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' ' I '1, RICHMOND COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION I FINANCIAL INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED SUPPLEMENTARY INFORMATION MANAGEMENTS DISCUSSION AND ANALYSIS EXHIBITS BASIC FINANCIAL STATEMENTS DISTRICT-WIDE FINANCIAL STATEMENTS A STATEMENT OF NET ASSETS 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 ASSETS 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 ASSETS FIDUCIARY FUNDS H STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS NOTES TO THE BASIC FINANCIAL STATEMENTS SCHEDULES REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BA.LANCES - BUDGET AND ACTUAL (NON-GAAP BASIS) GENERAL FUND Page 3 4 6 7 8 9 10 11 12 30 RJCHMOND COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION I FINANCIAL SCHEDULES SUPPLEMENTARY INFORMATION 2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 31 3 SCHEDULE OF STATE REVENUE 33 4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 35 ALLOTMENTS AND EXPENDITURES GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) 5 BY PROGRAM 36 6 BY SITE 37 SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133 SECTION Ill AUDITEE'S RESPONSE TO PRJOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRJOR YEAR FINDINGS AND QUESTIONED COSTS SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FJNDJNGS AND QUESTIONED COSTS SECTION I FINANCIAL RUSSELL W. HINTON STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400 August 6, 2003 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Richmond County Board of Education INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Ladies and Gentlemen: We have audited the accompanying financial statements of the governmental activities, each major fund. and the aggregate remaining fund information (Exhibits A through I) ofthe Richmond County Board of Education, as of and for the year ended June 30, 2002, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Richmond County Board of Education's management. Our responsibility is to express opinions on these financial statements based on our audit. Except as discussed in the following paragraph, we conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management. as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. We were unable to review an official record of the Board's meetings to determine ifthere were any significant items that could affect the scope of our audit. As discussed in Note 2 to the financial statements, management has not recognized in the governmental activities and general fund a portion ofsalaries and the corresponding employer's cost of related benefits earned for contractual services completed prior to June 30, 2002. Also funds 2002-34ARL- l 3X received, subsequent to June 30, 2002, from the Georgia Department of Education for the State's share ofthese unrecorded salaries and related benefits were not recorded as revenue in the year under review. Conversely, the similar salary costs and related revenues for contractual services completed prior to June 30, 2001, were improperly recorded in the year ended June 30, 2002. Accounting principles generally accepted in the United States of America require that revenues be recorded when available and measurable or earned, as appropriate, and that costs be recorded when liabilities are incurred, rather than when funds are received or disbursed. The aggregate effects on the financial statements of this variance or omission have not been determined, but are believed to be material. In our opinion, except for the effects of such adjustments, ifany, as might have been determined had we been able to review an official record of the Board's meetings as described in the third paragraph, and except for the effects of not properly recognizing revenues and costs for certain salaries in the governmental activities and general fund as described in the proceeding paragraph, the financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities and general fund ofthe Richmond County Board ofEducation, as ofJune 30, 2002, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, except for the effects of such adjustments, if any, as might have been determined had we been able to review an official record of the Board's meetings as described in the third paragraph, the financial statements referred to above present fairly, in all material respects, the respective financial position ofthe District-wide Capital Projects Funds, the Debt Service Funds and the aggregate remaining information of the Richmond County Board of Education, as of June 30, 2002, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 2 to the basic financial statements, during fiscal year 2002, the Board completed a comprehensive inventory of its capital assets for inclusion in the basic financial statements. and the Board consolidated its individual school activity accounts for inclusion in the basic financial statements. These changes are in accordance with generally accepted accounting principles. As described in Note 2, the Richmond County Board of Education has implemented a new financial reporting model as required by provisions of Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments. as of June 30, 2002. In accordance with Government Auditing Standards, we have also issued our report dated August 6, 2003, on our consideration of the Richmond County Board of Education's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. 2002-34ARL-13X Management's Discussion and Analysis and the Schedule ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through x and page 30 respectively, are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Richmond County Board of Education's basic financial statements. The accompanying supplementary information which consist of Schedules 2 through 6, which includes the Schedule of Expenditures of Federal Awards as required by U.S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations. are not a required part ofthe basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, except for the effects ofadjustments, if any, as might have been determined had we been able to review an official record of the Board's meetings as discussed in the third paragraph, and except for the effects of the matters referred to in the fourth paragraph, such information, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. A copy of this report has been filed as a permanent record in the office ofthe State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 506-24. Respectfully submitted, iJ~-- RWH:as 2002-34ARL-13X State Auditor Richmond County Board of Education Management's Discussion and Analysis For the Fiscal Year Ended June 30, 2002 The discussion and analysis of the Richmond 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, 2002. The intent of this discussion and analysis is to look at the School District's financial performance as a whole. Readers are encouraged to review the transmittal letter, the basic financial statements, and the accompanying notes to the basic financial statements to enhance their understanding of the School District's financial performance. FINANCIAL HIGHLIGHTS Key financial highlights for 2002 are as follows: The School District implemented GASB34 for 2002. As a result of this being the implementation year, many comparisons will not be available until 2003. In total. net assets increased $39.6 million, which represents an increase of 17.8 percent over 2001. All of this increase is for governmental activities. The School District has no business-type activities. General revenues accounted for $ 128 million. This represents 43 .3 percent of all revenues. Program specific revenues in the form of grants and contributions and charges for services accounted for $167.8 million or 56.1 percent of total revenues. The School District had $256.2 million in expenses related to governmental activities. Program specific grants and contributions and charges for services offset $ 167. 8 million of these expenses. General revenues, primarily property taxes and sales taxes of $128 million were adequate to provide for other expenses for these programs. Among major funds, the General Fund, had $251.7 million in revenues and $246.9 million in expenditures. The fund balance for the General Fund increased to $36. 7 million. The School District received revenues of $30,742,872.92 for the Special Purpose Local Option Sales Tax. As of June 30, the School district had received the maximum amount of sales tax authorized and collection of this sales tax was terminated. USING THE BASIC FINANCIAL STATEMENTS This annual report consists of a series of financial statements, the district-wide, and fund statements. The District-wide financial statements, the Statement of Net Assets, and the Statement of Activities are designed to illustrate the School District as an aggregate of its financial activities and present a longer-term view of its finances. Richmond County Board of Education Management's Discussion and Analysis For the Fiscal Year Ended June 30, 2002 The next level of detail is provided by the fund financial statements. These statements reflect the short-term finances as well as the balances available for future needs. For the Richmond County Board of Education, the General Fund, District-wide Capital Projects Funds and the Debt Service Funds are the most significant funds. REPORTING THE SCHOOL DISTRICT AS A WHOLE (DISTRICT WIDE) The Statement of Net Assets and the Statement of Activities The analysis of the School District as a whole looks at all financial transactions and enables the reader of the financial statements to ascertain whether the School District's financial position has improved or diminished. The statements include all assets and liabilities using the accrual basis of accounting. This methodology is similar to the accounting of most private-sector businesses. This basis of accounting considers all the current year's revenues and expenses regardless of when cash is received or paid. One departure is the accounting for the final two payments on General Fund teachers and bus driver's contracts, and the resources available from the Georgia Department of Education for the State's share of these contracts. Payments and revenues for July and August disbursements are recorded subsequent to June 30, 2002. There are many factors affecting the financial position of the School District. Some of these factors include the property tax laws, re-evaluation of property, state law requiring the reduction of class sizes, state and federal mandates that are unfunded, and the age and condition of school facilities. The Statement of Net Assets and the Statement of Activities is normally divided into two distinct types of activities, governmental and business type activities. All of the School District's activities are reflected as governmental activities. This includes instruction, 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, food services, community services, and interest on short-term and long-term debt. REPORTING THE SCHOOL DISTRICT'S MOST SIGNIFICANT FUNDS (FUND FINANCIALS) The fund financial statements provide detailed information about the School District's major funds. The School District's major governmental funds are the General Fund, District-wide Capital Projects Funds, and the Debt Service Funds. Governmental Funds - Most of the School District's activities are reported in governmental funds. These funds are reported using an accounting methodology called modified accrual accounting. This methodology measures cash and financial assets that can readily be converted to cash. The fund statements offer a short-term view of the School District's financial activities. 