Richmond County Board of Education, Augusta, Georgia annual financial statements for the fiscal year ended June 30, 2007 (including Independent Auditor's report)

RICHMOND COUNTY BOARD OF EDUCATION AUGUSTA, GEORGIA
ANNUAL FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
(including Independent Auditors' Report)
Dr. Dana T. Bedden, Superintendent Mr. James V. Atkins, Board President
L'E.Jt'R:NIN{j 'lO'D.Jty ..... L'E.Jt'DIN{j '10M0~1WW

RICHMOND COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

INTRODUCTORY SECTION

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

REQUIRED SUPPLEMENTARY INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

1

B

STATEMENT OF ACTIVITIES

2

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

4

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

5

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

6

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

7

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

8

H

STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

9

I

NOTES TO THE BASIC FINANCIAL STATEMENTS

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

27

RICHMOND COUNTY BOARD OF EDUCATION -TABLE OF CONTENTS-

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

28

3 SCHEDULE OF STATE REVENUE

30

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

32

5 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

35

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDITING 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 ID AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS

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

RICHMOND COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTIONV MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES

RICHMOND COUNTY

BOARD OF EDUCATION

JIM;\IY ATKll'\S f>r.-.wdm1

86-l Arond Street - 4 Hoor Augusta. Georgia 3090 I - 12 15
(706) 826-1000
DANA T. BEDDE~. Ed.D. S11peri11te11de111
January J8, 2008

C. GE~E SPIRES, CPA Conrro/Jer

Board of Trustees Richmond County Board ofEducation
Citizens of Ric hmond County
The annual fi nancial report for the year e nded June 30, 2007, prepared in accordance with generall y accepted accounting princ iples as promulgated by the Governmental Accounting Standards Board (GASB) is hereby submitted. The introduction section, which is unaudited, includ es this letter of transmittal, the mi ssion and beliefs of the Ric hmond County School System, quick facts about our system, a listing of the Board of Trustees and the County's organizational chart. The fina ncial section inc ludes the district-wide financial statements, fund level financ ial statements and the notes to the basic financial statements statewide.
The basic financial stateme nts a nd accompanying notes have been examined by the Georgia Department of Audits and Accounts. Their report is included here under Section I, Financ ial. Responsibility for the accuracy and completeness of the fina ncial statements rests with the Richmond County Board ofEducation.
Sincerely yours,
Dana T. Bedden, Ed . D. Superin tendent of Schools
D T B :j v

INTRODUCTION MISSION AND BELIEFS The Mission ofthe Richmond County School System is to educate students to become lifelong learners and productive citizens.
1. Every person has the right to a quality education. 2. Education is the shared responsibility of the individual, home, school, and the
community. 3. Every person can learn. 4. Respect and acceptance are essential for learning and personal development. 5. A safe, healthy and orderly environment is essential to learning. 6. Communication is the key to understanding among people. 7. Excellence cannot be compromised.
Augusta, Georgia is the second largest and oldest city in Georgia with a population of about 200,000. Situated on the bank ofthe Savannah River, Augusta is best known as the Garden City and home ofthe Masters GolfTournament held the first full week in April. It is also known for its rich medical heritage and the Fort Gordon military installation.
J
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Richmond County Board ofEducation

QUICK FACTS ABOUT OUR SYSTEM

Student Demographics (33,030) African American ................................................ ....... ....73% Asian .................. ....... ................ ... ... .. ... ...... .. ..............01% Hispanic ............. .... .. ............... ......................... ...........02% Multi-Racial ..................................................................02% White ..........................................................................22%

Schools (60) Comprehensive High ...........................................................08 Middle ....................................................... ....... .. .. ....... ... 09 Elementary........................................................................35 Magnet ...........................................................................03 Special. ... ........ .. ................. ... ................. . . .. ............... . .....03 Charter ............................. ....... .......... .... .. .. ................ .....02

2007 SAT Results Critical Reading Critical Math Critical Writing TOTAL

459 472 456 1,387

School Nutrition Approximately 14,500 breakfasts, 24,900 lunches, and 2,400 snacks are served each day.

Employees Certified Non Certified TOTAL

2,735 2,219 4,954

The following schools in this system qualified for Highest Percentage of Students Meeting and Exceeding Standards Award:
Davidson Magnet School-Platinum Award Winner A.R. Johnson Magnet - Platinum Award Winner Walker Traditional Elementary School- Gold Award Winner
The following schools qualified for a Greatest Gain ofStudents Meeting and Exceeding Standards Award:
Freedom Park Elementary - Gold Award Winner Garrett Elementary - Bronze Award Winner

Board Members
James Atkins President District 8 Term ends 12/31/08
Marion Barnes
District 1 Tenn ends 12/31/08
Eloise Curtis
District 2 Tenn ends 12/31/10
Frank Dolan
District 7 Term ends 12/31/10
Venus Cain District 9 Term Ends 12/31/10

Helen Minchew
District 10 Tenn ends 12/31/08
Jack Padgett, Jr.
District 6 Term ends 12/31/10
Barbara Pulliam
District 4 Term ends 12/31/08
Joe Scott Vice-President District 5 Term ends 12/31/08
Alex Howard District3 Term ends 12/31/10

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7 - -I The Peoole of Richmond
L Board ofEducation _J

Board

Superintendent

Deputy Superintendent

Assistant Superintendent for Administrative Services

Assistant Superintendent ror Instructional Services

Assistant Superintendent for School Improvement

Controller

Principals

Student Discipline K-
12 --,
Facilities Construction
Maintenance

Personnel Recruitment
Professional Learning
Employee Benefits

Curriculum

[ T:J L.

_____J

-,
Special Education

Transportation

L J Athletic Events

Guidance, Testing. and
Research

Zoning
School Social Workers

Educational Media and Technology
Psychological Services
____J
[ l GLRS

Accreditation

Accounting

L

_J L

---I

-; Internal
Auditing

Special

Data

Internal

Schools-

Processing

Affairs

AJternative,

Magnet

Purchasing Inventory

Public Safety

Leadership Development

I Control

Strategic Planning

l I School Nutrition

L
l

Career Technical Education

Production Printing
L

SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
January 23, 2008

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) of the Richmond County Board of Education, as of and for the year ended June 30, 2007, 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.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Board of Education's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opm10ns.

2007ARL-11X

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Richmond County Board of Education, as of June 30, 2007, 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 accordance with Government Auditing Standards, we have also issued our report dated January 23, 2008, on our consideration of the Richmond County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.
Management's Discussion and Analysis and the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through xi and page 27 respectively, are not a required part of the basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Richmond County Board of Education's basic financial statements. The accompanying supplementary information which consists of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the 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, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
The Introductory Section as listed in the table of contents, which includes a letter of transmittal, has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on it.
2007ARL-11X

A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24.
Respectfully submitted,
~w~~
Russell W. Hinton, CPA, CGFM State Auditor
RWH:gp 2007ARL-11X

RICHMOND COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007

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, 2007. 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 ofthe School District's financial performance.

FINANCIAL HIGHLIGHTS

Key financial highlights for the fiscal year ended June 30, 2007 are as follows:

In an election held November 7, 2006, Richmond County voters passed the third, one percent, Special Purpose Local Option Sales Tax (SPLOST} to raise not more than $225,000,000 over a period of twenty consecutive calendar quarters (2007-2012) and to issue $140,000,000 in general obligation debt. Proceeds will be used to construct, renovate and equip new schools including a vocational magnet schooi athletic facilities, acquire hardware, technology, school buses, and textbooks.

With the proceeds from the second, one percent, SPLOST, during fiscal year 2007, the school district opened two new elementary schools in South Augusta and completed renovation at one middle school and seven elementary schools. Renovations are ongoing at three high schools and six elementary schools.

Over the past five years, the school district has shown a decrease in full-time equivalent students.

