

Total Expenses

$ 34,789,109.77 $ 32,609,308.95 $ 10,969,054.20 $ 10,346,126.94

Although program revenues make up a majority of the revenues, the School District is still dependent upon tax revenues for governmental activities. 23.0 percent of instruction activities are supported through taxes and other general revenues; for all governmental activities general revenue support is 31.5 percent.

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PIERCE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014
The School District's Funds The School District's governmental funds are accounted for using the modified accrual basis of accounting. Total governmental funds had revenues of $37.5 million and expenditures of $38.7 million. The general fund had an overall decrease of $69,200 while the capital projects fund had an overall decrease of $1.06 million; this decrease is mainly due to transferring ESPLOST funds to the debt service fund for payment of debt. The debt service fund decreased $1,900. General Fund Budgeting Highlights The School District's budget is prepared according to Georgia law. The most significant budgeted fund is the General Fund. The Board uses a school-based budgeting concept based on FTE student allocations. The budgeting systems are designed to tightly control total school budgets but provide flexibility for school-level decision making. For the General Fund, the final budgeted revenues of $34.6 million exceeded the original budgeted amount of $32.0 million by $2.6 million. The actual revenues of $34.4 million were below the final budgeted amount by $255,000. The final budgeted expenditures of $33.9 million exceeded the original budgeted amount of $32.2 million by $1.7 million. The actual expenditures of $33.8 million were below the final budgeted amount by $51,000. General Fund revenues exceeded expenditures, contributing $530,000 to accumulated fund balance on hand. The School District has made a concerted effort to reduce expenditures as revenues decline, and this result is evidence of their work. Capital Assets and Debt Administration Capital Assets At the end of fiscal year 2014, the School District had $32.18 million invested in capital assets, all in governmental activities. Table 4 indicates balances at June 30, 2014.
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PIERCE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014

Table 4 Capital Assets (Net of Depreciation)

Governmental Activities

Fiscal

Fiscal

Year 2014

Year 2013

Land Construction In Progress Building and Improvements Equipment Land Improvements Intangible Assets

$ 556,655.71 $ 962,591.00
28,653,616.66 1,444,289.90 520,085.50 43,875.00

556,655.71 1,536,003.14 25,411,979.48 1,697,363.60
525,187.87 53,625.00

Total

$ 32,181,113.77 $ 29,780,814.80

Due to the steady collection of SPLOST revenues and the commitment of local funds to capital outlay projects, the Board has completed numerous construction projects and continues with the capital improvements program. The Board added $3.88 million in building projects during 2014, with another $963,000 pending completion.
Debt
At June 30, 2014, the Board had $5.68 million in bonds outstanding with $1.38 million due within one year. The Board also has $508,000 outstanding in intergovernmental contracts with the City of Blackshear; $53,000 is due within one year.
Table 5 Debt at June 30

Governmental Activities

Fiscal

Fiscal

Year 2014

Year 2013

General Obligation Bonds Intergovernmental Contracts

$ 5,680,000 $ 7,040,000 $ 508,000 $ 559,000

Current Issues

The following issues are expected to have a significant effect on the financial positions or results of operations:

State and Local Economy The State of Georgia continues to experience weakened economic conditions and state funding for education continues to reflect austerity reductions which began in fiscal year 2003. The Board is also challenged by the continued increase in employee benefits. However, because the Pierce County School District has taken a pro-active approach in managing the school system's finances through prioritization of educational programs, the

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PIERCE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 System continues to have a strong financial position. Further, the Special Purpose Local Option Sales Tax collections remain on target to meet bond obligations. The Pierce County Board of Education is optimistic about the ability of the School Board to maximize all of the financial resources to provide a quality education to our students. The School District will adopt GASB Statement 68 Accounting and Financial Reporting for Pensions in fiscal year 2015, which will require the School District to record a liability for its proportionate share of the Net Pension Liability of the Teachers' Retirement System of Georgia. The liability is estimated to be $21.1 million at June 30, 2015. Contacting the Board's Financial Management This financial report is designed to provide our citizens, taxpayers, investors, and creditors with a general overview of the Board's finances and to show the Board's accountability for the money it receives. If you have questions about this report or need additional information please contact: LeVance Gay Assistant Superintendent of Finance and Facilities Pierce County Board of Education 834 E. Main Street Blackshear, GA 31516
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PIERCE COUNTY BOARD OF EDUCATION

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PIERCE COUNTY BOARD OF EDUCATION STATEMENT OF NET POSITION JUNE 30, 2014
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation)
Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Interest Payable Contracts Payable Retainage Payable Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
NET POSITION
Net Investment in Capital Assets Restricted for
Continuation of Federal Programs Debt Service Capital Projects Unrestricted
Total Net Position

EXHIBIT "A"

GOVERNMENTAL ACTIVITIES

$

4,580,235.65

5,685,615.65

1,174,832.94 3,119,756.66
553,054.30 12,662.81 82,087.90
1,519,246.71 30,661,867.06

47,389,359.68

266,178.61 3,297,600.30
14,914.73 251,946.00
55,831.00
1,504,940.06 4,972,486.90
10,363,897.60

28,002,171.03
576,019.41 1,464,736.59
682,488.24 6,300,046.81

$

37,025,462.08

The notes to the basic financial statements are an integral part of this statement. - 1 -

PIERCE COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2014

GOVERNMENTAL ACTIVITIES
Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services Interest on Short-Term and Long-Term Debt
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations For Debt Services Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Sales Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Change in Net Position
Net Position - Beginning of Year (Restated)

EXPENSES

CHARGES FOR SERVICES

PROGRAM REVENUES

$ 21,592,362.65 $
1,708,203.54 1,213,778.12
586,442.71 819,261.99 1,883,927.36 162,321.03 2,244,151.17 1,414,645.92 148,560.54
82,541.07
855,595.35 1,887,801.77
189,516.55
$ 34,789,109.77 $

202,066.29
341,747.22 543,813.51

Net Position - End of Year

The notes to the basic financial statements are an integral part of this statement. - 2 -

EXHIBIT "B"

PROGRAM REVENUES OPERATING GRANTS AND
CONTRIBUTIONS

CAPITAL GRANTS AND CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

$ 15,472,124.21 $
192,115.48 878,585.11 477,394.00 634,066.14 940,521.00
-5.95 1,091,133.67
425,247.58 -6.24
82,541.07
1,448,447.99
$ 21,642,164.06 $

948,481.33 $ 60,512.85 31,359.19 4,440.52 32,827.26
171,701.71 256,852.15
127,902.99
1,634,078.00