11 Richmond County Board of Education Management's Discussion and Analysis For the Fiscal Year Ended June 30, 2002 A reconciliation of net changes in governmental fund balances to the governmental activities changes in net assets illustrate the relationships (or differences) between the governmental activities reported in the Statement of Net Assets and the Statement of Activities to the governmental funds presented in the fund financial statements. THE SCHOOL DISTRICT AS A TRUSTEE The School District serves as a fiduciary for the Davidson Trust, Gail Hendrick Scholarship, Nora Coxwell Scholarship, Robetta McKenzie Scholarship, and Sara Craig Scholarship Funds. The Davidson Trust is used to account for the principal and earnings which may be expended to provide financial assistance to needy students of Davidson Fine Arts Magnet School. The principal and earnings of the scholarship funds may be expended to provide scholarships for selected students. The School District also holds assets in a custodial capacity for various governments, employees, and students. These activities are reported in a separate statement of Fiduciary Net Assets and Changes in Net Assets. The School District has excluded these activities from the School District's other financial statements because the School District may not use these assets to finance its operations. THE SCHOOL DISTRICT AS A WHOLE The Statement of Net Assets provides the prospective of the School District as a whole. Table I provides a summary of the School District's net assets for 2002. Since this is the first year the School District has prepared financial statements following GASB Statement 34, net assets comparisons to fiscal year 2001 are not available. Ill Richmond County Board of Education Management's Discussion and Analysis For the Fiscal Year Ended June 30, 2002 Table 1 Net Assets (in Thousands) Assets Current and Other Assets Capital Assets, Net Total Assets Liabilities Current and Other Liabilities Long-Term Liabilities Total Liabilities Net Assets Invested in Capital Assets, Net of Related Debt Restricted Unrestricted Total Net Assets Governmental Activities Fiscal Year 2002 $208,623 220,455 $429,078 $ 12,231 154,703 $166,934 $194,420 44,346 23.378 $262,144 Table 2 shows the changes in net assets for fiscal year 2002. Revenues and expense comparisons for fiscal year 200 I are not available since this is the first year the School District has prepared financial statements in accordance with GASB Statement 34. IV Richmond County Board of Education Management's Discussion and Analysis For the Fiscal Year Ended June 30, 2002 Table 2 Change in Net Assets (in Thousands) Revenues Program Revenues: Charges for Services and Sales Operating Grants and Contributions Capital Grants and Contributions Total Program Revenues General Revenues: Taxes Property Taxes Sales Taxes Grants and Contributions not Restricted Investment Earnings Miscellaneous Total General Revenues Total Revenues 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 Community Services Food Services Interest on Short-Term and Long-Term Debt Total Expenses Increase in Net Assets Governmental Activities Fiscal Year 2002 $ 2,940 162,658 2,199 $167,797 $ 73,946 32, I02 14,712 3,406 3,879 $128,045 $295,842 $159,404 8,832 7,082 5,702 2,574 15,711 4,014 24,337 8,561 2,149 127 246 14,674 2.827 $256,240 $ 39,602 Governmental Activities The School District is dependent upon operating grants and property taxes to support governmental activities. Instruction comprises 62.2 percent, Support Service 30.8 percent, Food Services 5.7 percent and Interest I. I percent of government program expenses. V Richmond County Board of Education Management's Discussion and Analysis For the Fiscal Year Ended June 30, 2002 The Statement of Activities details the cost of program services and the charges for services and grants offsetting those services. Table 3 shows the total cost of services and the net cost of services for governmental activities. It identifies the cost of these services supported by tax revenue and unrestricted State entitlement. Cost of service comparisons to fiscal year 2001 are not available since fiscal year 2002 is the first year the School District has prepared financial statements in accordance with GASB Statement 34. Table 3 Governmental Activities (in Thousands) Total Cost of Services Fiscal Year 2002 Net Cost of Services Fiscal Year 2002 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 Community Services Food Services Interest on Short-Term and Long-Term Debt $159,404 8,832 7,082 5,702 2,574 15,711 4,014 24,337 8,561 2,149 127 246 14,674 2,827 $ -40,846 -6,005 -3,211 -2,461 1,925 -9,024 -2,892 -15,346 -5,072 -2,148 -84 -246 -206 -2.827 Total Expenses $256,240 $ -88,443 The School District's dependence upon general revenues is apparent. Over 29.1 percent of all governmental activities are supported by taxes, interest, and other governrnental revenues. vi Richmond County Board of Education Management's Discussion and Analysis For the Fiscal Year Ended June 30, 2002 Governmental Activities Cost of Services for Fiscal Year 2002 Ceatcal Support Services o84% ~------------------,-B_u~s1_ne~ss--=-A~dmin1strat1on 1 57% Community Services o 10% Other Support Services O 05% THE SCHOOL DISTRICT'S FUNDS The School District's funds are accounted for using the modified accrual basis of accounting. All governmental funds had revenues and other financing sources of $412.7 million and expenditures and other financing uses of $297. I million. The School District received $120.4 million proceeds from bonds issued for Capital Outlay. The general fund reflected an increase of $4.0 million, the debt service fund increased $0.5 million, and the district-wide capital projects funds increased $110.9 million. The, increase in the fund balance of the general fund indicates the School District was able to meet current costs. GENERAL FUND HIGHLIGHTS The School District's budget is prepared according to Georgia law. The most significant budgeted fund is the General Fund. Throughout fiscal year 2002, the School District amended its general fund budget several times although no change was significant. Site-based budgeting is used by the School District and is designed to tightly control total site budgets but allow some management flexibility. The School District's top management monitors a detailed report comparing actual revenues and expenditures to budget on a monthly basis. Site management has access to this information on a demand basis through a report available using the School District's accounting software. For the general fund, the final budgeted revenues and other financing sources of $262.5 million exceeded the original budgeted amount of $237.3 million by $25.2 million. This difference was Vll Richmond County Board of Education Management's Discussion and Analysis For the Fiscal Year Ended June 30, 2002 due to an increase in state revenues of $4.2 million, and increase of $5.8 million in federal revenues, an increase of $15.0 million in other sources from the issuance of a tax anticipation note, and a net increase of $0.2 million in investment and other earnings. The actual revenue exceeded the budgeted amount by $4.1 million. The final budgeted expenditures and other financing uses of $268. l million exceed the original budget of $242.7 million by $25.4 million. The difference was due to an increase of instruction by $4.4 million, support services $3.4 million and other uses of $15.2 million relating to the payment of the tax anticipation note. The actual expenditures and other financing uses were $15.1 million less than the budgeted amount. General fund revenues and other financing sources exceeded expenditures by $4.8 million. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets At the end of fiscal year 2002, the School District had capital assets of $220.4 million, net of accumulated depreciation. Table 4 shows only fiscal year 2002 balances since this is the first fiscal year the School District has prepared financial statements in accordance with GASB Statement 34. Table 4 Capital Assets (Net of Depreciation, in Thousands) Governmental Activities Fiscal Year 2002 Land Construction in Progress Buildings and Building Improvements Equipment Land Improvements $ 8,398 11,152 191,128 8,056 1,721 Total $220,455 The primary increases occurred in buildings and building improvements and construction in progress. Due to funding from a Special Purpose Local Option Sales Tax and a bond issue, the School District is building and renovating numerous schools. viii Richmond County Board of Education Management's Discussion and Analysis For the Fiscal Year Ended June 30, 2002 Debt At June 30, 2002, the School District had $133.1 million in general obligation bonds, with $7.9 million due within one year, and capital leases of $15.5 million, with $1.2 million due within one year. Debt comparisons to fiscal year 2001 are not available since this is the first year that the School District has presented financial statements in accordance with the GASB Statement 34. Table 5 Debt at June 30 (in Thousands) General Obligation Bonds Capital Leases Compensated Absences Unamortized Bond Premium Total Governmental Activities Fiscal Year 2002 $133,080 15.458 1,306 4,859 $154.703 CURRENT ISSUES The Richmond County Board of Education has maintained its economic stability by budgeting conservatively and monitoring its expenditures. Subsequent to the events of September 11, 200 I, there has been a negative impact on the economy in Richmond County and the State of Georgia. Sales tax collections and state revenues have dropped. For fiscal year 2003, the State of Georgia has implemented an austerity reduction for instructional and non-instructional programs. Additionally, austerity reductions have been proposed by the governor for fiscal year 2004. Richmond County's unemployment rate is consistent with the state average of 4.6 percent. The growth in the tax digest is nearly flat. The county increased mill rates for 2002. Tax collections have been slow and approximately 2,500 tax bills have not been levied due to appeals still outstanding. By the second quarter of 2003, the county anticipates being able to levy delinquent taxes. These issues are of concern to the School District as they could have a negative impact on its financial health. IX Richmond County Board of Education Management's Discussion and Analysis For the Fiscal Year Ended June 30, 2002 Contacting the School District's Financial Management This financial report is designed to provide our citizens, taxpayers, investors, and creditors with a general overview of the School District's finances and to reflect the School District's accountability for the monies it receives. Questions about this report or for additional financial information, please contact Controller, Richmond County Board of Education, 2083 Heckle Street, Augusta, Georgia 30904. X RICHMOND COUNTY BOARD OF EDUCATION RICHMOND COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30. 