WEIGHTED AVERAGE FTE

2006

2005

2003

32,530

32,972

33,395

33,627

33,807

In tot~ net assets increased $42.1 million, which represents an increase of 11.07 percent over 2006. All ofthe increase resulted from governmental activities.
General revenues accounted for $146.2 million. This represents 40.97 percent of all revenues. Program specific revenues, in the form of grants, contributions, and charges for services and sales, accounted for $210.7 million or 59.03 percent of total revenues. Total revenue increased 8. 74 percent.
The School District had $314.8 million in expenses related to governmental activities. Program specific grants, contnbutions, and charges for services and sales offset $210. 7 million of these expenses. General revenues, primarily property taxes and sales taxes of $146.2 million were adequate to provide for other expenses for these programs. Total expenses increased 8.25 percent.
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RICHMOND COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
Among major funds, the General Fund, had $309.2 million in revenues and $301.4 million in expenditures, and $.1 million in transfers from Capital Projects. The fund balance for the General Fund increased to $33.0 million.
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.
The next level ofdetail 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)
Statement of The 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 and the economic resources measurement focus. 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. 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 austerity reductions, state and federal mandates that are unfunded, and the age and condition of school facilities, and the economy ofthe area.
The Statement ofNet 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. The governmental activities of the Richmond County Board of Education are financed through taxes, state QBE funds, competitive and noncompetitive grants.
The Statement of Net Assets provides information about the overall financial activities of the school district; whereas, the Statement of Activities provides a comparison of direct expenses and program revenues. Direct expenses are incurred in association with a specific program or function.
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RICHMOND COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
REPORTING THE SCHOOL. DISTRICT'S MOST SIGNIFICANT FUNDS (FUND FINANCIALS) Governmental Funds 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. 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 be readily converted to cash. The fund statements offer a short-term view of the School District's financial activities. A reconciliation ofnet 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. Fiduciary Funds .The School District serves as a fiduciary for the Davidson Trust, Gail Hendrick Scholarship, Nora Coxwell Scholarship, Robetta McKenzie Scholarship, Cauthen 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 other 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 Schoo1 District may not use these assets to finance its operations.
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RICHMOND COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007

THE SCHOOL DISTRICT AS A WHOLE
The Statement ofNet Assets provides the prospective of the School District as a whole. Table 1 provides a comparative summary ofthe School District's net assets for 2006 and 2007.
TABLE 1 NET ASSETS (in Thousands)

Governmental Activities
June 30, 2007

Governmental Activities
June 30, 2006

Assets Current and Other Assets Capital Assets, Net

$

274,395 $

138,261

361,892

344,402

Total Assets

$

636,287 $

482,663

Liabilities Current and Other Liabilities Long-Term Liabilities

$

42,606 $

171,502

42,938 59,627

Total Liabilities

$

214,108 $

102,565

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

$

328,771 $

294,744

70,866

71,766

22,542

13,578

$

422,179 $

380,088

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RICHMOND COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
Table 2 shows the comparative changes in net assets for fiscal year 2006 and 2007.
TABLE2 CHANGE IN NET ASSETS
(in Thousands)

Revenues Program Revenues
Charges for Services Operating Grants and Contributions Capital Grants and Contributions
Total Program Revenues
General Revenues Taxes Property Taxes Sales Tax Grants and Contributions not Restricted Investment Earnings Miscellaneous
Total General Revenues
Total Revenues

Governmental Activities
June 30, 2007

Governmental Activities
June 30, 2006

$

4,620 $

4,836

204,636

181,296

1,408

5,220

$

210,664 $

191,352

$

72,495 $

70,079

36,797

37,864

23,476 7,939 5,504

20,215 5,628 3,065

$

146,211 $

136,851

$

356,875 $

328,203

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RICHMOND COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007

Program Expenses Instruction Support Services Pupil Services Improvement oflnstruction Educational Media Services General Administration School Administration Business Administration Maintenance and Operations of Plant Student Transportation Services Central Support Services Other Support Services

$

200,372 $

182,608

9,376 9,575 6,798 2,263 18,565 2,008 30,591 11,570 2,428
754

8,808 9,167 5,753 3,474 17,334
505 29,257 11,387
2,446 794

Operations ofNon-Instructional Services Community Services Food Services Interest on Short-Term and Long-Term Debt

174 17,008
3,312

159 15,771
3,349

Total Expenses

$

314,794 $

290,812

Change in Net Asset

$

42,081 $

37,391

Governmental Activities
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 are provided for 2006 and 2007.

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RICHMOND COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007

TABLE 3 Governmental Activities
(In Thousands)

Instructional

Total Cost of Services

Net Cost of Services

Fiscal Year Fiscal Year Fiscal Year Fiscal Year

2007

2006

2007

2006

$

200,372 $

182,608 $

49,747 $

48,731

Support Services Pupil Services Improvement of
Instruction Educational Media
Services General
Administration School
Administration Support Services
Business Maintenance and
Operation o f Plant Student
Transportation Central Support
Services Other Support
Services Operations ofNonInstructional Services
Community Services Food Services Interest on ShortTerm and Long-Term Debt

9,376 9,575 6,798 2,263 18,565 2,008
30,591 11,570 2,428
754
174 17,008
3,312

8,808 9,167 5,753 3,474 17,334
505
29,257 11,387 2,446
794
159 15,771
3,349

6,526 2,903 2,743 (1,683) 8,570 1,927
19,269 7,002 2,311
215
4 1,283
3,312

5,319 2,736 2,035 (226) 8,743
467
18,313 7,300 2,369 175
158 (10)
3,349

Total Expense

$

314,794 $

290,812 $

- - - ~ - 104,129 $

99,459

The School District is dependent upon operating grants and property taxes to support governmental activities. Instruction comprises 63.7 percent, Support Service 29.8 percent, Food Service 5.4 percent, Community Services 0.1 percent, and Interest 1.0 percent of government program expenses.

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RICHMOND COUNTY BOARD OF EDUCATION MANAGEMENT 'S DISCUSSION AND ANALYSIS FOR T HE FISCAL YEAR ENDED J UNE 30, 2007
Governmental Activities Cost of Services

Instructional 63-7"

Interest on Debt 1.0%
i::ood Services 5. 4%

Support Service s 29.8%

Instructional expend itures include act1v1tJes related to the interaction between students and teachers. Teaching may be performed in the classroom, home, or a hospital setting.
Support services include activities that assess and supplement the teaching process, assist teachers in developing and evaluating the technique of providing instruction, operation of the educational media centers, administration of the policy ofthe school district, maintenance of the fiscal responsibilities of the school distiict, transportation costs, and upkeep of the gro unds and facilities.
THE SCHOOL DISTRICT'S FUNDS
The School District's funds are accounted for using the modified accrual basis ofaccounting. All governmental funds had revenues and other financing sources of $497.5 mill ion and expenditures and other financing uses of $362.0 million. The general fund's fu nd balance reflected an increase of $7.9 mill ion, the debt service fund's fund balance decreased by $2.0 million, and the district-wide capital projects funds increased by $129.6 million. The decrease in the fund balance for the general fund indicates the School District spent more money than it received.
GENERAL FUND HIGHLIGHTS
The School District's budget is pr~pared according to Georgia law. The most significant budgeted fund is the General Fund. Throughout fiscal year 2007, the Schoo l District amended
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RICHMOND COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
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 $316.2 million exceeded the original budgeted of$284.0 million by $32.2 million. An increase of$15.5 million in federal revenues and an increase of $14.8 million in state revenue accounts for most of the increase in the budgeted revenues. The budgeted revenue exceeded the actual amount by $3.0 million.
The final budgeted expenditures and other financing uses of $316.2 million exceed the original budget of$284.0 million by $32.2 million. The difference was due to an increase in instruction by $20.6 million, and support services by $10.5 million and food services of $.8 million and Community Services of $.3 million. The actual expenditures and other financing sources and uses were $14. 7 million less than the budgeted amount.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
At the end of fiscal year 2007, the School District had capital assets of $361.9 million, net of accumulated depreciation. Table 4 shows comparative statements for 2006 and 2007.
TABLE4 CAPITAL ASSETS (Net of Depreciation, in Thousands)

Governmental Activities
June 30, 2007

Governmental Activities
June 30, 2006

Land

$

Construction Work in Progress

Building and Building Improvements

Equipment

Land Improvements

Total Capital Assets, Net of Depreciation

$

- ix-

14,962 $ 41,784 295,213
9,143 790
361,891 $

14,807 44,570 274,430
9,701 894
344,402

RICHMOND COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007

The primary increases occurred in buildings and building improvements. Due to funding from a Special Purpose Local Option Sales Tax and a bond issue, the School District is building and renovating numerous schools.

Debt
At June 30, 2007, the School District had $164.8 million in general obligation bonds, with $30.0 million due within one year, and capital leases of $.8 million, with $.8 million due within one year. Debt comparisons between fiscal year 2006 and 2007 are shown below.

