Telfair County Board of Education, McRae, Georgia, annual financial report for the fiscal year ended June 30, 2011 (including independent auditor's reports)

TELFAIR COUNTY BOARD OF EDUCATION
MCRAE, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2011
(Including Independent Auditor's Reports)

TELFAIR COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

B

STATEMENT OF ACTIVITIES

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

H

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

Page
i
1 2 4 5 6 7 8 9
23

TELFAIR COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

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

Page
24 25 26 27

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133

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

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

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

SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
April 11, 2012

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Telfair County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) of the Telfair County Board of Education, as of and for the year ended June 30, 2011, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Telfair County Board of Education's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Board's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our 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 Telfair County Board of Education, as of June 30, 2011, 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.

2011ARL-11

In accordance with Government Auditing Standards, we have also issued our report dated April 11, 2012, on our consideration of the Telfair County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.
Management's Discussion and Analysis and the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through ix and page 23 respectively, are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. 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, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Telfair 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 Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole.
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,

RWH:al 2011ARL-11

Russell W. Hinton, CPA, CGFM State Auditor

TELFAIR COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2011

INTRODUCTION
The District's financial statements for the fiscal year ended June 30, 2011 includes a series of basic financial statements that report financial information for the District as a whole, its funds, and its fiduciary responsibilities. The Statement of Net Assets and the Statement of Activities provide financial information about all of the District's activities and present both a short-term and long-term view of the District's finances on a global basis. The fund financial statements provide information about all of the District's funds. Information about these funds, such as the District's General Fund, is important in its own right, but will also give insight into the District's overall soundness as reported in the Statement of Net Assets and the Statement of Activities.
FINANCIAL HIGHLIGHTS
Key financial highlights for fiscal year 2011 are as follows:
On the District-wide financial statements:
District-wide net assets at June 30, 2011, were approximately $19.4 million. Net assets reflect the difference between all assets of the District (including capital assets, net of depreciation) and all liabilities, both short term and long term. The net assets at June 30, 2011, of $19.4 million represented an increase of approximately $1.8 million when compared to the prior year.
The School District had over $17.4 million in expenses relating to governmental activities; only $13.0 million of these expenses were offset by program specific charges for services, grants and contributions. However, the general revenues (primarily property and sales taxes) of approximately $6.2 were sufficient to provide for funding the balance of these expenses.
As stated above, general revenues accounted for $6.2 million or about 32% of all revenues totaling approximately $19.2 million. Program specific revenues in the form of charges for services, grants, and contributions accounted for the balance of these revenues.

Source of Revenues
Program Revenues
67.6%

General Revenue Property Taxes 22.2%
General Revenue Sales Taxes 6.0%

General Revenue All Other 4.2%

i

TELFAIR COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2011
On the fund financial statements:
Among major funds, the General Fund had over $16.9 million in revenues and $16.4 million in expenditures. The General Fund balance of approximately $2.3 million at June 30, 2011, increased by approximately $380,000 from the prior year.
OVERVIEW OF THE FINANCIAL STATEMENTS
These financial statements consists of three parts; management's discussion and analysis (this section), the basic financial statements including notes to the financial statements and required supplementary information. The basic financial statements include two levels of statements that present different views of the School District. These include the District-wide and fund financial statements.
The District-wide financial statements include the 'Statement of Net Assets' and 'Statement of Activities'. These statements provide information about the activities of the School District presenting both short-term and long-term information about the School District's overall financial status.
The fund financial statements focus on individual parts of the School District, reporting the School District's operation in more detail. The 'Governmental Funds' statements disclose how basic services are financed in the short-term as well as what remains for future spending. The 'Fiduciary Funds' statements provide information about the financial relationships in which the School District acts solely as a trustee or agent for the benefit of others. In the case of the Telfair County School District, the General Fund, Capital Projects Funds, and Debt Service Funds are all considered to be major funds. The District has no nonmajor funds as defined by GASB Statement 34 for purposes of this report.
The financial statements also include notes that explain some of the information in the statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the financial statements. Additionally, other supplementary information (not required) is also presented that further supplements understanding of the financial statements.
District-Wide Statements
Since Telfair County School District has no operations that have been classified as "Business Activities", the District-wide financial statements are basically a consolidation of all of the District's operating funds into one column called governmental activities. In reviewing the District-wide financial statements, a reader might ask the question, are we in a better financial position now than last year? The 'Statement of Net Assets' and the 'Statement of Activities' provides the basis for answering this question. These financial statements include all District's assets and liabilities and use the accrual basis of accounting, similar to the accounting used by most private-sector companies. This basis of accounting takes into account all of the current year's revenues and expenses, regardless of when cash is received or paid.
These two statements report the School District's net assets and any changes in those assets. The change in net assets is important because it tells the reader that, for the School District as a whole, the financial position of the School District has improved or diminished. The causes of this change may be the results of many factors, including those not under the School District's control, such as the property tax base, facility conditions, required educational programs, student-teacher ratios, and other factors.
ii

TELFAIR COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2011
When analyzing District-wide financial statements, it is important to remember these statements are prepared using an economic resources measurement focus (accrual accounting) and involve the following steps to format the Statement of Net Assets:
Capitalize current outlays for capital assets Depreciate capital assets Report long-term debt as a liability Calculate revenue and expense using the economic resources measurement focus and the
accrual basis of accounting Allocate net assets as follows:
o Net Assets invested in capital assets, net of related debt o Restricted net assets are those with constraints placed on the use by external sources
such as creditors, grantors, contributors or laws and regulations. o Unrestricted net assets are net assets that do not meet any of the above restrictions.
Fund Financial Statements
The School District uses many funds or subfunds to account for a multitude of financial transactions during the fiscal year. The fund financial statements presented in this report provide detail information about the School District's significant or major funds. As discussed previously, the District has no nonmajor Funds as defined by generally accepted accounting principles.
The District has two kinds of funds as discussed below:
Governmental Funds Most of the School District's activities are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end available for spending in future periods. These funds are reported using the modified accrual method of accounting which measures cash and all other financial assets that can be readily be converted to cash. The governmental fund statements provide a detailed short-term view of the School District's general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The differences between government activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds are reconciled in the financial statements.
Fiduciary Funds The School District is the trustee, or fiduciary, for assets that belong to clubs, organizations and others within the principals' accounts. The School District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The School District excludes these activities from the District-wide financial statements because it cannot use these assets to finance its operations.
FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT AS A WHOLE
Net assets, the difference between total assets and total liabilities, are one indicator of the financial condition of the District. When revenues exceed expenses, the result is an increase in net assets. When expenses exceed revenues, the result is a decrease in net assets. The relationship between revenues and expenses can be thought of as the District's operating results. The District's net assets, as measured in the Statement of Net Assets, can be one way to measure the District's financial health, or financial position. Over time, increases or decreases in the District's net assets,
iii

TELFAIR COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2011

as measured in the Statement of Activities, are one indicator of whether its financial health is improving or deteriorating. However, the District's goal and mission is to provide success for each child's education, not to generate profits as private corporations do. For this reason, many other nonfinancial factors should be considered in assessing the overall health of the District.