2002 ASSETS Cash and Cash Equivalents Investments Accounts Receivable. Net Taxes State Government Federal Government Other lnventones Capital Assets Land Construction m Progress Land Improvements Bu1ld1ngs Equipment Less Accumulated Deprec1at1on Total Assets LIABILITIES Accounts Payable Salaries Payable Expired Grant Balances Payable Retamages Payable Deposits and Deferred Revenues Long-Term L1ab1hties Due Within One Year Due m More Than One Year Total L1ab1lrt1es NET ASSETS Invested m Capital Assets, Net of Related Debt Restricted for Continuation of Federal Programs Debt Service Capital ProJects Unrestricted Total Net Assets Total L1ab1hbes and Net Assets The notes to the basic financial statements are an integral part of this statement -3- EXHIBIT"A" GOVERNMENTAL ACTIVITIES $ 25,178,675 91 157,369,305 03 15,271,389 68 957,038 85 4,431,575 55 2,176,719 38 3,238,551 48 8,398,171 55 11,152,252 51 6,045,850 76 260,564,431 80 27,354,618 85 -93,060,359 81 $ 429,078,221 54 $ 9,236,391 42 2,433,520 73 5.247 82 550,138 15 5,434 30 11,489,334 98 143,213,75112 $ 166,933,818 52 $ 194,419,524 24 3,238,551 48 5,199,471 91 35,908,830 95 23,378,024 44 $ 262,144,403 02 $ 429,078,221 54 RICHMOND COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30. 2002 EXPENSES CHARGES FOR SERVICES GOVERNMENTAL ACTIVITIES Instruction Support SeMces 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 Community Services Food Services Interest on Short-Term and Long-Term Debt Total Governmental Activities $ 159,404,020.92 $ 8,831,562.80 7,082,184.70 5,701,992.75 2,574,668 55 15,711,057.59 4,013,651.72 24,337,071.07 8,561,100.31 2,148,923.36 127,342 65 246,726 62 14,673,769 12 2,826,568 42 $ 256,240,640 58 $ 382,190 00 2,557,583 43 2,939,773.43 General Revenues Taxes Property Taxes For Maintenance and Operations For Debt Services Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Debt Services For Capital ProJects Intangible Recording Tax Real Estate Grants and Contributions not Restncted to Specific Programs Investment Earnings Miscellaneous Total General Revenues Change in Net Assets Net Assets - Beginning of Year Net Assets - End of Year The notes to the basic financial statements are an integral part of this statement -4- EXHIBIT"B" PROGRAM REVENUES OPERATING CAPITAL GRANTS AND GRANTS AND CONTRIBUTIONS CONTRIBUTIONS NET (EXPENSES) REVENUES AND CHANGES IN NET ASSETS $ 118,104,475 65 $ 2,823,520.96 3,295,066.25 3,110,624.21 4,499,535.02 6,683,830 92 375,640 36 8,981,744 00 2,837,477.56 562.48 43,259 50 11,902,442.78 $ 162,658,179.69 $ 71,363 45 $ 3,307.17 576,212.00 130,395.23 18.26 2,88917 745,772 37 9,189.93 651,275 76 569.24 516.20 7,937 22 2,199,446 00 $ -40,845,991 82 -6,004, 734.67 -3,210,906.45 -2,460,973 31 1,924,884 73 -9,024,337 50 -2,892,238 99 -15,346,13714 -5,072,346 99 -2,147,791.64 -83,566.95 -246,726 62 -205,805 69 -2,826,568.42 -88,443,241.46 $ 67,526,363.24 6,341,680.17 77,874 63 25,441,725 14 5,301,147 78 1,114,99973 244,092 09 14,711,956 90 3,406,209.80 3,879,069.22 $ 128,045,118 70 $ 39,601,877.24 222,542,525 78 $ 262,144,403 02 -5- RICHMOND COUNTY BOARD OF EDUCATION BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30 2002 EXHIBIT"C" ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net Taxes State Government Federal Government Other lnventones Total Assets LIABILITIES AND FUND BALANCES LIABILITIES Accounts Payable Salanes Payable Exptred Grant Balances Payable Reta1nages Payable Deposits and Deferred Revenue Total L1abiht1es FUND BALANCES Reserved for Debt Sel'l/lce lnventones Capital Pro1ects Unreserved Undes1gnated Reported m General Fund Capital Pro1ects Total Fund Balances Total Llab1ht1es and Fund Balances GENERAL FUND DISTRICTWIDE CAPITAL PROJECT FUNDS DEBT SERVICE FUNDS TOTAL $ 19,655,200.13 $ 1,399,822 10 $ 4,123,653 68 $ 25,178.675 91 14,844,590 09 142,128,454 48 396,260 46 157,369,305 03 2,541,95062 957,038 85 4,431,575 55 255,922 93 3,238,551 48 5,124,898 23 1,920.796 45 255,407 75 7,922,256 60 957,038 85 4,431,575 55 2.176.719 38 3,238,551 48 $ 45,924,829 65 $ 150,573,971 26 $ 4,775,321 89 $ 201,274,122 80 $ 6,776.510 78 $ 2.433,520 73 5,247 82 5 434 30 s 9,220,713 63 $ 2,459,880 64 550.138 15 3,010,018 79 $ 9,236,391 42 2,433,520 73 5.247 82 550,138 15 5 434 30 $ 12,230,732 42 $ 4,775,321 89 $ 4,775,321 89 $ 3,238,551 48 3,238,551 48 $ 147,431,152 83 147,431,152 83 33,465,564 54 132,799 64 33,465.564 54 132.799 64 $ 36.704,116 02 $ 147,563,952 47 $ 4,775,321 89 $ 189,043,390 38 $ 45,924,829 65 $ 150,573,971 26 $ 4,775,321 89 $ 201,274,122 80 The notes to the basic financial statements are an integral part of this statement -6- RICHMOND COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS JUNE 30 2002 EXHIBIT"D" Total Fund Balances - Governmental Funds (Exh1b1t "C") Amounts reported for Governmental Activities in the Statement of Net Assets are different because Capital Assets used in Governmental Act1v1t1es are not financial resources and therefore are not reported in the funds These assets consist of Land Construction in Progress Land Improvements Buildings Equipment Accumulated Deprec1at1on Total Caprtal Assets Some of the School District's property tax revenues will be collected after year end but are not available soon enough to pay for the current period's expenditures Long-Tenn L1ab1ht1es. including Bonds Payable, are not due and payable in the current period and therefore are not reported as hab1ht1es in the funds Long-Tenn LlabIlrt1es at year-end consist of Bonds and Notes Payable Caprtal Leases Compensated Absences Unamortized Bond Premium Total Long-Term Llab1ht1es $ 189,043,390 38 $ 8,398,171 55 11,152,252 51 6,045,850 76 260,564.431 80 27,354,618 85 -93,060,359 81 220,454,965 66 7,349,13308 $ -133,080,000 00 -15,457,496 00 -1,306,24710 -4,859,343 00 -154i103,086 10 Net Assets of Governmental Act1v1tIes (Exh1b1t "A") $ 262,144A03 02 The notes to the basic financial statements are an integral part of this statement -7- RICHMOND COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED JUNE 30. 2002 EXHIBIT"E" REVENUES Property Taxes Sales Taxes State Funds Federal Funds Charges for Servtees Investment Earnings Miscellaneous Total Revenues EXPENDITURES Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Adm1mstrahon School Adm1mstrallon Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Community Serv1ces Food SeMces Operation Capital Outlay Debt Serv1ces Principal Interest Total Expenditures Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES (USES} Accrued Interest on Bonds Sold Proceeds of Long-Term Capital-Related Debt Premiums on Bonds Sold Transfers In Transfers Out Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances - Begmmng GENERAL FUND DISTRICTWIDE CAPITAL PROJECTS FUNDS DEBT SERVICE FUNDS TOTAL $ 62,118,758 51 1,236,067 18 $ 151,575,081 11 29,211,371 50 2,939,773 43 798,642 92 3,827,069 22 $ 251,706,763 87 $ $ 5,301,147 78 2,500,050 77 52 000 00 5,924,571 80 $ 25,564,749 78 107,516 11 68,043,330 31 32,101,964 74 151,575,081.11 29,211,371 50 2,939,773 43 3,406,209 80 3,879,069 22 7,853,198 55 $ 31,596,837 69 $ 291,156,800 11 $ 155,729,874 35 $ 155,729,874 35 8,427,641 39 7,122,185 94 5,293,162 12 2,564,684 33 15,372,408 28 1,493,952 13 $ 23,302,181 49 8,428,888 80 2,237,994 98 64,297 13 246,726 62 13,963,194 58 55,088 06 3,056,916 00 $ 14,695,435 43 5,520.28 8,427,641 39 7,122,185 94 5,293,162 12 2,564,684 33 15,372,408 28 4,556,388 41 23,302,181 49 8,428,888 80 2,237,994 98 64,297 13 246,726 62 13,963,194 58 14,750,523 49 1,631,93127 985,948 70 311,422 22 29,495,000 00 1,925,397 50 31,126,931 27 3,222,768 42 $ 246,920,160 17 $ 18,063,773 65 $ 31,425,917 78 $ 296,409,851 60 $ 4,786,603 70 $ -10,210,575 10 $ 170 919 91 $ -5,253,051 49 $ 396,200 00 $ 396,200 00 $ 115,000,000 00 115,000,000 00 5,399,270 00 5,399,270 00 736,056 78 736,056 78 $ -736,056 78 -736,056 78 $ -736,056 78 $ 121,135,326 78 $ 396,200 00 $ 120,795,470 00 $ 4,050,546 92 $ 110,924,751 68 $ 567,119 91 $ 115,542,418 51 32,653,569 10 36,639,200 79 4,208,201 98 73,500,971 87 Fund Balances - Ending $ 36,704,116 02 $ 1471563,952 47 $ 4,775,321 89 $ 189,043,390 38 The notes to the basic financial statements are an integral part of this statement -8 - RICHMOND 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, 2002 EXHIBIT"P' Total Net Change in Fund Balances - Governmental Funds (Exhibit "E") $ 115,542,418 51 Amounts reported for Governmental Ac:tiv1t1es in the Statement of Act1v1ties are different because Capital Outlays are reported as expenditures in Governmental Funds However, in the Statement of Act1v1t1es, the cost of Capital Assets Is allocated over their estimated useful hves as depreciation expense In the current penod, these amounts are Capital Outlay Depreciation Expense Excess of Capital Outlay over Depreciation Expense $ 15,010,352 89 -6,867,063 46 8,143,289 43 Because some property taxes will not be collected for several months after the School D1stnct's fiscal year ends, they are not considered "available" revenues 4,685,717 71 Bond proceeds provide current financial resources to Governmental Funds, however, issuing debt increases Long-Term L1ab11it1es in the Statement of Net Assets In the current penod, proceeds were received from General Obligation Bonds Issued, including a premium of $ 5,399,270 00 -120,399,270 00 Repayment of Long-Term Debt Is reported as an expendrture in Governmental Funds, but the repayment reduces Long-Term L1ab1ht1es in the Statement of Net Assets In the current year, these amounts consist of Bond Pnnc1pal Retirements Capital Lease Payments Total Long-Term Debt Repayments $ 29,495,000 00 1,631,931.27 31,126,931.27 Some items reported in the Statement of Ac:tiv1ties do not require the use of current financial resources and therefore are not reported as expenditures in Governmental Funds This actIvIty consists of Increase in Compensated Absences Amortization of Bond Premium Total Add1tIonal Expenditures -37,13668 539,927 00 502,790 32 Change in Net Assets of Governmental Act1v1ties (Exh1b1t "B") $ 391601 1877 24 The notes to the basic financial statements are an integral part of this statement -9- RICHMOND COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS FIDUCIABY FUNDS ' JUNE 30, 2002 EXHIBIT"G" ASSETS Cash and Cash Equivalents LIABILITIES Funds Held for Others NET ASSETS Held m Trust for Private Purposes Total LiabIht1es and Net Assets PRIVATE PURPOSE TRUSTS AGENCY FUNDS $ 28,885 58 $ 471,330 83 $ 471,330 83 $ 28,885 58 $ 28,885 58 $ 471,330.83 The notes to the basic financial statements are an integral part of this statement. - 10 - RICHMOND COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS YEAR ENDED JUNE 30, 2002 EXHIBIT"H" REVENUES Investment Earnings Interest EXPENSES None Noted Change m Net Assets Net Assets - Beginning Net Assets - Ending PRIVATE PURPOSE TRUSTS $ 685 17 $ 0.00 $ 685.17 281200.41 $ 281885 58 The notes to the basic financial statements are an integral part of this statement. - 11 - RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STAl'EMENTS JUNE 30, 2002 EXHIBIT "I" Note I: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY REPORTING ENTITY The Richmond 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 ACCOUNTlNG 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 Richmond County Board of Education. District-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe 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 the fiduciary fund. