Turner County Board of Education, Ashburn, Georgia, annual financial report for the fiscal year ended 2018 June 30 (including independent auditor's reports)

TURNER COUNTY BOARD OF EDUCATION
ASHBURN, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2018
(Including Independent Auditor's Reports)

TURNER COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S REPORT

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

EXHIBITS

BASIC FINANCIAL STATEMENTS

GOVERNMENT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET POSITION

B

STATEMENT OF ACTIVITIES

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET POSITION

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

G

STATEMENT OF FIDUCIARY NET POSITION

FIDUCIARY FUNDS

H

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION

FIDUCIARY FUNDS

I NOTES TO THE BASIC FINANCIAL STATEMENTS

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TEACHERS RETIREMENT SYSTEM OF GEORGIA
2 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM OF GEORGIA
3 SCHEDULE OF PROPORTIONATE SHARE OF THE NET OPEB LIABILITY SCHOOL OPEB FUND
4 SCHEDULE OF CONTRIBUTIONS TEACHERS RETIREMENT SYSTEM OF GEORGIA 5 SCHEDULE OF CONTRIBUTIONS SCHOOL OPEB FUND 6 NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION 7 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND

Page
i
1 2
3 4 5 6 7 8 9
31 32 33 34 35 36 37

TURNER COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I
FINANCIAL
SCHEDULES
SUPPLEMENTARY INFORMATION
8 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 9 SCHEDULE OF STATE REVENUE 10 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

Page
38 39 41

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

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 V MANAGEMENT'S CORRECTIVE ACTION FOR CURRENT YEAR FINDINGS SCHEDULE OF MANAGEMENT'S CORRECTIVE ACTION

SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
September 5, 2019

The Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education
and Superintendent and Members of the Turner County Board of Education
INDEPENDENT AUDITOR'S REPORT
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Turner County Board of Education (School District), as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise the School District's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also

includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the of the governmental activities, each major fund, and the aggregate remaining fund information of the School District as of June 30, 2018, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As described in Note 2 and 14 to the financial statements, in 2018, the School District adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, as amended by GASB Statement No. 85, Omnibus 2017. The School District restated beginning net position for the effect of GASB Statement No. 75. Our opinions are not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis and required supplementary information listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the School District's basic financial statements. The accompanying supplementary information, as listed in the table of contents, is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by Title 2 U. S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements.

The accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated September 5, 2019 on our consideration of the School District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the School District's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School District's internal control over financial reporting and compliance.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24.
Respectfully submitted,
Greg S. Griffin State Auditor

TURNER COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018
Introduction
Our discussion and analysis of the Turner County Board of Education's (School District) financial performance provides an overall review of the School District's financial activities for the fiscal year ended June 30, 2018. The intent of this discussion and analysis is to look at the School District'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 of the School District's financial performance.
In fiscal year 2015, the School District adopted the Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions and GASB Statement No. 71, Pension Transition for Contribution Made Subsequent to the Measurement Date An Amendment of GASB Statement No. 68. In the current fiscal year, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions. The adoption of these statements has a significant negative impact on the School District's government-wide financial statements. The School District's governmental fund financial statements are not affected by implementation of GASB No. 68, GASB No. 71 or GASB No. 75.
Financial Highlights
Key financial highlights for fiscal year 2018 are as follows:
In fiscal 2018, the School District adopted Governmental Accounting Standards Board (GASB) No. 75, Accounting and Financial Reporting for Other Postemployment Benefits Other than Pensions. This standard directly impacts the School District's liabilities and unrestricted net position on the government-wide financial statements and resulted in significant changes in how the School District reflects its future responsibilities and liabilities to its employees. The current financial stability of the organization is not materially impacted by the adoption of this standard.
Beginning net position was restated resulting in a decrease of $14.9 million for the implementation of GASB No. 75. This restatement is based on actuarial estimates and information is not available for the fiscal year 2017 comparative balances used throughout this discussion and analysis. See Note 14 in the Notes to the Basic Financial Statements for more information about the restatement of net position.
In total, net position decreased $13.2 million from fiscal year 2017. This decrease was due to governmental activities since the School District has no business-type activities, and reflects the impact of reporting the School District's proportionate share of the post-employment liability for the School District.
The deficit balance reflected in the unrestricted net position is due to the implementation of GASB No. 68, GASB No. 71, and GASB No. 75. Excluding the impact of reporting the School District's proportionate share of the collective net pension and OPEB liabilities, as well as the related deferred Inflows and outflows of resources, the unrestricted net position would be $2.6 million.
General revenues accounted for $5.6 million in revenue or 34.8% of all revenues. Program specific revenues in the form of charges for services, operating and capital grants and contributions accounted for $10.5 million or 65.2% of total revenues. Total revenues were $16.1 million.
i

TURNER COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018
The School District had $14.8 million in expenses related to governmental activities; only $10.5 million of these expenses were offset by program specific charges for services and grants and contributions. General revenues (primarily property and sales taxes) of $5.6 million were sufficient to provide for these programs.
Among major funds, the general fund had $15.2 million in revenues and $14.2 million in expenditures. The general fund's fund balance increased by $151.8 thousand.
Using the Basic Financial Statements
This annual report consists of several parts including management's discussion and analysis, the basic financial statements and required supplementary information. These parts are organized so the reader can understand the Turner County Board of Education as a whole, or as an entire operating entity. The basic financial statements include two levels of statements that present different views of the School District. These include the government-wide and fund financial statements.
The government-wide financial statements include the Statement of Net Position and Statement of Activities. These statements provide information about the activities of the School District, presenting both short-term and long-term information about the School District's overall financial status.
The fund financial statements focus on individual parts of the School District, reporting the School District's operation in more detail. The governmental funds statements disclose how basic services are financed in the short-term as well as what remains for future spending. The fiduciary funds statements provide information about the financial relationships in which the School District acts solely as an agent for the benefit of others. The fund financial statements reflect the School District's most significant funds. In the case of the Turner County Board of Education, the general fund is by far the most significant fund.
Reporting the School District as a Whole
Statement of Net Position and Statement of Activities
While these documents contain the large number of funds used by the School District to provide programs and activities, the view of the School District as a whole looks at all financial transactions and asks the question, "How did we do financially during fiscal year 2018?" The Statement of Net Position and the Statement of Activities answer this question. These statements include all assets and all liabilities using the accrual basis of accounting similar to the accounting used by most privatesector companies. This basis of accounting takes into account all of the current year's revenues and expenses regardless of when cash is received or paid.
These two statements report the School District's net position and changes in net position. The change in net position is important because it tells the reader whether, for the School District as a whole, the financial position of the School District has improved or diminished. The causes of this change may be the result of many factors, including those not under the School District's control, such as the property tax base, facility conditions, required educational programs and other factors.
The School District adopted the Governmental Accounting Standard's Board's (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions which will replace GASB Statement No. 45. This statement required the Board of Education to restate fiscal year 2017 at transition (fiscal year 2018) through the recognition of a beginning net OPEB liability and a beginning deferred outflow of resources for its related OPEB plan contributions made subsequent to the measurement date of the beginning net OPEB liability.
ii

TURNER COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018
The OPEB liability discloses the School District's proportionate share of the collective net OPEB liability related to providing postemployment benefits to its employees. The School District participates in Georgia's School Personnel Post Employment Health Benefit Plan. As a result of implementation of GASB No. 75, the School District is presenting a more significant deficit balance in unrestricted net position following fiscal year 2015's implementation of GASB No. 68 and GASB No.71. This is a reflection of the School District's future responsibility and liability to its employees for their health benefits when those employees retire. The School District makes the required contributions to the plan to ensure sufficient resources are available to make postemployment benefit payments.
Contributions to the OPEB plan fund current expenditures of the plan for active employees, current administrative fees, and a contribution into the OPEB plan for retirees. The contribution is determined by the Georgia State Health Benefit Plan administrators, not the School District.
The Statement of Net Position and the Statement of Activities reflects the School District's governmental activities.
Reporting the School District's Most Significant Funds
Fund Financial Statements
Fund financial statements provide detailed information about the School District's major funds. The School District uses many funds to account for a multitude of financial transactions. However, the fund financial statements focus on the School District's most significant funds. The School District's major governmental funds are the general fund and the capital projects fund.
Governmental Funds Most of the School District's activities are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end available for spending in future periods. These funds are reported using the modified accrual method of accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the School District's general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The relationship (or differences) between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds are reconciled in the financial statements.
Fiduciary Funds The School District is the trustee, or fiduciary, for assets that belong to others, such as school clubs and organizations within the principal's accounts. The School District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The School District excludes these activities from the governmentwide financial statements because it cannot use these assets to finance its operations.
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TURNER COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018
Financial Analysis of the School District as a Whole
The perspective of the Statement of Net Position is of the School District as a whole. Table 1 provides a summary of the School District's net position for fiscal year 2018 as compared to net position for fiscal year 2017.
Table 1 Net Position

Assets Current and Other Assets Capital Assets, Net

Governmental Activities

Fiscal

Fiscal

Year 2018

Year 2017 (1)

$

5,098,362 $ 4,804,067

12,551,956

11,884,628

Total Assets

17,650,318

16,688,695

Deferred Outflows of Resources Related to Pensions/OPEB Plans

2,399,131

3,648,151

Liabilities Current and Other Liabilities Long-Term Liabilities Net Pension/OPEB Liabilities

1,845,383 468,219
24,982,184

1,490,996 682,544
15,486,953

Total Liabilities

27,295,786

17,660,493

Deferred Inflows of Resources Related to Pensions/OPEB Plans

4,679,979

1,045,430

Net Position Net Investment in Capital Assets Restricted Unrestricted (Deficit)

11,988,194 744,310
(24,658,820)

11,202,084 814,142
(10,385,303)

Total Net Position

$ (11,926,316) $ 1,630,923

Total net position decreased by $13.2 million.
(1) Fiscal year 2017 balances do not reflect the effects on the restatement of net position. See Note 14 in the Notes to the Basic Financial Statements for additional information.

iv

TURNER COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018

Table 2 shows the changes in net position for fiscal year 2018 compared to the changes in net position for fiscal year 2017.

Table 2 Change in Net Position

Revenues
Program Revenues: Charges for Services Operating Grants and Contributions

Governmental Activities

Fiscal

Fiscal

Year 2018

Year 2017 (1)

$

213,386

10,302,527

$

175,136

10,633,820

Total Program Revenues
General Revenues: Taxes Property Taxes For Maintenance and Operations For Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects and Debt Services Other Taxes Grant and Contributions Not Restricted to Specific Programs Investment Earnings Miscellaneous

10,515,913
3,538,058
961,335 6,448
781,229 5,571
326,637

10,808,956
3,509,817 20,816
898,516 40,921
562,593 4,389
459,451

Total General Revenues

5,619,278

5,496,503

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 Community Services Food Services
Interest on Short-Term and Long-Term Debt

16,135,191
8,110,298
561,421 533,925 216,098 405,067 932,089 283,320 1,439,967 794,365
76,473 218,328
236,929 7,062
975,804 33,084

16,305,459
8,131,794
487,745 613,468 198,624 314,017 590,364 370,437 1,531,195 754,302
74,174 236,166
302,233 9,223
996,636 47,973

Total Expenses

14,824,230

14,658,351

Change in Net Position

$ 1,310,961

$ 1,647,108

Net position decreased from fiscal year 2017 to fiscal year 2018 by 336.1 thousand.

(1) Fiscal year 2017 balances do not reflect the effects on the restatement of net position. See Note 14 in the Notes to the Basic Financial Statements for additional information.
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TURNER COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018

Governmental Activities
Instruction comprises 54.7% of governmental program expenses.
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 of services and the net cost of services. It identifies the cost of these services supported by tax revenue and unrestricted State entitlements.

