ANNUAL FINANCIAL REPORT
HARALSON COUNTY, GEORGIA FOR THE FISCAL YEAR ENDED JUNE 30, 2012
INCLUDING INDEPENDENT AUDITOR'S REPORT

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

B

STATEMENT OF ACTIVITIES

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

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

Page
i
1 2 4 5 6 7 9 10
27

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

SECTION I
FINANCIAL
SCHEDULES
SUPPLEMENTARY INFORMATION
2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 3 SCHEDULE OF STATE REVENUE 4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 5 ALLOTMENTS AND EXPENDITURES
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM

Page
28 29 30 33

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

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

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

SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
February 28, 2013

Honorable Nathan Deal, 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 of the governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) of the City of Bremen Board of Education, as of and for the year ended June 30, 2012, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the 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 Board's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.
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 of the 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 of our 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, 2012.

2012ARL-11

In addition, in our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Bremen Board of Education as of June 30, 2012, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated February 28, 2013, 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 of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.
Management's Discussion and Analysis and the Schedule of Revenues, 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 of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Bremen Board of Education's financial statements as a whole. The accompanying supplementary information consists of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the financial statements. The accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, except for the matters discussed in the third paragraph on which we express no opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.
2012ARL-11

A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24.
Respectfully submitted,

GSG:as 2012ARL-11

Greg S. Griffin State Auditor

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2012
INTRODUCTION
The School District's financial statements for the fiscal year ended June 30, 2012, 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 associated with the Primary Government for fiscal year 2012 are as follows:
On the District-wide financial statements:
District-wide net assets for the Primary Government at June 30, 2012, were just over $24.3 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 longterm. The net assets at June 30, 2012, of $24.3 million represented an increase of roughly $0.9 million in net assets when compared to the prior year net assets.
The School District had $19.4 million in expenses relating to governmental activities; only $12.1 million of these expenses were offset by program specific charges for services, grants and contributions. However, general revenues (primarily property and sales taxes) of $8.2 million were adequate to provide for these programs.
As stated above, general revenues accounted for $8.2 million or about 40.6% of all revenues totaling $20.3 million. Program specific revenues in the form of charges for services, grants, and contributions accounted for the balance of these revenues.

Program Revenues
59.4%

Source of Revenues

General General Revenue

Revenue - - Sales Taxes

Property

9.0%

Taxes

15.3%

General Revenue - All Other 16.3%

i

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2012
On the fund financial statements:
Among major funds, the General Fund had almost $17.7 million in revenues and over $17.9 million in expenditures. The General Fund balance of just over $4.3 million at June 30, 2012, decreased by roughly $250,000 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 the 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 districtwide financial statements, a reader might ask the question, are we in a better 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 of the School District's assets and liabilities and use the accrual basis of accounting similar to the accounting used by most privatesector companies. This basis of accounting takes into account all of the current year's revenues and expenses regardless of when cash is received or paid.
These two statements report the School District's net 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.
ii

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2012
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 of related 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 sub-funds 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 year-end available for spending in future periods. These funds are reported using the modified accrual method of accounting which measures cash and all other financial assets that can be 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 district-wide 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
iii

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2012
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 roughly $24.3 million at June 30, 2012. 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 $24.3 million of net assets, almost $888 thousand was restricted for continuation of Federal and other programs, debt service and ongoing 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 had almost $20.1 million (net of related debt) invested in capital assets (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 just over $3.4 million may be used to meet the School District's ongoing obligations to citizens and creditors.
iv

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2012

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 2012

Year 2011

Assets Current and Other Assets Capital Assets, Net

$

7,925,038 $ 11,419,694

31,983,564

27,426,162

Total Assets

$

39,908,602 $ 38,845,856

Liabilities Current and Other Liabilities Long-Term Liabilities

$

2,905,469 $

2,322,020

12,671,323

13,070,000

Total Liabilities

$

15,576,792 $ 15,392,020

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

$

20,063,691 $ 17,593,708

887,908

1,720,096

3,380,211

4,140,032

Total Net Assets

$

24,331,810 $ 23,453,836

Total net assets increased about $0.9 million in fiscal year 2012 from the prior year's net assets. This change in net assets is detailed in Table 2 as presented below. Table 2 also shows the changes in net assets as compared to the prior fiscal year.

