WALTON COUNTY BOARD OF EDUCATION
MONROE; GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30; 2004
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor
WALTON COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTION I
FINANCIAL
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
REQUIRED SUPPLEMENTARY INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
EXHIBITS
BASIC FINANCIAL STATEMENTS
DISTRICT-WIDE FINANCIAL STATEMENTS
A
STATEMENT OF NET ASSETS
3
B
STATEMENT OF ACTIVITIES
4
FUND FINANCIAL STATEMENTS
C
BALANCE SHEET
GOVERNMENTAL FUNDS
6
D
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS
7
E
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES
GOVERNMENTAL FUNDS
8
F
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT
OF REVENUES, EXPENDITURES AND CHANGES IN FUND
BALANCES TO THE STATEMENT OF ACTIVITIES
9
G
STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
11
H
NOTES TO THE BASIC FINANCIAL STATEMENTS
12
SCHEDULES
REQUIRED SUPPLEMENTARY INFORMATION
1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES - BUDGET AND ACTUAL
GENERAL FUND
27
WALTON COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTION I
FINANCIAL
SCHEDULES
SUPPLEMENTARY INFORMATION
2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
28
3 SCHEDULE OF STATE REVENUE
30
4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
32
5 ALLOTMENTS AND EXPENDITURES
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)
BY PROGRAM
33
SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
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
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133
SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
WALTON COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS
SECTIONV MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES
SECTION I FINANCIAL
Russell W. Hinton
STATE AUDITOR
(404) 656-2174
DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
March 17, 2005
Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Walton County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) of the Walton County Board of Education, as of and for the year ended June 30, 2004, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe Walton 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 ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our op1mons.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information ofthe Walton County Board ofEducation, as ofJune 30, 2004, 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.
2004ARL-11
In accordance with Government Auditing Standards, we have also issued our report dated March 17, 2005, on our consideration ofthe Walton County Board ofEducation's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose ofthat report is to describe the scope ofour testing ofinternal control over financial reporting and compliance and the results ofthat 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 read in conjunction with this report in considering the results of our audit.
Management's Discussion and Analysis and the Schedule ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through vii and page 27 respectively, are not a required part of the basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Walton County Board of Education's basic financial statements. The accompanying supplementary information which consist of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U.S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
A copy ofthis report has been filed as a permanent record in the office ofthe State Auditor and made available to the press ofthe State, as provided for by Official Code of Georgia Annotated section 506-24.
Respectfully submitted,
RWH:as 2004ARL-11
State Auditor
WALTON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004
INTRODUCTION
Our discussion and analysis of the Walton County School District's financial performance provides an overview of the School District's financial activities for the fiscal year ended June 30, 2004. The intent of this discussion and analysis is to look at the School District's financial performance as a whole; readers should also review the notes to the basic financial statements to enhance their understanding of the School District's financial performance.
FINANCIAL HIGHLIGHTS
Key financial highlights for fiscal year 2004 are as follows:
On the District-wide financial statements, the assets of the School District exceeded liabilities by $102 million. Of this amount, $11 million is unrestricted and is available for spending at the School District's discretion.
The School District had $84 million in expenses relating to governmental activities; only $59 million of these expenses are offset by program specific charges for services, grants, and contributions. General revenues (primarily property and sales taxes) of $42 million were provided for these programs.
As stated above, general revenues accounted for $42 million or 42% of all revenues totaling $101 million. Program specific revenues in the form of charges for services, grants and contributions accounted for the rest.
OVERVIEW OF THE FINANCIAL STATEMENTS
This annual report consists of three parts; management's discussion and analysis, the basic financial statements and required supplementary information. The basic financial statements include two levels of statements that present different views of the School District. These include the District-wide and fund financial statements.
The District-wide financial statements include the Statement of Net Assets and Statement of Activities. These statements provide information about the activities of the School District presenting both short-term and long-term information about the School District's overall financial status.
The fund financial statements focus on individual parts of the School District, reporting the School District's operation in more detail. The Governmental Funds statements disclose how basic services are financed in the short-term as well as what remains for future spending. The Fiduciary Funds statements provide information about the financial relationships in which the School District acts solely as a trustee or agent for the benefit of others. The fund financial statements reflect the School District's most significant funds. In the case of the Walton County School District, the General Fund, District-wide Capital Projects Fund, and Debt Service Fund are the most significant funds.
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WALTON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004
The financial statements also include notes that explain some of the information in the statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the financial statements. Additionally, other supplementary information (not required) is also presented that further supplements understanding of the financial statements.
District-wide Statements
The District-wide financial statements are basically a consolidation of all of the School District's operating funds into one column called governmental activities. In reviewing the District-wide financial statements, a reader might ask the question, are we in a better financial position than last year? The Statement of Net Assets and the Statement of Activities provides the basis for answering this question. These financial statements include all School District's assets and liabilities and uses the accrual basis of accounting similar to the accounting used by most private-sector companies. This basis of accounting takes into account all of the current year's revenues and expenses regardless of when cash is received or paid.
These two statements report the School District's net assets and any changes in those assets. The change in net assets is important because it tells the reader that, for the School District as a whole, the financial position of the School District has improved or diminished. The causes of this change may be the results of many factors, including those not under the School District's control, such as the property tax base, facility conditions, required educational programs and other factors.
The Statement of Net Assets and the Statement of Activities reflects the School District's governmental activities.
Fund Financial Statements
The School District uses many funds to account for a multitude of financial transactions during the fiscal year. However, the fund financial statements presented in this report provide detail information about only the School District's significant or major funds.
Governmental Funds - Most of the School District's activities are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at yearend available for spending in future periods. These funds are reported using the modified accrual method of accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the School District's general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The differences between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds are reconciled to the financial statements.
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WALTON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004
Fiduciary Funds - The School District is the trustee, or fiduciary, for assets that belong to others, such as school clubs and organizations within the principals' accounts. The School District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The School District excludes these activities from the District-wide financial statements because it cannot use these assets to finance its operations.
FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT AS A WHOLE
Recall that the Statement of Net Assets provides the perspective of the School District as a whole. Table 1 provides a summary of the School District's net assets for this fiscal year.