Table 3 Governmental Activities

Total Cost of Services

Fiscal

Fiscal

Year 2018

Year 2017(1)

Net Cost of Services

Fiscal

Fiscal

Year 2018

Year 2017(1)

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

Community Services

Food Services

Interest on Short-Term and Long-Term Debt

8,110,298 $
561,421 533,925 216,098 405,067 932,089 283,320 1,439,967 794,365
76,473 218,328
236,929 7,062
975,804 33,084

8,131,794 $
487,745 613,468 198,624 314,017 590,364 370,437 1,531,195 754,302
74,174 236,166
302,233 9,223
996,636 47,973

977,305 $
416,600 329,173
66,843 (41,147) 426,161 280,354 1,090,395 452,508 74,563 173,247
92,843 (34,639) (28,972) 33,084

628,024
341,365 471,403
36,189 (172,091)
78,311 368,700 1,143,650 440,589
74,174 145,558
302,233 (23,823) (32,861) 47,973

Total expenses

$ 14,824,230 $ 14,658,351 $ 4,308,318 $ 3,849,394

(1) Fiscal year 2017 balances do not reflect the effects on the restatement of net position. See Note 14 in the Notes to the Basic Financial Statements for additional information.

Although program revenues make up 65.2% of the revenues, the School District is still dependent upon tax revenues for governmental activities. For 2018, 31.3% of instruction activities are supported through taxes and other general revenues; for all governmental activities, general revenue support is 29.1%.
The School District's Funds
The School District's governmental funds are accounted for using the modified accrual basis of accounting. Total governmental funds had revenues of $16.1 million and expenditures of $16.2 million. The governmental funds had a slight decrease in fund balance of $68.2 thousand.

vi

TURNER COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018
General Fund Budgeting Highlights
The School District's budget is prepared according to Georgia law. The most significant budgeted fund is the general fund.
The School District prepares a budget based on the School District's guidelines. The budgeting systems are designed to tightly control total school and department budgets but provide flexibility for decision making.
For the general fund, actual revenues of $15.2 million was less than the final budget of $15.3 million. Actual expenditures of $14.2 million was less than the final budget of $15.2 million.
Capital Assets and Debt Administration
Capital Assets
At the end of fiscal year 2018, the School District had $12.6 million invested in capital assets, all in governmental activities. Table 4 shows balances net of accumulated depreciation for fiscal year 2018 compared to balances for fiscal year 2017.
Table 4 Capital Assets (Net of Depreciation)

Land Construction in Progress Buildings and Improvements Equipment Land Improvements

Governmental Activities

Fiscal

Fiscal

Year 2018

Year 2017

$

565,807 $

565,807

1,148,479

23,644

10,433,125

10,785,786

188,787

251,560

215,758

257,831

Total Debt Administration

$ 12,551,956 $ 11,884,628

An energy efficiency lease agreement was executed in fiscal year 2010 by and between the School District, the lessee, and Equipment Capital Corp., the lessor. The agreement authorized the borrowing of $1.9 million for the purchase of energy efficiency equipment, machinery, supplies, building modifications and other energy saving items. Payments of the lease are from the capital projects fund.

vii

TURNER COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018

At June 30, 2018, the School District had $468.2 thousand in total debt outstanding with $227.3 thousand due within one year. Table 5 summarizes debt outstanding at June 30, 2018 and 2017.

Table 5 Debt at June 30

Governmental Activities

Fiscal

Fiscal

Year 2018

Year 2017

Current Issues

Energy Efficiency Leases $ 468,219 $ 682,544

The following issues are expected to have a significant effect on the financial positions or results of operations:

State and Local Economy The State of Georgia economic conditions are improving since the General Assembly has eliminated austerity reductions at the end of the current fiscal year. But, the School District does anticipate financial challenges due to increases for retirement and health insurance costs for employees. Even with limited financial resources, the School District is optimistic about their ability to maximize all of the financial resources to provide a quality education for the students in Turner County.

Contacting the School District's Financial Management

This financial report is designed to provide our citizens, taxpayers, investors, and creditors with a general overview of the School District's finances and to show the School District's accountability for the money it receives. If you have questions about this report or need additional information, contact Elizabeth Walker, CFO, at the Turner County Board of Education, 423 North Cleveland Street, Ashburn, GA. You may also email any questions to ewalker@turner.k12.ga.us, or visit our website at www.turner.k12.ga.us.

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TURNER COUNTY BOARD OF EDUCATION

TURNER COUNTY BOARD OF EDUCATION STATEMENT OF NET POSITION JUNE 30, 2018
ASSETS
Cash and Cash Equivalents Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation)
Total Assets
DEFERRED OUTFLOWS OF RESOURCES
Related to Defined Benefit Pension Plans Related to OPEB Liability
Total Deferred Outflows of Resources
LIABILITIES
Accounts Payable Salaries and Benefits Payable Interest Payable Retainage Payable Deposits and Unearned Revenues Net Pension Liability Net OPEB Liability Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
DEFERRED INFLOWS OF RESOURCES
Related to Defined Benefit Pension Plans Related to OPEB Liability
Total Deferred Inflows of Resources
NET POSITION
Net Investment in Capital Assets Restricted for
Continuation of Federal Programs Capital Projects Unrestricted (Deficit)
Total Net Position

EXHIBIT "A"

GOVERNMENTAL ACTIVITIES

$

3,571,684.71

153,278.35 1,039,819.17
304,822.54 357.41
28,399.33 1,714,286.10 10,837,669.88

17,650,317.49

1,939,946.13 459,185.00
2,399,131.13

326,185.96 1,328,789.80
17,643.68 95,543.95 77,220.00 11,976,558.00 13,005,626.00
227,254.64 240,964.00
27,295,786.03

2,306,281.00 2,373,698.00
4,679,979.00

11,988,193.39
345,431.67 398,878.50 (24,658,819.97)

$ (11,926,316.41)

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

- 1 -

TURNER COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2018

EXHIBIT "B"

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 Community Services Food Services Interest on Short-Term and Long-Term Debt
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Sales Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Change in Net Position
Net Position - Beginning of Year (Restated)

EXPENSES

PROGRAM REVENUES

OPERATING

CHARGES FOR

GRANTS AND

SERVICES

CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET POSITION

$ 8,110,298.18 $
561,421.09 533,924.97 216,098.25 405,066.73 932,089.00 283,319.80 1,439,966.39 794,365.23
76,473.31 218,328.15
236,929.33 7,061.58
975,804.23 33,084.21
$ 14,824,230.45 $

- $
1,475.00 -
144,086.75 41,700.23 26,124.00 -
213,385.98 $

7,132,993.03 $
144,821.30 204,752.21 149,255.00 446,213.94 505,927.68
2,966.24 348,096.22 341,857.15
1,910.54 45,081.65
978,652.00 -
10,302,526.96

(977,305.15)
(416,599.79) (329,172.76)
(66,843.25) 41,147.21 (426,161.32) (280,353.56) (1,090,395.17) (452,508.08) (74,562.77) (173,246.50)
(92,842.58) 34,638.65 28,971.77 (33,084.21)
(4,308,317.51)

3,538,058.21
961,335.19 6,447.65
781,229.00 5,570.62
326,637.38
5,619,278.05
1,310,960.54
(13,237,276.95)

Net Position - End of Year

$ (11,926,316.41)

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

- 2 -

TURNER COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2018

EXHIBIT "C"

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

GENERAL FUND

CAPITAL PROJECTS
FUND

TOTAL

$ 3,213,278.85 $
79,493.34 1,039,819.17
304,822.54 357.41
28,399.33

358,405.86 $ 3,571,684.71

73,785.01 -

153,278.35 1,039,819.17
304,822.54 357.41
28,399.33

Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Retainage Payable Deposits and Unearned Revenue
Total Liabilities
FUND BALANCES
Nonspendable Restricted Assigned Unassigned
Total Fund Balances

$ 4,666,170.64 $

432,190.87 $ 5,098,361.51

$

310,517.27 $

1,328,789.80

-

77,220.00

1,716,527.07

15,668.69 $ -
95,543.95 -

326,185.96 1,328,789.80
95,543.95 77,220.00

111,212.64

1,827,739.71

28,399.33 317,032.34
97,709.29 2,506,502.61
2,949,643.57

320,978.23
-
320,978.23

28,399.33 638,010.57
97,709.29 2,506,502.61
3,270,621.80

Total Liabilities and Fund Balances

$ 4,666,170.64 $

432,190.87 $ 5,098,361.51

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

- 3 -

TURNER COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION JUNE 30, 2018

EXHIBIT "D"

Total fund balances - governmental funds (Exhibit "C")
Amounts reported for governmental activities in the Statement of Net Position are different because:
Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds.
Land Construction in progress Buildings and improvements Equipment Land improvements Accumulated depreciation
Some liabilities are not due and payable in the current period and, therefore, are not reported in the funds.
Net pension liability Net OPEB liability
Deferred outflows and inflows of resources related to pensions and OPEB are applicable to future periods and, therefore, are not reported in the funds.
Related to pensions Related to OPEB
Long-term liabilities, and related accrued interest, are not due and payable in the current period and therefore are not reported in the funds.
Accrued interest payable Capital leases payable
Net position of governmental activities (Exhibit "A")

$ 3,270,621.80

$

565,807.00

1,148,479.10

17,731,904.00

2,285,285.50

2,117,349.00

(11,296,868.62)

12,551,955.98

$ (11,976,558.00) (13,005,626.00)

(24,982,184.00)

$

(366,334.87)

(1,914,513.00)

(2,280,847.87)

$

(17,643.68)

(468,218.64)

(485,862.32)

$ (11,926,316.41)

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

- 4 -

TURNER COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2018

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 Community Services Food Services Operation
Capital Outlay Debt Services
Principal Dues and Fees Interest
Total Expenditures
Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Transfers In Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning

GENERAL FUND

CAPITAL PROJECTS
FUND

TOTAL

$ 3,538,058.21 $ 6,447.65
8,679,188.55 2,399,319.71
213,385.98 4,489.94
326,637.38
15,167,527.42

- $ 961,335.19
1,080.68 -

3,538,058.21 967,782.84
8,679,188.55 2,399,319.71
213,385.98 5,570.62
326,637.38

962,415.87 16,129,943.29

7,915,144.24
536,331.02 564,424.93 221,835.98 394,570.30 965,352.15 291,699.15 1,051,816.24 732,105.93
80,088.70 184,467.61 235,699.31
7,061.58 975,085.88
-
-
14,155,683.02
1,011,844.40

232,771.71
3,469.55 -
3,558.92 22,060.01
997.74 2,844.08 404,688.02 18,616.67
41,926.50
1,054,785.69
214,325.26 1,225.00
41,174.74
2,042,443.89
(1,080,028.02)

8,147,915.95
539,800.57 564,424.93 225,394.90 416,630.31 966,349.89 294,543.23 1,456,504.26 750,722.60
80,088.70 226,394.11 235,699.31
7,061.58 975,085.88 1,054,785.69
214,325.26 1,225.00
41,174.74
16,198,126.91
(68,183.62)

(860,000.00)
(860,000.00) 151,844.40
2,797,799.17

860,000.00 -
860,000.00 (220,028.02)
541,006.25

860,000.00 (860,000.00)
(68,183.62)
3,338,805.42

Fund Balances - Ending

$ 2,949,643.57 $

320,978.23 $ 3,270,621.80

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

- 5 -

TURNER 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, 2018

EXHIBIT "F"

Net change in fund balances total governmental funds (Exhibit "E")
Amounts reported for governmental activities in the Statement of Activities are different because:
Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of capital assets is allocated over their estimated useful lives as depreciation expense.
Capital outlay Depreciation expense
The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, donations, and disposals) is to decrease net position.
Repayment of long-term debt is reported as an expenditure in governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Position. In the current year, these amounts consist of:
Capital lease payments
District pension and OPEB contributions are reported as expenditures in the governmental funds when made. However, they are reported as deferred outflows of resources in the Statement of Net Position because the reported net pension and OPEB liabilities are measured a year before the District's report date. Pension and OPEB expenses, which is the change in the net pension and OPEB liabilities adjusted for changes in deferred outflows and inflows of resources related to pensions and OPEB, are reported in the Statement of Activities.
Pension expense OPEB expense
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.
Accrued interest

$ (68,183.62)

$ 1,157,996.37 (481,168.62)

