GA ASOO JU Ll, q /0C,3-9y STATE OF GEORGIA DEPARTMENT OF AUDITS 254 WASHINGTON STREET ATLANTA, GEORGIA 30334 AUDIT REPORT TOWNS COUNTY BOARD OF EDUCATION HIAWASSEE, GEORGIA YEAR ENDED JUNE 30, 1994 TOWNS COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION I FINANCIAL INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE EXHIBITS GENERAL PURPOSE FINANCIAL STATEMENTS COMBINED STATEMENTS - OVERVIEW A COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUP 2 B COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUND TYPES AND EXPENDABLE TRUST FUND 4 C COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - ACTUAL AND BUDGET GOVERNMENTAL FUND TYPES 7 D NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS 8 ADDITIONAL FINANCIAL INFORMATION COMBINING AND INDIVIDUAL FUND STATEMENTS SPECIAL REVENUE FUND E COMBINING BALANCE SHEET 20 F COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES 22 FIDUCIARY FUND TYPES G COMBINING BALANCE SHEET 24 H STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCYFUND 25 SCHEDULES I SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE 26 2 ANALYSIS OF CASH AND CASH EQUIVALENTS 28 3 ACCOUNTS RECEIVABLE 29 4 DEBT SERVICE REQUIREMENTS TO MATURITY 30 SCHEDULE OF REVENUE 5 STATE FUNDS 31 6 LOCAL AND OTHER FUNDS 32 TOWNS COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - ~ SECTION! FINANCIAL ADDITIONAL FINANCIAL INFORMATION SCHEDULES SCHEDULE OF EXPENDITURES BY OBJECT 7 GOVERNMENTAL FUND TYPES 33 8 LOTTERY PROGRAMS 34 ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS 9 OVERALL 35 10 BY PROGRAM 36 11 SCHEDULE OF COMPENSATION AND TRAVEL OF BOARD MEMBERS 38 SECTION II COMPLIANCE COMPLIANCE REPORT BASED ON AN AUDIT OF THE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS SINGLE AUDIT REPORT ON COMPLIANCE WITH THE GENERAL REQUIREMENTS APPLICABLE TO FEDERAL FINANCIAL ASSISTANCE PROGRAMS SINGLE AUDIT REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO NONMAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAM TRANSACTIONS SECTION III INTERNAL CONTROL REPORT ON INTERNAL CONTROL STRUCTURE IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS SINGLE AUDIT REPORT ON THE INTERNAL CONTROL STRUCTURE USED IN ADMINISTERING FEDERAL FINANCIAL ASSISTANCE PROGRAMS TOWNS COUNTY BOARD OF EDUCATION TABLE OF CONTENTS - SECTION IV FINDINGS AND IMPROPER OR QUESTIONED COSTS SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS SECTIONV PERTINENT VIEWS OF RESPONSIBLE OFFICIALS SCHEDULE OF PERTINENT VIEWS OF RESPONSIBLE OFFICIALS SECTION I FINANCIAL CLAUDE L. VICKERS STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS 254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400 June 6, 1995 Honorable Zell Miller, Governor Members of the General Assembly Members of the State Board ofEducation and Superintendent and Members of the Towns County Board ofEducation INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE Ladies and Gentlemen: We have audited the general purpose financial statements (Exhibits A through D) of the Towns County Board of Education, as of and for the year ended June 30, 1994, as listed in the table of contents. These financial statements are the responsibility of the Board's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, and the provisions of the Office of Management and Budget Circular A-128, "Audits of State and Local Governments". Those standards and 0MB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material 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 opinion. As described in the notes to the general purpose financial statements, the Board's financial statements have been prepared using certain accounting practices and policies which, in our opinion, vary in some respects from generally accepted accounting principles. These variances are described as follows: * The general purpose financial statements of the Board did not contain a General Fixed Assets Account Group to account for property and equipment owned by the Board which should be included to conform to generally accepted accounting principles. 94ARL-13 * School activity accounts maintained at the individual schools are not included in the general purpose financial statements. To conform to generally accepted accounting principles, these accounts should be included in the general purpose financial statements. The aggregate effects on the general purpose financial statements of these variances or omissions have not been determined, but are believed to be material. In our opinion, except for the effects on the general purpose financial statements of the matters referred to in the preceding paragraph, the general purpose financial statements present fairly, in all material respects, the financial position of the Towns County Board of Education as of June 30, 1994, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles. Our audit was conducted for the purpose of forming an opinion on the