ANNUAL FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010
(including Independent Auditor's Report)
Dr. Frank G. Roberson, Superintendent Mr. Marion Barnes, Board President
The Mission o f the Rlchrnond County School System IS t o educate students t o become lifelong learners and productive citizens.
Richmond County Board of Education 864 Broad Street
Augusta, GA 30901

RICHMOND COUNTY BOARD OF EDUCATION - TABLE OF CONTEIVTS -

INTRODUCTORY SECTION

SECTION I

IIVDEPENDENTAUDITOR'S COMBIIVED REPORT ON BASIC FINAIVCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

REQUIRED SLIPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FllVANClAL STATENIEIVTS

A

STATEMENT OF NET ASSETS

B

STATEMENT OF ACTIVITIES

FUND FINANCIAL STATEMENTS BALAIVCE SHEET GOVERNMENTAL FUNDS RECONCILIATION OF THE GOVERNMENTAL FLILIDS BALANCE SHEET -TO THE STATEMENT OF NET ASSETS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IIV FUIVD BALANCES GOVERNMENTAL FUNDS RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO 'THE STATEMENT OF ACTIVITIES STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS NOTES TO THE BASIC FINANCIAL STATEMENTS

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

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

RICHMOND COUNTY BOARD OF EDUCATION - TABLE OF CONTEIVTS -
SECTION I FINANCIAL SCHEDULES SUPPLEMENTARY INFORMATION 2 SCHEDULE OF EXPELIDITURES OF FEDERAL AWARDS 3 SCHEDULE OF STATE REVENUE 4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 5 ALLOTMEIVTS AND EXPEIVDITURES GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM
SECTION II COIVPLIANCE AND IIVTERIVAL CONTROL REPORTS INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MA'TTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WlTH GOVERNMENTAUDITING STANDARDS INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WlTH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WlTH OMB CIRCULAR A-133
SECTION Ill AUDITEE'S RESPONSE TO PRIOR YEAR FlhlDINGS AND QLIESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SEC-rIOIU IV FIIUDINGS AIVD QUESTIONED COSTS SCHEDLILE OF FllVDINGS AND QUESTIONED COSTS

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

RICHMOND ClQUNTY

BOARD OF EDUCATION

ALEX HOWARD
President

864 Broad Street - 4' Floor Augusta, Georgia 30901- 1215 (706) 826-1 125 -Fax: (706) 826-4614
JAMES WHITSON, Ph.D. Acting Superintendent

VENUS CADI Vice-president

April 1, 201 1
Board of Trustees Richmond County Board of Education
Citizens of Richmond County
The annual financial report for the year ended June 30, 2010, prepared in accordance with generally accepted accounting principles as promulgated by the Governmental Accounting Standards Board (GASB) is hereby submitted. The Introduction section, which is unaudited, includes this letter of transmittal, the mission and beliefs of the Richmond County School System, a system profile, a listing of the Board of Trustees and the County's organizational chart. The financial section includes the district- wide fmancial statements, h n t i level financial statements and the notes to the basic financial statements statewide.
The basic fmancial statements and accompanying notes have been examined by the Georgia Department of Audits and Accounts. Their report is included here under Section 1, Financial. Responsibility for the accuracy and completeness of the fmancial statements rests with the Richmond County Board of Education.
Sincerely,
James E. Whitson, PhD.
Acting Superintendent

INTRODUCTION MlSSlON AND BELIEFS The Mission of the Richmorrcl County School System is t o educate students t e become lifelong learners and productive citizens.
1. Every person has the right t o a quality educatioii. 2. Education is the shared responsibility of the individual, home, school, and tne
community. 3. Every person can learn. 4. Respect and acceptance are essential for learning and personal deveiopment. 5. A safe, healthy and orderly environment is essential to learning.
6. Communication is the key t o understanding among people.
7. Excellence cannot be compromised. SYSTEM PROFILE

POINTS OF PRIDE
0 A. R. Johnson Magnet received national certification for Project Lead the Way.
Cross Creek High School Future Farmers of America chapter named a N a t i ~ n a l 3 Star Chapter for second consecutive year.
Davidson Fine Arts named t o US IVews Top 1 0 0 High Schools for third consecutive year.
Davidson Fine Arts ranked third nationally for a top 100 school for African American students by US News and LVorld Reports.
Students from Academy of Richmond High School, Cross Creek High School, and Hephzibah High School received Junior Engineering Technical Society national ranking.
International Student Media Festival. Eighteen winners with one 4thgrade student at Glenn H ~ l l sElementary recognized as Best of Festival.
e Recognized as a 2 0 1 0 winner of the Digital School Districts for Large Student Populations for the school system's website.
State
A. R. .Johnsorl Magnet named Governor's Cup winner for 3-AAAA division.
Davidson Fine Arts recognized as the top scorer in the AAAA division for the second consecutive year.
Q Fifteen schools receive Distinguished Achievement awards. The Distinguished Achievement awards are based on the performance of students on the CriterionReferenced Competency Tests, the Georgia High School Graduation Tests, the Endof-Course Tests, and the state Writing Tests.
Twenty six schools recognized as Title 1Distinguished Schools.
Q Westside NJROTC named Distinguished Unit for 2010.
Q Westside NJROTC Rifle Team takes first place in Shoulder t o Shoulder Rifle corn petition.

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. . --.:'. Board of E d u d o n

2009-2QiO

Dr. Frank G. Roberson, Superintendent

As superintendent cf S C ~ O O ~ SI w, jil endeavor to carry out the mission of the school board and, in collaboration with all stakeholders, build nigh-quality educational opportunities for the community's chiidren that will prspare them for the challenges of an ever-changing world. 1 am viewed by others as a dynamic, innovative leader who will inspire excellence in every area of the system toward the creation of a world-class operation.

Education

Master of Education

1985 University of South Carolina Coiumb~aS, outh Carolina

Doctor of Philosophy

1992 University of South Carolina Columbia, South Carolina

Awards, Honors, Recognitions, and Achievements

Chairman of Superintendents' Division of Instructional Leaders, 2002 Featured as Outstanding Graduate in a University of South Carolina Pubtication Named South Carolina Administrator of the Year, 2002 Named Citizen of the Year by Midland Valley Chamber of Commerce, 2004 Named South Carolina District-Level Administrator of the Year, 2005 Recognized by joint sessions of the South Carolina General Assembly, 2005 Recognized by the SC State Board of Education, Educational Leadership, 2005 Recognized by the Aiken County Association of Universal Women, 2006 Featured in state published book t~tledA, frican Americans in South Carolina Known for improving the quality and effectiveness of low-performing schools Selected one of five education leaders to present South Carolina's education reform plan in Washington, D.C. to implement the president's school reform plan
Other Relevant Information
Worked on state committee to improve student achievement, graduation rate, close the achievement gap; served on state school funding taskforce, special education taskforce, school accountability committee; Education and Economic Development Act committee; taught graduate courses for the College of Charleston and South Carolina State University; author of eight books (one gained the attention of the British Broadcasting Company); member of a number of professional and civic organizations; published columnist; gospel musician; avid reader; carpenter (built his home); advises state and national legislators on school finance and education matters; and other related initiatives.

ORGANIZATIONAL CHART

SECTION I FINANCIAL

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

DEPARTMENOFTAUDITSAND ACCOUNTS
270 Washington S'eet, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
April 15, 2 0 1 1

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Richmond County Board of Education
INDEPENDENTBUDITOR'SCOMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEIMEIVTARY IN FORMA'l7OIV - 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, 2010, 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 GovernmentAuditlng 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 arefree of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Richmond County Board of Education, as of June 30, 2010, 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 April 15, 2011, 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 Stacdardsand should be considered in assessing the results of our audit.
Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis and the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through x and page 29 respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures, to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during the audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Richmond County Board of Education's financial statements as a whole. 'The accompanying supplementary information 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 Governmen&/ and ~Von-ProfitOrganizations, are presented for purposes of additional analysis and are not a required part of the financial statements. Such information is the responsib~lityof management and was derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements 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.
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,
Russell W. Hinton, CPA, CGFM State Auditor