v

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2012

Table 2 Change in Net Assets
Revenues Program Revenues: Charges for Services and Sales Operating Grants and Contributions Capital Grants and Contributions
Total Program Revenues
General Revenues: Taxes Property Taxes For Maintenance and Operations Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects/Debt Services Other Sales Taxes Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Special Item Demolition of Administrative Offices for New Auditorium
Total General Revenues and Special Item
Total Revenues
Program Expenses: Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services Interest on Short-Term and Long-Term Debt
Total Expenses
Increase in Net Assets

Governmental Activities

Fiscal Year

Fiscal Year

2012

2011

$

1,493,065 $

1,446,139

10,521,038

11,381,839

40,000

$

12,054,103 $

12,827,978

$

3,093,674 $

3,226,753

1,803,172 32,212

1,671,698 24,655

1,609,364 31,102
1,661,182

1,126,557 34,392
1,100,703

-122,518

$

8,230,706 $

7,062,240

$

20,284,809 $

19,890,218

$

12,992,524 $

12,201,180

577,824 77,382
291,782 605,731 1,159,788 177,888 1,372,487 131,396
16,922 270,791

683,522 59,419
278,856 602,001 1,114,351 174,657 1,344,514 117,546
15,952 326,724

388,812 874,412 469,096

312,497 800,552 436,564

$

19,406,835 $

18,468,335

$

877,974 $

1,421,883

vi

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2012

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.
Table 3 Governmental Activities

Total Cost of Services

Fiscal

Fiscal

Year 2012

Year 2011

Net Cost of Services

Fiscal

Fiscal

Year 2012

Year 2011

Instruction Support Services:
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services: Enterprise Operations Food Services Interest on Short-Term and Long-Term Debt

$ 12,992,524 $ 12,201,180 $

577,824 77,382
291,782 605,731 1,159,788 177,888 1,372,487 131,396
16,922 270,791

683,522 59,419
278,856 602,001 1,114,351 174,657 1,344,514 117,546
15,952 326,724

388,812 874,412 469,096

312,497 800,552 436,564

4,446,271 $
378,969 -6,524 44,602 46,590
517,419 161,386 716,624 114,224
16,922 220,109
168,655 58,389
469,096

2,863,785
379,090 -14,890 25,830
3,393 514,146 174,244 735,534 105,185
15,952 284,299
55,076 62,149 436,564

Total Expenses

$ 19,406,835 $ 18,468,335 $

7,352,732 $

5,640,357

Expenses for fiscal year 2012 increased a little over $900,000 from the prior year while the net cost of services for the School District increased by about $1.7 million. In other words, the School District's costs of providing services grew an additional $800,000 over just the increased expenses in fiscal 2012 as compared to fiscal 2011. The increase in the net costs of services for fiscal year 2012 (excluding the rise of fiscal year 2012 expenses vs. 2011 fiscal year expenses) was primarily attributable to a decrease in Operating and Capital Grants (State and Federal) of $820,000 as compared to the prior year. Normally, any time the sum of Operating and/or Capital Grants decrease from the prior year, the School District's costs of providing the same level of services goes up, even if actual expenses remain level from year to year.

FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT'S FUNDS

Information about the School District's governmental funds is presented starting on Exhibit "C" of this report. Governmental funds are accounted for using the modified accrual basis of accounting. The governmental funds had total revenues of $20.3 million and total expenditures of almost $24.8 million in fiscal year 2012. Additionally, the School District secured another $0.4 million in Other Financing Sources from the proceeds from new capital leases. The governmental fund balances at

vii

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2012
June 30, 2012, of roughly $5.0 million decreased about $4.0 million from the prior year. The decrease in fund balance was primarily attributable to the Capital Projects Fund making expenditures from reserves that were derived in prior years. 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 2012, 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 $17.7 million were greater than the final budgeted amount of $16.4 million by $1.3 million. About half of this variance was due to the fact miscellaneous revenues exceeded budgeted amounts by almost $800,000. The General Fund's final actual expenditures of almost $18.0 million were greater than the final budget amount of $17.1 by about $871,000. This small budget over expenditure was fully funded as actual revenues also exceeded budgeted amounts as discussed. The School District did not include the financial activity from School Principal's Accounts or After School Program in its final budget, which combined, amounted to roughly $0.9 million in revenues and expenditures. This factor is the predominant reason that both actual revenues and actual expenditures exceeded the budget as explained above. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets At fiscal year ended June 30, 2012, the School District had almost $32.0 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 land, land improvements, building, equipment and construction in progress. Table 4 reflects a summary of these balances, net of accumulated depreciation, as compared to the prior fiscal year.
viii