Table 1 Net Assets
Governmental Activities
Fiscal
Fiscal
Year 2004 Year 2003
Assets Current and Other Assets Capital Assets, Net
$ 33,679,019 $ 33,961,423 92,366.275 73.086.651
Total Assets
$126.045.294 $107.048.074
Liabilities Current and Other Liabilities Long-Term Liabilities
$ 15,286,436 $ 12,683,525 8,730.000 9,700.000
Total Liabilities
$ 24.016.436 $ 22.383.525
Net Assets Invested in Capital Assets, Net of Related Debt Restricted Unrestricted
$ 83,636,275 $ 63,386,651 7,374,694 11,617,273 11.017.889 9.660.625
Total Net Assets
$10220282858 $ 8426642549
Table 2 shows the Changes in Net Assets for this fiscal year.
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WALTON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004
Table 2 Change in Net Assets
Revenues Program Revenues: Charges for Services and Sales Operating Grants and Contributions Capital Grants and Contributions
Total Program Revenues
General Revenues: Taxes Property Taxes For Maintenance and Operations For Debt Services Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax Intangible Recording Tax Real Estate Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Total Revenues
Program Expenses Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations ofNon-Instructional Services Enterprise Operations Food Services Interest on Short-Term and Long-Term Debt
Total Expenses
Increase in Net Assets
Governmental Activities
Fiscal
Fiscal
Year 2004
Year 2003
$ 1,680,919 47,023,479 10,376,520
$ 59,080,918
$ 1,676,287 47,151,350 827,817
$ 49,655,454
$ 29,861,853 1,577,633 7,610
6,445,774 1,293,851
394,032
1,125,135 254,876
1,363,990
$ 42,324,754
$101,405,672
$ 24,412,764 1,531,390 6,959
5,241,850 1,494,793
269,334
2,536,135 360,387
1,519,666
$ 37,373,278
$ 87,028,732
$ 53,316,926
2,542,171 1,987,860 1,498,530 1,779,786 5,168,973
649,808 5,701,119 3,709,650
743,484 1,015,325
1,213,919 4,229,497
484,315
$ 84,041,363
$ 17,364,309
$ 56,200,952
2,346,215 1,878,356 1,412,842 1,587,958 5,056,769
584,195 5,864,938 3,356,408
687,730 840,604
330,425 4,064,691
530,498
$ 84,742,581
$ 2,286,151
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WALTON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004
Governmental Activities
The Statement of Activities shows the cost of program services and the charges for services and grants offsetting these services. Table 3 shows, for governmental activities, the total cost of services and the net cost of services. Net cost of services can be defined as the total cost less fees generated by the activities and intergovernmental revenue provided for specific programs. The net cost reflects the financial burden on the School District's taxpayers by each of these functions.
Table 3 Governmental Activities
Total Cost of Services
Fiscal
Fiscal
Year 2004 Year 2003
Net Cost of Services
Fiscal
Fiscal
Year 2004 Year 2003
Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services Interest on Short-Term and Long-Term Debt
$ 53,316,926 $ 56,200,952 $10,743,067 $20,066,931
2,542,171 1,987,860 1,498,530 1,779,786 5,168,973
649,808 5,701,119 3,709,650
743,484 1,015,325
2,346,215 1,878,356 1,412,842 1,587,958 5,056,769
584,195 5,864,938 3,356,408
687,730 840,604
2,132,432 945,395 627,811 273,302
2,690,238 649,808
2,967,581 1,985,642
680,952 794,386
1,966,470 1,052,642
556,898 184,664 3,298,959 581,565 3,236,101 1,610,544 685,702 685,281
1,213,919 4,229,497
484,315
330,425 4,064,691
530,498
1,213,919 -1,228,403
484,315
330,425 300,447 530,498
Total Expenses
$84,041.363 $84,742.581 $ 24,960.445 $ 35,087.127
FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT'S FUNDS
The School District's governmental funds are accounted for using the modified accrual basis of accounting. The governmental funds had total revenues and other financing sources of $104.8 million and total expenditures and other financing uses of $105.3 million.
General Fund Budgeting Highlights
The School District's budget is prepared according to Georgia Law. The most significant budgeted fund is the General Fund. During the course of fiscal year 2004, the School District amended its general fund budget as needed.
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WALTON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004
For the General Fund, the actual revenues and other financing sources of $85.6 million exceeded the original budgeted amounts of $78.3 million by $7.3 million. This difference was primarily due to the increase in property tax revenue of $4.4 million and increase in miscellaneous revenue of $1.6 million.
The final actual expenditures and other financing use of $81.4 million exceeded the original budgeted amount of $78.2 by $3.2 million. This difference was primarily due to the inclusion of the principal's accounts in our financial statements, but not in the original budget.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
At fiscal year ended June 30, 2004, the School District had $92.3 million invested in capital assets, all in governmental activities. Table 4 reflects a summary of these balances net of accumulated depreciation.
Table 4 Capital Assets (Net of Depreciation)
Governmental Activities
Fiscal
Fiscal
Year 2004 Year 2003
Land Construction in Progress Buildings and Building Improvements Equipment
$ 7,456,734 24,731,597 57,346,151 2,831,793
$ 7,456,734 7,175,600
55,019,190 3,435,127
Total
$ 92,366,275 $ 73,086.651
Due to the ongoing growth in the county, the School District has numerous construction projects including new buildings, additions and renovations.
Debt
At fiscal year ended June 30, 2004, the School District had $8.7 million in bonds outstanding. Table 5 summarizes the School District's debt for general obligation bonds.
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WALTON COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004
Table 5 Debt at June 30
Governmental Activities
Fiscal
Fiscal
Year 2004 Year 2003
Bonds Payable
$ 8.730.000 $ 9,700.000
CURRENT ISSUES
Currently known facts, decisions or conditions that are expected to have a significant effect on financial positions or results of operations.
Economic Slowdown - State funding for education has been stagnant and as a result more pressure is being placed on the local School Districts to prioritize its educational programs and provide additional local funding. Additional costs to the School District will be required with the continued implementation of House Bill 1187, which mandates lower teacher to student ratios, requiring additional teachers and additional classrooms. Despite these challenges, the Walton County School District is remaining optimistic about the ability of the School District to maximize all of the financial resources to provide a quality education to our students.
Capital Improvements - The School District plans capital improvements as future capital needs arise due to increased student population and facility repair and maintenance needs. Specific capital expenditure plans are formalized in conjunction with Special Purpose Local Option Sales Tax (SPLOST) and anticipated annual receipts of capital outlay funds from the state of Georgia Department of Education. Additionally, as of March 15, 2005, a $71.5 million bond issue was approved by the qualified voters of Walton County which will be used to build two new elementary and one high school. The School District regularly monitors anticipated capital outlay needs.