-4,969,690.82
-1,455,575.21 -335,193.01 -77,689.52 -180,755.33 -910,579.10 -162,326.98 -981,315.79 -732,546.19 -148,566.78 0.00
592,852.64 -1,418,151.56
-189,516.55
-10,969,054.20

7,008,954.96 99.10
1,596,141.00 98,625.18
3,379,095.02 14,230.18
1,117,846.68
13,214,992.12
2,245,937.92
34,779,524.16

$

37,025,462.08

- 3 -

PIERCE COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2014

EXHIBIT "C"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 4,177,000.14 $ 402,234.91 $

2,174,701.65

3,510,914.00

1,031,646.67 2,408,691.66
553,054.30 12,662.81 82,087.90

140,690.82 711,065.00

1,000.60 $ 2,495.45

4,580,235.65 5,685,615.65
1,174,832.94 3,119,756.66
553,054.30 12,662.81 82,087.90

Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Contracts Payable Retainage Payable
Total Liabilities
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - Property Taxes
FUND BALANCES
Nonspendable Restricted Assigned Unassigned
Total Fund Balances

$ 10,439,845.13 $ 4,764,904.73 $

3,496.05 $

15,208,245.91

$ 266,178.61 3,297,600.30 $
3,563,778.91

251,946.00 55,831.00
307,777.00

$

266,178.61

3,297,600.30

251,946.00

55,831.00

3,871,555.91

671,117.33

0.00 $

2,495.45

673,612.78

82,087.90 493,931.51 181,693.91 5,447,235.57
6,204,948.89

4,457,127.73 4,457,127.73

1,000.60 1,000.60

82,087.90 4,952,059.84
181,693.91 5,447,235.57
10,663,077.22

Total Liabilities, Deferred Inflows of Resources and Fund Balances

$ 10,439,845.13 $ 4,764,904.73 $

3,496.05 $

15,208,245.91

The notes to the basic financial statements are an integral part of this statement. - 4 -

PIERCE COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION JUNE 30, 2014

EXHIBIT "D"

Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Position are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of:
Land Construction in Progress Land Improvements Buildings and Improvements Equipment Intangible Assets Accumulated Depreciation
Total Capital Assets
Taxes that are not available to pay for current period expenditures are deferred in the funds.
Sales Taxes
Long-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of:
Bonds Payable Intergovernmental Contracts Accrued Interest Unamortized Bond Premiums
Total Long-Term Liabilities
Net Position of Governmental Activities (Exhibit "A")

$ 10,663,077.22

$ 556,655.71 962,591.00
1,399,573.32 38,832,049.00
4,297,763.96 97,500.00
-13,965,019.22

32,181,113.77

673,612.78

$ -5,680,000.00 -508,153.07 -14,914.73 -289,273.89

-6,492,341.69

$ 37,025,462.08

The notes to the basic financial statements are an integral part of this statement. - 5 -

PIERCE COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2014

EXHIBIT "E"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Food Services Operation
Capital Outlay Debt Services
Principal Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Sale of Equipment Transfers In Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 7,515,071.23

$

98,625.18 $ 1,596,141.00

21,195,997.11

1,556,858.00

3,902,481.97

543,813.51

8,953.81

5,274.17

1,098,292.68

34,363,235.49

3,158,273.17

99.10 $ 7,515,170.33

1,694,766.18

22,752,855.11

3,902,481.97

543,813.51

2.20

14,230.18

1,098,292.68

101.30 37,521,609.96

20,411,021.71
1,699,175.19 1,213,778.12
598,876.71 818,599.47 1,879,029.62 161,200.22 2,272,489.24 1,642,340.28 180,560.54
82,541.07 855,595.35 1,960,767.98
56,492.00
33,832,467.50
530,767.99

1,120.81
3,308,085.96 3,309,206.77
-150,933.60

1,360,000.00 173,378.50
1,533,378.50
-1,533,277.20

20,411,021.71
1,699,175.19 1,213,778.12
598,876.71 818,599.47 1,879,029.62 162,321.03 2,272,489.24 1,642,340.28 180,560.54
82,541.07 855,595.35 1,960,767.98 3,364,577.96
1,360,000.00 173,378.50
38,675,052.77
-1,153,442.81

19,554.00 -619,555.88 -600,001.88
-69,233.89 6,274,182.78

619,358.15 -1,531,196.29
-911,838.14 -1,062,771.74
5,519,899.47

1,531,394.02
1,531,394.02 -1,883.18 2,883.78

19,554.00 2,150,752.17 -2,150,752.17
19,554.00
-1,133,888.81
11,796,966.03

Fund Balances - Ending

$ 6,204,948.89 $ 4,457,127.73 $

1,000.60 $ 10,663,077.22

The notes to the basic financial statements are an integral part of this statement. - 6 -

PIERCE COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2014

EXHIBIT "F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:
Capital Outlay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense
The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, donations, and disposals) is to decrease net position.
Taxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds.
Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Position. In the current year, these amounts consist of:
Bond Principal Retirements Capital Lease Payments Payments to Bond Refunding Agent
Total Long-Term Debt Repayments
Some items 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. These activities consist of:
Net Increase in Accrued Interest
Change in Net Position of Governmental Activities (Exhibit "B")

$ -1,133,888.81

$ 3,439,963.03 -950,111.60

2,489,851.43

-89,552.46

-506,116.27

$ 1,360,000.00 50,347.37 72,318.48

1,482,665.85

2,978.18 $ 2,245,937.92

The notes to the basic financial statements are an integral part of this statement. - 7 -

PIERCE COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUNDS JUNE 30, 2014
ASSETS Cash and Cash Equivalents
LIABILITIES Funds Held for Others

EXHIBIT "G"
AGENCY FUNDS $ 184,654.20
$ 184,654.20

The notes to the basic financial statements are an integral part of this statement. - 8 -

PIERCE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Pierce 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 District-wide financial statements, fund financial statements and notes to the basic financial statements of the Pierce County Board of Education.
District-wide Statements:
The Statement of Net Position and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements:
The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds.
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for and reports all financial resources not accounted for and reported in another fund.
District-wide Capital Projects Fund accounts for and reports financial resources including Education Special Purpose Local Option Sales Tax (ESPLOST), Bond Proceeds and grants from Georgia State Financing and Investment Commission that are restricted, committed or assigned to the expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets.
Debt Service Fund accounts for and reports financial resources that are restricted, committed, or assigned including taxes (property and sales) legally restricted for the payment of general long-term principal and interest.