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. The School District reports the following major governmental funds: - 12 - RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "I" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES General Fund is the School District's primary operating fund. It accounts for all financial resources of the School District. except those resources required to be accounted for in another fund. District-wide Capital Projects Fund accounts for financial resources including Bond Proceed, grants from Georgia State Financing and Investment Commission and Special Purpose Local Option Sales Tax proceeds to be used for the acquisition, construction or renovation of major capital facilities. Debt Service Fund accounts for taxes (property and sales) legally restricted for the payment of general long-term principal, interest and paying agent's fees. The School District reports the following fiduciary fund types: The Private - Purpose Trust fund reports a trust arrangement under which principal and income may be expended to provide scholarships for selected students. Agency funds account for assets held by the School District as an agent for various funds, governments or individuals. BASIS OF ACCOUNTING The basis ofaccounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes. sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. The Board uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund - 13 - .-----------------------------~=----- RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FlNANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "I" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources. The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants. then general revenues. A departure from the above definitions is the accounting treatment afforded the final two payments on General Fund teachers' and bus drivers' contracts, and the resources available from the Georgia Department of Education for the State's share of these contracts. During fiscal year 2002, a substantial number of personnel of the School District were employed for a one hundred and ninety day period beginning in August 2001 and ending in early June 2002. Personnel contracts for this employment period specify that compensation be paid in twelve equal monthly payments beginning in September 2001 and ending in August 2002. State grants to fund the State's share of these contracts were disbursed from the Georgia Department of Education to the School District in the same twelve months. As of June 30, 2002, compensation under these employment contracts had been earned. but two of the twelve monthly payments, due for July and August 2002, had not been made. Payments for these two months were made and recorded as costs by the School District subsequent to June 30, 2002. Also, the State's portion of the compensation paid in July and August 2002 was received and recorded as revenue in the fiscal year subsequent to June 30, 2002. Conversely, the similar costs and related revenues for contractual services completed prior to June 30, 200 I, were recorded in the year ended June 30, 2002. Generally accepted accounting principles require that revenues be recorded when earned or available and measurable as appropriate and that expenditures or expenses as appropriate be recorded when incurred, rather than when funds are received or disbursed. RESTATEMENT OF PRIOR YEAR FUND BALANCE - GENERAL FUND In prior years, the financial activities of the School District's School Food Services Fund, Lottery Programs, Federal Programs, Other Programs and Athletic Fund were reported as Special Revenue Funds. These funds had a combined fund balance of$6,I 32,377.11 at July 1, 2001. For fiscal year 2002, these funds have been reported as part of the General Fund. In addition, governmental fund activity from the various school activity accounts, which were not reported in the prior year's financial statements, have been reported within the General Fund for fiscal year ended June 30, 2002. The governmental fund activity ofthe various school activity accounts had a fund balance of $649,540.16 at July 1, 2001. This change is in accordance with generally accepted accounting principles. - 14 - --------- RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "I" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES General Fund Balance July l, 2001 $ 25,996,289.45 Add Funds Consolidated with General Fund: School Food Services Fund Athletic Fund Other Programs School Activity Account - Governmental Activity 5.791,933.57 339,123.65 1,319.89 649,540.16 Deduct: Food Inventories Costing Differences 124,637.62 General Fund Balance July I, 200 I (Restated) $ 32,653,569.10 RESTATEMENT OF PRIOR YEAR FUND BALANCE - PRIVATE PURPOSE TRUSTS In prior years, the financial activities of the School District's Davidson Trust Fund, Gail Hendricks Scholarship Fund and Robetta McKenzie Scholarship Fund were reported as Expendable Trust Funds. These funds had a combined fund balance of$45,312.71 at July 1, 2001. For fiscal year 2002, these funds have been reported as part of Agency Funds. CHANGES IN ACCOUNTING PRINCIPLES The Richmond County Board of Education has implemented a new financial reporting model as required by provisions of Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments, as of June 30, 2002. The provisions of GASB Statement No. 34 require the inclusion of a Statement ofNet Assets. The elements comprising Net Assets - Beginning include the following: General Fund (Restated) July 1, 200 I Capital Projects Fund Debt Service Fund $ 32,653,569.10 36,639,200.79 4,208,201.98 Governmental Funds (Restated) July 1, 2001 Capital Assets Accumulated Depreciation Property Tax Revenue Timing Differences Bonds and Notes Payable Capital Leases Payable Compensated Absences $ 73,500,971.87 298,504,972.58 -86, 193,296.35 2,663,415.37 -47,575,000.00 -17,089,427.27 -1,269,110.42 Net Assets Beginning (See Exhibit "B") $222.542.525.78 - 15 - ---------------------- -- - ---------~=~--- RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBlT "I" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CASH AND CASH EQUIVALENTS COMPOSITION OF DEPOSITS Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the Board to deposit its funds in one or more solvent banks or insured Federal savings and loan associations. INVESTMENTS COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone 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 and equity investments are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following: ( 1) Obligations issued by the State of Georgia or by other states, (2) Obligations issued by the United States government, (3) Obligations fully insured or guaranteed by the United States government or a United States government agency, (4) Obligations of any corporation of the United States government, (5) Prime banker's acceptances, (6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services, (7) Repurchase agreements, and (8) Obligations of other political subdivisions of the State of Georgia. 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 - 16 - RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "I" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES disclosed from infonnation available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. PROPERTY TAXES The Augusta-Richmond County Board of Commissioners fixed the property tax levy for the 2001 tax digest year (calendar year) on October 8, 2001 (levy date). Taxes were due on December 20, 2001 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2001 tax digest are reported as revenue in the governmental funds for fiscal year 2002. The Augusta-Richmond County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% oftaxes 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, 2002, for maintenance and operations amounted to $62,047,925.53 and for school bonds amounted to $5,917,530.15. Tax millage rates levied for the 2001 tax year (calendar year) for the Richmond County Board of Education were as follows (a mill equals $1 per thousand dollars of assessed value): School Operations School Bonds 18.688 mills 1.860 mills 20.548 mills SALES TAXES Special Purpose Local Option Sales Tax revenue during the year amounted to $30,742,872.92 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 CONSUMABLE SUPPLIES On the financial statements, inventories of athletic, custodial, instructional, maintenance and transportation supplies are reported at cost (weighted average) and textbooks are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby consumable supplies are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used. - 17 - RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "I" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOOD INVENTORIES On the 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. 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 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. 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 ALL $ 5,000.00 $ 5,000.00 $ 5,000.00 N/A 20 years 25 to 50 years 5 to 20 years Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives. GENERAL OBLIGATION BONDS The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. Bond issuance costs are recognized in the financial statements during the fiscal year bonds are issued. In addition, general obligation bonds have been issued to refund existing general obligation bonds. General obligation bonds are direct obligations - I8 - RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "I" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Assets. Note 3: DEPOSITS AND INVESTMENTS COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a 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 ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. If a depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. OCGA Section 45-8-11 (b) provides an officer holding public funds may, in his discretion, waive the requirement for security in the case ofoperating funds placed in demand deposit checking accounts. Acceptable security for deposits consists of any one of or any combination of the following: ( 1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia, (2) Insurance on accounts provided by the Federal Deposit Insurance Corporation, (3) Bonds. bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia, (4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia, (5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose, (6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and - 19 - -- ----~=---- RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "I" Note 3: DEPOSITS AND INVESTMENTS (7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intennediate 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 At June 30, 2002, the bank balances were $31,279,292.81. The amounts of the total bank balances are classified into three categories of credit risk: Category I - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the School District or by the School District's agent in the School District's name. Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name. Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the School District's name.) The School District's deposits are classified by risk category at June 30, 2002, as follows: Risk Category Bank Balance 1 $ 674,271.22 2 30,603,600.74 3 1,420.85 Total $31,279.292.81 CATEGORIZATION OF INVESTMENTS Investments are classified as to risk by the three categories described below: Category I - Insured or registered, or securities held by the School District or the School District's agent in the School District's name. Category 2 - Uninsured or unregistered, with securities held by the counterparty's trust department or agent in the School District's name. Category 3 - Uninsured or unregistered, with securities held by the counterparty, or by its trust department or agent but not in the School District's name. Funds invested in an investment pool managed by another government are not required to be categorized unless the investing entity owns specific, identifiable investment securities in the pool. - 20 - RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "I" Note 3: DEPOSITS AND INVESTMENTS At June 30, 2002, the carrying value ofthe School District's total investments was $157,369,305.03 which is materially the same as fair value. The investments are classified as to risk categories as follows: Type of Investment U S Government Common Stoel,. Total Local Government Investment Pools Total Investments Risi,. Cah::gones 2 3 Carrying Amount Fair Value $121,232.955.99 $ $ 499,547 12 000 $121.232.955.99 $121.232,955.99 499,547.12 499 547 12 $---422..54.7.U $J21232955.,__2_2 $===='""O"f"ill' S 121,732.503.11 $121.732.503.11 35,636,801 92 35,636,801 92 $ I 5:Z 369 305..D.3 $ I5:Z 369 3..Q5...D3. The carrying amounts shown above includes amounts maintained in an investment pool by the State of Georgia, Office ofTreasury and Fiscal Services in which the School District owns no identifiable securities. The investment policy ofthe State of Georgia, Office ofTreasury and Fiscal Services for the Local Government Investment Pool (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. A description ofthe Primary Liquidity Portfolio is as follows: The Primary Liquidity Portfolio consists of Georgia Fund 1, which is a combination local and state government investment pool, and Fund 6. Georgia Fund 1 is a stable net asset value investment pool which follows Standard and Poor's criteria for AAAm rated money market funds. The pool is not registered with the Securities and Exchange Commission as an investment company but does operate Georgia Fund 1 in a manner consistent with Rule 2a-7 of the Investment Company Act of 1940 and is considered to be a 2a-7 like pool. The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($1.00 per share value). Net asset value is calculated weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and values participant's shares sold and redeemed based on $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost, which approximates fair value. The pool does not issue any legally binding guarantees to support the value of the shares. Participation in the pool is voluntary and deposits consist of funds from local governments; operating and trust funds of Georgia's state agencies, colleges and universities; and current operating funds of the State of Georgia's General Fund. Investments in Georgia Fund 1 and Fund 6 are directed toward short-term instruments such as U. S. Treasury obligations, securities issued or guaranteed as to principal and interest by the U. S. Government or any of its agencies or instrumentalities, banker's acceptances and repurchase agreements. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2002, was 0.12 years. The average investment duration for Fund 6 on June 30, 2002, was 0.75 years. - 21 - ----------~=--- RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "I" Note 4: NON-MONETARY TRANSACTIONS The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 1 - Inventories Note 5: CAPITAL ASSETS The following is a summary of changes in the Capital Assets during the fiscal year: Balances Jul:t I, 2001 Increases Decreases Balances June 30, 2002 Governmental Activities Capital Assets. Not Bemg Depreciated: Land Construction m Progress $ 7,249,536 79 $ 1.148_634.76 $ 8,398.171.55 1,072,362 18 I0,805,891 98 $ -726,001.65 11, 152,252 51 Total Capital Assets Not Bemg Depreciated $ 8,321,898 97 $11,954,526 74 $ -726,001 65 $ 19,550,424 06 Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements $258.176.552.40 $ 2.387,879 40 $ 25.960.670.45 1,393.948.40 6.045,850. 76 000 $260,564.431.80 27.354,618.85 6,045,850.76 Less Accumulated Depreciation for. Buildings and Improvements Equipment Land Improvement~ 64.317.432 24 17.841,104.87 4,034,759 24 5,118,79285 1.458.016.89 290,253.72 69.436,225 09 19,299.121 76 4,325,012.96 Total Capital Assets, Being Depreciated, Net $203,989,777 26 $ -3,085,235 66 $ 0.00 $200,904,541.60 Governmental Activity Capital Assets - Net $212,311 676_.23 $ 8,869 291.illl $ -726,001...65 $220 454 %5 66 Capital assets being acquired under capital leases as of June 30, 2002, are as follows: Governmental Funds Land and Equipment Less: Accumulated Depreciation $1,829,375.18 -712,252.08 $1,117,123.10 Current year depreciation expense by function is as follows: - 22 - RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "I" Note 5: CAPITAL ASSETS Instruction Support Services Pupil Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services $ 3,313,084.38 $ 346,668.00 349,238.36 1,913.96 302,851.65 11,625.60 963,317.05 632,581.79 59,669.88 54,109.20 2,721,975.49 832,003.59 $ 6,867,063.46 Note 6: RESTRICTED ASSETS Bond proceeds and grants from Georgia State Financing arid Investment Commission to be used for the acquisition, construction or renovation of major capital facilities and Special Purpose Local Option Sales Tax (SPLOST) and property tax levied specifically for retirement of outstanding bond principal, interest and paying agent's fees (Debt Service Funds) are reported as restricted assets in the Statement of Net Assets because their use is limited by applicable bond covenants or statutory prov1s1ons. Restricted assets at June 30, 2002, were as follows: Restricted Cash and Cash Equivalents: Debt Services Capital Acqmsit1ons Restricted Investments Debt Services Capital Acqu1s1tions Bond Proceeds Cagital Pro1ects Georgia State Financing and Investment Commission SPLOST Proceeds Debt Service Funds $ 4,123.653 68 $ 142.981.21 $ 273,001 00 $ 994,659 44 $118.304,616.28 $ 396.260 46 $23,823.838.20 Note 7: RISK MANAGEMENT The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation. - 23 - RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "I" Note 7: RISK MANAGEMENT The School District has obtained commercial insurance for risk ofloss associated with torts, assets, errors or omissions and acts of God. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the Board's insurance coverage in any of the past three years. The School District has established a limited risk management program for workers' 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. An excess coverage insurance policy covers individual claims in excess of $250,000.00 loss per occurrence, up to the statutory limit. Changes in the workers' 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 2001 2002 $ 0.00 $ 137,494.44 $ 137,494.44 $ 0.00 $ 0.00 $ 167,698.59 $ 167,698.59 $ 0.00 The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund with expenditures and liability being reported when it is probable that a loss has occurred, and the amount ofthat loss can be reasonably estimated. Changes in the unemployment compensation claims liability during the last two fiscal years are as follows: 2001 2002 Beginning of Year Liability Claims and Changes in Estimates Claims Paid End of Year Liability $ 8,049.00 $ 5,677.00 $ 12,186.00 $ 1,540.00 $ I,540.00 $ 17 414.34 $ 1,540.00 $ 18,414.34 The School District has purchased surety bonds to provide additional insurance coverage as follows: - 24 - RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS ' -~ JUNE 30, 2002 EXHIBIT "I" Note 7: RISK MANAGEMENT Position Covered Amount Superintendent President Vice-President Comptroller Assistant Superintendent Associate Superintendent Supervisors Administrative Assistant Each Central Office Bookkeeper Each Principal Each School Bookkeeper Each School Business Manager Athletic Business Manager Each Lunchroom Manager $ 50,000.00 $ 50,000.00 $ 50,000.00 $ 50,000.00 $ 50,000.00 $ 50,000.00 $ 20,000.00 $ 10,000.00 $ 10,000.00 $ 5,000.00 $ 5,000.00 $ 5,000.00 $ 5,000.00 $ 3,000.00 Note 8: SHORT-TERM DEBT The School District issues tax anticipation notes in advance of property tax collections, depositing the proceeds in its General Fund and District-Wide Capital Projects Fund. This short-term debt is to provide cash for operations until property tax collections are received by the School District. Article IX, Section V, Paragraph V of the Constitution of the State of Georgia limits the aggregate amount of short-term debt to 75 percent of the total gross income from taxes collected in the preceding year and requires all short-term debt to be repaid no later than December 31 ofthe calendar year in which the debt was incurred. Short-term debt activity for the fiscal year is as follows: Beginning Balance Issued Redeemed Ending Balance Tax Anticipation Notes $13.000.Q0_Qj}_Q $_15._000,000.00 $28,00Q.,Q_QQ.JlO $ .. 0.00 Note 9: LONG-TERM DEBT CAPITAL LEASES The Richmond County Board of Education has entered into various lease agreements as lessee for school buses, operating vehicles, office equipment, computer equipment, equipment upgrades at various schools, lighting systems, a career exploration lab and the acquisition and construction of school facilities. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of the future minimum lease payments as of the date of their inception. - 25 - RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "I" Note 9: LONG-TERM DEBT COMPENSATED ABSENCES Compensated absences represent obligations of the School District relating to employees' rights to receive compensation for future absences based upon service already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. The School District uses the vesting method to compute compensated absences. GENERAL OBLIGATION DEBT OUTSTANDING General Obligation Bonds currently outstanding are as follows: Purpose Interest Rates Amount General Government - Series 2002 General Government - Refunding - Series 1998 General Government - Refunding - Series 1993 General Government - Refunding - Series 1991 2.50% - 5.0% 3.80% - 4.25% 2.50% - 4.70% 4.50% - 6.30% $115,000,000.00 5,480,000.00 9,320,000.00 3,280,000.00 $133,080.000.00 The changes in Long-Term Debt during the fiscal year ended June 30, 2002, were as follows: Capital Leases Governmental Funds General Compensated Obligation Absences Bonds Unamortized Bond Premium Total Balance July I. 2001 $ 17,089.427.27 $ 1,269,110.42 $ 47.575,000.00 $ 0.00 $ 65.933,537.69 Add1t10ns Annual Leave Earned and Utilized (Net) G.O Bonds Unamortized Bond Premium 37,136.68 115,000,000.00 37,13668 115,000,000.00 5.399,270 00 5,399,270.00 Deductions Debt Retired Bond Premium Amortized 1.631.931 27 29.495,000.00 539,927 00 31. 126,931 27 539,927.00 Balance June 30, 2002 $.li.45 7.4%J!Q $ I 306 247. 1..Q $J 33 080 000 0Q $ 4 8593U.0.0 $J54 703.086. lO Portion of Long-Term Debt Due within One Year $ 1,208,233.88 $ 1,306,247.10 $ 7,895,000 00 $ 1,079,854 00 $ 11,489,334 98 At June 30, 2002, payments due by fiscal year which includes principal and interest for these items are as follows: - 26 - RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "I" Note 9: LONG-TERM DEBT Fiscal Year Ended June 30 2003 2004 2005 2006 2007 2008 - 2012 2013-2017 2018 - 2022 Total Principal and Interest Ca121tal Leases Prmc112al Interest General Obhgatton Debt Pnnc112al Interest Unamortized Bond Premium $ 1.208.233.88 $ 839,572 66 $ 7.895.000 00 $ 7,468,217 50 $ 1,079,854 00 1.123,727.93 780.728 92 21.550,000.00 5,268,710.00 1,079.854.00 I, 182.385 73 725.063 62 22.700.000 00 4.386,756.25 1,079.854 00 1,238.212 70 666,386 87 24.855.000.00 3,251,722 50 1,079,854.00 3.049,935 76 2.598.690 06 26.080,000 00 2.042,880.00 539,927 00 2.040,000 00 2,000.033 75 30.000,000 00 712.500 00 2. 740.000 00 1.300, 175 00 2,875,000 00 358,050 00 $1.5 45:Z 426 QQ $~68,7QQJIB $J.33.Q8Q OOQ QQ $23 IJQ :Z86 25. $ 4 859 343..ilQ Note I0: ON-BEHALF PAYMENTS The Board has recognized revenues and costs in the amount of $2,705,924.93 for health insurance and retirement contributions paid on the Board's behalf by the following State Agencies. Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $2,340,858.93 Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $365,066.00 Note I I: SIGNIFICANT COMMITMENTS The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2002, together with funding available: - 27 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - -- RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "I" Note 11: SIGNIFICANT COMMITMENTS Project Unearned Executed Contracts Funding Available From State B-02-005-414.2 B-02-003-432 B-02-004-413 B-02-006-438 B-02-009-438 B-02-011-444 B-02-015-425 B-02-007-412 B-01-042-439 03/02S- 721-022 B-01-045-422 $ 4,298,965.80 146,325.50 119,323.04 156,090.60 50,322.60 184,043.52 204,492.80 156,090.60 438,084.14 5,429,865.39 266,107.20 $ 1,552,438.00 $11,449,711.19 $ 1,552,438.00 The amounts described in this note are not reflected in the basic financial statements. Note 12: 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 ofthese proceedings is not presently determinable, but is not believed to be material to the basic financial statements. N'ote 13: ACCUMULATED EMPLOYEES' LEAVE Administrative and other clerical personnel earn two days of vacation each month with a maximum accumulation of twenty-four days less required vacation days to be taken during the year. Maintenance and other twelve-month employees earn vacation leave ranging from ten days to twenty-four days per year depending upon the employee's length of service with a maximum accumulation of22 days. Vacation leave vests with the employee and unused accumulated vacation leave up to the maximum accumulation is paid at the current rate of pay, to employees upon retirement or termination of employment. See Note 9 - Compensated Absences - 28 - RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS -- -- JUNE 30, 2002 EXHIBIT "I" Note 14: RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS) TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school systems are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts. TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.24% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows: Fiscal Year Percentage Contributed Required Contribution 2002 2001 2000 100% 100% 100% $12,647,066.90 $14,559,150.00 $14.016, 137.79 - 29 - RICHMOND COUNTY BOARD OF EDUCATION GENERAL FUND SCHEDULE OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL - (NON-GAAP BASIS) YEAR ENDED JUNE 30. 2002 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 Adm1mstrat1on School Admin1stratIon Business Admin1strat1on Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Community Services Food Services Operation Capital Outlay Debt Service Total Expenditures Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES (USES) Other Sources Other Uses Total Other Financing Sources (Uses) Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses Fund Balances - Beginning NONAPPROPRIATED BUDGETS ORIGINAL FINAL ACTUAL AMOUNTS $ 60,285,376 00 $ 60,285,376 00 $ 62,118,758 51 640,000 00 640,000 00 1,236,067 18 145,580,209 00 149,781,345 00 151,575,081 11 24,462,109 00 30,335,226 00 29,211,371 50 3,135,775 00 3,279,900 00 2,939,773 43 1,200,000 00 1,509,000 00 798,642 92 1,786,565 30 1,700,979 00 3,827,069 22 $ 237,090,034 30 $ 247,531,826 00 $ 251,706,763 87 $ 152,430,002 00 $ 156,854,616 00 $ 155,729,874.35 8,303,731 00 6,092,857 30 5,667,761.00 2,381,603 00 15,211,42200 1,508,548 00 24,481,355 00 8,138,011 00 2,319,355 00 84,726 00 12,308,743 00 307,60000 2,789,109 00 9,337,585 00 7,314,663 00 5,706,448 00 2,487,447 00 15,265,342.00 1,547,26300 24,491,720 00 8,389,733.00 2,882,079 00 138,648 00 239,200 00 14,771,533 00 55,000 00 2,789,109 00 8,427,641 39 7,122,185 94 5,293,162 12 2,564,684 33 15,372,408 28 1,493,952 13 23,302,181 49 8,428,888 80 2,237,994 98 64,297 13 246,726 62 13,963,194 58 55,088 06 2,617,879 97 $ 242,024,823 30 $ 252,270,386 00 $ 246,920,160 17 $ -4,934,789 00 $ -4,738,560 00 $ 4,786,603 70 $ 237,400 00 $ 15,000,000 00 -634,900 00 -15,841,508 00 $ -736 056 78 $ -397,500 00 $ -84150800 $ -736 056 78 $ -5,332,289 00 $ -5,580,068 00 $ 4,050,546 92 32,635,275 33 32,635,275 33 32,653,569 10 Fund Balances - Ending See notes to the basic financial statements $ 27,302,986 33 $ 27,055,207.33 $ 36,704,116 02 - 30 - RICHMOND COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30. 2002 SCHEDULE "2" FUNDING AGENCY PRQGRAMIGRANT Agnculture. U S Department of Child NutntIon Cluster Pass-Through From Georgia Department of Education Food and NutntIon Program Food Services School Breakfast Program National School Lunch Program Pass-Through From Office of School Readiness Summer Food Service Program for Children Total Child NutntIon Cluster Other Programs Pass-Through From Georgia Department of Education Food and Nutnt1on Program Food Distribution Program (1) Pass-Through From Office of School Readiness Food and Nutnt1on Program Child and Adult Care Food Program Total U S Department of Agnculture Corporation for National and Community Service Pass-Through From Georgia Department of Education Learn and Serve America School and Community Based Programs Education, U S Department of Special Education Cluster Pass-Through From Georgia Department of Education lnd1v1duals with D1sab1hlles Education Act Part B - Special Education Capacity Building Improvement Flow Through Georgia Leaming Resources System Preschool Severely Emotionally Disturbed Total Special Education Cluster Other Programs Direct Impact Aid Pass-Through From Georgia Department of Education Comprehensive School Reform Demonstration Proiect Elementary and Secondary Education Act Title I Accountab1hty Grants Grants to Local Educational Agencies Tltlell Eisenhower Professional Development Tltlelll Technology Literacy Challenge Fund Grants TltleVI Innovative Education Program Strategies Class Size Reduction Safe and Drug-Free Schools and Communities Stewart B McKinney Homeless Assistance Act Education for Homeless Children and Youth Vocational Education - Basic Grants to States High School Program Basic Grant Total U S Department of Education CFDA NUMBER PASSTHROUGH ENTITY ID NUMBER FEDERAL REVENUE IN PERIOD EXPENDITURES IN PERIOD 10 553 10 555 10 559 NIA $ 2,070.584 87 (2) NIA 7,456,091 13 $ 13,045,705 55 (3) NIA 332,335 06 332,335 06 $ 9,859,011 06 $ 13,378,040 61 10 550 10 558 NIA 850,471 82 850,471 82 NIA 59,816 27 (2) $ 10,769,299 15 $ 14,228,512 43 94 004 NIA $ 1,949 34 $ 1 949 34 84173 84 027 84 027 84173 84 027 84 041 84 332 84 348 84 010 84 281 84 318 84 298 84 340 84186 84196 84 048 NIA $ 56,507 00 $ 56,507 00 NIA 3,036,672 24 3,036,672 24 NIA 153.128 50 153,128 50 NIA 130,081 04 130,081 04 NIA 297,009 07 297 009 07 $ 3,673,397 85 $ 3,673.397 85 1,216,870 02 NIA 124,750 00 (5) 124,750 00 NIA 382,590 45 382,590 45 NIA 8,794,155 07 8,794,155 07 NIA 310.606 39 310,606 39 NIA 124,13195 124,131 95 NIA 579,504 44 579,504 44 NIA 1,560,208 35 1,560,208 35 NIA 350,009 37 350,009 37 NIA 10,263 94 10,263 94 NIA 566,840 00 566,840 00 $ 17,693,327 83 $ 16 476 457 81 - 31 - RICHMOND COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR Er'JDED JUNE 30. 