In the case of the Telfair County School District, assets exceeded liabilities by more than $19.4 million at June 30, 2011. To better understand the District's actual financial position and ability to deliver services in future periods, it is necessary to review the various components of the net asset category. For example, of the $19.4 million of net assets, about $1.5 million was restricted for continuation of Federal programs, debt service and ongoing capital projects. Accordingly, these funds were not available to meet the District's ongoing obligations to citizens and creditors.

In addition, the District had over $15.7 million (net of related debt) invested in capital assets (e.g., land, buildings, and equipment). The District uses these capital assets to provide educational services to students within geographic boundaries served by the District. Because of the very nature and on-going use of the assets being reported in this component of net assets, it must be recognized that this portion of the net assets is not available for future spending.
The remaining balance of unrestricted net assets of approximately $2.2 million may be used to meet the District's ongoing obligations to citizens and creditors.

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

Assets Current and Other Assets Capital Assets, Net

Governmental Activities

FY 2011

FY 2010

$

6,007,217

$

5,641,133

19,657,220

19,289,563

Total Assets

$

25,664,437

$

24,930,696

Liabilities Current and Other Liabilities Long-Term Liabilities

$

1,886,049

$

1,978,503

4,358,733

5,282,985

Total Liabilities

$

6,244,782

$

7,261,488

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

$

15,746,925

$

14,455,015

1,450,396

1,290,812

2,222,334

1,923,381

Total Net Assets

$

19,419,655

$

17,669,208

Total net assets increased approximately $1.8 million in fiscal year 2011 from the prior year. This change in net assets is detailed in Table 2 as presented below.

iv

TELFAIR COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2011
Table 2 Change in Net Assets

Revenues Program Revenues: Charges for Services and Sales Operating Grants and Contributions Capital Grants and Contributions Total Program Revenues
General Revenues: Property Taxes Sales Taxes Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Total Revenues
Program Expenses Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services Interest on Short-Term and Long-Term Debt
Total Expenses
Increase in Net Assets

Governmental Activities

FY 2011

FY 2010

$

171,935

$

178,086

11,816,361

12,296,395

981,012

$

12,969,308

$

12,474,481

$

4,248,673

$

4,776,266

1,150,479

1,116,980

531,227

1,100,225

8,781

16,501

265,309

208,514

$

6,204,469

$

7,218,486

$

19,173,777

$

19,692,967

$

10,907,900

$

11,158,061

611,171 890,163 217,607 276,299 882,973 166,597 1,062,006 846,752
118,885

602,666 1,063,259
227,733 299,343 877,680 208,028 1,053,085 810,781
2,842 144,464

158,709 1,034,102
250,165

140,836 1,011,847
230,308

$

17,423,330

$

17,830,933

$

1,750,447

$

1,862,034

v

TELFAIR COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2011

Cost of Providing Services

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

Total Cost of Services

FY 2011

FY 2010

Net Cost of Services

FY 2011

FY 2010

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

$ 10,907,900

11,158,061 $ 2,424,193

3,197,601

611,171 890,163 217,607 276,299 882,973 166,597 1,062,006
846,752 118,885

602,666 1,063,259
227,733 299,343 877,680 208,028 1,053,085
2,842 810,781 144,464

220,703 134,109 -129,545 -205,727 371,235 165,843 564,933
452,170 11,803

269,797 177,008
6,946 -171,762 385,268 207,305 540,024
2,839 393,652
11,635

158,709 1,034,102
250,165

140,836 1,011,847
230,308

$ 17,423,331 $ 17,830,933 $

158,709 35,431
250,165

44,302 61,530 230,308

4,454,022 $ 5,356,453

Expenditures for fiscal year 2011 as well as the net cost of providing services decreased from the prior year.
FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT'S FUNDS
Information about the School District's governmental funds is presented starting on Exhibit "C" of this report. Governmental funds are accounted for using the modified accrual basis of accounting. The governmental funds had total revenues of $18.1 million and total expenditures of almost $17.7 million in fiscal year 2011. Total governmental fund balances of almost $3.5 million at June 30, 2011, increased approximately $438,000 from the prior year.
General Fund Budget Highlights
The School District's budget is prepared according to Georgia Law. The most significant budgeted fund is the General Fund. During the course of fiscal year 2011, the School District amended its general fund budget as needed.
vi

TELFAIR COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2011

The School District budget is adopted at the aggregate level and maintained at the program, function, object, and site levels to facilitate budgetary control. The budgeting systems are designed to control the total budget, but provide flexibility to meet the ongoing programmatic needs. The budgeting systems are also designed to control total site budgets but provide flexibility for site management as well.

For the General Fund, the final actual revenues of over $16.9 million were more than the final budgeted amount of $15.3 by roughly $1.6 million. This can be attributed to receiving more Federal Funds, Charges for Services, and miscellaneous income than originally expected.

The General Fund's final actual expenditures of over $16.4 million were less than the final budget amount of $16.9 by approximately $500,000. This budget under expenditure was primarily due to actual expenditures for Improvement of Instructional Services being less than budget by $247,000, and expenditures for Student Transportation being less than the budget amount by $242,000. These decreases were offset by increase in actual expenditures for School Administration being greater than budget by approximately $51,000 and Maintenance and Operation of Plant being greater than budget by approximately $52,000. The District believes it effectively managed its budget during the fiscal year. Additionally, the District did not include revenues and expenditures for school activity accounts in the final budget.

CAPITAL ASSETS AND DEBT ADMINISTRATION

Capital Assets

At fiscal year ended June 30, 2011, the School District had $19.7 million invested in capital assets, net of accumulated depreciation, all in governmental activities. These assets are made up of a broad range of items including buildings; land; land improvements; and food service, transportation and maintenance equipment. Table 4 reflects a summary of these balances, net of accumulated depreciation, as compared to the prior fiscal year.