TABLES DEBT
(in Thousands)

Governmental Activities
June 30, 2007

Governmental Activities
June 30, 2006

General Obligation Bonds Capital Leases Compensated Balances Unamortized Bond Premium
Total Debt

$

164,800 $

764

1,565

4,373

$

171,502 $

56,080 1,490 1,517 540
59,627

Debt significantly increased as the result of the issuance of a $134.8 million general obligation bond to advance fund projects for the Phase III SPLOST passed by the voters on November 7, 2006. Proceeds from the SPLOST will be used to pay the debt.
The School District previously accumulated sufficient funds in its Debt Service fund to pay the final payment of the 1993 general obligation bond. As of the 2007 tax year, the School District no longer levies a millage rate for debt.
CURRENT ISSUES
The Richmond County Board of Education has maintained its economic stability by budgeting conservatively and monitoring its expenditures. An area of concern is the State of Georgia's continued amended formula reduction to the QBE funding formula. For Fiscal Year 2007, this accounted for a loss ofrevenue of$3.6 million.

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RICHMOND COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
The U.S. Census estimates Richmond County's population at 200,000. Between 2000 and 2005, the population of Augusta, GA shows a minimal decrease in population. From 2006 to 2007 school enrollment decreased by approximately 450 students. The last five years has indicated a trend in decreasing enrollment. As reported by the U. S. Department of Labor, the Augusta Richmond County metropolitan statistical area had an unemployment rate of 6.6% in August, 2006. Over the succeeding twelve month period, the unemployment rate dropped by .9 to 5.7%. 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 funds it receives. Questions about this report or for additional financial information, please contact Controller, Richmond County Board of Education, 864 Broad Street, Augusta, GA 30901.
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RICHMOND COUNTY BOARD OF EDUCATION

EXIIlBIT "A"

RICHMOND COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2007

GOVERNMENTAL ACTMTIES

ASSEfS Cash and Cash Equivalents Investments Accounts Receivable
Taxes State Government Federal Government Other Inventories Deferred Charges Capital Assets Buildings Construction in Progress Equipment Land Land Improvements Less: Accumulated Depreciation
Total Assets

$

22,113,232

205,593,396

10,142,858 23,059,887 7,511,839 2,427,102 2,194,998 1,351,098

394,732,437 41,784,635 32,181,293 14,961,686 6,065,888 (127,833,482)

$

636,286,867

LIABILITIES Accounts Payable Retainages Payable Salary and Benefits Payable Payroll Withholdings Payable Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities

$

3,667,340

1,738,176

35,248,870

1,951,018

31,857,061 139,645,078

$

214,107,543

NEf ASSEfS Invested in Capital Assets, Net of Related Debt

$

328,771,484

Restricted for Continuation of Federal Programs Reserve for Bus Replacement Debt Services Capital Projects
Unrestricted
Total Net Assets
Total Liabilities and Net Assets

6,070,804 217,560
34,461,325 30,116,316 22,541,835

$

422,179,324

$

636,286,867

The notes to the basic financial statements are an integral part ofthis statement. -I-

EXHIBIT "B"

RICHMOND COUNTY BOARD OF EDUCATION STATEMENT OF ACTMTIES
FOR THE YEAR ENDED JUNE 30, 2007

GOVERNMENT AL ACTIVITIES
Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Services Student Transportation Service Central Support Services Other Support Services Operations of Non-lnstru:tional Services Commwiity Services Food Services Interest on Short-Term and Long-Term Debt
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations For Debt Services Other Taxes Sales Taxes Special Purpose Local Option Sales Tax For Debt Services For Capital Projects Intangible Recording Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Change in Net Assets
Net Assets - Beginning of Year
Net Assets- End of Year

EXPENSES
$200,372,213
9,375,717 9,575,412 6,797,84 I 2,262,536 18,565,357 2,008,38 I 30,591,372 11,570,320 2,427,783
753,519
173,539 17,007,892
3,31 I,482
$314,793,364

CHARGES FOR SERVICES

PROGRAM REVENUES

OPERATING

CAPITAL

GRANTSAND

GRANTSAND

CONTRIBUTIONS CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

$ 2J21J69 $ 147,941,878 $

379J29

2,424,254 6,672,330 4,020,204 3,945,100 9,902,616
81,327 11,014,772 4,251,016
98,857 527,898

2,019,829

169,248 I 3,586,075

$ 4,620,327 $ 204,635,575 $

462,185
46,469
34,348 732
93,030 247
307,121 317,119
17,592 10,265
495 118,458
1,408,061

$ (49,746,881)
(6,525,765) (2,903,082) (2,743,289) 1,683,296 (8,569,711) (1,926,807) (19,269,479) (7,002,185) (2,311,334)
(215,356)
(3,796) (1,283,530) (3,311,482)
(104,129,401)

$

70,611,675

71,142

1,811,698

36,797,194
23,476,320 7,939,160 5,503,576
$ 146,210,765
$ 42,081,364 380,097,960
$ 422,179,324

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

RICHMOND COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2007

EXHIBIT"C"

ASSETS
Cash and Cash Equivalents Investments Accmmts Receivable
Taxes State Government Federal Government Other Inventories Total Assets

GENERAL FUND

DISTRICT-WIDE CAPITAL PROJECTS FUND

DEBT SERVICE
FUND

TOTAL

$ 20,924,454 $ 16,552,317

855,836 $ 332,942 $ 22,113,232

189,041,079

205,593,396

1,816,561 22,057,686 7,511,839
322,840 2,194,998
$ 71J80,695 $

6,114,235 1,002,201 2,104,262
199,117,613 $

218

7,931,014

23,059,887

7,511,839

2,427,102

2,194,998

333,160 $ 270,831,468

LIABILITIES Accounts Payable Retainages Payable Salary and Benefits Payable Payroll Withholdings Payable
Total Liabilities
FUND BALANCES
Reserved for: Continuation of Federal Programs Inventories Bus Replacement Debt Service Capital Projects
Unreserved Designated - Student Activities Undesignated
Total Fund Balances
Total Liabilities and Fund Balances

$ 1,204,218 $
35,248,870 1,951,018
$ 38,404,106 $

2,463,122 1,738,176
4,201,298

$ 3,667,340 1,738,176
35,248,870 1,951,018
$ 42,605,404

$ 5,476,012 2,194,998 217,560

33,990,000 160,613,356

$ 5,476,012

2,194,998

217,560

333,160

34,323,160

160,613,356

901,645 24,186,374 $ 32,276,589 $
$ 71,380,695 $

312,959 194,916J15 $ 333,160 199,117,613 $ 333,160

901,645 24,499,333 $ 228,226,064
$ 270,831,468

The notes to the basic financial statements are an integral part ofthis statement. -3-

EXIIlBIT "D"
RICHMOND COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2007

Total Fund Balances - Governmental Funds (Exhibit "C")

$ 228,226,064

Amounts reported for Governmental Activities in the Statement ofNet Assets are different because:
Capital Assets used in Governmental Activities are not fmancial resources and therefore are not reported in the funds. These assets consist of:
Land Construction in Progress Land Improvements Accumulated Depreciation - Land Improvements Buildings Accumulated Depreciation - Buildings (Credit) Machinery and F.quipment Accumulated Depreciation - Machinery and F.quipment
Total Capital Assets
Some ofthe School Districts property tax revenues will be collected after year end but are not available soon enough to pay for the current period's expenditures
Deferred charges are recorded as expenditures in governmental funds. The Statement ofNet Assets includes this amount as other assets.
Deferred Charges - Bond Issuance Costs

$ 14,961,686 41,784,635 6,065,888 (5,276,004) 394,732,437 (99,519,278) 32,181,293 (23,038,200)

361,892,457

2,211,844

1,351,098

Long-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of:
General Obligation Bonds Payable Capital Leases Payable Compensated Absences Payable Unamortized Bond Premiums
Total Long-Term Liabilities

$ (164,800,000) (763,739)
(1,565,112) {4,373,288)

(171,502,139)

Net Assets of Governmental Activities (Exhibit" A")

$ 422,179,324

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

EXIIlBIT "E"
RICHMOND COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2007

REVENUES Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous Total Revenues

GBIIERAL
FlN)
$ 72,805,302
179,285,936 49,039,620
4,620,327 2,310,693 1,115,187 $ 309,177,065

EXPENDITURES Current Instruction Support Services Pup ii 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 Operations Community Services Operations Capital Outlay Debt Services Interest Redemption of Principal Total Expenditures

$ 196,337,700
9,037,264 9,549,002 6,083,796 2,249,455 17,744,170 1,678,174 27,647,271 10,825,841 2,363,300
683,923 16,267,489
169,247
77,030 726,196 $ 301,439,858

Excess of Revenues over(under) Expenditures

$ 7,737,207

OTHER FINANCING SOURCES(USES)