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2012

Table 4 Capital Assets (Net of Depreciation)

Governmental Activities

Fiscal

Fiscal

Year 2012

Year 2011

Land Construction In Progress Land Improvements Building and Improvements Equipment

$

1,737,269 $

5,041,012

154,972

24,817,302

233,009

1,734,268 380,419 167,869
24,906,248 237,357

Total

$

31,983,564 $

27,426,161

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, 2012, the School District had almost $12.7 million in total debt outstanding which consisted of bond debt and capital leases. 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 2012

Year 2011

Bonds Payable Capital Leases

$

12,400,000 $

271,323

13,070,000

Total

$

12,671,323 $

13,070,000

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

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 operating millage for fiscal year 2012 was 14.95, which produced approximately $209,000 per mill. The School District plans to fund additional capital outlays with the one percent local option sales tax revenue and state capital outlay grants.

ix

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2012
The School District is financially challenged by the continuing slow economy and stagnant property values. Revenues in fiscal year 2012 from property taxes, State Funds, and Federal Funds actually decreased in the aggregate by roughly $400,000 from the prior year.
The School District is in excellent financial condition. The General Fund had an unassigned fund balance of $3.4 million at June 30, 2012, which is roughly the same amount as last year. The Board anticipates significant financial challenges going forward due to the continued expected flat revenues and higher health insurance costs for employees. In spite of these challenges, the School District will continue to be a good steward of tax dollars while providing a quality educational opportunity.
CONTACTING THE SCHOOL DISTRICT'S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overview of the School District's finances and to show the School District's accountability for the money it receives. If you have questions about this report or need additional financial information, contact Mr. Allen Pullen, System Accountant, City of Bremen Board of Education, 501 Pacific Avenue, Bremen, Georgia 30110. You may also email your questions to Mr. Pullen at allen.pullen@bremencs.com.
x

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY STATEMENT OF NET ASSETS JUNE 30, 2012

EXHIBIT "A"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories Deferred Charges - Bond Issuance Costs Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation)
Total Assets

PRIMARY GOVERNMENT GOVERNMENTAL
ACTIVITIES

COMPONENT UNIT BREMEN
EDUCATIONAL FOUNDATION, INC.

$ 5,534,077.25 $ 515,705.81
302,619.35 1,293,278.91
143,290.82 160.62
29,779.04 106,126.20 6,778,280.00 25,205,283.97

113,640.85 50,681.61

$ 39,908,601.97 $

164,322.46

LIABILITIES
Accounts Payable Salaries and Benefits Payable Interest Payable Contracts Payable Retainages Payable Deferred Revenue Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Continuation of Federal and State Programs Debt Service Unrestricted Governmental Activities Bremen Educational Foundation, Inc.
Total Net Assets
Total Liabilities and Net Assets

$

69,830.57

2,097,672.66

116,947.42

350,079.11

270,834.46

104.45

827,173.33 11,844,150.08

$ 15,576,792.08

$ 20,063,690.70
75,960.86 811,947.41
3,380,210.92 $
$ 24,331,809.89 $

164,322.46 164,322.46

$ 39,908,601.97 $

164,322.46

The notes to the basic financial statements are an integral part of this statement. - 1 -

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2012

GOVERNMENTAL ACTIVITIES
Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance And Operation of Plant Services Student Transportation Services Support Services - Central Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services Interest on Short-Term And Long-Term Debt
Total Governmental Activities
COMPONENT UNIT
Bremen Educational Foundation, Inc.
General Revenues Taxes Property Taxes For Maintenance and Operations Sales Taxes Special Purpose Local Option Sales Tax Other Sales Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Change in Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year

EXPENSES

CHARGES FOR SERVICES

$ 12,992,523.91 $
577,824.21 77,382.10
291,781.77 605,730.74 1,159,787.61 177,888.52 1,372,487.54 131,396.02
16,921.79 270,790.82
388,812.14 874,412.36 469,095.84
$ 19,406,835.37 $

865,328.48
220,156.87 407,579.51 1,493,064.86

$

836,486.22

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

PRIMARY

COMPONENT UNIT

GOVERNMENT

BREMEN

GOVERNMENTAL

EDUCATIONAL

ACTIVITIES

FOUNDATION, INC.