- 9 -

PIERCE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

The School District reports the following fiduciary fund type:

Agency funds account for assets held by the School District as an agent for various funds, governmental or individuals.

BASIS OF ACCOUNTING
The basis of accounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by separating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. The School District considers all intergovernmental revenues to be available if they are collected within 120 days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general longterm debt, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities are reported as other financing sources.
The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, both restricted and unrestricted resources are 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.

RESTATEMENT OF PRIOR YEAR NET POSITION
For fiscal year 2014, the School District made a prior period adjustment due to the adoption of GASB Statement No. 65, as described in "New Accounting Pronouncements" below, which require the restatement of the June 30, 2013, net position in Governmental Activities. The result is a decrease in Net Position at July 1, 2013 of $143,923.94. This change is in accordance with generally accepted accounting principles.

Net Position, July 1, 2013, as previously reported Reclassification of Bond Issuance Costs
Net Position, July 1, 2013, as restated

$ 34,923,448.10 -143,923.94
$ 34,779,524.16

NEW ACCOUNTING PRONOUNCEMENTS
In fiscal year 2014, the School District adopted the Governmental Accounting Standards Board (GASB) Statement No. 65, Items Previously Reported as Assets and Liabilities. The provisions of this Statement establish accounting and financial reporting standards that reclassify, as deferred outflows or inflows of resources, certain items that were previously reported as assets and liabilities and recognizes,

- 10 -

PIERCE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

as outflows or inflows of resources, certain items that were previously reported as assets and liabilities. As noted above, the School District restated Beginning Net Position for the cumulative effect of this accounting change.
FUTURE ACCOUNTING PRONOUNCEMENTS
In fiscal year 2015, the School District will adopt 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. Implementation of this statement will require the School District to record a liability for its proportionate share of the Net Pension Liability of pension plans in which it participates. Based on information provided by the Teachers' Retirement System of Georgia (TRS), the School District's liability for its proportionate share of the Net Pension Liability for the pension plan administered through TRS is estimated to be $21.1 million at June 30, 2015.
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. Official Code of Georgia Annotated Section 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building 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 (Georgia Fund 1) administered by the State of Georgia, Office of the State Treasurer,
7. Repurchase agreements, and
8. Obligations of other political subdivisions of the State of Georgia.
The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks.
RECEIVABLES
Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available.

- 11 -

PIERCE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.
PROPERTY TAXES
The Pierce County Board of Commissioners adopted the property tax levy for the 2013 tax digest year (calendar year) on September 17, 2013 (levy date) based on property values as of January 1, 2013. Taxes were due on December 20, 2013 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2013 tax digest are reported as revenue in the governmental funds for fiscal year 2014. The Pierce 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, 2014, for maintenance and operations amounted to $7,012,375.51 and for school bonds amounted to $99.10.
The tax millage rate levied for the 2013 tax year (calendar year) for the Pierce County Board Of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

16.70 mills

Additionally, Title Ad Valorem Tax revenues, at the fund reporting level, amounted to $502,695.72 during fiscal year ended June 30, 2014.
SALES TAXES
Education Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $1,596,141.00 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.
INVENTORIES
Food Inventories
On the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.
CAPITAL ASSETS
Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District.

- 12 -

PIERCE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

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

Capitalization Policy

Estimated Useful Life

Land

Land Improvements

$

Buildings and Improvements $

Equipment

$

Intangible Assets

$

Any Amount 50,000.00 50,000.00 5,000.00 50,000.00

N/A 15 years
25 to 60 years 5 to 25 years
10 to 20 years

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives, with the exception of intangible assets which are amortized.
Amortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, copyrights and software is computed using the straight-line method over the estimated useful lives of the assets, generally 10 to 20 years.
DEFERRED OUTFLOWS/INFLOWS OF RESOURCES
In addition to assets, the statement of net position and/or the balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of resources that applies to a future period(s) and therefore will not be recognized as an outflow of resources (expense/expenditure) until then. The School District did not have any items that qualified for reporting in this category for the year ended June 30, 2014.
In addition to liabilities, the statement of net position and/or the balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of resources that applies to a future period(s) and therefore will not be recognized as an inflow of resources (revenue) until that time. The School District has only one type of item, which arises only under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reporting only in the governmental funds balance sheet. The governmental funds report unavailable revenues from property taxes and this amount is deferred and will be recognized as an inflow of resources in the period in which the amounts become available.
GENERAL OBLIGATION BONDS
The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide financial statements, bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are recognized as an outflow of resources in the fiscal year in which the bonds are issued.
In the fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. In addition, general obligation bonds have been issued to refund existing general obligation bonds. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Position.

- 13 -

PIERCE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

NET POSITION
The School District's Net Position in the District-wide Statements is classified as follows:

Net Investment in Capital Assets - This represents the School District's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of Net Investment in Capital Assets.

Restricted Net Position - This represents resources for which the School District is legally or contractually obligated to spend resources for continuation of Federal Programs, debt service and capital projects in accordance with restrictions imposed by external third parties.

Unrestricted Net Position - Unrestricted Net Position represents resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes.

FUND BALANCES
The School District's fund balances are classified as follows:

Nonspendable Amounts that cannot be spent either because they are in a nonspendable form or because they are legally or contractually required to be maintained intact.

Restricted Constraints are placed on the use of resources are either (1) externally imposed conditions by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation.

Committed Amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board of Education. The Board of Education is the School District's highest level of decision-making authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Committed fund balance also should incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements.

Assigned Amounts that are constrained by the School District's intent to be used for specific purposes, but are neither restricted nor committed. The intent should be expressed by (1) the Board of Education or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes.

Unassigned The residual classification for the General Fund. This classification represents fund balances that have not been assigned to other funds and that have not been restricted, committed, or assigned to specific purposes within the General Fund.