general purpose financial statements of the Towns County Board ofEducation taken as a whole. The combining and individual fund statements (Exhibits E through H) and the financial schedules (Schedules 1 through 11 which includes the Schedule of Federal Financial Assistance) are presented for purposes of additional analysis and are not a required part of the general purpose financial statements ofthe Towns County Board of Education. Such information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, except for the effects of the matters referred to in the third paragraph, such information is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole. A copy ofthis report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated Section 50-6-24. ~:i:~ CLV:gp 94ARL-13 Claude L. Vickers State Auditor TOWNS COUNTY BOARD OF EDUCATION - 1- TOWNS COUNTY BOARD OF EDUCATION COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUP JUNE 30 1994 ASSETS Cash and Cash Equivalents Investments Held by Trustees Accounts Receivable Amount Available in Debt Service Fund Amount to be Provided in Future Years For Payment of Bond Debt GENERAL FUND $ 816,271.16 GOVERNMENTAL FUND TYPES SPECIAL CAPITAL REVENUE PROJECTS FUND FUND $ 1,878.69 340,115.05 $ 95,035.19 Total Assets $ 1,156,386.21 $ 95.035.19 $ 1 878.69 LIABILITIES AND FUND EQUITY LIABILITIES Cash Overdraft Accounts Payable Salaries Payable Deferred Compensation Plan General Obligation Bonds Payable Total Liabilities FUND EQUITY Fund Balances Reserved For Bus Replacement Funds For Debt Service For Expired Grant Balances/Questioned Costs For Capital Outlay Projects Unreserved Undesignated Total Fund Equity Total Liabilities and Fund Equity $ $ 79,998.13 257,136.91 46,354.67 5,526.22 10,321.50 $ 337,135.04 $ 62,202.39 $ 5,284.00 48,892.78 125,000.00 $ 179,176.78 640,074.39 $ $ 819,251.17 $ 32,832.80 $ 32,832.80 $ $ 1,156,386.21 $ 95,035.19 $ 1,878.69 1,878.69 1,878.69 The notes to the general purpose financial statements are an integral part of this statement. -2 - EXHIBIT"A" DEBT SERVICE FUND FIDUCIARY FUND TYPES TRUST AND AGENCY FUNDS ACCOUNT GROUP GENERAL LONG-TERM DEBT TOTALS (Memorandum Onl~ JUNE 30, 1994 JUNE 30, 1993 $ 467,050.27 $ 12,160.69 $ 1,297,360.81 $ 1,101,235.96 292,446.52 292,446.52 290,427.40 435,150.24 342,034.94 $ 467,050.27 467,050.27 502,576.37 7,949.73 7,949.73 7,423.63 $ 467,050.27 $ 304,607.21 $ 475,000.00 $ 2,499,957.57 $ 2,243,698.30 $ 46,354.67 85,524.35 $ 68,203.92 267,458.41 223,424.86 $ 292,446.52 292,446.52 290,427.40 $ 475,000.00 475,000.00 510,000.00 $ 292,446.52 $ 475,000.00 $ 1,166,783.95 $ 1,092,056.18 $ 467,050.27 $ 467,050.27 0.00 $ $ 467,050.27 $ $ 467,050.27 $ 12,160.69 12,160.69 304,607.21 $ $ 5,284.00 $ 8,039.80 467,050.27 502,576.37 48,892.78 5,542.97 125,000.00 $ 646,227.05 $ 516,159.14 686,946.57 635,482.98 $ 1,333,173.62 $ 1,151,642.12 475,000.00 $ 2,499,957.57 $ 2,243,698.30 -3- TOWNS COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUND TYPES AND EXPENDABLE TRUST FUND YEAR ENDED JUNE 30 1994 REVENUES State Funds Federal Funds Local and Other Funds 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 Food Services Operation Community Service Operations Capital Outlay Debt Service Principal Interest Paying Agent Fees Total Expenditures Excess of Revenues over {under) Expenditures OTHER FINANCING SOURCES {USES) Operating Transfers In Operating Transfers Out Total Other Financing Sources {Uses) Excess of Revenues and Other Financing Sources over {under) Expenditures and Other Financing Uses FUND BALANCE JULY 1 Residual Equity Transfer GENERAL FUND GOVERNMENTAL FUND SPECIAL CAPITAL REVENUE PROJECTS FUND FUND $ 1,835,701.87 $ 89,947.28 1 463179.33 $ 3,388,828.48 $ 80,229.81 $ 365,694.81 116,227.76 562152.38 $ 17,100.00 15,000.00 32 100.00 $ 2,100,343.60 $ 92,698.17 21,879.58 93,449.89 110,319.44 194,827.34 31,778."32 265,044.51 219,541.76 4,261.20 6,856.55 5,684.37 26,429.25 243,254.29 321.83 2,369.26 16,887.10 1,071.74 2,443.86 4,099.71 7,696.25 18,962.00 22.12 268,134.26 $ 30,221.31 $ 3173,113.98 $ $ 215 714.50 $ 565,262.42 $ -3,110.04 $ 30,221.31 1 878.69 $ $ -221.91 $ -221.91 $ $ 215,492.59 $ 603,749.29 9.29 221.91 221.91 -2,888.13 $ 35,730.22 -9.29 1,878.69 0.00 FUND BALANCE JUNE 30 $ 819,251.17 $ The notes to the general purpose financial statements are an integral part of this statement. -4- 32,832.80 $ 1,878.69 EXHIBIT"B" TYPES DEBT SERVICE FUND TOTAL FIDUCIARY FUND TYPE EXPENDABLE TRUST FUND TOTALS (Memorandum Onlll YEAR ENDED JUNE 30, 1994 JUNE 30, 1993 $ 1,933,031.68 455,642.09 $ 28 881.40 1 623,288.49 $ $ 28 881.40 $ 4 011 962.26 $ $ 2 574.45 1,933,031.68 $ 455,642.09 1,625,862.94 1,831,321.43 420,335.94 750,252.51 2 574.45 $ 4 014,536. 