$

7,647,982.22 $

198,855.62 83,906.09
247,179.40 558,651.50 641,222.51
16,502.77 655,061.73
15,593.81

50,682.11

405,400.83

$ 10,521,038.59 $

32,942.32 $
489.41 1,145.58
801.39 1,577.80
3,043.51 40,000.01 $

-4,446,270.89
-378,968.59 6,523.99
-44,602.37 -46,589.83 -517,419.52 -161,385.75 -716,624.42 -114,224.41 -16,921.79 -220,108.71
-168,655.27 -58,388.51
-469,095.84
-7,352,731.91

$

-836,736.22

$ 3,093,674.44

1,803,171.58 32,212.15
1,609,364.00 31,101.86 $
1,661,182.30

$ 8,230,706.33 $

$

877,974.42 $

23,453,835.47

2,291.64 5,845.00 8,136.64 -828,599.58 992,922.04

$ 24,331,809.89 $

164,322.46

- 3 -

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2012

EXHIBIT "C"

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

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 4,099,564.14 $ 1,395,342.17 $ 515,705.81

154,296.23 1,293,278.91
143,290.82 160.62
29,779.04

148,323.12

39,170.94 $ 5,534,077.25 515,705.81
302,619.35 1,293,278.91
143,290.82 160.62
29,779.04

$ 6,236,075.57 $ 1,543,665.29 $ 39,170.94 $ 7,818,911.80

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

$ 52,276.65 $ 2,097,672.66
47,278.17

17,553.92
350,079.11 270,834.46

$ 2,197,227.48 $ 638,467.49

$ 69,830.57 2,097,672.66 350,079.11 270,834.46 47,278.17
$ 2,835,694.97

$ 29,779.04 46,181.82 $
432,027.93 100,619.31 3,430,239.99

889,723.89 $ 15,473.91

$ 4,038,848.09 $ 905,197.80 $

$ 39,170.94

29,779.04 975,076.65 432,027.93 116,093.22 3,430,239.99

39,170.94 $ 4,983,216.83

$ 6,236,075.57 $ 1,543,665.29 $ 39,170.94 $ 7,818,911.80

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

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2012

EXHIBIT "D"

Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Assets are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of:
Land Land Improvements Accumulated Depreciation - Land Improvements Buildings Accumulated Depreciation - Buildings Construction in Progress Machinery and Equipment Accumulated Depreciation - Machinery and Equipment
Total Capital Assets
Bond Issuance Costs to be amortized over the life of the bonds in the District-wide Financial Statements
Unamortized Bond Issuance Costs
Some of the School District's tax revenues will be collected after year-end but are not available soon enough to pay for the current period expenditures
Property Taxes
Long-Term Liabilities, including Bonds Payable and Interest thereon, 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:
Accrued Interest on Long-Term Liabilities General Obligation Bonds Payable Capital Leases
Total Long-Term Liabilities
Net Assets of Governmental Activities (Exhibit "A")

$ 4,983,216.83

$ 1,737,268.50 268,355.00 -113,383.00
29,144,989.97 -4,327,687.00 5,041,011.50
774,968.00 -541,959.00

31,983,563.97

106,126.20

47,173.72

$ -116,947.42 -12,400,000.00 -271,323.41

-12,788,270.83

$ 24,331,809.89

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

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

EXHIBIT "E"

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

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 3,124,305.10 32,212.15 $
11,027,935.40 1,142,467.20 1,493,064.86 24,945.68 841,412.08

727,586.77 $
6,010.42 819,770.22

$ 1,075,584.81
145.76

3,124,305.10 1,835,383.73 11,027,935.40 1,142,467.20 1,493,064.86
31,101.86 1,661,182.30

$ 17,686,342.47 $ 1,553,367.41 $ 1,075,730.57 $ 20,315,440.45

$ 12,206,365.51 $ 414,640.61

$ 12,621,006.12

577,824.21 77,382.10
291,781.77 599,738.84 1,145,762.06 158,357.59 1,263,992.04 103,619.02
16,921.79 270,790.82 388,812.14 850,602.50

243.00 $ 107,143.66
5,001,875.94

2,350.00

577,824.21 77,382.10
291,781.77 599,738.84 1,145,762.06 160,950.59 1,371,135.70 103,619.02
16,921.79 270,790.82 388,812.14 850,602.50 5,001,875.94

