City of Bremen Board of Education, Haralson County, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2007

CITY OF BREMEN BOARD OF EDUCATION
HARALSON COUNTY, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY - 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

1

B

STATEMENT OF ACTIVITIES

2

COMPONENT UNIT FINANCIAL STATEMENTS

C

BALANCE SHEET

4

D

STATEMENT OF SUPPORT, REVENUES, EXPENSES AND

CHANGES IN NET ASSETS

5

FUND FINANCIAL STATEMENTS

E

BALANCE SHEET

GOVERNMENTAL FUNDS

6

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

7

G

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

8

H

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

9

I

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

10

J

NOTES TO THE BASIC FINANCIAL STATEMENTS

11

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERALFUND

27

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

35

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

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY - TABLE OF CONTENTS -
SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
March 18, 2008

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the City of Bremen 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 J) of the City of Bremen Board of Education, as of and for the year ended June 30, 2007, which collectively comprise the Board's basic financial statements of the Board's primary government as listed in the table of contents. These financial statements are the responsibility of the City of Bremen Board of Education's management. Our responsibility is to express opinions on these financial statements based on our audit.
Except as discussed in the following paragraph, we conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City of Bremen Board of Education's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opm1ons.

2007 ARL-25X

The financial statements of Bremen Educational Foundation, Inc. (Foundation) have not been audited, and we were not engaged to audit the Foundation's financial statements as part of our audit ofthe School District's basic financial statements. The Foundation's financial activities are included in the School District's basic financial statements as a discretely presented component unit.
Because the Foundation's financial statements have not been audited, the scope ofour work was not sufficient to enable us to express, and we do not express, an opinion on the financial statements of the Foundation as of and for the year ended June 30, 2007.
In addition, 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 for the City of Bremen Board of Education, as of June 30, 2007, and the respective changes in financial position thereoffor the year then ended in conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated March 18, 2008, on our consideration of the City of Bremen Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose ofthat report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.
Management's Discussion and Analysis and the Schedule ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through x and page 27 respectively, are not a required part ofthe 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 City of Bremen 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, except for the matters discussed in the third paragraph on which we express no opinion, such information, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
2007 ARL-25X

A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24.
Respectfully submitted,
~w.4d Russell W. Hinton, CPA, CGFM State Auditor
RWH:as 2007 ARL-25X

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007

INTRODUCTION
The School District's financial statements for the fiscal year ended June 30, 2007, includes a series of basic financial statements that report financial information for the School District as a whole, its funds, and its fiduciary responsibilities. The Statement of Net Assets and the Statement of Activities provide financial information about all of the School District's activities and present both a short-term and long-term view of the School District's finances on a global basis. The fund financial statements provide information about all of the School District's funds. Information about these funds, such as the School District's General Fund, is important in its own right, but will also give insight into the School District's overall soundness as reported in the Statement of Net Assets and the Statement of Activities.
FINANCIAL HIGHLIGHTS
Key financial highlights for fiscal year 2007 are as follows:
On the District-wide financial statements:
District-wide net assets at June 30, 2007, were $14.5 million. Net assets reflect the difference between all assets of the School District (including capital assets, net of depreciation) and all liabilities, both short-term and long-term. The net assets at June 30, 2007, of $14.5 represented an increase of $2.9 in net assets when compared to the pnor year.
The School District had $15.l million in expenses relating to governmental activities; only $11.6 million of these expenses were offset by program specific charges for services, grants and contributions. However, general revenues (primarily property and sales taxes) of $6.4 million were adequate to provide for these programs.
As stated above, general revenues accounted for $6.4 million or about 36% of all revenues totaling $18 million. Program specific revenues in the form of charges for services, grants, and contributions accounted for the balance of these revenues.

Source of Revenues

General Revenue Property Taxes 14.0% General Revenue Sales Taxes 10.9%
General Revenue All Other 10.9%

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CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
The School District increased its outstanding bond debt $6 million through the sale of general obligation bonds for the purpose of Capital Outlay. This debt will be retired in part of a Special Purpose Local Option Sales Tax that was approved by the citizenry in conjunction with the Bond Sale.
On the fund financial statements:
Among major funds, the General Fund had $15.1 million in revenues, and $14.5 million in expenditures. The General Fund balance of almost $2.8 million at June 30, 2007, increased almost $600,000 from the prior year.
OVERVIEW OF THE FINANCIAL STATEMENTS
These financial Statements consists of three parts: management's discussion and analysis (this section), the basic financial statements including notes to the 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. In the case of the City of Bremen School District, the General Fund, Capital Projects Funds, and Debt Service Funds are all considered to be major funds. The School District has no nonmajor funds as defined by GASB Statement 34 for the purposes of this report.
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
Since City of Bremen School District has no operations that have been classified as "Business Activities", 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 School District-wide financial statements, a reader might ask the question, are we in a better
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CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
financial position now 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, student-teacher ratios, and other factors.
When analyzing District-wide financial statements, it is important to remember these statements are prepared using an economic resources measurement focus (accrual accounting) and involve the following steps to format the Statement of Net Assets:
Capitalize current outlays for capital assets Depreciate capital assets Report long-term debt as a liability Calculate revenue and expense using the economic resources measurement focus and the
accrual basis of accounting Allocate net assets as follows:
o Net Assets invested in capital assets, net ofrelated debt o Restricted net assets are those with constraints placed on the use by external
sources such as creditors, grantors, contributors or laws and regulations. o Unrestricted net assets are net assets that do not meet any of the above
restrictions.
Fund Financial Statements
The School District uses many funds or subfunds to account for a multitude of financial transactions during the fiscal year. The fund financial statements presented in this report provide detail information about the School District's significant or major funds. As discussed previously, the School District has no nonmajor Funds as defined by generally accepted accounting principles.
The School District has two kinds of funds as discussed below:
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
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CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
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 government activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds are reconciled in the financial statements.
Fiduciary Funds - The School District is the trustee, or fiduciary, for assets that belong to clubs, organizations and others 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 Districtwide financial statements because it cannot use these assets to finance its operations.
FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT AS A WHOLE
Net assets, which is the difference between total assets and total liabilities, is one indicator of the financial condition of the School District. When revenues exceed expenses, the result is an increase in net assets. When expenses exceed revenues, the result is a decrease in net assets. The relationship between revenues and expenses can be thought of as the School District's operating results. The School District's net assets, as measured in the Statement of Net Assets, can be one way to measure the School District's financial health, or financial position. Over time, increases or decreases in the School District's net assets - as measured in the Statement of Activities - are one indicator of whether its financial health is improving or deteriorating. However, the School District's goal and mission is to provide success for each child's education, not to generate profits as private corporations do. For this reason, many other nonfinancial factors should be considered in assessing the overall health of the School District.
In the case of the City of Bremen School District, assets exceeded liabilities by $14.5 million at June 30, 2007. To better understand the School District's actual financial position and ability to deliver services in future periods, it is necessary to review the various components of the net asset category. For example, of the $14.5 million of net assets, about $2.2 million was restricted for bus replacement, continuation of Federal programs, debt service, and capital projects. Accordingly, these funds were not available to meet the School District's ongoing obligations to citizens and creditors.
In addition, the School District also had $9.6 million invested in capital assets (net of related debt) (e.g., land, buildings, and equipment). The School District uses these capital assets to provide educational services to students within geographic boundaries served by the School District. Because of the very nature and on-going use of the assets being reported in this component of net assets, it must be recognized that this portion of the net assets is not available for future spending.
The remaining balance of unrestricted net assets of almost $2.7 million may be used to meet the School District's ongoing obligations to citizens and creditors.
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CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007