RlCHlVlOlVD COUIVTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS
JLlhlE 3 0 . 2010
The discussion and analysis of the Richmond County Board of Education's financial performance provides an overall review of the School System's financial activities for the fiscal year ended June 30, 2010. The intent of this discussion and analysis is to look at the School System's financial performance as a whole. Readers are encouraged to review the transmittal letter, the basic financial statements, and the accompanying notes to the basic financial statements to enhance their understanding of the School System's financial ~;erformance.
FINANCIAL HIGHLIGHTS
Key financial highlights for the fiscal year ended June 30, 2 0 1 0 are as follows:
The School System's assets exceeded its liabilities by $ 4 9 9 . 1 m~llionat June 30, 2010. This represents a change in net assets of $24.6 million.
Total Revenues decreased $2.9 million. Program specific revenues increased $2.7 million and general revenues decreased $5.6 million.
To.ta'r net assets include the following:
1) Capital assets, net of related debt of $410.0 million, include property and equipment, net of accumulated depreciation, and reduced for outstanding debt related to the construction or purchase of capital assets.
2) Restricted net assets of $61.9 million, constraints which are imposed outside of the School System. This includes restrictions for debt covenants and continuance of grants, and capital projects.
3) Unrestricted net assets of $27.1 million represent the net assets available to sustain the School System's continuing obligations to its citizens and creditors.
The School System's General Fund reported a fund balance of $35.4 million at June 30, 2010, which represents an increase of $2.8 million from the prior fiscal year.
The financial highlights noted above are explained in more detail within the financial analysis section of this document.
OVERVIEW OF 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 System as an aggregate of its financial activities and present a longer-term view of its finances. Increases or decreases to net assets may provide an informative indicator of the financial position of the School System as a whole.
The next level of detail is provided by the fund financial statements. These statements reflect the short-term finances as kvell as the ,balances available for future needs. Fund financial statements are useful in assessing annual financing requirements and the commitment of existing spendable resources.
Figure 1summarizes the significant features of the Richmond County Board of Education's annual financial statements and provides information on the School System's activities and the types of information found in the financial statements.

RICHMOND COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS
JUlVE 30, 2010

Figure 1.

Significant Features of the Government-Wide and Fund Level F~nanciaSl tatements

I

I

1 scope

l ~ n t i r eSchool System (excluding fiduciary funds)

l ~ h aectivities of the School System that are not proprietary or fiduciary. This includes instruction, support services, administration, transportation, and maintenance.

l ~ u n d sfor which the School System administers resources on behalf of someone else. This includes scholarships and student funds.

Required Financial Statements
I

Balance Sheet Statement of Statement of Act~vit~esRevenues, Expenditures, and Changes in Fund Balance

Statement of Fiduciary Net Assets Statement of Changes in Fiduciary Net Assets

Accrual accounting and Modified accrual

Accrual accounting and

economic resources accounting and current economic resources

focus All assets and

financial focus
I
Generally includes

focus All assets and liabilities.

liabilities(financia1,

assets expected to be lnciudes short-term and

capital, short-term and consumed and

long term and may

long-term)

liabilities that are due include capital assets.

within the year or soon

thereafter. No capital

1 I assets or long-term
liabilities are included.

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Type of Inflow/Outflow All revenues and

Revenues for whlch All additions and

Information

expenditures earned or cash is received during deductions durlng the

incurred during the

the year or soon

year, regardless of

fiscal year regardless thereafter.

when cash is received

of when cash is

Expenditures for which or paid out.

received or paid out. goods or services have

been received and the

related liability is due

and payable.

REPORTING THE SCHOOL SYSTEM AS A WHOLE (DISTRICT-WIDE)
Statement of the Net Assets and the Statement of Activities
The analysis of the School System as a whole looks at all financial transactions and enables the reader of the financial statements to ascertain whether the School System'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 cons~dersall 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 System. 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, the age and condition of school facilities, and the economy of the area.

RICHMOND COUNTY BGARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS
JLILIE 30, 2 0 1 0
The Statement of Net Assets and the Statement of Activities is normally divided into two distinct types of activities, governmental and business type activities. All of the School System'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 non-competitive grants.
The Statement of Net Assets provides information about the overali financial activities of the School System; 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.
REPORTING THE SCHOOL SYSTEM'S MOST SIGNIFICANT FUNDS (FUND FINANCIALS)
Governmental Funds
The fund financial statements provide detailed information about the School System's major funds. The School System's major governmental funds are the General Fund, District-wide Capital Projects Fund, and the Debt Service Fund.
Most of the School System'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 shortterm view of the School System's financial activities. A reconciliation of net changes in governmental fund balances to the governmental activities changes in net assets illustrate the relationships (or differences) between the governmental activities reported in the Statement of Net Assets and the Statement of Activities to the governmental funds presented in the fund financial statements.
Fiduciarv Funds
The School System serves as a fiduciary for the Davidson Trust, Linda Gail Hendrick Scholarship, Nora Coxwell Scholarship, Robetta McKenzie Scholarship, Ellen Cauthen Scholarship, Sarah Craig Scholarship, Charles Larke Scholarship, and Melinda W~lliamsScholarship 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 experlded -to provide scholarships for selected students. The School System 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 System has excluded these activities from the School System's other financial statements because the School System may not use these assets to finance its operations.
THE SCHOOL SYSTEM AS A WHOLE
The Statement of Net Assets provides.the prospective of the School System as a whole.

RlCHMOlUD COUIVTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30,2010
Table 1provides a comparative summary of the School System's net assets for fiscal years 2009 and 2010.
TABLE 1 N ET ASSETS (in Thousands)

Assets Current and Other Assets Capital Assets, Net
Total Assets

Governmental Activities
June 30,2010

Governmental Activities
1u ne 3 0 , 2 0 0 9

Liabilities Current and Other Liabilities Long-Term I-iabilities
Total Liabilities

$

52,167

$

48,420

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

$ 410,043 61,903 27,123
$ 499,069

$ 353,178 66,510 25,273
$ 474,961

RICHMOND COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2010

Table 2 shows the comparative changes in net assets for fiscal years 2009 and 2010.

TAELE 2 CHANGE IN NET ASSETS
(in Thousands)

Revenues Program Revenues Charges for Services Operating Grants and Contributions Capital Grants and Contributions
Total Program Revenues

Governmental Activities
June 3 0 , 2 0 1 0

Governmental Activities
June 3 0 , 2 0 0 9

General Revenues Taxes
Property Taxes Sales Tax Grants and Contributions
not Restricted Investment Earnings Miscellaneous
Total General Revenues
Total Revenues

Program Expenses lnstruction Support Services Pupil Services Improvement of lnstruction Educational Media Services General Administration School Administration Business Administration Maintenance and Operations of Plant Student Transportation Services Cen-tralSupport Services Other Support Services
Operations of Non-Instructional Services Community Services Food Services
Interest on Short-Term and Long-Term Debt
Total Expenses
Change in lUet Asset

RICHMOND COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30,2010

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 entitlements. Cost of service comparisons are provided for fiscal years 2009 and 2010.
TABLE 3 GOVERNMENTAL ACTIVITIES
(In Thousands)

Instructional Support Services
Pupil Services Improvement of Instruction Educational Meciia Services General Administration School Administration Support Services Business Maintenance and Operation of Plant Student Transportation Central Support Services Other Support Services Operations of Non-lnstructional Services Community Services Food Services Interest on Short-Term and Long-Term Debt
Total Expense

Total Cost of Services

Net Cost of Services

Fiscal Year

Fiscal Year

Fiscal Year Fiscal Year

2010

2009

2010

2009

$

194,771 $ 201,104 $

57,784 $

61,421

RICHMOND COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 3 0 , 2 0 1 0

The School System is dependent upon operating grants and property taxes to support governmental activities. Instruction comprises 6 1 percent, Support Services 3 1 percent, Food Service 6 percent, and Interest 2 percent of government program expenses.

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Instructional expenditures include activities related to the interaction between students and teachers. Teaching may be performed in the classroom, home, or a hospital setting. Figure 3.

RICHMOND COUlUTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2010
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 of the School System, maintenance of the fiscal responsibilities of the School System, transportation costs, and upkeep of the grounds and facilities.
THE SCHOOL SYSTEM'S FUNDS
The School System's funds are accounted for using the modified accrual basis of accounting. All governmental funds had revenues and other financing sources of $344.9 million and expenditures and other financing uses of $378.7 million. The general fund's fund balance reflected an increase of $2.8 million, the debt service fund's fund balance was constant, and the district-wide capital projects funds decreased by $36.7 million.
GENERAL FUND HIGHLIGHTS
The School System's budget is prepared according to Georgia law. 'The most significant budgeted fund is the General Fund. Throughout fiscal year 2010, the School System amended its general fund budget several times. The most significant changes were attributed to the receipt of funds from the American Recovery and Reinvestment Act (ARRA). Site-based budgeting is used by the School System and is designed to tightly control total site budgets but allow some management flexibility. The School System'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 System's accounting software.
For the general fund, the final budgeted revenues of $331.6 million exceeded the original budget of $320.7 million by $10.9 million. The budgeted revenues exceeded the actual amount by $30.3 million. In fiscal year 2010, the state continued t o experience significant reductions in revenues. The state revised its revenue estimates and cut funding to local school systems. Throughout the year, the School System made a concerted effort to reduce expenditures and was successful in mitigating the loss of funding. The actual expenditures were $41.9 million less than the budgeted amount. The significant difference in the comparison of the budget to actual expenditures is the result of the ARRA funds being budgeted for a two year period. The fund balance was increased by $2.8 million instead of the projected reduction of $2.3 million.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
At the end of fiscal year 2010, the School System had capital assets of $440.3 m~llion,net of accumulated depreciation.