676,827.75

(9,500.00)

214,325.26

$ 541,339.62 (51,939.00)

489,400.62

8,090.53

Change in net position of governmental activities (Exhibit "B")

$ 1,310,960.54

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

- 6 -

ASSETS Cash and Cash Equivalents Investments Receivable, Net
State Other
Total Assets LIABILITIES Cash Overdraft Accounts Payable Funds Held for Others
Total Liabilities NET POSITION Held in Trust for Private Purpose

TURNER COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUNDS JUNE 30, 2018

EXHIBIT "G"

PRIVATE PURPOSE TRUSTS

AGENCY FUNDS

$

499.60 $

-

25,000.00

-

-

14,569.80

-

14,127.10

$ 25,499.60 $ 28,696.90

$ 20,118.28 111.65
8,466.97

$ 28,696.90

$ 25,499.60

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

- 7 -

TURNER COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FIDUCIARY FUNDS YEAR ENDED JUNE 30, 2018
ADDITIONS Investment Earnings Interest
DEDUCTIONS Other Deductions Change in Net Position
Net Position - Beginning
Net Position - Ending

EXHIBIT "H"

PRIVATE PURPOSE TRUSTS

$

249.99

249.99 25,249.61
$ 25,499.60

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

- 8 -

TURNER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2018

EXHIBIT "I"

NOTE 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Turner County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a board elected by the voters and a Superintendent appointed by the Board. The School District 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
The accompanying financial statements of the School District have been prepared in conformity with generally accepted accounting principles (GAAP) as prescribed by the Governmental Accounting Standards Board (GASB). GASB is the accepted standard-setting body for governmental accounting and financial reporting principles. The most significant of the School District's accounting policies are described below.
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the government-wide financial statements, fund financial statements and notes to the basic financial statements. The government-wide statements focus on the School District as a whole, while the fund financial statements focus on major funds. Each presentation provides valuable information that can be analyzed and compared between years and between governments to enhance the information's usefulness.
GOVERNMENT-WIDE STATEMENTS:
The Statement of Net Position and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Net Position presents the School District's non-fiduciary assets and liabilities, with the difference reported as net position. Net position is reported in three categories as follows:
1. Net investment in capital assets consists of the School District's total investment in capital assets, net of accumulated depreciation, and reduced by outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of net investment in capital assets.
2. Restricted net position consists of resources for which the School District is legally or contractually obligated to spend in accordance with restrictions imposed by external third parties or imposed by law through constitutional provisions or enabling legislation.
3. Unrestricted net position consists of resources not meeting the definition of the two preceding categories. Unrestricted net position often has constraints on resources imposed by management which can be removed or modified.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.

- 9 -

TURNER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2018

EXHIBIT "I"

Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
FUND FINANCIAL STATEMENTS
The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate financial statements are presented for governmental and fiduciary funds. 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:
The general fund is the School District's primary operating fund. It accounts for and reports all financial resources not accounted for and reported in another fund.
The capital projects fund accounts for and reports financial resources including Education Special Purpose Local Option Sales Tax (ESPLOST) that are restricted, committed or assigned for capital outlay expenditures, including the acquisition or construction of capital facilities and other capital assets.
The School District reports the following fiduciary fund types:
Private purpose trust funds are used to report all trust arrangements, other than those properly reported elsewhere, in which principal and income benefit individuals, private organizations or other governments.
Agency funds are used to report resources held by the School District in a purely custodial capacity (assets equal liabilities) and do not involve measurement of results of operations.
BASIS OF ACCOUNTING
The basis of accounting determines when transactions are reported on the financial statements. The government-wide and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants, and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. The School District considers all intergovernmental revenues to be available if they are collected within 120 days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general longterm debt, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources.
- 10 -

TURNER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2018

EXHIBIT "I"

The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
NEW ACCOUNTING PRONOUNCEMENTS
In fiscal year 2018, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions. This statement establishes standards for recognizing and measuring liabilities, deferred outflows of resources, deferred inflows of resources, and expense/expenditures. For defined benefit OPEB, this statement identifies the methods and assumptions that are required to be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service. Note disclosure and required supplementary information requirements about defined benefit OPEB also are addressed. The adoption of this statement has a significant impact on the School District's financial statements. As noted in the Restatement of Net Position note disclosure, the School District restated beginning net position for the cumulative effect of this accounting change.
In fiscal year 2018, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 81, Irrevocable Split-Interest Agreements. This statement requires that a government that receives resources pursuant to an irrevocable split-interest agreement recognize assets, liabilities, and deferred inflows of resources at the inception of the agreement. Furthermore, this statement requires that a government recognize assets representing its beneficial interests in irrevocable split-interest agreements that are administered by a third party, if the government controls the present service capacity of the beneficial interests. This statement requires that a government recognize revenue when the resources become applicable to the reporting period. The adoption of this statement does not have a significant impact on the School District's financial statements.
In fiscal year 2018, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 85, Omnibus 2017. The objective of this statement is to address practice issues that have been identified during implementation and application of certain GASB Statements. This statement addresses a variety of topics including issues related to blending component units, goodwill, fair value measurement and application, and postemployment benefits (pensions and other postemployment benefits [OPEB]). The adoption of this statement does not have a significant impact on the School District's financial statements.
In fiscal year 2018, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 86, Certain Debt Extinguishment Issues. The primary objective of this statement is to improve consistency in accounting and financial reporting for in-substance defeasance of debt by providing guidance for transactions in which cash and other monetary assets acquired with only existing resources--resources other than the proceeds of refunding debt--are placed in an irrevocable trust for the sole purpose of extinguishing debt. This statement also improves accounting and financial reporting for prepaid insurance on debt that is extinguished and notes to financial statements for debt that is defeased in substance. The adoption of this statement does not have a significant impact on the School District's financial statements.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand, demand deposits, investments in the State of Georgia local government investment pool (Georgia Fund 1) and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated (O.C.G.A.) 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations.
- 11 -

TURNER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2018

EXHIBIT "I"

INVESTMENTS
The School District can invest its funds as permitted by O.C.G.A. 36-83-4. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity.
Investments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. All other investments are reported at fair value.
For accounting purposes, certificates of deposit are classified as investments if they have an original maturity greater than three months when acquired.
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.
INVENTORIES
Food Inventories
On the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (calculated on the first-in, first-out basis). 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
On the government-wide financial statements, capital assets are recorded 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 the acquisition value on the date donated. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. The School District does not capitalize book collections or works of art.
Capital acquisition and construction are recorded as expenditures in the governmental fund financial statements at the time of purchase (including ancillary charges), and the related assets are reported as capital assets in the governmental activities column in the government-wide financial statements.
Depreciation is computed using the straight-line for all assets, except land, and is used to allocate the actual or estimated historical cost of capital assets over estimated useful lives.

- 12 -

TURNER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2018

EXHIBIT "I"

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

Capitalization Policy

Estimated Useful Life

Land

Land Improvements

$

Buildings and Improvements $

Equipment

$

Construction in Progress

$

Intangible Assets

$

Any amount 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00

DEFERRED OUTFLOWS/INFLOWS OF RESOURCES

N/A 15 to 40 years 25 to 60 years
5 to 20 years N/A
10 to 50 years

In addition to assets, the statement of financial position will report a separate section for deferred outflows of resources. This separate financial statement element, represents a consumption of resources that applies to a future period(s) and therefore will not be recognized as an outflow of resources (expense/expenditure) until then.

In addition to liabilities, the statement of financial position will report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of resources that applies to a future period(s) and therefore will not be recognized as an inflow of resources (revenue) until that time.
PENSIONS

For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the pension plan's fiduciary net position and additions to/deductions from the plan's fiduciary net position have been determined on the same basis as they are reported by the plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (OPEB)

For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the Georgia School Employees Postemployment Benefit Fund (School OPEB Fund) and additions to/deductions from School OPEB Fund fiduciary net position have been determined on the same basis as they are reported by School OPEB Fund. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
FUND BALANCES

Fund balance for governmental funds is reported in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent.

The School District's fund balances are classified as follows:

Nonspendable consists of resources that cannot be spent either because they are in a nonspendable form or because they are legally or contractually required to be maintained intact.

Restricted consists of resources that can be used only for specific purposes pursuant constraints either (1) externally imposed by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation.

- 13 -

TURNER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2018

EXHIBIT "I"

Committed consists of resources that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board. The Board is the School District's highest level of decisionmaking authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Committed fund balance also should incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements.

Assigned consists of resources constrained by the School District's intent to be used for specific purposes, but are neither restricted nor committed. The intent should be expressed by (1) the Board or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes.

Unassigned consists of resources within the general fund not meeting the definition of any aforementioned category. The general fund should be the only fund that reports a positive unassigned fund balance amount. In other governmental funds, it may be necessary to report a negative unassigned fund balance.
USE OF ESTIMATES

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.
PROPERTY TAXES

The Turner County Board of Commissioners adopted the property tax levy for the 2017 tax digest year (calendar year) on September 5, 2017 (levy date) based on property values as of January 1, 2017. Taxes were due on December 20, 2017 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2017 tax digest are reported as revenue in the governmental funds for fiscal year 2018. The Turner 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, 2018, for maintenance and operations amounted to $3,347,987.01.

The tax millage rate levied for the 2017 tax year (calendar year) for the School District was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

15.985 mills

Additionally, Title Ad Valorem Tax revenues, at the fund reporting level, amounted to $190,071.20 during fiscal year ended June 30, 2018.
SALES TAXES
Education Special Purpose Local Option Sales Tax (ESPLOST), at the fund reporting level, during the year amounted to $961,335.19 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.
NOTE 3: BUDGETARY DATA
The budget is a complete financial plan for the School District's fiscal year, and is based upon careful estimates of expenditures together with probable funding sources. The budget is legally adopted each year for the general and capital projects funds. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds, except the various school activity (principal) accounts is prepared and adopted by fund and function. The legal level of

- 14 -

TURNER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2018

EXHIBIT "I"

budgetary control was established by the Board at the aggregate fund level. The budget for the general fund was prepared in accordance with accounting principles generally accepted in the United States of America.
The budgetary process begins with the School District's administration presenting an initial budget for the Board's review. The administration makes revisions as necessary based on the Board's guidelines, and a tentative budget is approved. After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper of general circulation in the locality. At the next regularly scheduled meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. The approved budget is then submitted, in accordance with provisions of O.C.G.A. 20-2-167(c), to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.
See the General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual in the Supplementary Information Section for a detail of any over/under expenditures during the fiscal year under review.
NOTE 4: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS
O.C.G.A. 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110% of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110% of the daily pool balance. At June 30, 2018, $102,467.81 of deposits were not secured by surety bond, insurance or collateral as specified above. The School District is working with the affected financial institutions to ensure appropriate levels of collateral are maintained for all of the School District's deposits.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.

- 15 -

TURNER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2018

EXHIBIT "I"

CATEGORIZATION OF DEPOSITS

Custodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2018, the School District had deposits with a carrying amount of $3,597,184.31, which includes $25,000.00 in Certificates of Deposits that are reported as investments, and a bank balance of $4,759,219.90. The bank balances insured by Federal depository insurance were $529,607.14 and the bank balances collateralized with securities held by the pledging financial institution in the School District's name were $4,127,144.95.