Fund Balances of the Governmental Funds at June 30, 2014, are as follows:

Nonspendable

Inventories

$

Restricted

Continuation of Federal Programs $

493,931.51

Capital Projects

2,980,972.46

Debt Service

1,477,155.87

Assigned

School Activity Accounts

Unassigned

82,087.90
4,952,059.84 181,693.91
5,447,235.57

Fund Balance, June 30, 2014

$

10,663,077.22

- 14 -

PIERCE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

It is the goal of the School District to achieve and maintain a committed, assigned, and unassigned fund balance in the general fund at fiscal year-end of not less than 6% of expenditures, not to exceed 15% of the total budget of the subsequent fiscal year, in compliance with Official Code of Georgia Annotated Section 20-2-167(a)5. If the unassigned fund balance at fiscal year-end falls below the goal, the School District shall develop a restoration plan to achieve and maintain the minimum fund balance.
When multiple categories of fund balance are available for expenditure, the School District will start with the most restricted category and spend those funds first before moving down to the next category with available funds.
USE OF ESTIMATES
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.
Note 3: BUDGETARY DATA
The budget is a complete financial plan for the School District's fiscal year, and is based upon careful estimates of expenditures together with probable funding sources. The budget is legally adopted each year for the general fund. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds is prepared and adopted by fund, function, and object. The legal level of budgetary control was established by the Board at the aggregate fund level. The budget for the General Fund was prepared in accordance with accounting principles generally accepted in the United States of America.
The budgetary process begins with the School District's administration presenting an initial budget for the Board's review. The administration makes revisions as necessary based on the Board's guidelines and a tentative budget is approved. After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper of general circulation in the locality, as well as the School District's website. At the next regularly scheduled meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. The approved budget is then submitted, in accordance with provisions of Official Code of Georgia Annotated Section 20-2-167(c), to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.
See Schedule 1 General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual for a detail of any over/under expenditures during the fiscal year under review.
Note 4: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS
Official Code of Georgia Annotated (O.C.G.A.) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. Section 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 percent of the daily pool balance.
Acceptable security for deposits consists of any one of or any combination of the following:
1. Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
2. Insurance on accounts provided by the Federal Deposit Insurance Corporation,

- 15 -

PIERCE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

3. Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
4. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
5. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
6. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
7. Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
CATEGORIZATION OF DEPOSITS
Custodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2014, the School District had deposits with a carrying amount of $4,764,889.85, and a bank balance of $5,536,343.69. The bank balances insured by Federal depository insurance were $662,970.30 and the bank balances collateralized with securities held by the pledging institution or by the pledging financial institution's trust department or agent in the School District's name were $4,873,373.39.
CATEGORIZATION OF INVESTMENTS
At June 30, 2014, the carrying value of the School District's total investments was $5,685,615.65, which is materially the same as fair value. This investment consisted entirely of funds invested in the Georgia Fund 1 (local government investment pool) administered by the State of Georgia, Office of the State Treasurer which is not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office of the State Treasurer for the Georgia Fund 1 (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1 is disclosed in the State of Georgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at http://www.audits.ga.gov/SGD/cafr.html.
The Primary Liquidity Portfolio consists of Georgia Fund 1 which is not registered with the SEC as an investment company but does not operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share. The pool is an AAAf rated investment pool by Standard and Poor's. The weighted average maturity for Georgia Fund 1 on June 30, 2014, was 62 days.
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. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories.

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PIERCE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

Note 6: CAPITAL ASSETS
The following is a summary of changes in the Capital Assets during the fiscal year:

Balances July 1, 2013

Increases

Decreases

Balances June 30, 2014

Governmental Activities Capital Assets, Not Being Depreciated:
Land Construction in Progress

$

556,655.71

1,536,003.14 $

962,591.00 $

$ 1,536,003.14

556,655.71 962,591.00

Total Capital Assets Not Being Depreciated

2,092,658.85

962,591.00

1,536,003.14

1,519,246.71

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements Intangible Assets
Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements Intangible Assets

34,955,107.33 5,035,880.21 1,343,080.32 97,500.00
9,543,127.85 3,338,516.61
817,892.45 43,875.00

3,876,941.67 79,941.50 56,492.00
635,304.49 243,462.74
61,594.37 9,750.00

818,056.75 728,504.29

38,832,049.00 4,297,764.96 1,399,572.32 97,500.00
10,178,432.34 2,853,475.06 879,486.82 53,625.00

Total Capital Assets, Being Depreciated, Net

27,688,155.95

3,063,263.57

89,552.46

30,661,867.06

Governmental Activity Capital Assets - Net $ 29,780,814.80 $

4,025,854.57 $

1,625,555.60 $ 32,181,113.77

Capital assets being acquired under capital leases as of June 30, 2014, are as follows:

Buildings and Improvements Less: Accumulated Depreciation

Governmental

Activities

$

939,429.85

165,157.53

$

774,272.32

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PIERCE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014
Current year depreciation expense by function is as follows:

EXHIBIT "H"

Instruction Support Services
Pupil Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Food Services

$ 571,965.51

$ 34,192.37 18,886.34 2,674.34 19,770.50 9,750.00
103,408.82 112,433.05

301,115.42 77,030.67

$ 950,111.60

note 7: INTERFUND TRANSFERS
Interfund transfers for the year ended June 30, 2014, consisted of the following:
Transfers From

Transfers to

General Fund

District-wide Capital Projects

District-wide Capital Projects $ 619,358.15

Debt Service Fund

197.73 $ 1,531,196.29

Total

$ 619,555.88 $ 1,531,196.29

Transfers are used to move property tax revenues collected by the General Fund to (1) the Districtwide Capital Projects Fund for supplemental funding source for capital construction projects and (2) to transfer Education Special Purpose Local Option Sales Tax (ESPLOST) revenues collected by Districtwide Capital Projects Fund to the Debt Service Fund for payment of Debt Service.
Note 8: RISK MANAGEMENT
The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation.
The School District has obtained commercial insurance for risk of loss associated with job related illness of injuries to employees. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years.
The School District participates in the Georgia School Boards Association Risk and Insurance Management System, a public entity risk pool organized on July 1, 1994, to develop and administer a plan to reduce risk of loss on account of general liability, motor vehicle liability, or property damage, including safety engineering and other loss prevention and control techniques, and to administer one or more groups of self-insurance funds, including the processing and defense of claims brought against members of the system.

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PIERCE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

The School District pays an annual premium to the system for its general insurance coverage. Additional coverage is provided through agreements by the system with other companies according to their specialty for property, boiler and machinery (including coverage for flood and earthquake), general liability (including coverage for sexual harassment, molestation and abuse), errors and omissions, crime and automobile risks. Payment of excess insurance for the system varies by line of coverage.
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.
Changes in the unemployment compensation claims liability during the last two fiscal years are as follows:

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

2013 $ 2014 $

2,423.00 $ 1,254.00 $

4,191.00 $ 9,136.00 $

5,360.00 $ 10,390.00 $

1,254.00 0.00

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

Position Covered

Amount

Superintendent $ 50,000.00

NOTE 9: LONG-TERM LIABILITIES
The Pierce County Board of Education entered into a contract with the City of Blackshear dated August 12, 1996, to provide for facilities of water and sewage to the Pierce County Middle School and to provide for sewage facilities to the Pierce County High School. The principal amount of $441,429.00 and interest at an annual rate of 5.16 percent will be paid over a twenty year period.

