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STATE OF GEORGIA

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DEPARTMENT OF AUDITS AND ACCOUNTS

Russell W Hmton State Auditor

MANAGEMENT REPORT
NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY
AN ORGANIZATIONAL UNIT OF THE STATE OF GEORGIA YEAR ENDED JUNE 30 2002

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NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY MANAGEMENT REPORT -TABLE OF CONTENTS-

LETTER OF TRANSMITTAL

SECTION I

SELECTED FINANCIAL INFORMATION

EXHIBITS

A COMBINED SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES-BUDGET AND ACTUAL

1

B SCHEDULE OF SALARIES AND TRAVEL

2

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

SECTION Ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

DEPARTMENT OF AUDITS AND ACCOUNTS

254 Washington Street, S.W., Suite 214

w. RUSSELL

HINTON

STATE AUDITOR

(404) 6S6-2174

Atlanta, Georgia 30334-8400

February 17, 2003
Honorable Sonny Perdue, Governor Members of the General Assembly of Georgia Members of the State Board of Education
and Director and Members of the North Georgia Regional Educational Service Agency Board of Control
Ladies and Gentlemen.
As part of our audit of the basic financial statements of the State of Georgia presented in the State of Georgia Comprehensive Annual Financial Report and the issuance of a Statewide Single Audit Report pursuant to the Single Audit Act Amendments, as of and for the year ended June 30, 2002, we have performed certain audit procedures at the North Georgia Regional Educational Service Agency Accordingly, the financial statements and compliance activities of the North Georgia Regional Educational Service Agency were examined to the extent necessary in order to express an opinion as to the fair presentation of the financial statements contained in the foregoing documents and to issue reports on compliance and internal controls as required by the Single Audit Act Amendments of 1996.
This Management Report contains information pertinent to the financial and compliance activities of the North Georgia Regional Educational Service Agency as of and for the year ended June 30, 2002. The particular information provided is enumerated in the Table of Contents
This report is intended solely for the information and use of management of the State of Georgia and members of the Board and is not intended to be and should not be used by anyone other than these specified parties.

Respecttully s u b : ~ ~

RWH:sdd

SECTION I SELECTED FINANCIAL INFORMATION

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY

EXHIBIT "A"

COMBINED SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL

YEAR ENDED JUNE 30, 2002

REVENUES
State Funds Federal Funds Other Funds
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Adm in1strat1on School Adm in1strat1on Business Adm in1strat1on Maintenance and Operation of Plant Other Support Services Enterprise Operations
Total Expenditures
Excess of Revenues over (under) Expenditures
FUND BALANCE JULY 1, 2001
AdJustments

BUDGET

ACTUAL

$ 2,870,571 00 $ 3,148,124 00

418,459 00

401,892 85

1,400,323 27

1,679,650 10

$ 4,689,353 27 $ 5,229,666 95

$ 1,627,827 00 $ 1,637,955 81

279,677 14 1,359,718 06
500 00 325,218 07 156,732.00 169,009 92 101,328.18
666,918 49

305,839 20 1,450,614 82
318,14421 170,13720 168,104.29 110,66541
39,761.00 826,577 34

$ 4,686,928 86 $ 5,027,799 28

$

2,424.41 $

201,867 67

529,573 88 397.50

536,382 83

FUND BALANCE JUNE 30, 2002
SUMMARY OF FUND BALANCE
Reserved Inventories Sick and Personal Leave
Unreserved Designated for Self-Insurance Program U ndes1gnated

$

532,395.79 $===73=8==25=0=50=

$

158,143 98

322 00

$

158,465 98

30,704 87 549,079 65

$ ===7=3=8,=25=0=5=0 - 1-

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF SALARIES AND TRAVEL YEAR ENDED JUNE 30, 2002

EXHIBIT"B"