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

Governmental Activities

FY 2011

FY 2010

Land Land Improvements Buildings and Improvements Equipment

$

212,917

$

212,917

188,137

209,702

17,557,716

17,943,957

1,698,450

922,987

Total

$

19,657,220

$

19,289,563

Additional information about the School District's Capital Assets can be found in the Notes to the Basic Financial Statements.

vii

TELFAIR COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2011

Long-Term Debt

At June 30, 2011, the School District had $4.3 million in total debt outstanding which consisted of just over $4.3 million in bond debt, and about $24,000 in capital lease debt. Table 5 summarizes the School District's debt as compared to the prior fiscal year.

Table 5 Change in Long Term Debt

Governmental Activities

FY 2011

FY 2010

Bonds Payable Capital Leases

$

4,335,000

$

5,220,000

23,733

62,985

Total

$

4,358,733

$

5,282,985

Additional information about the School District's debt can be found in the Notes to the Basic Financial Statements.
FACTORS BEARING ON THE SCHOOL DISTRICT'S FUTURE
Currently known circumstances that are expected to have a significant effect on financial position or results of operations in future years are as follows:
The District is financially stable. The School District's operating millage for fiscal year 2011 was 15.99, which produced approximately $284,500 per mill. The District plans to fund additional capital outlays with the one percent local sales tax revenue.
The School District is financially challenged by the State's continuing reduction of revenue estimates and subsequent reduction of state revenue appropriations to local school districts. State Revenues in fiscal year 2011 were marginally less than the prior year. Further reductions of State Funding are budgeted for fiscal year 2012 which include a provision that all employees take 10 days from work without pay during the fiscal year. Additionally, sales taxes have also slowed which have negatively affected revenues provided through those sources. In spite of these challenges, the School District will continue to be a good steward of tax dollars while providing a quality educational opportunity.
The District will continue to face challenges from the implementation of the A+ Education Reform Act, which mandates lower teacher to student ratios. The District will also continue to be impacted by the remedial actions required for schools under the No Child Left Behind Act. In the midst of these factors, the District remains confident in the ability to maximize resources to provide the best possible educational; experience for all of our students.

viii

TELFAIR COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 CONTACTING THE SCHOOL DISTRICT'S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens taxpayers, investors and creditors with a general overview of the School District's finances and to show the School District's accountability for the money it receives. If you have questions about this report or need additional financial information, contact Mrs. Kyla M. Milton, Director of Finance, Telfair County School District, P. O. Box 240, McRae, Georgia 31055. You may also email your questions to Mrs. Milton at kmilton@telfair.k12.ga.us.
ix

TELFAIR COUNTY BOARD OF EDUCATION

TELFAIR COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2011
ASSETS
Cash and Cash Equivalents Accounts Receivable, Net
Taxes State Government Federal Government Local Other Inventories Deferred Charges Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation)
Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Interest Payable 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
Continuation of Federal Programs Debt Service Capital Projects Unrestricted
Total Net Assets
Total Liabilities and Net Assets

EXHIBIT "A"

GOVERNMENTAL ACTIVITIES

$

3,327,751.41

1,030,974.78 1,009,446.51
572,742.40 594.18 979.81
29,317.56 35,409.91 212,917.00 19,444,302.93

$

25,664,436.49

$

16,684.01

1,722,174.76

147,190.00

1,043,733.06 3,315,000.00

$

6,244,781.83

$

15,746,924.66

225,468.65 956,050.00 268,877.77 2,222,333.58

$

19,419,654.66

$

25,664,436.49

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

TELFAIR COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2011

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

EXPENSES

CHARGES FOR SERVICES

$ 10,907,900.38 $
611,171.50 890,163.30 217,606.81 276,298.62 882,972.69 166,597.50 1,062,006.42 846,751.87 118,885.06
158,708.99 1,034,101.59
250,165.24
$ 17,423,329.97 $

99,706.61
72,228.57 171,935.18

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

EXHIBIT "B"

PROGRAM REVENUES OPERATING GRANTS AND
CONTRIBUTIONS

CAPITAL GRANTS AND CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

$

7,658,052.29 $

316,892.91 724,661.95 219,620.54 475,060.48 496,139.19
754.80 497,073.39 394,581.55 107,082.06

926,441.61

$

11,816,360.77 $

725,948.60 $ 73,575.87 31,392.37
127,531.51 6,965.18
15,598.08
981,011.61 $

-2,424,192.88
-220,702.72 -134,108.98 129,545.24 205,727.04 -371,235.42 -165,842.70 -564,933.03 -452,170.32
-11,803.00
-158,708.99 -35,431.41
-250,165.24
-4,454,022.41

$

4,228,084.17

20,589.20

1,136,335.57 14,143.53
531,227.00 8,781.02
265,308.83

$

6,204,469.32

$

1,750,446.91

17,669,207.75

$

19,419,654.66

- 3 -

TELFAIR COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2011

EXHIBIT "C"

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

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 2,229,169.50 $ 1,098,581.91 $

904,628.92 1,009,446.51
572,742.40 594.18 979.81
29,317.56

126,345.86

0.00 $ 3,327,751.41
1,030,974.78 1,009,446.51
572,742.40 594.18 979.81
29,317.56

Total Assets

$ 4,746,878.88 $ 1,224,927.77 $

0.00 $ 5,971,806.65

LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Salaries and Benefits Payable Deposits and Deferred Revenue
Total Liabilities
FUND BALANCES
Nonspendable Restricted Committed Unassigned
Total Fund Balances

$

16,684.01

1,722,174.76

741,286.18

$ 2,480,144.95

$

16,684.01

1,722,174.76

741,286.18

$ 2,480,144.95

$

29,317.56

$

196,151.09 $ 1,224,927.77

72,396.44

1,968,868.84

$ 2,266,733.93 $ 1,224,927.77 $

0.00 $

29,317.56 1,421,078.86
72,396.44 1,968,868.84

0.00 $ 3,491,661.70

Total Liabilities and Fund Balances

$ 4,746,878.88 $ 1,224,927.77 $

0.00 $ 5,971,806.65

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

TELFAIR COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2011

EXHIBIT "D"

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

$

$

212,917.00

783,242.00

22,502,230.54

3,923,672.90

-7,764,842.51

$ -4,335,000.00 -147,190.00 -23,733.06 35,409.91

3,491,661.70
19,657,219.93 741,286.18
-4,470,513.15

Net Assets of Governmental Activities (Exhibit "A")

$

19,419,654.66

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

TELFAIR COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2011

EXHIBIT "E"

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

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 4,152,942.38 14,143.53 $
8,816,510.43 3,531,077.34
171,935.17 7,391.50
265,308.83
$ 16,959,309.18 $