At June 30, 2018, $102,467.81 of the School District's bank balance was exposed to custodial credit risk as follows:

Uninsured and Uncollateralized

$ 102,467.81

Uninsured with collateral held by the pledging

financial institution

-

Uninsured with collateral held by the pledging

financial institution's trust department or

agent but not in the School District's name

-

Total

$ 102,467.81

Reconciliation of cash and cash equivalents balances to carrying value of deposits:

Cash and cash equivalents Statement of Net Position Statement of Fiduciary Net Position

$ 3,571,684.71 499.60

Total cash and cash equivalents

3,572,184.31

Add: Deposits with original maturity of three months or more reported as investments

25,000.00

Total carrying value of deposits - June 30, 2018

$ 3,597,184.31

- 16 -

TURNER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2018

EXHIBIT "I"

NOTE 5: CAPITAL ASSETS

The following is a summary of changes in the capital assets for governmental activities during the fiscal year:

Balances July 1, 2017

Increases

Decreases

Balances June 30, 2018

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

$ 565,807.00 $

- $

- $ 565,807.00

23,643.73

1,148,479.10

23,643.73

1,148,479.10

Total Capital Assets Not Being Depreciated

589,450.73

1,148,479.10

23,643.73

1,714,286.10

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements
Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements

17,731,904.00 2,278,633.50 2,100,840.00
6,946,118.00 2,027,073.00 1,843,009.00

16,652.00 16,509.00
352,661.61 69,925.12 58,581.89

10,000.00
-

17,731,904.00 2,285,285.50 2,117,349.00

500.00
-

7,298,779.61 2,096,498.12 1,901,590.89

Total Capital Assets, Being Depreciated, Net

11,295,177.50

(448,007.62)

9,500.00

10,837,669.88

Governmental Activity Capital Assets - Net

$ 11,884,628.23 $ 700,471.48 $

33,143.73 $ 12,551,955.98

Current year depreciation expense by function is as follows:

Instruction

Support Services

Pupil Services

$

General Administration

Maintenance and Operation of Plant

Student Transportation Services

Other Support Services

Food Services

43,424.35 2,128.21
17,533.66 50,911.85
1,407.09

$ 360,187.22
115,405.16 5,576.24

$ 481,168.62

NOTE 6: INTERFUND TRANSFERS INTERFUND TRANSFERS Interfund transfers for the year ended June 30, 2018, consisted of the following:

Transfers to

Transfers from General Fund

Capital Projects Fund $ 860,000.00

Transfers are used to move property tax revenues collected by the general fund to the capital projects fund as supplemental funding source for capital construction projects.

- 17 -

TURNER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2018

EXHIBIT "I"

NOTE 7: LONG-TERM LIABILITIES The changes in long-term liabilities during the fiscal year for governmental activities, were as follows:

Balance July 1, 2017

Governmental Activities

Balance

Additions

Deductions June 30, 2018

Due Within One Year

Energy Efficiency Leases $ 682,543.90 $

- $ 214,325.26 $ 468,218.64 $ 227,254.64

OBLIGATIONS UNDER ENERGY EFFICIENCY LEASES

An energy efficiency lease agreement dated April 27, 2010 was executed by and between the School District, the lessee, and Equipment Capital Corp., the lessor. The agreement authorized the borrowing of $1,926,938.00 for the purchase of energy efficiency equipment, machinery, supplies, building modifications and other energy saving items. Payments of the lease shall be made from the School District's capital projects fund.

The following assets were acquired through the energy efficiency capital lease and are reflected in the capital asset note at fiscal year-end:

Governmental Activities

Buildings and Improvements Less: Accumulated Depreciation

$ 1,926,938.00 578,081.40

$ 1,348,856.60

Debt currently outstanding is as follows:

Purpose

Interest Rate Issue Date

Maturity Date

Amount Issued

Amount Outstanding

Equipment Capital Corp.

5.49%

4/27/2010

11/15/2019 $ 1,926,938.00 $ 468,218.64

The following is a schedule of total energy efficiency lease payments:

Fiscal Year Ended June 30:
2019 2020

Principal
$ 227,254.64 $ 240,964.00

Interest
28,245.36 14,536.00

Total Principal and Interest $ 468,218.64 $

42,781.36

- 18 -

TURNER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2018

EXHIBIT "I"

NOTE 8: RISK MANAGEMENT INSURANCE Commercial Insurance

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; and natural disasters. Except as described below, the School District carries commercial insurance for these risks. Settled claims resulting from these insured risks have not exceed commercial insurance coverage in any of the past three fiscal years.

The School District has elected to self-insure for losses related to natural disasters. The School District has not experienced any losses related to this risk in the past three years.
UNEMPLOYMENT COMPENSATION

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 of that loss can be reasonably estimated.

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

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

2017 $

-

$ 6,270.00 $ 6,270.00 $

-

2018 $

-

$ 3,102.00 $ 3,102.00 $

-

SURETY BOND

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

Position Covered

Amount

Superintendent Special Education Director High School Principal Elementary Principal Assistant Principals

$ 100,000.00

$

10,000.00

$

6,000.00

$

6,000.00

$

6,000.00

- 19 -

TURNER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2018

EXHIBIT "I"

NOTE 9: FUND BALANCE CLASSIFICATION DETAILS

The School District's financial statements include the following amounts presented in the aggregate at June 30, 2018:

Nonspendable Inventories
Restricted Continuation of Federal Programs $ Capital Projects
Assigned School Activity Accounts
Unassigned

$ 28,399.33

317,032.34 320,978.23

638,010.57

97,709.29 2,506,502.61

Fund Balance, June 30, 2018

$ 3,270,621.80

When multiple categories of fund balance are available for expenditure, the School District will start with the most restricted category and spend those funds first before moving down to the next category with available funds.

It is the goal of the School District to achieve and maintain unassigned, assigned, and committed fund balances in the general fund at fiscal year end of not less than 5% of revenues, not to exceed 15% of the total budget of the subsequent fiscal year, net of any committed reserve balance for capital expenditures and assigned fund balances "to cover unanticipated deficiencies in revenue or unanticipated expenditures", in compliance with O.C.G.A. 20-2-167(a)5. If the total of the unassigned, assigned, and committed fund balances (net of the previous allowances) at fiscal yearend falls below the goal, the School District shall develop a restoration plan to achieve and maintain the minimum fund balance.
NOTE 10: SIGNIFICANT COMMITMENTS
COMMITMENTS UNDER CONSTRUCTION CONTRACTS

The following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2018, together with funding available:

Project

Unearned Executed Contracts (1)

Payments through June 30, 2018 (2)

Funding Available From State (1)

Turner County Elementary Project #19LW-742-001 $ 1,032,784.31 $ 1,054,785.69 $ 1,393,560.00

(1) The amounts described are not reflected in the basic financial statements.
(2) Payments include contracts and retainages payable at year end.
NOTE 11: SIGNIFICANT CONTINGENT LIABILITIES FEDERAL GRANTS
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. Any disallowances resulting from the grantor audit may become a liability of the School District. However, the School District believes that such disallowances, if any, will be immaterial to its overall financial position.

- 20 -

TURNER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2018

EXHIBIT "I"

LITIGATION
The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to have a material adverse effect on the financial condition of the School District.
NOTE 12: OTHER POST-EMPLOYMENT BENEFITS (OPEB)
GEORGIA SCHOOL PERSONNEL POST-EMPLOYMENT HEALTH BENEFIT FUND
Plan Description: Certified teachers and non-certified public school employees of the School District as defined in 20-2-875 of the Official Code of Georgia Annotated (O.C.G.A.) are provided OPEB through the School OPEB Fund - a cost-sharing multiple-employer defined benefit postemployment healthcare plan, reported as an employee trust fund and administered by a Board of Community Health (Board). Title 20 of the O.C.G.A. assigns the authority to establish and amend the benefit terms of the group health plan to the Board.
Benefits Provided: The School OPEB Fund provides healthcare benefits for retirees and their dependents due under the group health plan for public school teachers, including librarians, other certified employees of public schools, regional educational service agencies and non-certified public school employees. Retiree medical eligibility is attained when an employee retires and is immediately eligible to draw a retirement annuity from Employees' Retirement System (ERS), Georgia Judicial Retirement System (JRS), Legislative Retirement System (LRS), Teachers Retirement System (TRS) or Public School Employees Retirement System (PSERS). If elected, dependent coverage starts on the same day as retiree coverage. Medicare-eligible retirees are offered Standard and Premium Medicare Advantage plan options. Non-Medicare eligible retiree plan options include Health Reimbursement Arrangement (HRA), Health Maintenance Organization (HMO) and a High Deductible Health Plan (HDHP). The School OPEB Fund also pays for administrative expenses of the fund. By law, no other use of the assets of the School OPEB Fund is permitted.
Contributions: As established by the Board, the School OPEB Fund is substantially funded on a payas-you-go basis; that is, annual cost of providing benefits will be financed in the same year as claims occur. Contributions to the School OPEB Fund from the School District were $455,381.00 for the year ended June 30, 2018. Active employees are not required to contribute to the School OPEB Fund.
OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB
At June 30, 2018, the School District reported a liability of $13,005,626.00 for its proportionate share of the net OPEB liability. The net OPEB liability was measured as of June 30, 2017. The total OPEB liability used to calculate the net OPEB liability was based on an actuarial valuation as of June 30, 2016. An expected total OPEB liability as of June 30, 2017 was determined using standard roll-forward techniques. The School District's proportion of the net OPEB liability was actuarially determined based on employer contributions during the fiscal year ended June 30, 2017. At June 30, 2017, the School District's proportion was 0.092567%, which was a decrease of 0.011013% from its proportion measured as of June 30, 2016.

- 21 -

TURNER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2018

EXHIBIT "I"

For the year ended June 30, 2018, the School District recognized OPEB expense of $507,320.00. At June 30, 2018, the School District reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

OPEB

Deferred

Deferred

Outflows of

Inflows of

Resources

Resources

Changes of assumptions

$

- $ 990,345.00

Net difference between projected and

actual earnings on OPEB plan investments

3,804.00

-

Changes in proportion and differences between School District contributions and proportionate share of contributions

-

1,383,353.00

School District contributions subsequent to

the measurement date

455,381.00

-

Total

$ 459,185.00 $ 2,373,698.00

School District contributions subsequent to the measurement date of $455,381.00 are reported as deferred outflows of resources and will be recognized as a reduction of the net OPEB liability in the year ended June 30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Year Ended June 30:

OPEB

2019 2020 2021 2022 2023 2024

$ (425,974.00) $ (425,974.00) $ (425,974.00) $ (425,974.00) $ (426,925.00) $ (239,073.00)

- 22 -

TURNER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2018

EXHIBIT "I"

Actuarial assumptions: The total OPEB liability as of June 30, 2017 was determined by an actuarial valuation as of June 30, 2016 using the following actuarial assumptions and other inputs, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2017:
OPEB:

Inflation

2.75%

Salary increases

ERS

3.25% - 7.00%, including inflation

JRS

4.50%, including inflation

LRS

None

TRS

3.25 -- 9.00%, including inflation

PSERS

N/A

Long-term expected rate of return
Healthcare cost trend rate

3.88%, compounded annually, net of investment expense, and including inflation

Pre-Medicare Eligible

7.75%

Medicare Eligible

5.75%

Ultimate trend rate

Pre-Medicare Eligible

5.00%

Medicare Eligible

5.00%

Year of Ultimate trend rate

2022

Mortality rates were based on the RP-2000 Combined Mortality Table for Males or Females, as appropriate, with adjustments for mortality improvements based on Scale BB as follows:
For ERS, JRS and LRS members: The RP-2000 Combined Mortality Table projected to 2025
with projection scale BB and set forward 2 years or both males and females is used for the period after service retirement and for dependent beneficiaries. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB and set back 7 years for males and set forward 3 years for females is used for the period after disability retirement.
For TRS members: The RP-2000 White Collar Mortality Table projected to 2025 with projection
scale BB (set forward 1 year for males) is used for death after service retirement and beneficiaries. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward two years for males and four years for females) is used for death after disability retirement.
For PSERS members: The RP-2000 Blue-Collar Mortality Table projected to 2025 with
projection scale BB (set forward 3 years for males and 2 years for females) is used for the period after service retirement and for beneficiaries of deceased members. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward 5 years for both males and females) is used for the period after disability retirement.
The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the pension systems, which covered the five-year period ending June 30, 2014.

- 23 -

TURNER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2018

EXHIBIT "I"

Projection of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculation.