li.8Mf.
ANDROS, GEORGE C APPLEGATE, DAVID A BAKER, PAUL W BIERCE, KATHY BOYETTE, BRIDGET L BRANDT.GLENDA BROOKS, DEBORAH ANN BROOKS, JANICE K BROWN, HOLLY A BROWN, KELLIE A BROWNLEE, SUSAN T BRUNO, SUSAN CAHILL, ASHLEY B CANTRELL JR, WILLIAM L CANTRELL. YOLANDA N CLAMPITT, VANNA M COLE, JOANNE B CONNER, JOANN S COOK, DEBBIE M COX, MARCIA L COX, MARGARET A COX, RALPH N DAUGHERTY, STACIE L DAVIS, PEGGY A DAY, MARGARET N DECKER, KATHERINE N ELLIS, ALICE M ENIS, DONALD F ENIS, GERTRUDE A FARMER, LOLA FAY FORD, CYNTHIA P FOSTER, JAMES EARL FOSTER, LINDA W FULGHUM, JIM GAGNE, JULIE ANN GRIFFITH, NANCY C HAMILTON, JANNINE D HARMON, LARRY G HARRELL, DEBORAH S HARRIS, FRANCESE HARVEY, DONETTE P HATTERSLEY, JANIE HODGES, SHERI D HOWELL, JUDY HUGHES, LOIS P JENNINGS, HELEN JETT, MILDRED LORRRAINE JOHNSON, JOHNNY JOHNSON, VIRGINIA M KING, TERESA D KINGSLEY, CURTIS W KIRKLAND, VIRGINIA C KRIEGER. SHIRLEY L LANKFORD, MARY A LIFORD, BARBARA A LONG, BRENDA M LOWMAN, BRENDA S LOWMAN, TARA L MASSINGALE, PAMELA D MCDONALD, JUDY MITCHELL. PAULA J MOODY, TERESA M MOORE, JESSICA A MORRIS, BARBARA J MULKEY, CINDY NORTON, LELAND EUGENE OLKEN, NANCY L PECK, DEBORAH D PONDERS, BARTS POTTER. JEAN M QUEEN, REBECCA S RAY, SUSAN G

TITLE CATEGORY
Director of Psycho-Ed Prog Psycho-Educational Teacher Psycho-Ed Spec Ed Specialist Psycho-Ed School Sec/Clerk Psycho-Educational Teacher Psycho-Ed School Sec/Clerk Psych-Ed Parapro/Teacher Aide Psych-Ed Parapro/Teacher Aide Psycho-Educet1onel Teacher Psych-Ed Parapro/Teacher Aide Psycho-Educational Teacher Psycho-Ed Spec Ed Specialist Psych-Ed Parapro/Teecher Aide Enterprise Techn1c1en Psych-Ed Parepro/Teacher Aide Support Serv Secretary/Clerk Psych-Ed Parapro/Teacher Aide Psych-Ed Perapro/Teacher Aide Psycho-Ed School Psychologist Psych-Ed ParaprofTeacher Aide Psycho-Educational Teacher Enterprise Tech Coordinator Psych-Ed Parapro/Teacher Aide Psych-Ed Parapro/Teacher Aide Substitute Teacher Psycho-Educational Teacher IS Personnel-F1nance&Business Director of GLRS Support Serv Secretary/Clerk Substitute Teacher Psycho-Educational Teacher Psych-Ed Parapro/Teacher Aide IS Personnel-Finance&Business Psych-Ed Parapro/Teacher Aide Substitute Teacher Psych-Ed Parapro/Teacher Aide Psycho-Educational Teacher RESA Director Psycho-Ed School Sec/Clerk Substitute Teacher Psych-Ed Parapro/Teacher Aide Psych-Ed Parapro/Teacher Aide Substitute Teacher Psych-Ed Parapro/Teacher Aide Substitute Teacher Family Services Coordinator Substitute Teacher Enterprise Techn1c1an Substitute Teacher Substitute Teacher Youth Apprent1cesh1p Director Plant Operations Director/Mgr Psycho-Educational Teacher Custodial Personnel Psych-Ed Parapro/Teacher Aide Psycho-Ed School Sec/Clerk Psycho-Educational Teacher Psycho-Educational Teacher Psycho-Ed Spec Ed Specialist Psycho-Ed School Sec/Clerk Psych-Ed Parapro/Teacher Aide Psych-Ed Parapro/Teacher Aide Psycho-Educational Teacher Family Services Coordinator Support Serv Secretary/Clerk Deputy/Assoc/Assistant Supt Psych-Ed Parapro/Teacher Aide Psycho-Educational Teacher Psych-Ed Parapro/Teacher Aide Psycho-Educational Teacher Substitute Teacher Psycho-Educational Teacher
-2-