$ 91,407.49 $ 1,044,928.08
1,389.52

4,152,942.38 1,150,479.10 8,816,510.43 3,531,077.34
171,935.17 8,781.02
265,308.83

92,797.01 $ 1,044,928.08 $ 18,097,034.27

$ 10,390,109.24

$ 10,390,109.24

611,171.50 890,163.30 217,606.81 271,285.62 873,625.69 155,113.20 968,990.52 755,145.27 118,885.06 158,708.99 979,619.59
$

157,900.95

611,171.50 890,163.30 217,606.81 271,285.62 873,625.69 155,113.20 968,990.52 755,145.27 118,885.06 158,708.99 979,619.59 157,900.95

39,252.25 2,051.75

$ 885,000.00 1,052.50
183,065.78

924,252.25 1,052.50
185,117.53

$ 16,431,728.79 $ 157,900.95 $ 1,069,118.28 $ 17,658,748.02

$ 527,580.39 $ -65,103.94 $ -24,190.20 $

438,286.25

$ 123,776.75 $ $ -147,966.95

$ -147,966.95 $ 123,776.75 $

$

379,613.44 $

58,672.81 $

1,887,120.49

1,166,254.96

24,190.20 $

147,966.95 -147,966.95

24,190.20 $

0.00

0.00 $

438,286.25

0.00

3,053,375.45

Fund Balances - Ending

$ 2,266,733.93 $ 1,224,927.77 $

0.00 $ 3,491,661.70

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

TELFAIR COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2011

EXHIBIT "F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:
Capital Outlay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense
Capital Assets purchased with Universal Service Fund (e-rate) proceeds are not reported in Governmental Funds. However, in the Statement of Activities, the e-rate proceeds are shown as Capital Grants and Contributions.
Taxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds.
Bond issuance costs, deferred gains on refundings and similar items when debt is first issued are reported as an expenditure in Governmental Funds, but are reported as deferred charges on the Statement of Net Assets and amortized over the term of the debt, using the straight-line method.
Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of:
Bond Payments Capital Lease Payments
Some items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in Governmental Funds. These activities consist of:
Net Increase in Accrued Interest

$

438,286.25

$

205,437.83

-818,792.51

-613,354.68

981,011.61 95,730.99

-11,484.30

$

885,000.00

39,252.25

924,252.25

-63,995.21

Change in Net Assets of Governmental Activities (Exhibit "B")

$ 1,750,446.91

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

TELFAIR COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS JUNE 30, 2011
ASSETS Cash and Cash Equivalents
LIABILITIES Funds Held for Others

EXHIBIT "G"

AGENCY FUNDS

$

24,897.66

$

24,897.66

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

TELFAIR COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY The Telfair County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Telfair County Board of Education.
District-wide Statements: The Statement of Net Assets and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for all financial resources of the School District, except those resources required to be accounted for in another fund.
District-wide Capital Projects Fund accounts for and reports financial resources including Special Purpose Local Option Sales Tax (SPLOST) that are restricted, committed or assigned to the expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets.
- 9 -

TELFAIR COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

Debt Service Fund accounts for and reports financial resources that are restricted, committed, or assigned including taxes (sales) legally restricted for the payment of general long-term principal and interest.
The School District reports the following fiduciary fund type:
Agency funds account for assets held by the School District as an agent for various funds, governments, or individuals.
BASIS OF ACCOUNTING The basis of accounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources.
The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
The State of Georgia reimburses the School District 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 1 through August 31. In accordance with the respective rules and regulations of the QBE program, the State of Georgia reimburses the School District 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, the School District recognizes the same QBE as a receivable and revenue, consistent with symmetrical recognition.
- 10 -

TELFAIR COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

NEW ACCOUNTING PRONOUNCEMENTS In fiscal year 2011, the School District adopted the Governmental Accounting and Standards Board (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. The provisions of this Statement establish accounting and financial reporting standards for all governments that report governmental funds. It establishes criteria for classifying fund balances into specifically defined classifications and clarifies definitions for governmental funds.

CASH AND CASH EQUIVALENTS COMPOSITION OF DEPOSITS Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations.

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 Telfair County Board of Commissioners fixed the property tax levy for the 2010 tax digest year (calendar year) on September 14, 2010, (levy date). Taxes were due on December 20, 2010, (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2010 tax digest are reported as revenue in the governmental funds for fiscal year 2011. The Telfair County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2011, for maintenance and operations amounted to $4,132,353.18.

The tax millage rate levied for the 2010 tax year (calendar year) for the Telfair County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

15.990 mills

SALES TAXES Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $1,136,335.57 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.

FOOD INVENTORIES On the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.

- 11 -

TELFAIR COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

CAPITAL ASSETS Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District.

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

Capitalization

Estimated

Policy

Useful Life

Land Land Improvements Construction in Progress Buildings and Improvements Equipment Intangible Assets

All

N/A

$ 5,000.00

10 to 60 years

$ 5,000.00

N/A

$ 5,000.00

10 to 80 years

$ 5,000.00

5 to 20 years

$ 50,000.00 To be Assigned Individually

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

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

GENERAL OBLIGATION BONDS The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide financial statements, bond issuance costs are reported as deferred charges and amortized over the term of the debt using the straight line method. In the fund financial statements, the School District recognized bond issuance costs during the fiscal year bonds are issued. 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.

In the District-wide and fund financial statements, the School District recognizes bond premiums and discounts during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. To conform to generally accepted accounting principles, bond premiums and discounts should be amortized over the life of the bonds on the District-wide statements. The effect of this deviation is deemed to be immaterial to the fair presentation of the basic financial statements.

- 12 -

TELFAIR COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

NET ASSETS The School District's net assets in the District-wide Statements are classified as follows:
Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.
Restricted net assets - These represent resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation of Federal programs, debt service and capital projects in accordance with restrictions imposed by external third parties.
Unrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes.
FUND BALANCES The School District's fund balances are classified as follows:
Nonspendable Amounts that cannot be spent either because they are in a nonspendable form or because they are legally or contractually required to be maintained intact.
Restricted Constraints are placed on the use of resources are either (1) externally imposed conditions by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation.
Committed Amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board of Education. The Board of Education is the School District's highest level of decision-making authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Committed fund balance also should incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements.
Assigned Amounts that are constrained by the School District's intent to be used for specific purposes, but are neither restricted nor committed. The intent should be expressed by (1) the Board of Education or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes.
Unassigned The residual classification for the General Fund. This classification represents fund balances that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the General Fund.

