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

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

TELFAIR COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S REPORT

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET POSITION

B

STATEMENT OF ACTIVITIES

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET POSITION

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

G

STATEMENT OF FIDUCIARY NET POSITION

FIDUCIARY FUNDS

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

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

Page
i
1 2 4 5 6 7 8 9
25

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
26 27 28 29

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE 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

SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
June 12, 2015

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
Ladies and Gentlemen:
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) of the Telfair County Board of Education, as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the Board's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also
2014ARL-11

includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, the basic financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Telfair County Board of Education, as of June 30, 2014, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As described in Note 2 to the financial statements, in 2014 the Telfair County Board of Education adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 65, Items Previously Reported as Assets and Liabilities. Our opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis and the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through viii and page 25 respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Telfair County Board of Education's basic financial statements. The accompanying supplementary information, consisting of Schedules 2 through 5, is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements.
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The accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements as a whole.
Other Reporting Required by Governm ent Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated June 12, 2015, 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 in considering Telfair County Board of Education's internal control over financial reporting and compliance.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24.
Respectfully submitted,

GSG:as 2014ARL-11

Greg S. Griffin State Auditor

TELFAIR COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014
INTRODUCTION
The District's financial statements for the fiscal year ended June 30, 2014 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 Position 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 Position and the Statement of Activities.
FINANCIAL HIGHLIGHTS
Key financial highlights for fiscal year 2014 are as follows:
On the District-wide financial statements:
District-wide net position at June 30, 2014 was approximately $19.5 million. Net position reflects 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 position at June 30, 2014 of $19.5 million represented an increase of approximately $5.0 thousand when compared to the prior year.
The School District had over $17.1 million in expenses relating to governmental activities; only $10.8 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 $6.3 million provided additional funding of these expenses.
As stated above, general revenues accounted for $6.3 million or about 37% of all revenues totaling approximately $17.1 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 63.1%

General Revenue Property Taxes 24.6%
General Revenue Sales Tax 6.6%
General Revenue All Other 5.7%

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TELFAIR COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014
On the fund financial statements:
Among major funds, the General Fund had over $16.0 million in revenues and over $15.9 million in expenditures. The General Fund balance of approximately $1.7 million at June 30, 2014 increased by approximately $50,000 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 Position' 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 Position' and the 'Statement of Activities' provides the basis for answering this question. These financial statements include all District's assets and liabilities and uses 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 position and any changes in net position. The change in net position 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, 2014
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 Position:
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 position as follows:
o Net Investment in Capital Assets o Restricted net position is that with constraints placed on the use by external sources
such as creditors, grantors, contributors or laws and regulations. o Unrestricted net position is net position that does not meet any of the above restrictions.
Fund Financial Statements
The School District uses many funds or sub-funds 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 Position 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 position, which is the difference between total assets and total liabilities, is one indicator of the financial condition of the District. When revenues exceed expenses, the result is an increase in net position. When expenses exceed revenues, the result is a decrease in net position. The relationship between revenues and expenses can be thought of as the District's operating results. The District's net position, as measured in the Statement of Net Position, can be one way to measure the District's financial health, or financial position. Over time, increases or decreases in the District's net position as measured in the Statement of Activities - are one indicator of whether its financial health is
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TELFAIR COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014

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 approximately $19.5 million at June 30, 2014. 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 position category. For example, of the $19.5 million of net position, about $1.4 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 $16.8 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 ongoing use of the assets being reported in this component of net position, it must be recognized that this portion of the net position is not available for future spending.
The remaining balance of unrestricted net position of approximately $1.2 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 position for this fiscal year as compared to the prior fiscal year.
Table 1 Net Position

Governmental Activities

Fiscal

Fiscal

Year 2014

Year 2013

Assets Current and Other Assets Capital Assets, Net

$

9,752,092 $

5,334,726

18,665,980

18,604,177

Total Assets

28,418,072

23,938,903

Liabilities Current and Other Liabilities Long-Term Liabilities

2,818,313 6,086,463

2,042,078 2,388,921

Total Liabilities

8,904,776

4,430,999

Net Position Net Investment in Capital Assets Restricted Unrestricted

16,848,833 1,436,406 1,228,057

16,663,693 1,310,495 1,533,716

Total Net Position

$

19,513,296 $ 19,507,904

Total net position increased approximately $5,000 in fiscal year 2014 from the prior year. This change in net position is detailed in Table 2 as presented below.
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TELFAIR COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014

Table 2 Change in Net Position
Revenues Program Revenues: Charges for Services and Sales Operating Grants and Contributions Capital Grants and Contributions
Total Program Revenues
General Revenues: Taxes 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 Position

