THOMAS COUNTY BOARD OF EDUCATION
'THOMASVILLE, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

THOMAS COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

3

B

STATEMENT OF ACTIVITIES

5

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

6

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

7

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

8

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

9

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

10

H

STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

11

I

NOTES TO THE BASIC FINANCIAL STATEMENTS

13

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

31

THOMAS COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

32

3 SCHEDULE OF STATE REVENUE

34

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

36

5 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

37

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133

SECTION 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

RUSSELL W. HINTON
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400
March 5, 2004

Honorable Sonny Perdue, Governor Members ofthe General Assembly Members of the State Board of Education
and Superintendent and Members of the Thomas County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through I) of the Thomas County Board of Education, as of and for the year ended June 30, 2003, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe Thomas County Board ofEducation's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our op1mons.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective position ofthe governmental activities, each major fund, and the aggregate remaining fund information of the Thomas County Board of Education, as of June 30, 2003, and the respective changes in financial position thereoffor the year then ended in conformity with accounting principles generally accepted in the United States of America.
2003-34ARL-11

As discussed in Note 2 to the basic financial statements, during fiscal year 2003, the Board consolidated its individual school activity accounts for inclusion in the basic financial statements. This change is in accordance with generally accepted accounting principles.
As described in Note 2, the Thomas County Board of Education has implemented a new financial reporting model as required by provisions of Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments, as of June 30, 2003.
In accordance with Government Auditing Standards, we have also issued our report dated March 5, 2004, on our consideration of the Thomas County Board of Education's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
Management's Discussion and Analysis and the Schedule ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through xi and page 31 respectively, are not a required part of the basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Thomas County Board of Education's basic financial statements. The accompanying supplementary information which consist of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U.S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
A copy ofthis report has been filed as a permanent record in the office ofthe State Auditor and made available to the press ofthe State, as provided for by Official Code of Georgia Annotated section 506-24.
Respectfully submitted,
,?..~.ai '~ ~
Russell W. Hinton State Auditor
RWH:as 2003-34ARL-l 1

THOMAS COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
The discussion and analysis ofThomas County Board ofEducation's financial performance provides an overall review of the Board's financial activities for the fiscal year ended June 30, 2003. The intent of this discussion and analysis is to look at the Board's financial performance as a whole. Readers should also review the financial statements and the notes to the basic financial statements to enhance their understanding ofthe Board's financial performance.
Financial Highlights
Key financial highlights for 2003 are as follows:
The Board implemented GASB 34 for 2003. Due to this being the implementation year, many comparisons are not available that will be available for 2004.
On the district-wide financial statements, the assets ofthe Board exceeded liabilities by $25.4 million. Ofthis amount, $3 .2 million is unrestricted and is available for spending at the School Board's discretion.
The Board had $41.9 million in expenses relating to governmental activities; only $31.8 million ofthese expenses are offset by program specific charges for services, grants and contributions. General revenues (primarily property and sales taxes) of$12.2 million were adequate to provide for these programs.
As stated above, general revenues accounted for $12.2 million or 28% ofall revenues totaling $44 million. Program specific revenues in the form of charges for services, grants and contributions accounted for the rest.
The General Fund's balance increased to $4.9 million from $4.4 million.
Using the Basic Financial Statements This annual report consists of a series of financial statements and notes to those statements. These statements are organized so the reader can understand the Thomas County Board of Education as a financial whole, or as an entire operating entity.
The Statement ofNet Assets and Statement ofActivities provide information about the activities of the whole Board, presenting both an aggregate view ofthe Board's finances and a longer-term view of those finances. Fund financial statements provide the next level of detail. For governmental funds, these statements tell how services were financed in the short-term as well as what remains for future spending. The fund financial statements also look at the Board's most significant funds. In the case of the Thomas County Board of Education, the General Fund is by far the most significant fund.
1

THOMAS COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
Reporting the Board as a Whole
Statement ofNet Assets and the Statement ofActivities
While this document contains the large number offunds used by the Board to provide programs and activities for the schools, the view ofthe Board as a whole looks at all financial transactions and asks the question, "How did we do financially during fiscal year 2003 ?" The Statement ofNet Assets and the Statement ofActivities answers this question. These statements include all assets and liabilities using the economic resources focus and accrual basis ofaccounting 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 the cash is received or paid.
These two statements report the Board's net assets and changes in those assets. This change in net assets is important because it tells the reader that, for the Board as a whole, thefinancial position of the Board has improved or diminished. The causes ofthis change may be the result ofmany factors, some financial, some not. Nonfinancial factors include the Board's property tax base, facility conditions, required educational programs and other factors.
In the Statement of Net Assets and the Statement of Activities, the Board has one distinct type of activity:
Governmental Activities - All ofthe Board's programs and services are reported here including instruction, support services, operation and maintenance of plant, pupil transportation, food service, student activity accounts and various others.
Reporting the Board's Most Significant Funds
Fund Financial Statements
Fund financial reports provide detailed information about the Board's major funds. The Board uses many funds to account for a multitude of financial transactions. However, these fund financial statements focus on the Board's most significant funds. The Board's major governmental funds are the General Fund, Capital Projects Fund and the Debt Service Fund.
Governmental Funds Most of the Board's activities are reported in governmental funds, which focus on how money flows into and out ofthose funds and the balances left at year-end available for spending in future periods. These funds are reported using the current financial resources measurement focus and the modifiedaccrual accounting method, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the Board's general government operations and the basic services it provides. Governmental fund information helps determine whether there is adequate financial resources that can be spent in the near future to finance educational programs. The relationship (or differences) between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmentalfunds is reconciled in the financial statements.
ii

THOMAS COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003

Fiduciary Funds The Board is the trustee, or fiduciary, for assets that belong to others, such as school clubs and organizations within the principals' accounts. The 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 district excludes these activities from the district-wide financial statements because it cannot use these assets to finance its operations.

The Board as a Whole

The perspective ofthe statement of net assets is ofthe Board as a whole. This is a new perspective since the Board's financial statements were not presented from this viewpoint in the past. Table 1 provides a summary of the Board's net assets for 2003. Since this is the first year the Board has prepared financial statements following GASB Statement 34, net assets comparisons to fiscal year 2002 are not available.