The Pierce County Board of Education entered into a contract with the City of Blackshear dated March 17, 2011, to provide water and sewage services to the Midway Elementary School and water services to Pierce County High School. The principal amount of $498,000.00 and interest at an annual rate of 3.25 percent will be paid over a twenty year period.

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

Purpose

Interest Rates

Amount

General Government - Refunding - Series 2003 General Government - Series 2012

2.78% $ 275,000.00 2.0% - 3.0% 5,405,000.00
$ 5,680,000.00

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PIERCE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

The changes in Long-Term Liabilities during the fiscal year ended June 30, 2014, were as follows:

Balance July 1, 2013

Governmental Activities

Additions

Deductions

Balance June 30, 2014

Due Within One Year

G.O. Bonds

$ 7,040,000.00 $

Intergovernmental Contract

558,500.44

Bond Premiums Amortized

361,592.37

0.00 $ 1,360,000.00 $ 50,347.37 72,318.48

5,680,000.00 $ 1,380,000.00

508,153.07

52,621.58

289,273.89

72,318.48

$ 7,960,092.81 $

0.00 $ 1,482,665.85 $ 6,477,426.96 $ 1,504,940.06

At June 30, 2014, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30:

Intergovernmental

Agreement

Principal

Interest

General Obligation Debt

Principal

Interest

Unamortized Bond

2015 2016 2017 2018 2019 2020 - 2024 2025 - 2029 2030 - 2031

$ 52,621.58 $ 55,003.23 27,255.90 22,144.64 22,875.16
126,205.39 148,441.51
53,605.66

16,841.92 $ 14,460.27 12,548.03 11,803.42 11,072.90 43,534.90 21,298.78
1,499.89

1,380,000.00 1,405,000.00 1,430,000.00 1,465,000.00

143,872.50 $ 107,925.00
65,400.00 21,975.00

72,318.48 72,318.48 72,318.48 72,318.45

Total Principal and Interest $ 508,153.07 $ 133,060.11 $ 5,680,000.00 $ 339,172.50 $ 289,273.89

NOTE 10: ON-BEHALF PAYMENTS
The School District has recognized revenues and costs in the amount of $1,801,453.87 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.
Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Certificated Personnel In the amount of $1,706,676.00
Paid to the Teachers' Retirement System of Georgia For Teachers' Retirement System (TRS) Employer's Cost In the amount of $38,034.87
Office of the State Treasurer Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $56,743.00
Funds paid to the Georgia Department of Community Health by the Georgia Department of Education on behalf of the School District are reported as part of the Quality Basic Education revenue allotments on Schedule 3 Schedule of State Revenue.

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PIERCE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

NOTE 11: SIGNIFICANT COMMITMENTS

The following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2014:

Project

Unearned Executed Contracts

Pierce County High School Cooling Tower, Tennis Courts, and Paving $

243,479.80

The amount described in this note is not reflected in the basic financial statements.
NOTE 12: SIGNIFICANT CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.
The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance 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 13: POST-EMPLOYMENT BENEFITS
GEORGIA SCHOOL PERSONNEL POST-EMPLOYMENT HEALTH BENEFIT FUND
Plan Description. The Georgia School Personnel Post-employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Benefit Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (O.C.G.A.) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board). The Department of Community Health, which includes the School OPEB Fund, issues a separate stand-alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.
Funding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. For members with fewer than five years of service as of January 1, 2012, contributions also vary based on years of service. On average, members with five years or more of service as of January 1, 2012, pay approximately 25 percent of the cost of the health insurance coverage. In accordance with the Board resolution dated December 8, 2011, for members with fewer than five years of service as of January 1, 2012, the State provides a premium subsidy in retirement that ranges from 0% for fewer than 10 years of service to 75% (but no greater than the subsidy percentage offered to active employees) for 30 or more years of service. The subsidy for eligible dependents ranges from 0% to 55% (but no greater than the subsidy percentage offered to dependents of active employees minus 20%). No subsidy is available to Medicare eligible members not enrolled in a Medicare Advantage Option. The Board of Community Health sets all member premiums by resolution and in accordance with the law and applicable revenue and expense projections. Any subsidy policy adopted by the Board may be changed at any time by Board resolution and does not constitute a contract or promise of any amount of subsidy.
Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board.

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PIERCE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected "pay-as-you-go" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.
The combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30, 2014:
For certificated teachers, librarians and regional educational service agencies and certain other eligible participants:

July 1, 2013 - June 30, 2014 $945.00 per member per month

For non-certificated school personnel:

July 1, 2013 - June 30, 2014 $596.20 per member per month

No additional contribution was required by the Board for fiscal year 2014 nor contributed to the School OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the School plan for other post-employment benefits and are subject to appropriation.

Fiscal Year

Percentage Contributed

Required Contribution

2014 2013 2012

100% 100% 100%

$ 3,248,046.57 $ 3,086,351.44 $ 3,104,912.32

NOTE 13: Retirement PLANS
TEACHERS' RETIREMENT SYSTEM OF GEORGIA (TRS)
Plan Description. The TRS is a cost-sharing multiple-employer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS. The Teachers' Retirement System of Georgia issues a separate stand-alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.
On October 25, 1996, the Board created the Supplemental Retirement Benefits Plan of the Georgia Teachers' Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1, 1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits.
TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service.

- 22 -

PIERCE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 30 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available.

Funding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 10 years of service. If a member terminates with less than 10 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2014, were 6.00% of annual salary. Employer contributions required for fiscal year 2014 were 12.28% of annual salary as required by the June 30, 2011, actuarial valuation.

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

Fiscal Year

Percentage Contributed

Required Contribution

2014 2013 2012

100% 100% 100%

$ 2,127,316.44 $ 1,952,324.55 $ 1,757,636.31

PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM (PSERS)
Bus drivers, lunchroom personnel, and maintenance and custodial personnel are members of the Public School Employees Retirement System of Georgia. The System is funded by contributions by the employees and by the State of Georgia. The School District makes no contribution to this plan.