- 13 -

TELFAIR COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

Fund Balances of the Governmental Funds at June 30, 2011, are as follows:

FUND BALANCES

Nonspendable Inventories

$

29,317.56

Restricted Continuation of Federal Programs Debt Service Capital Projects
Committed School Activity Accounts

$ 196,151.09 1,103,240.00 121,687.77

1,421,078.86 72,396.44

Unassigned

1,968,868.84

Fund Balance June 30, 2011

$ 3,491,661.70

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

COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (O.C.G.A.) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. Section 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 percent of the daily pool balance

Acceptable security for deposits consists of any one of or any combination of the following:

(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,

(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,

(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,

- 14 -

TELFAIR COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
CATEGORIZATION OF DEPOSITS Custodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. At June 30, 2011, the bank balances were $3,786,661.22. The bank balances were entirely covered by Federal depository insurance or collateralized with securities held by the pledging financial institution's agent in the School District's name.
Note 4: NON-MONETARY TRANSACTIONS
The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories
Note 5: CAPITAL ASSETS
The following is a summary of changes in the Capital Assets during the fiscal year:

Governmental Activities Capital Assets, Not Being Depreciated:
Land

Balances July 1, 2010

Increases

Decreases

Balances June 30, 2011

$

212,917.00 $

0.00 $

0.00 $

212,917.00

Capital Assets, Being Depreciated: Buildings and Improvements Equipment Land Improvements

$ 22,418,768.00 $

83,462.54 $

2,833,660.00 1,090,012.90

770,268.00

12,974.00

0.00 $

22,502,230.54 3,923,672.90 783,242.00

Less: Accumulated Depreciation: Buildings and Improvements Equipment Land Improvements

4,474,811.00 1,910,673.00
560,566.00

469,703.39 314,550.40
34,538.72

4,944,514.39 2,225,223.40
595,104.72

Total Capital Assets, Being Depreciated, Net $ 19,076,646.00 $ 367,656.93 $

0.00 $ 19,444,302.93

Governmental Activity Capital Assets - Net

$ 19,289,563.00 $ 367,656.93 $

0.00 $ 19,657,219.93

- 15 -

TELFAIR COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

Capital assets being acquired under capital leases as of June 30, 2011, are as follows:

Governmental Funds

Equipment Less: Accumulated Depreciation

$

184,225.00

165,803.00

$

18,422.00

Current year depreciation expense by function is as follows:

Instruction Support Services
General Administration School Administration Maintenance and Operation of Plant Student Transportation Services Food Services
Note 6: INTERFUND TRANSFERS

$

$

18,694.09

9,349.23

112,361.99

92,573.46

$

531,333.85
232,978.77 54,479.89
818,792.51

Interfund transfers for the year ended June 30, 2011, consisted of the following:

Transfer to

Transfers From General Fund

District-wide Capital Projects Debt Service Fund
Total

$

123,776.75

24,190.20

$

147,966.95

Transfers are used to move property tax revenues collected by the General Fund to (1) the Districtwide Capital Projects Fund as required match or supplemental funding source for capital construction projects and (2) provide supplemental funding for the Debt Service Fund to make debt payments.

- 16 -

TELFAIR COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

Note 7: RISK MANAGEMENT

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

The School District has obtained commercial insurance for risk of loss associated with torts, assets, and errors or omissions. The School District has neither significantly reduced coverage for these risks, nor incurred losses or settlements which exceeded the School District's insurance coverage in the past three years.

The School District has elected to self-insure for all losses related to acts of God. The School District has not experienced any losses related to this risk in the past three years.

The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund with expenses/ expenditures and liabilities being reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. The School District has not experienced any unemployment compensation claims during the past two fiscal years.

The School District participates in the Georgia Education Workers' Compensation Trust, a public entity risk pool organized on December 1, 1991, to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Trust for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Trust with the Safety National Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $1,000,000.00 loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided by Safety National Casualty Company with a loss fund percentage of 100%, based on the Fund's annual normal premium, up to a maximum limit of indemnity of aggregate limit of $2,000,000.00.

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

Position Covered

Amount

All Employees

$ 100,000.00

Note 8: LONG-TERM DEBT

CAPITAL LEASES The Telfair County Board of Education entered into various agreements for the purchase of air conditioning equipment, building improvements and copiers. These lease agreements qualify as capital leases for accounting purposes, and, therefore, have been recorded at the present value of the future minimum lease payments as of the date of their inception.

- 17 -

TELFAIR COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

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

Purpose

Interest Rates

Amount

General Government - Series 2006A General Government - Series 2006B

3.75% - 4.00% 3.75%

$ 3,370,000.00 1,850,000.00

$ 5,220,000.00

The changes in Long-Term Debt during the fiscal year ended June 30, 2011, were as follows:

Balance July 1, 2010

Additions

Governmental Funds Deductions

Balance June 30,
2011

Due Within One Year

G.O. Bonds

$ 5,220,000.00 $

Capital Leases

62,985.31

0.00 $ 885,000.00 $ 4,335,000.00 $ 1,020,000.00

39,252.25

23,733.06

23,733.06

$ 5,282,985.31 $

0.00 $ 924,252.25 $ 4,358,733.06 $ 1,043,733.06

At June 30, 2011, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30:

Capital Leases

Principal

Interest

General Obligation Debt

Principal

Interest

2012 2013 2014 2015

$

23,733.06 $

360.94 $

1,020,000.00 $ 1,060,000.00 1,105,000.00 1,150,000.00

147,190.00 107,682.50
66,213.75 22,481.25

Total Principal and Interest

$

23,733.06 $

360.94 $ 4,335,000.00 $ 343,567.50

Note 9: ON-BEHALF PAYMENTS

The School District has recognized revenues and costs in the amount of $68,338.76 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.

Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $32,564.00

Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $28,849.76

- 18 -

TELFAIR COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

Office of the State Treasurer Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $6,925.00
Note 10: SIGNIFICANT CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.
The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the basic financial statements.
Note 11: SUBSEQUENT EVENTS
On November 14, 2011, the Telfair County Board of Education approved a $2,000,000.00 temporary loan in advance of property tax collections. Proceeds from this short-term loan will be issued to provide cash for operations until property tax collections are received by the School District, should the need arise. The maturity date of the loan is December 31, 2011. Telfair County Board of Education did not draw down any temporary loan funds during the allotted time frame.
Note 12: POSTEMPLOYMENT 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 postemployment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Benefit Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (O.C.G.A.) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board). The Department of Community Health, which includes the School OPEB Fund, issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.
Funding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately 25 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.
- 19 -

TELFAIR COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

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, 2011:

For certificated teachers, librarians and regional educational service agencies:

July 2010 - April 2011 May 2011 - June 2011

21.955% of covered payroll for August - May Coverage 1.429% of covered payroll for June - July Coverage

For non-certificated school personnel:

July 2010 - December 2010 January 2011 - May 2011 June 2011

$162.72 per member per month $218.20 per member per month $246.20 per member per month

The Department of Education was appropriated an additional $25,081,633 for non-certificated personnel health insurance payments. The amount attributable to the School District is reflected in the On-behalf note disclosure.