Table 1 Net Assets (in Thousands)

Governmental Activities Fiscal Year 2003

Assets Current and Other Assets Capital Assets, Net

$33,030,858 19,754,403

Total Assets

$52,785,261

Liabilities Current and Other Liabilities Long-Term Liabilities

$ 5,444,561 21,902,971

Total Liabilities

$27,347,532

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

$18,596,496 3,642,236 3,198,997

Total Net Assets

$25,437.729

111

THOMAS COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003 The Board had a significant increase in the Long - Term Liabilities. The Board issued $15 million in general obligation bonds during the current fiscal year to be financed from the proceeds ofan Special Purpose Local Option Sales Tax (SPLOST) to be collected in the next five years as approved by the voters of Thomas County in September, 2002. The SPLOST began on January 1, 2003. The proceeds from this debt issue were received in December 2002, and the majority ofthe proceeds will be disbursed on the related construction costs in the near future. The Board also had a significant increase in capital leases through intergovernmental contracts with the South Georgia Governmental Services Authority (SGGSA). The first contract with SGGSA is for $5 million of debt to be used with the above $15 million ofgeneral obligation bonds for the construction oftwo new schools. The second contract with SGGSA is for $1.7 million of Qualified Zone Academy Bonds (QZAB) to be used for the renovation of two elementary schools. QZAB bonds are financing instruments authorized by the Federal government. Bondholders are given Federal tax credits in lieu of cash interest payments. Therefore, the Board will not incur any interest cost on the debt of$1.7 million. Table 2 shows the changes in net assets for fiscal year 2003. Since this is the first year the Board has prepared financial statements following GASB Statement 34, revenue and expense comparisons to fiscal year 2002 are not available.
lV

THOMAS COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003

Table 2 Change in Net Assets
(in Thousands)
Revenues Program Revenues: Charges for Services and Sales Operating Grants and Contributions
Total Program Revenues
General Revenues: Taxes Property Taxes For Maintenance and Operations Sales Taxes Special Purpose Local Option Sales Tax For Debt Service Intangible Recording Tax Real Estate Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Total Revenues
Program Expenses Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services Interest on Short-Term and Long-Term Debt
Total Expenses
Increase in Net Assets
V

Governmental Activities Fiscal Year 2003
$ 875,335 30,915,447
$31,790,782
$ 6,784,377
1,753,867 196,012 30,522
2,052,783 342,318
1,051,546
$12,211,425
$44,002,207
$28,096,634
2,193,068 755,001 526,053 463,613
2,354,225 239,824
2,449,707 1,667,708
209,128 202,695
317,027 2,311,922
106,805
$41,893,410
$ 2,108,797

THOMAS COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003

Figure A shows the funding sources for the revenues. State grants comprise 63 percent of the Board's revenues. Property Taxes make up 15 percent of the total funding, while an additional 5 percent is earned from the county's sales taxes.

figure A

o %/ o Sources of Revenue for Fiscal Year 2003

S ale: 0:axes ~

Other 3

Ch

t

s:~:sesor

2%

o Federal
12%

Property Taxes 15%

State Funds 63%

As shown in Figure B, Instruction comprised 67.1 percent of governmental program expenses. Administration and Other Services (3.7 percent) consist ofthe central office, business & warehouse, athletics and other operations of the School District.

Figure B

Functional Expenses for Fiscal Year 2003

4 .0% Student Transportation

3.7% Administration & Other Services

1.8% Improvement of
1.3% Educational rvledia

5.5% Food Services
5.6% School Ad min istration
5.8% Maintenance &
Operation

Instruction

Vl

THOMAS COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003

Governmental Activities

The Statement of Activities shows the cost of program services and the charges for services and grants offsetting those services. Table 3 shows, for governmental activities, the total cost ofservices and the net cost of services. In other words, it identifies the cost ofthese services supported by tax revenue and unrestricted State entitlements. Since this is the first year the Board has prepared financial statements following GASB Statement 34, the cost ofservice comparisons are not available for fiscal year 2002.

Table3 Governmental Activities
(in Thousands)

Total Cost of Services Fiscal Year2003

Net Cost of Services
Fiscal Year2003

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

$28,096,634 $ 5,836,222

2,193,068 755,001 526,053 463,613
2,354,225 239,824
2,449,707 1,667,708
209,128 202,695

1,075,476 241,434 3,691 -440,913
1,134,746 239,824 952,955 589,089 204,138 -15,169

317,027 2,311,922
106,805

-53,453 227,783 106,805

Total Expenses

$~1.8231~U0 $10.102.628

Althoughprogram revenues make up a majority ofthe funding, the Board is still dependent upon tax revenues for governmental activities. Over 30.3 percent of instruction activities are supported through taxes and other general revenues, and for all governmental activities general revenue support is 31 percent.

Vll

THOMAS COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
The Board's Funds
The Board's governmental funds are accounted for using the modified accrual basis of accounting. Total governmental funds had revenues and other financing sources of $66.1 million and expenditures and other financing uses of$43.3 million. There was an increase in the fund balance totaling $23 million for the governmental funds as a whole, primarily from the issuance of Long Term Liabilities of$21.7 million. The General Fund had an increase of $0.5 million, the Capital Projects Fund had an increase of $20.7 million due to the unspent bond proceeds and the Debt Service Fund had an increase of $1.8 million. The positive change in the fund balance ofthe general fund for the year, excluding the effect of new long-term debt, reflects that the Board was able to adequately meet current costs.
General Fund Budgeting Highlights
The Board's budget is prepared in accordance with Georgia law. The most significant budgeted fund is the General Fund.
During the course offiscal year 2003, the Board did not amend its General Fund budget. The Board uses site-based budgeting. The budgeting systems are designed to tightly control total site budgets but provide flexibility for site management.
For the General Fund, the actual revenues and otherfinancing sources of$42 million exceeded the
original budgeted amount of $41 million by $1 million. This difference was due to an increase in Federal revenues of $0.7 million, and an increase of $0.9 million for miscellaneous. The Board approved the initial budget with property tax revenue of$7.3 million, but chose to only levy property taxes totaling $6.8 million. The unbudgeted charges for services revenue primarily consists of the individual school and principal accounts that were not included in the final budget.
The actual expenditures and other financing uses of $41.4 million exceeded the original budgeted
amount of$40.9 million by $0.5 million. This difference was due mainly to an increase in Federally funded grant expenditures and additional unbudgeted expenditures from school accounts and debt service costs.
Although General Fund revenues and expenditures exceeded the original budget, the Board made a concerted effort to absorb a mid-year revenue reduction from the state in the amount of$474,000. This reduction was absorbed by the Board by reducing expenditures where possible and by using existing General Fund Balance.
Vlll

THOMAS COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003

Capital Assets and Debt Administration

Capital Assets

At the end of fiscal year 2003 the Board had $19.8 million invested in capital assets, net of depreciation, all in governmental activities. Table 4 shows fiscal year 2003 balances. Since this is the first year the Board has prepared financial statements following GASB Statement 34, capital assets comparisons to fiscal year 2002 are not available.

Table4 Capital Assets (Net of Depreciation, in Thousands)

Governmental Activities Fiscal Year2003

Land
Construction in Progress Buildings and Building Improvements Equipment Land Improvements

$ 1,361,823 211,520
15,388,062 2,189,027
603,971

Total

$19,754.403

The overall capital assets increased in fiscal year 2003 due to current year additions exceeding depreciation. In fiscal year 2003, the Board purchased 108 acres of land in anticipation of the construction ofa new Pre-K/Kindergarten school and a new 5th through 8th middle school. These projects will be funded by the aforementioned general obligation bonds, proceeds of the capital leases, local funding and state capital outlay grants. Construction expenses totaling $25 .8 million are projected for fiscal years 2004 and 2005.

Debt

At June 30, 2003, the Board had $15 million in bonds outstanding with $2.8 million ofprincipal due within one year, and $6.7 million in capital leases outstanding with no principal due within one year. The capital leases are intergovernmental contracts with the South Georgia Governmental Services Authority, as described earlier.