Operating Transfers From Other Funds

$

Operating Transfers To Other Funds

Sales Or Compensation For Loss of Fixed Assets

Bond Proceeds

Bond Premium

Total Other Financing Sources (Uses) $

103,340 32,727
136,067

Net Change in Fund Balances

$ 7,873,274

Fund Balances - Beginning

25,103,315

Fund Balances - Ending

$ 32,976,589

DISTRCTWIE
CAPITAL FRO..ETS
R.JND $ 36,797,194
1,194,400
5,568,668 3,400,000 $ 46,960,262
$ 731,565 80,935
471,495 141,323 1,688,872 809,515
52,115 27,255,658
77,943 $ 31,309,421 $ 15,650,841
$ (27,208,048) 914,980
134,800,000 5,466,611
$ 113,973,543 $ 129,624,384
65,291,931 $ 194,916,315

DEBT SSMCE
FlN)
$ 114,450
59,799 $ 174,249

$

2,921

3,153,588 26,080,000 $ 29,236,509 $ ~29,062,260)
$ 27,104,708
$ 27,104,708 $ (1,957,552)
2,290,712 $ 333,160

TOTAL $ 72,919,752
36,797,194 180,480,336 49,039,620
4,620,327 7,939,160 4,515,187 $356,311,576
$197,069,265
9,118,199 9,549,002 6,555,291 2,249,455 17,885,493 3,369,967 28,456,786 10,825,841 2,363,300
683,923 16,319,604
169,247 27,255,658
3,308,561 26,806,196 $361,985,788
$ (5,674,212)
$ 27,208,048 (27,208,048)
$ 947,707 $ 134,800,000 $ 5,466,611 $141,214,318
$ 135,540,106
92,685,958
$ 228,226,064

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

EXIIlBIT "F"

RICHMOND COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTNITIES JUNE 30, 2007

Total Net Change in Fund Balances - Governmental Funds (Exhibit ''E'')

Amounts reported for Governmental Activities in the Statement of Activities are different because:

Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciaiton expense. In the current period, these amounts are:

Capital Outlay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense

$ 28,461,745 (9,378,412)

Because some property taxes will not be collected for several months after the School District's rJScal year ends, they are not considered "available" revenues.

In the Statement of Activities, only the gain on the sale of the land/building/equipment is reported, whereas in the Governmental Funds, the entire proceeds from the sale increases rmancial resources. Thus, the change in net assets differs from the change in fund balances by the cost of the land/carrying value of the building/equipment sold.

Bond proceeds provide current rmancial resources to Governmental Funds; however, issuing debt increases Long-Term Liabilities in the Statement of Net Assets. In the current period, proceeds were received from:

Issuance of Bonds (including a premium of $5,466,611) Total Long-Term Debt Issuance

$ (140,266,611)

Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of:

Bond Principal Retirements Capital Lease Payments
Total Long-Term Debt Repayments

$ 26,080,000 726,196

Some items reported in the Statement of Activities do not require the use of current rmancial resources and therefore are not reported as expenditures in Governmental Funds. These activities consist of:

Increase in Compensated Absences Amortization of Bond Premiums Amortization of Bond Issuance Costs
Total Additional Expenditures

$

(48,205)

1,633,250

1,351,098

Net Assets of Governmental Activities (Exhibit ''B'')

$ 135,540,106
19,083,333 (425,238)
( 1,592,565) (140,266,611)
26,806,196
2,936,143 $ 42,081,364

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

EXHIBIT"G"

RICHMOND COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30, 2007

ASSETS Cash and Cash Equivalents
Total Assets
LIABILITIES Accounts Payable Funds Held for Others
Total Liabilities
NET ASSETS Held in Trust for Private Purposes
Total Liabilities and Net Assets

PRIVATE PURPOSE TRUSTS

AGENCY FUNDS

$ 30,005 $ 602,413 $ 30,005 $ 602,413

$ 67,556 534,857
$ 602,413

$ 30,005 $ 30,005 $ 602,413

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

RICHMOND COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FIDUCIARY FUNDS JUNE 30, 2007

EXIIlBIT "H''

ADDITIONS Investment Earnings Interest
DEDUCTIONS Scholarships Change in Net Assets
Net Assets - Beginning Net Assets - Ending

PRIVATE PURPOSE TRUSTS

$

1,550

$

835

$

715

$ 29,290

$ 30,005

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

RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "I"

Note 1: 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 ACCOUNTING POLICIES
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Richmond County Board of Education.
District-wide Statements: The Statement of Net Assets and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function ofthe 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 ofthe School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.
-9-

RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for all financial resources of the School District, except those resources required to be accounted for in another fund.
District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST), Bond Proceeds and grants from Georgia State Financing and Investment Commission to be used for the acquisition, construction or renovation of major capital facilities.
Debt Service Fund accounts for taxes (property and sales) legally restricted for the payment of general long-term principal, interest and paying agent's fees.
The School District reports the following fiduciary fund types:
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 of accounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set ofaccounts.

- 10-

RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, 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.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks or insured Federal savings and loan associations.
INVESTMENTS
COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interestearning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year 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 ofsafety 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,

- 11 -

RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(3) Obligations fully insured or guaranteed by the United States government or a United States government agency,

(4) Obligations ofany corporation ofthe United States government,

(5) Prime banker's acceptances,

(6) The Local Government Investment Pool administered by the State of Georgia, Office ofTreasury and Fiscal Services,

(7) Repurchase agreements, and

(8) Obligations ofother political subdivisions ofthe State of Georgia.

The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks.

RECEIVABLES

Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federa4 State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.

PROPERTY TAXES

The Augusta-Richmond County Board of Commissioners fixed the property tax levy for the 2006 tax digest year (calendar year) on August 15, 2006 (levy date). Taxes were due on November 15, 2006 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2006 tax digest are reported as revenue in the governmental funds for fiscal year 2007. The Augusta-Richmond County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting leve4 during the fiscal year ended June 30, 2007, for maintenance and operations amounted to $70,831,829 and for school bonds amounted to $93,105.

The tax millage rate levied for the 2006 tax year (calendar year) for the Richmond County Board ofEducation was as follows (a mill equals $1 per thousand dollars ofassessed value):

School Operations

18.616 mills

- 12 -

RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SALES TAXES
Special Purpose Local Option Sales Tax, at the fund reporting leve~ during the year amounted to $36,797,194 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 basic 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.
FOOD INVENTORIES On the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.
CAPITAL ASSETS
Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art.
Capitalization thresholds and estimated useful lives ofcapital assets reported in the District-wide statements are as follows:

- 13 -

RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Capitalization Policy

Estimated Useful Life

Land Land Improvements Buildings and Improvements Equipment

All

NIA

$

5,000

20 years

$ 5,000 25 to 50 years

$ 5,000 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. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement ofNet Assets.

NET ASSETS

The School District's net assets in the District-wide Statements are classified as follows:

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

Restricted net assets - These represent resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation of Federal programs, debt service and capital projects in accordance with restrictions imposed by external third parties.

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

- 14 -

RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "I"

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 of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (OCGA 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 percent of the daily pool balance.
Acceptable security for deposits consists of any one of or any combination ofthe 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 ofthe State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities ofthe State of Georgia,
(5) Bonds ofany public authority created by the laws ofthe State ofGeorgia, providing that the statute that created the authority authorized the use ofthe bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
CATEGORIZATION OF DEPOSITS At June 30, 2007, the bank balances were $33,554,749. The amounts ofthe total uninsured bank balances are classified into three categories of custodial credit risk:
Category 1 - Uncollaterized, Category 2 - Cash collateralized with securities held by the pledging financial institution,
or
- 15 -

RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "I"

Note 3: DEPOSITS AND INVESTMENTS

Category 3 - Cash collateralized with securities held by the pledging financial institution's trust department or agent but not in the School District's name.

The School District's deposits are classified by custodial credit risk category at June 30, 2007, as follows:

Custodial Credit Risk Category
1 2 3
Total

Bank Balance

$

0

398,092

32.679,479

$ 33,077,571

CATEGORIZATION OF INVESTMENTS The School District's investments as of June 30, 2007, are presented below. All investments are presented by investment type and debt securities are presented by maturity.

Investment Type
Debt Securities Repurchase Agreements (Explicitly Guaranteed)
Other Investments Equity Mutual Funds Equity Securities - Domestic Common Stock
Investment Pools Office of Treasury and Fiscal Services Georgia Fund 1

Fair Value

Investment Maturity 6-10 Years

$188,055,266 $188,055.266

681,188 670,555

16,186.087

Total Investments

$205,593.096

The Local Government Investment Pool administered by the State of Georgia, Office ofTreasury and Fiscal Services is not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office of Treasury and Fiscal Services for the Local Government Investment Pool (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. Additional information on the Local Government Investment Pool is disclosed in the State of Georgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at http://www.audits.state.ga.us/internet/searchRpts.html.