Governmental Activities

Fiscal Year

Fiscal Year

2014

2013

$

193,609 $

200,308

10,561,592

10,519,552

77,220

228,659

10,832,421

10,948,519

4,225,358 1,133,267
666,148 10,506
307,398
6,342,677
17,175,098

4,111,187 1,208,430
563,412 6,506
245,484
6,135,019
17,083,538

10,668,329

10,451,563

332,253 512,722 182,941 264,766 922,325 274,509 1,193,035 1,000,509
119,522

445,755 512,958 191,437 273,088 907,500 142,696 1,199,239 970,212
4,022 119,927

398,154 1,236,805
63,836

132,645 1,188,450
41,088

17,169,706

16,580,580

$

5,392 $

502,958

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

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 Governmental Activities

Total Cost of Services

Fiscal

Fiscal

Year 2014

Year 2013

Net Cost of Services

Fiscal

Fiscal

Year 2014

Year 2013

Instruction

$

10,668,329 $

10,451,563 $

Support Services:

Pupil Services

332,253

445,755

Improvement of Instructional Services

512,722

512,958

Educational Media Services

182,941

191,437

General Administration

264,766

273,088

School Administration

922,325

907,500

Business Administration

274,509

142,696

Maintenance and Operation of Plant

1,193,035

1,199,239

Student Transportation Services

1,000,509

970,212

Central Support Services

4,022

Other Support Services

119,522

119,927

Operations of Non-Instructional Services:

Enterprise Operations

398,154

132,645

Food Services

1,236,805

1,188,450

Interest on Short-Term and Long-Term Debt

63,836

41,088

3,694,234 $
273,298 184,840 -18,505 -181,352 447,544 272,182 698,438 521,237
-3,650
398,154 -12,971 63,836

3,702,537
244,739 134,099 -36,084 -192,649 349,123 132,417 684,050 319,706
4,022 11,747
132,645 104,621
41,088

Total Expenses

$

17,169,706 $

16,580,580 $

6,337,285 $

5,632,061

Expenditures for fiscal year 2014 as well as the net cost of providing services increased 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 over $17.1 million and total expenditures of $18.4 million in fiscal year 2014. Total governmental fund balances of $6.5 million at June 30, 2014, increased approximately $3.6 million 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 2014, 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, 2014

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 $16.0 million were more than the final budgeted amount of $15.6 by roughly $400,000. This can be attributed to receiving more Property Taxes, Charges for Services, and miscellaneous income than originally expected.
The General Fund's final actual expenditures of $15.9 million were more than the final budget amount of $15.8 by approximately $100,000. 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, 2014, the School District had $18.7 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 (Net of Depreciation)

Governmental Activities

Fiscal

Fiscal

Year 2014

Year 2013

Construction In Progress Land Land Improvements Building and Improvements Equipment

$

871,716

212,917 $

138,453

16,210,159

1,232,735

212,917 157,375 16,686,550 1,547,335

Total

$

18,665,980 $

18,604,177

Additional information about the School District's Capital Assets can be found in the Notes to the Basic Financial Statements.
Long-Term Debt
At June 30, 2014, the School District had $6.0 million in total debt outstanding which consisted of just over $5.9 million in bond debt, and about $101,000 in capital lease debt. Table 5 summarizes the School District's debt as compared to the prior fiscal year.

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

Table 5 Debt at June 30

Governmental Activities

Fiscal

Fiscal

Year 2014

Year 2013

Bonds Payable Capital Leases

$

5,985,000 $

101,463

2,255,000 133,922

Total

$

6,086,463 $

2,388,922

A bond in the amount of $4.8 million was issued in fiscal year 2014 and caused the significant increase reflected above. Additional information about the School District's debt can be found in the Notes to the Basic Financial Statements.
FACTORS BEARING ON THE 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 2014 was 15.394, which produced approximately $260,723 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 2014 were marginally less than the prior year. Further reductions of State Funding are budgeted for fiscal year 2015 which include a provision that all employees take 7 days from work without pay during the fiscal year. 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.
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@telfairschools.org.

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TELFAIR COUNTY BOARD OF EDUCATION

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

EXHIBIT "A"
GOVERNMENTAL ACTIVITIES
$ 7,567,344.70 729,344.71 983,422.44 441,279.00 1,286.26 113.43 29,301.58
1,084,633.00 17,581,346.83 28,418,071.95
153,401.13 1,763,186.02
30,009.33 784,544.40
87,171.60 1,183,130.35 4,903,332.68 8,904,775.51
16,848,833.23 224,958.29
1,156,001.86 55,445.64
1,228,057.42
$ 19,513,296.44

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, 2014

GOVERNMENTAL ACTIVITIES
Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services 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 Railroad Cars Title Ad Valorem Tax Sales Taxes Special Purpose Local Option Sales Tax For Debt Services Other Sales Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Change in Net Position
Net Position - Beginning of Year
Net Position - End of Year