Table 5 summarizes the long-term debt outstanding at June 30, 2003. Since this is the first year the Board has prepared its financial statements following GASB Statement 34, debt comparisons to fiscal year 2002 are not available.

ix

THOMAS COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003

TableS Debt at June 30 (in Thousands)

Governmental Activities Fiscal Year2003

General Obligation Bonds Capital Leases Compensated Absences

$15,000,000 6,715,000 187,971

Total

$21,902.971

At June 30, 2003, the Board's overall legal bonding authority was $56 million based on the assessed value oftaxable property as ofJanuary 1, 2003. The Board's bonds have assigned ratings of"AA" by Standards and Poor's based on the Boards participation in the Georgia state intercept program. Standard and Poor's assigned an underlying rating of "A" for the School Districts Bonds.

The State ofGeorgia limits the amount available to be spent each year on multiyear leases, purchase, or lease purchase contracts to 7.5 percent of the locally generated taxes for the maintenance and operation of the school system. Both the current year payments and subsequently scheduled payments are well below the 7.5 percent threshold of $508,795.

Current Issues

The Thomas County Board ofEducation consists of6 campuses located in Thomas County, which had a population of42,737 in 2000. Overall, the County has a stable population with steady growth, but much lower than the state as a whole. The County grew 12:2% during the 20 year period from 1980 to 2000, compared to 49.9% for the state of Georgia during the same 20 year period. The County's 2000 population ranked 43rd in the state. Current student enrollment in the system is approximately 5,400 students in grades PK-12. Among Georgia's 179 school systems that levy ad valorem taxes, Thomas County has the 40th lowest millage rate in the state.

Just as the population has remained stable over the last five years, so has the sales tax revenue. Since the School Boards Special Purpose Local Option Sales Tax (SPLosn only began on January l, 2003, no comparative data is available. However, estimates of the SPLOST were based on the City/County Special Purpose Local Option Sales Tax history, with an assumption of no growth. Thus far into the SPLOST, those estimates have been accurate, with sales tax collections being about $3.6 million per year.

X

THOMAS COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
Thomas County's largest employer is Archbold Memorial Hospital, with 1,600 employees. The Thomas County Board of Education is the second largest employer with approximately 800 employees. The largest private employer is Flowers Foods, with employment ofapproximately 500.
The population growth ofThomas County is somewhat limited by the existence ofmany plantations in the county. Much ofthe land in the southern part ofThomas County, which borders Florida and is in close proximity to Tallahassee, is undeveloped timber land. In fact, eight ofthe County's largest
taxpayers are plantation owners.
Thomas County has one large municipality and several small ones. The county seat is Thomasville, which had a population of 18,162 in 2000. The county also includes the communities of Barwick, Boston, Coolidge, Meigs, Ochlocknee, and Pavo, with populations ranging from 444 to 1,417.
The median household income as of2002 was $43,100 per year. As of2000, the per capita income
was $24,459. About 30 percent of the county's population was age 50 or over in 2002.
The biggest current issue facing the Board is a continued reduction in state funding due to lack of growth in state revenues. In the current fiscal year 2004, the year began with the Board's state
revenue being reduced by the same amount as in fiscal year 2003, $474,000. Presently, it appears
that the state legislature will cut fiscal year 2004 revenue by another $459,000, but the Board should also receive a mid-term increase of state revenue in the amount of$285,000 because ofenrollment growth, which will partially offset the additional cut. However, the biggest reduction may be in fiscal year 2005, with current indications of a reduction in funding of approximately $1.5 million. Since the fiscal year 2005 budget has not been approved by the legislature, this reduction is speculative at the present time. Ifadditional reductions do occur, the Board will most likely look at several options to offset the reductions, including staff reductions, reduction of fund balance, increased property taxes, and other budget reductions.
Contacting the Board's Financial Management
This financial report is designed to provide our citizen's, taxpayers, investors and creditors with a general overview of the Board's finances and to show the Board's accountability for the money it receives. Ifyou have questions about this report or need additional financial information, contact Joey N. Holland, CPA, Finance Director at the Thomas County Board of Education, 11343 U.S. Highway 319 North, Thomasville, Georgia 31757. You may also email your questions to hollandj@rose.net.
xi

THOMASCOUNTYBOARDOFEDUCATION

THOMAS COUNTY BOARD OF EDUCATION
STATEMENT OF NET ASSETS
JUNE 30, 2003

EXHIBIT"A"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories Capital Assets Land Construction in Progress Land Improvements Buildings Equipment Less: Accumulated Depreciation
Total Assets
LIABILITIES
Accounts Payable Salaries Payable Deferred Revenue Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Charter School Continuation of Federal Programs Debt Service Capital Projects Unrestricted
Total Net Assets
Total Liabilities and Net Assets
The notes to the basic financial statements are an integral part of this statement. -3-

GOVERNMENTAL ACTIVITIES

$

10,872,887

16,629,343

965,785 3,457,037
903,820 65,397 136,589

1,361,823 211,520
1,779,758 23,053,563
4,843,131 -11.495,392

$ ========-==52='=78=5=,2=6=-1

$

1,828,423

3,585,545

30,593

2,859,818 19,043,153

$

27,347,532

$

18,596,496

467,947 1,162,829 1,797,989
213,471 3,198,997

$

25,437,729

$ _ _====52='=78=5=,2=6_1

THOMAS COUNTY BOARD OF EDUCATION STATEMENT OF ACTMTIES
FOR THE YEAR ENDED JUNE 30. 2003

EXHIBIT"B"

EXPENSES

PROGRAM REVENUES

OPERATING

CHARGES FOR

GRANTS AND

SERVICES

CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

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 Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services Interest on Short-Term and Long-Term Debt

$ 28,096,634 $
2,193,068 755,001 526,053 463,613
2,354,225 239,824
2,449,707 1,667,708
209,128 202,695
317,027 2,311,922
106,805

Total Governmental Activities

$ 4118931410 $

General Revenues Taxes Property Taxes For Maintenance and Operations Sales Taxes Special Purpose Local Option Sales Tax For Debt Services Intangible Recording Tax Real Estate Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous

Total General Revenues

Change in Net Assets

20,650 $
370,480 484,205

22,239,762 $
1,117,592 513,567 522,362 904,526
1,219,479
1,496,752 1,078,619
4,990 217,864
1,599,934

875335 $----=--3=0-9-1=5=4=47= $

-5,836,222
-1,075,476 -241,434 -3,691 440,913
-1,134,746 -239,824 -952,955 -589,089 -204,138 15,169
53,453 -227,783 -106 805
-10, 102,628

$

6,784,377

1,753,867 196,012 30,522
2,052,783 342,318
1 051 546

$ _ ___,1c,:,.2,.,.2_,_11:.,:,4,,.2:,:,_5

$

2,108,797

Net Assets - Beginning of Year

Net Assets- Ending of Year

s_ _.....;2;;;5o1.:,4.37.a1o.1.;2;,;;,9

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

THOMAS COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS
JUNE 30, 2003

EXHIBIT"C"

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

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 5,613,550 $ 4,095,933 $ 1,163,404 $ 10,872,887