Table 1 provides a summary of the School District's net assets for this fiscal year as compared to the prior fiscal year.

Table 1 Net Assets

Governmental Activities

Fiscal

Fiscal

Year 2007

Year 2006

Assets Current and Other Assets Capital Assets, Net

$ 9,835,213 13,800.071

$ 5,137,770 9,853,819

Total Assets

$ 23,635,284 $ 14,991.589

Liabilities Current and Other Liabilities Long-Term Liabilities

$ 2,553,950 6,600,000

$ 1,608,604 1.793,768

Total Liabilities

$ 9,153,950 $ 3,402,372

Net Assets Invested in Capital Assets, Net of Related Debt Restricted Unrestricted

$ 9,634,418 2,186,075 2,660,841

$ 8,060,595 1,472,594 2,056,028

Total Net Assets

$ 14,481.334 $ 1115821217

Net assets increased $2.9 million in fiscal year 2007. This change in net assets is supported by Table 2 as presented below:

Table 2 shows the Changes in Net Assets for this fiscal year as compared to the prior fiscal year. Certain fiscal year 2006 expenditures for enterprise operations and community services have been reclassified for purposes of comparability.

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CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007

Table 2 Change in Net Assets

Revenues Program Revenues: Charges for Services and Sales Operating Grants and Contributions Capital Grants and Contributions

Governmental Activities

Fiscal

Fiscal

Year 2007

Year 2006

$ 1,216,111 9,641,985 700,087

$ 1,025,847 8,729,515
3,056

Total Program Revenues

$ 11,558,183 $ 9,758,418

General Revenues:

Taxes

Property Taxes

For Maintenance and Operations

$

Sales Taxes

Special Purpose Local Option Sales Tax

For Debt Service

For Capital Projects

Grants and Contributions not Restricted to

Specific Programs

Investment Earnings

Miscellaneous

2,521,808
1,965,535
1,045,031 327,064 589,681

$ 2,247,183
1,149,674 834,839
1,049,628 82,016
739,659

Total General Revenues

$ 6,449,119 $ 6,102,999

Total Revenues

$ 18,007,302 $ 15,861,417

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

$ 10,184,335
470,085 269,578 230,535 312,408 876,306 176,992 907,468 203,621
26,620 78,876
270,941 683,532 215,411 208,476

$ 9,581,048
387,989 222,919 220,376 334,172 765,960 112,290 810,587 118,574
10,689 40,829
259,337 664,084 112,947 101,158

Total Expenses

$ 15,115,184 $ 13,742,959

Increase in Net Assets

$ 2,892,118 $ 21118A58

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CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007

Cost of Providing Services

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 activity as compared to the prior fiscal year as restated. Certain fiscal year 2006 revenues and expenditures for enterprise operations and community services have been reclassified for purposes of comparability.

Table 3 Governmental Activities

Total Cost of Services

Fiscal

Fiscal

Year 2007 Year 2006

Net Cost of Services

Fiscal

Fiscal

Year 2007 Year 2006

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

$10,184,335 $ 9,581,048 $

470,085 269,578 230,535 312,408 876,306 176,992 907,468 203,621 26,621 78,876

387,989 222,919 220,376 334,172 765,960 112,290 810,587 118,574
10,689 40,829

270,941 683,531 215,411 208,476

259,337 664,084 112,947 101,158

1,758,290 $
329,195 146,268 23,631 -166,397 397,388 174,558 376,633 62,726 26,620 78,048
130,617 -13,281 24,229 208,476

2,560,061
273,154 100,194 53,773 -104,466 361,551 110,228 354,480 100,567
8,059 40,155
77,982 50,860 -103,215 101,158

Total Expenses

$15,115,184 $13,742,959 $ 3,557,001 $ 3,984,541

The table above indicates that the net costs of providing services decreased in fiscal year 2007 as compared to the prior fiscal year. However, the reader should remember that in fiscal year 2007 $700,000 of capital grants revenue was reported and allocated against expenditures compared to only $3,000 in the prior fiscal year. This increase in capital outlay funding in fiscal year 2007 blurs the comparability of the net costs of providing services on a year to year basis.

FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT'S FUNDS

Information about the School District's governmental funds is presented starting on Exhibit "E" of this report. Governmental funds are accounted for using the modified accrual basis of accounting. The governmental funds had total revenues of almost $18 million and total

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CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
expenditures of almost $20.3 million in fiscal year 2007. Additionally, the School District sold $6 million in General Obligation Debt during the fiscal year. Total governmental fund balances of $7.2 million at June 30, 2007, increased $3.7 million from the prior year. This increase in fund balance occurred primarily because of the General Obligation Bonds sold during fiscal year 2007.
General Fund Budget 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 2007, the School District amended its general fund budget as needed.
The School District budget is adopted at the aggregate level and maintained at the program, function, object, and site levels to facilitate budgetary control. The budgeting systems are designed to control the total budget, but provide flexibility to meet the ongoing programmatic needs. The budgeting systems are also designed to control total site budgets but provide flexibility for site management as well.
For the General Fund, the final actual revenues of $15.1 million were over the final budgeted amount of $13.2 million by $1.9 million. This difference (final actual vs. final budget) was primarily attributable to revenues for property taxes over final budget of almost $293,000, revenues for State Funds over final budget of $882,000, revenues for charges for services over final budget of $108,000, and miscellaneous revenues over final budget of $533,000. The School District traditionally estimates revenue on a conservative basis to avoid shortfalls in actual revenues. Additionally, the School District did not include revenues for school activity accounts (included in miscellaneous revenues) in the final budget.
The General Fund's final actual expenditures of $14.6 million exceeded the final budget amount of almost $12.8 million by $1.8 million. This difference (final actual vs. final budget) was primarily attributable to actual expenditures for instruction exceeding the final budget of $1.1 million, and the fact that expenditures for enterprise operations of $271,000 and expenditures for community services of $215,000 were not included in the School District's final budget.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
At fiscal year ended June 30, 2007, the School District had over $13.8 million invested in capital assets, net of accumulated depreciation, all in governmental activities. These assets are made up of a broad range of items including buildings; land; land improvements; and food service, transportation and maintenance equipment. This year's additions (net of depreciation) totaled over $3 .9 million and included:
Construction in progress costs for new middle school totaling $3.3 million.
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CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007

Table 4 reflects a summary of these balances, net of accumulated depreciation, as compared to the prior fiscal year.