No additional contribution was required by the Board for fiscal year 2011 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 postemployment benefits and are subject to appropriation.

The School District'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

2011 2010 2009

100%

$

100%

$

100%

$

1,552,362.44 1,451,935.08 1,121,720.17

Note 13: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
Plan Description. The TRS is a cost-sharing multiple-employer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.

On October 25, 1996, the Board created the Supplemental Retirement Benefits Plan of the Georgia Teachers Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1, 1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits.

- 20 -

TELFAIR COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service.
Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 30 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available.
Funding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 10 years of service. If a member terminates with less than 10 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2011, were 5.53% of annual salary. The member contribution rate will increase to 6.00% effective July 1, 2012. Employer contributions required for fiscal year 2012 were 10.28% of annual salary as required by the June 30, 2010, actuarial valuation. The employer contribution rate will increase to 11.41% effective July 1, 2012.
Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2011 2010 2009

100%

$

100%

$

100%

$

896,549.54 859,598.43 841,525.57

PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM (PSERS)

Bus drivers, lunchroom personnel, and maintenance and custodial personnel are members of the Public School Employees' Retirement System of Georgia. The System is funded by contributions by the employees and by the State of Georgia. The School District makes no contribution to this plan.

- 21 -

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TELFAIR COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2011

SCHEDULE "1"

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

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

$

4,165,862.00 $

4,186,451.20 $

4,152,942.38

28,177.00

28,177.00

14,143.53

8,588,576.03

8,947,129.69

8,816,510.43

2,082,933.61

2,090,765.61

3,531,077.34

83,650.00

83,650.00

171,935.17

9,742.00

9,742.00

7,391.50

6,975.00

9,975.00

265,308.83

$ 14,965,915.64 $ 15,355,890.50 $ 16,959,309.18

$

9,354,528.90 $ 10,537,957.06 $ 10,390,109.24

298,500.56 457,379.98 216,054.55 224,537.81 832,118.37 179,607.32 913,023.77 778,800.40
1,000.00 54,499.00 989,531.61

694,313.95 1,136,723.11
216,124.55 262,767.34 822,933.56 179,607.32 916,056.31 996,796.40
1,000.00 126,804.00 988,616.00

611,171.50 890,163.30 217,606.81 271,285.62 873,625.69 155,113.20 968,990.52 755,145.27
118,885.06 158,708.99 979,619.59
41,304.00

$ 14,299,582.27 $ 16,879,699.60 $ 16,431,728.79

$

666,333.37 $

-1,523,809.10 $

527,580.39

-269,484.25

-147,966.95

$

666,333.37 $

-1,793,293.35 $

379,613.44

1,965,026.40

1,965,026.40

1,887,120.49

-4,728.63

-16,998.84

Fund Balances - Ending

$

2,626,631.14 $

154,734.21 $

2,266,733.93

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

See notes to the basic financial statements.

- 23 -

TELFAIR COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2011

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total U. S. Department of Agriculture
Education, U. S. Department of Educational Technology State Grants Cluster Pass-Through From Georgia Department of Education ARRA - Education Technology State Grants
Special Education Cluster Pass-Through From Georgia Department of Education Special Education ARRA - Grants to States ARRA - Preschool Grants Grants to States Preschool Grants
Total Special Education Cluster
Title I, Part A Cluster Pass-Through From Georgia Department of Education ARRA - Title I Grants to Local Educational Agencies Title I Grants to Local Educational Agencies
Total Title I, Part A Cluster
Other Programs Direct Safe and Drug-Free Schools and Communities - National Programs Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Education Jobs Fund Improving Teacher Quality State Grants Migrant Education - State Grant Program Rural Education
Total Other Programs
Total U. S. Department of Education

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

10.553 10.555

N/A

N/A

$

$

(2) 955,880.56 (1)
955,880.56

* 84.386

N/A

$

307,249.47

* 84.391 * 84.392 * 84.027 * 84.173

N/A

$

N/A

N/A

N/A

$

6,020.88 1,452.39 344,932.36 19,112.00
371,517.63

* 84.389 * 84.010

N/A

$

N/A

$

220,740.73 861,523.63
1,082,264.36

84.184
84.048 * 84.410
84.367 84.011 84.358

$
N/A N/A N/A N/A N/A
$
$

261,270.37
23,375.00 354,152.00 163,478.33
28,284.25 43,984.08
874,544.03
2,635,575.49

Total Expenditures of Federal Awards

$

3,591,456.05

N/A = Not Available
Notes to the Schedule of Expenditures of Federal Awards
(1) Includes the Federally assigned value of donated commodities for the Food Donation Program in the amount of $75,575.35.
(2) Expenditures for the funds earned on the School Breakfast Program ($248,554.46) were not maintained separately and are included in the 2011 National School Lunch Program.
Major Programs are identified by an asterisk (*) in front of the CFDA number.
The School District did not provide Federal Assistance to any Subrecipient.
The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Telfair County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 24 -

TELFAIR COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2011
AGENCY/FUNDING
GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle Grades (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Nursing Services Mid-term Adjustment Hold-Harmless Vocational Supervisors Education Equalization Funding Grant Food Services Vocational Education Amended Formula Adjustment Other State Programs Dual Enrollment Health Insurance Math and Science Supplements Preschool Handicapped Program Teachers' Retirement
Human Resources, Georgia Department of Family Connection
Office of the State Treasurer Public School Employees Retirement
South Georgia Regional Prevention Coalition Family Connection

See notes to the basic financial statements.

