WALKER COUNTY BOARD OF EDUCATION
LAFAYETTE, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2012
(Including Independent Auditor's Reports)

WALKER COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

B

STATEMENT OF ACTIVITIES

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

H

STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

I

NOTES TO THE BASIC FINANCIAL STATEMENTS

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

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

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 3 SCHEDULE OF STATE REVENUE

Page
1 2 4 5 6 7 8 9 11
29 30 32

WALKER COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

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

Page
33 35

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

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

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

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
March 21, 2013

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Walker County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through I) of the Walker County Board of Education, as of and for the year ended June 30, 2012, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Walker County Board of Education's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Board's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Walker County Board of Education, as of June 30, 2012, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
Management has omitted Management's Discussion and Analysis that accounting principles generally accepted in the United States of America requires to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an
2012ARL-11

essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information.
In accordance with Government Auditing Standards, we have also issued our report dated March 21, 2013, on our consideration of the Walker County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.
The Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on page 29, is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Walker County Board of Education's financial statements as a whole. The accompanying supplementary information consists of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the financial statements. The 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 financial statements. The 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 financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24.
Respectfully submitted,

GSG:as 2012ARL-11

Greg S. Griffin State Auditor

WALKER COUNTY BOARD OF EDUCATION

WALKER COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2012
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories Capitalized Bond and Other Debt Issuance Costs Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation)
Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Claims Incurred but not Reported (IBNR) Contracts Payable Retainages Payable Deposits and Deferred Revenues Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Continuation of Federal Programs Debt Service Capital Projects Unrestricted
Total Net Assets
Total Liabilities and Net Assets
The notes to the basic financial statements are an integral part of this statement.
- 1 -

EXHIBIT "A"

GOVERNMENTAL ACTIVITIES

$

49,373,739.37

2,709,517.14

3,331,882.75 5,803,335.02 1,812,714.56
47,106.52 691,721.61 389,956.00 7,353,158.74 85,432,888.92

$

156,946,020.63

$

457,952.86

10,830,256.73

635,333.91

544,338.00

303,594.00

20.25

2,250,511.13 23,679,503.75

$

38,701,510.63

$

92,542,963.17

1,621,342.83 2,297,698.06 6,695,571.05 15,086,934.89

$

118,244,510.00

$

156,946,020.63

WALKER COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2012

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

EXPENSES

CHARGES FOR SERVICES

$

58,625,325.44 $

431,213.84

2,639,612.87 2,670,408.34 1,430,272.76
576,537.74 4,976,119.77
889,046.13 6,203,338.65 4,488,488.20
348,944.83 386,954.81

5,326,535.26 130,541.55

921,739.36

$

88,692,126.35 $ 1,352,953.20

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

EXHIBIT "B"

PROGRAM REVENUES OPERATING GRANTS AND
CONTRIBUTIONS

CAPITAL GRANTS AND CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

$ 37,037,554.32
740,748.18 1,056,395.99 1,146,825.01 1,420,995.80 2,678,713.71
37,625.19 2,916,474.91 1,311,067.17 $
39,597.69 114,870.49
4,507,403.29
$ 53,008,271.75 $

$ 381,460.00 381,460.00 $

-21,156,557.28
-1,898,864.69 -1,614,012.35
-283,447.75 844,458.06 -2,297,406.06 -851,420.94 -3,286,863.74 -2,795,961.03 -309,347.14 -272,084.32
102,607.39 -130,541.55
-33,949,441.40

$

20,878,190.02

533,988.35

4,855,871.61 307,815.39
5,799,798.00 618,935.04
2,224,450.87

100,354.50

$

35,319,403.78

$

1,369,962.38

116,874,547.62

$ 118,244,510.00

- 3 -

WALKER COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2012

EXHIBIT "C"

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

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 17,040,577.67 $ 30,040,089.82 $ 2,293,071.88 $

2,704,440.64

450.32

4,626.18

2,900,654.95 5,803,335.02 1,812,714.56
46,906.52 691,721.61

431,227.80 200.00

49,373,739.37 2,709,517.14
3,331,882.75 5,803,335.02 1,812,714.56
47,106.52 691,721.61

$ 31,000,350.97 $ 30,471,967.94 $ 2,297,698.06 $

63,770,016.97

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

$ 439,856.24 $ 10,830,256.73
1,946,427.34 $ 13,216,540.31 $

18,096.62 544,338.00 303,594.00
866,028.62

$

457,952.86

10,830,256.73

544,338.00

303,594.00

1,946,427.34

$ 14,082,568.93

$ 691,721.61 3,968,308.23 $ 29,605,939.32 $ 2,279,508.78
10,844,272.04

$ 2,297,698.06

$ 17,783,810.66 $ 29,605,939.32 $ 2,297,698.06 $

691,721.61 35,871,945.61
2,279,508.78 10,844,272.04
49,687,448.04

$ 31,000,350.97 $ 30,471,967.94 $ 2,297,698.06 $

63,770,016.97

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

WALKER COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2012

EXHIBIT "D"

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

$ 49,687,448.04

$ 2,106,409.16 5,246,749.58 5,131,007.09
101,840,098.12 12,184,706.80 -33,722,923.09

92,786,047.66

1,946,407.09

$ -19,920,000.00 -4,100,000.00 389,956.00 -174,831.46 -1,735,183.42 -635,333.91

-26,175,392.79

$ 118,244,510.00

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

WALKER COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2012

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

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 21,077,157.71 307,815.39 $
47,803,812.17 11,385,717.58
1,352,953.20 363,995.29
2,224,250.87

$ 4,855,871.61
254,939.75 200.00

$ 84,515,702.21 $ 5,111,011.36 $

0.00 $

21,077,157.71 5,163,687.00
47,803,812.17 11,385,717.58
1,352,953.20 618,935.04
2,224,450.87

0.00 $ 89,626,713.57

$ 56,537,002.06

$ 56,537,002.06

2,639,612.87 2,712,443.84 $ 1,430,272.76
575,027.15 4,979,561.91
887,053.63 6,060,734.93 4,449,889.68
348,944.83 376,562.70 5,274,137.35