2002 SCHEDULE "2" FUNDING AGENCY PROGRAM/GRANT Health and Human Services. U S Department of Pass-Through From Georgia Department of Human Resources Block Grants for Prevention and Treatment of Substance Abuse Grant-m-A1d Justice, U S Department of Direct Public Safety Partnership and Community Pohcmg Grant OTHER FEDERAL ASSISTANCE Defense, U S Department of Direct Department of the Air-Force R O T C Program Department of the Army R O T C Program Depa_rtment of the Mannes R O T C Program Department of the Navy R O T C Program Total U S Department of Defense CFDA NUMBER PASSTHROUGH ENTITY ID NUMBER FEDERAL REVENUE IN PERIOD EXPENDITURES IN PERIOD 93 959 NIA $ 155,060 oo s___1-5~5~,0~6~0~0.o... 16 710 $ --'-'15:..o1...,,0:..:B.;..1=2=-2 (4) $ 37,187 72 (4) 183,673 13 (4) 52,349 72 (4) 167 443 39 (4) $ 440,653 96 Total Federal Fmanaal Assistance $ 29,211,371 50 $ 30,861,979 58 NIA = Not Available Notes to the Schedule of Expenditures of Federal Awards (1) The amounts shown for the Food D1stnbut1on Program represents the Federally assigned value of nonmonetary ass:stance for donated com111od:ties received and/or consumed by the School Distnct dur:ng the current fiscal year (2) Expenditures for the Child and Adult Care Food Program and the School Breakfast Program were not maintained separately and are mciuded m the 2002 National School Lunch Program (3) Expenditures for this program :nclude State. and/or Other Funds Expenditures are not ma:ntamed by fund source (4) Expenditures on this program were not ma:nta:ned by fund source (5) Funds earned on this program do not require reporting of expend:tures. Ma1or Pr<>Qrams are identified by an aster:sk () :n front of the CFDA number The School D:stnct did not provide Federal Assistance to any Subree1p1ent The accompany:ng schedule of expenditures of Federal awards includes the Federal grant act1v1ty of the Richmond County Board of Education and 1s presented on the modified accrual basis of account:ng which 1s the basis of accounting used :n the presentation of the fund finanaal statements See notes to the basic finanaal statements - 32 - RICHMOND COUNTY BOARD OF EDUCATION -- - - - SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2002 AGENCY/FUNDING GRANTS Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle Grades (6-8) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disab1ht1es Category I Category II Category Ill Category IV Gifted Student - Category VI Remedial Education Program Altematrve Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Bus Replacement Nursing Services Pnncipal Supplements Vocational Supervisors Education Equalization Funding Grant Food Services Vocational Education Other State Programs 4-8 After School Program Georgia Learning Resources System Health Insurance K-3 Reading Program Mentor Teachers Outdoor Classrooms State Grant PayforPertormance - 33 - SCHEDULE "3" GOVERNMENTAL FUND TYPE GENERAL FUND $ 6,942,063 00 1,846,825.00 17,924,856 00 5,186,690 00 9,795,726.00 2,906,045.00 1,234,104.00 17,565,750 00 16,307,011 00 3,371.41600 810,016.00 3,588,236 00 6,515,657.00 862,930.00 401,668 00 617,908 00 1,439,363 00 194,934 00 3,103,846 00 968,879 00 576,212.00 4,128,578 00 6,284,439.00 8,981,744 00 2,784,836 00 645,241.00 646,596 00 139,965 00 141,398.00 11,589,627.00 1,041,784 00 252,570 59 357,851.00 97,314.00 2,340,858 93 521,764.18 28,764 00 750.00 236,000.00 RICHMOND COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2002 AGENCY/FUNDING GRANTS Education, Georgia Department of Other State Programs Preschool Handicapped Program School Snack Severely Emotionally Disturbed Student Achievement Teachers' Retirement Lottery Programs Computers in the Classroom Post Secondary Options Office of School Readiness Pre-Kindergarten Program Office of Treasury and Fiscal Services Pubhc School Employees Retirement CONTRACTS Education, Georgia Department of Foreign Language Model Program Georgia's Reading Challenge Middle School After School Program OTHER Community Affairs, Georgia Department of Local Assistance Grant SCHEDULE "3" GOVERNMENTAL FUND TYPE GENERAL FUND $ 494,566.00 90,509.20 2,351,948.00 494,696 50 180,404.97 912,482.00 2,178.00 4,112,516 74 365,066 00 52,302 00 35,185.00 37,500.00 65,511 00 $ 151,575,08111 See notes to the basic financial statements. - 34- RICHMOND COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS YEAR ENDED JUNE 30. 2002 SCHEDULE "4" PROJECT The general obhgatK>n debt of the d1stnct will be retired from the proceeds of the special use tax This WIii indude a large portion of the bond issue of $115,000,000 00 entitled "Richmond County General ObhgatK>n School Bond Senes 1996" and certain other previously outstanding general obligation bonds at an estimated cost of $124,750,000 00 The pnncipal and interest on these bonds come due on May 1st and November 1st of each year May 1, 1998, WIii be the first time the pnncipal WIii come due to be retired, in part, by the sales tax The school board WIii construct, as provided in the election, a middle school and/or an elementary school, which expenditures shall indude acquinng, constructing and equipping these school buildings In addlllon, to the construction of the middle and/or elementary school, the special sales tax shall be ullhzed to renovate, repair, improve and equip eXlstlng school buildings and other buildings and facilities ORIGINAL ESTIMATED COST(1) CURRENT ESTIMATED COSTS(2) AMOUNT EXPENDED IN CURRENT YEAR(3) AMOUNT EXPENDED IN PRIOR YEARS (3) PROJECT STATUS $ 124,755,000.00 $ 124,755,000 00 $ 25,441,72514 $ 83,632,494 28 Ongoing 25,245,000 00 110,988,201 00 11,637,921 22 16,293,900 14 Ongoing $ 150,000,000.00 $ 235,743,201 00 $ 37,079,646 36 $ 99,926,394 42 ( 1) The School Dlstnct's onginal cost estimate as specified in the resolution calhng for the Imposition of the Local Option Sales Tax (2) The School D1stnc:t's current estimate of total cost for the prOJects lndudes all cost from proJect inception to completion (3) The voters of Richmond County approved the imposition of a 1% sales tax to fund the above pro1ects and retire associated debt. Amounts expended for these pro1ects may indude sales tax proceeds, state, local property taxes and/or other funds over the life of the prOjE!Cls See notes to the basic financial statements - 35 - RICHMOND COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE\ ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30. 2002 SCHEDULE "5" DESCRIPTION Direct Instructional Programs Kindergarten Program Kindergarten Program-Eariy lntervenbon Program Pnmary Grades (1-3) Program Pnmary Grades-Eariy lntervenbon (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early lntervenbon (4-5) Program Middle Grades (6-8) Program Middle School (6-8) Program High School General Educabon (9-12) Program Vocational Laboratory (9-12) Program Students with D1sab1hbes category 1 Category II Category Ill Category IV Gifted Student - Category VI Remedial Educabon Program Altemat1ve Educabon Program Enghsh Speakers of Other Languages (ESOL) TOTAL DIRECT INSTRUCTIONAL PROGRAMS Media Center Program Staff and ProfesslOllal Development ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (11 ELIGIBLE QBE PROGRAM COSTS SALARIES OPERATIONS TOTAL $ 7,965,359.00 $ 7,417,898 54 $ 197,777 89 $ 7,615,676 43 2,119,057.00 2,079,047.43 10,388 15 2,089,435 58 20,567,069 00 20,569,817 43 802,23845 21,372.055 88 5,951,234.00 5,199,864 53 22,847 34 5,222,711 87 11,239,664.00 12,680,036 97 584,413 80 13,264,450 77 3,334,408 00 1,416,017 00 20,155,030.00 18,710,747.00 3,868,380.00 13,512,803 00 460,873 00 708,991 00 1,651,532.00 223,668.00 2,267,628.97 1,727,350 49 21,359,782 55 24,592,929 70 4,409,16069 905,225 05 4,314,291.14 6,249,067 44 1,083,685.24 562,534.59 1,135,99043 1,809,649 55 401,407.85 8,521 51 80,515 52 792,674 99 860,555 82 468,332 88 22,866 05 18,145 24 22,401 41 3,624.50 20,577 50 2,593 05 42,948 71 16 143 83 2,276.150 48 1,807,866 01 22,152,457 54 25,453,485 52 4,877,493.57 928,09110 4,332,436 38 6,271,468.85 1,087,309.74 583,112 09 1, 138,583 48 1,852.598 26 417,551 68 $ 111,884,832 00 $ 118,765,368 59 $ 3,977,566 64 $ 122,742,935 23 3,561,374 00 661,150.00 4,399,989 57 512,542 75 686,951.09 179,642.28 5,086,940 66 692,18503 TOTAL QBE FORMULA FUNDS $ 116,107,356.00 $ 123.677.900 91 $ 4,844,160 01 $ 128,522.060 92 (1) Comprised of State Funds plus Local Five Mill Share See notes to the basic financial statements - 36- RICHMOND COUNTY BOARD OF EDUCATION GENERAL FUND- QUALITY BASIC EDUCATION PROGRAM (QBE) ALLOTMENTS AND EXPENDITURES - BY SITE YEAR ENDED JUNE 30, 2002 SCHEDULE "6" SITE Cross Creek High School Craig-Houghton Elementary School Hephzibah Elementary School Meadowbrook Elementary School Morgan Road Middle School Jamestown Elementary School Collins Elementary School Goshen Elementary School Glenn Hills Middle School Sue Reynolds Elementary School Willis Foreman Elementary School Tobacco Road Elementary School McBean Elementary School Lake Forest Hills Elementary School Jenkins-White Elementary School Spirit Creek Middle School Butler High School Garrett Elementary School Langford Middle School National Hills Elementary School Rollins Elementary School Walker Trad1t1onal Elementary School Windsor Spring Road Elementary School Hephzibah Middle School Barton Chapel Elementary School Copeland Elementary School Glenn Hills Elementary School Hephzibah High School Merry Elementary School Warren Road Elementary School Craig Elementary School Hornsby Elementary School East Augusta Middle School Westside High School Bayvale Elementary School Glenn Hills High School Milledge Elementary School Sego Middle School Johnson Magnet Josey High School Blythe Elementary School Gracewood Elementary School Lamar Elementary School Monte Sano Elementary School Academy of Richmond County High School - 37 - ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) ELIGIBLE QBE PROGRAM COSTS $ 3,545,647 00 $ 4,224,259 02 1,955,717 00 2,048,878 14 1,583,703.00 1,583,367 32 2,215,541 00 2,310,339 99 2,637,755.00 2,781,217 10 2,606,655.00 2,601,120 00 1,639,169 00 1,715,82031 1,711,218 00 1,784,469 51 3,421,495.00 3,598,013 82 1,512,881 00 1,431,260.82 2,361,497 00 2,250,813 85 2,243,292 00 2,188,193 81 1,973,852 00 1,856,457.01 2,169,836.00 2,286,528 79 1,542,897 00 1,518,048.00 2,538,597.00 2,744,334.81 3,274,006.00 4,270,732.27 971,907 00 1,122,169.26 2,066,945.00 2,342,679.17 778,078 00 872,643.57 1,483, 129 00 1,665,424.83 2,115,791.00 2,323,805.50 2,551,023.00 2,679,217 87 2,815,726 00 3,013,495.27 1,994,306.00 2,015,879 82 1,560,283.00 1,605,048 01 1,760,290.00 1,861,866 07 3,544,173.00 4,178,16914 1,731,703.00 1,601,406 86 1,598,878.00 1,671,184.88 63619 1,045,858.00 1,033,203.69 1,547,879 00 2,061,627.61 2,439,899 00 3,140,232 22 1,389,350.00 1,426,132 93 3,545,986.00 4,201,555 14 1,088,448 00 1,129,390 59 2,780,652 00 2,867,999 94 1,255,155 00 1,843,470 93 3,583,327 00 4,440,009 39 1,527,814 00 1,445,939.68 1,487,416.00 1,454,964.22 1,320,785.00 1,291,067 18 1,348,772 00 1,377,46917 3,178,980.00 4,186,262 73 RICHMOND COUNTY BOARD OF EDUCATION GENERAL FUND- QUALITY BASIC EDUCATION PROGRAM (QBE) ALLOTMENTS AND EXPENDITURES - BY SITE YEAR ENDED JUNE 30, 2002 SCHEDULE "6" SITE Southside Elementary School Wheeless Road Elementary School Davidson Magnet School Terrace Manor/Wilkinson Gardens Elementary School Bungalow Road Elementary School Harns Elementary School Murphey Middle School Tubman Middle School Wilkinson Gardens Elementary School Tutt Middle School Laney High School Sand Hills Psychoeducat1onal Program Central Office (Alternative Education Program) TOTAL (1) Compnsed of State Funds plus Local Five Mill Share ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) ELIGIBLE QBE PROGRAM COSTS $ 1,407,752 00 $ 1,521,655 32 1,704,687 00 1,742,516 13 2,003,001.00 2,753,617 41 1,875,938 00 1,815,054 66 1,116,437.00 1,180,893.23 1,044,837 00 1,064,232 04 2,176,784 00 2,441,624 98 2,029,489.00 2,294,514 46 1,505,100 00 1,464,021.06 1,870,340.00 2,248,167 68 2,052,624.00 2,866,444.25 7,548 32 116511532.00 1,2951839 26 $ 11118841832.00 $ 122,7421935 23 See notes to the basic financial statements. - 38 - SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS RUSSELL W. HlNTOl'i STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street, S W. Suite 214 Atlanta, Georgia 30334-8400 August 6. 