71 $ 3,001,909.88 $ 2,343,597.89 $ 93,020.00 24,248.84 110,336.99 111,391.18 197,271.20 31,778.32 269,144.22 227,238.01 23,223.20 22.12 274,990.81 5,684.37 56,650.56 $ 35,000.00 29,057.50 350.00 35,000.00 29,057.50 350.00 $ 64 407.50 $ 3 833,005.21 $ $ -35 526.10 $ 178,957.05 $ 0.00 $ 2,343,597.89 $ 1,923,173.92 93,020.00 24,248.84 110,336.99 111,391.18 197,271.20 31,778.32 269,144.22 227,238.01 23,223.20 22.12 274,990.81 5,684.37 56,650.56 65,685.70 22,576.92 82,938.41 96,155.24 165,211.90 36,113.08 285,441.41 175,266.30 30,436.70 5,083.98 228,329.75 35,000.00 29,057.50 350.00 30,000.00 30,975.00 350.00 0.00 $ 3 833 005.21 $ 3,177,738.31 2 574.45 $ 181,531.50 $ -175 828.43 $ 221.91 -221.91 $ 0.00 $ -35,526.10 $ 178,957.05 $ 502,576.37 1,142,055.88 $ 221.91 -221.91 $ 0.00 2,574.45 $ 181,531.50 $ -175,828.43 9,586.24 1,151,642.12 1,327,470.55 $ 467,050.27 $ 1,321,012.93 $ 12160.69 $ 1,333,173.62 $ 1,151,642.12 -5- TOWNS COUNTY BOARD OF EDUCATION EXHIBIT "C" COMBINED STATEMENT OF REVENUES EXPENDITURES AND CHANGES IN FUND BALANCES ACTUAL AND BUDGET - GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30 1994 REVENUES State Funds Federal Funds Local and Other Funds Total Revenues 12\PENDITURES 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 Food Services Operation Community Service Operations Capital Outiay Debt Service Total Expendrtures Excess of Revenues over (under) Expendrtures OTHER FINANCING SOURCES (USES) Other Sources Other Uses Total Other Financing Sources (Uses) Excess of Revenues and Other Financing Sources over (under) Expendrtures and Other Financing Uses FUND BALANCE JULY 1 1993 ADJUSTMENTS Prior Year (Net) ACTUAL PER EXHIBIT"B" BUDGET VARIANCE FAVORABLE (UNFAVORABLE) $ 1,933,031.68 $ 1,756,220.00 $ 455,642.09 533,379.00 1,623,288.49 1,364,505.00 $ 4,011,962.26 $ 3,654,104.00 $ 176,811.68 -77,736.91 258,783.49 357,858.26 $ 2,343,597.89 $ 2,206,533.00 $ 93,020.00 24,248.84 110,336.99 111,391.18 197,271.20 31,778.32 269,144.22 227,238.01 23,223.20 22.12 274,990.81 5,684.37 56,650.56 64,407.50 68,379.00 26,393.00 87,775.50 104,671.00 206,547.00 34,873.00 281,990.00 201,383.00 24,461.20 175.00 226,413.00 5,000.00 153,000.00 64,357.50 $ 3,833,005.21 $ 3,691,951.20 $ $ 178,957.05 $ -37,847.20 $ -137,064.89 -24,641.00 2,144.16 -22,561.49 -6,720.18 9,275.80 3,094.68 12,845.78 -25,855.01 1,238.00 152.88 -48,577.81 -684.37 96,349.44 -50.00 -141,054.01 216,804.25 $ 221.91 $ 6,728.00 $ -221.91 -6,728.00 $ 0.00 $ 0.00 $ $ 178,957.05 $ -37,847.20 $ 1,142,055.88 1,109,714.59 -6,506.09 6,506.09 0.00 216,804.25 32,341.29 -102,743.13 102,743.13 FUND BALANCE JUNE 30 1994 $ 1,321,012.93 $ 969,124.26 $ 351,888.67 The notes to the general purpose financial statements are an integral part of this statement. -7- TOWNS COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30 1994 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Towns County Board ofEducation (Board) was established under the laws ofthe State of Georgia and operates under the guidance of a school board and Superintendent, both elected by the voters. With the exception of the departures from generally accepted accounting principles disclosed in the following paragraphs, the financial statements ofthe Board have been prepared in confonnity with generally accepted accounting principles as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting standards. The more significant ofthe Board's accounting policies are described below. REPORTING ENTITY In evaluating how to define the government unit for financial reporting purposes, management has considered the criteria set forth in GASB Codification of Governmental Accounting and Financial Reporting Standards, Section 2100, "Defining the Financial Reporting Entity". The primary government consists of all the organizations that compose the legal entity ofthe Towns County Board ofEducation. Based upon the application ofthe above criteria, the Towns County Board ofEducation is detennined to be the lowest level of government exercising oversight responsibility and control over all activities related to public education in Towns County, Georgia. The Board is not included in any other governmental "reporting entity" as defined by GASB Codification of Governmental Accounting and Financial Reporting Standards. Board members were elected by the public and have decision making authority, the power to designate management, except for the Superintendent who was also elected, the ability to significantly influence operations, and primary accountability for fiscal matters. The Board detennines the millage rate at which school taxes are levied and may incur bonded indebtedness with voter approval. FUND ACCOUNTING The Board uses funds and an account group 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. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available financial resources. General Fixed Assets are recorded as expenditures in the various funds at the time of purchase. A General Fixed Assets Account Group is not presently maintained by the Board. To conform to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types. - 8- TOWNS COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30 1994 Note I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Although "school activity accounts" are maintained at the individual schools, neither the assets, liabilities and fund equity, nor the revenues, expenditures and changes in fund balances of these accounts are reflected in these financial statements. To conform to generally accepted accounting principles, these accounts should be recorded in the general purpose financial statements. The general purpose financial statements account for all State, Federal, Local and Other Funds under control ofthe Board, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds and the account group presented in this report are as follows: GOVERNMENTAL FUND TYPES - are used to account for all or most of a Board's general activities. Governmental Fund Types include: GENERAL FUND - the fund used to account for all financial resources of the Board except those required to be accounted for in another fund. These transactions relate to resources obtained and used for services traditionally provided by a board of education. SPECIAL REVENUE FUND - the fund used to account for the proceeds of specific revenue sources (other than for major capital projects) that are legally restricted to expenditures for specified purposes. These funds are primarily received from the Georgia Department of Education and from the Federal government to accomplish specific objectives and are required to be accounted for separately. Also included are proceeds received from State, Federal, Local and Other sources for operations of the school food services fund. This fund could be accounted for as an enterprise fund; however, the Board chooses not to provide for depreciation, but to maintain the fund on a modified accrual basis and to report the fund as a special revenue fund under governmental fund types, which is acceptable under generally accepted accounting principles for governmental entities. CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction of major capital facilities. DEBT SERVICE FUND- the fund used to account for the accumulation ofresources for, and the payment of, general long-term principal, interest and paying agent fees. FIDUCIARY FUND TYPES - the trust and agency funds used to account for assets held by a government unit in a trustee capacity or as an agent for individuals, private organizations, other government units and/or other funds. These funds include: EXPENDABLE TRUST FUND Self-Insured Employee Benefit Fund - the fund used to account for Unemployment Compensation contributions and expenditures of the Project Head Start Program. AGENCY FUND - the fund used to account for assets held for other funds, governments, or individuals. - 9- TOWNS COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30 1994 Note I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ACCOUNT GROUP GENERAL LONG-TERM DEBT ACCOUNT GROUP - used to account for general obligation bonds outstanding. BASIS OF ACCOUNTING The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds and the expendable trust fund are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Their reported fund balance is considered a measure of available spendable resources. Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds. Other liabilities, which are not expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group. Agency funds are purely custodial in nature and do not involve measurement of results of operations. Governmental funds and the expendable trust fund are accounted for using the modified accrual basis of accounting under which: Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount ofthe transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Those revenues considered susceptible to accrual are property taxes, local option sales taxes, intergovernmental grants and investment income. Property taxes are considered available if they are collected and remitted by the collecting agent to the Board within 60 days after fiscal year-end. Expenditures are generally recognized when the related fund liability is incurred. A substantial number of personnel of the Board were employed for a one hundred and ninety day period beginning in late August of 1993 and ending in early June 1994. Employment contracts for these employment periods typically specify that compensation be paid in twelve equal monthly payments beginning in September 1993 and ending in August 1994. State grants to fund the State's share of these contracts are disbursed to the Board in the same twelve month period. In accordance with generally accepted accounting principles, salary and fiinge benefit expenditures and the related revenue from the State to fund these contracts are recorded in the fiscal period covered by these financial statements. The agency fund is accounted for using the modified accrual basis of accounting in