CONTACTING THE SCHOOL DISTRICT'S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overview of the School District's finances and to show the School District's accountability for the money it receives. If you have questions about this report or need additional financial information, contact Mr. Harry S. Lee, Director of Budget and Finance at Walton County School District, 200 Double Springs Church Road, Monroe, Georgia 30656. You may also email your question to Mr. Lee at hlee@walton.kl2.ga.us.
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WALTON COUNTY BOARD OF EDUCATION
WALTON COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30. 2004
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories Capital Assets Land Construction in Progress Buildings Equipment Less: Accumulated Depreciation
Total Assets
LIABILITIES
Accounts Payable Salaries Payable Contracts Payable Retainages Payable 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. -3 -
EXHIBIT"A"
GOVERNMENTAL ACTIVITIES
$
12,374,665
11,953,858
2,379,102 6,039,568
848,999 6,944
75,883
7,456,734 24,731,597 68,128,182
9,423,259 -17 373 497
$ ===12=6=,0=4=5=,2=94=
$
3,600,307
7,066,004
2,846,087
1,774,038
1,025,000 7 705 000
$
24,016,436
$
83,636,275
399,748 947,200 6,027,746 11 017 889
$
102,028,858
$ ===12=6=,0=4=5=,2=94===
WALTON COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30. 2004
GOVERNMENTAL ACTIVITIES
Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services Interest on Short-Term and Long-Term Debt
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations For Debt Services Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Intangible Recording Tax Real Estate Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Change in Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year
EXPENSES
CHARGES FOR SERVICES
$
53,316,926
2,542,171 1,987,860 1,498,530 1,779,786 5,168,973
649,808 5,701,119 3,709,650
743,484 1,015,325
1,213,919 4,229,497 $
484 315
$
84,041,363 $
1,680,919 1680919
The notes to the basic financial statements are an integral part of this statement. -4-
EXHIBIT"B"
PROGRAM REVENUES
OPERATING
CAPITAL
GRANTS AND
GRANTS AND
CONTRIBUTIONS CONTRIBUTIONS
NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS
$
35,025,377 $
7,548,482 $
-10,743,067
387,631 1,033,055
870,719 1,424,396 1,716,983
2,612,191 1,467,281
62,532 220,939
22,108 9,410
82,088 761,752
121,347 256,727
-2,132,432 -945,395 -627,811 -273,302
-2,690,238 -649,808
-2,967,581 -1,985,642
-680,952 -794,386
2,202,375
1,574,606
-1,213,919 1,228,403 -484 315
$
47,023,479 $
10,376,520 $
-24,960,445
$
29,861,853
1,577,633
7,610
6,445,774 1,293,851
394,032 1,125,135
254,876 1,363,990
$
42,324,754
$
17,364,309
84,664,549
$ ===1=02;;.,,0=2=8'=8=58=
-5-
WALTON COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2004
EXHIBIT"C"
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories
Total Assets
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Salaries Payable Contracts Payable Retainages Payable
Total Liabilities
FUND BALANCES
Reserved for: Continuation of Federal Programs Debt Service Inventories Capital Projects
Unreserved Designated for Self-Insurance Undesignated Reported in: General Fund Capital Projects
Total Fund Balances
Total Liabilities and Fund Balances
GENERAL FUND
DISTRICTWIDE
CAPITAL PROJECTS
FUND
DEBT SERVICE
FUND
TOTAL
$ 2,039,509 $ 11,953,858
3,964,924 5,269,920
848,999 6,944 75 883
9,447,219 $
1,259,298 769,648
887,937 $ 110,118
12,374,665 11,953,858
5,334,340 6,039,568
848,999 6,944 75 883
$ 24,160,037 $ 11,476,165 $ 998,055 $ 36,634,257
$ 3,148,872 $ 7,066,004
$ 10,214,876 $
451,435
2,846,087 1,774,038
5,071,560
$ 3,600,307 7,066,004 2,846,087 1 774,038
$ 15,286,436
$
323,865
75,883 $
1,000,000
12,545,413
$ 13,945,161 $
$ 6,027,746
376,859 6,404,605 $
$ 998,055
998,055 $
323,865 998,055
75,883 6,027,746
1,000,000
12,545,413 376,859
21,347,821
$ 24,160,037 $ 11,476,165 $ 998,055 $ 36,634,257
The notes to the basic financial statements are an integral part of this statement. -6-
WALTON COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30. 2004
EXHIBIT"D"
Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Assets are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of:
Land Construction in Progress Buildings Equipment Accumulated Depreciation
Total Capital Assets
Some of the School District"s property tax revenues will be collected after year-end but are not available soon enough to pay for the current period's expenditures.
Long-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of:
Bonds Payable
Net Assets of Governmental Activities (Exhibit "A")
$ 21.347,821
$ 7,456,734 24,731,597 68,128,182 9,423,259 -17,373,497
92,366,275
-2,955,238
-8,730,000 $ 102,028,858
The notes to the basic financial statements are an integral part of this statement. -7-
WALTON COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30. 2004
EXHIBIT"E"
REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Food Services Operation
Capital Outlay Debt Services
Principal Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
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
$ 32,146,691
$
1,607,780 $ 6,445,774
41,124,618
10,119,793
7,280,723
1,680,919
160,494
90,400
1,621,029
1,592,944 $ 80,103
3,982 13 189
33,739,635 8,133,657
51,244,411 7,280,723 1,680,919 254,876 1,634,218
$ 85,622,254 $ 16,655,967 $ 1,690,218 $ 103,968,439
$ 51,338,572
$ 51,338,572
2,536,287 1,999,256 1,498,530 1,757,940 4,966,246
649,808 5,931,949 3,041,767
743,484 1,015,325 1,213,919 3,858,616
3,000 $ 22,552,201
2,536,287 1,999,256 1,498,530 1,757,940 4,966,246
649,808 5,931,949 3,041,767
743,484 1,015,325 1,213,919 3,858,616 22,555,201
$
970,000
484 315
970,000 484 315
$ 80,554,699 $ 22,552,201 $ 1454315 $ 104,561,215
$ 5,067,555 $ -5,896,234 $
235,903 $
-592,776
$
835,070
$
-835,070
$
-835,070 $
835,070
$ 4,232,485 $ -5,061,164 $
9,712,676
11,465,769
$
$ 235,903 $ 762,152
835,070 -835 070
0 -592,776 21,940,597
Fund Balances - Ending
$ 13,945,161 $ 6,404,605 $
998,055 $ ==2;;,;1~,3;;,,;4~7.;;,8;;,21=
The notes to the basic financial statements are an integral part of this statement. -8-
WALTON COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30. 2004
EXHIBIT"F"
Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")
$
-592,776
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
$ 21,251,610 -1,701,758
19,549,852
Because some property taxes will not be collected for several months after the School District's fiscal year ends, they are not considered "available" revenues.