39,568.00
15.00 89,991.09 173,182.10
3,447,802.78

2,639,612.87 2,752,011.84 1,430,272.76
575,027.15 4,979,561.91
887,068.63 6,150,726.02 4,623,071.78
348,944.83 376,562.70 5,274,137.35 3,447,802.78

$ 408,525.33

4,255,000.00 194,600.00

4,255,000.00 408,525.33 194,600.00

$ 86,271,243.71 $ 4,159,084.30 $ 4,449,600.00 $ 94,879,928.01

$ -1,755,541.50 $

951,927.06 $ -4,449,600.00 $ -5,253,214.44

$ 18,000,000.00

$ 18,000,000.00

1,817,811.20

1,817,811.20

$

100,354.50

100,354.50

26,150.00 $ 2,345,698.06

2,371,848.06

-26,150.00

-2,345,698.06

-2,371,848.06

$

74,204.50 $ 17,498,263.14 $ 2,345,698.06 $ 19,918,165.70

$ -1,681,337.00 $ 18,450,190.20 $ -2,103,901.94 $ 14,664,951.26

19,465,147.66 11,155,749.12

4,401,600.00

35,022,496.78

Fund Balances - Ending

$ 17,783,810.66 $ 29,605,939.32 $ 2,297,698.06 $ 49,687,448.04

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

WALKER COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES FOR YEAR ENDED JUNE 30, 2012

EXHIBIT "F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:
Capital Outlay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense
The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, donations, and disposals) is to decrease net assets.
Taxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds.
Bond proceeds provide current financial resources to Governmental Funds; however, issuing debt increases Long-Term Liabilities in the Statement of Net Assets. In the current period, proceeds were received from:
General Obligation Bonds Issued, Including a Premium of $ 1,817,811.20
Bond issuance costs, deferred gains on refundings and similar items when debt is first issued are reported as an expenditure in Governmental Funds, but are reported as deferred charges on the Statement of Net Assets and amortized over the term of the debt, using the straight-line method. The details of this difference in the current period are as follows:
Deferral of Bond Issuance Costs
Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of:
Bond Principal Retirements
Some items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in Governmental Funds. These activities consist of:
Amortization of Bond Premium Decrease in Compensated Absences Increase in Claims and Judgments
Total Additional Expenditures
Change in Net Assets of Governmental Activities (Exhibit "B")

$ 14,664,951.26

$ 4,253,715.15 -2,738,935.55

1,514,779.60

-2,250.00

335,020.66

-19,817,811.20

389,956.00

4,255,000.00

$

82,627.78

27,837.97

-80,149.69

30,316.06

$ 1,369,962.38

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

WALKER COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS JUNE 30, 2012

EXHIBIT "G"

ASSETS
Cash and Cash Equivalents Investments

PRIVATE PURPOSE TRUSTS

AGENCY FUNDS

$

45,606.54 $

133,817.11

43,514.34

Total Assets

$

179,423.65 $

43,514.34

LIABILITIES Funds Held for Others
NET ASSETS Held in Trust for Private Purposes
Total Liabilities and Net Assets

$

43,514.34

$

179,423.65

$

179,423.65 $

43,514.34

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

WALKER COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FIDUCIARY FUNDS YEAR ENDED JUNE 30, 2012
ADDITIONS Contributions Donors Investment Earnings Interest Total Additions
DEDUCTIONS Scholarships Change in Net Assets
Net Assets - Beginning
Net Assets - Ending

EXHIBIT "H"

PRIVATE PURPOSE TRUSTS

$

18,562.33

6,038.41

$

24,600.74

$

25,000.00

$

-399.26

179,822.91

$ 179,423.65

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

(This page left intentionally blank)

WALKER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "I"

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

- 11 -

WALKER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "I"

The School District reports the following fiduciary fund types:
Private Purpose Trust fund reports trust arrangements under which principal and income benefit a student chosen based upon written agreement.
Agency funds account for assets held by the School District as an agent for various funds or individuals.
BASIS OF ACCOUNTING
The basis of accounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources.
The School District funds certain programs by a combination 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.
CASH AND CASH EQUIVALENTS
Composition of Deposits Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations.

- 12 -

WALKER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "I"

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

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

2. Obligations issued by the United States government,

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

4. Obligations of any corporation of the United States government,

5. Prime banker's acceptances,

6. The Georgia Fund 1 administered by the State of Georgia, Office of the State Treasurer,

7. Repurchase agreements, and

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

The School District does not have a formal policy regarding investment policies that address custodial credit risks,
RECEIVABLES

Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.

PROPERTY TAXES

The Walker County Board of Commissioners fixed the property tax levy for the 2011 tax digest year (calendar year) on October 20, 2011 (levy date). Taxes were due on December 31, 2011 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2011 tax digest are reported as revenue in the governmental funds for fiscal year 2012. The Walker 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, 2012, for maintenance and operations amounted to $20,543,169.36.

The tax millage rate levied for the 2011 tax year (calendar year) for the Walker County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

1 7 .4 0 4 m ills

- 13 -

WALKER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "I"

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $4,855,871.61 and is to be used for capital outlay for educational purposes or debt services. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.
INVENTORIES
Consumable Supplies On the basic financial statements, inventories of consumable supplies are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby consumable supplies are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.
Food Inventories On the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.
CAPITAL ASSETS

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

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

C a p ita liz a tio n Policy

Estim ated Useful Life

Land

Any Amount

Land Im provem ents

$

5 ,0 0 0 .0 0

Buildings and Im provem ents

$

5 ,0 0 0 .0 0

Equipm ent

$

5 ,0 0 0 .0 0

N/A 20 to 80 years 10 to 80 years
3 to 20 years

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives.
COMPENSATED ABSENCES
Members of the Teachers' Retirement System of Georgia (TRS) may apply unused sick leave toward early retirement. The liability for early retirement will be borne by TRS rather than by the individual school districts. Otherwise, sick leave does not vest with the employee, and no liability is reported in the School District's financial statements.