- 25 -

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

447,508.28

456,497.00 268,035.00 1,499,667.00
70,620.00 776,640.00
36,115.00 881,785.00 856,908.00 287,067.00
1,116,762.00 203,585.00 93,581.00 71,635.00 31,607.00 186,617.00 56,603.00 34,020.00
378,728.00 404,006.00 421,970.00
331,072.00 42,665.00
278,348.00 7,318.00
531,227.00 29,846.00 68,357.00
-1,216,529.00
1,152.00 32,564.00 30,580.77 15,077.00 28,849.76
42,250.00
6,925.00
6,851.62

$

8,816,510.43

TELFAIR COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2011

SCHEDULE "4"

PROJECT

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3) (4)

AMOUNT EXPENDED IN PRIOR YEARS (3) (4)

PROJECT STATUS

Adding to, renovating, repairing, improving, and

equipping Telfair County High School;

acquiring, constructing, and equipping new

transportation and maintenance facilities;

adding to, renovating, repairing, improving, and

equipping existing school buildings, school

system facilities, and transportation facilities;

acquiring miscellaneous new equipment,

fixtures and furnishings for the school system,

including instructional and administrative

technology equipment, school buses,

maintenance vehicles, and safety and security

equipment; acquiring textbooks system-wide;

and paying debt service on the general

obligation debt of the school district and paying

expenses incident to accomplishing the

foregoing.

$

6,500,000.00 $

6,500,000.00 $ 157,900.95 $ 5,705,923.31

Ongoing

(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax.

(2) The School District's current estimate of total cost for the project. Includes all cost from project inception to completion.

(3) The voters of Telfair County approved the imposition of a 1% sales tax to fund the above project and retire associated debt. Amounts expended for this project may include sales tax proceeds, state, local property taxes and/or other funds over the life of the project.

(4) In addition to the expenditures shown above, the School District has incurred interest to provide advance funding for the above project as follows:

Prior Years

$ 299,365.95

Current Year

183,065.78

Total

$ 482,431.73

See notes to the basic financial statements.

- 26 -

TELFAIR COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2011

SCHEDULE "5"

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

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

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

$

524,651.00 $ 447,008.67 $ 13,389.84 $ 460,398.51

314,140.00

226,394.33

550.00

226,944.33

1,660,005.00

1,332,239.23

17,707.10

1,349,946.33

130,632.00

109,276.62

109,276.62

868,314.00

724,888.28

17,172.83

742,061.11

65,161.00

86,934.14

550.00

87,484.14

2,034.69

2,034.69

1,046,303.00

1,085,380.62

14,124.15

1,099,504.77

925,493.00

1,084,261.30

28,245.31

1,112,506.61

325,441.00

344,494.58

24,400.00

368,894.58

1,349,464.00

16,413.00

16,413.00

18,352.79

16,413.00

34,765.79

564,927.98

17,479.01

582,406.99

18,246.27

35,286.00

53,532.27

996,984.13

720.05

997,704.18

239,572.00

141,557.87

407.91

141,965.78

100,078.00

133,633.18

133,633.18

83,626.00

40,537.90

153,000.00

193,537.90

38,523.00

63,334.17

63,334.17

$

7,671,403.00 $ 7,420,486.75 $ 355,858.20 $ 7,776,344.95

218,210.00 39,666.00

182,402.15

20,507.12

202,909.27 29,880.53

TOTAL QBE FORMULA FUNDS

$

7,929,279.00 $ 7,602,888.90 $ 376,365.32 $ 8,009,134.75

(1) Comprised of State Funds plus Local Five Mill Share.

(2) Allotments do not include the impact of the State amended formula adjustment.

See notes to the basic financial statements.

- 27 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
April 11, 2012

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Telfair County Board of Education
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Telfair County Board of Education as of and for the year ended June 30, 2011, which collectively comprise Telfair County Board of Education's basic financial statements and have issued our report thereon dated April 11, 2012. 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 Reporting
Management of Telfair County Board of Education is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered Telfair County Board of Education's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Telfair County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Telfair County Board of Education's internal control over financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses and therefore, there can be no assurances that all deficiencies, significant deficiencies or material weaknesses have been identified. However, as described in the accompanying Schedule of Findings and Questioned Costs, we identified a certain deficiency in internal control over financial reporting that we consider to be a material weakness and another deficiency that we consider to be a significant deficiency.

2011YB-40

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. We consider item FS-7341-11-02 to be a material weakness.
A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider item FS-7341-11-01 in the accompanying Schedule of Findings and Questioned Costs to be a significant deficiency in internal control over financial reporting.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Telfair 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 Telfair County Board of Education in a separate letter dated April 11, 2012.
Telfair County Board of Education's response to the findings identified in our audit is described in the accompanying Schedule of Management's Responses. We did not audit Telfair County Board of Education's response and, accordingly, we express no opinion on it.
This report is intended solely for the information and use of management, members of the Telfair 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,

RWH:al 2011YB-40

Russell W. Hinton, CPA, CGFM State Auditor

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
April 11, 2012

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Telfair County Board of Education
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
Ladies and Gentlemen:
Compliance
We have audited Telfair 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, 2011. Telfair 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 Telfair County Board of Education's management. Our responsibility is to express an opinion on Telfair County Board of Education's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Telfair 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 Telfair County Board of Education's compliance with those requirements.
In our opinion, the Telfair County Board of Education complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2011. However, the results of our auditing procedures disclosed an instance of noncompliance with those requirements, which is required to be reported in accordance with OMB Circular A-133 and which is described in the accompanying Schedule of Findings and Questioned Costs as item FA-7341-11-01.
2011SA-40

Internal Control Over Compliance
Management of Telfair 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 Telfair 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 OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Telfair County Board of Education's internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a Federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a Federal program will not be prevented, or detected and corrected, on a timely basis.
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-7341-11-01.
A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a Federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Telfair County Board of Education's response to the finding identified in our audit is described in the accompanying Schedule of Management's Responses. We did not audit Telfair County Board of Education's response and, accordingly, we express no opinion on the response.
This report is intended solely for the information and use of management, members of the Telfair 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,

RWH:al 2011SA-40

Russell W. Hinton, CPA, CGFM State Auditor

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

TELFAIR COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2011
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.

SECTION IV FINDINGS AND QUESTIONED COSTS

TELFAIR COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2011

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

Unqualified

Internal control over financial reporting:

Material weakness identified?

Yes

Significant deficiency identified?

Yes

Noncompliance material to financial statements noted:

No

Federal Awards

Internal Control over major programs:

Material weakness identified?

No

Significant deficiency identified?

Yes

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

Unqualified

Any audit findings disclosed that are required to be reported in

accordance with OMB Circular A-133, Section 510(a)?

Yes

Identification of major programs:

CFDA Numbers

Name of Federal Program or Cluster

84.010, 84.389 84.027, 84.173, 84.391, 84.392 84.410 84.386

Title I, Part A Cluster Special Education Cluster Education Jobs Fund Education Technology State Grants Cluster

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

$300,000.00

Auditee qualified as low-risk auditee?