- 16 -

RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "I"

Note 3: DEPOSITS AND INVESTMENTS
The Primary Liquidity Portfolio consists of Georgia Fund 1 which is not registered with the SEC as an investment company but does operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share. The pool is an AAAm rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2007, was 15 days.
Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investment will adversely affect the fair value of an investment. The School District does not have a formal policy for managing interest rate risk.
Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event ofthe failure ofthe counterparty to a transaction, the School District will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The School District does not have a formal policy for managing custodial credit risk.
At June 30, 2007, $188,055,266 of the School District's applicable investments were uninsured, are not registered in the name ofthe School District and are held by either the counterparty or the counterparty's trust department or agent, but not in the School District's name.
Note 4: NON-MONETARY TRANSACTIONS
The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their federally assigned value. See Note 2 - Inventories
Note 5: CAPITAL ASSETS
The following is a summary of changes in the Capital Assets during the fiscal year:

- 17 -

RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "I"

Note 5: CAPITAL ASSETS

Balances July 1,2006

Increases

Decreases

Balances June 30, 2007

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

$ 14,807,136 $

570,928 $

416,378 $ 14,961,686

44,570,170

25,569,168

28,354,703

41,784,635

$ 59,377,306 $ 26,140,096 $ 28,771,081 $ 56,746,321

Cap ital Assets Being Depreciated Buildinl!,'!I and Improvements Equipment Land Improvements

$ 367,322,587 $ 31,334,925 6,079,010

29,465,777 $ 1,210,575

2,055,927 $ 394,732,437

364,207

32,181,293

13,122

6,065,888

Less Accumulated Depreciation for: Buildinl!,'!I and Improvements Equipment Land Improvements

92,893,177 21,634,056
5,184,906

7,520,269 1,754,961
103,182

894,168 350,817
12,084

99,519,278 23,038,200
5,276,004

Total Capital Assets, Being Depreciated, Net

$ 285,024,383 $ 21,297,940 $ 1,176,187 $ 305,146,136

Governmental Activity Capital Assets - Net

$ 344,401,689 $ 47,438,036 $ 29,947,268 $ 361,892,457

Current year depreciation expense by function is as follows:

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
Community Services Food Services

$ 3,629,068

$ 364,873 269,699 5,746 730,467 1,936
2,411,510 812,371 138,129 80,597

4,815,328 3,886
930,130

$ 9,378,412

- 18 -

RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "I"

Note 6: RESTRICTED ASSETS

Special Purpose Local Option Sales Tax (SPLOST), general o_bligation bond proceeds, 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 ofNet Assets because their use is limited by applicable bond covenants or statutory provisions. Restricted assets at June 30, 2007, were as follows:

District-wide Capital Projects

Bond

SPLOST

Proceeds

Debt Service Funds

Restricted Cash and Cash Equivalents: Debt Services
Restricted Investments: Debt Services Capital Acquisitions '

$ 751,550

$

$ 33,990,000 $ 17,318,077 $ 137,733,002

332,942

Note 7: INTERFUND TRANSFERS

Interfund transfers for the year ended June 30, 2007, consisted ofthe following:

Transfers to

Transfers From District-wide Capital Projects

General Fund Debt Service Fund

$ 103,340 27,104,708

Total

$ 27,208,048

Transfers are used to move unrestricted revenues collected by the District-wide Capital Projects Fund to the General Fund as local funding for noncapital construction projects, and to move District-wide Capital Projects Fund sales tax revenue to the Debt Service Fund for payment of bonds.

- 19 -

RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "I"

Note 8: RISK MANAGEMENT
The School District is exposed to various risks of loss related to torts; theft o:t; damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation.
The School District has obtained commercial insurance for risk ofloss associated with assets and acts of God. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years.
The School District participates in the Georgia School Boards Association Risk and Insurance Management System, a public entity risk pool organized on July 1, 1994, to develop and administer a plan to reduce risk ofloss on account of general liability, motor vehicle liability, or property damage, including safety engineering and other loss prevention and control techniques, and to administer one or more groups of self-insurance funds, including the processing and defense of claims brought against members of the system. The School District pays an annual premium to the system for its general insurance coverage. Additional coverage is provided through agreements by the system with other companies according to their specialty for property, boiler and machinery (including coverage for flood and earthquake), general liability (including coverage for sexual harassment, molestation and abuse), errors and omissions, crime and automobile risks. Payment of excess insurance for the system varies by line of coverage.

The School District has elected to self-insure for all losses related to torts. The School District has not experienced any losses related to these risks in 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$350,000 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

2006

$

$ 269,633 $ 269,633 $

2007

$

$ 384,766 $ 384,766 $

- 20-

RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
RJNE 30, 2007

EXHIBIT "I"

Note 8: RISK MANAGEMENT

The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.

Changes in the unemployment compensation claims liability during the last two fiscal years are as follows:

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

2006 2007

$ 9,703 $ 10,642

$ 20,266 $ 32,612

$ 19,327 $ 40,845

$ 10,642 $ 2,409

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

Position Covered

Amount

Superintendent President Vice-President Controller Deputy Superintendent Director ofAccounting Accounting Supervisors Each Central Office Bookkeeper Each Principal Each School Bookkeeper Each High School Athletic Manager Each Lunchroom Manager Each Middle School Athletic Manager

$

50,000

$

50,000

$

50,000

$

50,000

$

50,000

$

20,000

$

20,000

$

10,000

$

5,000

$

5,000

$

5,000

$

3,000

$

1,000

- 21 -

RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "I"

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 and a career exploration lab. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value ofthe future minimum lease payments as ofthe date oftheir inception.

COMPENSATED ABSENCES Compensated absences represent obligations of the School District relating to employees' rights to receive compensation for future absences. based upon service already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. Typically, the General Fund is the fund used to liquidate this long-term debt. The School District uses the vesting method to compute compensated absences.

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

Purpose

Interest Rates

Amount

General Government - Series 2002 General Government - Series 2007

2.50% - 5.00% 4.00% - 5.00%

$ 30,000,000 134,800,000

$ 164,800.000

The changes in Long-Term Debt during the fiscal year ended June 30, 2007, were as follows:

- 22-

RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "I"

Note 9: LONG-TERM DEBT

Balance July 1, 2006

Capital Leases $ 1,489,935

Govennnental Funds

General

Comp~ted

Ob~fun

Absences (I)

Bonds

$

1,516,907 $ 56,080,000

Unatrortm:d Bond
Premium $ 539,927

Total $ 59,626,769

Addnms Annual Leave F.amed Issuance ofGO Bonds Bond Premium

2,258,523

134,800,000

5,466,611

2,258,523 134,800,000
5,466,611

Deletions Annual Leave Utilra:d Debt Retired Bond Premium Amortrzro

726,196

2,210,318

26,080,000

1,633,250

2,210,318 26,806,196
1,633,250

Balance Jme 30

$

763,739 $

1,565,112 $ 164,800,000 $ 4,373,288 $ 171,502,139

Due within One Year

$

763,739 $

$ 30,000,000 $ 1,093,322 $ 31,857,061

(1) The portion of Compensated Absences due within one year has been determined to be immaterial to the basic financial statements.

At June 30, 2007, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Fnded June 30

Capital leases

Principal

Interest

2008 Total Principal and Interest

$ 763,739 $ 39,485 $ 763,739 $ 39,485

Fiscal Year Fnded June 30
2008 2009 2010 2011 2012-2013
Total Principal and Interest

General Obligation

Debt

Principal

Interest

$ 30,000,000 22,000,000 24,800,000 26,000,000 62,000,000

$ 7,267,500 6,024,900 4,886,775 3,653,750 3,052,538

$ 164,800,000 $ 24,885,463

Unamortized Bond
Premium
$ 1,093,322 1,093,322 1,093,322 1,093,322
$ 4,373,288

- 23 -

RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "I"

Note 10: ON-BEHALF PAYMENTS

The School District has recognized revenues and costs in the amount of $5,211,294 for health insurance and retirement contnbutions paid on the School District's behalf by the following State Agencies.

Georgia Department ofEducation Paid to the Georgia Department ofCommunity Health For Health Insurance ofNon-Certified Personnel In the amount of$4,970,948

Paid to the Teachers Retirement System For Teacher's Retirement (TRS) Employer's Cost In the amount of$199,173

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$41,173

Note 11: SIGNIFICANT COMMITMENTS

The following is an analysis of significant outstanding construction or renovation contracts executed by the School District as ofJune 30, 2007.