recognizing assets and liabilities. - 10 - TOWNS COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO TIIB GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30 1994 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BUDGET The Towns County Board of Education has a legally authorized nonappropriated budget which is formally approved by the Board at the aggregate level. Budgets are prepared to provide a basis for funding operations and there is no legal prohibition regarding overexpenditure of the aggregate budget. The budget process begins when the Board's administration prepares a tentative aggregated budget for the Board's approval. After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper ofgeneral circulation in the locality. At the next regular meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final school budget. This final budget is then submitted, in accordance with provisions of the Quality Basic Education Act, OCGA Section 20-2-167, to the Georgia Department ofEducation. The Board prepares its budget on the modified accrual basis, which is the same basis on which it presents its financial statements. The budget comparison on Exhibit "C" presents actual and budget data for all governmental funds on a combined basis. CASH AND CASH EQUIVALENTS CO:MPOSITION OF DEPOSITS Cash and cash equivalents consist of deposits (including certificates of deposit, savings and N.O.W. accounts) in authorized financial institutions. Georgia Laws authorize the Board to deposit its funds in one or more solvent banks, insured Federal savings and loan associations, or insured State chartered building and loan associations. The placement of proceeds from bond issues in certificates of deposit is limited to financial institutions located within this State. INVESTMENTS HELD BY TRUSTEE Investments held by trustee consist of contributions from employees who have elected to participate in the Board's deferred compensation plan. See Note 8 - Deferred Compensation Plan RECEIVABLES Receivables consist ofgrant reimbursements due from Federal, State or other grantors 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 general purpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. PROPERTY TAXES The Towns County Board of Commissioners fixed the property tax levy for the 1993 tax year (calendar year) on August 5, 1993 (levy date). Taxes were due on December 20, 1993. The lien date for property taxes was - 11 - TOWNS COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEJ\1ENTS JUNE 30 1994 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES JanlllllY 1, 1993. Taxes collected within the current fiscal year or within 60 days after year-end are reported as revenue in fiscal year 1994 since their collection meets the criteria of GASB codification section P70. l 03. The Towns County Tax Commissioner bills and collects the property taxes for the Board of Education and remits taxes collected to the Board. The tax millage rate levied for the 1993 tax year (calendar year) for the Towns County Board ofEducation was as follows (a mill equals $1 per thousand dollars of assessed value): School Operations 4...5.mills INVENTORIES FOOD INVENTORIES Inventories of purchased foods and donated food commodities used in the preparation of meals are not reported on the Combined Balance Sheet. Donated food commodities are recorded as revenues and expenditures at the time commodity items are received. Purchased foods inventories are recorded as expenditures at the time of purchase. GENERAL OBLIGATION BONDS The Board issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. 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 General Long-Term Debt Account Group. INTERFUND TRANSACTIONS The Board has the following types ofinterfund transactions: Reimbursements ofexpenditures initially made from a fund that are properly applicable to another fund, are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed. Residual equity transfers are recorded for nonrecurring or nonroutine permanent transfers of equity. Operating transfers are recorded for all interfund transactions other than residual equity transfers and reimbursements. - 12 - TOWNS COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE30 1994 Note I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES MEMORANDUM ONLY - TOTAL COLUMNS Total columns on the general purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position or results of operations in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. Certain reclassifications have been made to the comparative data to conform to the current year classifications. Note 2: DEPOSITS AND INVESTMENTS COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee ofinsurance, or by collateral in an amount of not less than 110 percent of the public funds being secured after the deduction ofthe amount of deposit insurance. OCGA Section 45-8-11 provides an officer holding