-2,292,539
In the Statement of Activities, only the gain on the sale of the equipment is reported, whereas in the Governmental Funds, the entire proceeds from the sale increase financial resources. Thus, the change in net assets differs from the change in fund balances by the carrying value of the equipment sold.
-270,228
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
970,000
Change in Net Assets of Governmental Activities (Exhibit "8")
$ 17,364,309
The notes to the basic financial statements are an integral part of this statement. -9 -
WALTON COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS JUNE 30. 2004
ASSETS Cash and Cash Equivalents
LIABILITIES Funds Held for Others
EXHIBIT"G"
AGENCY FUNDS $ ====1=84=!'=60=0=
$ ====1=8=l4'e:60=0=
The notes to the basic financial statements are an integral part of this statement. - 11 -
WALTON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004
EXHIBIT"H"
Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Walton County Board ofEducation (School District) was established under the laws ofthe 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 Walton County Board of Education.
District-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support ofthe School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting ofinternal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds.
The School District reports the following major governmental funds:
- 12 -
WALTON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004
EXHIBIT"H"
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund.
District-wide Capital Projects Fund accounts for financial resources including Bond Proceeds, Special Purpose Local Option Sales Tax proceeds and grants from Georgia State Financing and Investment Commission to be used for the acquisition, construction or renovation of major capital facilities.
Debt Service Fund accounts for taxes (property and sales) legally restricted for the payment of general long-term principal, interest and paying agent's fees.
The School District reports the following fiduciary fund type:
Agency funds account for assets held by the School District as an agent for various funds, governments or individuals.
BASIS OF ACCOUNTING
The basis ofaccounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis 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
- 13 -
WALTON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004
EXHIBIT"H"
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
liability is incurred, except for principal and interest on general long-term debt, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds ofgeneral long-term liabilities and acquisitions under capital leases are reported as other financing sources.
The School District funds certain programs by a combination ofspecific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the School District to deposit its funds in one or more solvent banks or insured Federal savings and loan associations.
INVESTMENTS
COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase 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 ofreturn 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,
- 14 -
WALTON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004
EXHIBIT"H"
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services,
(7) Repurchase agreements, and
(8) Obligations of other political subdivisions of the State of Georgia.
RECEIVABLES
Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.
PROPERTY TAXES
The Walton County Board ofCommissioners fixed the property tax levy for the 2003 tax digest year (calendar year) on September 15, 2003 (levy date). Taxes were due on November 15, 2003 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2003 tax digest are reported as revenue in the governmental funds for fiscal year 2004. The Walton 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, 2004, for maintenance and operations amounted to $32,139,081 and for school bonds amounted to $1,592,944.
Tax millage rates levied for the 2003 tax year (calendar year) for the Walton County Board of Education were as follows (a mill equals $1 per thousand dollars of assessed value):
School Operations School Bonds
17.02 mills ~mills
17.90 mills
SALES TAXES
Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $6,445,774 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.
- 15 -
WALTON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004
EXHIBIT"H"
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVENTORIES
FOOD INVENTORIES On the basic financial statements, inventories ofdonated food commodities used in the preparation ofmeals are reported at their Federally assigned value and purchased foods inventories are reported at cost (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 ofassets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art.
Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide statements are as follows:
Capitalization Policy
Estimated Useful Life
Land Buildings and Improvements Equipment
All
NIA
$
50,000 15 to 80 years
$
5,000 5 to 25 years
Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives.
GENERAL OBLIGATION BONDS
The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. Bond issuance costs are recognized in the financial statements during the fiscal year bonds are issued. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Assets.
- 16 -
WALTON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004
EXHIBIT"H"
Note 3: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum ofmoney which has not been secured by surety bond, by guarantee ofinsurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. Ifa depository elects the pooled method (OCGA 45-8-13 .1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. OCGA Section 45-8-11 (b) provides an officer holding public funds may, in his discretion, waive the requirement for security in the case ofoperating funds placed in demand deposit checking accounts.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
CATEGORIZATION OF DEPOSITS At June 30, 2004, the bank balances were $6,483,121. The amounts of the total bank balances are classified into three categories of credit risk:
- 17 -
WALTON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004
EXHIBIT"H"
Note 3: DEPOSITS AND INVESTMENTS
Category 1 - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the School District or by the School District's agent in the School District's name.
Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name.
Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the School District's name.)
The School District's deposits are classified by risk category at June 30, 2004, as follows:
Risk Category
Bank Balance
1
$ 1,499,894
2
4,983,227
3
0
Total
$ 6.483.121
CATEGORIZATION OF INVESTMENTS At June 30, 2004, the carrying value ofthe School District's total investments was $7,953,858 which is materially the same as fair value. This investment consisted entirely offunds invested in the Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services which are not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy ofthe State ofGeorgia, Office ofTreasury and Fiscal Services for the Local Government Investment Pool (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. A description of the Primary Liquidity Portfolio is as follows:
The Primary Liquidity Portfolio consists of Georgia Fund 1, which is a combination local and state government investment pool, and Fund 6. Georgia Fund 1 is a stable net asset value investment pool which follows Standard and Poor's criteria for AAAm rated money market funds. The pool is not registered with the SEC as an investment company but does operate Georgia Fund 1 in a manner consistent with Rule 2a-7 ofthe Investment Company Act of 1940. The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($1.00 per share value). Net asset value is calculated daily and reported to the rating agency weekly to ensure stability. The pool distributes earnings (net ofmanagement fees) on a monthly basis and values participant's shares sold and redeemed at the pool's share price, $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost. The pool does not issue any legally binding guarantees to support the value of the shares. Participation in the pool is voluntary and deposits consist of funds from local governments; operating and trust funds of Georgia's state agencies, colleges and universities; and current operating funds of the State of Georgia's General Fund.
- 18 -
WALTON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004
EXHIBIT"H"
Note 3: DEPOSITS AND INVESTMENTS
Investments in Georgia Fund 1 and Fund 6 are directed toward short-term instruments such as U. S. Treasury obligations, securities issued or guaranteed as to principal and interest by the U. S. Government or any of its agencies or instrumentalities, banker's acceptances and repurchase agreements. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2004, was 24 days. The average investment duration for Fund 6 on June 30, 2004, was 0.22 years.