- 14 -

WALKER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "I"

Vacation leave of ten days is awarded on a fiscal year basis to all full time personnel employed on a twelve month basis. Vacation leave of five days is awarded on a fiscal year basis to all eleven month personnel. No other employees are eligible to earn vacation leave. Vacation leave not utilized during the fiscal year may be carried over to the next fiscal year, providing such vacation leave does not exceed thirty days.

Beginning of Year Liability

In c re a s e s

Decreases

End of Year Liability

2010 2011 2012

$ $181,674.53 $ $251,097.10 $ $230,676.83 $ $ $202,094.80 $ $245,799.21 $ $245,224.58 $ $ $202,669.43 $ $242,205.94 $ $270,043.91 $

2 0 2 ,0 9 4 .8 0 2 0 2 ,6 6 9 .4 3 1 7 4 ,8 3 1 .4 6

GENERAL OBLIGATION BONDS
The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide financial statements, a portion of bond premiums are deferred and amortized over the life of the bonds using the straight-line method. The portion of bond premiums relating to the 2007 bond issue and all bond issuance costs were not deferred. To conform to generally accepted accounting principles, all bond premiums and bond issuance costs should be deferred and amortized over the life of the bonds on the District-wide statements. The effect of this deviation is deemed to be immaterial to the fair presentation of the basic financial statements.
In the fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Assets.
NET ASSETS
The School District's net assets in the District-wide Statements are classified as follows:
Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.
Restricted net assets - These represent resources for which the School District is legally or contractually obligated to spend resources for continuation of Federal programs, debt service and capital projects in accordance with restrictions imposed by external third parties.
Unrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes.
FUND BALANCES
The School District's fund balances are classified as follows:
Nonspendable Amounts that cannot be spent either because they are in a nonspendable form or because they are legally or contractually required to be maintained intact.

- 15 -

WALKER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "I"

Restricted Constraints are placed on the use of resources are either (1) externally imposed conditions by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation.

Committed Amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board of Education. The Board of Education is the School District's highest level of decision-making authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Committed fund balance also should incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements.
Assigned Amounts that are constrained by the School District's intent to be used for specific purposes, but are neither restricted nor committed. The intent should be expressed by (1) the Board of Education or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes.

Unassigned The residual classification for the General Fund. This classification represents fund balances that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the General Fund.

Fund Balances of the Governmental Funds at June 30, 2012, are as follows:

N o nspe nda ble In v e n to rie s
Restricted C ontinuation of Federal Program s Capital Projects Debt Service
Assigned E-Rate Funds for Technology Se lf-In s u ra n c e School Activity Accounts M iscellaneous Local Grants Clearwire Agreem ent
Unassigned

$

6 9 1 ,7 2 1 .6 1

$ 1,366,577.57 2 9 ,6 0 5 ,9 3 9 .3 2 4 ,8 9 9 ,4 2 8 .7 2

3 5 ,8 7 1 ,9 4 5 .6 1

$

6 2 2 ,7 3 5 .3 4

4 8 9 ,5 4 3 .3 9

8 9 5 ,2 5 9 .8 7

7 1 ,9 7 0 .1 8

2 0 0 ,0 0 0 .0 0

2 ,2 7 9 ,5 0 8 .7 8 1 0 ,8 4 4 ,2 7 2 .0 4

Fund Balance, June 30, 2012

$ 49,687,448.04

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.
USE OF ESTIMATES
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.
NOTE 3: BUDGETARY DATA
The budget is a complete financial plan for the School District's fiscal year, and is based upon careful estimates of expenditures together with probable funding sources. The budget is legally adopted each year for the general, debt service and capital projects funds. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds is prepared and adopted by fund, function and object. The legal level of 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.
- 16 -

WALKER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "I"

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, as well as the School District's website. At the next regularly scheduled meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. The approved budget is then submitted, in accordance with provisions of Official Code of Georgia Annotated section 20-2-167(c), to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.
The Walker County Board of Education will adopt the non-appropriated annual budget at the aggregate level as its legal level of controls. The Board will prepare and present the annual budget by fund type, fund, function and object for management control; however, the level of budgetary control will be set at the aggregate level. The Board must approve, for management purposes, any changes between the appropriations by fund type. However, the Superintendent shall have the authority to appropriations within fund type.
See Schedule 1 General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual for a detail of any over/under expenditures during the fiscal year under review.
NOTE 4: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS
Official Code of Georgia Annotated (O.C.G.A.) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. Section 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 percent of the daily pool balance.
Acceptable security for deposits consists of any one of or any combination of the following:
1. Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
2. Insurance on accounts provided by the Federal Deposit Insurance Corporation,
3. Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
4. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
5. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
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.
- 17 -

WALKER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

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 managing custodial credit risk. At June 30, 2012, the bank balances were $52,138,317.82. The amounts exposed to custodial credit risk are classified into three categories as follows:

Category 1 Category 2 -
Category 3 -

Uncollateralized, Cash collateralized with securities held by the pledging financial institution, or Cash collateralized with securities held by the pledging financial institution's trust department or agent but not in the School District's name.

The School District's deposits by custodial risk category at June 30, 2012, are as follows:

Custodial Credit Risk Category

Bank Balance

1 2 3
Total

$

0 .0 0

24 7 ,1 2 9 .2 3

0 .0 0

$

24 7 ,1 2 9 .2 3

CATEGORIZATION OF INVESTMENTS
The School District's investments as of June 30, 2012, are presented below. All investments are presented by investment type and debt securities are presented by maturity.

Investm ent Type

Fair Value

Investm ent M aturity 1 -5 Y e a rs

Debt Securities M unicipal Obligation

$ 2 ,5 9 5 ,6 1 6.9 9 $ 2 ,5 9 5 ,6 1 6 .9 9

Investm ent Pools Office of State Treasurer Georgia Fund 1

2 8 ,7 4 2 .6 3

Total Investm ents

$ 2,624,359.62

The Georgia Fund 1, formerly referred to as LGIP, administered by the State of Georgia, Office of the State Treasurer is not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office of the State Treasurer for the Georgia Fund 1 (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1 is disclosed in the State of Georgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at http://www.audits.ga.gov/SGD/cafr.html.
The Primary Liquidity Portfolio consists of Georgia Fund 1 which is not registered with the SEC as an investment company but does operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share. The pool is an AAAm rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2012, was 48 days.