Table 4 Capital Assets (Net of Depreciation)

Governmental Activities

Fiscal

Fiscal

Year 2007

Year 2006

Land Construction in Progress Land Improvements Buildings and Improvements Equipment

$ 1,009,996 3,891,100 52,589 8,579,037 267 349

$ 1,009,996
56,023 8,547,277
240,523

Total

$ 13,800,071 $ 9,853,819

Additional information about the School District's Capital Assets can be found in the Notes to the Basic Financial Statements.

Long-Term Debt

At June 30, 2007, the School District had $6.6 million in total debt outstanding which consisted of general obligation bond debt. Table 5 summarizes the School District's debt as compared to the prior fiscal year.

Table 5 Debt at June 30

Governmental Activities

Fiscal

Fiscal

Year 2007

Year 2006

Bonds Payable Capital Leases

$ 6,600,000 $ 1,790,000 3 768

Total

$ 6,600,000 $ 1,793,768

Additional information about the School District's debt can be found in the Notes to the Basic Financial Statements.

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CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
FACTORS BEARING ON THE SCHOOL DISTRICT'S FUTURE Currently known circumstances that are expected to have a significant effect on financial position or results of operations in future years are as follows:
The School District is financially stable. The School District's current operating millage is 12.95, which produces approximately $193,380 per mill. The School District continues to grow with an average of 75 students per year over the last three years The School District is currently constructing a new middle school and is making renovations at the high school. The School District plans to fund additional capital outlays with the one percent Special Purpose Local Option Sales Tax revenue in conjunction with general obligation bonds and state capital outlay grants.
The Bremen Educational Foundation, Inc. had net assets at $1.2 million at June 30, 2007. These funds were derived through private sources and are designated primarily for scholarships for graduating seniors and for construction of a Performing Arts Center.
The School District will continue to face challenges from the implementation of the A+ Education Reform Act, which mandates lower teacher to student ratios. The School District will also continue to be impacted by the remedial actions required for under performing schools under the No Child Left Behind Act. In the midst of these challenges, the School District remains confident in the ability to maximize resources to provide the best possible educational experience for all of our students.
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 Dr. Stanley McCain, Superintendent, City of Bremen Board of Education, 504 Laurel Street, Bremen, Georgia 30110. You may also email your questions to Dr. McCain at stanley.mccain@bremencs.com.
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CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY STATEMENT OF NET ASSETS JUNE 30, 2007

EXHIBIT"A"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Funds Inventories Capital Assets Land Construction in Progress Land Improvements Buildings Equipment Less: Accumulated Depreciation
Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Contracts Payable Retainages Payable Long-Term Liabilities
Due in More Than One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Bus Replacement Continuation of Federal Programs Debt Services 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.
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GOVERNMENTAL ACTIVITIES

$

4,737,862.61

2,757,489.12

452,938.04 1,807,486.14
56,868.56 22,568.70

1,009,996.00 3,891,100.00
120,084.00 11,020,081.00
549,930.00 -2,791,120.00

$ ===23='=63=5=,2=8=4.=1.7..

$

1,001.83

1,721,547.80

629,665.39

201,734.54

6,600,000.00

$

9,153,949.56

$

9,634,418.08

8,052.00 102,635.70 128,153.13 1,947,234.40 2,660,841.30

$

14,481,334.61

$ ===23='=63=5=,2=8=4.=1==7

CITY OF BREMEN BOARD OF EDUCATION-HARALSON COUNTY STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2007

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 Support Services - Central Other Support Services Operations of Non-Instructional Services Enterprise Operations School Nutrition Program Community Services Operations Interest on Short-Term and Long-Term Debt
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations Sales Taxes Special Purpose Local Option Sales Tax For Debt Services Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Change in Net Assets
Net Assets - Beginning of Year

EXPENSES

CHARGES FOR SERVICES

$ 10,184,334.69 $
470,085.08 269,577.64 230,534.98 312,408.36 876,306.23 176,992.22 907,468.45 203,620.67
26,620.13 78,876.22
270,940.90 683,531.48 215,410.95 208,476.08
$ 15,115,184.08 $

515,015.87
140,324.06 369,589.54 191,181.85 1,216,111.32

Net Assets - End of Year

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

EXHIBIT"B"

PROGRAM REVENUES OPERATING GRANTS AND
CONTRIBUTIONS

CAPITAL GRANTS AND CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

$

7,390,713.94 $

140,890.53 123,309.62 206,904.24 461,982.19 476,359.12
2,433.86 525,383.88
13,755.15

827.84

299,424.71

$

9,641,985.08 $

520,315.44 $
16,822.52 2,558.97 5,451.48 127,139.65
27,798.37
700,086.43 $

-1,758,289.44
-329, 194.55 -146,268.02
-23,630.74 166,396.35 -397,388.14 -174,558.36 -376,633.09 -62,725.87 -26,620.13 -78,048.38
-130,616.84 13,281.14 -24,229.10
-208,476.08
-3,557,001.25

$

2,521,807.45

1,965,535.39 1,045,031.00
327,064.38 589,681.09

$

6,449,119.31

$

2,892,118.06

11,589,216.55

$ ===14='=48..,1...,,3=34==61=

-3-

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY BALANCE SHEET COMPONENT UNIT JUNE 30, 2007

EXHIBIT "C"

ASSETS Cash and Cash Equivalents Investments
Total Assets
NET ASSETS Unrestricted

BREMEN EDUCATIONAL FOUNDATION,
INC.