RICHMOND COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 3 0 , 2 0 1 0

Table 4 shows comparative statements for 2009 and 2010.

TABLE 4 CAPITAL ASSETS (Ket of Depreciation, in Thousands)

Land Construction Work in Progress Works of Art Building and Building Improvements Equipment Land Improvements
Total Capital Assets, Net of Depreciation

Governmental Activities
June 30,2010

$

15,110

41,161

42

369,501

11,747

2,788

$ 440,349

Governmental Activities
June 30,2009

'The primary increases occurred in bulldings and bullding improvements. Due to funding from a Special Purpose Local Option Sales Tax and a bond issue, the School System is building and renovating numerous schools.
Debt
At June 30, 2010, the School System had $88.0 million in general obligation bonds, with $26.0 million due within one year. Debt comparisons between fiscal year 2009 and 2 0 1 0 are shown below.
TABLE 5 DEBT
(in Thousands)

General Obligation Bonds Compensated Balances Unamortized Bond Premium
Total Debt

Governmental Activities
June 3 0 , 2 0 1 0

Governmental Activities
June 3 0 , 2 0 0 9

RICHMOND COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 3 0 , 2 0 1 0 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 2009, this accounted for a loss of revenue of $11.3 million. For fiscal year 2010, this reduction in state funds increased to $30.8 million of which $15.9 million was offset by funds from the American Recovery and Reinvestment Act. The 2 0 1 0 U. S. Census is expected to show that Richmond County's population is stagnant with a population at 200,000. The School System continues to show a decrease in the weighted average of full time equivalent students. From 2009 to 2 0 1 0 the weighted average of full time equivalent students decreased by 297 students. The figure shown below shows the 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 9.2% in June, 2010. This represented a decrease in unemployment of 1.0% -fromJune, 2009. Contacting the School System's Financial Management This financial report is designed to provide our citizens, taxpayers, investors, and creditors with a general overview of the School System's finances and to reflect the School System's accountability for the funds it receives. Questions about this report or for additional financial information, please contact the Director of Finance and Accounting, Richmond County Board of Education, 864 Broad Street, Augusta, GA 30901.

RICHMOND COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30.2010
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable. Net
Interest Taxes State Government Federal Government Other Inventories Deferred Charges Cap~taAl ssets, Non-Depreciable Cap~taAl ssets, Depreciable (Net of Accumulated Depreciation)
Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Payroll Withhold~ngsPayable Arb~tragePayable Contracts Payable Retamages Payable Deposits and Deferred Revenues Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Bus Replacement Continuation of Federal Programs Debt Service Capital Projects Unrestricted General Fund Capital Projects Fund School Activities
Total Net Assets
Total Liabilities and Net Assets
The notes to the bas~cfinancial statements are an integral part of this statement
-1-

GOVERNMENTAL ACTIVITIES

RICHMOND COUNl'f BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30,2010

GOVERNMENTAL ACTIVITIES
Instruction support Sewrces
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operatton of Plant Student Transportation Servlces Central Suppoct Services Olher Support Servjces Operations of Non-lnstructronal Services Comrnun~tyServices Food Services Interest on Short-Term and Long-Term Debt
Total Governmental Actrvitles
General Revenues Taxes Property Taxes For Marntenance and Operations Sales Taxes Special Purpose Local OpZ~onSales Tax For Capital Projects Other Sales Tax Grants and Contributions not Restnded to Specific Programs Investment Earntngs Miscellaneous
Total General Revenues
Change in Net Assets
Net Assets - Beglnningof Year (Restated)
Net Assets - End of Yea1

EXPENSES

CHARGES FOR
SERVICES

The notes to the bas~cfinancial statements ate an integral part of this statement -2-

PROGRAM REVENdES OPERATING GRANTS A N 0
CONTRIBUTIONS

CAPITAL GRANTS AND CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

RICHMOND COUNTY BOARD OF EDUCATION BALANCE SHEEl
GOVERNMENTAL FUNDS JUNE 30,2010

GENERAL FUND

DISTRICTWLDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

Cash and Cash Equivalents Investments Accounts Receivable. Net
Interest Taxes State Government Federal Government Other lnvenlo~~es
Total Assets

LIABILITIFSAND FUND BALANCES

Accounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Contracis Payable Retainages Payable Depos~tsand Deferred Revenue
Total Liabllltles
FUND BALANCFS
~ese-ed roc Arbitrage Rebate Tax Bus Replacement Contbnuation of Federal Programs Debt Sewice Capital Pro~ects
Unreserved Deslgnated for Antic~patedRevenues Shortfall Deslgnated for Studen:Acr~viries Undesignated Re~ortedIn: General Fund
Total Fund Balances

Total Liab~l~t~aneds Fund Balances

TOTAL

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

RICHMOND COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30,2010
- Total Fund Balances Governmental Funds (Exhibit "C")
Amounts reported for Governmental Act~vitiesin the Statement of Net Assets are different because:
Capital Assels used in Governmental Act~vit~easre not financial resources and therefore are not reported in the funds. These assets consrst of:
Land Construction In Progress Land Improvements Bu~ldlngs Egu~pment Works of Art and Historical Collections Accumulated Depreciation
Total Capital Assets
Taxes that are not available to pay for current period expenditures are deferred In the funds.
Only the portion of the arbitrage rebate tax llablltty that represents the use of current flnanclal resources would be reporled at the fund level. Slnce the liability wlll not be paid out over the next fiscal year, rt IS not reported In the fund level statements.
Deferred charges are recorded as expenditures in governmental funds. The Statement of Net Assets includes this amount as other assets.
- Deferred Charges Bond Issuance Costs
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 conslst of:
Bonds Payable Compensated Absences Payable Unamonlzed Bond Premlums
Total LonETerm Llabll~ties
Net Assets of Governmental Activities (Exhibit " A )

EXHIBIT " D

The notes to the baslc flnanclal statements are an integral part of this statement.
- 5 -

RICHMOND COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 3 0 , 2 0 1 0

REVENUES
Propem Taxes Sales Taxes State Funds Federal Funds Charges for Servrces Investment Earnings Miscellaneous
Total Revenues
EXPENOITURES
Current Lns~uction Support Serv~ces Pupil Services Improvement of Instructional Services Educat~onaMl edia Serv~ces General Adm~nrstration School Admdnistration Busloess Adrn~n~stration Maintenance and Operation of Plant Student Transportation Services Central Suppon Services Other Support Services Community SeNlces Food Services Operatdon
Capital Outlay Debt Services
Princ~pal Dues and Fees Interest
Total Expenditures
Excess of Revenues over (under) Expend~tures
OTHER FINANCING SOURCES (USES)
Sale of Equipment Transfers In Transfers Out
Total Other Financing Sources ([Jses)
Net Change ~nFund Balances
Fund Balances -Beginning
- Fund Balances Ending

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

The notes to the bas+$ financial statementsare an Integral part of this statement. -6-

RICHMOND COUNT/ BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES. EXPENDITURESAND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30,2010
Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are.
Capital Outlay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense
Capital Assets purchased wlth Universal Service Fund (e-rate) proceeds are not reported in Governmental Funds. However, in the Statement ofActivities, the e-rate proceeds are shown as Capital Grants and Contributions.
Some of the Capltal Assets acquired this year were donated to the School System In Governmental Funds, these assets, as well as the associated revenues are not recognized, but in the Statement of Activities, the contribution IS recognized as a capital contribution
Taxes reported In the Statement of Activities that do not provlde current financial resources are not reported as revenues in the funds.
Property Taxes Special Purpose Local Option Sales Tax
Total Taxes Reported
The net effect of various miscellaneous transactions involving capital assets (1.e.. sales, trade-ins, donations, and disposals) is to decrease net assets.
Only the portion of the arbitrage rebate tax liability that represents the use of current financial resources would be reported at the fund level Since the liability will not be paid out over the next fiscal year. it IS not reported in the fund level statements.
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, this amount consists of:
Bond Principal Retirements
Some items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in Governmental Funds These activities consist of
Increase in Compensated Absences Amortization of Bond Prem~um Amortization of Bond Issuance Costs
Total Additional Expenditures
Change in Net Assets of Governmental Activities (Exhibit "B")
The notes to the basic financial statements are an integral part of this statement. -7-