EXPENSES

CHARGES FOR SERVICES

$ 10,668,328.62 $
332,253.44 512,722.23 182,940.79 264,766.41 922,324.50 274,509.35 1,193,034.82 1,000,508.61 119,522.28
398,153.82 1,236,804.94
63,836.36
$ 17,169,706.17 $

120,116.47
73,492.46 193,608.93

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 POSITION

$

6,853,977.73

58,954.98 327,882.45 201,446.00 446,118.69 474,780.07
2,327.70 494,597.03 402,051.40 $ 123,172.41

1,176,284.11

$ 10,561,592.57 $

$ 77,220.00 77,220.00

-3,694,234.42
-273,298.46 -184,839.78
18,505.21 181,352.28 -447,544.43 -272,181.65 -698,437.79 -521,237.21
3,650.13
-398,153.82 12,971.63 -63,836.36
-6,337,284.67

4,013,567.09 24,534.03
187,257.42
1,123,374.08 9,892.48
666,148.00 10,506.26
307,397.72
6,342,677.08
5,392.41
19,507,904.03

$

19,513,296.44

- 3 -

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

EXHIBIT "C"

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

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 1,988,157.78 $ 5,579,186.92 $

634,249.10 983,422.44 441,279.00
1,286.26 113.43
29,301.58

95,095.61

0.00 $ 7,567,344.70
729,344.71 983,422.44 441,279.00
1,286.26 113.43
29,301.58

$ 4,077,809.59 $ 5,674,282.53 $

0.00 $ 9,752,092.12

LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES

LIABILITIES

Accounts Payable Salaries and Benefits Payable Contracts Payable Retainages Payable

$ 153,401.13 1,763,186.02 $

784,544.40 87,171.60

Total Liabilities

1,916,587.15

871,716.00

DEFERRED INFLOWS OF RESOURCES

Unavailable Revenue - Property Taxes

414,191.57

0.00

FUND BALANCES

Nonspendable Restricted Committed Unassigned

29,301.58 195,656.71
99,653.49 1,422,419.09

$ 4,802,566.53

Total Fund Balances

1,747,030.87 4,802,566.53

Total Liabilities, Deferred Inflows of Resources and Fund Balances

$ 4,077,809.59 $ 5,674,282.53 $

$

153,401.13

1,763,186.02

784,544.40

87,171.60

2,788,303.15

414,191.57

0.00 0.00

29,301.58 4,998,223.24
99,653.49 1,422,419.09
6,549,597.40

0.00 $ 9,752,092.12

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 POSITION JUNE 30, 2014

EXHIBIT "D"

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

$ 6,549,597.40

$ 212,917.00 871,716.00 797,579.00
22,578,540.00 4,417,773.00
-10,212,545.17

18,665,979.83

414,191.57

$ -5,985,000.00 -30,009.33
-101,463.03

-6,116,472.36

$ 19,513,296.44

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, 2014

EXHIBIT "E"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services 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)
Proceeds of Bonds Transfers In Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning
Fund Balances - Ending

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 4,201,609.36 9,892.48
8,664,086.12 2,640,874.45
193,608.93 8,159.43 $
307,397.72
16,025,628.49

$ $ 1,123,374.08
2,346.83

4,201,609.36 1,133,266.56 8,664,086.12 2,640,874.45
193,608.93 10,506.26
307,397.72

2,346.83 1,123,374.08

17,151,349.40

10,186,790.75
332,253.44 512,722.23 182,940.79 255,300.41 916,446.50 167,730.54 970,489.82 962,585.61 119,522.28 139,442.38 1,181,396.94
32,458.66
2,771.34
15,962,851.69
62,776.80

94,337.50
1,133,272.31
1,227,609.81 -1,225,262.98

1,105,000.00 1,293.78
66,205.66
1,172,499.44
-49,125.36

10,186,790.75
332,253.44 512,722.23 182,940.79 255,300.41 916,446.50 262,068.04 970,489.82 962,585.61 119,522.28 139,442.38 1,181,396.94 1,133,272.31
1,137,458.66 1,293.78
68,977.00
18,362,960.94
-1,211,611.54

-10,269.74 -10,269.74 52,507.06 1,694,523.81

4,835,000.00 10,269.74 -49,125.36
4,796,144.38
3,570,881.40
1,231,685.13

49,125.36
49,125.36 0.00 0.00

4,835,000.00 59,395.10 -59,395.10
4,835,000.00
3,623,388.46
2,926,208.94

$ 1,747,030.87 $ 4,802,566.53 $

0.00 $ 6,549,597.40

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, 2014

EXHIBIT "F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:
Capital Outlay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense
Taxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds.
Bond proceeds provide current financial resources to Governmental Funds; however, issuing debt increases Long-Term Liabilities in the Statement of Net Position. In the current period, proceeds were received from:
General Obligation Bonds Issued
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 Position 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 Position. In the current year, these amounts consist of:
Bond Principal Retirements Capital Lease Payments
Total Long-Term Debt Repayments
Some items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in Governmental Funds. These activities consist of:
Net Decrease in Accrued Interest on Issuance of Bonds
Change in Net Position of Governmental Activities (Exhibit "B")