Project

Unearned Executed Contracts

05-721-034 05-721-037 05-721-042 05-721-045 B-02-002-443 B-02-003-432 B -02-004-413 B-02-008-449 B-02-012-445 B-02-013-446 B-02-014-447 B-027-007-46 B-027-007-46-2 B-03-023-426 B-04-031-427 B-07-010-456 SA0lS-721-242

$

4,840

4,425

96,905

409,966

4,857

15,503

10,174,186

13,345

821,648

2,960,342

7,852,695

31,640

124,800

97,473

12,693

880,662

9,190

$

23,515,170

- 24-

RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "I"

Note 11: SIGNIFICANT COMMITMENTS

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

Note 12: SIGNIFICANT CONTINGENT LIABILITIES

Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.

The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the basic financial statements.

Note 13: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school systems are covered by the Teachers Retirement System of Georgia (TRS), which is a costsharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivor's 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 ofAudits and Accounts.

TRS CONTRIBUTIONS REQUIRED AND MADE Employees of the 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 9.28% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2007 2006 2005

100% 100% 100%

$ 15,053,633 $ 14,117,458 $ 13,774,433

- 25 -

{This page left intentionally blank)

SCHEDULE "1" RICHMOND COUNTY BOARD OF EDUCATION
GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2007

REVENUES Property Taxes State Funds Federal Funds Charges fur Services Investment Eammgs Miscefuneous
Total Revenues

NONAPPROPRIATED BUOOEfS

ORIGINAq1i

FINAL(li

$ 71,252,672 165,480,699 35,794,994 2,631,360 1,530,000 2,120,236
$ 278,809,961

$ 71,252,672 180,237,196 51,306,141 2,635,547 1,573,487 5,143,732
$ 312,148,775

ACTUAL AMOUNTS
$ 72,805,302 179,285,936 49,039,620 4,620,327 2,310,693 1,115,187
$ 309,177,065

EXPENDITURES Current Instruction Support Services Pupil Services Improvement oflnstructional Services F.ducational Media Services General Administration Sclx>ol Administration Business Administration Mailtena.nce and Operation ofPlant Student Transportation Services Central Support Servi:es Other Support Servi:es Food Servi:es Operations Corrnrunity Servi:es Operations Debt Services Interest Redemption ofPrincipal
Total Expenditures
Excess ofRevenues owr (under) Expenditures

$ 179,403,791 $ 199,988,428 $ 196,337,700

7,717,870 6,901,145 6,724,413 2,996,310 17,490,862 1,664,885 27,735,487 12,536,969 2,498,583
893,567 16,229,637

9,769,602 11,112,359 6,892,817 3,515,809 18,708,160 1,705,135 28,836,258 13,489,396 2,563,341 1,078,784 17,052,712
240,919

9,037,264 9,549,002 6,083,796 2,249,455 17,744,170 1,678,174 27,647,271 10,825,841 2,363,300
683,923 16,267,489
169,247

120,900 1,059,600 $ 283,974,019 $ (5,164,058)

120,900 1,059,600 $ 316,134,220 $ (3,985,445)

77,030 726,196 $ 301,439,858 $ 7,737,207

OTHER FINANCING SOURCES (USES} Operating Transfers From Other Funds Sale or Compensation For Loss ofFixed Assets Other Sources Operating Transfers To Other Funds Capital Lease Proceeds
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning Fund Balances - Ending

$

40,000 $

40,000 $

3,930,996 (40,000)
1,233,062

2,756,651 (44,268)
1,233,062

103,340 32,727

$ 5,164,058 $ 3,985,445 $ 136,067

$

$ 7,873,274

25,103,315

25,103,315

25,103,315

$ 25,103,315 $ 25,103,315 $ 32,976,589

Notes to the Schedule ofRevenues, F.xpenditures, and Changes in Fund Balances Budget and Actwl (1) Original and Final Budget amounts include budgeted rewnues or expenditures ofthe various principal accounts.

The accompanying schedule ofrewnues, expenditures, and changes in fund balances budget and actual is presented on the modified accrual basis ofaccounting which is the basis ofaccounting used in the presentation ofthe fund financial statements.

See notes to the basic financial statements. - 27 -

RICHMOND COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2007

SCHEDULE "2"

FUNDING AGENCY PROGRAM GRANT

CFDA NUMBER

PASSTHROUGH ENTITYID NUMBER

EXPENDITURES IN PERIOD

Agriculture, U.S Department of Education Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program Pass-Through From Bright From The Start Georgia Department of Early Care and Learning Summer Food Service Program for Children Total Child Nutrition Cluster

10.553
10.555 10.559

(2)

NIA

$

14,323,737

351,566

$

14,675,303

Other Programs Pass-Through From Georgia Department of Education Food Donation (1) Total U.S. Department of Agricultw-e

10.55

NIA

886,867

$

15,562,170

Education, U.S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States GLRS Mentor Grants Preschool Grants Total Special Education Cluster

84.027 84.323 84.173

NIA

$

7,037,681

20,953

NIA

148,057

$

7;206,691

Other Programs

Direct

Impact Aid

Fund for the Improvement of Education

Pass-Through From Georgia Department of Education

Hurricane Relief - Education for Homeless Children and Youth

English Language Arts Acquisition Grants

Enhancing Education Through Technology

Improving Teacher Quality Grants

Mathematics and Science Partnership

Reading First State Grants

Safe and Drug-Free Schools and Communities

State Grants for Innovative Programs

Title 1 Grants to Local Educational Agencies

Charter Schools Federal Implementation

Twenty-First Centwy Community Learning Centers



Vocational Education - Basic Grants to States

Total U.S. Department of Education

84.041 84.215
84.938 84.365 84.318 84.367 84.366 84.357 84.186 84.298 84.010 84.282 84.287 84.048

NIA

(3)

NIA

$

249,651

NIA

4,417

NIA

18,766

NIA

407,731

NIA

2,433,095

NIA

81,009

NIA

5;289,896

NIA

238,981

NIA

110;1.68

NIA

16,659,578

NIA

200,000

NIA

l;l.23,646

NIA

455,789

$

27,372,827

See notes to the basic financial statements. - 28-

RICHMOND COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2007

SCHEDULE "2"

FUNDING AGENCY PROGRAM GRANT

CFDA NUMBER

PASSTHROUGH ENTITY ID NUMBER

EXPENDITURES IN PERIOD

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 Department of the Marines R.O.T.C. Program Department of the Navy R.O.T.C. Program Total U.S. Department of Defense

$

61,157

246,230

72,059

229,014

$

608,460

Total Federal Finarx:ial Assistance

$

50,750,148

NIA= Not Available

Notes to the Schedule of Expenditures of Federal Awards (1) The amount shown for the Food Donaoon Program represents the Federally assigned value of nonmonetary assic!tance
for donated commodities received and/or conswned by the School Dist:rt during the current fiscal year. (2) Expenditures for the ftmds earned on the School Breakfast Program ($3,277,402) were not maintained separately and
are included in the 2007 Naoonal School L1U1Ch Program. (3) Funds earned on the Impact Aid Program, in the amo1mt of $970,885 do not require reporting of expenditw-es. Major
Programs are identified by an astemk (*) in front oft.he CFDA number.

The School Dist:rt did not provide assistance to any Sulrecipient.

The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Richmond County Board of Education and is presented on the modified accrual basis of accounting which ic; the basis of accounting used in the presentaoon of the fimd financial statements.