16,629,343

16,629,343

259,789 3,457,037
903,820
136,589

65,397

634,585

894,374 3,457,037
903,820 65,397 136,589

$ 10,370,785 $ 20,790,673 $ 1,797,989 $ 32,959,447

LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Salaries Payable Deferred Revenue
Total Liabilities
FUND BALANCES
Reserved for: Charter School Continuation of Federal Programs Debt Service Inventories Capital Projects
Unreserved Designated for Self-Insurance Undesignated Reported in: General Fund Capital Projects Fund
Total Fund Balances

$ 1,802,822 $ 3,585,545 30,593
$ 5,418,960 $

25,601 25,601

$ 1,828,423 3,585,545 30,593
$ 5,444,561

$ 467,947

$ 467,947

1,079,580

1,079,580

$ 1,797,989

1,797,989

136,589

136,589

$ 20,416,697

20,416,697

421,489

421,489

2,846,220

348,375

2,846,220 348,375

$ 4,951,825 $ 20,765,072 $ 1,797,989 $ 27,514,886

Total Liabilities and Fund Balances

$ 10,370,785 $ 20,790,673 $ 1,797,989 $ 32,959,447

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

THOMAS COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2003

EXHIBIT"D"

Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Assets are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of:
Land Construction in Progress Land Improvements Buildings Equipment Accumulated Depreciation
Total Capital Assets
Some of the School District's property tax revenues will be collected after year end but are not available soon enough to pay for the current period's expenditures.
Long-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 and Notes Payable Capital Leases Compensated Absences
Total Long-Term Liabilities

$ 27,514,886

$

1,361,823

211,520

1,779,758

23,053,563

4,843,131

-11,495,392

19,754,403

71,411

$ -15,000,000 -6,715,000 -187 971

-21,902,971

Net Assets of Governmental Activities (Exhibit "A")

$ 25,437,729

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

THOMAS COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30. 2003

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 Central Support Services Other Support Services Enterprise Operations Food Services Operation
Capital Outlay Debt Services
Principal Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Accrued Interest on Bonds Sold Proceeds of Long-Term Capital-Related Debt Premiums on Bonds Sold Capital Leases Transfers In Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$

6,743,941

226,534

27,535,914

5,432,316

504,855

126,798 $

1,422,026

$

41,992,384 $

$ $ 1,753,867

213,471

2,049

213,471 $ 1,755,916 $

6,743,941 1,980,401 27,535,914 5,432,316
504,855 342,318 1,422,026
43,961,771

$

27,641,609

$ 27,641,609

2,146,440 750,786 503,997 475,819
2,336,104 258,398 $
2,452,806 1,602,851
209,128 202,695 317,027 2,239,406

318,247 51,877
1,357,799

2,146,440 750,786 503,997 475,819
2,336,104 576,645
2,504,683 1,602,851
209,128 202,695 317,027 2,239,406 1,357,799

42,055 4204

$

118,386

42,055 122,590

$

41,183,325 $ 1,727,923 $

118,386 $ 43,029,634

$

809,059 $ -1,514,452 $ 1,637,530 $

932,137

$

15,785 $

15,785

$ 14,897,844

102,156

15,000,000

359,198

359,198

6,715,000

6,715,000

250,000

42,518

292,518

$

-250,000

-42,518

-292,518

$

-250,000 $ 22,179,524 $

160,459 $ 22,089,983

$

559,059 $ 20,665,072 $ 1,797,989 $ 23,022,120

4,392,766

100,000

0

4,492,766

Fund Balances - Ending

$

4,951,825 $ 20,765,072 $ 1,797,989 $ 27,514,886

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

THOMAS 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. 2003

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

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

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

General Obligation Bonds Issued

Some of the Capital Assets acquired this year were financed with capital leases. In Governmental Funds, a capital lease arrangement is considered a source of financing, but in the Statement of Net Assets, the lease obligation is reported as a Long-Term Liability.

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

Capital Lease Payments

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

Increase in Compensated Absences

$ 23,022,120

1,605,948 -866 396

739,552 40,436

-15,000,000 -6,715,000

42,055

-20,366

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

$ ==2=,1=0=8=7,=97=

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

THOMAS COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS JUNE 30, 2003

EXHIBIT"G"

ASSETS
Cash and Cash Equivalents Investments
Certificate of Deposit Accounts Receivable, Net
Interest

PRIVATE PURPOSE TRUSTS

AGENCY FUNDS

$

27,113

$

75,213

2,255

Total Assets

$

77,468 $ ===2=7=1,=13=

LIABILITIES Accounts Payable Funds Held for Others
Total Liabilities NET ASSETS Held in Trust for Private Purposes

$

1,700

$

27,113

$

1,700 $

27,113

$

75 768 $

0

Total Liabilities and Net Assets

$

77468 $ =====27=,1=1=3

The notes to the basic financial statements are an integral part of this statement. - 10 -

THOMAS COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FIDUCIARY FUNDS YEAR ENDED JUNE 30, 2003

EXHIBIT"H"

REVENUES Investment Earnings Interest
EXPENSES Scholarships Change in Net Assets
Net Assets - Beginning
Net Assets - Ending

PRIVATE PURPOSE TRUSTS

$

2,847

5099

$

-2,252

78,020

$ ===7=5=7'=68=

The notes to the basic financial statements are an integral part of this statement. - 11 -

THOMAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "I"

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Thomas 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 Thomas County Board of Education.
District-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support ofthe 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 ofinternal 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:
- 13 -

THOMAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund.
District-wide Capital Projects Fund accounts for financial resources including Bond Proceeds and grants from Georgia State Financing and Investment Commission to be used for the acquisition, construction or renovation of major capital facilities.
Debt Service Fund accounts for taxes (sales) legally restricted for the payment ofgeneral longterm principal, interest and paying agent's fees.
The School District reports the following fiduciary fund types:
Private Purpose Trust fund reports trust arrangements under which income is to be used to provide scholarship aid to defray college educational expenses.
Agency funds account for assets held by the School District as an agent for various funds or individuals.
BASIS OF ACCOUNTING
The basis ofaccounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The 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 ofaccounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund
- 14 -

THOMAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30. 2003

EXHIBIT "I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

liability is incurred, except for principal and interest on general long-term debt and compensated absences, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources.

The School District funds certain programs by a combination ofspecific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.

A substantial number of personnel of the School District were employed for a one hundred and ninety day period beginning in August 2002 and ending in early June 2003. Employment contracts for these employment periods typically specify that compensation be paid in twelve equal monthly payments beginning in September 2002 and ending in August 2003. State grants to fund the State's share of these contracts are disbursed to the School District in the same twelve month period. In accordance with generally accepted accounting principles, salary and fringe benefit costs and the related revenue from the State to fund these contracts are recorded in the fiscal period covered by these financial statements.

RESTATEMENT OF PRIOR YEAR FUND BALANCE - GENERAL FUND

In prior years, the financial activities of the School District's School Food Services Fund, Lottery Programs and Federal Programs were reported as Special Revenue Funds. These funds had a combined fund balance of$1,468,977 at July 1, 2002. For fiscal year 2003, these funds have been reported as part of the General Fund. In addition, governmental fund activity from the various school activity accounts, which were not reported in the prior year's financial statements, have been reported within the General Fund for fiscal year ended June 30, 2003. The governmental fund activity ofthe various school activity accounts had a fund balance of$141,196 at July 1, 2002. This change is in accordance with generally accepted accounting principles.