SALARIES

s

58,847 81 $

29,628 30

64,630 15

13,825 01

41,075 80

12,617 02

1,014 50

19,132 00

37,785 80

4,000 80

33,784 20

46,386 62

14,932 89

5,556 19

14,783 40

32,523 84

4,541 60

3,268 40

41,97493

15,375 00

44,659 20

61,872 96

2,620 54

2,893 84

509 53

52,554 20

66,753 12

78,796 80

33,080 16

93 75

43,486 70

5,704 16

66,753 12

9,055 80

918 68

7,467 90

44,659 20

98,784 00

23,082 96

58 22

3,853 74

11,594 83

1,577 31

17,582 46

250 00

30,043 05

179 69

54,388 08

2,957 71

25 00

63,11880

13,306 56

30,442 50

14,12084

15,070 80

11,051 80

50,466 70

29,024 20

39,803 30

15,469 80

3,18420

3,10000

28,009 20

25,814 18

32,523 84

40,292 16

1,927 95

39,333 30

12,908 40

44,779 20

361 99

52,13330

~ 2,120 71 69 72 3,573 85 382 48 167 44 279 16
47 88
1,186 72
233 24 66 98 28 74
506 52
23 80
12 50
771 58 1,051 88 6,188 92
75 04
947 52
65 70 205 24 4,768 45
70 84
180 00
241 92
639 12
2,500 36
280 00 136 36
40 60 1,063 93
29 96 28 84 22 40 775 33 242 43 534 33 56 00 93 24 47 04 82 32
210 00

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF SALARIES AND TRAVEL YEAR ENDED JUNE 30, 2002

t:!AM..E
ROBERTSON, CHARLON A ROBERTSON, JAMES K ROGERS. REBECCA D SANE, ROBBIE L SCOTT. DOROTHY L SENN, DONNA M SHULL. TINA R SIMS, RUTH ANN STEVENSON. DIAN K SUTTON, SR JOHN Q TALLENT, WILLIAM DENNY TANKERSLEY, WILLIAM LARRY TEEMS.FRANCES JOAN WEAVER.CANDACE LYNN WEAVER, CARA WEAVER, CAROL A WEAVER, JOSEPH BENNY WILKINS, VIRGINIA GAYLE WILLIAMS, ARTHUR M

TITLE CATEGORY
Psych-Ed Parapro/Teacher Aide Psych-Ed Parapro/Teacher Aide Psych-Eci Parapro/Teacher Aide Psych-Ed Parapro/Teacher Aide Psych-Ed Parapro/Teacher Aide Psycho-Educational Teacher Psycho-Educational Teacher Psycho-Ed School Sec/Clerk Psycho-Education~Teacher Enterprise Techn1c1an Psych-Ed Parapro/Teacher Aide Enterprise Techn1c1an Psych-Ed Perapro/Teacher Aide School Improvement Specialist Secretary Support Serv Secretary/Clerk Enterprise Techn1c1an Psych-Ed Parapro/Teacher Aide Enterprise Techn1c1an

Accruals June 30, 2002

SALARIES

$

2,572 30 $

4,294 19

659 88

15,653 40

11,515 98

50,466 70

27,246 70

23,739 93

34,115 00

35,560 12

14,670 80

26,542 68

16,977 60

82,111 80

36,575 04

40,495 92

52,803 84

15,493 40

43 594 32

$

2,363,273 59 $

I.B.A.'Lil
18 10 38 92
355 44
399 48 16 52
321 00 149 24
56 90
5,419 46 972 12 72 80 346 68 406 98 589 98
39,212 71

223,470 28

1 222 48

$

2 586,743 87 $

40,435 19

-3-

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

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2002

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-8524-00-02 FS-8524-00-03 FS-8524-01-01 FS-8524-01-02

Further Action Not Warranted Previously Reported Corrective Action Implemented Unresolved - See.Corrective Action/Responses Previously Reported Corrective Action Implemented

CORRECTIVE ACTION/RESPONSES

GENERAL LEDGER Failure to Implement an Adequate Deficit Reduction Plan Finding Control Number: FS-8524-01-01

North Georgia RESA has been actively reviewing the deficit spending of the Printing and Repairs department since FY96. The printing and repairs department provide essential services to our local school systems. System surveys indicate continued need and support of these departments. In addition to providing needed equipment repair services, the repairs department provides technology training and assistance to our school systems.

Recognizing the need to address the deficit spending in these two services, the following corrective measures have been implemented:

1) An equity adjustment was made at the beginning on FY96 to transfer FY95 general membership to repairs. Additional membership funds were transferred from General Fund to the Repairs Department. It is to be noted that the FY95 audit recommended the General Fund cover the deficit fund balance.

2) During FY96 a break.even analysis for the printing and repairs was prepared and implemented during FY97.

3) During FY98, North Georgia RESA lost the membership of its largest school system. It was determined that due to the specialized training of each member of the repair team, and the needs for these services that the team would be kept in tact. It was recognized that the break-even analysis would not be effective and funding would have to be supplemented by the General Fund. The reentry of full membership of this system is being actively sought.

4) During FY98 the number of personnel in the printing department was decreased from 2 positions to 1.6.