RICHMOND COUNTY BOARD OF EDUCATION STATEMENT OF FlOUClARY NET ASSETS FIDUCIARY FUNDS JUNE 30,2010
nSSETS
Cash and Cash Equivalents
LIABILITIES Accounrs Payable Funds Held for Others
Total Liabilities NET ASSETS Held in Trust for Private Purposes
Total Llabilitres and Net Assets

EXHIBIT "G"

PRIVATE PURPOSE TRUSTS

AGENCY FUNDS

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

RICHMOND COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FIDUCIARY FUNDS YEAR ENDED JUNE 30.2010
ADDITIONS Investment Earnings Change in Net Assets
Net Assets - Beginning
Net Assets - Ending

EXHIBIT "H"
PRIVATE PURPOSE TRUSTS

The notes to the basic financial statements are an integral part of this statement.
- 9-

RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATElVlEIVTS
JUNE 30.2010

EXHIBIT "I"

Note 1: DESCRIPTION OF SCHOOL SYSTEM AND REPORTING ENTITY
REPORTING ENTIW
The Richmond County Board of Education (School System) 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 System is a primary government and consists of all the organizations that compose its legal entity.
lVote 2: SUNllVlARY OF SIGNIFICANT ACCOUIVTIIVG POLICIES
BASIS OF PRESENTATION
The School System'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 System, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School System's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School System related to the administration and support of the School System'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 System'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 separa-tecolumn.
The School System reports the following major governmental funds:
General Fund is the School System's primary operating fund. It accounts for all financial resources of the School System, except those resources required to be accounted for in another fund.

RlCHMOlVD COUIVTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30.2010

EXHIBIT "I"

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 System reports the following fiduciary fund types:
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 System as an agent for various funds, governments or individuals.
BASIS OF PRESENTATION
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 I'lows take place. IVon-exchange transactions, in which the School System gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, and grants. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue frorn sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations are recognized in the fiscal year in which all eligib~lityrequirements have been satisfied.
The School System 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-balancingset of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School System considers all revenues reported in the governmental funds to be ava~lableif 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 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 liab~litiesare reported as other financing sources.
The School System 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 System's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.

RICHMOND COUIVTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 3 0 , 2 0 1 0

EXHIBIT "I"

The State of Georgia reimburses the School System for teachers' salaries and operating costs through the Quality Basic Education Formula Earnings program (QBE). Generally teachers are contracted for the school year (July 1- June 30) and paid over a twelve month contract period, generally September 1through August 31. In accordance with the respective rules and regulations of the QBE program, the State of Georgia reimburses the School System over the same twelve month period in which teachers are paid. At June 30, the amount of teachers' salaries incurred but not paid until July and August of the subsequent year are accrued. Since the State of Georgia recognizes its QBE liability for the July and August salaries at June 30, t h e School System recognizes the same QBE as a receivable and revenue, consistent with symmetrical recognition.
NEW ACCOUNTING PRONOUNCEMENTS
In fiscal year 2010, the School System adopted the Governmental Accounting and Standards Board (GASB) Statement No. 51, Accounting and Reporting for Intangible Assets. The provisions of this Statement generally require retroactive reporting for intangible assets acquired after June 30, 1980, with the exception of those intangible assets that have indefinite useful lives and those that are considered internally generated.
In addition, the School System adopted GASB Statement No. 53, Accounting and Financial Reporting for Derivative Instruments. The provisions of this Statement impacts disclosure regarding derivative instruments entered into by the state and local governments. Derivative disclosures, if any, will be identified in Note 3.
RESTATEMENT OF PRIOR YEAR NET ASSETS
For fiscal year 2010, the School System restated various Capital Assets due to a change in the capitalization policy and errors and omissions. The School System decreased land by $24,416.25. Additionally, the School System decreased, net of accumulated depreciation, buildings and improvements by $529,647.61, and increased net of accumulated depreciation, equipment by $51,471.00. The result is a decrease in Net Assets at July 1,2009, of $502,592.86. This change is in accordance with generally accepted accounting principles.
CASH AND CASH EQUIVALENTS
Composition o'f Deposits
Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 454314 authorizes the School System to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations.
INVESTMENTS
Composition of Investments Investments made by the School System 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 System to invest its funds. In selecting among options for investment or among institutional bids for

RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUIVE 30, 2 0 1 0

EXHIBIT "I"

deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
1. Obligations issued by the State of Georgia or by other states, 2. Obligations issued by the United States government, 3. Obligations fully insured or guaranteed by the United States government or a United States
government agency, 4. Obligations of any corporation of the United States government, 5. Prime banker's acceptances, 6. The Georgia Fund 1administered by the State of Georgia, Office of Treasury and Fiscal
Services, 7. Repurchase agreements, and 8. Obligations of other political subdivisions of the State of Georgia.
Tne School System does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentratiorl of credit risks, interest rate risks or foreign currency risks.
RECEIVABLES
Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.
PROPERTY TAXES
The Richmond County Board of Commissioners fixed the property tax levy for the 2 0 0 9 tax digest year (calendar year) on July 28, 2 0 0 9 (levy date). Taxes were due on November 16, 2009 (lien date). Taxes collected within the current fiscal year or within 6 0 days after year-end on the 2 0 0 9 tax digest are reported as revenue in the governmental funds for fiscal year 2010. The Richmond County Tax Commissioner bills and collects the property taxes for the School System, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School System. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2010, for maintenance and operations amounted to $79,174,677.29.
The tax millage rate levied for the 2009 tax year (calendar year) for the Richmond County Board of Education was as follows (a mill equals $ 1 per thousand dollars of assessed value):

School Operations

19.342 mills

SALESTAXES
Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted t o $36,255,615.95 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 a t least every five years.

RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2010

EXHIBIT "I"

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 System 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 System 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 System does not capitalize book collections. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School System.

Capi-talization 'thresholds and estimated useful lives of capital assets reported in the District-wide

statements are as follows:

Cap~tal~zat~on

Estimated Useful

Policy

Life

Personal Property (Equipment) Buildings and Building Improvements Land Improvements Land Vehicles Infrastructure Works of Art Intangible Assets

$

5,000.00

$

100,000.00

$

5,000.00

Any amount

$

5,000.00

$ 1,000,000.00

$ Anyamount

$ 1,000,000.00

5 t o 3 0 years 2 5 t o 5 0 years
2 0 years N/A
8 years 65 years N/ A
5 years

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives, with the exception of intangible assets which are amortized.

Amortization of intangible assets such as water, timber, mineral rights, easements, patents, trademarks, copyrights and internally generated software is computed using the straight-line method over the estimated useful lives of the assets, generally 10 to 2 0 years.

RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEIMEIVTS
JUNE 3 0 . 2 0 1 0

EXHIBIT "I"

COMPENSATED ABSENCES
Members of the Teachers Retirement System of Georgia (TRS) may apply unused sick leave toward early retirement. The liability for early retiremen-t will be borne by TRS rather than by the individual school systems. Otherwise, sick leave does not vest with the employee, and no liability is reported in the School System's financial statements.
Vacation leave of 1 2 days is awarded on a fiscal year basis t o all full time personnel employed on a twelve month basis. No other employees are eligible to earn vacation leave. Vacation leave not utilized during the fiscal year may be carried over to the next fiscal year, providing such vacation leave does not exceed 2 0 days unless otherwise approved by management.

Beginning of Year Liabil~ty

Inc~r- eases

Decreases

End of Year L~abil~ty

GENERAL OBLIGATION BONDS
The School System issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide financial statements, bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are reported as deferred charges and amortized over the term of the debt.
In the fund financial statements, the School System recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financingsources while discounts on debt issuances are reported as
other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds
received, are reported as debt service expenditures. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Assets.
NET ASSETS
The School System's net assets in the District-wide Statements are classified as follows:
Invested in capital assets, net of related debt - This represents the School System'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 of related debt.
Restricted net assets- These represent resources for which the School System is legally or coi~tractuallyobligated t o spend resources for bus replacement, continuation of Federal Programs, debt service, and capital projects in accordance with restrictions imposed by external third parties.