- 18 -

WALKER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "I"

Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investment will adversely affect the fair value of an investment. The School District does not have a formal policy for managing interest rate risk.
Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, the School District will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The School District does not have a formal policy for managing custodial credit risk.

At June 30, 2012, $2,595,616.99 of the School District's applicable investments were (1) uninsured and unregistered, with securities held by the counterparty's trust department or agent in the name of the School District and (2) uninsured or unregistered, with securities held by the counterparty, or by its trust department or agent, but not in the School District's name.
Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The School District does not have a formal policy for managing custodial credit risk.

The investments subject to credit quality risk are reflected below:

Rated Debt Investm ents

Quality Ratings
A

Debt Securities M unicipal Obligation

$

2 ,5 9 5 ,6 1 6 .9 9

Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The School District does not have a formal policy for managing concentration of credit risk. More than 5% of the School District's investments are in Municipal Obligations. These investments are 99% of the School District's total investments.
NOTE 5: NON-MONETARY TRANSACTIONS
The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories

- 19 -

WALKER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "I"

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

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

Balances July 1, 2011

Increases

Decreases

Balances June 30, 2012

$ 2,106,409.16 1,805,933.14 $ 3,477,242.44 $

$ 3 6 ,4 2 6 .0 0

2 ,1 0 6 ,4 0 9 .1 6 5 ,2 4 6 ,7 4 9 .5 8

Total Capital Assets, Not Being Depreciated $ 3,912,342.30 $ 3,477,242.44 $

36,426.00 $ 7,353,158.74

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

$ 102,061,527.61 $ 1 1 ,4 8 2 ,0 3 1 .0 9 5 ,1 3 1 ,0 0 7 .0 9

52,965.00 $ 7 5 9 ,9 3 3 .7 1

274,394.49 $ 101,840,098.12

5 7 ,2 5 8 .0 0

1 2 ,1 8 4 ,7 0 6 .8 0

5 ,1 3 1 ,0 0 7 .0 9

Less: Accumulated Depreciation: Buildings and Improvements Equipment Land Improvements

2 1 ,6 5 2 ,1 9 7 .3 9 7 ,7 7 3 ,8 7 4 .7 2 1 ,8 8 7 ,3 1 7 .9 2

1 ,8 1 2 ,1 1 2 .5 3 7 1 3 ,3 3 3 .7 2 2 1 3 ,4 8 9 .3 0

2 7 4 ,3 9 4 .4 9 5 5 ,0 0 8 .0 0

2 3 ,1 8 9 ,9 1 5 .4 3 8 ,4 3 2 ,2 0 0 .4 4 2 ,1 0 0 ,8 0 7 .2 2

Total Capital Assets, Being Depreciated, Net $ 87,361,175.76 $ -1,926,036.84 $

Governmental Activity Capital Assets - Net

$ 91,273,518.06 $ 1,551,205.60 $

2,250.00 $ 85,432,888.92 38,676.00 $ 92,786,047.66

Capital assets being acquired under capital leases as of June 30, 2012, are as follows:
Governm ental Funds

Buildings and Im provem ents Less: Accum ulated Depreciation

$

4 ,4 5 6 ,2 3 2 .0 0

4 5 0 ,1 4 9 .7 0

$

4 ,0 0 6 ,0 8 2 .3 0

Current year depreciation expense by function is as follows:

In s tru c tio n Support Services
Im provem ent of Instructional Services General Adm inistration Business Adm inistration M aintenance and Operation of Plant Student Transportation Services Food Services

$

$

1 1 ,4 0 4 .0 5

2 9 ,8 0 0 .0 0

1 ,9 7 5 .8 5

1 3 7 ,0 2 0 .5 4

4 1 3 ,3 4 4 .5 0

$

1 ,9 6 1 ,4 9 1 .8 4
5 9 3 ,5 4 4 .9 4 1 8 3 ,8 9 8 .7 7 2 ,7 3 8 ,9 3 5 .5 5

- 20 -

WALKER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "I"

NOTE 7: INTERFUND TRANSFERS

Interfund transfers for the year ended June 30, 2012, consisted of the following:

Transfer to

Transfers From

District-w ide

General

C apita l

Fund

Projects

District-w ide C apital Projects Debt Service Fund

$

2 6 ,1 5 0 .0 0

$ 2,345,698.06

Total

$

26,150.00 $ 2,345,698.06

Transfers are used (1) to move property tax revenues collected by the General Fund to the Districtwide Capital Projects Fund as supplemental funding source for capital construction projects, and (2) to move SPLOST revenues collected by the District-wide Capital Projects Fund to the Debt Service Fund to pay current year bond principal and interest as required in the bond resolution.
NOTE 8: RISK MANAGEMENT

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

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

The School District has established a limited risk management program for workers' compensation claims. In connection with this program, a self-insurance reserve has been established within the General Fund by the School District. 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. An excess coverage insurance policy covers individual claims in excess of $1,000,000.00 loss per occurrence, up to the statutory limit.

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

Beginning of Year Liability

Claim s and Changes in Estim ates

Claim s Paid

End of Year Liability

2011

$

2012

$

501,765.19 $ 555,184.22 $

228,947.64 $ 325,489.53 $

175,528.61 $ 245,339.84 $

5 5 5 ,1 8 4 .2 2 6 3 5 ,3 3 3 .9 1

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.