Note 4: NON-MONETARY TRANSACTIONS
The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories
Note 5: CAPITAL ASSETS
The following is a summary of changes in the Capital Assets during the fiscal year:
Balances July 1, 2003
Increases
Balances Decreases June 30, 2004
Governmental Activities Capital Assets, Not Being Depreciated:
Land Construction in Progress
$ 7,456,734
$ 7,456,734
7,175,600 $ 20,858,954 $ 3,302,957 24,731,597
Total Capital Assets Not Being Depreciated $ 14,632,334 $ 20,858,954 $ 3,302,957 $ 32,188,331
Capital Assets Being Depreciated Buildings and Improvements Equipment
$ 64,825,225 $ 3,302,957
$ 68,128,182
10,062,250
392,656 $ 1,031,647
9,423,259
Less Accumulated Depreciation for: Buildings and Improvements Equipment
9,806,035 6,627,123
975,996 725,762
761 419
10,782,031 6,591,466
Total Capital Assets, Being Depreciated, Net $ 58,454,317 $ 1,993,855 $ 270,228 $ 60,177,944
Governmental Activity Capital Assets - Net $ 73,086.651 $ 22,852,809 $ 3,573,185 $ 92,366.275
Current year depreciation expense by function is as follows:
- 19 -
WALTON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004
EXHIBIT"H"
Note 5: CAPITAL ASSETS
Instruction Support Services
Pupil Services Improvements of Instructional Services General Administration School Administration Maintenance and Operation of Plant Student Transportation Services Food Services
$ 1,017,128
$
2,979
1,268
11,061
102,643
16,351
338,156
472,458 212,172
$ 1,701,758
Note 6: RESTRICTED ASSETS
Special Purpose Local Option Sales Tax (SPLOST), Lottery funds and property tax levied specifically for retirement of outstanding bond principal, interest and paying agent's fees (Debt Service Funds) are reported as restricted assets in the Statement of Net Assets because their use is limited by applicable bond covenants or statutory provisions. Restricted assets at June 30, 2004, were as follows:
District-wide Capital Projects SPLOST
Debt Service Funds
Restricted Cash and Cash Equivalents: Debt Services Capital Acquisitions
$ $ 10,235,039
887,937
Note 7: INTERFUND TRANSFERS
Interfund transfers for the year ended June 30, 2004, consisted of the following:
Transfer to
Transfers From General Fund
District-wide Capital Projects
$==8===3=='5,=='07=0
- 20 -
WALTON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004
EXHIBIT"H"
Note 7: INTERFUND TRANSFERS
Transfers are used to move property tax revenues collected by the General Fund to the District-wide Capital Projects Fund as required match or supplemental funding source for capital construction projects.
Note 8: RISK MANAGEMENT
The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation.
The School District has obtained commercial insurance for risk ofloss associated with torts, assets, errors or omissions and acts ofGod. 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. A premium is charged when needed by the General Fund to each user program on the basis of the percentage of that program's payroll to total payroll in order to cover estimated claims budgeted by management based on known claims and prior experience. The School District accounts for claims 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 $300,000 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
Claims and Changes in Estimates
Claims Paid
End ofYear Liability
2003 2004
$
0 $ 108,489 $
88,919 $
19 570
$
19 570 $
50,253 $
69,823 $
0
The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.
Changes in the unemployment compensation claims liability during the last two fiscal years are as follows:
- 21 -
WALTON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004
EXHIBIT"H"
Note 8: RISK MANAGEMENT
2003 2004
Beginning of Year Liability
Claims and Changes in Estimates
Claims Paid
End of Year Liability
$
0 $
15,532 $
15,532 $
0
$
0 $
28,637 $
28,637 $
0
The School District has purchased surety bonds to provide additional insurance coverage as follows:
Position Covered
Amount
Superintendent All Other Employees
$ 100,000 $ 100,000
Note 9: LONG-TERM DEBT
GENERAL OBLIGATION DEBT OUTSTANDING General Obligation Bonds currently outstanding are as follows:
Purpose
Interest Rates
Amount
General Government - Series 1995
4.20% - 6.00% $ 8,730,000
The changes in Long-Term Debt during the fiscal year ended June 30, 2004, were as follows:
Governmental Funds General
Obligation Bonds
Balance July 1, 2003
$ 9,700,000
Deductions Debt Retired
970,000
Balance June 30, 2004
$ 8,730,000
Portion of Long-Term Debt Due within One Year
$ 1,025,000
At June 30, 2004, payments due by fiscal year which includes principal and interest for these items are as follows:
- 22 -
WALTON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004
EXHIBIT"H"
Note 9: LONG-TERM DEBT
Fiscal Year Ended June 30
General Obligation
Debt
Principal
Interest
2005 2006 2007 2008 2009 2010 - 2011
$ 1,025,000 $ 1,090,000 1,160,000 1,235,000 1,315,000 2,905,000
460,550 399,050 333,650 272,750 211,000 220,250
Total Principal and Interest
$ 8,730,000 $ 1,897.250
Note 10: ON-BEHALF PAYMENTS
The School District has recognized revenues and costs in the amount of $594,379 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.
Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $587,510
Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $6,869
Note 11: SIGNIFICANT COMMITMENTS
The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2004, together with funding available:
- 23 -
WALTON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004
EXHIBIT "H"
Note 11: SIGNIFICANT COMMITMENTS
Project
Unearned Executed Contracts
Funding Available From State
Loganville Primary School Momoe Area High School Youth Middle School
$ 167,313
12,720,551 $ 1,142,446
841 577
729 734
$ 13,729,441 $ 1,872.180
The amounts described in this note are not reflected in the basic financial statements.
Note 12: SIGNIFICANT CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.
The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance ofroutine School District operations. The ultimate disposition ofthese proceedings is not presently determinable, but is not believed to be material to the basic financial statements.
Note 13: SUBSEQUENT EVENTS
In the subsequent fiscal year, voters authorized the School District to issue general obligation bonds in the amount of $71,500,000. The proceeds from these bonds will be used for acquiring, constructing and equipping new schools; acquiring land for future school sites; adding to, renovating, repairing, improving, furnishing and equipping existing educational buildings, properties and facilities of Walton County School District; purchasing new buses for Walton County School District and paying expenses incident thereto.
Note 14: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school systems are covered by the Teachers Retirement System of Georgia (IRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and
- 24 -
WALTON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004
EXHIBIT"H"
Note 14: RETIREMENT PLANS
survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.
TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.24% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:
Fiscal Year
Percentage Contributed
Required Contribution
2004 2003 2002
100% 100% 100%
$ 4,190,335 $ 4,132,552 $ 3,642,761
- 25 -
WALTON COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30. 2004
SCHEDULE "1"
REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Food Services Operation
Capital Outlay
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING USES
Other Uses
Net Change in Fund Balances
Fund Balances - Beginning
NONAPPROPRIATED BUDGETS
ORIGINAL (1)
FINAL (1)
ACTUAL AMOUNTS
$
27,762,268 $
27,818,097 $
32,146,691
1,412,991
1,412,991
1,607,780
40,560,029
40,622,065
41,124,618
6,642,369
6,580,333
7,280,723
1,665,560
1,665,560
1,680,919
253,000
253,000
160,494
2,000
2,000
1,621,029
$
78,298,217 $
78,354,046 $
85,622,254
$
50,218,407 $
50,284,336 $
51,338,572
2,083,317 1,626,654 1,433,528 2,336,935 4,873,982
612,822 5,640,699 2,655,890
735,030 924,480
3,863,096 126 400
2,083,317 1,650,654 1,433,528 2,284,100 4,873,982
612,822 5,767,099 2,655,890
720,030 887,386
3,863,096
2,536,287 1,999,256 1,498,530 1,757,940 4,966,246
649,808 5,931,949 3,041,767
743,484 1,015,325 1,213,919 3,858,616
3 000
$
77,131,240 $
77,116,240 $
80,554,699
$
1,166,977 $
1,237,806 $
5,067,555
-1 060, 197
$
106,780 $
0
1,237,806 $ 6,887,250
-835,070 4,232,485 9 712,676
Fund Balances - Ending
$
106 780 $
8,125,056 $==1~3~,9~4~5,~16~1~
Notes to the Schedule of Revenues. Expenditures and Changes in Fund Balances Budget and Actual
(1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the various principal accounts.
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.
- 27 -
WALTON COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30. 2004
SCHEDULE "2"
FUNDING AGENCY PROGRAM/GRANT
Agriculture, U.S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Food Donation (1)
Total U.S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Other Programs Pass-Through From Coffee County Board of Education Fund for the Improvement of Education Pass-Through From Georgia Department of Education Comprehensive School Reform Demonstration Enhancing Education Through Technology Program Improving Teacher Quality State Grants English Language Acquisition Grants Reading Excellence - Local Reading Improvement Safe and Drug-Free Schools and Communities State Grants for Innovative Programs Tech-Prep Education Title I Accountability Grant Title I Grants to Local Educational Agencies Twenty-First Century Community Learning Centers Vocational Education - Basic Grants to States
Total U.S. Department of Education
Defense, U.S. Department of Direct Department of the Air Force R.O.T.C. Program
Total Federal Financial Assistance
N/A = Not Available
CFDA NUMBER
PASSTHROUGH
ENTITY ID
NUMBER
EXPENDITURES IN PERIOD
10.553 10.555
N/A N/A $
$
(2) 3,425,399
3,425,399
10.550
N/A
$
176 903 3,602,302
* 84.027 * 84.173
N/A $ N/A
$
1,377,716 44,603
1,422,319
84.215
84.332 84.318 84.367 84.365 84.338 84.186 84.298 84.243 84.348 84.010 84.287 84.048
N/A
N/A
N/A N/A N/A N/A N/A N/A
NIA N/A N/A N/A
N/A
$
178,018
154,507 47,041 477,723 22,043 698,708 68,209 59,522
3,794 3,721 1,930,987 126,768 76,192
5,269,552
$
48256
$===8,:,;;;92;;,;0;i,,,1=1=0
- 28 -
WALTON COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2004
SCHEDULE "2"
Notes to the Schedule of Expenditures of Federal Awards
(1) The amount shown for the Food Donation Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year.
(2) Expenditures for the funds earned on the School Breakfast Program ($386,680) were not maintained separately and are included in the 2004 National School Lunch Program.
Major Programs are identified by an asterisk (*) in front of the CFDA number.
The School District did not provide Federal Assistance to any Subrecipient.
The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Walton 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.
- 29-
WALTON COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 2004
SCHEDULE "3"
AGENCY/FUNDING
GOVERNMENTAL FUND TYPES
CAPITAL
GENERAL
PROJECTS
FUND
FUND
GRANTS
Bright From the Start:
Georgia Department of Early Care and Learning
Pre-Kindergarten Program
$ 1,133,283
$
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle Grades (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV CategoryV Gifted Student - Category VI Remedial Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Bus Replacement Nursing Services Principal Supplements Education Equalization Funding Grant Food Services Vocational Education Austerity Reduction Other State Programs Alternative Program Apprenticeship Program Health Insurance Mentor Teachers National Teacher Certification Preschool Handicapped Program
2,748,398 240,959
6,050,072 776,096
2,995,524 624,819
5,249,942 3,879,752 1,302,582
1,203,700 998,225
3,354,564 445,781 21,842
1,051,595 144,342 202,574 868,919 263,571 185,894
1,112,527 1,634,802 2,609,866
1,255,596 256,727 204,687 40,256 530,756 239,470 113,287
-2,075,755
382,469 51,970
587,510 9,248
46,728 141,818
Georgia Institute of Technology Student Information System
43,352
Georgia State Financing and Investment Commission Reimbursement on Construction Projects
$ 10,119,793
TOTAL
1,133,283
2,748,398 240,959
6,050,072 776,096
2,995,524 624,819
5,249,942 3,879,752 1,302,582
1,203,700 998,225
3,354,564 445,781 21,842
1,051,595 144,342 202,574 868,919 263,571 185,894
1,112,527 1,634,802 2,609,866
1,255,596 256,727 204,687 40,256 530,756 239,470 113,287
-2,075,755
382,469 51,970
587,510 9,248
46,728 141,818
43,352
10,119,793
- 30-
WALTON COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2004
SCHEDULE "3"
AGENCY/FUNDING
GRANTS Office of Treasury and Fiscal Services Public School Employees Retirement
CONTRACTS Education, Georgia Department of After School Programs Georgia's Reading Challenge
GOVERNMENTAL FUND TYPES
CAPITAL
GENERAL
PROJECTS
FUND
FUND
TOTAL
$
6,869
$
6,869
66,352 123,649
66,352 123 649
$ 41,124,618 $ 10,119,793 $=====5=1=24=4=4=11=
See notes to the basic financial statements.