$ 3,623,388.46

$ 973,413.00 -911,610.00

61,803.00 23,749.18

-4,835,000.00 -12,441.31

$ 1,105,000.00 32,458.66

1,137,458.66

6,434.42

$

5,392.41

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

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

EXHIBIT "G"

AGENCY FUNDS

$

33,388.78

$

33,388.78

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, 2014

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 Position and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, 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 and reports all financial resources not accounted for and reported in another fund.
District-wide Capital Projects Fund accounts for and reports financial resources including Education Special Purpose Local Option Sales Tax (ESPLOST) and Bond Proceeds 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, 2014

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. The School District considers all intergovernmental revenues to be available if they are collected within 120 days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general longterm debt, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities 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 position 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.
NEW ACCOUNTING PRONOUNCEMENTS
In fiscal year 2014, the School District adopted the Governmental Accounting Standards Board (GASB) Statement No. 65, Items Previously Reported as Assets and Liabilities. The provisions of this Statement establish accounting and financial reporting standards that reclassify, as deferred outflows or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows or inflows of resources, certain items that were previously reported as assets and liabilities.

- 10 -

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

EXHIBIT "H"

FUTURE ACCOUNTING PRONOUNCEMENTS

In fiscal year 2015, the School District will adopt Governmental Account Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions. The provisions of this Statement establish accounting and financial reporting standards for pensions that are provided to the employees of state and local government employers through pension plans that are administered through trusts. Implementation of this statement will require the School District to record a liability for its proportionate share of the Net Pension Liability of pension plans in which it participates. Actuarial estimates are currently being made to determine the School District's liability, the effects of which are believed to be material.

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 adopted the property tax levy for the 2013 tax digest year (calendar year) on September 30, 2013 (levy date) based upon property values as of January 1, 2013. Taxes were due on December 20, 2013 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2013 tax digest are reported as revenue in the governmental funds for fiscal year 2014. The 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, 2014, for maintenance and operations amounted to $3,989,817.91.

The tax millage rate levied for the 2013 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

15.394 mills

Additionally, Title Ad Valorem Tax revenues, at the fund reporting level, amounted to $187,257.42 during fiscal year ended June 30, 2014.

- 11 -

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

EXHIBIT "H"

SALES TAXES
Education Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $1,123,374.80 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.
INVENTORIES

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

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

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 5,000.00 5,000.00 5,000.00 5,000.00 50,000.00

N/A 10 to 60 years
N/A 10 to 80 years
5 to 20 years 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.

- 12 -

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

EXHIBIT "H"

DEFERRED OUTFLOWS/INFLOWS OF RESOURCES
In addition to assets, the statement of net position and/or the balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of resources that applies to a future period and therefore will not be recognized as an outflow of resources (expense/expenditure) until then. The School District did not have any items that qualified for reporting in this category for the year ended June 30, 2014.
In addition to liabilities, the statement of net position and/or the balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of resources that applies to a future period and therefore will not be recognized as an inflow of resources (revenue) until that time. The School District has only one type of item, which arises only under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from property taxes and these amounts are deferred and will be recognized as an inflow of resources in the period in which the amounts become available.
GENERAL OBLIGATION BONDS
The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide financial statements, bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are recognized as an outflow of resources in the fiscal year in which the bonds are issued.
In the fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Position.
NET POSITION
The School District's net position in the District-wide Statements are classified as follows:
Net Investment in capital assets - This represents the School District's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.
Restricted net position - This represents 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 position - Unrestricted net position represents resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes.
- 13 -

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

EXHIBIT "H"

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

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

$

$

195,656.71

3,616,555.34

1,186,011.19

29,301.58
4,998,223.24 99,653.49
1,422,419.09

Fund Balance, June 30, 2014
USE OF ESTIMATES

$

6,549,597.40

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.