- 21 -

WALKER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "I"

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

Beginning of Year Liability

Claim s and Changes in Estim ates

Claim s Paid

End of Year Liability

2011

$

2012

$

0.00 $ 0.00 $

83,774.29 $ 67,173.32 $

83,774.29 $ 67,173.32 $

0 .0 0 0 .0 0

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

Position Covered

Am ount

Su p e rin te n d e n t All Em ployees

$

5 0 ,0 0 0 .0 0

$

5 0 0 ,0 0 0 .0 0

NOTE 9: POLLUTION REMEDIATION OBLIGATIONS

The School District is the owner of Science and Technology Center located at 409 Pond Spring Road, and is responsible for asbestos removal. The School District has recorded a liability and expense related to this pollution remediation in the amount of $24,278.00, on the Statement of Net Assets and on the Statement of Activities. The estimates of the liabilities are based on a range of expected outlays, net of expected cost recoveries, if any, for the type and amount of pollution contamination detected. The estimates are reviewed and adjusted periodically for price changes, additional contamination and any other changes detected. Currently, the School District does not expect an additional liability related to this asbestos removal.
NOTE 10: LONG-TERM DEBT
CAPITAL LEASES

The Walker County Board of Education entered into a lease agreement for capital project renovations. This lease agreement qualifies as capital lease for accounting purposes, and, therefore, has been recorded at the present value of the future minimum lease payments as of the date of its inception.
COMPENSATED ABSENCES

Compensated absences represent obligations of the School District relating to employees' rights to receive compensation for future absences based upon service already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. Typically, the General Fund is the fund used to liquidate this long-term debt. The School District uses the vesting method to compute compensated absences.
GENERAL OBLIGATION DEBT OUTSTANDING

General Obligation Bonds currently outstanding are as follows:

Purpose

Interest Rates

Amount

General Governm ent - Series 2007 General Governm ent - Series 2012

4.00% - 5.00% 2.00% - 4.00%

$ 1,920,000.00 1 8 ,0 0 0 ,0 0 0 .0 0

$ 19,920,000.00

- 22 -

WALKER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "I"

The changes in Long-Term Debt during the fiscal year ended June 30, 2012, were as follows:

Balance July 1, 2011

A d d i ti o n s

Governmental F unds

Balance

D e d u cti o n s

June 30, 2012

Due Within One Year

G. O. Bonds

$ 6,175,000.00 $ 18,000,000.00 $

Capital Leases

4,100,000.00

Compensated Absences (1)

202,669.43

242,205.94

B ond Premiums Amortized

0.00

1,817,811.20

4,255,000.00 $ 19,920,000.00 $

4,100,000.00

270,043.91

174,831.46

82,627.78

1,735,183.42

1,920,000.00 330,511.13

$ 10,477,669.43 $ 20,060,017.14 $ 4,607,671.69 $ 25,930,014.88 $ 2,250,511.13

(1) The portion of Compensated Absences due within one year has been determined to be immaterial to the basic financial statements.

At June 30, 2012, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30:

Ca p i ta l Le a se s Principal

2017

$ 4,100,000.00 $

Fiscal Year Ended June 30:

General Obligation Debt

Principal

I n te r e st

U namortized Bond Premium

2013 2014 2015 2016 2017 2018

$ 1,920,000.00 $ 3,410,000.00 3,585,000.00 3,620,000.00 3,665,000.00 3,720,000.00

703,773.06 $ 618,050.00 530,175.00 385,900.00 222,100.00
74,400.00

330,511.13 330,511.13 330,511.13 330,511.13 330,511.13
82,627.77

Total Principal and Interest

$ 19,920,000.00 $ 2,534,398.06 $ 1,735,183.42

NOTE 11: ON-BEHALF PAYMENTS
The School District has recognized revenues and costs in the amount of $143,059.34 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.
Georgia Department of Education Paid to the Teachers' Retirement System of Georgia For Teachers' Retirement System (TRS) Employer's Cost In the amount of $26,417.34
Office of the State Treasurer Paid to the Public School Employees' Retirement System For Public School Employees' Retirement (PSERS) Employer's Cost In the amount of $116,642.00

- 23 -

WALKER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "I"

NOTE 12: SPECIAL ITEMS

During fiscal year 2012, the School District received $100,354.50 in insurance proceeds to make repairs to capital assets for damages occurred as a result of straight line winds in June 2011. The building damaged was fully depreciated. Therefore, no asset impairment loss occurred. These proceeds were relocated to the Advancing Education Center.
NOTE 13: SIGNIFICANT COMMITMENTS

The following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2012, together with funding available:

Project

Unearned Executed C o ntra cts

Funding Available From State

Saddle Ridge Elem entary School and M iddle School

1 0 R A -7 4 6 -0 1 4

$

Science and Technology Center Dem olition

Resurfacing Tennis Courts - LaFayette High School

11,593,231.21 $ 3 0 ,8 0 0 .0 0 2 2 ,0 0 0 .0 0

5 ,6 1 2 ,5 3 6 .0 0

$ 11,646,031.21 $

5 ,6 1 2 ,5 3 6 .0 0

The amounts described in this note are not reflected in the basic financial statements.
NOTE 14: SIGNIFICANT CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.
The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the basic financial statements.
NOTE 15: POST-EMPLOYMENT BENEFITS
GEORGIA SCHOOL PERSONNEL POST-EMPLOYMENT HEALTH BENEFIT FUND
Plan Description. The Georgia School Personnel Post-employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Benefit Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (O.C.G.A.) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board). The Department of Community Health, which includes the School OPEB Fund, issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.
Funding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. For members with fewer than five years of service as of January 1, 2012, contributions also vary based on years of service. On average, members with five years or more of service as of January 1, 2012, pay approximately 25 percent of the cost of the health insurance coverage. In accordance with the Board resolution dated

- 24 -

WALKER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "I"

December 8, 2011, for members with fewer than five years of service as of January 1, 2012, the State provides a premium subsidy in retirement that ranges from 0% for fewer than 10 years of service to 75% (but no greater than the subsidy percentage offered to active employees) for 30 or more years of service. The subsidy for eligible dependents ranges from 0% to 55% (but no greater than the subsidy percentage offered to dependents of active employees minus 20%). No subsidy is available to Medicare eligible members not enrolled in a Medicare Advantage Option. The Board of Community Health sets all member premiums by resolution and in accordance with the law and applicable revenue and expense projections. Any subsidy policy adopted by the Board may be changed at any time by Board resolution and does not constitute a contract or promise of any amount of subsidy.
Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected "pay-as-you-go" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.
The combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30, 2012:
For certificated teachers, librarians and regional educational service agencies and certain other
eligible participants:

June 2011 July 2011 August 2011 - March 2012 April 2012 - June 2012

1.429% of covered payroll for July coverage 18.534% of covered payroll for August coverage 24.000% of covered payroll for September - April coverage
3.958% of covered payroll for May - July coverage

For non-certificated school personnel:

July 2011 - August 2011

$246.20 per member per month

September 2011 - June 2012 $296.20 per member per month

No additional contribution was required by the Board for fiscal year 2012 nor contributed to the School OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the School plan for other post-employment benefits and are subject to appropriation.