Additionally, there was a change of assumptions that affected measurement of the total OPEB liability since the prior measurement date. The methodology used to determine employee and retiree participation in the School OPEB Fund is based on their current or last employer payroll location. Current and former employees of public school districts, libraries, regional educational service agencies and community colleges are allocated to the School OPEB Fund irrespective of retirement system affiliation. In addition, the discount rate increased from 3.07% to 3.58%.
The long-term expected rate of return on OPEB plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected nominal returns, net of investment expense and the assumed rate of inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset Class

Target Allocation

Long-Term Expected Real Rate of Return*

Local Government Investment Pool

100.00%

1.13%

*Rate shown is net of the 2.75% assumed rate of inflation.
Discount rate: In order to measure the total OPEB liability for the School OPEB Fund, a single equivalent interest rate of 3.58% was used as the discount rate. This is comprised mainly of the yield or index rate for 20 year tax-exempt general obligation municipal bonds with an average rating of AA or higher (3.56% per the Bond Buyers Index). The projection of cash flows used to determine the discount rate assumed that contributions from members and from the employer will be made at the current level as averaged over the last five years, adjusted for annual projected changes in headcount. Projected future benefit payments for all current plan members were projected through 2115. Based on these assumptions, the OPEB plan's fiduciary net position was projected to be available to make OPEB payments for inactive employees through year 2029. Therefore, the calculated discount rate of 3.58% was applied to all periods of projected benefit payments to determine the total OPEB liability.
Sensitivity of the District's proportionate share of the net OPEB liability to changes in the discount rate: The following presents the School District's proportionate share of the net OPEB liability calculated using the discount rate of 3.58%, as well as what the District's proportionate share of the net OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (2.58%) or 1 percentage-point higher (4.58%) than the current discount rate:

1% Decrease (2.58%)

Current Discount Rate (3.58%)

1% Increase (4.58%)

Net OPEB Liability

$ 15,441,852.00 $

13,005,626.00 $ 11,082,951.00

- 24 -

TURNER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2018

EXHIBIT "I"

Sensitivity of the District's proportionate share of the net OPEB liability to changes in the healthcare cost trend rates: The following presents the School District's proportionate share of the net OPEB
liability, as well as what the District's proportionate share of the net OPEB liability would be if it were
calculated using healthcare cost trend rates that are 1-percentage-point lower or 1-percentage-point
higher than the current healthcare cost trend rates:

1% Decrease

Current Healthcare Cost Trend Rate

1% Increase

Net OPEB Liability

$ 10,780,182.00 $

13,005,626.00 $ 15,903,151.00

OPEB plan fiduciary net position: Detailed information about the OPEB plan's fiduciary net position is available in the Comprehensive Annual Financial Report (CAFR) which is publicly available at https://sao.georgia.gov/comprehensive-annual-financial-reports.
NOTE 13: RETIREMENT PLANS
The School District participates in various retirement plans administered by the State of Georgia, as further explained below.
TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
Plan Description: All teachers of the School District as defined in O.C.G.A 47-3-60 and certain other support personnel as defined by 47-3-63 are provided a pension through the Teachers Retirement System of Georgia (TRS). TRS, a cost-sharing multiple-employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. The Teachers Retirement System of Georgia issues a publicly available separate financial report that can be obtained at www.trsga.com/publications.
Benefits Provided: TRS provides service retirement, disability retirement, and death benefits. Normal retirement benefits are determined as 2% of the average of the employee's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. An employee is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. Ten years of service is required for disability and death benefits eligibility. Disability benefits are based on the employee's creditable service and compensation up to the time of disability. Death benefits equal the amount that would be payable to the employee's beneficiary had the employee retired on the date of death. Death benefits are based on the employee's creditable service and compensation up to the date of death.
Contributions: Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. Pursuant to O.C.G.A. 47-3-63, the employer contributions for certain full-time public school support personnel are funded on behalf of the employer by the State of Georgia. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees were required to contribute 6% of their annual pay during fiscal year 2018. The School District's contractually required contribution rate for the year ended June 30, 2018 was 16.81% of annual School District payroll, of which 16.76% of payroll was required from the School District and 0.05% of payroll was required from the State. For the current fiscal year, employer contributions to the pension plan were $1,229,408.13 and $3,174.30 from the School District and the State, respectively.
PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM (PSERS)
Plan description: PSERS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly in 1969 for the purpose of providing retirement allowances for public school employees who are not eligible for membership in the Teachers Retirement System of Georgia.
- 25 -

TURNER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2018

EXHIBIT "I"

The ERS Board of Trustees, plus two additional trustees, administers PSERS. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. PSERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/formspubs/formspubs.
Benefits provided: A member may retire and elect to receive normal monthly retirement benefits after completion of ten years of creditable service and attainment of age 65. A member may choose to receive reduced benefits after age 60 and upon completion of ten years of service.
Upon retirement, the member will receive a monthly benefit of $14.75, multiplied by the number of years of creditable service. Death and disability benefits are also available through PSERS. Additionally, PSERS may make periodic cost-of-living adjustments to the monthly benefits. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contribution, the member forfeits all rights to retirement benefits.
Contributions: The general assembly makes an annual appropriation to cover the employer contribution to PSERS on behalf of local school employees (bus drivers, cafeteria workers, and maintenance staff). The annual employer contribution required by statute is actuarially determined and paid directly to PSERS by the State Treasurer in accordance with O.C.G.A. 47-4-29(a) and 60(b). Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.
Individuals who became members prior to July 1, 2012 contribute $4 per month for nine months each fiscal year. Individuals who became members on or after July 1, 2012 contribute $10 per month for nine months each fiscal year. The State of Georgia, although not the employer of PSERS members, is required by statute to make employer contributions actuarially determined and approved and certified by the PSERS Board of Trustees. The current fiscal year contribution was $18,742.00.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions
At June 30, 2018, the School District reported a liability of $11,976,558.00 for its proportionate share of the net pension liability for TRS.
The net pension liability for TRS was measured as of June 30, 2017. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2016. An expected total pension liability as of June 30, 2017 was determined using standard roll-forward techniques. The School District's proportion of the net pension liability was based on contributions to TRS during the fiscal year ended June 30, 2017.
At June 30, 2017, the School District's TRS proportion was 0.064441%, which was a decrease of 0.010625% from its proportion measured as of June 30, 2016.
At June 30, 2018, the School District did not have a PSERS liability for a proportionate share of the net pension liability because of a Special Funding Situation with the State of Georgia, which is responsible for the net pension liability of the plan. The amount of the State's proportionate share of the net pension liability associated with the School District is $134,781.00.
The PSERS net pension liability was measured as of June 30, 2017. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2016. An expected total pension liability as of June 30, 2017 was determined using standard roll-forward techniques. The State's proportion of the net pension liability associated with the School District was based on actuarially determined contributions paid by the State during the fiscal year ended June 30, 2017.
For the year ended June 30, 2018, the School District recognized pension expense of $687,084.00 for TRS and $27,164.00 for PSERS and revenue of $27,164.00 for PSERS. The revenue is support provided by the State of Georgia.
- 26 -

TURNER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2018

EXHIBIT "I"

At June 30, 2018, the School District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

TRS

Deferred

Deferred

Outflows of

Inflows of

Resources

Resources

Differences between expected and actual experience

$ 447,997.00 $ 45,198.00

Changes of assumptions

262,541.00

-

Net difference between projected and actual earnings on pension plan investments

-

82,419.00

Changes in proportion and differences between School District contributions and proportionate share of contributions

-

2,178,664.00

School District contributions subsequent to the measurement date

1,229,408.13

-

Total

$ 1,939,946.13 $ 2,306,281.00

The School District contributions subsequent to the measurement date of $1,229,408.13 for TRS are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ended June 30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year Ended June 30:

TRS

2019 2020 2021 2022 2023

$ (702,495.00) $ 43,806.00 $ (209,112.00) $ (699,186.00) $ (28,756.00)

Actuarial assumptions: The total pension liability as of June 30, 2017 was determined by an actuarial valuation as of June 30, 2016, using the following actuarial assumptions, applied to all periods included in the measurement:

Teachers Retirement System:

Inflation

2.75%

Salary increases

3.25% 9.00%, average, including inflation

Investment rate of return

7.50%, net of pension plan investment expense, including inflation

- 27 -

TURNER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2018

EXHIBIT "I"

Post-retirement mortality rates were based on the RP-2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males) for service requirements and dependent beneficiaries. The RP-2000 Disabled Mortality table with future mortality improvement projected to 2025 with Society of Actuaries' projection scale BB (set forward two years for males and four years for females) was used for the death after disability retirement. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB.

The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014.
Public School Employees Retirement System:

Inflation

2.75%

Salary increases

N/A

Investment rate of return

7.50%, net of pension plan investment expense, including inflation

Post-retirement mortality rates were based on the RP-2000 Blue-Collar Mortality Table projected to 2025 with projection scale BB (set forward 3 years for males and 2 years for females) for the period after service retirements and for dependent beneficiaries. The RP-2000 Disabled Mortality projected to 2025 with projection scale BB (set forward 5 years for both males and females) was used for death after disability retirement. There is a margin for future mortality improvement in the tables used by the System. Based on the results of the most recent experience study adopted by the Board on December 17, 2015, the numbers of expected future deaths are 9-11% less than the actual number of deaths that occurred during the study period for healthy retirees and 9-11% less than expected under the selected table for disabled retirees. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB.
The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014.
The long-term expected rate of return on TRS and PSERS pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset class

TRS Target allocation

Fixed income Domestic large stocks Domestic mid stocks Domestic small stocks International developed market stocks International emerging market stocks Alternative

30.00% 39.80%
3.70% 1.50% 19.40% 5.60%
-

Total

100.00%

* Rates shown are net of the 2.75% assumed rate of inflation

PSERS Target allocation
30.00% 37.20%
3.40% 1.40% 17.80% 5.20% 5.00%
100.00%

Long-term expected real rate of return*
(0.50)% 9.00% 12.00% 13.50% 8.00% 12.00% 10.50%

- 28 -

TURNER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2018

EXHIBIT "I"

Discount rate: The discount rate used to measure the total TRS and PSERS pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the TRS and PSERS pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
Sensitivity of the School District's proportionate share of the net pension liability to changes in the discount rate: The following presents the School District's proportionate share of the net pension liability calculated using the discount rate of 7.50%, as well as what the School District's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate:

Teachers Retirement System:

1% Decrease (6.50%)

Current Discount Rate (7.50%)

1% Increase (8.50%)

School District's proportionate share of the

net pension liability

$ 19,654,937.00 $ 11,976,558.00 $ 5,651,300.00

Pension plan fiduciary net position: Detailed information about the pension plan's fiduciary net

position is available in the separately issued TRS and PSERS financial report which is publicly available

at www.trsga.com/publications and http://www.ers.ga.gov/formspubs/formspubs.html.

NOTE 14: RESTATEMENT OF PRIOR YEAR NET POSITION

For fiscal year 2018, the School District made prior period adjustments due to the adoption of GASB Statement No. 75, as described in "New Accounting Pronouncements", which require the restatement of the June 30, 2017, net position in Governmental Activities. The result is a decrease in net position at July 1, 2017 of $14,868,200.00 This change is in accordance with generally accepted accounting procedures.

Net Position, July 1, 2017 as previously reported

$

1,630,923.05

Prior Period Adjustment - Implementation of GASB No. 75: Net OPEB Liability (measurement date)

(15,350,852.00)

Deferred Outflows - School District's Contributions made during fiscal year 2017

482,652.00

Net Position, July 1, 2017, as restated

$ (13,237,276.95)

- 29 -

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TURNER COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TEACHERS RETIREMENT SYSTEM OF GEORGIA
FOR THE YEAR ENDED JUNE 30

SCHEDULE "1"

Year Ended
2018 2017 2016 2015

School District's proportion of the
net pension liability

School District's proportionate share of the net pension
liability

State of Georgia's proportionate share of the net pension liability
associated with the School District

Total

School District's covered payroll

School District's proportionate share of the net pension liability as a percentage of its
covered payroll

Plan fiduciary net position as a
percentage of the total pension liability

0.064441% $ 11,976,558.00 $ 0.075066% $ 15,486,953.00 $ 0.080245% $ 12,216,504.00 $ 0.081444% $ 10,289,375.00 $

-

$ 11,976,558.00 $ 7,406,261.42

68,083.00 $ 15,555,036.00 $ 8,272,266.73

67,747.00 $ 12,284,251.00 $ 8,533,119.18

58,241.00 $ 10,347,616.00 $ 8,355,950.26

161.71% 187.22% 143.17% 123.14%

79.33% 76.06% 81.44% 84.03%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available.