- 14 -

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

EXHIBIT "H"

Note 3: BUDGETARY DATA
The budget is a complete financial plan for the School District's fiscal year, and is based upon careful estimates of expenditures together with probable funding sources. The budget is legally adopted each year for the general, debt service, and capital projects funds. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds, except the various school activity (principal) accounts, is prepared and adopted by fund, function, and object. The legal level of budgetary control was established by the Board at the aggregate function level. The budget for the General Fund was prepared in accordance with accounting principles generally accepted in the United State of America.
The budgetary process begins with the School District's administration presenting an initial budget for the Board's view. The administration makes revisions as necessary based on the Board's guidelines and a tentative budget is approved. After approval of this tentative budget by the Board, such budge is advertised at least once in a newspaper of general circulation in the locality, as well as the School District's website. At the next regularly scheduled meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. The approved budget is then submitted, in accordance with provisions of Official Code of Georgia Annotated section 20-2-167(c), to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.
See Schedule 1 General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual for detail of any over/under expenditures during the fiscal year under review.
Note 4: 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,

- 15 -

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

EXHIBIT "H"

(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
CATEGORIZATION OF DEPOSITS
Custodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2014, the School District had deposits with a carrying amount of $7,600,733.48 and a bank balance of $7,862,766.36. The bank balances insured by Federal depository insurance were $500,704.90 and the bank balances collateralized with securities held by the pledging financial institution or by the pledging financial institution's trust department or agent in the School District's name were $7,362,061.46.
Note 5: NON-MONETARY TRANSACTIONS
The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories

- 16 -

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

EXHIBIT "H"

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

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

Balances July 1, 2013

Increases

Decreases

Balances June 30, 2014

$ 212,917.00

$

0.00 $ 871,716.00

0.00 $

212,917.00 871,716.00

Total Capital Assets, Not Being Depreciated

212,917.00

871,716.00

0.00 1,084,633.00

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements

22,578,540.00 4,316,076.00 797,579.00

101,697.00

0.00

22,578,540.00 4,417,773.00 797,579.00

Less Accumulated Depreciation For: Buildings and Improvements Equipment Land Improvements

5,891,990.45 2,768,741.00
640,203.72

476,390.00 416,297.00
18,923.00

6,368,380.45 3,185,038.00
659,126.72

Total Capital Assets, Being Depreciated, Net

18,391,259.83 -809,913.00

0.00 17,581,346.83

Governmental Activity Capital Assets, Net

$ 18,604,176.83 $ 61,803.00 $

0.00 $ 18,665,979.83

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

Equipment Less: Accumulated Depreciation

Governmental Funds
$ 188,935.00 94,466.00

$ 94,469.00

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

$ 499,953.00

$

9,466.00

5,878.00

222,545.00

118,360.00

356,249.00 55,408.00

$ 911,610.00

- 17 -

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

EXHIBIT "H"

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

Transfer to

Transfers From

District-wide

General

Capital

Fund

Projects

District-wide Capital Projects Debt Service Fund

$

10,269.74

$

49,125.36

Total

$

10,269.74 $

49,125.36

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 to (2) provide supplemental funding to the Debt Service Fund to make debt service payments.
Note 8: RISK MANAGEMENT
The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation.
The School District has obtained commercial insurance for risk of loss associated with 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 workers' compensation insurance coverage. Specific excess of loss 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 million loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided with limits of $2 million. The Trust covers the first $1 million of each Employers Liability claim with Safety National providing additional Employers Liability limits up to a $2 million per occurrence maximum. Safety National Casualty Company also provides $2 million in aggregate coverage to the Trust, attaching at 110% of the loss fund and based on the Fund's annual normal premium.

- 18 -

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

EXHIBIT "H"

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

Position Covered

Amount

All Employees

$

100,000.00

Note 9: LONG-TERM DEBT
CAPITAL LEASES
The Telfair County Board of Education entered into lease agreements for the purchase of 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.
GENERAL OBLIGATION DEBT OUTSTANDING
General Obligation Bonds currently outstanding are as follows:

Purpose

Interest Rates

Amount

General Government - Series 2006A General Government - Series 2006B General Government - Series 2014

3.75% - 4.00% $ 3.75% 1.46%

735,000.00 415,000.00 4,835,000.00

$ 5,985,000.00
The changes in Long-Term Debt during the fiscal year ended June 30, 2014, were as follows:

G.O. Bonds Capital Leases

Balance July 1, 2013
$ 2,255,000.00 $ 133,921.69

Additions

Governmental Activities

Balance

Deductions

June 30, 2014

4,835,000.00 $

1,105,000.00 $ 32,458.66

5,985,000.00 $ 101,463.03

Due Within One Year
1,150,000.00 33,130.35

$ 2,388,921.69 $ 4,835,000.00 $ 1,137,458.66 $ 6,086,463.03 $ 1,183,130.35

- 19 -

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

EXHIBIT "H"

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

Capital Leases

General Obligation Debt

Principal

Interest

Principal

Interest

Fiscal Year Ended June 30:

2015 2016 2017 2018 2019 2020

$

33,130.35 $

33,815.94

34,516.74

2,099.65 $ 1,414.06
714.26

1,150,000.00 $ 930,000.00 965,000.00 970,000.00 980,000.00 990,000.00

71,306.69 63,802.00 49,968.50 35,843.00 21,608.00
7,227.00

Total Principal and Interest

$

101,463.03 $

4,227.97 $

5,985,000.00 $

249,755.19

Note 10: ON-BEHALF PAYMENTS

The School District has recognized revenues and costs in the amount of $786,027.94 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.

Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Certificated Personnel In the amount of $718,596.00

Paid to the Teachers Retirement System of Georgia For Teachers' Retirement System (TRS) Employer's Cost In the amount of $36,291.94

Office of State Treasurer Paid to the Public School Employees' Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $31,140.00

Funds paid to the Georgia Department of Community Health by the Georgia Department of Education on behalf of the School District are reported as part of the Quality Basic Education revenue allotments on Schedule 3 Schedule of State Revenue.

Note 11: SIGNIFICANT COMMITMENTS

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

Project

Unearned Executed Contracts

Funding Available From State

Pre-K Renovation, Security Doors, Middle School Gym Renovation and Vocational Classroom Renovation

$

4,426,906.80 $

746,703.00

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

- 20 -

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

EXHIBIT "H"

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

- 21 -

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

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, 2014:

For certificated teachers, librarians and regional educational service agencies and certain other eligible participants:

July 1, 2013 - June 30, 2014 $945.00 per member per month For non-certificated school personnel: July 1, 2013 - June 30, 2014 $596.20 per member per month

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

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

2014 2013 2012

100% 100% 100%

$

1,897,473.00

$

1,719,263.81

$

1,528,425.50

Note 14: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

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

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

TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service.

- 22 -

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

EXHIBIT "H"

Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 30 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available.
Funding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 10 years of service. If a member terminates with less than 10 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2014, were 6.00% of annual salary. Employer contributions required for fiscal year 2014 were 12.28% of annual salary as required by the June 30, 2011, actuarial valuation.
Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2014 2013 2012

100% 100% 100%

$

954,793.20

$

898,831.30

$

842,088.24

PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM (PSERS)

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

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

SCHEDULE "1"

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

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

VARIANCE OVER/UNDER

$ 4,089,896.00 $ 4,089,896.00 $ 4,201,609.36 $

20,000.00

20,000.00

9,892.48

7,580,421.00

8,617,480.73

8,664,086.12

1,102,000.00

2,724,509.00

2,640,874.45

86,900.00

86,900.00

193,608.93

3,000.00

3,000.00

8,159.43

28,000.00

76,621.00

307,397.72

12,910,217.00

15,618,406.73

16,025,628.49

111,713.36 -10,107.52 46,605.39 -83,634.55 106,708.93
5,159.43 230,776.72
407,221.76

8,835,728.49
310,867.03 239,296.80 189,678.77 233,717.21 880,908.10 138,501.77 899,421.16 874,277.30
56,752.00
1,274,481.33
13,933,629.96
-1,023,412.96

10,152,073.78
339,337.03 552,925.69 189,678.77 275,627.21 877,007.26 171,406.77 909,532.16 929,209.92 126,284.00
1,279,159.58
15,802,242.17
-183,835.44

10,186,790.75
332,253.44 512,722.23 182,940.79 255,300.41 916,446.50 167,730.54 970,489.82 962,585.61 119,522.28 139,442.38 1,181,396.94
35,230.00
15,962,851.69
62,776.80

-34,716.97
7,083.59 40,203.46
6,737.98 20,326.80 -39,439.24
3,676.23 -60,957.66 -33,375.69
6,761.72 -139,442.38
97,762.64 -35,230.00
-160,609.52
246,612.24

-1,023,412.96 1,771,006.65
-13,349.24

-183,835.44 1,771,006.65
-10,556.72

-10,269.74 52,507.06 1,694,523.81

-10,269.74 236,342.50 -76,482.84
10,556.72

Fund Balances - Ending

$ 734,244.45 $ 1,576,614.49 $ 1,747,030.87 $ 170,416.38

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 ($336,668.67) or expenditures ($329,178.62) 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.

- 25 -

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

SCHEDULE "2"

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

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

* 10.553 * 10.555

N/A

(2)

N/A $ 1,121,780.84 (1)

1,121,780.84

10.766

62,100.00 1,183,880.84

84.027

N/A

84.173

N/A

340,533.46 13,343.00
353,876.46

84.048

N/A

84.367

N/A

84.011

N/A

84.358

N/A

84.010

N/A

32,420.12 144,624.61
19,276.80 31,719.61 842,054.97
1,070,096.11
1,423,972.57

Total Expenditures of Federal Awards

$ 2,607,853.41

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 $90,762.07.
(2) Expenditures for the funds earned on The School Breakfast Program ($302,501.71) were not maintained separately and are included in the 2014 National School Lunch Program.