RICHMOND COUIVTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 3 0 . 2 0 1 0

EXHIBIT "I"

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 Systeiil, and may be used at the discretion of the Board to meet current expenses for those purposes.
FUND BALANCES
Reserved Reserves represent those portions of fund balance equity that are legally segregated for a specific future use.
Unreserved - Designated
Designated fund balances represent tentative plans for future use of financial resources. The School System designated by board action $4,000,000.00 of fund balance to be used for salaries in the subsequent year in response to anticipated state budget cuts.
For Encunabrances- This reserve constitutes the unperformed portion of purchase orders, contracts and other commitments for goods and services at year end. Encumbrances outstanding are reported as a reservation of fund balance and do not constitute expenditures or liabilities in the current year because the commitments will be honored during the subsequent year. For the fiscal year ending June 30, 2010, the School System incurred encumbrances of $410,448.18 for Federal programs where revenue will be recognized in a subsequent year.
USE OF ESTIMATES
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.
Note 3: DEPOSITS AND INVESTMENTS
COLLATERALIWTION OF DEPOSITS
Official Code of Georgia Annotated (O.C.G.A.) Section 45-8-12 provides that there shall not be on deposi-t 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 collatera!. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 1 1 0 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. Section 45-8-13.1) the agregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 1 1 0 percent of the dally pool balance.
Acceptable security for deposits consists of any one of or any combination of the following:
1. Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
2. lnsurance on accounts provided by the Federal Deposit lnsurance Corporation,

RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 3 0 , 2 0 1 0

EXHIBIT "I"

3. Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
4. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
5. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
6. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
7. Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal IVational Mortgage Association.

CATEGORIZATION OF DEPOSITS

Custodial credit risk is the risk that in .the event of a bank failure, the School System's deposits may not be returned to it. The School System does not have a formal policy for managing custodial credit risk. At June 30, 2010, the bank balances were $24,006,532.72. The bank balances were entirely covered by Federal depository insurance or collateralized with securities held by the pledging financial institution's trust department or agent but not in the School System's name.

CATEGORIZATION OF IIVVESTIVIEIVTS

The School System's investments as of June 30, 2010, are presented below. All investments are presented by investment type and debt securities are presented by maturity.

lnvestment T v ~ e

Fair Value

lnvestment Maturity 1- 5 Years

Debt Securities Repurchase Agreements

$ 114;644,524.22 $ 114,644,524.22

Other Investments Equity IMutual Funds Equity Secur~ties- Domestic

487.23 66,688.00

lnvestment Pools Office of Treasury and Fiscal Services Georgia Fund 1

Total lnvestments

RlCHMOlVD COUlVTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 3 0 . 2 0 1 0

EXHIBIT "I"

-rhe Georgia Fund 1,formerly referred to as LGIP, administered by the State of Georgia, Office of Treasury and Fiscal Services is not required to be categorized since the School System 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 Georgia Fund 1(Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1is disclosed in the State o f Georgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at http://www.audits.qa.qov/SGD/cafr. html.
The Primary Liquidity Portfolio consists of Georgia Fund 1which 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 1may not exceed 6 0 days. The weighted average maturity for Georgia Fund 1on June 30,2010, was 4 6 days.
Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investment w ~ lal dversely affect the fair value of an investment. The :School System 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 of the fa~lureof the counterparty to a transaction, the School System 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 System does not have a formal policy for managing custodial credit risk.
At June 30, 2010, $114,644,524.22 of the School System's applicable investments were uninsured and unregistered, with securities held by the counterparty's trust department or agent in the name of the School System.
Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. 'The School .System does not have a formal policy for managing credit quality risk.
The investments subject to credit quality risk are reflected below:

Rated Debt Investments

Fair Value

Ouality Ratings MA

Debt Securit~es Mutual Funds
Repurchase Agreements

$

114,644,524.22 $ 114,644,524.22

Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government's inves-trnent in a single issuer. The School System does not have a formal policy for managing concentration of credit risk. More than 5% of the School System's investments are in Federal National Mortgage Association repurchase agreements and Government National Mortgage Association. These investments account for 78%of the School System's total investments.

RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUlVE 30, 2010

EXHIBIT "I"

Note 4: INON-MONETARYTRANSACTIONS

The School System 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 Nate 2 - Inventories

Note 5: CAPITAL ASSETS

The following is a summary of changes in the Capital Assets during the fiscal year:

Governmental Actlvltles Capltal Assets Not Belng Depreciated
Works of Art Land Construction ~nProgress Total Capltal Assets Not Belng Depreciated

Balances
July 1.2009
(Restated)

Increases

Decreases

Balances
June 30.2010

$ 42,00000 15,110,231.11 29,785.254.40 $ 32,911,759.77
$ 44,937,485.51 $ 32,911,759.77

Capital Assets Being Depreciated Bulld~ngsand Bulldlng Improvemen's Equprnent Land Improvements

$ 459,779.239.52 S 30,987,912.00 $ 605.582.55 $

31,939,305.09 2,985,752.55 1,007.302.38

6,200,579.42 2,203.226.30

68,364.73

490,161,568.97 33,917,755.26 8,335,440.99

Less Accumulated Deprec~aQoFnor: Buldlngs and Building Improvements

111,811.637.51 9.302.279.72 453,308.71

120,660,608.52

Land Improvements Total Capltal Assets Belng Depreciated Net
Governmental Actlvltles Capital Assets Net

5,434,577.60 181,134.46

68.364.73

5,547,347.33

$ 359,633,467.29 $ 24,568,089.90 $ 166.165.33 $ 384,035.391.86

Z 404,570,952.80 $ 57,479,849.67 Z 21,702,130.31 $ 440,348,672.16

Current year depreciation expense by function is as follows:

Instruction Support Services
Pupil Services Educational Media Services General Administration School Adm~nistration Business Administration Maintenance and Operation of Plant Student Transportation Support Services - Central Community Service Other Support Services Food Service Operation

RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 3 0 , 2 0 1 0

Note 6: INTERFUND TRANSFERS

Interfund transfers for the year ended June 30, 2010, consisted of the following:

Transfers to Debt Service Fui^ld

Transfers From D istrict-wide
Capital Projects

EXHIBIT "I"

Transfers are used to move District-wide Capital Projects Fund sales tax revenue to the Debt Service Fund for payment of bonds.
Note 7: RISK MANAGEMENT
The School System is exposecl to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation.
The School District has obtained commercial insurance for risk of loss associated with assets, errors or omissions, job related illness or injuries and acts of God. The School System has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School System's insurance coverage in any of the past three years.
The School System participates in the Georgia School Boards Association Risk and Insurance Management System, a public entity risk pool organized on July 1,1994, to develop and administer a plan to reduce risk of loss on account of school board legal liability and motor vehicle liability 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 System pays an annual premium to the system for its school board legal liability insurance coverage. Additional coverage is provided through agreements by the system with other companies for property, boiler and machinery (including coverage for flood and earthquake), general liability (including coverage for sexual harassment, molestation and abuse), errors and orriissions and crime. Payment of excess insurance for the system varies by line of coverage.
The School System has elected to self-insure for all losses related to toils. The School System has not experienced any losses related to this risk in -the past three years.
The School System has established a limited risk management program for workers' compensation claims. The School System accounts for claims within the General Fund with expenses/expenditures and liabili-ty 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 $500,000.00 loss per occurrence, up to the statutory limit.

RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUIVE 30, 2 0 1 0

EXHIBIT "I"

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

C l a ~ m sand

Beg~nningof Year

Changes in

Claims

End of Year

- - Liab~l~ty

Estimates

Pa~d

Liability

The School System is self-insured with regard to unemployment compensation claims. The School System 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 !iability during the last two fiscal years are as follows:

Claims and

B e g ~ n n ~onfgYear

Changes In

Claims

End of Year

Liab~lity

Estimates

Pa ld

Liability

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

Position Covered
Superintendent President Vice-President Controller Deputy Superintendent Director of Accounting Accounting Supervisors Each Central Office Bookkeeper Each Principal Each School Bookkeeper Each Lunchroom Manager

Amount

Note 8: POLLUTION REMEDIATION OBLIGATIONS

The School System sold property located at 2083 Heckle Street, and in accordance with the provisions of the closing documents agreed to remediate the pollution caused by leaking underground storage tanks. In 2005, three groundwater monitoring wells were installed to determine the horizontal and vertical extent of contamination. In June, 2008, a Dual Phase Pump and Treat Vacuum System was put in place to treat the groundwater. A target concentration of 5,000 ppb Benzene in groundwater is the remedial goal set by the Environmental Protection Division (EPD). To complete the EPD requirements, the School System has recorded a liability and expense related to this pollution remediation in the amount of $81,421.00. The estimate of the liability is based on the installation of a vapor extraction unit to actively remediate the pollution.