No

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TELFAIR COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2011
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
EMPLOYEE COMPENSATION Inadequate Internal Control Procedures Significant Deficiency Finding Control Number: FS-7341-11-01
Condition: The accounting procedures of the School District were insufficient to provide for adequate internal controls over employee compensation.
Criteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance employees are paid according to approved salary schedules and that documentation is maintained to support salary payments.
Questioned Cost: N/A
Information: A review of employee compensation revealed that no Board-approved salary schedules exist for most classified employees. In addition, two employees were noted to have been paid differently from their documented amount and supplemental pay, with no supporting documentation.
Cause: The School District's management failed to ensure that normal business procedures established for the payment of salaries were consistently followed.
Effect: Failure to follow established business procedures can create increased susceptibility to misappropriation of assets.
Recommendation: The School District should implement policies and procedures to ensure that normal business procedures are followed for all salaries, which includes ensuring that salaries are paid according to approved salary schedules and that adequate documentation is maintained to support the salary payments.
FINANCIAL REPORTING Inadequate Controls over Financial Reporting Material Weakness Finding Control Number: FS-7341-11-02
Condition: The School District did not have adequate controls in place to ensure that all required activity was included in the financial statement information presented for audit.
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TELFAIR COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2011
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS Criteria: Chapter 22A Annual Financial Reporting of the Financial Management for Georgia Local Units of Administration provides that School Districts must prepare their financial statements in accordance with generally accepted accounting principles. Questioned Cost: N/A Information: During the audit, correcting entries were proposed and accepted by the client to properly present the entity's financial statements as follows:
Several entries were necessary to tie beginning net assets and beginning fund balance to the prior year totals.
A review of the capital assets listing and the general ledger revealed the School District failed to capitalize assets purchased with the assistance of E-Rate discounts. The value of these assets, net of depreciation, was $981,011.61.
Entries were necessary to properly accrue Property Tax and Sales Taxes on the District-wide and the Governmental Fund statements.
Numerous reclassification entries were made to improve financial statement presentation. Supplemental Schedules and Notes to the Basic Financial Statements required auditor
revision. Cause: The School District did not implement an adequate system of internal control over the financial reporting process. Effect: The School District did not comply with the requirements of Georgia Department of Education regarding financial reporting. Numerous adjustments were necessary in order for the School District's financial statements to be in conformity with generally accepted accounting principles. Recommendation: The School District should implement controls over the financial statement reporting process to ensure that all required activity is included in the financial statement information.
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TELFAIR COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2011
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
REPORTING Failure to File Accurate Completion Reports Significant Deficiency U. S. Department of Education Through Georgia Department of Education Special Education Cluster (CFDA 84.027) Title I, Part A Cluster (CFDA 84.010) Finding Control Number: FA-7341-11-01
Condition: The School District failed to file accurate completion reports for the Special Education Cluster (CFDA 84.027) and the Title I, Part A Cluster (CFDA 84.010).
Criteria: In accordance with provisions of OMB Circular A-133, Part 3 Compliance Supplement, Subpart L Reporting, states in part, "Each recipient must report program outlays and program income...as prescribed by the Federal awarding agency. The reporting requirements for subrecipients are as specified by the pass-through entity."
Chapter 41, State and Federal Fiscal Rules and Procedures of the Financial Management for Georgia Local Units of Administration states, "This chapter sets forth the principal requirements that a School District must meet to account for an externally report its budget and financial operations relating to state and Federally funded programs administered by the Georgia Department of Education."
Questioned Cost: N/A
Information: A review of the School District's accounting records revealed the following:
1. Actual Special Education Cluster expenditures for the Flow Through grant period ending June 30, 2011, were $344,932.36, while expenditures were reported on the completion report as $361,126.00, resulting in a variance of $16,193.64.
2. Actual Title I, Part A Cluster expenditures for the School Improvement Grant program period ending September 30, 2010, were $113,421.34, while expenditures were reported on the completion report as $124,644.00, resulting in a variance of $11,222.66.
No fund balances resulted due to the reporting errors.
Cause: Management failed to implement procedures to ensure that amounts reported on the completion reports agreed with actual expenditures.
Effect: Failure to accurately report Federal expenditures can result in inaccurate and incomplete disclosures for Federal grant reporting purposes can result in excessive claims for reimbursement.
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TELFAIR COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2011 III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Recommendation: Management should implement procedures to ensure that completion reports, submitted to the Georgia Department of Education, (1) include all activity of the reporting period, (2) are supported by applicable accounting records and (3) are properly presented in accordance with program requirements.
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SECTION V MANAGEMENT'S RESPONSES

TELFAIR COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2011

Finding Control Number: FS-7341-11-01
The Board recognizes the importance of accurately calculating employee compensation. We are currently in the process of developing and adopting a salary schedule for classified employees. In regards to the two employees with varying amounts; we consider the first an isolated incident that was imported incorrectly from the budgeting software and the other, also an isolated incident in which an employee was paid based on a completed time sheet that was turned in before being signed for approval. Verbal approval had been given for the additional work done. We will review salaries after they have been transferred from the budgeting software for errors and be more diligent about receiving written approval on all additional pay.
Finding Control Number: FS-7341-11-02
Entries made to tie to the beginning net assets and fund balance were necessary because all prior year entries were not made available at the time of financial statement preparation. However, upon receipt of the prior year auditor entries, Telfair County Board of Education was able to identify the journal entries causing the beginning differences noted in net assets and fund balance and point them out to the current year auditors.

The assets purchased using E-Rate assistance were not capitalized due to an oversight The actual grant revenue did not flow through the Board of Education's financial records, but paid directly to the vendor by E-Rate and was therefore never recorded. However, the assets actually purchased using Board funds were correctly identified and capitalized. The Board will record all assets going forward.

Property and Sales Tax was accrued on a two month basis in accordance with GASB regulations. Due to a change in methodology implemented by the State, these accruals for property and sales tax are no longer based on a two month lag in receipts, but only one month. Future accruals will reflect this change in methodology.

The Board is in agreement with the changes in financial statement presentation and supplementary information schedules.

Finding Control Number: FA-7341-11-01

The Board recognizes the importance of accurately reporting expenditures on an annual basis via completion reports. Additional steps will be added to the process to ensure all expenditures are accurately reported.

Contact Person: Telephone: Fax: Email:

Kyla M. Milton, Director of Finance (229) 868-5661 (229) 868-5549 kmilton@telfair.k12.ga.us