- 31 -
WALTON COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30. 2004
SCHEDULE "4"
PROJECT
To pay the costs of adding to renovating, repairing, improving and equipping existing educational buildings, properties and facilities of Walton County School District, including, but not limited to, acquiring, constructing and equipping two new elementary schools and a new middle school, acquiring any necessary real property, acquiring school buses, and acquiring and installing computer and other technology related equipment
To pay the costs of acquiring, constructing and equipping two new elementary schools and a new high school, acquiring land for future school sites, and adding to, renovating, repairing, improving, furnishing and equipping existing educational buildings, properties and facilities of the Walton County School District
ORIGINAL ESTIMATED
COST (1)
CURRENT ESTIMATED COSTS (2)
AMOUNT EXPENDED IN CURRENT YEAR (3)
AMOUNT EXPENDED IN PRIOR YEARS (3)
PROJECT STATUS
$ 31,000,000 $ 38,530,325 $ 9,904,271 $ 28,626,054 Ongoing
40,390,000
40,390,000
10,827,486
758 210 Ongoing
$ 71,390,000 $ 78,920,325 $ 20 731 757 $ 29,384,264
(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 Walton County approved the imposition of a 1% sales tax to fund the above projects. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the project.
See notes to the basic financial statements.
- 32-
WALTON COUNTY BOARD OF EDUCATION GENERAL FUND- QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30. 2004
SCHEDULE "5"
DESCRIPTION
ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) (2)
ELIGIBLE QBE PROGRAM COSTS
SALARIES
OPERATIONS
TOTAL
Direct Instructional Programs
Kindergarten Program
$
Kindergarten Program-Early Intervention Program
Primary Grades (1-3) Program
Primary Grades-Early Intervention (1-3) Program
Upper Elementary Grades (4-5) Program
Upper Elementary Grades-Early Intervention (4-5)
Program
Middle School (6-8) Program
High School General Education (9-12) Program
Vocational Laboratory (9-12) Program
Students with Disabilities
Category I
Category II
Category Ill
Category IV
CategoryV
Gifted Student - Category VI
Remedial Education Program
Alternative Education Program
English Speakers of Other Languages (ESOL)
3,214,902 $ 370,933
7,222,358 983,647
3,576,348
2,866,523 $ 328,837
8,055,159 888,938
4,724,773
745,468 6,312,128 4,608,674 1,580,937 7,177,465
620,404 6,454,863 5,987,154 1,339,969
553,500 1,089,805 4,184,423
47,312
1,250,712 164,203 457,749 251,108
1,259,218 116,983 706,151 484,056
100,836 $ 13,812
427,580 32,185
166,208
22,012 395,264 241,356 172,664
39,470 75,996 553,749 21,873
2,568 53,510
1,361 6,760 4,905
2,967,359 342,649
8,482,739 921,123
4,890,981
642,416 6,850,127 6,228,510 1,512,633
592,970 1,165,801 4,738,172
69,185 2,568
1,312,728 118,344 712,911 488 961
TOTAL DIRECT INSTRUCTIONAL PROGRAMS
$
37,916,632 $ 39,708,068 $
2,332,109 $
42,040,177
Media Center Program Staff and Professional Development
1,036,646 222,722
1,198,511 43,296
285,662 164,667
1,484,173 207,963
TOTAL QBE FORMULA FUNDS
$
39,176,000 $ 40,949,875 $
2,782,438 $ ==4=3=7'=3=2=,3=13=
(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State budget austerity reduction.
See notes to the basic financial statements.
- 33 -
SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS
Russell W. Hinton
STATE AUDITOR
(404) 656-2174
DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
March 17, 2005
Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Walton County Board of Education
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 Walton County Board of Education as of and for the year ended June 30, 2004, which collectively comprise Walton County Board of Education's basic financial statements and have issued our report thereon dated March 17, 2005. 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
In planning and performing our audit, we considered Walton County Board of Education's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide an opinion on the internal control over financial reporting. However, we noted certain matters involving the internal control over financial reporting and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over financial reporting that, in ourjudgment, could adversely affect Walton County Board of Education's ability to record, process, summarize and report financial data consistent with assertions of management in the financial statements. Reportable conditions are described in the accompanying Schedule of Findings and Questioned Costs as items FS-7471-04-01 and FS-7471-04-02.
2004YB-30
A material weakness is a reportable condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we believe none of the reportable conditions described above is a material weakness.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Walton 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.
This report is intended solely for the information and use of the management and members of the Walton County Board ofEducation and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
RWH:as 2004YB-30
State Auditor
Russell W. Hinton
STATE AUDITOR
(404) 656-2174
DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
March 17, 2005
Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Walton County Board of Education
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of Walton County Board ofEducation with the types ofcompliance requirements described in the US. Office of Management and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each ofits major Federal programs for the year ended June 30, 2004. Walton 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 Walton County Board of Education's management. Our responsibility is to express an opinion on Walton County Board of Education's compliance based on our audit.
We conducted our audit ofcompliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types ofcompliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Walton 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 Walton County Board of Education's compliance with those requirements.
2004SA-10
In our opinion, the Walton County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 2004.
Internal Control Over Compliance
The management of Walton County Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered Walton County Board ofEducation's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with 0MB Circular A-133.
Our consideration ofthe internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a reportable condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level ofrisk that noncompliance with applicable requirements oflaws, regulations, contracts and grants caused by error or fraud that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses.
This report is intended solely for the information and use of the management, members of the Walton County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
~tb.~3-s.. Russell W. Hinton State Auditor
RWH:as 2004SA-10
SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS
WALTON COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
FINDING CONTROL NUMBER AND STATUS
FS-7471-03-01
Partially Resolved - See Corrective Action/Responses
CORRECTIVE ACTION/RESPONSES
CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Finding Control Number: FS-7471-03-01
The School District is continuing its improvement in maintaining capital assets records. Equipment with values less than the $5,000 capitalization threshold recorded in the records have been corrected since last year's audit. Additionally, equipment with a value of $20,000 which met the capitalization threshold and was omitted from last year's record have been corrected. The School District is currently ongoing a hiring process to employ an individual that has the necessary knowledge and experience to maintain the capital assets records. It is our hope that this hiring takes place in time to correct this finding for the fiscal year 2005 audit.
SECTION IV FINDINGS AND QUESTIONED COSTS
WALTON COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2004
I SUMMARY OF AUDITOR'S RESULTS
1. Type of Report Issued on the Financial Statements The auditor's opinion on the Walton County Board of Education's financial statements was unqualified.
2. Reportable Conditions in Internal Control Disclosed by the Audit of the Financial Statements The audit report for the Walton County Board of Education disclosed financial statement reportable conditions related to the following control categories.
Expenditures/LiabilitieslDisbursements Capital Assets
Employee Compensation
None ofthe reportable conditions described above are considered to be material weaknesses.
3. Noncompliance Material to the Financial Statements The audit of the Walton County Board of Education disclosed no instances of noncompliance that were deemed to be material to the financial statements.