General Fund Balance July 1, 2002

$ 2,782,593

Add Funds Consolidated with General Fund: School Food Services Fund Federal Programs School Activity Account - Governmental Activity

1,121,000 347,977 141,196

General Fund Balance July 1, 2002 (Restated)

$ 4,392,766

- 15 -

THOMAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CHANGES IN ACCOUNTING PRINCIPLES

The Thomas County Board of Education has implemented a new financial reporting model as required by provisions of Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments, as of June 30, 2003.

The provisions of GASB Statement No. 34 require the inclusion of a Statement ofNet Assets. The elements comprising Net Assets - Beginning include the following:

General Fund (Restated) July 1, 2002 Capital Projects Fund

$ 4,392,766 100,000

Governmental Funds (Restated) July 1, 2002 Capital Assets Accumulated Depreciation Property Tax Revenue Timing Differences Capital Leases Payable Compensated Absences

$ 4,492,766 29,817,324 -10,802,4 73 30,975 -42,055 -167,605

Net Assets Beginning (See Exhibit "B")

$23,328,932

CASH AND CASH EQUIVALENTS

COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the Board to deposit its funds in one or more solvent banks or insured Federal savings and loan associations.

INVESTMENTS

COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:

- 16 -

THOMAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Obligations issued by the State of Georgia or by other states,

(2) Obligations issued by the United States government,

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

(4) Obligations of any corporation of the United States government,

(5) Prime banker's acceptances,

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

(7) Repurchase agreements, and

(8) Obligations of other political subdivisions of the State of Georgia.

RECEIVABLES

Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables 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 Thomas County Board of Commissioners fixed the property tax levy for the 2002 tax digest year (calendar year) on September 24, 2002 (levy date). Taxes were due on December 16, 2002 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2002 tax digest are reported as revenue in the governmental funds for fiscal year 2003. The Thomas 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, 2003, for maintenance and operations amounted to $6,743,941.

The tax millage rate levied for the 2002 tax year (calendar year) for the Thomas County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

12.329 mills

- 17 -

THOMAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SALES TAXES
Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $1,753,867 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
SUPPLIES INVENTORIES Inventories of consumable supplies are reported on the Combined Balance Sheet at average cost. The School District uses the consumption method to account for the inventories. The consumable supplies inventories are recorded as an asset when purchased and expenditures are recorded as the inventory items are used.
FOOD INVENTORIES On the basic financial statements, inventories ofdonated food commodities used in the preparation ofmeals are reported at their Federally assigned value and purchased foods inventories are reported at cost (weighted average). 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 ofpurchase. On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost ofnormal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art.
Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide statements are as follows:

- 18 -

THOMAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Capitalization Policy

Estimated Useful Life

Land Land Improvements Buildings Equipment

$

5,000

NIA

$

5,000

20 years

$

5,000

50 years

$

5,000 10 to 20 years

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives.

GENERAL OBLIGATION BONDS

The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. Bond issuance costs are recognized in the financial statements during the fiscal year bonds are issued. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement ofNet Assets.

Note 3: DEPOSITS AND INVESTMENTS

COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum ofmoney which has not been secured by surety bond, by guarantee ofinsurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. Ifa depository elects the pooled method (OCGA 45-8-13 .1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. OCGA Section 45-8-11 (b) provides an officer holding public funds may, in his discretion, waive the requirement for security in the case ofoperating funds placed in demand deposit checking accounts.

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

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

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

(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,

- 19 -

THOMAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"I"

Note 3: DEPOSITS AND INVESTMENTS

(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,

(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,

(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and

(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.

CATEGORIZATION OF DEPOSITS At June 30, 2003, the bank balances were $15,991,904. The amounts ofthe total bank balances are classified into three categories of credit risk:

Category 1 - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the School District or by the School District's agent in the School District's name.
Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name.
Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the School District's name.)

The School District's deposits are classified by risk category at June 30, 2003, as follows:

Risk Category

Bank Balance

1

$ 1,646,096

2

14,290,785

3

55,023

Total

$ 15,991.904

CATEGORIZATION OF INVESTMENTS At June 30, 2003, the carrying value of the School District's total investments was $12,629,344 which is materially the same as fair value. This investment consisted entirely of funds invested in the Local Government Investment Pool administered by the State ofGeorgia, Office ofTreasury and

-20-

THOMAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"!"

Note 3: DEPOSITS AND INVESTMENTS
Fiscal Services which are not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy ofthe State of Georgia, Office of Treasury and Fiscal Services for the Local Government Investment Pool (Primary Liquidity Portfolio and Extended Term Portfolio) does not provide for investment in derivatives or similar investments. A description of the Primary Liquidity Portfolio is as follows:
The Primary Liquidity Portfolio consists of Georgia Fund 1, which is a combination local and state government investment pool, and Fund 6. Georgia Fund 1 is a stable net asset value investment pool which follows Standard and Poor's criteria for AAAm rated money market funds. The pool is not registered with the SEC as an investment company but does operate Georgia Fund 1 in a manner consistent with Rule 2a-7 ofthe Investment Company Act of 1940. The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($1.00 per share value). Net asset value is calculated daily and reported to the rating agency to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and values participant's shares sold and redeemed at the pool's share price, $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost. The pool does not issue any legally binding guarantees to support the value of the shares. Participation in the pool is voluntary and deposits consist of funds from local governments; operating and trust funds of Georgia's state agencies, colleges and universities; and current operating funds of the State of Georgia's General Fund.
Investments in Georgia Fund 1 and Fund 6 are directed toward short-term instruments such as U. S. Treasury obligations, securities issued or guaranteed as to principal and interest by the U. S. Government or any of its agencies or instrumentalities, banker's acceptances and repurchase agreements. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2003, was 30 days. The average investment duration for Fund 6 on June 30, 2003, was 0.39 years.
The Extended Term Portfolios consist ofFund 3 "Georgia Extended Asset Pool", Fund 7 and Fund 8. The Georgia Extended Asset Pool is a variable net asset value investment pool which follows Standard and Poor's criteria for AAAf rated funds. The pool is not registered with the SEC as an investment company. The pool's primary objective is the prudent management of public funds on behalf of the State of Georgia and local governments seeking income higher than money market rates. Net Asset Value (NAV) is calculated daily to determine current share price. NAV is calculated by taking the closing fair value of securities owned plus other assets and subtracting liabilities. The remainder is then divided by the total number ofshares outstanding to compute NAV per share (current share price). The pool distributes earnings (net ofmanagement fees) on a monthly basis and determines participant's shares sold and redeemed based on the current share price, which at June 30, 2003, was at $2.03 per share. The Office of Treasury and Fiscal Services has hired a third party bank, Investors Bank and Trust, to perform custody and valuation services to include calculation ofthe NAV. Pooled cash and cash equivalents and investments are reported at fair value.

- 21 -

THOMAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"!"