$

125,633.37

1,094,488.77

$ ===1=,2=2=0..1..2=2=.1=4=

$ ===1=,2=2=0..1..=22==14=

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

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY STATEMENT OF SUPPORT, REVENUES, EXPENSES AND CHANGES IN NET ASSETS
COMPONENT UNIT YEAR ENDED JUNE 30, 2007

EXHIBIT "D"

REVENUES
Gifts and Contributions
OPERATING COSTS
Accounting Fees Bank Charge Gifts Given Grant Requests License Postage Rent Scholarships
Total Operating Costs
Net Change
OTHER INCOME AND EXPENSE
Interest Income Dividend Income Gain on Sale of Securities
Total Other Income and Expense
Increase in Net Assets
Beginning Net Assets
Ending Net Assets

BREMEN EDUCATIONAL FOUNDATION,
INC.

$

30,745.65

$

350.00

75.09

3,000.00

9,953.77

30.00

37.46

18.00

4,750.00

$

18,214.32

$

12,531.33

$

65,245.40

1,872.58

25,374.94

$

92,492.92

$

105,024.25

1,115,097.89

$ 1,220,122.14

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

CITY OF BREMEN BOARD OF EDUCATION- HARALSON COUNTY BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2007

EXHIBIT"E"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Inventories
Total Assets
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Salaries and Benefits Payable Contracts Payable Retainages Payable
Total Liabilities
FUND BALANCES
Reserved for: Bus Replacement Continuation of Federal Programs Debt Service Inventories Capital Projects
Unreserved Designated for Student Activities Designated for Acquisition of Land Undesignated Reported in: General Fund
Total Fund Balances
Total Liabilities and Fund Balances

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 1,460,672.05 $ 3,158,099.66 $ 1,757,489.12 1,000,000.00

48,138.96 1,159,339.70
56,868.56 22,568.70

349,812.44 648,146.44

119,090.90 $ 4,737,862.61 2,757,489.12
397,951.40 1,807,486.14
56,868.56 22,568.70

$ 4,505,077.09 $ 5,156,058.54 $ 119,090.90 $ 9,780,226.53

$

1,001.83

1,721,547.80

$

$ 1,722,549.63 $

629,665.39 201,734.54
831,399.93

$

1,001.83

1,721,547.80

629,665.39

201,734.54

$ 2,553,949.56

$

8,052.00

80,067.00

$

9,062.23 $

22,568.70

4,315,596.38

260,655.35 530,000.00

1,881,184.41

$ 2,782,527.46 $ 4,324,658.61 $

$ 119,090.90

8,052.00 80,067.00 128,153.13 22,568.70 4,315,596.38

260,655.35 530,000.00

1,881,184.41

119,090.90 $ 7,226,276.97

$ 4,505,077.09 $ 5,156,058.54 $ 119,090.90 $ 9,780,226.53

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

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2007

EXHIBIT "F"

Total Fund Balances - Governmental Funds (Exhibit "E")
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 Land Improvements 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:
General Obligation Bonds Payable

$ 7,226,276.97

$ 1,009,996.00 3,891,100.00 120,084.00
11,020,081.00 549,930.00
-2,791,120.00

13,800,071.00

54,986.64

-6,600,000.00

Net Assets of Governmental Activities (Exhibit "A")

$ 14,481,334.61

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

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2007

EXHIBIT"G"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Community Services Food Services Operation
Capital Outlay Debt Services
Principal Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Proceeds of Long-Term Capital Related Debt 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

$ 2,476,418.81 $
9,975,280.48 763,675.59
1,216,111.32 117,862.54 583,053.59

712,449.89 $ 648,146.44
209,130.22 6 627.50

$ 1,253,085.50
71.62

2,476,418.81 1,965,535.39 10,623,426.92
763,675.59 1,216,111.32
327,064.38 589,681.09

$ 15,132,402.33 $ 1,576,354.05 $ 1,253,157.12 $ 17,961,913.50

$ 9,998,508.20

$ 9,998,508.20

470,085.08 269,577.64 230,534.98 307,136.36 875,393.23 110,463.00 $ 869,673.17 154,656.67
16,702.13 78,876.22 270,940.90 215,410.95 683,531.48

65,985.09 13,645.35 22,134.00
4,199,704.93

470,085.08 269,577.64 230,534.98 307,136.36 875,393.23 176,448.09 883,318.52 176,790.67
16,702.13 78,876.22 270,940.90 215,410.95 683,531.48 4,199,704.93

3,768.62 150.38

$ 1,190,000.00 208,325.70

1,193,768.62 208,476.08

$ 14,555,409.01 $ 4,301,469.37 $ 1,398,325.70 $ 20,255,204.08

$

576,993.32 $ -2, 725,115.32 $ -145, 168.58 $ -2,293,290.58

$ 6,000,000.00 $
-262,809.07

$ 262,809.07

6,000,000.00 262,809.07 -262,809.07

$ 5,737,190.93 $ 262,809.07 $ 6,000,000.00

$

576,993.32 $ 3,012,075.61 $ 117,640.49 $ 3,706,709.42

2,205,534.14

1,312,583.00

1 450.41

3,519,567.55

Fund Balances - Ending

$ 2,782,527.46 $ 4,324,658.61 $ 119,090.90 $ 7,226,276.97

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

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2007

EXHIBIT"H"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "G")
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
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.
Bond proceeds provide current financial resources to Governmental Funds; however, issuing debt increases Long-Term Liabilities in the Statement of Net Assets. In the current period, proceeds were received from:
General Obligation Bonds Issued
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 Capital Lease Payments
Total Long-Term Debt Repayments
Change in Net Assets of Governmental Activities (Exhibit "B")

$ 3,706,709.42

$ 4,177,500.00 -231,248.00

3,946,252.00

45,388.02

-6,000,000.00

$ 1,190,000.00 3,768.62

1,193,768.62

$ 2,892,118.06

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

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30, 2007

EXHIBIT"!"

ASSETS Cash and Cash Equivalents
LIABILITIES Funds Held for Others

AGENCY FUNDS
$ 70,809.69
$ 70,809.69

The notes to the basic financial statements are an integral part of this statement. - 10 -

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007

EXHIBIT "J"

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The City ofBremen 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.
DISCRETELY PRESENTED COMPONENT UNIT
The Bremen Educational Foundation, Inc. is a non-profit organization established in 2001 as a permanent endowment created by alumni and supporters of the Bremen City School District to support the tradition of excellence in the system. The purpose of the Foundation is to improve the quality ofeducation in the system and act as a fiscal agent for donors who wish to sponsor approved projects for the system, its teachers and students. (See Note "16")
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 ofthe City of Bremen 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 ofgoods 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.
- 11 -

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007

EXHIBIT "J"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for 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 Special Purpose Local Option Sales Tax (SPLOST), Bond Proceeds and grants from Georgia State Financing and Investment Commission to be used for the acquisition, construction or renovation ofmajor capital facilities.
Debt Service Fund accounts for taxes (sales) legally restricted for the payment ofgeneral longterm 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 clubs or individuals.
BASIS OF ACCOUNTING
The basis of accounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.