See notes to the basic financial statements. - 29-

AGENCY/FUNDING

RICHMOND COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2007

SCHEDULE "3"

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECT

FUND

FUND

TOTAL

Education, Georgia Department of Quality Basic Education
Direct Instruction Code Kindergarten Kindergarten Early Intervention Program Primary Grades Program 1-3 Primary Grades Early Intervention Program 1-3 Upper Elementary Grades Program 4-5 Primary Grades Early Intervention Program 4-5 Middle Grades Program 6-8 Middle School Program 6-8 High School General Education Program 9-12 Vocational Laboratory Program 9-12 Students with Disabilities Program For Intellectually Gifted Students Remedial Education Program Alternative Education Program English For Speakers Of Other Languages (Esol) Program Media Centers Twenty Days Additional Instruction Staff Development Indirect Cost Central Administration School Administration Facilities Maintenance and Operation Categorical Grants
Pupil Transportation Pupil Transportation Bus Replacement Nurses Principal Supplements Mid Term Hold Harmless Vocational Supervisors Equali2ation Grant Food Services Vocational Education K-8 Statewide Reading And Math Grants National Teacher Certification Preschool Handicapped State Grant Total Grants from Georgia Department of Education

On Behalf Payments On Behalf Payments - Health Insurance On Behalf Payments - Teachers Retirement On Behalf Payments - Public School Employees Total

Retirement

$ 12,365,453 1,177,058
29,002,668 2,658,482 12,592,603 1,849,346 1,742,103
22,141,865 20,986,574 6,428,944 17,207,606
980,985 534,989 1,898,517 203,339 3,861,191 1,257,347 695,507
3,152,869 8,559,459 9,693,943
3,082,839 213,658 553,320 104,675
2,440,918 75,434
22,505,435 892,894 335,444 575,962 142,141 327,923
$ 190,241,491
4,970,948 199,173 41,173
$ 5,211,294

$ 12,365,453 1,177,058
29,002,668 2,658,482 12,592,603 1,849,346 1,742,103
22,141,865 20,986,574 6,428,944 17,207,606
980,985 534,989 1,898,517 203,339 3,861,191 1,257,347 695,507 3,152,869
8,559,459 9,693,943 3,082,839
0 0 213,658 553,320 104,675 2,440,918 75,434 22,505,435 892,894 335,444 575,962 142,141 327,923 $ 190,241,491
4,970,948 199,173 41,173
$ 5,211,294

See notes to the basic financial statements. - 30-

AGENCY/FUNDING

RICHMOND COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2007

SCHEDULE "3"

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECT

FUND

FUND

TOTAL

Georgia Prekindergarten Program Grants From Pre-K Lottery Total
Middle School Swnmer Remedial Program Other Grants From Georgia Department Of Education Total
Foreign Lauguage, Elementary Model Program Other Grants From Georgia Department Of Education Total
Georgia Council For The Arts - Georgia Challenge Grant Other Grants From Georgia Department Of Education Total
Local Fair Share (Current Year) Qbe Contra Account (Debit) Total
For Use With Other General Fund Programs Other Grants From Georgia Department Of Education Total
Other Special Revenues Severely Emotionally Disturbed Total
K-8 Statewide Reading And Math Grants - Pyscho Ed Other Grants From Georgia Department Of Education Total
Virtual Schools Grant Other Grants From Georgia Department Of Education Total
Graduation Coaches Other Grants From Georgia Department Of Education Total
Residential Treatment Center Grants Other Grants From Georgia Department Of Education Total
Misc Qbe Contra Account - Austerity Reduction Capital Outlay Grants Total
Grand Total

4,766,368 $ 4,766,368

47,876

$

47,876

97,744

$

97,744

2,400

$

2,400

{20,650,054} $ (20,650,054)

8,290

$

8,290

2,116,416 $ 2!116,416

10,800

$

10,800

3,300

$

3,300

350,961

$

350,961

68,169

$

68,169

(2,989,120)
$ {2,989,120} $ $ 179,285,935 $

4,766,368 $ 4,766,368

47,876

$

47,876

97,744

$

97,744

2,400

$

2,400

{20,650,054} $ (20,650,054)

8,290

$

8,290

2,116,416 $ 2,116,416

10,800

$

10,800

3,300

$

3,300

350,961 $ 350,961

68,169

$

68,169

1,194,400 1,194,400 1,194,400

(2,989,120) 1,194,400
$ {1,794,720} $ 180,480,335

See notes to the basic financial statements. - 31 -

SCHEDULE "4" RICHMOND COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2007

The general obligation debt of the School District will be retired from the proceeds of the special use tax. This will include a large portion of the bond issue of$ I 15,000,000 entitled "Richmond County General Obligation School Bond Series 1996" and certain other previously outstanding general obligation bonds at an estimated cost of $124,750,000. The principal and interest on these bonds come due on May 1st and November 1st of each year. May I, 1998 will be the first time the principal will come due to be retired. in part, by the sales tax.

ORIGINAL ESfIMATED
cosr o>
$ 124,755,000

CURRENT ESfIMATED
COSfS(2)
$ 128,477,340

AMOUNT EXPENDED IN CURRENT
YEAR(3)
$ 2,128,880

AMOUNT EXPENDED
IN PRIOR YEARS(3)

PROJECT SfATUS

$ 126,348,460 Complete

The School District will construct, as provided in the election, a middle school and/or an elementary school, which expenditures shall include acquiring, constructing and equipping these school buildings. In addition, to the construction of the middle and/or elementary school, the special sales tax shall be utilized to renovate, repair, improve and equip existing school buildings and other buildings and facilities.

25,245,000

53,261,010

252,367

52,596,880

Ongoing

Acquiring, constructing, installing and equipping new school buildings and facilities and other buildings and facilities useful or desirable in connection therewith, acquiring. constructing, installing. and equipping additions to existing schools, including without limitation new classroom space, adding to, renovating, removing, repairing, improving. and equipping existing school buildings and other buildings and facilities useful or desirable in connection therewith, acquiring, constructing, installing. and equipping stadiums and related athletic facilities for physical and general educational purposes, acquiring transportation vehicles and equipment and buildings and facilities for the repair and maintenance thereof, acquiring, constructing and equipping safety structures and facilities useful or desirable in connection with any of the foregoing, and acquiring the necessary property and rights in property thereof, both real and personal.

200,000,000

212,842,457

29,504,036

152,738,617

Ongoing

Acquiring. constructing. installing and equipping new school buildings and facilities and other buildings and facilities useful or desirable in connection therewith, additions to existing schools, including without limitation new classroom space, and athletic facilities for physical and general educational purposes, adding to, renovating, removing, repairing. improving and equipping existing school buildings and other buildings and facilities useful or desirable in connection therewith, acquiring textbooks and technology hardware and equipment in connection with the foregoing, acquiring, constructing, installing and equipping acquiring school buses and other vehicles for the safety, security, and maintenance of the school facilities and equipment and buildings and facilities for the repair and maintenance thereof, acquiring, constructing and equipping safety structures and facilities useful or desirable in connection with any of the foregoing, acquiring the necessary property and rights in property thereof, both real and personal, to pay capitalized interest on the general as the "Richmond Cowtty General Obligation Sales Tax Bonds, Series 2007", and to pay or reimburse the expenses of the Board of Education necessary to accomplish the foregoing, including the expenses of the Board of Education incurred in connection with the calling the election and imposing the sales and use tax (collectively the "Projects).

225,000,000

$ 575,000,000

140,266,611 $534,847,418

4,657,727 $ 36,543,010

$ 331.683,957

Ongoing

See notes to the basic financial statements. - 32-

SCHEDULE "4" RICHMOND COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2007
( l) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax. (2) The School District's current estimate of total cost for the projects. Includes all costs from project inception to completion. (3) The voters of Richmond County approved the imposition ofa 1% sales tax to fund the above projects and retire associated
debt. Amounts expended for these projects may include sales tax proceeds, state, local property taxes, and/or other funds over the life of the projects.
See notes to the basic financial statements. - 33 -

{This page left intentionally blank)

SCHEDULE "5" RICHMOND COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE) ALLOTMENTSANDEXPENDITURESBYPROGRAM
YEAR ENDED JUNE 30, 2007

DESCRIPTION
Direct Instructional Programs Kinder~en Programs Kinder~en Program - Early Intervention Program Primary Grades (l-3) Program Primary Grades Early Intervention (l-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 Disabilities CATEGORYI CATEGORY II CATEGORY III CATEGORY IV Gifted Student - CATEGORY VI Remedial Education Program Alternative Education Program English Speakers ofOther Languap (ESOL)

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

$

12,051,080

1,322,439

28,185,057

3,077,791

12,369,941

2,131,631 1,690,038 22,020,741 20,751,900 6,339,334 17,019,816

920,600 485,030 1,881,600 201,766

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

$

12,098,818 $

352,938

29,527,452

1,237,082

15,876,772

1,603,422 2,255,533 23,751,693 27,808,440 5,394,483

3,097,822 6,355,106 5,949,553
971,336 694,765 340,067 2,528,206 586,277

168,403 $ 10,002
591,814 27,251 300,835
17,014 84,427 481,656 1,643,377 554,924
41,525 71,424 67,446 14,540 25,938 17,214 81,923 10,790

12,267,221 362,939
30,119,266 1,264,333
16,177,607
1,620,436 2,339,960 24,233,348 29,451,816 5,949,407
3,139,347 6,426,530 6,016,999
985,876 720,703 357,281 2,610,129 597,068

TOTAL DIRECT INSTRUCTIONAL PROGRAMS $
Media Center Program Staff and Professional Development

130,448,764 $
3,817,951 695,507

140,429,765 $ 5,406,087

4,210,501 $ 502,684

144,640,267 5,908,771

TOTAL QBE FORM ULA FUNDS

$

134,962,222 $

145,835,852 $

4,713,186 $

150,549,038

(I) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State budget austerity reduction.