Major Programs are identified by an asterisk (*) in front of the CFDA number.

The School District did not provide Federal Assistance to any Subrecipient.

The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the 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.

- 26 -

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

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

(1) Payments to the Georgia Department of Community Health by the Georgia Department of Education on behalf of the School District in the amount of $718,596.00 are included as part of the Quality Basic Education revenue allotments above.

See notes to the basic financial statements.

- 27 -

SCHEDULE "3"
GOVERNMENTAL FUND TYPE GENERAL FUND
$ 492,329.45
422,171.00 242,701.00 1,096,261.00 197,501.00 427,625.00 280,869.00 1,096,224.00 631,759.00 263,810.00 1,017,623.00 344,203.00 214,774.00
64,740.00 19,829.00 172,458.00 51,785.00 34,231.00
858.00
348,247.00 386,002.00 411,531.00 159,319.00 -1,091,129.00
323,873.00 32,581.00
666,148.00
30,652.00 14,907.73 21,342.00 77,220.00 36,291.94 17,400.00 81,809.00
45,000.00
31,140.00
$ 8,664,086.12

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

SCHEDULE "4"

PROJECT

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3) (4) (5)

AMOUNT EXPENDED IN PRIOR YEARS (3) (4)

TOTAL COMPLETION
COST

EXCESS PROCEEDS NOT
EXPENDED

ESTIMATED COMPLETION
DATE

2009 SPLOST

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 systemwide; 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 $

0.00 $ 6,003,077.66 $

0.00 $

0.00

8/1/2014

2014 SPLOST

Renovating existing facilities to install security doors and acquiring safety and security equipment

37,675.00

40,519.87

40,519.87

0.00

40,519.87

0.00 Completed

Renovating the existing pre-k facility

1,475,278.00

1,475,278.00

834,041.00

0.00

0.00

0.00 08/01/2019

Renovating existing agricultural instructional facilities

250,000.00

250,000.00

0.00

0.00

0.00

0.00 08/01/2019

Renovating, adding-to, and equipping the middle school gymnasium for multi-purpose activities

4,257,047.00

4,257,047.00

0.00

0.00

0.00

0.00 08/01/2019

Adding and equipping new classrooms

75,000.00

75,000.00

0.00

0.00

0.00

0.00 08/01/2019

Acquiring instructional materials and textbooks, buses, transportation equipment, and instructional technology, including vocational, fine arts, athletics, and physical education equipment, and band uniforms and related band equipment

250,000.00

250,000.00

0.00

0.00

0.00

0.00 08/01/2019

Paying expenses incident to accomplishing the foregoing

855,000.00

855,000.00

258,711.44

0.00

0.00

0.00 08/01/2019

Total 2014 SPLOST

7,200,000.00

7,202,844.87 1,133,272.31

0.00

40,519.87

0.00

$ 13,700,000.00 $ 13,702,844.87 $ 1,133,272.31 $ 6,003,077.66 $ 40,519.87 $

0.00

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

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

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

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

Prior Years

$ 737,288.45

Current Year

66,205.66

Total

$ 803,494.11

(5) In addition to the expenditures shown above, the School District incurred bond issuance costs to provide advance funding for the above 2014 SPLOST projects as follows:

$

94,337.50

See notes to the basic financial statements.

- 28 -

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

SCHEDULE "5"

DESCRIPTION
Direct Instructional Programs Kindergarten Program Kindergarten Program-Early Intervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle 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
TOTAL QBE FORMULA FUNDS

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

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

$

493,162.00 $ 480,086.07 $ 4,726.26 $ 484,812.33

285,443.00

136,522.31

136,522.31

1,282,091.00 1,681,698.02

7,028.34 1,688,726.36

251,304.00

73,875.78

73,875.78

511,097.00

575,949.66

7,835.71

583,785.37

338,425.00 1,274,458.00
745,332.00 301,661.00 1,197,957.00
395,026.00 249,516.00
77,043.00 27,745.00

78,145.23 74.32
1,267,578.05 1,236,026.35
353,431.89
23,269.63
510,550.36 47,460.35
989,045.27 107,164.65
79,108.00 22,573.69 54,753.78

7,160.86 29,051.13 26,094.79
13,790.91 14,568.59 14,561.42 13,040.91
1,240.36
162,000.00

78,145.23 74.32
1,274,738.91 1,265,077.48
379,526.68
37,060.54 14,568.59 525,111.78 60,501.26 989,045.27 108,405.01 79,108.00 184,573.69 54,753.78

7,430,260.00 7,717,313.41 301,099.28 8,018,412.69

202,632.00 39,957.00

153,280.70 1,180.90

16,160.09 31,891.85

169,440.79 33,072.75

$

7,672,849.00 $ 7,871,775.01 $ 349,151.22 $ 8,220,926.23

(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State amended formula adjustment. (3) Allotments do not include the State Health payments made by GDOE to the Department of Community Health for the certified employees.