- 12 -

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007

EXHIBIT "J"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis ofaccounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, 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 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. Official Code of Georgia Annotated Section 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 ofGeorgia 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:
(I) 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,
- 13 -

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007

EXHIBIT "J"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(4) Obligations of any corporation of the United States government,

(5) Prime banker's acceptances,

(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.

The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration ofcredit risks, interest rate risks or foreign currency risks.

RECEIVABLES

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

PROPERTY TAXES

The City of Bremen fixed the property tax levy for the 2006 tax digest year (calendar year) on October 18, 2006 (levy date). Taxes were due on December 20, 2006 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2006 tax digest are reported as revenue in the governmental funds for fiscal year 2007. The Bremen City Clerk bills and collects the property taxes for the School District, withholds $3.50 per bill 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, 2007, for maintenance and operations amounted to $2,476,418.81.

The tax millage rate levied for the 2006 tax year (calendar year) for the City of Bremen Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

12.95 mills

- 14 -

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007

EXHIBIT "J"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $1,965,535.39 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.

INVENTORIES

FOOD INVENTORIES On the basic financial statements, inventories of donated 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 ofart. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District.

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

Capitalization Policy

Estimated Useful Life

Land Land Improvements Buildings and Improvements Equipment

All

NIA

$ 10,000.00 10 to 60 years

$ 50,000.00 45 to 60 years

$ 10,000.00 5 to 30 years

- 15 -

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007

EXHIBIT "J"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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.
NET ASSETS
The School District's net assets in the District-wide Statements are classified as follows:
Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net ofoutstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.
Restricted net assets - These represent resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation of Federal programs, debt service and capital projects in accordance with restrictions imposed by external third parties.
Unrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes.
FUND BALANCES RESERVED
Reserves represent those portions of fund balance equity that are legally segregated for a specific future use.
UNRESERVED-DESIGNATED Designated fund balances represent tentative plans for future use of financial resources.
Note 3: DEPOSITS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not
- 16 -

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007

EXHIBIT "J"

Note 3: DEPOSITS
been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent 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. At June 30, $400,000.00 of deposits were not secured by surety bond, insurance or collateral as specified above. The School District is working with the affected financial institutions to ensure appropriate levels of collateral are maintained for all of the School District's deposits.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by 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, 2007, the bank balances were $8,317,578.48. The amounts of the total uninsured bank balances are classified into three categories of custodial credit risk:
Category 1 - Uncollateralized, Category 2 - Cash collateralized with securities held by the pledging financial institution, or
by its trust department or agent in the School District's name, Category 3 - Cash collateralized with securities held by the pledging financial institution's
trust department or agent but not in the School District's name.
- 17 -

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007

EXHIBIT "J"

Note 3: DEPOSITS

The School District's uninsured deposits are classified by custodial credit risk category at June 30, 2007, as follows:

Custodial Credit Risk Category

Bank Balance

1

$ 400,000.00

2

0.00

3

3,628,900.13

Total

$ 4!028!900.13

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:

Governmental Activities Capital Assets, Not Being Depreciated:
Land Construction in Progress
Total Capital Assets Not Being Depreciated
Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements
Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements
Total Capital Assets, Being Depreciated, Net
Governmental Activity Capital Assets - Net

Balances July 1, 2006

Increases

Decreases

Balances June 30, 2007

$ 1,009,996.00

$ 1,009,996.00

0.00 $ 4, I 05,366.00 $ 214,266.00 3,891, I00.00

$ 1,009,996.00 $ 4, I05,366.00 $ 214,266.00 $ 4,901,096.00

$10,805,815.00 $ 477,796.00 120,084.00

214,266.00 $ 72,134.00

0.00 $11,020,081.00 549,930.00 120,084.00

2,258,540.00 237,271.00 64,061.00

182,504.00 45,310.00
3 434.00

2,441,044.00 282,581.00 67 495.00

$ 8,843,823.00 $ 55,152.00 $

0.00 $ 8,898,975.00

$ 2,853,812,QQ $ 4,16Q,518.QQ $ 214,266.QO $ 13,8QO,Q71.QO

- 18 -

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007

EXHIBIT "J"

Note 5: CAPITAL ASSETS

Current year depreciation expense by function is as follows:

Instruction Support Services
General Administration School Administration Maintenance and Operation of Plant Student Transportation Services Food Services

$ 185,640.00

$

6,002.00

913.00

1,945.00

26,830.00

35,690.00 9,918.00

$ 231,248.00

Note 6: RESTRICTED ASSETS

Special Purpose Local Option Sales Tax (SPLOST) and general obligation bond proceeds are 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, 2007, were as follows:

District-wide Capital Projects SPLOST

Debt Service Funds

Restricted Cash and Cash Equivalents: Debt Services Capital Acquisitions
Restricted Investments: Capital Acquisitions

$

9,062.23 $ 119,090.90

$ 3,149,037.43

$ 1,000,000.00

Note 7: INTERFUND TRANSFERS

Interfund transfers for the year ended June 30, 2007, consisted of the following:

Transfer to

Transfers From District-wide Capital Projects

Debt Service Fund

$ 262,809.07

- 19 -

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007

EXHIBIT "J"

Note 7: INTERFUND TRANSFERS

Transfers are used to move capitalized interest, which was included as a part of Bond Proceeds, to the Debt Service Fund to pay interest on bonds.

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 participates in the Georgia School Boards Association Risk and Insurance Management System, a public entity risk pool organized on July 1, 1994, to develop and administer a plan to reduce risk of loss on account of general liability, motor vehicle liability, or property damage, including safety engineering and other loss prevention and control techniques, and to administer one or more groups of self-insurance funds, including the processing and defense of claims brought against members ofthe system. Coverage under this system includes loss related to torts, theft of, damage to, and destruction ofassets; errors or omissions, and acts ofGod. The School District pays an annual premium to the system for its general insurance coverage. Additional coverage is provided through agreements by the system with other companies according to their specialty for property, boiler and machinery (including coverage for flood and earthquake), general liability (including coverage for sexual harassment, molestation and abuse), errors and omissions, crime and automobile risks. Payment of excess insurance for the system varies by line of coverage.

Coverage in the Georgia School Boards Association Risk and Insurance Management System includes Dishonesty and Faithful Performance coverage as follows:

Position Covered

Amount

Superintendent Employees

$ 50,000.00 $ 50,000.00

The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the same fund that the employee's salary and benefits were paid. Claims are accounted for with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.