The School District's combined active and retiree contributions to the health insurance plans, which equaled the required contribution, for the current fiscal year and the preceding two fiscal years were as follows:

Fiscal Year

Percentage C o ntribute d

Required C o n trib u tio n

2012 2011 2010

100% 100% 100%

$

8 ,8 8 6,6 3 9.3 4

$

8 ,7 6 2,8 8 4.7 4

$

7 ,8 8 1,3 7 8.8 6

- 25 -

WALKER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "I"

NOTE 16: RETIREMENT PLANS TEACHERS' RETIREMENT SYSTEM OF GEORGIA (TRS)

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

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

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

Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 30 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available.

Funding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 10 years of service. If a member terminates with less than 10 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2012, were 5.53% of annual salary. The member contribution rate will increase to 6.00% effective July 1, 2012. Employer contributions required for fiscal year 2012 were 10.28% of annual salary as required by the June 30, 2009, actuarial valuation. The employer contribution rate will increase to 11.41% effective July 1, 2012.

Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage C o ntribute d

Required C o n trib u tio n

2012 2011 2010

100% 100% 100%

$

4 ,9 1 2,9 5 0.9 0

$

5 ,1 1 8,2 6 8.3 1

$

4 ,8 2 9,4 0 5.7 4

- 26 -

WALKER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "I"

PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM (PSERS)
Bus drivers, lunchroom personnel, and maintenance and custodial personnel are members of the Public School Employees' Retirement System of Georgia. The System is funded by contributions by the employees and by the State of Georgia. The School District makes no contribution to this plan.
DEFINED CONTRIBUTION PLAN
In December 2007, Walker County Board of Education began an employer paid 403(b) annuity plan for the group of employees covered under the Public School Employees' Retirement System (PSERS). Recognizing that PSERS was a limited defined contribution and defined benefit plan which did not provide for an adequate retirement for this group of employees, it was the Board's desire to supplement the retirement of this group.
The Board selected Variable Annuity Life Insurance Company as the provider of this plan. For each employee covered under PSERS, the Board began contributing to the plan an amount equal to three percent of the employee's base pay.
The employee becomes vested in the plan with five years of experience. Employees who had already achieved five years of experience at the time the plan was implemented were vested upon enrollment.
Funds accumulated in the employer paid accounts are only available to the employee upon termination of employment and five years of service to Walker County Board of Education. If an employee terminates employment prior to achieving years of service, funds paid on behalf of the non-vested employee are credited back to the Board.
The vendor for the plan changed to Lincoln Financial in January 2009.
Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year
2012 2011 2010

Percentage C o ntribute d

Required C o n trib u tio n

100% 100% 100%

$

13 1 ,6 9 8.5 9

$

21 2 ,3 1 3.0 3

$

21 1 ,8 4 8.9 5

- 27 -

(This page left intentionally blank)

WALKER COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2012

SCHEDULE "1"

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

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

VARIANCE OVER/UNDER

$ 20,975,000.00 $ 20,975,000.00 $ 21,077,157.71 $ 102,157.71

300,000.00

300,000.00

307,815.39

7,815.39

47,499,793.00 47,450,903.00 47,803,812.17

352,909.17

9,792,477.72 10,764,472.34 11,385,717.58

621,245.24

1,142,165.00

1,142,165.00

1,352,953.20

210,788.20

174,505.00

174,505.00

363,995.29

189,490.29

911,270.00

911,270.00

2,224,250.87 1,312,980.87

$ 80,795,210.72 $ 81,718,315.34 $ 84,515,702.21 $ 2,797,386.87

$ 56,236,237.31 $ 57,067,214.93 $ 56,537,002.06 $ 530,212.87

2,729,666.00 2,936,858.41 1,482,724.00
487,309.00 5,026,566.00
402,072.00 6,612,918.00 4,750,230.00
370,360.00 395,255.00 5,530,887.00

2,717,090.00 3,070,567.41 1,482,724.00
505,475.00 5,026,566.00
402,072.00 6,612,918.00 4,750,698.00
370,360.00 397,505.00 5,530,887.00

2,639,612.87 2,712,443.84 1,430,272.76
575,027.15 4,979,561.91
887,053.63 6,060,734.93 4,449,889.68
348,944.83 376,562.70 5,274,137.35

77,477.13 358,123.57
52,451.24 -69,552.15 47,004.09 -484,981.63 552,183.07 300,808.32 21,415.17 20,942.30 256,749.65

$ 86,961,082.72 $ 87,934,077.34 $ 86,271,243.71 $ 1,662,833.63

$ -6,165,872.00 $ -6,215,762.00 $ -1,755,541.50 $ 4,460,220.50

$ $ -100,000.00 $ -100,000.00

100,354.50 $ 100,354.50

-26,150.00

73,850.00

$ -100,000.00 $ -100,000.00 $

74,204.50 $ 174,204.50

$ -6,265,872.00 $ -6,315,762.00 $ -1,681,337.00 $ 4,634,425.00

19,465,147.66 19,465,147.66 19,465,147.66

0.00

9,863.66

-9,863.66

Fund Balances - Ending

$ 13,199,275.66 $ 13,159,249.32 $ 17,783,810.66 $ 4,624,561.34

Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual
(1) Original and Final Budget amounts do not include budgeted revenues ($1,764,190.80) or expenditures ($1,756,617.57) of the various principal accounts.
The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 29 -