1,125.45

145,373.28

670,000.00 470,402.01

816,498.73 470,402.01

$ 17,953,075.84 $ 5,669,276.49 $ 1,142,752.01 $ 24,765,104.34

$ -266,733.37 $ -4,115,909.08 $ -67,021.44 $ -4,449,663.89

3,181.53

414,640.61

417,822.14

$ -263,551.84 $ -3,701,268.47 $ -67,021.44 $ -4,031,841.75

4,302,399.93

4,606,466.27

106,192.38

9,015,058.58

Fund Balances - Ending

$ 4,038,848.09 $ 905,197.80 $ 39,170.94 $ 4,983,216.83

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 STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2012

EXHIBIT "F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:
Capital Outlay Depreciation Expense - Buildings Depreciation Expense - Equipment Depreciation Expense - Land Improvements
Excess of Capital Outlay over Depreciation Expense
Certain tax revenues are not deferred in the Statement of Activities based on availability as they are in the Governmental Funds.
Property Taxes July 1, 2011 June 30, 2012 Total
Proceeds received from the execution of Capital Leases, Installment Sales, and from Bond Proceeds are reported as Liabilities in the Statement of Activities. Whereas, in the Governmental Funds, these proceeds are reported as Other Financing Sources.
Proceeds from Capital Leases
Bond Issuance Costs are recorded as expenditures in the Governmental Funds when paid, but are amortized as expense in the Governmental Activities over the life of the Bond Issued.
Unamortized Bond Costs: July 1, 2011 June 30, 2012 Total Bond Issuance Costs
Accrued Interest on Long-Term Liabilities is reported in the Statement of Activities, but does not require the use of financial resources and therefore is not reported as an expenditure in the Governmental Funds.
Accrued Interest on Long-Term Debt July 1, 2011 June 30, 2012 Total Accrued Interest
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:
Redemption of Bond Principal Payment of Principal on Capital Leases
Total
Change in Net Assets of Governmental Activities (Exhibit "B")
The notes to the basic financial statements are an integral part of this statement.
- 7 -

$ -4,031,841.75

$ 5,085,851.00 -463,004.00 -52,548.00 -12,897.00

4,557,402.00

$ -77,804.38 47,173.72

-30,630.66

-417,822.14

$ -123,064.13 106,126.20

-16,937.93

$ 118,253.59 -116,947.42

1,306.17

$ 670,000.00 146,498.73

816,498.73

$ 877,974.42

(This page left intentionally blank)

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30, 2012
ASSETS Cash and Cash Equivalents
LIABILITIES Funds Held for Others

EXHIBIT "G"
AGENCY FUNDS $ 123,191.48
$ 123,191.48

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

CITY OF BREMEN BOARD OF EDUCATION HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2012

EXHIBIT "H"

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The City of Bremen Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
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 of education in the system and act a fiscal agent for donors who wish to sponsor approved projects for the system, its teachers and students. (See Note "15")
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the City of Bremen Board of Education.
District-wide Statements: The Statement of Net Assets and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds, 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 District had no funds that were reported as nonmajor funds.

- 10 -

CITY OF BREMEN BOARD OF EDUCATION HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2012

EXHIBIT "H"

The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for and reports all financial resources not accounted for and reported in another fund.
District-wide Capital Projects Fund accounts for and reports financial resources including Special Purpose Local Option Sales Tax (SPLOST), Bond Proceeds and donations that are restricted, committed or assigned to the expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets.
Debt Service Fund accounts for and reports financial resources that are restricted, committed, or assigned including taxes (sales) legally restricted for the payment of general long-term principal and interest.
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.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources.

- 11 -

CITY OF BREMEN BOARD OF EDUCATION HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2012

EXHIBIT "H"

The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
CASH AND CASH EQUIVALENTS
Composition of Deposits Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations.
INVESTMENTS
Composition of Investments Investments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interestearning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
1) Obligations issued by the State of Georgia or by other states,
2) Obligations issued by the United States government,
3) Obligations fully insured or guaranteed by the United States government or a United States government agency,
4) Obligations of any corporation of the United States government,
5) Prime banker's acceptances,
6) The Georgia Fund 1 administered by the State of Georgia, Office of the State Treasurer,
7) Repurchase agreements, and
8) Obligations of other political subdivisions of the State of Georgia.
The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration of credit 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

- 12 -

CITY OF BREMEN BOARD OF EDUCATION HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2012

EXHIBIT "H"

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 2011 tax digest year (calendar year) on September 12, 2011 (levy date). Taxes were due on December 1, 2011 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2011 tax digest are reported as revenue in the governmental funds for fiscal year 2012. The Bremen City Clerk 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, 2012, for maintenance and operations amounted to $3,124,305.10.