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

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

2006 2007

$

0.00 $

4 954.00 $

4 954.00 $

0.00

$

0.00 $

1,235.00 $

1,235.00 $

0.00

- 20 -

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007

EXHIBIT "J"

Note 8: RISK MANAGEMENT

The School District participates in the Georgia Education Workers' Compensation Trust, a public entity risk pool organized on December 1, 1991, to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Trust for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Trust with the Midwest Employers Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $500,000.00 loss per occurrence, up to $2,000,000.00.

Note 9: OPERATING LEASES

City ofBremen Board of Education has entered into various leases as lessee for a mobile classroom and various copiers. These leases are considered for accounting purposes to be operating leases. Lease expenditures for the year ended June 30, 2007, for governmental funds amounted to $65,876.92.

Year Ending

Governmental Funds

2008 2009 2010 2011

$ 38,530.00 22,832.00 4,145.00 1,925.00

Total

$ 67,432.00

Note 10: LONG-TERM DEBT

GENERAL OBLIGATION DEBT OUTSTANDING General Obligation Bonds currently outstanding are as follows:

Purpose

Interest Rates

Amount

General Government - Series 2001 (Carroll) General Government - Series 2006 (Haralson)

3.6%

$ 600,000.00

4.10% - 4.38%

6,000,000.00

$ 6,600,000.00

- 21 -

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007

EXHIBIT "J"

Note 10: LONG-TERM DEBT

On March 21, 2006, voters authorized $6,000,000.00 in general obligation debt for capital outlay purposes which was not issued as of June 30, 2007.

The changes in Long-Term Debt during the fiscal year ended June 30, 2007, were as follows:

Governmental Funds

General

Capital

Obligation

Leases

Bonds

Total

Balance July 1, 2006

$

3,768.62 $ 1,790,000.00 $ 1,793,768.62

Additions G. 0. Bonds

6,000,000.00 6,000,000.00

Deductions Debt Retired

3,768.62 1,190,000.00 1,193,768.62

Balance June 30, 2007

$======='0==.0==0 $ 6,600,000.00 $ 6,600,000.00

At June 30, 2007, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30

General Obligation

Debt

Principal

Interest

2008 2009 2010 2011 2012 2013-2017 2018 - 2022 2023

$ 267,106.26

$ 600,000.00

267,106.26

256,306.26

256,306.26

256,306.26

310,000.00 1,275,176.30

4,635,000.00

746,531.30

1,055,000.00

23,078.13

Total Principal and Interest

$ 6,600,000.00 $ 3,347,917.03

Note 11: ON-BEHALF PAYMENTS

The School District has recognized revenues and costs in the amount of $235,411.61 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.

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CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007

EXHIBIT "J"

Note 11: ON-BEHALF PAYMENTS

Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $234,115.61

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 $1,296.00

Note 12: SIGNIFICANT COMMITMENTS

The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2007, together with funding available:

Project

Unearned Executed Contracts

Funding Available From State

07-763-070 07-763-071 07-763-015

$ 332,987.51 $ 36,292.60

256,982.19

225,193.96

11,012,126.50 3,848,692.00

$ 11,602,096.20 $ 4,110,178.56

The amounts described in this note are not reflected in the basic financial statements.

Note 13: 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 14: SUBSEQUENT EVENTS

In the subsequent fiscal year, the School District issued general obligation bonds in the amount of $6,000,000.00. The debt was previously authorized by the voters on March 21, 2006. The proceeds from these bonds will be used for the acquisition, construction, renovation, and equipping of new and existing educational facilities and cost of issuance thereto.

- 23 -

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007

EXHIBIT "J"

Note 15: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school systems are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and 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 9.28% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2007 2006 2005

100% 100% 100%

$ 779,138.79 $ 779,112.43 $ 669,309.00

Note 16: COMPONENT UNIT

The Bremen Educational Foundation, Inc. (Foundation) is a legally separate tax-exempt component
unit ofthe City ofBremen Board of Education (School District). It was organized on December 17,
2001, as a Georgia Corporation pursuant to the provisions of the Georgia Non-Profit Corporation Code. The Foundation's governing board consists of 8 members consisting of alumni and or local business persons plus ex-officio member to include the superintendent of the Bremen City School System. New members are elected by the Foundation Board. Although the School District does not control the timing or amount ofreceipts from the Foundation, the majority ofresources or income thereon the Foundation holds and invests are restricted to the improvement of the quality of education of the School District and act as a fiscal agent for donors who wish to sponsor approved projects for the system, its teachers and students. Consequently, the Foundation is considered a component unit of the School District and is discretely presented in the School District's financial statements.

The Foundation utilizes the accrual method of accounting. The Foundation is subject to Statement ofFinancial Standards (SFAS) 117, "Financial Statement ofNot-for-Profit Organizations". As such, certain revenue recognition criteria and presentation features are different from GASB revenue

- 24 -

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007

EXHIBIT "J"

Note 16: COMPONENT UNIT
recognition criteria and presentation features. No modifications have been made to the Foundation's financial information in the School District's financial reporting entity for these differences. The Foundation's fiscal year is July 1, 2006, through June 30, 2007.
During the year ended June 30, 2007, the Foundation made contributions in the form of teacher grants and gifts to all three schools. These contributions totaled $12,954.00 with $2,000.00 to Sewell Middle School, $4,954.00 to Jones Elementary, $3,000.00 to Bremen High School, and $3,000.00 was given to Bremen High School as pass-through gift. Scholarships to individuals and colleges totaled $4,750.00.
Complete audited financial statements for the Foundation were not available as of the date of this report. Any inquiries or information about the Foundation can be obtained from Bremen Educational Foundation, Inc. The contacts are as follows: Mr. Vann Pelt, President, 810 Valley Run Drive, Bremen, Georgia 30110, 770-834-0738, Ext. 134, e-mail address, vpelt@silvey.com or Ms. Joanie Lowe, Treasurer, 121 Buchanan Street North, Bremen, Georgia 30110, 770-537-1110, e-mail address, joanielowe@bellsouth.net

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CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2007

SCHEDULE "1"

REVENUES
Property Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operation Enterprise Operations Community Service
Debt Service
Total Expenditures
Net Change in Fund Balances
Fund Balances - Beginning
Adjustments

NONAPPROPRIATED BUDGETS

ORIGINAL(1)

FINAL (1)