WALKER COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2012

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Schools and Roads Cluster Pass-Through From Office of the State Treasurer Schools and Roads - Grants to States
Other Programs Pass-Through From Georgia Department of Education Food Services ARRA - Child Nutrition Discretionary Grants Limited Availability Fresh Fruit and Vegetable Program
Total Other Programs
Total U. S. Department of Agriculture
Education, U. S. Department of Educational Technology State Grants Cluster Pass-Through From Georgia Department of Education ARRA - Education Technology State Grants
School Improvement Grants Cluster Pass-Through From Georgia Department of Education ARRA - School Improvement Grants
Special Education Cluster Pass-Through From Georgia Department of Education Special Education ARRA - Grants to States Grants to States Preschool Grants
Total Special Education Cluster
Title I, Part A Cluster Pass-Through From Georgia Department of Education ARRA - Title I Grants to Local Educational Agencies Title I Grants to Local Educational Agencies
Total Title I, Part A Cluster
Other Programs Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Education Jobs Fund English Language Acquisition Grants Improving Teacher Quality State Grants
Total Other Programs
Total U. S. Department of Education

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

* 10.553 * 10.555

N/A

(2)

N/A $ 4,933,291.32 (1)

$ 4,933,291.32

10.665

N/A

(3)

10.579 10.582

N/A $

24,116.00

N/A

167,410.44

$ 191,526.44

$ 5,124,817.76

* 84.386

N/A $ 122,757.19

* 84.388

N/A $ 1,248,305.48

84.391 84.027 84.173

N/A $

4,985.31

N/A

2,051,078.34

N/A

62,502.49

$ 2,118,566.14

84.389 84.010

N/A $

17,494.34

N/A

2,775,390.07

$ 2,792,884.41

84.048 84.410 84.365 84.367

N/A $

90,552.63

N/A

23,312.00

N/A

3,307.35

N/A

447,576.04

$ 564,748.02

$ 6,847,261.24

- 30 -

WALKER COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2012

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Defense, U. S. Department of Direct Department of the Air Force R.O.T.C. Program Department of the Army R.O.T.C. Program
Total U. S. Department of Defense

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

$

65,262.34

64,822.95

$ 130,085.29

Total Expenditures of Federal Awards

$ 12,102,164.29

N/A = Not Available

Notes to the Schedule of Expenditures of Federal Awards

(1) Includes the Federally assigned value of donated commodities for the Food Donation Program in the amount of $489,772.97. (2) Expenditures for the funds earned on the School Breakfast Program ($1,122,226.46) were not maintained separately and are included in the
2012 National School Lunch Program. (3) Funds earned on this program, in the amount of $16,680.03, do not require reporting of expenditures.

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

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

The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Walker County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 31 -

WALKER COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2012

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 English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Mid-term Adjustment Hold-Harmless Amended Formula Adjustment Categorical Grants Pupil Transportation Regular Education Equalization Funding Grant Food Services Nursing Services Other State Programs Dual Enrollment Funding Health Insurance Math and Science Supplements Move On When Ready Grant Preschool Handicapped Program Pupil Transportation - State Bonds Residential and Reintegration Services Teachers' Retirement Virtual Schools Grant Vocational Education
Office of the State Treasurer Public School Employees Retirement

See notes to the basic financial statements.

- 32 -

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

1,031,914.52

2,824,696.00 253,071.00
5,843,201.00 724,740.00
2,735,555.00 393,584.00
4,520,202.00 3,787,525.00 1,194,965.00 7,911,058.00 2,130,784.00
522,825.00 348,300.00
49,462.00 882,775.00 252,684.00 196,403.00
1,138,559.00 1,829,974.00 2,292,205.00
36,256.00 -7,300,086.00

949,371.00 5,799,798.00
134,894.00 140,055.00
1,363.00 6,272,424.00
29,511.31 700.00
105,530.00 381,460.00
77,466.00 26,417.34
1,625.00 165,903.00

116,642.00

$

47,803,812.17

WALKER COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2012

SCHEDULE "4"

PROJECTS ESPLOST II (2002)

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3) (4)

AMOUNT EXPENDED IN PRIOR YEARS (3) (4)

TOTAL COMPLETION
COST

EXCESS PROCEEDS NOT
EXPENDED

ESTIMATED COMPLETION
DATE

1. Constructing and equipping a new Chattanooga Valley Middle School, a new Rossville Middle School and a new K-5 elementary school in North Walker County; $ 15,925,000.00 $ 26,470,001.39 $

2. Construction of a new planetarium;

500,000.00

64,542.25

0.00 $ 23,470,001.39

57,600.00

6,942.25 $

64,542.25 $

August 2013 (5) 0.00 Completed (6)

Total ESPLOST II (2002)

$ 16,425,000.00 $ 26,534,543.64 $ 57,600.00 $ 23,476,943.64 $ 64,542.25 $

0.00

ESPLOST III (2007)

1. Construction of a new K-5 elementary school in north

Walker County;

$ 11,000,000.00 $ 16,000,000.00 $ 3,439,394.10 $

2. Construction of classroom additions to Naomi Elementary School;

500,000.00

1,584,362.90

866.43

1,792,591.14 1,583,496.47 $ 1,584,362.90 $

August 2013 (5) 0.00 Completed

3. Acquisition, construction, improvement, repair and equipping of other buildings and facilities useful or desirable in connection therewith, including acquisition of any necessary property therefore, both real and personal.

8,955,143.00

2,616,747.05

62,652.00

2,554,095.05 2,616,747.05

Total ESPLOST III (2007)

$ 20,455,143.00 $ 20,201,109.95 $ 3,502,912.53 $ 5,930,182.66 $ 4,201,109.95 $

0.00 Completed 0.00

ESPLOST IV (2012)

1. Renovations, new construction, improvements and

equipping LaFayette High school including a new field

house and roof;

$

2. Renovations, new construction, improvements and equipping Rossville Elementary School;

3. Renovations, new construction, improvements and equipping Chattanooga Valley Elementary School;

4. Renovations, new construction, improvements and equipping LaFayette Middle School;
5. Construction of new roofs at North LaFayette Elementary, Ridgeland High gym and central service sites;

6. Improvements to parking lots and drives;

7. New school buses and improvements to existing school buses;

8. Additions to, remodeling, renovating, improving, and equipping existing educational buildings, properties, and facilities of the school district, and acquiring any property, both real and personal, and equipment necessary therefore, additions and improvements to central services facilities, computers and related technology, and athletic facilities and sites, and;