public funds may, in his discretion, waive the requirement for security in the case of operating 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 ofindebtedness or other direct obligations of the United States or of the State of Georgia, (4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities ofthe 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 - 13 - TOWNS COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO TIIE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30 1994 Note 2: DEPOSITS AND INVESTMENTS (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 and 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, 1994, the bank balances were $1,528,770.44. The amounts of the 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 Board or by the Board's agent in the Board's name. Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the Board'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 Board's name.) The Board's deposits are classified by risk category at June 30, 1994, as follows: Risk Category Bank Balance 1 $ 200,010.00 2 0.00 3 1 328 760.44 Total $ 1 528 770 44 CATEGORIZATION OF INVESTMENTS At June 30, 1994, the carrying amount of the Board's total investments was $292,446.52 and this entire amount is categorized as Unclassified - Deferred Compensation Plan pooled investments. The market value ofthese investments was $292,446.52. Note 3: NON-MONETARY TRANSACTIONS The Board 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 1 - Inventories - 14 - TOWNS COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30 1994 Note 4: RISK MANAGEMENT The Board has established a limited risk management program for Unemployment Compensation. Estimated claims are budgeted by management based on known claims and prior experience. During fiscal year 1994, no claims were paid. The Project Head Start Program contributes to the Unemployment Compensation Fund based on estimated costs of unemployment claims by applying a rate not to exceed 2.5% of gross wages on the first $6,000.00 of each individual's wages paid in the calendar year. Note 5: GENERAL LONG-TERM DEBT The changes in General Long-Term Debt during the fiscal year ended June 30, 1994, were as follows: Balance July I, 1993 Deductions Balance June 30, 1994 General Obligation Bonds $ 510,000.00 35 000.00 $ 475 000 00 At June 30, 1994, payments due, by fiscal year which includes principal and interest for these items: Fiscal Year Ended June 30 General Obligation Bonds 1995 1996 1997 1998 1999 2000 and thereafter $ 49,012.50 65,960.00 63,600.00 61,240.00 63,880.00 326 625.00 Total Principal and Interest $ 630 317 50 Note 6: SIGNIFICANT COMMITMENTS At June 30, 1994, the Board had encumbrances in the amount of$14,381.00 for the unperformed portion of purchase orders, contracts and other commitments for goods and services associated with the Lottery - 15 - TOWNS COUNTY BOARD OF EDUCATION EXI-IlBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATE:tv!ENTS JUNE 30 1994 Note 6: SIGNIFICANT COMMITMENTS Programs. The Georgia Department ofEducation has funding available to the Board in an amount equal to these encumbrances. The revenues and expenditures associated with these encumbrances will be recognized in the subsequent fiscal year. Encumbrances outstanding do not constitute expenditures or liabilities in the current year because these commitments will be honored during the subsequent year. These encumbrances are identified by Lottery Program as follows: Safe Schools Grant $ 14 381 00 The amounts described in this note are not reflected in the general purpose financial statements. Note 7: 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 expenditures which are disallowed under grant terms. The Board believes that such disallowances, if any, will be immaterial to its overall financial position. Note 8: DEFERRED COMPENSATION PLAN The Board offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all Board employees, permits them to defer a portion oftheir salary until future years. Participation in the plan is optional. The deferred compensation is not available to employees until termination, retirement, death or unforeseeable emergency. All amounts ofcompensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property or rights are (until paid or made available to the employee or other beneficiary) solely the property and rights of the Board subject only to the claims of the Board's general creditors. Participants' rights under the plan are equal to those of general creditors of the Board in an amount equal to the fair market value of the deferred account for each participant. It is the opinion of the Board that the Board has no liability for losses under the plan but does have the duty of due care that would be required of an ordinary prudent investor. The Board believes it is unlikely that it will use the assets to satisfy the claims of general creditors in