Note 3: DEPOSITS AND INVESTMENTS
The pool does not issue any legally binding guarantees to support the value of the shares. Participation in the pool is voluntary and deposits consist offunds from local governments, operating and trust funds of State agencies, and current operating funds of the State's General Fund.
Investments in the Georgia Extended Asset Pool consist generally ofsecurities issued or guaranteed as to principal and interest by the U. S. Government or any of its agencies or instrumentalities and repurchase agreements. The duration at June 30, 2003 was 0.70 years.
Investments in Fund 7 consist generally of repurchase agreements and certain U. S. Government Securities. The average investment duration for Fund 7 on June 30, 2003 was 1.17 years.
Investments in Fund 8 consist generally of repurchase agreements and certain U.S. Government Securities, which include mortgage-backed securities such as collateralized mortgage obligations and adjustable rate mortgages. These mortgage-backed securities are reported as U. S. Government Securities in the disclosure of custodial risk. Investments in Fund 8 are transacted by an external investment management firm under direction ofinvestment advisory agreements executed between the Office and the investment management firm.
The agreement directs the investment firm to utilize the Merrill Lynch 1-3 year Treasury Index in managing the average duration of the overall portfolio, excluding cash, to within plus or minus 6 months ofthe duration ofthe Index. The average investment duration for Fund 8 on June 30, 2003 was 1.49 years. In addition, the investment advisory agreements place limitations on individual security purchases and holdings as follows:
1) Limits the duration ofany security at the time ofpurchase to a maximum offive (5) years.
2) Requires any mortgage-backed security, at the time of purchase and periodically, thereafter, to pass a "stress test" which provides for a duration profile not to exceed 7 years given an instantaneous and permanent interest yield increase of 300 basis points.
3) With the exception ofU. S. Treasury securities, limits individual security investments to no more than the greater of$5 million or 10% ofthe separate portfolio's total investments.
4) Prohibits investments in interest only strips, principal only strips, inverse floaters, and Z tranche securities.
Note 4: NON-MONETARY TRANSACTIONS
The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories

-22-

THOMAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"!"

Note 5: CAPITAL ASSETS

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

Balances July 1, 2002

Increases

Balances Decreases June 30, 2003

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

$ 210,270 $ 1,151,553 $

0

211,520

0 $ 1,361,823 211,520

Total Capital Assets Not Being Depreciated $ 210,270 $ 1,363,073 $

0 $ 1,573,343

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements

$ 23,001,686 $ 4,825,610 1,779,758

51,877 235,962 $

$ 23,053,563

218,441

4,843,131

1,779,758

Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements

7,202,879 2,512,432 1,087,162

462,622 315,149
88,625

173,477

7,665,501 2,654,104 1,175,787

Total Capital Assets, Being Depreciated, Net $ 18,804,581 $ -578,557 $

44964 $ 18,181,060

Governmental Activity Capital Assets - Net $ 19,014.851 $ 784.516 $

44 964 $ 19,754,403

Capital assets being acquired under capital leases as of June 30, 2003, are as follows:

Governmental Funds

Buildings Less: Accumulated Depreciation

$

51,877

1 037

$===='50:l!:.8!:=4:=0

- 23 -

THOMAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "I"

Note 5: CAPITAL ASSETS

Current year depreciation expense by function is as follows:

Instruction Support Services
Pupil Services Improvements of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Food Services

$ 446,184
44,573 4,029 21,085 4,514 17,322 1,923 5,631 251,815 69,320

Note 6: RESTRICTED ASSETS

$====8==66=.3'==9==6

Special Purpose Local Option Sales Tax (SPLOST), general obligation bond proceeds and property tax levied are reported as restricted assets in the Statement ofNet Assets because their use is limited by applicable bond covenants or statutory provisions. Restricted assets at June 30, 2003, were as follows:

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

District-wide Capital Projects

Bond

Capital

SPLOST

Proceeds

Leases

Debt Service Funds

$ 2,255,527

$ 1,163,404 $ 1,492,031

$ 11,626,971 $ 5,002,372

Note 7: INTERFUND TRANSFERS

Interfund transfers for the year ended June 30, 2003, consisted of the following:

- 24-

THOMAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "I"

Note 7: INTERFUND TRANSFERS

Transfer to

Transfers From

District-wide

General

Capital

Fund

Projects

District-wide Capital Projects Debt Service Funds

$ 250,000 $_------'4=2,=-..=51'-"'-8

Total

$ 250.000 $==4==2='=.5==1==8

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

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 ofloss associated with torts and job related illness or injuries to employees. The School District has not incurred losses (settlements) which exceeded the Board's insurance coverage in any of the past three years.

The School District participates in the Georgia School Boards Association Risk and Insurance Management System, a public entity risk pool organized on July 1, 1994, to develop and administer a plan to reduce risk of loss on account of general liability, motor vehicle liability, or property damage, including safety engineering and other loss prevention and control techniques, and to administer one or more groups of self-insurance funds, including the processing and defense of claims brought against members ofthe system. The School District pays an annual premium to the system for its general insurance coverage. Additional coverage is provided through agreements by the system with other companies according to their specialty for property and general liability. Payment of excess insurance for the system varies by line of coverage.

The School District has elected to self-insure for all losses related to acts of God. In addition, the School District has elected to self-insure for errors or omissions, which includes, among other risks, risks for sexual harassment and discrimination. The School District has not experienced any losses related to these risks 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 liability being reported when it is probable that a loss has occurred, and the amount ofthat loss can be reasonably estimated.

- 25 -

THOMAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "I"

Note 8: RISK MANAGEMENT

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

2002 2003

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End ofYear Liability

$

0 $

6,503 $

6,503 $

0

$

0 $

11,120 $

11,120 $

0

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

Position Covered

Amount

Superintendent All Other Employees (Per Loss)

$ 100,000

$

10,000

Note 9: LONG-TERM DEBT

CAPITAL LEASES The Thomas County Board of Education has entered into various lease agreements including a Qualified Zone Academy Bond as lessee for the purpose of renovating, repairing and equipping several schools and related facilities in the School District. These lease agreements qualify as capital leases for accounting purposes.

COMPENSATED ABSENCES Compensated absences represent obligations ofthe School District relating to employees' rights to receive compensation for future absences based upon service already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. The School District uses the vesting method to compute compensated absences.

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

Purpose

Interest Rates

Amount

General Government - Series 2002

2.0%-4.0% $ 15,000.000

The changes in Long-Term Debt during the fiscal year ended June 30, 2003, were as follows:

-26-

THOMAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "I"

Note 9: LONG-TERM DEBT

Balance July 1, 2002
Additions Capital Leases Annual Leave Earned G.O. Bonds
Deductions Annual Leave Utilized Debt Retired
Balance June 30, 2003
Portion of Long-Term Debt Due within One Year

Capital Leases

Governmental Funds

General

Compensated Obligation

Absences

Bonds

$

42,055 $

167,605 $

0 $

Total 209,660

6,715,000

106,427

15,000,000

6,715,000 106,427
15,000,000

42,055

86,061

86,061 42,055

$ 6 715 000 $'===!.!1Y87a 971 $ 15 000 000 $ 21902971

$

0 $_~'--7"4,818 $ 2,785,000 $ 2,859,818

At June 30, 2003, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30

Capital Leases

Principal

Interest

2004 2005 2006 2007 2008 2009 - 2013 2014 - 2018

$ $ 280,000
290,000 300,000 315,000 1,740,000 3,790,000

132,868 180,500 170,392 159,923 149,093 567,131 230,138

Total Principal and Interest

$ 6,715.000 $ 1,590.045

Fiscal Year Ended June 30

General Obligation

Debt

Principal

Interest

2004 2005 2006 2007 2008

$ 2,785,000 $ 2,885,000 2,990,000 3,105,000 3,235,000

473,550 417,850 331,300 241,600 123,150

Total Principal and Interest

$ 15,000,000 $ 1,587,450

- 27 -

THOMAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "I"