RlCHMOlVD COUIVTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2 0 1 0

EXHIBIT "I"

Note 9: LONG-TERM DEBT
CONIPENSATED ABSENCES
Compensated absences represent obligations of the School System 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 System uses the vesting method to compute compensated absences.
GENERAL OBLIGATION DEBT OUTSTANDING
General Obligation Bonds currently outstanding are as follows:

Purpose General Government - Series 2007

Interest Rates 4.00% - 5.00%

Am o u n t $ 88,000,000.00

The changes in Long-Term Debt during the fiscal year ended June 30, 2010, were as follows:

Balance July 1, 2009 Additions
Annual Leave Earned

Compensated Absences (1)

Governmental Funds General Obligation Bonds

Unamortized Bond
Premium

$

1,641,581.76 $ 112,800,000.00 $ 2,186,644.46

920,319.64

Total $ 116,628,226.22
920,319.64

Deletions Annual Leave Utilized Debt Retired Bond Premium Amortized

1,093,322.23

1,093,322.23

Balance June 30,2610

$

1,724,384.83 $ 88,000,000.00 $ 1,093,322.23 $ 90,817,707.06

Due w~thjnOne Year

$

0.00 $ 26.000,000.00 $ 1,093,322.23 $ 27,093,322.23

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

RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "I"

At June 30, 2010, payments due by fiscal year which includes principal and interest for these items

Fiscal Year Ended June 30:

General Obrigauon Debt

Prrnc~pal

Interest

Unamortized Bond Prem~um

Total Pr~ncipaal nd Interest $ 88,000,000.00 5

6,706,287.50 $

1,093,322.23

Note 10: ON-BEHALF PAYMENTS
The School System has recognized revenues and costs in the amount of $721,888.72 for health insurance and retirement contribu.tions paid on the School System's behalf by the following Stale Agencies.
Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $435,020.74
Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $148,922.04
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 $137,945.94

RICHMOND COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2 0 1 0

EXHIBIT "I"

IVote 1 1 : SlGlVlFlCANT COMMITMENTS

'The following is an analysis of significant outstanding construction or renovation contracts executed by the School System as of June 30, 2010, together with funding available:

Project

Unearned Executed Contracts

Funding Available From State

08195 ACES118-179 ACES118-180 ACES118-181 ACES118-183 B-03-022-426 8-03-023-431 B-03-024-414 8-04-004-413.2 B-04-030-451 B-07-001-458 B-07-002-426 B-07-008-445 B-08-012-457 B-08-013-425 B-08-016-445 B-08-017-452 B-08-14-425 6-09-018-454 B-09-019-439 B-09-021-449 B-09-025-413/B10-721-100 B-09-026-414 8-09-027-438/BlO-72 1-096 B-10-721-097 B-10-721-098 8-10-721-099 B-10-721-101 B-10-721-102 MJR 10-005

The amounts described in this note are not reflected in the basic financial statements.
Note 12:SIGNIFICANT CONTINGENT LIABILITIES
ARBITRAGE REBATE TAX The Federal T,ax Reform Act o f 1986 requires issuers of tax-exempt debt to make payrnents t o the United States Treasury of Investment Income received at yields that exceed the issuer's tax-exempt borrowing rates. The U. S. Treasury requires payment every five years. The estimated future liability

RICHMOND COUlUTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 3 0 . 2 0 1 0

EXHIBIT "I"

of $4,669,521.13 at June 30, 2010, is based on tax exempt debt subject t o the Tax Reform Act. The estimated liability will be updated annually for any tax-exempt issuances or changes in yields through January SO, 2012, at which time payment of the final calculated liability for the five-year period is required to be remitted.
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 System believes that such disallowances, if any, will be immaterial to its overall financial position.
The School System is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School System operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the basic financial statements.
Note 13: POST-EMPLOYMENT BENEFITS
GEORGIA SCHOOL PERSONNEL EMPLOYEES POST-EMPLOYMENT HEALTH BENEFIT FUND
Plan Description. The Georgia School Personnel Post-Employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Insurance Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (OCGA) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board).
Funding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately 2 5 percent of the cost of the health insurance coverage.
Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under .the health insurance plans for both active and retired employees based on projected "pay-as-you-go" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.
The combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30,2010:

RICHMOND COUIVTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2010

EXHIBIT "I"

For certificated teachers, librarians and regional educational service agencies:

July 2009 August 2 0 0 9 - October 2009 November 2009 -June 2010

1 8 . 5 3 4 % of covered payroll for August Coverage 14.492% of covered payroll for September - November Coverage 18.534% of covered payroll for December - July Coverage

For non-certificated school personnel:

July 2009 -June 2 0 1 0

$162.72 per member per month plus Department of Education contr~but~oonf $22,838,311.00

No additional contribution was required by the Board for fiscal year 2 0 1 0 nor contributed to the State OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the State plan for other post-employment benefits and are subject to appropriation.

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

Percentage

Required

Fiscal Year

Contributed

Contribution

Note 14: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
Plan Description. The TRS is a cost-sharing multiple-employer defined benefit p[an created in 1 9 4 3 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.
On October 25, 1996, the Board created the Supplemental Retirement Benefits Plan of the Georgia Teachers Retirement System (SRBPTRS). SRBP-TRS was established as a qualified excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits
are otherwise limited by IRC Section 415. Beginning July 1,1997, all members and retired former
members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits.
TRS provides service retirement, disability retirement, and survivor's benefits. The benefit slructure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 3 0 years of creditable service, regardless of age, or after 1 0 years of service and attainment of age 60. A member is eligible for early retirement after 2 5 years of creditable service.

RICHMOIVD COUIVTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 3 0 . 2 0 1 0

EXHIBIT "I"

Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 4 0 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 6 0 or by 7% for each year or fraction thereof by which the member has less than 3 0 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available.
Funding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 1 0 years of service. If a member terminates with less than 10 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2010, were
5.25% of annual salary. The member contribution rate will increase to 5.53% effective July 1,2010.
Employer contributions required for fiscal year 2 0 1 0 were 9.74% of annual salary as required by the June 30, 2007, actuarial valuation. The employer contribution rate will increase to 10.28% effective July 1, 2010.

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

F~scaYl ear

Percentage Contributed

Required Contribution

(This page left intentionally blank)

RICHMOND COUNTY BOARD OF EDUCATlON GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30.2010

-R-EVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Serv~ces Investment Earnings Miscei ianeous
Total Reuenues
EXPENDITURES
Currenl instrucllon Support Services Pup11Servces Improvement of lnstructtonal Services Educational Med~aServlces General Adminisrratlon School Admlnlstratlon Business Administration Maintenance and Operation of Plant Student Transponation Services Central Support Services Orher Support Sewlces Food Servlces Operatton Commun~ryServ~cesOporar~ons
Debt S e ~ l c e Redempbon of Principal
Total Expenditures
Excess of Revenuesover (under) Expenditures
OTHER FINANCING SOURCES ULW
Sale or Compensation for Loss of Fixed Assets Other Sources
Total Other Flnanclng Sources [Uses)
Net Change In Fund Balances
Fund Baiances- Beg~nn~ng

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (11

Fund Balances - Endlng
Notertp the Schedule of Revenues. Ex~hdltu~esmxLCbangeins Fund Balances BuGet and Actual
(1) Original anc F l n ~Bl udget amounts do nor include budgeted revenues or expend~turesof the various principal accounts. The acwmpanyingschedule of revenues, expend~turesand changes in fund balances budge1and actual IS Dresentetl on the modtfled accrual basas of accounung which 1s the basls of accounting use5 in the presentalon of Ule fund financial statements. See notes to Ule baslc financial statemenrs.