- 31 -

TURNER COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY PUBLIC SCHOOLS EMPLOYEES RETIREMENT SYSTEM OF GEORGIA
FOR THE YEAR ENDED JUNE 30

SCHEDULE "2"

Year Ended

School District's proportion of the
net pension liability

School District's proportionate share of
the net pension liability

State of Georgia's proportionate share of the net pension liability
associated with the School District

Total

School District's covered payroll

School District's proportionate share of the net pension
liability as a percentage of its covered payroll

Plan fiduciary net position as a
percentage of the total pension
liability

2018 2017 2016 2015

0.00% $ 0.00% $ 0.00% $ 0.00% $

-

$

-

$

-

$

-

$

134,781.00 $ 134,781.00 $ 257,504.16 129,766.00 $ 129,766.00 $ 213,695.21
83,224.00 $ 83,224.00 $ 201,337.50 83,869.21 $ 83,869.21 $ 194,206.39

N/A

85.69%

N/A

81.00%

N/A

87.00%

N/A

88.29%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available.

- 32 -

TURNER COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET OPEB LIABILITY
SCHOOL OPEB FUND FOR THE YEAR ENDED JUNE 30

SCHEDULE "3"

Year Ended 2018

School District's proportion of the net OPEB liability

School District's proportionate share of the net OPEB liability

State of Georgia's proportionate share of the
net OPEB liability associated with the School
District

Total

0.092567% $ 13,005,626.00 $

-

$ 13,005,626.00

School District's covered-employee
payroll

School District's proportionate share of the
net OPEB liability as a percentage of its covered-
employee payroll

Plan fiduciary net position as a
percentage of the total OPEB liability

$ 6,672,171.60

194.92%

1.61%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available.

- 33 -

TURNER COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF CONTRIBUTIONS TEACHERS RETIREMENT SYSTEM OF GEORGIA
FOR THE YEAR ENDED JUNE 30

SCHEDULE "4"

Year Ended

Contractually required contribution

Contributions in relation to the contractually required
contribution

Contribution deficiency (excess)

2018

$

1,229,408.13 $

1,229,408.13 $

-

2017

$

1,056,873.51 $

1,056,873.51 $

-

2016

$

1,175,290.00 $

1,175,290.00 $

-

2015

$

1,115,924.72 $

1,115,924.72 $

-

School District's covered payroll

Contribution as a percentage of covered payroll

$ 7,336,206.40 $ 7,406,261.42 $ 8,272,266.73 $ 8,533,119.18

16.76% 14.27% 14.21% 13.08%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available.

- 34 -

TURNER COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF CONTRIBUTIONS SCHOOL OPEB FUND
FOR THE YEAR ENDED JUNE 30

SCHEDULE "5"

Year Ended

Contractually required contribution

Contributions in relation to the contractually required
contribution

Contribution deficiency (excess)

2018

$

455,381.00 $

455,381.00 $

-

School District's covered-employee
payroll

Contribution as a percentage of covered-
employee payroll

$ 6,589,512.02

6.91%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available.

- 35 -

TURNER COUNTY BOARD OF EDUCATION NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED JUNE 30, 2018

SCHEDULE "6"

Teachers Retirement System
Changes of assumptions: In 2010 and later, the expectation of retired life mortality was changed to the RP2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. In 2010, assumed rates of salary increase were adjusted to more closely reflect actual and anticipated experience.
On November 18, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, disability, withdrawal and salary increases. The expectation of retired life mortality was changed to RP2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males).
Public School Employees Retirement System
Changes of assumptions: In 2010 and later, the expectation of retired life mortality was changed to the RP2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience.
On December 17, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement and withdrawal. The expectation of retired life mortality was changed to the RP2000 Blue Collar Mortality Table projected to 2025 with projection scale BB (set forward 3 years for males and 2 years for females).
School OPEB Fund
Changes of benefit terms: In June 30, 2010 actuarial valuation, there was a change of benefit terms to require Medicare-eligible recipients to enroll in a Medicare Advantage plan to receive the State subsidy.
Changes in assumptions: In the revised June 30, 2017 actuarial valuation, there was a change relating to employee allocation. Employees were previously allocated based on their Retirement System membership, and currently employees are allocated based on their current employer payroll location. Additionally, there were changes to the discount rate and an increase in the investment rate of return due to a longer-term investment strategy.
In the June 30, 2015 actuarial valuation, decremental and underlying inflation assumptions were changed to reflect the Retirement Systems' experience studies.
In the June 30, 2012 actuarial valuation, a data audit was performed and data collection procedures and assumptions were changed.

- 36 -

TURNER COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2018

SCHEDULE "7"

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 Community Services Food Services Operation
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Operating Transfers from Other Funds Operating Transfers To Other Funds
Total Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning
Adjustments
Fund Balances - Ending

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

VARIANCE OVER/UNDER

$ 3,393,000.00 $ 3,393,000.00 $ 3,538,058.21 $

10,000.00

10,000.00

6,447.65

8,654,423.00

8,730,155.00

8,679,188.55

1,753,372.00

2,943,588.00

2,399,319.71

2,500.00

29,500.00

213,385.98

1,000.00

3,000.00

4,489.94

143,500.00

143,500.00

326,637.38

13,957,795.00

15,252,743.00

15,167,527.42

145,058.21 (3,552.35)
(50,966.45) (544,268.29) 183,885.98
1,489.94 183,137.38
(85,215.58)

9,091,044.25
530,413.00 632,891.81 186,722.00 428,966.00 879,034.00 342,948.00 942,781.00 769,452.00
147,943.00
9,500.00
-
13,961,695.06
(3,900.06)

8,902,444.42
537,601.00 641,194.75 233,722.00 443,885.00 959,034.00 342,948.00 1,054,395.00 789,408.00
86,963.00 147,943.00
9,500.00 1,020,000.00
15,169,038.17
83,704.83

7,915,144.24
536,331.02 564,424.93 221,835.98 394,570.30 965,352.15 291,699.15 1,051,816.24 732,105.93
80,088.70 184,467.61 235,699.31
7,061.58 975,085.88
14,155,683.02
1,011,844.40

987,300.18
1,269.98 76,769.82 11,886.02 49,314.70 (6,318.15) 51,248.85
2,578.76 57,302.07
6,874.30 (36,524.61) (235,699.31)
2,438.42 44,914.12
1,013,355.15
928,139.57

100,300.00 (100,300.00)
(3,900.06) 2,721,302.47 6,759.89

130,300.00 (990,300.00) (860,000.00) (776,295.17) 2,721,302.47
(8,412.83)

(860,000.00) (860,000.00) 151,844.40 2,797,799.17
-

(130,300.00) 130,300.00
928,139.57
76,496.70 8,412.83

$ 2,724,162.30 $ 1,936,594.47 $ 2,949,643.57 $ 1,013,049.10

Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual
(1) Original and Final Budget amounts do not include the budgeted revenues or expenditures of the various principal accounts. The actual revenues and expenditures of the various principal accounts are $259,831.12 and $271,292.35, respectively.
The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 37 -

TURNER COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2018

SCHEDULE "8"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total U.S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Grants to States Preschool Grants Preschool Grants
Total Special Education Cluster
Other Programs Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Migrant Education - State Grant Program Rural Education Rural Education Student Support and Academic Enrichment Program Supporting Effective Instruction State Grant Supporting Effective Instruction State Grant Title I Grants to Local Educational Agencies Title I Grants to Local Educational Agencies Twenty-First Century Community Learning Centers Twenty-First Century Community Learning Centers Pass-Through From Bleckley County Board of Education Rural Health Development Grant
Total Other Programs
Total U. S. Department of Education
Defense, U. S. Department of Direct Department of the Army R.O.T.C. Program

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

10.553 10.555

18185GA324N1099 $ 18185GA324N1100

257,639.33 789,497.23
1,047,136.56

84.027 84.027 84.173 84.173

H027A160073 H027A170073 H173A160081 H173A170081

84.048 84.011 84.358 84.358 84.424A 84.367 84.367 84.010 84.010 84.287 84.287
93.912

V048A170010 S011A170011 S358B160010 S358B170010 S424A170011 S367A160001 S367A170001 S010A160010 S010A170010 S287C160010 S287C170010
DC7RH27765

77,786.00 154,798.71
4,711.00 13,714.35
251,010.06
21,645.18 21,046.78
7,016.00 20,132.49
6,550.00 79,422.00 49,236.81 18,862.00 746,418.37 28,551.00 332,771.89
62,814.89
1,394,467.41
1,645,477.47

12.UNKNOWN

51,305.43

Total Expenditures of Federal Awards

$ 2,743,919.46

Notes to the Schedule of Expenditures of Federal Awards
Note 1. Basis of Presentation
The accompanying schedule of expenditures of federal awards (the "Schedule") includes the federal award activity of the Turner County Board of Education (the "Board") under programs of the federal government for the year ended June 30, 2018. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Board, it is not intended to and does not present the financial position or changes in net position of the Board.
Note 2. Summary of Significant Accounting Policies
Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following, as applicable, either the cost principles in OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments , or the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards , wherein certain types of expenditures are not allowable or are limited as to reimbursement. The Board has elected not to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance.

See notes to the basic financial statements.

- 38 -

TURNER COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2018
AGENCY/FUNDING
GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Gifted Student - Category VI Remedial Education Program Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Principal Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Amended Formula Adjustment Categorical Grants Pupil Transportation Regular Nursing Services Midterm Hold Harmless Sparsity Education Equalization Funding Grant Other State Programs Food Services Math and Science Supplements Preschool Handicapped Program Teacher of the Year Grant Teachers Retirement Vocational Education Vocational Supervisors
Office of the State Treasurer Public School Employees Retirement

SCHEDULE "9"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

303,282.97

225,828.00 213,270.00 458,067.00 557,006.00 293,228.00 335,876.00 678,219.00 721,946.00 184,366.00 1,220,011.00 351,515.00 110,784.00
51,280.00 131,244.00
39,025.00 24,547.00
1,074.00
384,805.00 444,324.00 299,379.00 (118,358.00)
262,960.00 45,000.00
428,553.00 67,157.00
781,229.00
25,186.00
27,491.44 507.25
3,174.30 100,993.75
7,475.84
18,742.00

$

8,679,188.55

See notes to the basic financial statements.

- 39 -

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TURNER COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2018

SCHEDULE "10"

PROJECT

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED IN PRIOR YEARS (3)

TOTAL COMPLETION
COST

EXCESS PROCEEDS NOT
EXPENDED

SPLOST Projects 2012-2016:

Lease/Purchase ABM/Linc

Mechanical HVAC/Lighting Upgrade $ 1,275,500.00 $

991,293.20 $

140,128.19 $

851,165.01 $

991,293.20 $

-

Textbooks

700,000.00

222,590.48

17,197.22

205,393.26

222,590.48

-

Facility Repairs, Renovations,

Improvement Acquisitions

1,924,500.00

1,972,600.52

235,619.76

1,736,980.76

1,972,600.52

-

Technology Improvements

1,100,000.00

1,044,909.95

138,837.85

906,072.10

1,044,909.95

-

Vocational Equipment

50,000.00

-

-

-

-

-

Rolling Stock

250,000.00

263,048.49

9,223.23

253,825.26

263,048.49

-

5,300,000.00

4,494,442.64

541,006.25

3,953,436.39

4,494,442.64

-

SPLOST Projects 2017-2021:

Lease/Purchase ABM/Linc

Mechanical HVAC/Lighting Upgrade

1,275,500.00

115,371.81

115,371.81

-

-

-

Textbooks

700,000.00

14,158.99

14,158.99

-

-

-

Facility Repairs, Renovations,

Improvement Acquisitions

1,924,500.00

1,248,778.63

1,248,778.63

-

-

-

Technology Improvements

1,100,000.00

114,309.44

114,309.44

-

-

-

Vocational Equipment

50,000.00

-

-

-

-

-

Rolling Stock

250,000.00

7,593.77

7,593.77

-

-

-

5,300,000.00

1,500,212.64

1,500,212.64

-

-

-

ESTIMATED COMPLETION
DATE
Completed Completed Completed Completed Completed Completed
6/30/2021 6/30/2021 6/30/2021 6/30/2021 6/30/2021 6/30/2021

$ 10,600,000.00 $ 5,994,655.28 $ 2,041,218.89 $ 3,953,436.39 $ 4,494,442.64 $

-

(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax.
(2) The School District's current estimate of total cost for the projects. Includes all cost from project inception to completion.
(3) The voters of Turner County approved the imposition of a 1% sales tax to fund the above projects and retire associated debt. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects.