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(This page left intentionally blank)

PIERCE COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2014

SCHEDULE "1"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operation Food Services Operation Capital Outlay
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES
Sale or Equipment Operating Transfers To Other Funds
Total Other Financing Sources
Net Change in Fund Balances
Fund Balances - Beginning
Adjustments

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

VARIANCE OVER/UNDER

$

7,173,769.00 $

7,173,769.00 $

7,515,071.23 $

341,302.23

41,800.00

41,800.00

98,625.18

56,825.18

20,975,432.09

21,124,932.09

21,195,997.11

71,065.02

3,272,913.41

5,761,612.41

3,902,481.97

-1,859,130.44

439,449.00

439,449.00

543,813.51

104,364.51

9,500.00

9,500.00

8,953.81

-546.19

67,275.00

67,275.00

1,098,292.68

1,031,017.68

31,980,138.50

34,618,337.50

34,363,235.49

-255,102.01

20,042,664.95
1,291,172.45 1,046,161.42
672,000.00 807,212.71 1,870,000.00 181,000.00 2,240,000.00 1,384,000.00 247,000.00
58,021.97
1,958,890.00 450,000.00
32,248,123.50
-267,985.00
0.00
0.00
-267,985.00
6,416,226.15

21,117,164.46
1,530,511.00 1,359,593.68
672,000.00 810,236.00 1,854,169.64 181,000.00 2,240,000.00 1,384,450.00 247,000.00
78,804.00
1,958,890.00 450,000.00
33,883,818.78
734,518.72
0.00
0.00
734,518.72
6,416,226.15
-316,887.29

20,411,021.71
1,699,175.19 1,213,778.12
598,876.71 818,599.47 1,879,029.62 161,200.22 2,272,489.24 1,642,340.28 180,560.54
82,541.07 855,595.35 1,960,767.98
56,492.00
33,832,467.50
530,767.99

706,142.75
-168,664.19 145,815.56
73,123.29 -8,363.47 -24,859.98 19,799.78 -32,489.24 -257,890.28 66,439.46 -3,737.07 -855,595.35 -1,877.98 393,508.00
51,351.28
-203,750.73

19,554.00 -619,555.88 -600,001.88
-69,233.89 6,274,182.78

19,554.00 -619,555.88 -600,001.88 -803,752.61 -142,043.37 316,887.29

Fund Balances - Ending

$

6,148,241.15 $

6,833,857.58 $

6,204,948.89 $ -628,908.69

Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual
(1) Original and Final Budget amounts do not included budgeted revenues or expenditures of the various principal accounts. The actual revenues and expenditures of the various principal accounts are $839,620.94 and $881,636.28, respectively.
The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 25 -

PIERCE COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2014

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program Pass-Through From Bright From the Start: Georgia Department of Early Care and Learning Summer Food Service Program For Children
Total Child Nutrition Cluster
Pass-Through From Bright From the Start: Georgia Department of Early Care and Learning Child and Adult Care Food Program
Total U. S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Other Programs Pass-Through From Georgia Department of Education ARRA - Race-to-the-Top Incentive Grants Career and Technical Education - Basic Grants to States English Language Acquisition Grants Improving Teacher Quality State Grants Migrant Education - State Grant Program Rural Education Striving Readers Title I Grants to Local Educational Agencies
Total Other Programs
Total U. S. Department of Education
Total Expenditures of Federal Awards
N/A = Not Available

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

* 10.553 * 10.555
* 10.559

N/A

(2)

N/A

$

1,730,334.67 (1)

N/A

63,173.45

1,793,508.12

10.558

N/A

10,720.66 1,804,228.78

84.027

N/A

84.173

N/A

650,553.90 31,952.70
682,506.60

84.395

N/A

84.048

N/A

84.365

N/A

84.367

N/A

84.011

N/A

84.358

N/A

* 84.371

N/A

84.010

N/A

10,778.46 39,048.00 12,844.37 155,243.07 71,154.00 77,123.27 445,834.12 1,008,217.36
1,820,242.65
2,502,749.25

$

4,306,978.03

Notes to the Schedule of Expenditures of Federal Awards
(1) Includes the Federally assigned value of donated commodities for the Food Donation Program in the amount of $73,220.97
(2) Expenditures for the funds earned on the School Breakfast Program ($292,173.58) were not maintained separately and are included in the 2014 National School Lunch Program.
Major Programs are identified by an asterisk (*) in front of the CFDA number.
The School District did not provide Federal Assistance to any Subrecipient.
The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Pierce County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 26 -

PIERCE COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2014

SCHEDULE "3"

AGENCY/FUNDING
GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education (1) Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Amended Formula Adjustment Categorical Grants Pupil Transportation Regular Nursing Services Education Equalization Funding Grant Other State Programs Food Services Math and Science Supplements Preschool Handicapped Program Pupil Transportation - State Bonds Teachers' Retirement Vocational Education Vocational Supervisors Mid-term Adjustment Hold Harmless Technology to Support Digital Learning Bonds
Regional Educational Services
Capital Outlay - Exceptional Growth
Office of the State Treasurer Public School Employees Retirement

GOVERNMENTAL FUND TYPE

CAPITAL

GENERAL

PROJECTS

FUND

FUND

TOTAL

$

570,637.65

$ 570,637.65

811,780.00 517,239.00 2,469,699.00 953,562.00 1,367,508.00 176,382.00 2,527,416.00 2,071,981.00 556,690.00 2,673,316.00 931,301.00 443,419.00 166,165.00 215,114.00 429,831.00 130,993.00
82,430.00
558,590.00 847,202.00 977,241.00 -2,694,833.00

811,780.00 517,239.00 2,469,699.00 953,562.00 1,367,508.00 176,382.00 2,527,416.00 2,071,981.00 556,690.00 2,673,316.00 931,301.00 443,419.00 166,165.00 215,114.00 429,831.00 130,993.00
82,430.00
558,590.00 847,202.00 977,241.00 -2,694,833.00

426,862.00 70,529.00
3,379,095.00
50,620.00 21,471.09 64,078.00 77,220.00 38,034.87 33,576.61 13,367.00 141,747.00 18,989.89
20,000.00
$ 1,556,858.00

426,862.00 70,529.00
3,379,095.00
50,620.00 21,471.09 64,078.00 77,220.00 38,034.87 33,576.61 13,367.00 141,747.00 18,989.89
20,000.00
1,556,858.00

56,743.00

56,743.00

$ 21,195,997.11 $ 1,556,858.00 $ 22,752,855.11

(1) Payments to the Georgia Department of Community Health by the Georgia Department of Education on behalf of the School District in the amount of $1,706,676.00 are included as part of the Quality Basic Education revenue allotments.

See notes to the basic financial statements.