ACTUAL AMOUNTS

RICHMOND COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30.2010

FUNDING AGENCY rnGRAM/GRANT
Agriculture. U. S. Department of Ch~ldNutrition Ciuster Pass~ThroughFrom Georgia Department of Education Food Services School Breakfast Program National School Lunch Program Pass-Through From Brlght From the Start: Georgia Department of Early Care and Learning Summer Food Service Program For Ch~ldren
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Depanment of Education Food Services ARRA - Child Nutrition Discretionary Grants Limited Availability
Total U. S. Department of Agriculture
Educat~on.U. S. Department of Impact Ald Cluster Direct lmoact Aid
Education of Homeless Children and Youth Cluster Pass-Through From Georgia Department of Education Education for Homeless Children and Youth
Education Technology State Grants Cluster Pass-Through From Georgia Department of Education Education Technology State Grants
School Improvement Grants Cluster Pass-Through From Georgia Department of Education School Improvement Grants
Special Educat~onCluster Pass-Through From Georgia Department of Education Speclal Education ARRA - Grants to States ARRA - Preschool Grants Grants to States Preschool Grants
Total S ~ e c i aEl ducation Cluster
State F~scaSi tablilzation Fund Cluster Pass-Through From Georg~aOepartnient of Education
ARRA.Education StateGrants
T~tle1. Part A Cluster Pass-Through From Georgia Department of Education ARRA -Title I Grants to Local Educational Agencies T~tleI Grants to Local Educational Agencies
Total Title I. PanA Cluster
Other Programs D~rect Fund for Improvement of Instruction Pass-Through From Georgia Department of Education Career and Technical Education -Basic Grants to States Charter Schools English Language Acqu~sitionGrants ImprovingTeacher Quality State Grants Mathematics and Science Pannerships Read~ngFirst State Grants Safe and Drug-Free Schools and Communities -State Grants

CFOA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

RICHMOND COUNTY BOARD OF EDUCATION SCHEDULEOF EXPENDITURESOF FEDERALAWARDS
YEAR ENDEDJUNE 30.2010

SCHEDULE '2'

FUNDING AGENCY pROGRAM/GRANT
Educat~on.U. S. Oepanrnentol Other Programs Pass-ThroughFrom Georg~aOepanment of Education Special Education State Permonel Development Twcntyhrst CenturyCommunity Learnlng Centers Pass-Through from Office of Plannlngand Budget Transition t o TeachlngGrant
Total Other Programs
Total U. S. Depanrnent of Eoucation
Health and Human S e ~ ~ c eUs. .S. Department o l Ch~ldCare and Development Fund Cluster Passfhrough From 8r1ghtFrom the Start: Georgia Department of Early Care and Learnlng AURA - Chlld Care and Development Block Grant
Otner Programs Pass-ThroughFrom Georgia Depanment of Education HIV Prevention Actrvitles Non-GovernmenlalOrganlzauon Baseo
Total U. S. Oe~anrnentofHealth and Human S e ~ i c e s
Justice. U. S. Depanment of Pass-ThroughFrom Children and Yourh Coordlnat~ngCouncll PU~IICSafety Partnersh~pana Community PolrclngGrants
Defense. U. S. Depaflrnent of Dlrect Deuanmenl of the Air Force R.O.T.C. Program Oeuartment or the Army R.O.T.C. Piogram Departmentof the Marines R.O.T.C. Program Department of the Navy R.O.T.C. Program
Total U. S. Depanmenr of Defense

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

Total Federal Financial Assistance
N/A = NO[ Available
Notes to the Schedule of ExPenailureSof FeQeralAwards
[I) Includes the Federallyassign& value of aonared commodirles lor the Food Donation Program In the amount of S1.147.29L33.
(2) Expendituresfor the funds earned on the School Breakfast Program ($3.571.429.90w)ere not maintained separately and are Included In the 2010 NatbonalSchool Lunch Program.
(31 Funds earned on the Impact Aid Program. In the amount of $887.262.18.do not requlre reporting or exnendltures.
Major Programs are identbf~edby an asler~sk(-1 In front of the CFDA number.
The School D~stricdt ~ dnot provideFederalAssistance to any Subrec~p~enl.
The accompanyingschedule of expendiruresof Federalawards includes the Federalgrant activityof the RlchmondCounIy Board of Educabon ano 15 presented on the modified accrual basis of accwntlngwhlch IS the basts of accounting used ~nthe presentallon of the fund financial statements.

See notes l o the basic linanclal statements.

RICHMOND COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 3 0 , 2 0 1 0

GRANTS Brlght From the Start: Georgla Department of Early Care and Learnlng Pre-K~ndergartenProgram
Educatlon, Georgia Department of Quality Basic Educatlon Dlrect lnstruct~onaCl ost Klndergarten Program Klndergarten Program - Early lnterventlon Program Prlmary Grades (1-3) Program Prlmary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early lnterventlon (4 5) Program Mlddle Grades (6-8) Program Middle School (6-8) Program H~ghSchool General Education (9-12) Program Vocat~onalLaboratory (9-12) Program Students wlth Dlsab~lltles Category I Category II Category Ill Category IV Category V Gifted Student - Category VI Remed~aEl ducatlon Program Alternative Educatlon Program Engllsh Speakers of Other Languages (ESOL) Medla Center Program 2 0 Days Addltlonal lnstructlon Staff and Professional Development Indirect Cost Central Admlnlstrat~on School Admlnlstratlon Faclllty Maintenance and Operations Categorical Grants Pup11Transportation Regular Nursing Services Vocatlonal Supe~lsors Mld-term Adjustment Hold-Harmless Educat~onEqual~zationFundlng Grant Food Sewlces Vocatlonal Educat~on Amended Formula Adjustment Local Fair Snare Other State Programs Dual Enrollment Health Insurance Hlgh Performing Prlnclpals National Teacher Certif~cat~on Preschool Handicapped Program Resldentlal Treatment Centers Grant Rule 1 0 Speclal Education State Grant Severely Emotionally Disturbed Teachers' Retirement Vlrtual Schools Grant

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

TOTAL

RICHMOND COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 3 0 , 2 0 1 0

GRANTS Georgla State Financing and Investment Commlsslon Re~mbursemenot n Construction Projects
Offlce of Treasury and F~scaSl ervices Public School Employees Retirement
Transportation, Georgla Department of Students Agalnst Destructive Dec~s~ons

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

TOTAL

See notes to the baslc flnanclal statements.

RICHMOND COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDEDIUNE30.2010

SCHEDULE '4'

PROJECT

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3)

AMOUNT EXPENDED IN PRIOR YEARS (3)

PROJECT STATUS

SPLOST 1997

The School System will construct, as provide0 111 the

eieci~ona, mlddle and/or an elementary'school,which

expenditures shall include acqulrlng, consvucting, and

equlpping these school buildings. In addition to the

construmon of the middle and/or elementary school, the

speclal sales taxshall be ut~llzedto renovate, repair.

improve and equlp exlstlngschool buildings and other

buildings and facil~t~es.

$

25.245.000.00 $

53.346.118.00 $

103.728.76 $ 53.084.569.39 Ongoing

SPLOST 2002
Acquiring, constructing, installing and equlppingnew school bu~idlngsand facilities and other buildingsand facil~t~eusseful or desirable in connection therewith, acquiring, constructing. Installing. and equ~ppingaddit~ons to existingschools. lniuding without llmltation new classroom space, adding to. renovating. removing repair~ng.irnprovlng.and equlpoing existlng school Oulldlngsand other bulldings and lacillties useful or deslrable in connection therewrth. acquiring. construcrlng. ~nstall~nagn. d equipping stadlums and related athletic fac~l~tiefosr physrcal and general educational purposes. acquir~ngtransportallonvehicles and equipment afld buildingsand fachties tor the repair and malntenance thereof, ac~uiring~construcrinangd equlpping safety srructures and fac~iltiesuseful or desirable in connecllon with any of the foregoing. and acquiring the necessary property and nghts in properly thereof. both real and

SPLOST 2007
(a) Acquir~ng,consuuctlng, installing and equlpplng new school bulidlngs and facilities and other bulldlngs and fac~litiesuseful or des~rablein connectron therewith. addit~onsto existlng schools, ~ncludlngwrthout lhmlratlon new classroom space, and athletic facilrtles for physical and general educat~onapl urposes, adding to, renovarlng. removing repalring. improving and equtppingexistlng school bulldlngs and other bulldlngs and facil~tiesuseful or Desirable in connection ~herewlth.
(b) Acquiring tenbooks and technology hardware and software and equipment in connection with the forego~ng.
jc) acquiring, constructlng, lnstalllng and equlpplng acqurrtngschool buses and other vehtcles for the safety, Security. and malntenance of Ihe school fac~iitresand equipment and builcllngs and fac~lit~efosr t3e remir and malntenance thereof. acquiring construcilngand esulDplngsafety structures and faciilties useful or deslrable In connection with any of the foregoing, acqu~ring the necessary property and rlghts In properly therefor, both real and personal.
(d) to pay caprtallzed Interest on the general obligation debt and
(e) lo pay or reimburse the excenses of the Boar0 of Education necessary to accomplish the foregoing including the expenses incurred In connectlon with calling the elenion and imposingthe Sale5 and use tax.