the future. Investments are managed by the plan's trustee, Lincoln National Pension Company, under an investment option, or a combination ofinvestment options, made by the participants. - 16 - TOWNS COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30 1994 Note 9: 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 public employee retirement system (PERS). TRS provides service retirement, disability retirement and survivors benefits for its members. A member is eligible for service retirement after 30 years of creditable service, regardless of age, or after IO years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service and attainment of age 55, at a reduced benefit. Retirement benefits paid to members are equal to 2% of the average of the member's two consecutive highest paid years of service multiplied by the number of years of creditable service up to 40 years. The normal retirement pension is payable monthly for life. Options are available for distribution ofthe member's monthly pension at a reduced rate to a designated beneficiary on the member's death. Retirement benefits also include death and disability benefits. A disabled member or surviving spouse is entitled to receive annually an amount equal to the member's service retirement benefit or disability retirement, whichever is greater. The death benefit is the amount that would be payable to the member's beneficiary had the member retired on the date of death on either a service retirement allowance or a disability retirement allowance, whichever is larger. The benefit is based on the member's creditable service (minimum of IO years of service) and compensation up to the time of disability or death. Members become fully vested after ten years of service. If a member terminates with less than ten years of service, no vesting of employer contributions occurs, but the member's contributions are refunded with interest. The Board's payroll for employees covered by TRS for the year ended June 30, 1994, was $1,851,579.80; total payroll was $2,183,230.07. TRS CONTRIBUTIONS REQUIRED AND MADE Employees of the Board who are covered by TRS are required to contribute 6% of their gross earnings to TRS. The Board makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees as advised by their independent actuary. For fiscal year 1994 that rate for employer contributions was 11.81%. The interest rate assumption (rate ofretum on investments) was 7.50%. Total contributions made during fiscal year 1994 amounted to $329,767.36, of which $218,671.67 was made by the Board and $111,095.69 was made by employees. These contributions represented 11.81% (Board) and 6% (employees) of covered payroll. - 17 - TOWNS COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30 1994 Note 9: RETIREMENT PLANS TRS FUNDING STATUS AND PROGRESS The amount of the total pension benefit obligation is based on a standardized measurement established by Statement No. 5 ofthe Governmental Accounting Standards Board (GASB) that, with some exceptions, must be used by a PERS. The standardized measurement is the actuarial present value of credited projected benefits. This valuation method reflects the present value of estimated pension benefits that will be paid in future years as a result of employee services performed to date, and is adjusted for the effects of projected salary increases. A standardized measure ofthe pension benefit obligation was adopted by the GASB to enable readers of PERS financial statements to assess that PERS funding status on a going-concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among other PERS and among other employers. Total unfunded pension benefit obligation ofTRS as ofJune 30, 1993, was as follows: Total pension benefit obligation $13,912,014,000.00 Net assets available for benefits, at cost 12 821 722 000.00 Unfunded pension benefit obligation $ 1 090 292 000 00 The measurement ofthe total pension benefit obligation is based on an actuarial valuation as ofJune 30, 1993. Net assets available to pay pension benefits were valued as of the same date. TRS does not make separate measurements of assets and pension benefit obligation for individual employers. Total contributions from all employers to TRS for fiscal year ended June 30, 1994 were $521,550,000.00. The Board's contribution for the year ended June 30, 1994 of$218,671.67 was actuarially determined and represented .0419% of total contributions made by all participating employers. Ten year historical trend information is presented in the 1994 TRS Component Unit Financial Report. This information is useful in assessing TRS's accumulation of sufficient assets to pay pension benefits as they become due. PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM OF GEORGIA (PSERS) PSERS PLAN DESCRIPTION Substantially all bus drivers, maintenance, custodial, and lunchroom personnel employed by local school systems are covered by the