See notes to the basic financial statements. - 35 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Sqi.te 1-156 Atlanta, Georgia 30334-8400
January 23, 2008

Honorable Sonny Perdue, Governor Members ofthe General Assembly Members ofthe State Board of Education
and Superintendent and Members ofthe Richmond County Board of Education
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements ofthe governmental activities, each major fund, and the aggregate remaining fund information ofRichmond County Board ofEducation as of and for the year ended June 30, 2007, which collectively comprise Richmond County Board of Education's basic financial statements and have issued our report thereon dated January 23, 2008. 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 ofthe United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Richmond County Board of Education's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Richmond County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Richmond County Board of Education's internal control over financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified certain deficiencies in internal control over financial reporting that we consider to be significant deficiencies.
2007YB-30

A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affect the Richmond County Board of Education's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Richmond County Board of Education's financial statements that is more than inconsequential will not be prevented or detected by the Richmond County Board of Education's internal control. We consider item FS-7211-07-01 in the accompanying Schedule of Findings and Questioned Costs to be a significant deficiency in internal control over financial reporting.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the Richmond County Board of Education's internal control.
Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph ofthis section and would not necessarily disclose all deficiencies in internal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, we believe that the significant deficiency described above is not a material weakness.
Compliance and Other Matters
As part ofobtaining 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 of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
We noted certain matters that we have reported to management of Richmond County Board of Education in a separate letter dated January 23, 2008.
Richmond County Board of Education's response to the findings identified in our audit is described in the accompanying Schedule of Management's Responses. We did not audit Richmond County Board of Education's response and, accordingly, we express no opinion on it.
2007YB-30

This report is intended solely for the information and use of management and 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.

RWH:gp 2007YB-30

Respectfully submitted,

.

~i.a.-1.l~

Russell W. Hinton, CPA, CGFM State Auditor

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

])EPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
January 23, 2008

Honorable Sonny Perdue, Governor Members ofthe General Assembly Members ofthe State Board ofEducation
and Superintendent and Members ofthe Richmond County Board ofEducation
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 U.S. Office of Management and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 2007. 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 A-133, 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 of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the 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.
2007SA-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 of its major Federal programs for the year ended June 30, 2007.
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, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Richmond County Board of Education's internal control over compliance.
A control deficiency in an entity's internal control over compliance exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect noncompliance with a type of compliance requirement of a Federal program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity's ability to administer a Federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a Federal program that is more than inconsequential will not be prevented or detected by the entity's internal control.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a Federal program will not be prevented or detected by the entity's internal control.
Our consideration of the internal control over compliance was for the limited purpose described in the first paragraph ofthis section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above.
2007SA-10

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,
~ w....J~
Russell W. Hinton, CPA, CGFM State Auditor
RWH:gp 2007SA-10

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, 2007

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER

AUDITEE'S RESPONSE/STATUS

SEE AUDITOR'S COMMENTS

FS-7211-04-01 Partially Resolved - See Corrective Action Responses

FS-7211-05-03 Further Action Not Warranted

FS-7211-06-01 Further Action Not Warranted

(1)

FS-7211-06-02 Unresolved - See Corrective Action Responses

CORRECTIVE ACTION/RESPONSES

EMPLOYEE COMPENSATION Inadequate Internal Control Procedures Finding Control Number FS-7211-04-01

The Board of Education has received no official communication regarding this issue. However, Chris Beacher of Live Oak, Inc. commented by telephone that the State Health Benefit Plan will not be pursuing this issue.

CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Finding Control Number: FS-7211-06-02

The administration will be recommending a more comprehensive capital assets policy to the Board of Trustees for adoption at the Board's February, 2008 meeting. In addition, the administration will be preparing more extensive and comprehensive administrative policies to complement the recommended capital assets policy.

AUDITOR'S COMMENTS

(1) Findings/internal control deficiencies of this nature, that are not deemed significant deficiencies or material weaknesses and do not require reporting in the audit report in accordance with Statements on Auditing Standards (SAS) 112 or Governmental Auditing Standards (Yellow Book), will be communicated in a management letter in subsequent periods.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.

SECTION IV FINDINGS AND QUESTIONED COSTS

RICHMOND COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007
I SUMMARY OF AUDITOR'S RESULTS
1. Type ofRq,ort Issued on the Financial Statements The auditor's-opinion on the Richmond County Board of Education's financial statements was unqualified.
2. Significant Deficiencies in Internal Control Disclosed by the Audit of the Financial Statements The audit report for the Richmond County Board of Education disclosed a financial statement significant deficiency related to the following control category.
Capital Assets
The significant deficiency described above is not 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. Significant Deficiencies in Internal Control Over Major Programs The audit report for the Richmond County Board of Education did not disclose any significant deficiencies in internal control over major programs.
5. Type of Re.port 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 Rq,orted by Section .510(a} ofOMB 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: 10.553 Food Services - School Breakfast Program 10.555 Food Services - National School Lunch Program 10.559 Summer Food Service Program for Children 84.287 Twenty-First Century Community Learning Centers
8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $1,551,631.
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.
- 1-

RICHMOND COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Significant Deficiency Finding Control Number: FS-7211-07-01

Condition:

This is a repeat finding (FS-7211-05-03 and FS-7211-06-02) from fiscal years ended June 30, 2005, and June 30, 2006. The School District failed to adequately maintain its capital assets records.

Criteria:

Chapter 37 Fixed Assets of the Financial Management for Georgia Local Units of Administration indicates that School Districts must establish fixed asset policies, define system requirements, implement a fixed asset system and maintain fixed asset inventory records.

Questioned Cost: NIA

Information:

A review of the School District's capital asset records noted deficiencies as discussed below:

The School District lacked proper internal controls to detect significant errors in a timely manner.
Equipment purchases in the amount of $293,214 were capitalized in Construction in Progress (CIP) instead of Equipment, resulting in a misstatement to depreciation of$4,887.
A review of Construction in Progress (CIP) activity identified $84,830 for equipment that did not meet the capitalization threshold for equipment.
The capital assets listing as presented, while inaccurate, was also incomplete and failed to provide all elements of information as required by Chapter 37 Fixed Assets of the Financial Management for Georgia Local Units of Administration, such as descriptions and location identifiers.
Equipment items meeting the $5,000 capitalization threshold were not identified on the current year additions listing. This omission resulted in a projected misstatement of$385,865.
Donated assets are not included in the capital assets records. Equipment in the amount of $835,357 was capitalized with an
incorrect purchase date, resulting in errors in accumulated depreciation of $74,802. A physical inspection of 175 inventory items revealed several errors resulting in a projected misstatement of $618,404.

-2-

RICHMOND COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Significant Deficiency Finding Control Number: FS-7211-07-01

Cause:

The School District failed to ensure adequate accounting procedures were in place to process, record and report capital assets and related activity.

Effect:

The School District's failure to maintain a complete and accurate capital assets listing can lead to inaccurate internal and external reporting, as well as noncompliance with generally accepted accounting principles.

Recommendation:

The School District should reassess internal control procedures related to capital assets to ensure that they are in place and operating effectively. An administrative review should be performed to ensure the accuracy of capital assets records and make appropriate adjustment to ensure that capital assets records and procedures for maintaining capital assets conform to generally accepted accounting principles.

III FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS

No matters were reported.

- 3-

SECTIONV MANAGEMENT'S RESPONSES

RICHMOND COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2007
Finding Control Number: FS-7211-07-01
Some changes were made in the procedure for handling Capital Assets since the fiscal year 2006 audit. Each school's Media Specialist has been given the responsibility to properly account for Capital Assets in their school to include the receipt ofby whatever means, the transfer ofand the removal of Capital Assets. In addition, a concentrated effort has been started to made sure all qualified Capital Assets are properly tagged and accounted for in the Board's Capital Assets records. A system to monitor the Capital Assets process will be put in place.
A revised Board policy for Capital Assets will be presented to the Board of Trustees for adoption within the next few months. In addition, more detailed administrative procedures and internal control procedures are being developed and will be in place within the next few months.
Contact Person: Anita P. Faglier, Director of Finance and Accounting Phone: (706) 826-1113 Fax Number: (706) 826-4611 E-mail Address: faglian@boe.richmond.kl2.ga.us