ACTUAL AMOUNTS

$

2,183,602.00 $

2,183,602.00 $

2,476,418.81

8,672,452.00

9,093,318.00

9,975,280.48

220,856.00

711,765.00

763,675.59

1,109,352.59

1,109,352.59

1,216,111.32

39,000.00

39,000.00

117,862.54

50,000.00

50 000.00

583,053.59

$

12,275,262.59 $

13,187,037.59 $

15,132,402.33

$

8,569,712.04 $

8,900,923.32 $

9,998,508.20

351,505.00 206,115.00 227,270.00 237,248.00 801,009.13 117,963.00 798,661.00 133,396.00
11,845.00 42,995.42 639,635.00 175,100.00

425,652.85 298,058.25 227,270.00 266,668.25 800,998.13 117,963.00 798,661.00 133,396.00
11,845.00 42,995.42 640,135.00 175,100.00

470,085.08 269,577.64 230,534.98 307,136.36 875,393.23 110,463.00 869,673.17 154,656.67
16,702.13 78,876.22 683,531.48 270,940.90 215,410.95
3 919.00

$

12,312,454.59 $

12,839,666.22 $

14,555,409.01

$

-37, 192.00 $

347,371.37 $

576,993.32

2,064,309.41

2,064,309.41

2,205,534.14

6 898.47

9,023.79

Fund Balances - Ending

$

2,034,015.88 $

2,420,704.57 $ =====2=,7=8='2'=52=7=.4==6

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 -

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2007

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 Direct School-Based Student Drug-Testing Program Pass-Through From Georgia Department of Education Enhancing Education Through Technology Program Improving Teacher Quality State Grants Title I Grants to Local Educational Agencies State Grants for Innovative Programs Vocational Education - Basic Grants to States
Total U. S. Department of Education
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) 604,389.19
604,389.19

10.550

N/A $

51,356.13 655,745.32

84.027 84.173

NIA

$

NIA

$

296,595.88 30,208.00
326,803.88

84.184
84.318 84.367 84.010 84.298 84.048

NIA NIA N/A NIA NIA
$

22,376.00
4.00 47,794.60 89,290.36
1,570.12 12,785.00
500,623.96

$==1='=15=6=,3=6=9.=28.,.

- 28 -

CITY OF BREMEN BOARD OF EDUCATION- HARALSON COUNTY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2007

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 ($38,832.59) were not maintained separately and are included in the 2007 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 City of Bremen 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-

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2007

SCHEDULE "3"

AGENCY/FUNDING
GRANTS Brighi from the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV CategoryV Gifted Student - Category VI Remedial Education Program Alternative Education Program Special Education - Supplemental Speech 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 Sparsity Nursing Services Principal Supplements Vocational Supervisors Education Equalization Funding Grant Food Services Vocational Education Amended Formula Adjustment Other State Programs Art Education Curriculum Graduation Coaches Health Insurance K-8 Statewide Reading and Math Grant Middle School Summer Remedial Program National Teacher Certification Preschool Handicapped Program Virtual Schools State Grant

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

$

458,748.61

$

630,273.00 89,600.00
1,287,218.00 147,054.00 664,804.00 57,207.00 967,845.00 804,769.00 458,381.00
137,849.00 51,705.00
539,898.00 200,391.00 128,486.00 206,550.00
50,440.00 81,982.00
2,500.00 184,100.00
57,383.00 34,461.00
370,871.00 403,777.00 463,289.00
12,446.00 51,940.00 35,802.00 47,986.00
5,689.00 9,429.00 1,045,031.00 37,842.00 16,063.26 -160,820.00
30,000.00 40,075.00 234,115.61 22,500.00
294.00 3,136.00 62,774.00
100.00

TOTAL
458,748.61
630,273.00 89,600.00
1,287,218.00 147,054.00 664,804.00 57,207.00 967,845.00 804,769.00 458,381.00
137,849.00 51,705.00
539,898.00 200,391.00 128,486.00 206,550.00
50,440.00 81,982.00
2,500.00 184,100.00
57,383.00 34,461.00
370,871.00 403,777.00 463,289.00
12,446.00 51,940.00 35,802.00 47,986.00
5,689.00 9,429.00 1,045,031.00 37,842.00 16,063.26 -160,820.00
30,000.00 40,075.00 234,115.61 22,500.00
294.00 3,136.00 62,774.00
100.00

- 30-

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2007

SCHEDULE "3"

AGENCY/FUNDING
GRANTS Georgia State Financing and Investment Commission Reimbursement on Construction Projects
Office of Treasury and Fiscal Services Public School Employees Retirement

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

TOTAL

$

648,146.44 $

648,146.44

1 296.00

$

9,975,280.48 $

648,146.44 $ 10,623,426.92

See notes to the basic financial statements.

- 31 -

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2007

SCHEDULE "4"

PROJECT

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED
IN PRIOR YEARS (3)

PROJECT STATUS

HARALSON COUNTY Acquiring, constructing and equipping school buildings and other buildings and facilities useful or desirable in connection therewith, adding to, renovating, repairing, improving and equipping existing school buildings and other buildings and facilities, useful or desirable in connection therewith, including constructing, modifying and equipping classrooms, acquiring system-wide technology improvements, acquiring school transportation vehicles and acquiring the necessary property for such schools, both real and personal, and for the future school sites, all at a maximum cost of $4,900,000.00

$ 4,900,000.00 $ 4,900,000.00 $ 816,573.83 $ 3,323,026.00 Ongoing

CARROLL COUNTY Funding the acquisition, construction, renovation, modification, improvement, extending and equipping of projects throughout the City of Bremen School System, including, but without limitation, additions, renovations, and improvements of certain existing system facilities, system-wide technology improvements, the acquisition of school transportation vehicles; the acquisition of land for additional schools, and the acquisition of all property, both real and personal, deemed necessary and advisable therefore including the funding of capitalized interest on debt of the City of Bremen with respect to the Bremen School Projects (the "Bremen School Projects"), the maximum cost of such Bremen School Projects not to exceed $4,840,000.00

4,840,000.00

4,840,000.00

179,152.09

3,141,816.00 Ongoing

HARALSON COUNTY II Funding a portion of the costs of the acquisition, construction, equipping and furnishing of new school buildings and facilities, including, but not limited to, additional classrooms, a new middle school, a new fine arts center and new physical education/athletic facilities, the addition, renovation, repair and improvement to existing school buildings and facilities, including, but not limited to, all existing schools, existing physical education/athletic facilities and the high school cafeteria, the acquisition and purchase of system-wide technology and safety equipment, including, but not limited to, computer hardware and software and security and safety equipment, the acquisition and purchase of school vehicles, including, but not limited to, school buses and maintenance vehicles, the addition, renovation, repair, paving and improvement to driveways and parking facilities, the acquisition and purchase of any property necessary and desirable therefore, both real and personal and the purchase of land (the "Bremen Projects"), capitalized interest on the Bremen Bonds through and including October 1, 2007

9,390,000.00

9,390,000.00

3,514,069.15

Ongoing

$ 19,130,000.00 $ 19,130,000.00 $ 4,509 795.07 $ 6,464,842.00 - 32 -

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2007

SCHEDULE "4"

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

See notes to the basic financial statements.