- 27 -

PIERCE COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2014

SCHEDULE "4"

PROJECT

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT
EXPENDED IN CURRENT YEAR (3) (4)

AMOUNT
EXPENDED IN PRIOR YEAR (3) (4)

TOTAL COMPLETION
COST

EXCESS PROCEEDS NOT
EXPENDED

ESTIMATED COMPLETION
DATE

2011 SPLOST REFERENDUM

(1) Retiring previously incurred general

obligation debt of the Pierce County School

District.

$

(2) Providing funds to pay or to be applied toward all or a portion of the costs of additions, renovation, improvements and new capital outlay projects of the Blackshear Elementary School.

(3) Providing funds to pay or to be applied toward all or a portion of the costs of additions, renovation, improvements and new capital outlay projects of the Pierce County High School.

(4) Providing funds to pay or to be applied toward all or a portion of the costs of additions, renovation, improvements and new capital outlay projects of the Pierce County Middle School.

(5) Providing funds to pay or to be applied toward all or a portion of the costs of additions, renovation, improvements and new capital outlay projects of the Patterson Elementary School.

(6) Providing funds to pay or to be applied toward all or a portion of the costs of technology development system-wide.

839,758.00 $ 1,098,070.22 3,293,000.00 1,627,000.00 2,025,056.00
615,810.00

1,702,213.39 $ 1,534,499.31 $

1,161,220.92

51,740.70

3,293,000.00 2,447,277.79

1,637,950.60

794,767.46

2,025,056.00 615,810.00

4,800.00

167,713.88 $ 1,109,480.22
689,044.44 843,183.14
5,611.00 370,283.86

0.00 $ 1,161,220.92

(7) Providing funds to pay or to be applied toward all or a portion of the costs of additions, renovation, improvements and new capital outlay projects at transportation facility.
(8) Providing funds to pay or to be applied toward all or a portion of the costs of purchasing buses.
(9) Providing funds to pay or to be applied toward all or a portion of the costs of additions, renovation, improvements and new capital outlay projects system-wide and/or central office.

120,000.00

120,000.00

261,000.00

338,054.00

1,820,305.78 1,820,305.78

9,500.00

338,054.00

338,054.00

$ 11,700,000.00 $ 12,713,610.69 $ 4,842,585.26 $ 3,523,370.54 $ 1,499,274.92 $

0.00 12/31/2015

0.00 Complete

6/30/2015

6/30/2016

6/30/2016 6/30/2016

6/30/2015 0.00 Complete

0.00

6/30/2016

(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax.
(2) The School District's current estimate of total cost for the projects. Includes all cost from project inception to completion.
(3) The voters of Pierce County approved the imposition of a 1% sales tax to fund the above projects. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the project(s).
(4) During fiscal year 2004, the Pierce County Board of Education issued General Obligation Refunding Bond Issue 2003 to refund portions of the 1993 Bond Issue. The amount expended in the Current Year includes debt service on the replacement refunding issues.

See notes to the basic financial statements.

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PIERCE COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2014

SCHEDULE "5"

DESCRIPTION
Direct Instructional Programs Kindergarten Program Kindergarten Program-Early Intervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category III Category IV Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL)
TOTAL DIRECT INSTRUCTIONAL PROGRAMS
Media Center Program Staff and Professional Development

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) (2)

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

$

1,037,635.00 $ 355,434.17 $ 159,380.98 $

514,815.15

554,690.00

1,025,419.40

1,306.25

1,026,725.65

2,738,985.00

332,664.25

272,194.12

604,858.37

1,079,130.00

3,601,351.37

33,760.38

3,635,111.75

1,503,896.00

218,955.71

43,855.03

262,810.74

220,677.00 2,831,312.00 2,276,573.00
620,843.00 2,968,463.00
1,029,871.00 481,043.00 188,541.00 236,917.00

1,394,038.19 3,209,010.56 2,308,838.77
720,251.53
246,526.14 25,417.23
1,958,949.10 239,013.77 660,716.30 32,017.08
320,153.55

15,589.68 173,722.38 280,028.22
58,068.44
50,769.60
6,979.80
3,113.11 921.21
288,690.00 1,699.67

1,409,627.87 3,382,732.94 2,588,866.99
778,319.97
297,295.74 25,417.23
1,965,928.90 239,013.77 663,829.41 32,938.29 288,690.00 321,853.22

17,768,576.00 16,648,757.12

1,390,078.87

18,038,835.99

477,660.00 89,801.00

496,610.01 12,896.46

91,266.70 80,213.56

587,876.71 93,110.02

TOTAL QBE FORMULA FUNDS

$

18,336,037.00 $ 17,158,263.59 $ 1,561,559.13 $ 18,719,822.72

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

See notes to the basic financial statements.

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SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
May 10, 2016

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Pierce County Board of Education
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited, in accordance with 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 Pierce County Board of Education as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise Pierce County Board of Education's basic financial statements and have issued our report thereon dated May 10, 2016.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered Pierce County Board of Education's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Pierce County Board of Education's internal control. Accordingly, we do not express an opinion on the effectiveness of the Pierce County Board of Education's internal control.
Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying Schedule of Findings and Questioned Costs, we identified a certain deficiency in internal control over financial reporting that we consider to be a material weakness.

2014YB-41

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A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiency described in the accompanying Schedule of Findings and Questioned Costs as item FS-2014-001 to be a material weakness.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Pierce County Board of Education's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
We noted certain matters that we have reported to management of Pierce County Board of Education in a separate letter dated May 10, 2016.
Pierce County Board of Education's Response to Findings
Pierce County Board of Education's response to the finding identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. Pierce County Board of Education's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.
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.
Respectfully submitted,

GSG:er 2014YB-41

Greg S. Griffin State Auditor

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
May 10, 2016

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Pierce County Board of Education
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133
Ladies and Gentlemen:
Report on Compliance for Each Major Federal Program
We have audited Pierce County Board of Education's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2014. Pierce County Board of Education's major federal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs.
Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of Pierce County Board of Education's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the Pierce County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

2014SA-10

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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 Pierce County Board of Education's compliance.
Opinion on Each Major Federal Program
In our opinion, the Pierce County Board of Education complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2014.
Report on Internal Control over Compliance
Management of Pierce County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Pierce County Board of Education's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Pierce County Board of Education's internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.
Respectfully submitted,

GSG:er 2014SA-10

Greg S. Griffin State Auditor

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

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PIERCE COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2014
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
FINDING CONTROL NUMBER AND STATUS
FS-7131-13-01 Unresolved - See Corrective Action/Responses
CORRECTIVE ACTION/RESPONSES
Financial Reporting Inadequate Controls over the Financial Reporting Process Finding Control Number: FS-7131-13-01
The Capital Projects Fund has been corrected on our general ledger for this oversight, details of the correction were provided to DOAA personnel. Future entries will have a more detailed analysis performed to prevent this oversight.
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
No matters were reported.