See notes to the basic financial statements.

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SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
June 12, 2015

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, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Telfair County Board of Education as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise Telfair County Board of Education's basic financial statements and have issued our report thereon dated June 12, 2015.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered Telfair County Board of Education's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Telfair County Board of Education's internal control. Accordingly, we do not express an opinion on the effectiveness of the Telfair County Board of Education's internal control.
Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying Schedule of Findings and Questioned Costs, we identified a certain deficiency in internal control over financial reporting that we consider to be a material weakness.

2014YB-41

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiency described in the accompanying Schedule of Findings and Questioned Costs as item FS 2014-001 to be a material weakness.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Telfair County Board of Education's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
We noted certain matters that we have reported to management of Telfair County Board of Education in a separate letter dated June 12, 2015.
Telfair County Board of Education's Response to Findings
Telfair County Board of Education's response to the finding identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. Telfair County Board of Education's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Respectfully submitted,

GSG:as 2014YB-41

Greg S. Griffin State Auditor

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
June 12, 2015

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 FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133
Ladies and Gentlemen:
Report on Compliance for Each Major Federal Program
We have audited 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, 2014. 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.
Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of Telfair County Board of Education's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the 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 on compliance for each major federal program. However, our audit does not provide a legal determination of Telfair County Board of Education's compliance.
2014SA-10

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

GSG:as 2014SA-10

Greg S. Griffin 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, 2014
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, 2014

I SUMMARY OF AUDITOR'S RESULTS

Financial Statements

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

Unmodified

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

Yes None Reported

Noncompliance material to financial statements noted:

No

Federal Awards

Internal Control over major programs: Material weakness identified? Significant deficiency identified?

No None Reported

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

Unmodified

Any audit findings disclosed that are required to be reported in

accordance with OMB Circular A-143, Section 510(a)?

No

Identification of major programs:

CFDA Numbers

Name of Federal Program or Cluster

10.553, 10.555

Child Nutrition Cluster

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

$300,000.00

Auditee qualified as low-risk auditee?

Yes

- 1 -

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

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS 2014-001 Control Category: Internal Control Impact:

Inadequate Controls over the Financial Reporting Financial Reporting Material Weakness

Description: The School District did not have adequate internal controls in place over the financial statement reporting process.

Criteria: Chapter 22A Annual Financial Reporting of the Financial Management for Georgia Local Units of Administration published by the Georgia Department of Education indicates that School Districts must prepare their financial statements in accordance with generally accepted accounting principles.

Condition: During the audit, the following correcting entries were proposed and accepted by the School District to properly present the entity's financial statements, notes to the financial statements and schedules:

A material audit adjustment of $871,716.00 was necessary to record contracts and retainage payable in the District-wide Capital Projects Fund and Governmental Activities.
Material reclassification adjustments were necessary to correctly present the Net Investment in Capital Assets, Restricted for Capital Projects and Unrestricted Net Position balances on the Statement of Net Position.
Material adjustments to expenditure and transfer accounts were necessary in the Debt Service Fund and Capital Projects Fund to properly record bond issue costs.
Numerous other audit adjustments and reclassification entries were necessary to properly present the School District's note disclosures and supplemental schedules.
Several amounts reported in Management's Discussion and Analysis required adjustment to agree to the financial statements and note disclosures.

Various misstatements and misclassifications were also encountered throughout the course of the audit and were reported to management. These adjustments were not corrected by management as they were deemed immaterial to the financial statements.

Cause: In discussing the issue with management, the Finance Director stated that the issues noted were due to oversight in preparation of the financial statements.

Effect or Potential Effect: The School District did not comply with the requirements of the Georgia Department of Education regarding financial reporting. Several 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 presented for audit and that the statements are complete and accurate.

- 2 -

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

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

Views of Responsible Officials and Corrective Action Plans: An invoice in the amount of $784,544.40 relating to a renovation project undertaken by the school system was received and dated during July 2014. Because the invoice was received subsequent to year-end and included materials purchased but not fully utilized prior to the fiscal year-end the liability was not recorded in fiscal year 2014. Had the invoice been recorded, the government-wide statements would additionally have recorded a construction in progress of the same amount. However since the duration of the project was to be completed in less than a year, a decision was made to defer the posting of the liability. This would present the project as being fully funded and fully expensed and capitalized in fiscal year 2015. Review procedures have been put in place to ensure future financial statements are in conformity with generally accepted accounting principles.

Contact Person: Telephone: Fax: Email:

Kyla M. Milton, Director of Finance (229) 868-5661 (229) 868-5549 kmilton@telfairschools.org

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.

- 3 -