173,086,524.00 21.000,000.00
3,941.000.00 25.283,671.00
1,688.800.00

173.086.529.00 21.000.000.00
3.941.000.00 25.283.671.00
1.688.800.00

38,276,788.66 3,865.973.18
4.886.775.00

43,844.185.43 Ongoing 4.661.637.13 Ongo~ng
2.395.705.49 Ongoing 13.726.124.68 Ongo~ng
1.688.872.29 Ongoing

RICHMOND COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDEDJUNE 30.2010 (1) The School District's original cost estlmate as specified in the resolution calling for the lmposit~onof the Local Opt~on
Sales Tax. (2) The School D~strict'scurrent estimate of total cost for the projects. Includesall cost from project inception to completion.
The current estimated cost may increase over the origlnal cost estimate as a result of increased tax collect~onsand investment earnings. (3) The voters of RichmondCounty approved the imposition of a 1% sales tax to fund the above projects and retlre
associated debt. Amounts expended for these projects may include sales tax proceeds, state. local property taxes and/or other funds over the llfe of the pfOjeCtS.
See notes to the baslc financial statements.

(This page left intentionally blank)

RICHMOND COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES BY PROGRAM YEAR ENDED JUNE 3 0 . 2 0 1 0

Direct Instructional Programs Kindergarten Program Kinderganen Program-Early lntervention Program Pr~maryGrades (1-3) Program Primary Grades-Early lntervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle Grades (6-8) Program Middle School (6-8) Program High School General Education (9-12) Program Vocat~onalLaboratory (9-12) Program Students with Disabilities Category I Category I1 Category I l l Category lV Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL)
TOTAL DIRECT INSTRUCTIONAL PROGRAMS
Medta Center Program Staff and Professional Development
TOTAL QBE FORMULA FUNDS

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) (2) (3)

ELIGIBLE QBE PROGRAM COSTS

SA5ES

OPERAZS

TOTAL

(1) Comprised of State Funds plus Local Five M ~ lSl hare. (2) Allotments do not include the Impact of the State amended formula adjustment of $28.739.511.00. (3) Allotments do not include accruals of state revenues.

See notes to the basic financial statements.

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

Russell 'W. Hinton
STATE AUDITOR
(4Gd) 656-2174

DEPARTMENT OF AUDITSAND ACCOUNTS
270 Washington Street; S.W., Suite 1-156 Atlanta, Georgia 30334-8400
April 15, 2 0 1 1

Honorable Nathan Deal, 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 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN ALlDlT OF FINANCIAL STA'TENIENTS PERFORMED IN ACCORDAIVCE WITH GOVERNMENTAUDlTlNG STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Richmond County Board of Education as of and for the year ended June 30, 2010, which collectively comprise Richmond County Board of Education's basic financial statements and have issued our report thereon dated April 15, 2011. 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.
Internal Control Over Financial R e ~ o r t i n g
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 opirlions 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.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis.
Our consideration of internal control over financial reporting was for the limited purpose described in .the first paragraph of this section and was not designed to identify all deficiencies in internal control over firlancial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.

Compliance and Other Matters
As part of obtaining reasonable assurance about whether Richmond County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions 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 April 15, 2011.
This report is intended solely for the information and use of management, members of the Richmond County Board of Education, others within the entity, 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.
2 2 d,4% Respectfully submitted,
Russell W. Hinton, CPA, CGFM State Auditor

Russell W. Hinton
STATE AUDITOR
( G 4 ) 656-2174

]DEPARTMENT OF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-1 56 Atlanta, Georgia 30334-8400
April 15, 2 0 1 1

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Richmond County Board of Education
INDEPEbIDENT ALIDI'TOR'S REPORT ON COMPLIANCE WlTH REO1,IIREMENTS THAT COLILD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAIOR PROGRAM AND OIV IN'TERIVAL CONTROL OVER COMPLIANCE IN ACCORDANCE WlTH OMB CIRCULAR A-133
Ladies and Gentlemen:

We have audited Richmond County Board of Education's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2010. 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.
VVe conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of Slatee$/iocal Govert~rnenfsa, nd Non-Profit Organ~zations.Those standards and ONlB 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 of Education's compliance with those reauirements.
In our opinion, 'the Richmond County Board of Education complied, in all material respects, with the compliance reqclirerrlents referrecl t~ above that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2010.

Internal Control Over Compliance
Management of Richmond County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the 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 the requirements that could have a direct and material effect on a major Federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OWlB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Richmond County Board of Education's internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a Federal program on a timely basis. A material weakness in internal control over ca/npiianceis a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requjreirlerlt of a Federal prograrn will not be prevented, or detected and corrected, on a timeiy basis.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, 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. However, we identified a certain deficiency in internal control over compliance that we consider to be a significant deficiency as described in the accompanying Schedule of Findings and Questioned Costs as item FA-7211-10-01. A significant deficiency in interna! control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a Federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Richmond County Board of Education's response to the finding identified in our audit is described in the accompanying S c h e d ~ ~ol fe Management's Responses. We did not audit Richmond County Board of Education's response and, accordingly, we express no opinion on the response.
This report is intended solelyfor .the in'formation and use of management, members of the Richmond County Board of Education, others within the entity, 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,
Russell W. Hinton, CPA, CGFM State Auditor

SECTION Ill 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 30.2010
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS No matters were reported. PRIOR YEAR FEDERAL AWARD FINDINGS AND OUESTIONED COSTS No matters were reported.

SECTION IV FINDINGS AND QUESTIONED COSTS

RICHMOND COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIOhIED COSTS
YEAR ENDED JUIVE 3 0 , 2 0 1 0

I SUMMARY OF AUDITOR'S RESULTS

Financial Statements

Type of auditor's report issue: Governmental Activities; General Fund; Capital Projects Fund; Debt Service Fund; Aggregate Remaining Fund Information

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

Noncompliance material to financial statements noted

Federal Awards

Ir~ternaCl ontrol over major programs: Material weakness identified? Significant deficiency identified?

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

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

Identification of major programs:

CFDA Number(s)

Name of Federal Program or Cluster

Child IVutrition Cluster Title I, Part A Cluster Special Education Cluster State Fiscal Stabilization Fund Cluster

Dollar threshold used to distinguish between Type A and Type B programs: Auditee qualified as low-risk auditee?

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

No matters were reported.

Unqualified No
None Reported
No Yes Unqualified Yes
$2,238,263.35 IN o

RICHMOND COUNTY BOARD OF EDUCATION SCHEDULE OF FIIVDIIVGS AIVD QUESTIONED COSTS
YEAR ENDED JUNE 3 0 , 2 0 1 0
111 FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ACTIVITIES ALLOWED/UIVALLOWED ALLOWABLE COSTS/COST PRINCIPLES Unallowable Expenditure Significant Deficiency U. S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010) Finding Control Number: FA-7211-10-01
Condition: A review of expenditures charged to the Title I Grants to Local Educational Agencies (CFDA 84.010) program revealed that the School District failed to implement internal control procedures to ensure expenditures were allowable.
Criteria: Provisions of ON1B Circular A-87, Cost Principles for Local, State and Indian Tribal Governments, require that "to be allowable under Federal awards, costs must be...authorized or not prohibited under state or local laws or regulations" and "supported by underlying documentation".
Questioned Cost: $5,200.00
Information: A review of expenditure vouchers for the Title I Grants to Local Educational Agencies (CFDA 84.010) revealed an unallowable expenditure.
Cause: Management failed to monitor compliance with Federal guidelines to ensure that expenditures charged to the Federal program were allowable.
E-Rect: Failure t o ensure that program expenditures are allowable can result in noncompliance with the Federal grant.
Recommendation: The School System should implement procedures to ensure that all expenditures charged to the Federal program are allowable under OMB Circular A-87. In addition, the Georgia Department of Education should review this matter to determine if a reclaim of grant funds is appropriate.

SECTION V MANAGEMENT'S RESPONSES

RICHMOND COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30,2010

Finding Control Number: FA-7211-10-01

We concur with this finding. We have returned funds totaling $5,278.25 via check number 00224248 dated April 15, 2 0 1 1 ($5,200.00 for unallowable cost and $78.25 for the reduction in indirect cost) t o the Georgia Department of Education.

Contact Person: Telephone: Fax: Email:

James Whitson, Interim Superintendent 706-826-1113 706-826-4611 whitsja@boe.richmond.kl2.ga.us