4. Reportable Conditions in Internal Control Over Major Programs The audit report for the Walton County Board of Education did not disclose any reportable conditions in internal control over major programs.
5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Walton County Board ofEducation's report on compliance with requirements applicable to major programs was unqualified.
6. Audit Findings Required to be Reported by Section .510(a) of 0MB Circular A-133 The Walton County Board ofEducation's audit did not disclose audit findings required to be reported by section .510(a) of 0MB Circular A-133.
7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food Services - School Breakfast Program 10.555 Food Services - National School Lunch Program 84.027 Special Education - Grants to States 84.173 Special Education - Preschool Grants
8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.
9. Low Risk Auditee The Walton County Board ofEducation qualified as a low risk auditee as defined by Section .530 of 0MB Circular A-133.
- 1-
WALTON COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2004
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION Inadequate Internal Control Procedures Reportable Condition Finding Control Number: FS-7471-04-01
During the fiscal year ended June 30, 2004, the School District entered into a contract with Live Oak Consulting, Inc. (LOC). The firm assists local school boards in reducing employer cost associated with health insurance plans administered by the Georgia Department ofCommunity Health (DCH). LOC is paid a fee equal to 50 percent ofthe first year employer cost savings identified by LOC, not to exceed $30,000. The School District, following the recommendations of LOC, moved 27 employees from the Health Insurance Plan for Public School Teachers (See OCGA Title 20, Chapter 2, Article 17, Part 6, Sub Part 1) to the Health Insurance Plan for Public School Employees (See OCGA Title 20, Chapter 2, Article 17, Part 6, Sub Part 2).
According to DCH, School District employees who are to be included as members of the Health Insurance Plan for Public School Teachers (PST) are either:
1. Employed in a professionally certificated position; employee holds a valid certification; employee is assigned to a position that requires a certification as a qualification; employee's compensation is determined, at least in part, based upon the certificate; and employee is a member of the Teachers Retirement System or other public school retirement system.
Or:
2. Employed in a professionally certificated capacity; employee holds a valid certification; employee is not assigned to a position that requires a certification as a qualification; employee's compensation is determined, at least in part, based upon the certificate; and employee is a member of the Teachers Retirement System or other public school retirement system.
With respect to membership in the Health Insurance Plan for Public School Employees (PSE) Georgia Laws OCGA 20-2-910 and 47-4-2 (20) provide that the definition of public school employee, for the purpose ofmembership in the Health Insurance Plan for Public School Employees, means classroom aides, paraprofessionals, noncertified administrative and clerical employees, school bus drivers, school lunchroom personnel, school maintenance personnel and school custodial personnel. Generally, in order to determine which School District employees are eligible for the PSE or for the PST insurance plans, a comparison should be made ofthe employee's position and DCH's criteria listed above. Ifthe employee meets either test, then the employee is eligible for the Health Insurance Plan for Public School Teachers. If the employee fails both of the above tests, the employee is eligible for the Health Insurance Plan for Public School Employees.
-2 -
WALTON COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2004
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION Inadequate Internal Control Procedures Reportable Condition Finding Control Number: FS-7471-04-01
From information provided by the School District, it is not clear that all ofthese 27 employees who were moved from the PST plan to the PSE plan are eligible for membership in the PSE plan under DCH's criteria.
In addition, the School District ceased paying employer contributions on 3 additional employees which had elected not to have State insurance coverage. However, the employer contribution rates associated with School District employees covered by the Health Insurance Plan for Public School Teachers is calculated by multiplying the total payments for salaries ofall such teachers employed by the School District by the percentage rate established by the Governor and the DCH Board, see OCGA 20-2-892 (b).
As of June 30, 2004, the School District made payments totaling $30,000 to Live Oak Consulting, Inc.
The School District should establish policies and procedures to ensure that employer contributions for employee health insurance plans are paid in accordance with State Laws. In addition, the School District should contact the Georgia Department of Community Health to determine whether the employees who were moved from the PST plan were moved in error. If employees were moved in error the affected employees should be returned to the PST plan and the School District should make payment to DCH for those employees. Ifall above referenced employees should have remained in the PST plan the amount due to DCH would be $110,605.93. Additionally, the School District should consult with its legal counsel regarding obtaining a refund for those employees who should not have been moved to the PSE plan. The amount of the refund from LOC could be as much as $30,000.
CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Reportable Condition Finding Control Number: FS-7471-04-02
A review ofthe School District's Capital Assets policies and procedures and related Capital Assets records noted deficiencies as discussed below:
-3 -
WALTON COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2004
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Reportable Condition Finding Control Number: FS-7471-04-02
(1) The Capital Asset list provided by the School District for audit purposes contained numerous errors and omissions. Audit adjustments were necessary to ensure that capital assets were materially presented.
(2) Equipment added during the current year, as well as existing equipment on the Capital Assets listing, had incorrect useful lives which resulted in incorrect depreciation amounts.
(3) A sample of 99 Capital Asset records was selected to determine if capital assets were maintained correctly. Seventeen items could not be found. The total dollar value of the missing equipment was $47,867.
(4) Some information provided on the Capital Asset listing was vague in detail. In some instances the descriptions did not contain model number, maker or serial number.
The School District failed to ensure that internal control procedures were working effectively in order to properly record and maintain capital asset records. The School District should reassess internal control procedures for the Capital Assets Inventory to ensure they are in place and operating effectively. The annual physical count should be reconciled to the inventory listing and variances should be documented and explained. Administrative review should be performed to ensure the accuracy of inventory records and amounts recorded in the general ledger. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.
-4 -
SECTIONV MANAGEMENT'S RESPONSES
WALTON COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2004
Finding Control Number: FS-7471-04-01
The School District followed the guidelines as published in the Georgia Department ofCommunity Health, Regulations of the Community Health Board, Chapter 478-6, and dated June 11, 2003. These guidelines state, "The employer contribution rate for the teachers health insurancefund shall be a percentage ofthe salary approved by the State Board ofEducation under the Quality Basic Education Actfor persons holding certificated positions. The School District is currently in contact with the Georgia Department of Community Health to resolve this issue.
Finding Control Number: FS-7471-04-02
The School District concurs with this finding. The School District is continuing its improvement in the maintenance of its capital assets records. It is our hope that this finding will be rectified in time for the fiscal year 2005 audit.
Contact Person: Harry S. Lee, Director of Budget and Finance Phone: (770) 266-4438 Fax Number: (770) 266-4448 E-mail Address: hlee@walton.k12.ga.us