2003 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Richmond County Board of Education REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED TN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Ladies and Gentlemen: We have audited the financial statements of Richmond County Board of Education as of and for the year ended June 30, 2002. and have issued our report thereon dated August 6, 2003. This report was qualified for a scope limitation and for a departure from generally accepted accounting principles. as identified in the auditor's report on the basic financial statements. Except as discussed in the following paragraph, 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. We were unable to review an official record of the Board's meetings to determine if there were any significant items that could affect the scope of our audit. Compliance As part of obtaining reasonable assurance about whether Richmond County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws. regulations, contracts and grants, 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 ofour tests disclosed no instances ofnoncompliance that are required to be reported under Government Auditing Standards. 2002YB-30 Internal Control Over Financial Reporting In planning and performing our audit, we considered Richmond County Board of Education's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. However, we noted certain matters involving the internal control over financial reporting and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over financial reporting that, in our judgment, could adversely affect Richmond County Board of Education's ability to record, process, summarize and report financial data consistent with assertions of management in the financial statements. Reportable conditions are described in the accompanying Schedule of Findings and Questioned Costs as items FS-7211-02-01 and FS-7211-02-02. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we believe none ofthe reportable conditions described above are a material weakness. This report is intended solely for the information and use of the management, members of the Richmond County Board of Education, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, ~-c:tl~ RWH:as 2002YB-30 State Auditor RUSSELL W. HINTON STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street, S. W Suite 214 Atlanta, Georgia 30334-8400 August 6, 2003 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Richmond County Board of Education REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133 Ladies and Gentlemen: Compliance We have audited the compliance of Richmond County Board of Education with the types of compliance requirements described in the US. Office ofManagemenr and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 2002. Richmond County Board of Education's major Federal programs are identified in the Summary of Auditor's Results Section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of Richmond County Board of Education's management. Our responsibility is to express an opinion on Richmond County Board of Education's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and 0MB Circular Al 33, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types ofcompliance 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 Richmond County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Richmond County Board ofEducation's compliance with those requirements. 2002SA-10 In our opinion, the Richmond County Board of Education complied. in all material respects, with the requirements referred to above that are applicable to each ofits major Federal programs for the year ended June 30, 2002. Internal Control Over Compliance The management of Richmond County Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered Richmond County Board of Education's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with 0MB Circular A-133. Our consideration ofthe internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level of risk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses. This report is intended solely for the information and use of the management, members of the Richmond County Board of Education, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. - ~ - ~ Respectfully submitted, RWH:as 2002SA-10 State Auditor SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS RICHMOND COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2002 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS FS-7211-00-01 FS-7211-01-01 Further Action Not Warranted Previously Reported Corrective Action Implemented SECTION IV FINDINGS AND QUESTIONED COSTS RICHMOND COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2002 I SUMMARY OF AUDITOR'S RESULTS 1. Type of Report Issued on the Financial Statements The auditor's opinion on the Richmond County Board of Education's financial statements was qualified for a scope limitation and for a departure from generally accepted accounting principles. 2. Reportable Conditions in Internal Control Disclosed by the Audit of the Financial Statements The audit report for the Richmond County Board of Education disclosed financial statement reportable conditions related to the following control categories. Expenditures/Liabilities/Disbursements General Ledger Revenues/Receivables/Receipts None ofthe reportable conditions described above are considered to be a material weakness. 3. Noncompliance Material to the Financial Statements The audit of the Richmond County Board of Education disclosed no instances of noncompliance that were deemed to be material to the financial statements. 4. Reportable Conditions in Internal Control Over Major Programs The audit report for the Richmond County Board of Education did not disclose any reportable conditions in internal control over major programs. 5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Richmond County Board of Education's report on compliance with requirements applicable to major programs was unqualified. 6. Audit Findings Required to be Reported by Section .51 0(a) of 0MB Circular A-133 The Richmond County Board of Education's audit did not disclose audit findings required to be reported by section .510(a) ofOMB Circular A-133. 7. Major Programs Federal awards audited as major programs are as follows: 84.010 Elementary and Secondary Education Act - Title I - Grants to Local Educational Agencies 84.041 Impact Aid 8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $952,132.73. - 1- RICHMOND COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2002 I SUMMARY OF AUDITOR'S RESULTS 9. Low Risk Auditee The Richmond County Board of Education qualified as a low risk auditee as defined by Section .530 ofOMB Circular A-133. II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Separation of Duties Reportable Condition Finding Control Number: FS-7211-02-01 Our examination of the principals' accounts disclosed weaknesses in internal control as discussed below: Revenues/Receivables/Receipts I) Deposit preparation was not separated from the record keeping and cash custody functions. 2) Based on a sample of40 items, thirteen receipts were not deposited to the bank account in a timely manner. Expenditures/Liabilities/Disbursements I) The check writing function was not separated from record keeping or processing ofsigned checks. 2) Based on a sample of 30 items, there was no documentation indicating prior approval of purchases included with voucher packets. These deficiencies were a result of management's decision to limit the number of administrative staff made responsible for accounting functions and failure to ensure established controls were functioning as designed. Management should implement procedures to ensure that the key accounting functions of custody, record keeping and authorization be segregated. Additionally, controls should be revised and monitored to provide reasonable assurance that transactions are processed according to established procedures. Management's Response: Management has implemented a new policy which requires funds collected in the schools to be deposited within three days oftheir receipt. This policy should help ensure that all monies received are deposited in a timely manner. -2 - RICHMOND COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 2002 II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Separation of Duties Reportable Condition Finding Control Number: FS-7211-02-01 In addition, Management has also instituted a new document, the Payment Authorization Form that the Principal must sign to indicate his or her preapproval of all purchases. Also, only Principals and the Controller of the Richmond County Board of Education are authorized to sign checks at the school level. Furthermore, although the complete segregation ofduties ofthe key accounting functions ofcustody, recordkeeping and authorization are valid internal controls, it is not economically feasible for the Richmond County Board of Education to separate those functions at the school level at this time. Internal Audits will continue to be performed to provide routine assessments of the schools' compliance with established board policies and procedures. GENERAL LEDGER Failure to Maintain Board Meeting Minutes Reportable Condition Nonmaterial Noncompliance Finding Control Number: FS-7211-02-02 The School District failed to maintain a permanent record of its Board meetings in accordance with Georgia Code 20-2-57, which sates in part: "It shall be the duty of the superintendent or the Board's nominee as secretary to be present at the meetings of the local board, to keep the minutes of its meetings and make a permanent record of them, and to do any other clerical work it may direct the superintendent to do. The superintendent or the Board's nominee shall record in a book, to be provided for the purpose, all official proceedings ofthe local board, which shall be a public record open to the inspection ofany person interested therein; and all such proceedings, when so recorded, shall be signed by the chairperson and countersigned by the secretary." This condition occurred because management ignored the specific requirements imposed upon the School District by Georgia Code 20-2-57. As a result, we were unable to review an official record of the Board's meetings to determine if there were significant items that could affect the scope of our audit. Appropriate procedures should be implemented by the School District to ensure that Board minutes are properly maintained and signed by the chairperson and secretary as required. -3- RICHMOND COUNTY BOARD OF EDUCATION SCHEDULE OF FINDThl'GS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2002 II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS GENERAL LEDGER Failure to Maintain Board Meeting Minutes Reportable Condition Nonmaterial Noncompliance Finding Control Number: FS-7211-02-02 Management's Response: Management has taken the appropriate action to maintain the official records ofthe Board meetings in accordance with Georgia Law. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported. -4-