9. A new high school -- beginning phases as funds allow (if supported by growth in student population)

(10) Cost the issuance of general obligation debt for the purpose of financing the costs of the capital outlay projects described above

5,200,000.00 $ 2,000,000.00 1,000,000.00 1,000,000.00
350,000.00 750,000.00 3,200,000.00
8,500,000.00 6,177,500.00
0.00

5,200,000.00 $ 2,000,000.00 1,000,000.00 1,000,000.00
350,000.00 750,000.00 3,200,000.00
8,500,000.00 6,177,500.00
408,525.33

14,764.34
173,182.10 185.00
408,525.33

Total ESPLOST IV (2012)

$ 28,177,500.00 $ 28,586,025.33 $ 596,656.77 $

$ 408,525.33 $ 0.00 $ 408,525.33 $

August 2013 June 2014 June 2014 December 2013 April 2013 September 2013 August 2017
August 2017 August 2017 0.00 Completed 0.00

$ 65,057,643.00 $ 75,321,678.92 $ 4,157,169.30 $ 29,407,126.30 $ 4,674,177.53 $

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

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

Prior Years

$ 3,872,730.83

Current Year

194,600.00

Total

$ 4,067,330.83

(5) Funds from ESPLOST II and ESPLOST III will be combined with state funds to fund Saddle Ridge Elementary and Middle Schoo

(6) Funds from ESPLOST II and ESPLOST III were combined to fund the Jim Smith Planetarium

See notes to the basic financial statements.

- 33 -

0.00

(This page left intentionally blank)

WALKER COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2012

SCHEDULE "5"

DESCRIPTION

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

Direct Instructional Programs

Kindergarten Program

$

Kindergarten Program-Early Intervention Program

Primary Grades (1-3) Program

Primary Grades-Early Intervention (1-3) Program

Upper Elementary Grades (4-5) Program

Upper Elementary Grades-Early Intervention (4-5)

Program

Middle School (6-8) Program

High School General Education (9-12) Program

Vocational Laboratory (9-12) Program

Students with Disabilities

Category I

Category II

Category III

Category IV

Category V

Gifted Student - Category VI

Remedial Education Program

Alternative Education Program

English Speakers of Other Languages (ESOL)

3,263,691.00 $ 274,140.00
6,811,665.00 747,130.00
3,193,452.00 443,648.00
5,196,464.00 4,357,197.00 1,387,577.00 9,189,577.00
2,432,119.00 667,171.00 401,582.00 58,811.00

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

$

38,424,224.00 $

Media Center Program Staff and Professional Development

1,021,094.00 226,942.00

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

3,039,620.49 $ 246,290.13
8,083,132.59 612,909.93
4,626,435.04 339,874.71

28,534.60 $ 64,927.17 25,819.48

3,068,155.09 246,290.13
8,148,059.76 612,909.93
4,652,254.52 339,874.71

6,375,131.09 6,500,440.06 1,353,610.46

94,940.16 121,945.32
79,211.15

6,470,071.25 6,622,385.38 1,432,821.61

763,779.27 1,130,317.19 7,755,159.97 1,717,939.28
1,368,774.34 1,075,125.80
280,670.79 213,643.17

4,336.07 1,955.72 71,525.58 17,897.39 1,793.66 7,432.67 1,988.24 534,000.00 7,366.03

768,115.34 1,132,272.91 7,826,685.55 1,735,836.67
1,793.66 1,376,207.01 1,077,114.04
814,670.79 221,009.20

45,482,854.31 $ 1,063,673.24 $ 46,546,527.55

1,287,611.58 43,970.00

81,592.17 155,260.28

1,369,203.75 199,230.28

TOTAL QBE FORMULA FUNDS

$

39,672,260.00 $ 46,814,435.89 $ 1,300,525.69 $ 48,114,961.58

(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State amended formula adjustment.

See notes to the basic financial statements.

- 35 -

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
March 21, 2013

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Walker County Board of Education
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Walker County Board of Education as of and for the year ended June 30, 2012, which collectively comprise Walker County Board of Education's basic financial statements and have issued our report thereon dated March 21, 2013. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
Management of Walker County Board of Education is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered Walker County Board of Education's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Walker County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Walker County Board of Education's internal control over financial reporting.
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.

2012YB-10

Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Walker County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
We noted certain matters that we have reported to management of Walker County Board of Education in a separate letter dated March 21, 2013.
This report is intended solely for the information and use of management, members of the Walker County Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,

GSG:as 2012YB-10

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
March 21, 2013

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Walker County Board of Education
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
Ladies and Gentlemen:
Compliance
We have audited Walker County Board of Education's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2012. Walker County Board of Education's major Federal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major Federal programs is the responsibility of Walker County Board of Education's management. Our responsibility is to express an opinion on Walker County Board of Education's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Walker County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Walker County Board of Education's compliance with those requirements.
In our opinion, the Walker County Board of Education complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2012.

2012SA-10

Internal Control Over Compliance
Management of Walker County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to Federal programs. In planning and performing our audit, we considered Walker County Board of Education's internal control over compliance with the requirements that could have a direct and material effect on a major Federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Walker County Board of Education's internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a Federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a Federal program will not be prevented, or detected and corrected, on a timely basis.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above.
This report is intended solely for the information and use of management, members of the Walker County Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,

GSG:as 2012SA-10

Greg S. Griffin State Auditor

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

WALKER COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2012
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.

SECTION IV FINDINGS AND QUESTIONED COSTS

WALKER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2012

I SUMMARY OF AUDITOR'S RESULTS

Financial Statements

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

Unqualified

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

No None Reported

Noncompliance material to financial statements noted:

No

Federal Awards

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

No None Reported

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

Unqualified

Any audit findings disclosed that are required to be reported in

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

No

Identification of major programs: CFDA Numbers

Name of Federal Program or Cluster

10.553, 10.555 84.386 84.388

Child Nutrition Cluster Educational Technology State Grants Cluster School Improvement Grants Cluster

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

$363,064.93

Auditee qualified as low-risk auditee?

No

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

No matters were reported. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.