- 1-

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2002
5) In preparation of the FY99 budget North Georgia RESA reviewed projected revenues and expenditures for the Repairs and Printing Department. The approved budget recognized a deficit spending in the areas of printing and repairs and that these funds would be supported by equity and by the General Fund.
6) The FY2000 budget reflected the resignation of a mid-level repairs salaried employee, by an experienced but entry-level employee, thereby decreasing salary expenses. The approved FY2000 budget also recognizes the supplementing of the repair and printing department with fund equity and General Fund revenues. It is to be noted that the actual FY2000 deficit spending for printing and repairs was less that the projected deficit. This was accomplished by additional services provided to school systems, as well as management's review ofrevenue and expenditures on a monthly basis.
7) The FY200 I recognizes a reorganization of the printing department with a decrease in personnel expenditures and an increase in printing orders.
8) The FY2001 approved budget recognizes a continued support of the repairs department by the General Fund. It is to be noted that school system surveys reflect a continued high need for the services provided by this department.
9) During the FY2002, the staff of the repairs department was reduced by one position. The printing department during the middle ofthe year was reduced to one position.
The finance department, the executive director, and the board of control continue to monitor the deficit spending of both of these departments. General Fund monies are monitored to assure that assets are available to supplement these departments.
-2-

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2002

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

F A-8524-00-03 FA-8524-01-01 F A-8524-01-02

Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented

CORRECTIVE ACTION/RESPONSES

ALLOWABLE COSTS/COST PRINCIPLES Improper Indirect Cost Expenditures Vocational Education - Basic Grants to States (CFDA 84.048) Amount: $36,608.00 Finding Control Number: FA-8524-00-03

We do not concur with this finding. North Georgia RESA provided enumerable services to Vocational-Technical Education in the areas of State Administration, Leadership, and the Georgia Vocational Staff Development Consortium. The agreed upon and approved rate for providing these services to Vocational-Technical Education was 6.9% ofthe total grant for State Administration and Leadership, and 7.45% for the Georgia Vocational Staff Development Consortium. The agreed upon rates are documented by signed DE0448 grant budgets. These grant budgets were approved by the RESA official, the Vocational-Technical Education official and the Grants Accounting official.

This finding is currently under review by the U.S. Department of Education at the request of the Georgia Department of Education, Vocational-Technical Education Department.

ALLOWABLE COSTS/COST PRINCIPLES Improper Indirect Cost Expenditures Vocational Education - Basic Grants to States (CFDA 84.048) Amount: $12,628.77 Finding Control Number: FA-8524-01-01

North Georgia RESA prqvided enumerable services to Vocational-Technical Education in the areas of State Administration, Leadership, and the Georgia Vocational Staff Development Consortium. The agreed upon and approved rate for providing these services to Vocational-Technical Education was 6.9% of the total grant for State Administration and Leadership, and 7.45% for the Georgia Vocational Staff Development Consortium. The agreed upon rates are documented by signed DE0448 grant budgets. These grant budgets were approved by the RESA official, the
-3-

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2002

Vocational-Technical Education official, and the Grants Accounting official.

Paragraph three of the audit finding states that, " The GDOE approved rate of 8.56% would have been permitted if the RESA carried out all of the program services and administrative functions for these three program activities instead of merely acting as fiscal agent." In reference to the Georgia Vocational StaffDevelopment Consortium for FY0 1, RESA was responsible for all program services and administrative functions. The Executive Director of GVSDC was contracted by RESA. Employees were hired and housed by North Georgia RESA. The website was housed and maintained by RESA. Contracts with staff development providers were entered into on behalf of the consortium by RESA. All financial information for the consortia was maintained by RESA and provided to the board of directors of GVSDC.

Currently the Georgia Department of Education has requested a review ofthis finding

by the U.S. Department of Education.



-4-

SECTION Ill CURRENT YEAR FINDtNGS AND QUESTIONED COSTS

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2002
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS GENERAL LEDGER Failure to Implement an Adequate Deficit Reduction Plan Finding Control Number: FS-8524-02-01 The Printing Fund and Repair Fund at North Georgia Regional Educational Service Agency (RESA) ended the year with deficit balances of $128,759.96 and $498,949.40, respectively. The Printing Fund deficit increased by $2,545.30 and the Repair Fund deficit increased by $40,732.09 from the prior year. These deficits have occurred primarily because expenditures have consistently exceeded revenues. The deficits in these funds, if not corrected, could eventually cause the RESA as a whole to be in a deficit position. Management should develop a deficit reduction plan and implement sound business practices to ensure that additional deficits do not occur for the Printing Fund and Repair Fund in subsequent periods.
-I-