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CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES BY PROGRAM YEAR ENDED JUNE 30, 2007

SCHEDULE "5"

DESCRIPTION
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 Grades (6-8) 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 Category V Gifted Student - Category VI Remedial Education Program Alternative Education Program
TOTAL DIRECT INSTRUCTIONAL PROGRAMS
Media Center Program Staff and Professional Development

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

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

$

673,050.00 $ 660,161.00 $

37,037.00 $

697,198.00

96,570.00

122,749.00

533.00

123,282.00

1,402,953.00

1,954,539.00

72,223.00

2,026,762.00

152,733.00

119,331.00

824.00

120,155.00

718,068.00

833,734.00

26,272.00

860,006.00

58,588.00 1,052,778.00
883,619.00 481,141.00 1,141,367.00
225,833.00 49,087.00 89 309.00

52,411.00
1,225,611.00 1,502,970.00
248,285.00
97,189.00 56,812.00 443,112.00 159,946.00 76,413.00 105,611.00 12,906.00 108,252.00

385.00 4,657.00 32,071.00 58,613.00 6,536.00
453.00 553.00

52,796.00 4,657.00
1,257,682.00 1,561,583.00
254,821.00
97, 189,00 56,812.00 443,112.00 159,946.00 76,413.00 106,064.00 12,906.00 108,805.00

$

7,025,096.00 $ 7,780,032.00 $

240,157.00 $

8,020,189.00

199,289.00 37 838.00

194,192.00 3,509.00

31,654.00 37,416.00

225,846.00 40 925.00

TOTAL QBE FORMULA FUNDS

$

7,262,223.00 $ 7,977,733.00 $

309,227.00 $

8,286,960.00

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

See notes to the basic financial statements.

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SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
March 18, 2008

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members ofthe City of Bremen 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 City of Bremen Board ofEducation as ofand for the year ended June 30, 2007, which collectively comprise City of Bremen Board of Education's basic financial statements and have issued our report thereon dated March 18, 2008. This report was qualified for a scope limitation, as identified in the auditor's report on the basic financial statements. Except as discussed in the following paragraph, 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.
The financial statements of Bremen Educational Foundation, Inc. (Foundation) have not been audited, and we were not engaged to audit the Foundation's financial statements as part of our audit ofthe School District's basic financial statements. The Foundation's financial activities are included in the School District's basic financial statements as a discretely presented component unit. We do not express an opinion for the discretely presented component unit.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered City of Bremen Board of Education's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose ofexpressing an opinion
2007YB-10X

on the effectiveness of the City of Bremen Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City of Bremen Board of Education's internal control over financial reporting.
A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affect the City ofBremen Board ofEducation's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement ofthe City of Bremen Board of Education's financial statements that is more than inconsequential will not be prevented or detected by the City of Bremen Board of Education's internal control.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement ofthe financial statements will not be prevented or detected by the City of Bremen Board of Education's internal control.
Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph ofthis section and would not necessarily disclose all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether City of Bremen Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
We noted certain matters that we have reported to management of City of Bremen Board of Education in a separate letter dated March 18, 2008.
2007YB-10X

This report is intended solely for the information and use ofthe management, members ofthe City of Bremen Board of Education, 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,
-=RA ___ no w,~~
~u~~ton, CPA, CGFM State Auditor
RWH:as 2007YB-10X

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
March 18, 2008

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the City of Bremen Board of Education
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULARA-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of City ofBremen Board ofEducation with the types ofcompliance requirements described in the U.S. 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, 2007. City of Bremen 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 City of Bremen Board of Education's management. Our responsibility is to express an opinion on City of Bremen Board of Education's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the 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 of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the City ofBremen Board ofEducation's compliance with those requirements and performing such other procedures as we considered necessary in the

2007SA-10

circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on City of Bremen Board of Education's compliance with those requirements.
In our opinion, the City of Bremen Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each ofits major Federal programs for the year ended June 30, 2007.
Internal Control Over Compliance
The management of City of Bremen 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 City ofBremen 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 ofexpressing our opinion on compliance, but not for the purpose ofexpressing an opinion on the effectiveness ofinternal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City of Bremen Board of Education's internal control over compliance.
A control deficiency in an entity's internal control over compliance exists when the design or operation of a control does not allow management or employees, in the normal course ofperforming their assigned functions, to prevent or detect noncompliance with a type of compliance requirement of a Federal program on a timely basis. A significant deficiency is a control deficiency, or combination ofcontrol deficiencies, that adversely affects the entity's ability to administer a Federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a Federal program that is more than inconsequential will not be prevented or detected by the entity's internal control.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a Federal program will not be prevented or detected by the entity's internal control.
Our consideration of the internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above.
2007SA-10

This report is intended solely for the information and use ofthe management, members ofthe City of Bremen Board of Education, 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,

RWH:as 2007SA-10

~to~ Russell W. Hinton, CPA, CGFM State Auditor

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

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2007
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.

SECTION IV FINDINGS AND QUESTIONED COSTS

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2007
I SUMMARY OF AUDITOR'S RESULTS
1. Type of Report Issued on the Financial Statements The auditor's opinion on the City of Bremen Board of Education's financial statements was unqualified for all opinion units with the exception of the Board's discretely presented component unit. Those financial statements have not been audited and we express no opinion on them.
2. Significant Deficiencies in Internal Control Disclosed by the Audit ofthe Financial Statements The audit report for the City of Bremen Board of Education did not disclose any significant deficiencies related to the financial statements.
3. Noncompliance Material to the Financial Statements The audit of the City of Bremen Board of Education disclosed no instances of noncompliance that were deemed to be material to the financial statements.
4. Significant Deficiencies in Internal Control Over Major Programs The audit report for the City of Bremen Board of Education did not disclose any significant deficiencies in internal control over major programs.
5. Type of Report Issued on Compliance for MajGr Programs The auditor's opinion on the City ofBremen Board ofEducation's report on compliance with requirements applicable to major programs was unqualified.
6. Audit Findings Required to be Reported by Section .51 0(a) of 0MB Circular A-133 The City ofBremen Board of Education's audit did not disclose audit findings required to be reported by section .510(a) ofOMB 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
8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00.
9. Low Risk Auditee The City ofBremen Board ofEducation qualified as a low risk auditee as defined by Section .530 of 0MB Circular A-133.
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CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2007
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.
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