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SECTION IV FINDINGS AND QUESTIONED COSTS

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PIERCE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014

I SUMMARY OF AUDITOR'S RESULTS
Financial Statements
Type of auditor's report issue: Governmental Activities; General Fund; Capital Projects Fund; Debt Service Fund; Aggregate Remaining Fund Information
Internal control over financial reporting: Material weakness identified? Significant deficiency identified?
Noncompliance material to financial statements noted:
Federal Awards
Internal Control over major programs: Material weakness identified? Significant deficiency identified?
Type of auditor's report issued on compliance for major programs: All major programs

Unmodified
Yes No No
No None Reported
Unmodified

Any audit findings disclosed that are required to be reported in accordance with OMB Circular A-133, Section 510(a)?

Identification of major programs:

CFDA Numbers

Name of Federal Program or Cluster

10.553, 10.555, 10.559 84.371

Child Nutrition Cluster Striving Reader

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

Auditee qualified as low-risk auditee?

No
$300,000 No

- 1 -

PIERCE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS 2014-001 Control Category: Internal Control Impact:

Inadequate Controls over the Financial Reporting Process Financial Reporting Material Weakness

Description: This is a repeat finding (FS-7321-13-01) from the year ended June 30, 2013. The School District did not have adequate internal controls in place over the financial reporting process. Financial statements, as presented for audit, contained material errors and omissions in accordance with generally accepted accounting principles (GAAP).

Criteria: The School District is required to maintain a system of controls over the preparation of financial statements in accordance with generally accepted accounting principles (GAAP). The School District's internal controls over GAAP financial reporting should include adequately trained personnel with the knowledge, skills and experience to prepare GAAP based financial statements and include all disclosures as required by the Governmental Accounting Standards Board (GASB).

GASB Statement No. 34, Basic Financial Statements - Management's Discussion and Analysis - for State and Local Governments (Statement), requires governments to present government-wide and fund financial statements as well as a summary reconciliation of the (a) total governmental funds balances to the net position of governmental activities in the Statement of Net Position, and (b) total change in governmental fund balances to the change in the net position of governmental activities in the Statement of Activities. In addition, the Statement requires information about the government's major and nonmajor funds in the aggregate, to be provided in the fund financial statements.

Chapter 22A Annual Financial Reporting of the Financial Management for Georgia Local Units of Administration provides that School Districts must prepare their financial statements in accordance with generally accepted accounting principles.

Condition: During the audit, the following correcting entries were proposed and accepted by the School District to properly present its financial statements, notes to the financial statements and schedules as follows:

The calculation of delinquent property taxes was incorrect resulting in an understatement to Accounts Receivable and Property Tax Revenues of $673,612.78 on the District-wide statements. Also, Accounts Receivable and Deferred Inflows of Resources were overstated by $303,209.73 (General Fund - $296,521.29 and Debt Service Fund - $6,688.44) on the Governmental fund statements.
A review of Net Position Beginning of the Year on the District-wide statements, revealed that the School District did not restate beginning Net Position for the adoption of GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, resulting in beginning Net Position being overstated by $143,923.94.
The School District did not properly classify adjustments made in preparation of the financial statements resulting in expenses being overstated by $1,623,551.92, property tax revenue being overstated by $1,333,096.19 and capital assets being understated by $146,531.79.

- 2 -

PIERCE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014

II

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

The School District also did not properly classify adjustments in the General Fund resulting in expenditures being overstated by $153,367.14 and property tax revenue being overstated by the same amount.
The School District did not to record on-behalf payments for health insurance, in the Districtwide statements, resulting in an understatement of operating grants and contributions and expenses of $1,070,094.73.
A review of the notes to the financial statements revealed the School District understated the bank balance in the Deposits and Investments note by $1,150,649.65.
Supplemental Schedule 4 required proposed revisions to be presented properly.
Reclassifications entries were proposed and accepted by management for the following misclassifications:
o Accounts Receivable accounts were not classified correctly resulting in Accounts Receivable State being overstated by $423,298.41, Accounts Receivable Taxes being understated by $360,529.34, Accounts Receivable Federal being understated by $51,005.91, and Accounts Receivable Other being understated by $11,763.16.
o Revenues were not classified correctly resulting in Federal revenue/operating grants and contributions being overstated by $62,525.97, property tax revenue being overstated by $41,698.63, miscellaneous revenue being understated by $62,525.97 and sales tax revenue being understated by $41,698.63.
o The calculation of Net Investment in Capital Assets reported on the Statement of Net Position did not consider available bond proceeds on hand in the amount of $2,298,484.22 and $559,816.78 of other reclassification issues. While the bond proceeds are anticipated to be used for the acquisition of capital assets, at fiscal yearend the funds have not been expended and should not be reported as a component of the debt that is used in the calculation. Also, the School District did not restrict $1,476,155.27 for principal and interest payments due through December 31, 2014 of the subsequent period.
o Georgia Fund 1 (local government investment pool) was not classified correctly resulting In Cash and Cash Equivalents being overstated and Investments being understated by $3,510,914.00.
Various misstatements and misclassifications were also encountered throughout the course of the audit and were reported to management. These adjustments were not corrected by management as they were deemed immaterial to the financial statements.

- 3 -

PIERCE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS Cause: In discussing these deficiencies with the School District, they stated the cause related to not fully understanding the financial statement reporting process. Effect or Potential Effect: Material misstatements and misclassifications were included in the financial statements presented for audit. In addition, the lack of controls and monitoring could impact the reporting of the School District's financial position and results of operations. Recommendation: As part of internal control over the preparation of financial statements, including disclosures, the School District should continue to implement comprehensive preparation and/or review procedures to ensure that the financial statements are complete and accurate. These procedures should be performed by a properly trained individual possessing a thorough understanding of the applicable GAAP, GASB pronouncements, and knowledge of the School District's activities and operations. Views of Responsible Officials and Corrective Action Plans: We concur with this finding. We will continue to take advantage of training opportunities for financial statement preparation. Contact Person: Levance Gay, Assistant Superintendent of Finance/Facilities Phone: (912) 449-2044 Fax: (912) 449-2046 E-mail: lgay@pierce.k12.ga.us III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.
- 4 -