Note 10: ON-BEHALF PAYMENTS
The Board has recognized revenues and costs in the amount of $398,262 for health insurance and retirement contributions paid on the Board's behalf by the following State Agencies.
Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $350,527
Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $47,735
Note 11: 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 ofroutine School District operations. The ultimate disposition ofthese proceedings is not presently determinable, but is not believed to be material to the basic financial statements.
Note 12: ACCUMULATED EMPLOYEES' LEAVE
Twelve month employees earn ten days ofvacation annually, provided they have been employed at least nine months of the previous fiscal year, with a maximum accumulation of thirty days. Upon retirement or termination ofemployment, employees have the option ofearly release or payment for accumulated vacation at their current rate of pay. See Note 9 - Long-Term Debt
Note 13: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school systems are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.

- 28 -

THOMAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "I"

Note 13: RETIREMENT PLANS

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board ofTrustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.24% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2003 2002 2001

100% 100% 100%

$ 2,170,747 $ 2,063,144 $ 2,301,902

- 29-

THOMAS COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2003

SCHEDULE "1"

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

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

$

7,357,910 $

7,357,910 $

6,743,941

27,500

27,500

226,534

27,775,832

27,775,832

27,535,914

4,730,412

4,730,412

5,432,316

532,000

532,000

504,855

93,000

93,000

126,798

463 470

463 470

1,422,026

$

40,980,124 $

40,980,124 $

41,992,384

$

27,558,293 $

27,558,293 $

27,641,609

1,909,368 866,996 576,000 422,954
2,156,222 270,500
2,608,300 1,632,162
187,750 359,613
2,223,100

1,909,368 866,996 576,000 422,954
2,156,222 270,500
2,608,300 1,632,162
187,750 359,613
2,223,100

2,146,440 750,786 503,997 475,819
2,336,104 258,398
2,452,806 1,602,851
209,128 202,695 317,027 2,239,406
46259

$

40,771,258 $

40,771,258 $

41,183,325

$

208,866 $

208,866 $

809,059

$

130,000 $

130,000

-380 000

-380,000 $

-250,000

$

-250,000 $

-250,000 $

-250,000

$

-41,134 $

-41,134 $

559,059

4,646,816

4,646,816

4,392,766

94474

94474

Fund Balances - Ending

$

4,700,156 $

4 700 156 $ ===4=''=95=1=,8=2=5

Notes to the Schedule of Revenues. Expenditures and Changes in Fund Balances Budget and Actual (1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the various principal accounts.

See notes to the basic financial statements.

- 31 -

THOMAS COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30. 2003

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U.S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food and Nutrition Program Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Food and Nutrition Program Food Distribution Program (1)
Total U.S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Individuals with Disabilities Education Act Part B - Special Education Capacity Building Improvement Grant Capacity Building - Project Winning Team Flow Through Preschool Severely Emotionally Disturbed Pass-Through From Georgia Department of Human Resources Individuals with Disabilities Education Act Part B - Special Education Flow Through
Total Special Education Cluster
Other Programs Pass-Through From Coastal Plains Regional Educational Service Agency d/b/a Southern Pines Migrant Education Agency Elementary and Secondary Education Act Title I Migrant Education Pass-Through From Georgia Department of Education Elementary and Secondary Education Act Title I Grants to Local Educational Agencies State School Improvement Grants Title II Eisenhower Professional Development Enhancing Education Through Technology Improving Teacher Quality Title VI Innovative Education Program Strategies Rural and Low Income Schools TitleX Charter Schools Vocational Education - Basic Grants to States High School Program Basic Grant

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

10.553 10.555

NIA NIA $
$

(2) 2 101 367 (3)
2,101,367

10.550

NIA
$

138 037 2,239,404

.* 84.027 84.027 * 84.027 * 84.173 * 84.027

NIA $ NIA NIA NIA NIA

51,817 174,000 996,101 66,285 166,949

* 84.027

NIA
$

260,162 1,715,314

84.011

NIA

. 84.010

NIA

84.218

NIA

84.281

NIA

84.318

NIA

84.367

NIA

84.298

NIA

84.358

NIA

84.282

NIA

84.048

NIA

38,844 (3)
1,265,596 8,425 7,740
87,892 278,248
35,667 93,749 177,459
77,522

- 32-

THOMAS COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30. 2003

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Education, U.S. Department of Other Programs Pass-Through From Southwest Georgia Regional Educational Service Agency Safe and Drug-Free Schools and Communities Pass-Through From Southwest Georgia Technical College Vocational Education - Basic Grants to States High School Program Tech Prep Program
Total U.S. Department of Education
Defense, U. S. Department of Direct Department of the Air Force R.O.T.C. Program

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

84.186

N/A $

3,689 (3)

84.243

N/A

4676

$ _ _---=..,3,.!..;79::...:4ci=,8::2.:...1

$ _ _ _ _3~7~5~7~8

Total Federal Financial Assistance N/A = Not Available

$ =====6,=07=1:!.=,8=0=3

Notes to the Schedule of Expenditures of Federal Awards

(1) The amount shown for the Food Distribution Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year.
(2) Expenditures for the funds earned on the School Breakfast Program ($395,877) were not maintained separately and are included in the 2003 National School Lunch Program.
(3) Expenditures for this program include State, and/or Other Funds. Expenditures are not maintained by fund source.

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 Thomas 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 basic financial statements.

See notes to the basic financial statements.

- 33-

THOMAS COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 2003
AGENCY/FUNDING
GRANTS Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle Grades (6-8) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV CategoryV Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Bus Replacement Sparsity Nursing Services Principal Supplements Vocational Supervisors Migrant Education Education Equalization Funding Grant Food Services Vocational Education Austerity Reduction Other State Programs Health Insurance Mentor Teachers National Teacher Certification Preschool Handicapped Program Severely Emotionally Disturbed Lottery Programs Assistive Technology Computers in the Classroom Post Secondary Options
Office of School Readiness Pre-Kindergarten Program
- 34 -

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

1,278,013

88,331

2,699,478

772,838

1,428,523

526,692

9,738

3,071,715

2,522,635

661,733

204,287 809,931 2,016,193 346,708
6,465 461,491 107,299 230,410
10,158 458,416 152,631
99,616

605,848 905,396 1,397,696

834,299 151,934
19,000 114,011
21,038 25,831
1,704 2,063,522
157,356 36,641
-576,315
350,527 2,158 2,390
73,573 1,976,214
13,479 100,506
15,139

1,037,741

THOMAS COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 2003
AGENCY/FUNDING
GRANTS Office of Treasury and Fiscal Services Public School Employees Retirement
CONTRACTS Education, Georgia Department of After School Programs Reading First Program
Governors Council on Developmental Disabilities Kennesaw State University Project WINS (Winning Ideas Network Schools)
Georgia Institute of Technology Student Information System
OTHER Community Affairs, Georgia Department of Local Assistance Grant

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

47,735

47,034 62,008

3,689 77,459

5 000

$ =====2=-7,=53=5=,9=1=4

See notes to the basic financial statements.