Public School Employees Retirement System of Georgia (PSERS). All employer's contributions are made by the State of Georgia. PSERS provides service retirement, disability retirement and survivors benefits for its members. A member is eligible for normal service retirement after 10 years ofservice and attainment of age 65. A member applying for service retirement with 10 years of service and retires between the ages of 60 and 65 receives a reduced - 18 - TOWNS COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE30 1994 Note 9: RETIREMENT PLANS benefit. Monthly retirement benefits paid to members are equal to $8.00 per month multiplied by the number of years of creditable service. Options are available for distribution of the member's monthly pension at a reduced rate to a designated beneficiary on the member's death. Retirement provisions include death and disability benefits. Disability benefits are the same as if the employee had retired at age 65 as long as the employee has 15 or more years of creditable service. Death benefits are dependent upon the number ofyears of service. Ifthere are Jess than ten years of service, a lump sum refund of the employee's contributions and interest are made to the beneficiary. Ifthere are more than ten years of service, the beneficiary shall receive for life half of what the employee would have received upon retirement. Members become fully vested after ten years of service. If a member terminates with Jess than ten years of service, no vesting ofemployer contributions occurs, but the member's contributions are refunded with interest. There were 31 employees covered under PSERS for the year ended June 30, 1994. PSERS CONTRIBUTIONS REQUIRED AND MADE Covered employees are required by State statute to contribute $4. 00 a month for the nine month school year. Unlike TRS, the Board makes no contribution to PSERS. The State of Georgia is required by statute to make employer contributions actuarially determined and approved and certified by the PSERS' Board of Trustees. Total contributions from employees ofthe Board made during fiscal year 1994 amounted to $1,052.00. Total contribution for all school systems made by the State of Georgia to PSERS for fiscal year ended June 30, 1994, was $9,150,000.00. Note 10: SURETY BONDS The School Superintendent, Mr. James Kimsey, is bonded in the amount of$25,000.00 with the Fidelity and Deposit Company ofMaryland, Baltimore, Maryland, their Bond No. 3044-11-83, on which premium was paid through December 31, 1994. - 19 - ASSETS Cash and Cash Equivalents Accounts Receivable Total Assets L!ai!ILITll;S ~Q FUNQ EQUITY ~ Cash Overdraft Acoounts Payable Salaries Payable Total Liabilitifi FUND EQUITY Fund Balances Unreserved Undesignaled Total Llabilitifi and Fund Equity TQl'll!:jS !:;OUNTY !!QARQ OF !,DUCATJON QOM61NING ~ Q I ; Hl;f;T l!P;!:;~I BElll:!:lUE FL!!:lQ JUNE 30 1994 ELEMENTARY SCHOOL FOOD SERVICES FUND STATE PRESCHOOL HANDICAPPED PROGRAM AFTER-SCHOOL PROGRAM LOTTERY PROGRAMS CHAPTER1 EDUCATION OF DEPRIVED CHILDREN 17,530.56 $ 0.00 $ 0.00 15.302.24 47.325.81 $ 27,330.39 32,832.80 $ 0.00 $ 0.00 $ 47,325.81 $ 27,330.39 45,525.81 $ 1,800.00 47,325.81 $ 13,653.03 3,355.86 10,321.50 27,330.39 32,832.80 $ 32,832.80 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 0.00 $ 47,325.81 $ 27,330.39 See notes to the general purpose financial statements. -20- EXHIBIT"E" AND SECONDARY EDUCATION ACT TITLEII- EISENHOWER CHAPTER 2 MATHEMATICS BLOCK GRANT AND SCIENCE FLOW THROUGH EDUCATION INDIVIDUALS WITH DISABILITIES EDUCATION ACT TITl.E VI, B FLOW PRESCHOOL THROUGH PROGRAM PROJECT PRE-KINDERGARTEN TOTALS HEAD START PROGRAM JUNE 30, 1994 JUNE 30, 1993 0.00 0.00 $ 370.36 17,900.92 $ 35,244.29 261.00 --~2~1=.5~3 $ _ _ _~4-~794=.22~ 95,035.19 34,200.74 370.36 $---'2"'1"'.53"'$ _ _ __.;,,4,;,;;794;.aa;;22._$ 112,936.11 $ 69,445.03 261.00 261.00 $ 370.36 21.53 $ 4,794.22 $ 370.36 $ _ _~2~1=.53~$---4~,7=94=.2:2. $ 64,255.59 $ 5,526.22 10,321.50 80,103.31 $ 18,034.09 4,664.82 11,015.90 33,714.81 ---~0-=00~$ _ _ _~0=.00~$ _ _~0=.00~$ _ _~0=.00~$ _ _~0=.00~$ _ _ _ _~0-=00~$ 32,832.80 $ 35,730.22 _ _ _ _o._00_$ _____26._1..0. 0...,$ _ __.o...o.o.. $ 370.36 $ _ _ _2_1_.53..,,$ _ _ _.._.4,..,7.9.4...2=2 $ 112,936.11 $ 69,445.03 -21 - TQWNS CQUNTY ~ARQ QF ~QUCATION ~QMBININg TA~MEliI OF REVENUE EXP&NDIIl.!~ ~ CHANG~S IN FUND ~~E Pia~!& Blal/l;N\J~ F!.!t,!Q YEAR ENQEP JUNE 39 1994 ~ State Funds Federal Funds Local and Other Funds Total Revenues EXPENQITURl;S Current Instruction Support Services PupilSeNicas Improvement of Instructional Services Educational Medla Services General Administration School Administration Maintenance and Operation of Plant Student Trans~ SeNicas Central Support SeNicas Other Support Selvices Food SeNicas Operation Total Expenditures Excess d Revenues over (under) Expenditures QTHEB B~IN2 ~URQE~ Operating Transfers In Excess of Revenues and Other Financing Sources