See notes to the basic financial statements.

- 41 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
September 5, 2019

The Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education
and Superintendent and Members of the Turner County Board of Education
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Turner County Board of Education (School District), as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise the School District's basic financial statements, and have issued our report thereon dated September 5, 2019.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the School District's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the School District's internal control. Accordingly, we do not express an opinion on the effectiveness of the School District's internal control.
Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified. However, as described in the accompanying Schedule of Findings and Questioned Costs, we identified certain deficiencies in internal control that we consider to be a material weakness and significant deficiencies.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiency described in the accompanying Schedule of Findings and Questioned Costs as item FS 2018-003 to be a material weakness.

A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiencies described in the accompanying Schedule of Findings and Questioned Costs as items FS 2018-001, FS 2018-002, and FS 2018-004, to be significant deficiencies.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the School District's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
School District's Response to Findings
The School District's response to the findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. The School District's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the School District's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School District's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Respectfully submitted,
Greg S. Griffin State Auditor

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
September 5, 2019

The Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education
and Superintendent and Members of the Turner County Board of Education
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE
Report on Compliance for Each Major Federal Program
We have audited the Turner County Board of Education (School District) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2018. The School District's major federal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs.
Management's Responsibility
Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of the School District's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the School District's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the School District's compliance.

Opinion on Each Major Federal Program
In our opinion, the School District complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2018.
Report on Internal Control over Compliance
Management of the School District is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the School District's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the School District's internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
Respectfully submitted,
Greg S. Griffin State Auditor

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

TURNER COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2018
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS-7421-12-01

Inadequate Controls over Financial Reporting

Control Category: Internal Control Impact: Compliance Impact:

Financial Reporting Significant Deficiency None

Finding Status: Entity's Response

Unresolved
The school district will try to ensure that all required activity is included in the financial statement information.

FS-7421-13-01

Internal Control Procedures over School Activity Accounts

Control Category:
Internal Control Impact: Compliance Impact:

Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Significant Deficiency None

Finding Status: Entity's Response

Unresolved
School District staff will implement and retrain school personnel on key accounting functions and record keeping. School District staff will also review transaction samples to provide reasonable assurance that transactions are processed according to established procedures.

FS-7421-13-02

Inadequate Controls over Financial Reporting Process

Control Category: Internal Control Impact: Compliance Impact:

Financial Reporting Significant Deficiency None

Finding Status: Entity's Response

Unresolved
The School Bookkeeper transferred designated expenditures and revenues from Agency Funds to Governmental Funds. Management will classify entries correctly in the financial statements to avoid the necessity of auditor revision. Management will check schedule preparation to avoid the necessity of auditor revision.

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TURNER COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2018
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS-7421-13-03

Improper Use of SPLOST Proceeds

Control Category: Internal Control Impact: Compliance Impact:

Expenditures/Liabilities/Disbursements None Material Noncompliance

Finding Status: Entity's Response

Unresolved
The School District has repaid a portion of the expenditures in SPLOST. The School District will use discretion in the future when paying expenditures out of SPLOST funds and refer to the SPLOST referendum for approved expenditures.

FS 2014-001

Inadequate Internal Control Procedures over School Activity Accounts

Control Category:
Internal Control Impact: Compliance Impact:

Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Significant Deficiency None

Finding Status: Entity's Response

Unresolved
The principal will oversee the athletic accounts. Procurement procedures are in place that require appropriate signatures, purchase orders, and documentation with every purchase

FS 2014-002

Inadequate Internal Control Procedures

Control Category:
Internal Control Impact: Compliance Impact:

Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Employee Compensation General Ledger Capital Assets Material Weakness None

Finding Status: Entity's Response

Partially Resolved Budgets will be reconciled in a timely manner. Employee compensation will be approved by the CFO. Procurement policy is in place.

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TURNER COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2018

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS 2014-003

Inadequate Controls over Financial Reporting Process

Control Category: Internal Control Impact: Compliance Impact:

Financial Reporting Significant Deficiency None

Finding Status: Entity's Response

Unresolved
All budgets will be reconciled on a monthly basis. An outside CPA firm will help with the yearly closeout of the budgets. All financial reports will be completed in a timely manner involving internal and external agencies.

FS 2014-004

Undocumented SPLOST Expenditures

Control Category: Internal Control Impact: Compliance Impact:

Expenditures/Liabilities/Disbursements None Material Noncompliance

Finding Status: Entity's Response

Unresolved
Appropriate procurement policies and procedures are in place and have been approved by the Board. The SPLOST expenditures will follow the guidelines outlined in the procurement plan.

FS 2015-001

Inadequate Internal Control Procedures over School Activity Accounts

Control Category:
Internal Control Impact: Compliance Impact:

Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Significant Deficiency None

Finding Status: Entity's Response

Unresolved
The principal will oversee the school accounts. Procurement procedures are in place that require appropriate signatures, purchase orders, and documentation with every purchase. The School District will ensure proper separation of duties. Training will occur with the school bookkeepers on proper documentation and retention of records.

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TURNER COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2018

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS-2015-002

Inadequate Internal Control Procedures

Control Category:
Internal Control Impact: Compliance Impact:

Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Employee Compensation Capital Assets Material Weakness None

Finding Status: Entity's Response

Partially Resolved
Procurement Plan has been put in place to help with internal control procedures. Employee compensation will be reviewed by the CFO and payroll clerk for accuracy. The system has secured the services of an outside CPA firm to prepare the system's financials. The CFO will begin to work with the banking entities to ensure only authorized personnel can open or close accounts and eliminate outside parties from holding accounts that utilize the Turner County Board of Education FEI number.

FS 2015-003

Inadequate Controls over Financial Reporting Process

Control Category: Internal Control Impact: Compliance Impact:

Financial Reporting Significant Deficiency None

Finding Status: Entity's Response

Unresolved
The School District will be more involved in the financial reporting process and will be more diligent in checking over the notes for accuracy. The School District will also make sure that the CPA firm understands that financial statement reporting must follow the Financial Management for Georgia Local Units of Administration guidelines.

FS 2015-004

Undocumented/Unallowable SPLOST Expenditures

Control Category: Internal Control Impact: Compliance Impact:

Expenditures/Liabilities/Disbursements Material Weakness Material Noncompliance

Finding Status: Entity's Response

Unresolved
The School District has put protocols, practices, and procedures in place through procurement policy to safeguard against unallowable costs to SPLOST.

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TURNER COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2018
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS 2016-001

Inadequate Internal Control Procedures over School Activity Accounts

Control Category:
Internal Control Impact: Compliance Impact:

Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Significant Deficiency None

Finding Status: Entity's Response

Unresolved
The principal will oversee the school accounts. Procurement procedures are in place that require appropriate signatures, purchase orders, and documentation with every purchase. The School District will ensure proper separation of duties. Training will occur with the school bookkeepers on proper documentation and retention of records.

FS-2016-002

Inadequate Internal Control Procedures

Control Category:
Internal Control Impact: Compliance Impact:

Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Employee Compensation Journal Entries Material Weakness None

Finding Status: Entity's Response

Partially Resolved
Procurement Plan has been put in place to help with internal control procedures. Employee compensation will be reviewed by the CFO and payroll clerk for accuracy. The system has secured the services of an outside CPA firm to prepare the system's financials. The CFO will begin to work with the banking entities to ensure only authorized personnel can open or close accounts and eliminate outside parties from holding accounts that utilize the Turner County Board of Education FEI number.

FS 2016-003

Inadequate Controls over Financial Reporting Process

Control Category: Internal Control Impact: Compliance Impact:

Financial Reporting Material Weakness None

Finding Status: Entity's Response

Unresolved
The School District will be more involved in the financial reporting process and will be more diligent in checking over the notes for accuracy. The School District will also make sure that the CPA firm understands that financial statement reporting must follow the Financial Management for Georgia Local Units of Administration guidelines.

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TURNER COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2018

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS 2016-004

Improper Use of SPLOST Proceeds

Control Category: Internal Control Impact: Compliance Impact:

Expenditures/Liabilities/Disbursements Material Weakness None

Finding Status: Entity's Response

Unresolved
The School District has put protocols, practices, and procedures in place through procurement policy to safeguard against unallowable costs to SPLOST.

FS 2016-005

Internal Controls over Agency Funds

Control Category: Internal Control Impact: Compliance Impact:

Accounting Controls Significant Deficiency None

Finding Status:

Previously Reported Corrective Action Implemented

FS 2017-001

Inadequate Internal Control Procedures over School Activity Accounts

Control Category:
Internal Control Impact: Compliance Impact:

Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Significant Deficiency None

Finding Status: Entity's Response

Unresolved
Policy will enforce that all expenditures must have a purchase order attached and contain legible content descriptors, exact product prices, appropriate signatures of approval, dates, addresses and appropriate filings. This will eliminate 95% of the audit findings associated with school activity accounts. In addition, the CFO and her department will conduct random visits to the school each year examining the accounting procedures and practices. Continuing, the finance department will hold annual trainings for school bookkeepers to assure revenue collection, recordkeeping, and bank reconciliations are being done in a timely and efficient manner. Last, separation of duties will be established as much as possible given the school system is a small system with a limited number of employees

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TURNER COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2018

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS-2017-002

Inadequate Internal Control Procedures

Control Category:
Internal Control Impact: Compliance Impact:

Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Employee Compensation Journal Entries Capital Assets Material Weakness None

Finding Status: Entity's Response

Partially Resolved
In August, 2016 the Turner County Board of Education (TCBOE) passed policy FPA that details a procurement plan for Turner County Schools. This plan explicitly details protocols, procedures and/or actions required when purchasing products or supplies for the school system and contains procedures for securing vendors to conduct business with the TCBOE. All expenditures now require a purchase order that contains content descriptors, exact product prices, appropriate signatures of approval, dates, times, addresses and appropriate filings. In addition, policy FPA will eliminate receipting issues that might create an overstatement or understatement of fund balances. All employee compensation regarding salary, supplements, and/or any other forms of payment will be completed in the office of the CFO and signed off by the preparer and the CFO. This will minimize mistakes regarding, but not limited to, salary miscalculations, lack of documentation for payment, misstatements of overpayments, misstatements of financial statements and/or errors to benefit payments. The CFO will begin to consolidate banking accounts assuring only authorized personnel can open or close accounts and eliminate outside parties from holding accounts that utilize the TCBOE FEI number. Lastly, and to assure appropriate internal controls, the CFO will work with her office to assure the chart of accounts are prepared accurately, monitored frequently, and discussed often among her staff.

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TURNER COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2018
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS 2017-003

Inadequate Controls over Financial Reporting Process

Control Category: Internal Control Impact: Compliance Impact:

Financial Reporting Material Weakness None

Finding Status: Entity's Response

Unresolved
The CFO will begin consolidating bank accounts making it more manageable toward reporting correctly each account in the financial statements. Fewer accounts also assure that appropriate notes and documentations are included in the financial statements. Budgets are monitored daily by the Superintendent and/or the CFO to assure the control of expenditures does not reach a deficit. The CFO and her department have also created controls (i.e. policy FPA) regarding the SPLOST budget; whereby, this budget is monitored daily to assure appropriate reporting and year-end reporting.