- 35-

THOMAS COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30. 2003

SCHEDULE "4"

PROJECT

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3) (4)

PROJECT STATUS

To acquire land and construct and equip a new

Pre-K/Kindergarten School, a new middle school,

and a new 9th Grade Academy; renovations and

improvements to Garrison-Pilcher Elementary School,

including roof, flooring, and restrooms, to include

handicap access; renovations and improvements to

Cross Creek Elementary School, including restrooms

and entrances; renovations and improvements to

Central Middle School, including the installation of new

HVAC systems, installing rubber tile at classroom

building entrances, carpeting, auditorium and gymnasium

improvements, and restroom facilities; renovations and

improvements to Thomas County Central High School,

including metal lockers, renovations to restrooms and

athletic facilities; renovations and improvements to

Chappelle School, including science labs, interior painting

restrooms improvements, and the installation or

replacement of HVAC systems; the acquisition and

equipping of transportation and maintenance facilities,

including the replacement of school buses and classroom

furniture, additions to the maintenance shop and bus

garage, resurfacing of parking areas and purchasing

necessary related equipment, renovations and

improvements to administrative offices; athletic facilities

and equipment; and acquisition of classroom technology,

including networking and administrative systems

$ 22,400,000 $ 30,602,921 $

1,409,676 Ongoing

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

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

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

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

Prior Years

$

0

Current Year

118,388

Total

$ ==1=18=,3=88=

See notes to the basic financial statements.

- 36-

THOMAS COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE}
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30. 2003

SCHEDULE "5"

DESCRIPTION

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

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

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 Ill

Category IV

Gifted Student - Category VI

Remedial Education Program

Alternative Education Program

English Speakers of Other Languages (ESOL)

1,384,297 $ 133,367
2,998,438 812,014
1,597,333
532,977 2,565
3,397,797 2,800,146
732,961 3,826,859
441,017 122,887 254,224
14 845

1,647,715 $ 233,840
3,552,936 860,579
2,378,619
279,453 3,888,004
4,119,392 671,966
195,138 790,005 2,903,675 136,783 522,622
551,540 46 604

37,276 $ 7,725
147,191 13,482
107,291
3,032 198,207
275,760 27,249
1,903 11,892 113,604
1,092 7,972 1,400 3,483

1,684,991 241,565
3,700,127 874,061
2,485,910
282,485 4,086,211
4,395,152 699,215
197,041 801,897 3,017,279 137,875 530,594
1,400 555,023
46604

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

$

19,051,727 $ 22,778,871 $

958,559 $

23,737,430

Media Center Program Staff and Professional Development

506,540 111 037

512,544 73,066

86,124 39,226

598,668 112,292

TOTAL QBE FORMULA FUNDS

$

19,669,304 $ 23,364,481 $ 1,083,909 $ ==2=4,.,,44=8=,3=9===0

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

See notes to the basic financial statements.

- 37 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

RUSSELL W. HINTON
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400
March 5, 2004

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Thomas County Board of Education
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Thomas County Board of Education as of and for the year ended June 30, 2003, which collectively comprise Thomas County Board of Education's basic financial statements and have issued our report thereon dated March 5, 2004. We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Compliance
As part of obtaining reasonable assurance about whether Thomas County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination offinancial statement amounts. However, providing an opinion on compliance with those provisions was not an objective ofour audit, and accordingly, we do not express such an opinion. The results ofour tests disclosed no instances ofnoncompliance that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Thomas County Board ofEducation's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal
2003-34YB-10

control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation ofone or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses.
This report is intended solely for the information and use of the management, members of the Thomas County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
w.~

RWH:as 2003-34YB-10

State Auditor

RUSSELL W. HINTON
STATE AUDITOR (404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400
March 5, 2004

Honorable Sonny Perdue, Governor Members of the General Assembly Members ofthe State Board of Education
and Superintendent and Members of the Thomas County Board of Education
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of Thomas County Board of Education with the types of compliance requirements described in the US. Office ofManagement and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each ofits major Federal programs for the year ended June 30, 2003. Thomas County Board ofEducation's major Federal programs are identified in the Summary of Auditor's Results Section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of Thomas County Board of Education's management. Our responsibility is to express an opinion on Thomas County Board of Education's compliance based on our audit.
We conducted our audit ofcompliance in accordance with auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types ofcompliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Thomas County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Thomas County Board ofEducation's compliance with those requirements.
2003SA-10

In our opinion, the Thomas County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each ofits major Federal programs for the year ended June 30, 2003.
Internal Control Over Compliance
The management of Thomas County Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered Thomas County Board ofEducation's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with 0MB Circular A-133.
Our consideration ofthe internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level of risk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course ofperforming their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses.
This report is intended solely for the information and use of the management, members of the Thomas County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
0,., .00, ~.c!l$
~ e l l W. Hinton State Auditor
RWH:as 2003SA-10

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

THOMAS COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2003

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-7361-02-01

Previously Reported Corrective Action Implemented

SECTIONN FINDINGS AND QUESTIONED COSTS

THOMAS COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
I SUMMARY OF AUDITOR'S RESULTS
1. Type of Report Issued on the Financial Statements The auditor's opinion on the Thomas County Board ofEducation's financial statements was unqualified.
2. Reportable Conditions in Internal Control Disclosed by the Audit of the Financial Statements The audit report for the Thomas County Board ofEducation did not disclose any reportable conditions related to the financial statements.
3. Noncompliance Material to the Financial Statements The audit of the Thomas County Board of Education disclosed no instances of noncompliance that were deemed to be material to the financial statements.
4. Reportable Conditions in Internal Control Over Major Programs The audit report for the Thomas County Board ofEducation did not disclose any reportable conditions in internal control over major programs.
5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Thomas County Board ofEducation's report on compliance with requirements applicable to major programs was unqualified.
6. Audit Findings Required to be Reported by Section .510{a) of 0MB Circular A-133 The Thomas County Board ofEducation's audit did not disclose audit findings required to be reported by section .510(a) of 0MB Circular A-133.
7. Major Programs Federal awards audited as major programs are as follows: 84.010 Elementary and Secondary Education Act - Title I - Grants to Local Educational Agencies 84.027 Individuals with Disabilities Education Act - Part B - Special Education Capacity Building Improvement Grant 84.027 Individuals with Disabilities Education Act - Part B - Special Education Capacity Building - Project Winning Team 84.027 Individuals with Disabilities Education Act - Part B - Special Education Flow Through 84.027 Individuals with Disabilities Education Act - Part B - Special Education Severely Emotionally Disturbed 84.173 Individuals with Disabilities Education Act - Part B - Special Education Preschool
8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.
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THOMAS COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003 I SUMMARY OF AUDITOR'S RESULTS 9. Low Risk Auditee
The Thomas County Board ofEducation qualified as a low risk auditee as defined by Section .530 ofOMB Circular A-133. II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.
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