FS 2017-004

Improper Use of SPLOST Proceeds

Control Category: Internal Control Impact: Compliance Impact:

Expenditures/Liabilities/Disbursements Material Weakness None

Finding Status: Entity's Response

Unresolved
The Turner County Board of Education (TCBOE) passed policy FPA that details a procurement plan for Turner County Schools. This plan explicitly details protocols, procedures and/or actions required when purchasing products or supplies for the school system and contains procedures for securing vendors to conduct business with the TCBOE. All expenditures now require a purchase order that contains content descriptors, exact product prices, appropriate signatures of approval, dates, times, addresses and appropriate filings. In addition, the account number must be listed on the purchase order and therefore, the account being charged must be approved by at least two people. The CFO will work with her office to assure the chart of accounts are prepared accurately, monitored frequently, and discussed often among her staff and she will make sure that the SPLOST referendum is read often and followed properly.

FS 2017-005

Internal Controls over Agency Funds

Control Category: Internal Control Impact: Compliance Impact:

Accounting Controls Significant Deficiency None

Finding Status:

Previously Reported Corrective Action Implemented

- 8 -

TURNER COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2018
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.
- 9 -

SECTION IV FINDINGS AND QUESTIONED COSTS

TURNER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2018

I SUMMARY OF AUDITOR'S RESULTS

Financial Statements

Type of auditor's report issue: Governmental Activities; General Fund; Capital Projects Fund; Aggregate Remaining Fund Information
Internal control over financial reporting: Material weakness identified? Significant deficiencies identified?
Noncompliance material to financial statements noted:

Unmodified
Yes Yes No

Federal Awards

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

No None Reported

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

Unmodified

Any audit findings disclosed that are required to be reported in

accordance with 2 CFR 200.516(a)?

No

Identification of major programs:

CFDA Numbers

Name of Federal Program or Cluster

10.553, 10.555 84.010

Child Nutrition Cluster Title I Grants to Local Educational Agencies

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

$750,000.00

Auditee qualified as low-risk auditee?

No

TURNER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2018

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS 2018-001 Control Category:
Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding:

Internal Control Procedures over School Activity Accounts Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Significant Deficiency None FS 2017-001, FS 2016-001, FS 2015-001, FS 2014-001, FS-7421-13-01

Description: Our review of the accounting procedures of the School District revealed weaknesses in internal controls related to school activity accounts.

Criteria: The School District's management is responsible for designing and maintaining internal controls that provide proper separation of duties and reasonable assurance that transactions are processed according to established procedures.

Condition: The following deficiencies were noted with the School District's school activity accounts:

Cash and Cash Equivalents The School District did not have adequate internal controls in place to ensure that the bank reconciliation function was separate from the record keeping function. One high school bank reconciliation was not completed timely. The November 2017 bank reconciliation was signed and dated as reconciled on February 14, 2018. One outstanding check, totaling $2,000.00, on the June 30, 2018 bank reconciliation for the high school was made payable to "cash". The review of school bank reconciliations for June 2018 revealed many reconciling items that were over one year old, the oldest being from December 2013.

Revenues/Receivables/Receipts The School District did not have adequate internal controls in place to ensure proper separation of duties and proper documentation of receipts. During a review of five receipts, the following deficiencies were noted: o One receipt lacked adequate documentation to determine if the receipt was credited to the correct revenue account or was recorded in the correct amount. o One receipt lacked adequate documentation to support the amount of the receipt recorded. o Two gate receipts did not have adequate documentation of separation of duties on the reconciliations. o One gate receipt did not include adequate documentation to determine the athletic event to credit a portion of the funds being receipted.

Expenditures/Liabilities/Disbursements: During a review of five disbursements, the following deficiencies were noted: o Two expenditures lacked documentation of prior approval before payment. o One expenditure did not have documentation of prior approval before purchase. o One expenditure lacked evidence that goods were received.

TURNER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2018

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
Three accounts on the Funds Held for Others listing had deficit balances. Agency accounts are used to account for assets belonging to private organizations, other governments, or individuals, therefore balances should not be negative.
Cause: High turnover in the high school and middle school bookkeeping position is part of the cause for Finding FS 2018-001. The Turner County Finance Office has determined that school personnel have had inadequate training on key accounting functions and proper recordkeeping procedures. A new finance department at the board of education with no training and very few procedures established prior caused a failure to provide adequate independent review to assure that transactions are processed according to GAAP standards.
Effect or Potential Effect: Failure to maintain adequate internal controls over school activity accounts increases the risk that misstatements could occur in the financial statements due to errors and/or irregularities and not be detected in a timely manner.
Recommendation: The School District should implement necessary procedures to ensure that the key accounting functions of custody and record keeping are separated. In addition, the School District should implement procedures to ensure that disbursements and receipts of funds within the school activity accounts are adequately documented and recorded in the financial records. The School District should also establish a monitoring process to provide reasonable assurance that transactions are processed according to established procedures, as well as, provide training to employees on proper recordkeeping procedures.
Views of Responsible Officials: We concur with this finding.

FS 2018-002 Control Category:
Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding:

Internal Control Procedures Cash and Cash Equivalents Employee Compensation Journal Entries Capital Assets Significant Deficiency None FS 2017-002, FS 2016-002, FS 2015-002, FS 2014-002

Description: The accounting procedures of the School District were insufficient to provide for adequate internal controls over several control categories.

Criteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are processed according to established procedures.

TURNER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2018
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
Condition: Cash and Cash Equivalents
During the review of ten bank reconciliations it was noted that two bank reconciliations lacked evidence of both a preparer and an approver.
Three bank accounts exist under the Board's Federal Employer Identification number over which the entity is not a custodian.
Employee Compensation During the review of eight employee's salaries, the following issues were noted: o The local salary and supplements schedules were not approved by the Board. o Two instances were noted of an employee's salary not being based on the pay scales. o Two instances were noted of employees' salaries not being paid correctly, resulting in immaterial underpayments.
Journal Entries During a review of twenty-two journal entries recorded in the general ledger, it was noted that two entries lacked evidence of both a preparer and an approver.
Capital Assets Several instances were noted of equipment items, specifically vehicles, being depreciated over a useful life that is different than the school district's capitalization policy. One asset item was deleted in error. Three current year purchases that are capital assets under the school district's capitalization policy, were not recorded as capital asset additions.
Cause: With the high turnover of staff, training has been needed in many different areas for many different employees. Training for the finance department and bookkeepers along with implementation of new procedures have not yet been fully completed due to the number of changes needed. Separation of duties has been a challenge due to the smaller staff but time has also been a factor for setting all new procedures into action. The finance department must be given time to establish and maintain a monitoring process to provide reasonable assurance that all transactions, both school and board office, are processed according to established procedures.
Effect or Potential Effect: Without satisfactory accounting controls and procedures in place, the School District could place itself in a position where potential misappropriation of assets could occur. In addition, the lack of controls impacted its reporting of financial position and results of operations.
Recommendation: The School District should review accounting procedures in place and design and implement monitoring controls to provide reasonable assurance that transactions are processed according to established controls.
Views of Responsible Officials: We concur with this finding.

TURNER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2018

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS 2018-003 Control Category: Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding:

Internal Controls over Financial Reporting Process Financial Reporting Material Weakness None FS 2017-003, FS 2016-003, FS 2015-003, FS 2014-003, FS-7421-13-02, FS-7421-12-01

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

Criteria: Management is responsible for having adequate controls over the preparation of financial statements in accordance with generally accepted accounting principles (GAAP). The School District's internal controls over GAAP financial reporting should include adequately trained personnel with the knowledge, skills and experience to prepare GAAP based financial statements and include all disclosures as required by the Governmental Accounting Standards Board (GASB).

GASB Statement No. 34, Basic Financial Statements Management's Discussion and Analysis for State and Local Governments (Statement), requires governments to present government-wide and fund financial statements as well as a summary reconciliation of the (a) total governmental funds balances to the net position of governmental activities in the Statement of Net Position, and (b) total change in governmental fund balances to the change in the net position of governmental activities in the Statement of Activities. In addition, the statement requires information about the government's major and nonmajor funds in the aggregate to be provided in the fund financial statements.
Chapter II - 2 Annual Financial Reporting of the Financial Management for Georgia Local Units of Administration provides that School Districts must prepare their financial statements in accordance with generally accepted accounting principles.

Condition: The following errors and omissions were noted in the School District's financial statements, note disclosures and supplementary information presented for audit:

Agency fund accounts receivable other and funds held for others were both understated by $14,127.10 due to agency school activity accounts being incorrectly recorded as governmental funds. These misstatements were material to the agency fund. Adjustments to the financial statements were proposed by the auditors and accepted by the School District.
Agency fund cash overdraft was overstated and funds held for others was understated by $4,595.59 due to unrecorded cash. These misstatements were significant to the agency fund. Adjustments to the financial statements were proposed by the auditors and accepted by the School District.
One bank account in the amount of $41,700.23 was not recorded. This error caused immaterial misstatements to the general fund and the government-wide financial statements. Adjustments to the financial statements were proposed by the auditors and accepted by the School District.

TURNER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2018

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

The Schedule of Approved Local Option Sales Tax Projects did not separate the amounts expended in current year between the 2012 referendum projects and the 2017 referendum projects. In addition, the Elementary School project in the amount of $1,054,785.69 was omitted on the schedule. An adjustment to the schedule was proposed by the auditors and accepted by the School District.
Several other audit adjustments were proposed by auditors and accepted by the School District to properly present the financial statements and note disclosures.

Cause: It has been determined that the cause of Finding FS 2018-003 is lack of School Financial Reporting Training for the district. The School District's Finance Office must strengthen internal control procedures. The Finance Officer also needs training on financial statement reporting to ensure proper oversight of what is being reported.

Effect or Potential Effect: Material and significant misstatements were included in the financial statements presented for audit. The lack of controls and monitoring could impact the reporting of the School District's financial position and results of operations.

Recommendation: The School District should strengthen their internal controls and preparation and review procedures over financial reporting to ensure that the financial statements, including disclosures, presented for audit are complete and accurate. These procedures should be performed by a properly trained individual(s) possessing a thorough understanding of GAAP, the applicable GASB pronouncements and knowledge of the School District's activities and operations. The School District should also consider implementing the use of a review checklist to assist in the review process over the financial statements.

Views of Responsible Officials: We concur with this finding.

FS 2018-004 Control Category: Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding:

Improper Use of SPLOST Proceeds Expenditures/Liabilities/Disbursements Significant Deficiency None FS 2017-004, FS 2016-004, FS 2015-004, FS 2014-004, FS-7421-13-03

Description: The School District's Special Purpose Local Option Sales Tax (SPLOST) funds were spent on goods and services that were not specifically identified in the SPLOST referendum.

Criteria: According to Paragraph IV, Section VI, Article VIII of the Constitution of the State of Georgia, "the purpose or purposes for which the proceeds of the tax are to be used and may be expended include (1) Capital Outlay projects for educational purposes; (2) the retirement of previously incurred general obligation debt with respect only to capital outlay projects of the school system..." Official Code of Georgia Annotated (O.C.G.A.) 48-8-121 states, "The proceeds received from the tax authorized by this part shall be used...exclusively for the purpose or purposes specified in the resolution or ordinance calling for imposition of the tax".

TURNER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2018
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
The Attorney General's Official Opinion 97-7 for O.C.G.A. 20-2-260(b)(5), states, "'capital outlay projects' as used in the educational sales tax purposes amendment should be read as well to refer to major, permanent, or long-lived improvements or betterments, such as would be properly chargeable to a capital asset account and as distinguished from current expenditures and ordinary maintenance expenses".
Condition: During the year under review, the School District charged $26,902.10 for unallowable expenditures for bus repairs, supplies, and communication service.
Questioned Cost: $26,902.10
Cause: The cause of Finding 2018-004 was due to the misinterpretation by management of the SPLOST referendum in regards to allowable and unallowable expenditures.
Effect or Potential Effect: Improper use of SPLOST proceeds.
Recommendation: The School District should research this issue, consult with legal counsel and verify if expenditures of this nature are an appropriate use of SPLOST funds in accordance with State law and the SPLOST referendum as approved by the voters of Turner County.
Views of Responsible Officials: We concur with this finding.
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No maters were reported.

SECTION V MANAGEMENT'S CORRECTIVE ACTION