The tax millage rate levied for the 2011 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

14.95 mills

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $1,803,171.58 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. The most recent authorization for Haralson County expires on June 30, 2017. The most recent authorization for Carroll County expires on December 31, 2017.

INVENTORIES

On the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.

CAPITAL ASSETS

Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art. During the fiscal year 2012, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District.

- 13 -

CITY OF BREMEN BOARD OF EDUCATION HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2012

EXHIBIT "H"

Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide

statements are as follows:

Capitalization

Estimated

Policy

Useful Life

Land Land Improvements Buildings and Improvements Equipment Intangible Assets

All $ 10,000.00 $ 50,000.00 $ 10,000.00 $ 250,000.00

N/A 10 to 60 years 45 to 60 years
5 to 30 years individually determined

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives, with the exception of intangible assets which are amortized.

Amortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, copyrights and internally generated software is computed using the straight-line method over the estimated useful lives of the assets.

GENERAL OBLIGATION BONDS

The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide financial statements, bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are reported as deferred charges and amortized over the term of the debt.

In the fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Assets.

NET ASSETS

The School District's net assets in the District-wide Statements are classified as follows:

Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.

Restricted net assets - These represent resources for which the School District is legally or contractually obligated to spend resources for 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.

- 14 -

CITY OF BREMEN BOARD OF EDUCATION HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2012

EXHIBIT "H"

FUND BALANCES

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

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

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

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

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

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

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

Nonspendable Inventories
Restricted Bus Replacement Continuation of Federal Programs Other Sponsored Programs Debt Service
Committed School Activity Accounts
Assigned After School Program Local Capital Outlay Projects
Unassigned

$

$

13,946.00

27,638.75

4,597.07

928,894.83

$ 100,619.31 15,473.91

29,779.04
975,076.65 432,027.93 116,093.22 3,430,239.99

Fund Balance, June 30, 2012

$

4,983,216.83

- 15 -

CITY OF BREMEN BOARD OF EDUCATION HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2012

EXHIBIT "H"

It is the goal of the School District to achieve and maintain an unassigned fund balance in the general fund at fiscal year end of not less than 5% of the General Fund expenditures, not to exceed 15% of the total budget of the subsequent year, net of any Committed Reserve Balance for capital expenditures, in compliance with Official Code of Georgia Annotated Section 20-2-167(a) 5. If the unassigned fund balance at fiscal year end falls below the goal, the School District shall develop a restoration plan to achieve and maintain the minimum fund balance.
When multiple categories of fund balance are available for expenditure, the School District will start with the most restricted category and spend those funds first before moving down to the next category with available funds.
USE OF ESTIMATES
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.
Note 3: BUDGETARY DATA
The budget is a complete financial plan for the School District's fiscal year, and is based upon careful estimates of expenditures together with probable funding sources. The budget is legally adopted each year for the general, debt service, and capital projects funds. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds, except the various school activity (principal) accounts and the After School Program, is prepared and adopted by fund, function and object. The legal level of budgetary control was established by the Board at the aggregate fund/function level. The School District's formal budget was prepared in accordance with accounting principles permitted by the State of Georgia but not in accordance with generally accepted accounting principles in the United States of America.
The budgetary process begins with the School District's administration presenting an initial budget for the Board's review. The administration makes revisions as necessary based on the Board's guidelines and a tentative budget is approved. After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper of general circulation in the locality, as well as the School District's website. At the next regularly scheduled meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. The approved budget is then submitted, in accordance with provisions of Official Code of Georgia Annotated section 20-2-167(c), to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.
The Superintendent is authorized by the Board to approve adjustments of no more than 10 percent of the amount budgeted for expenditures in any budget function for any fund, with the exception of the personnel area. The Superintendent shall report any such adjustments to the Board. If expenditure of funds in any budget function for any fund is anticipated to be more than 10 percent of the budgeted amount, the Superintendent shall request Board approval for the budget amendment. In such case, the expenditure shall be reported to the Board at its regularly scheduled meeting. Under no circumstance is the Superintendent or other staff person authorized to spend funds that exceed the total budget, as adjusted, without approval by the Board.
See Schedule 1 General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual for a detail of any over/under expenditures during the fiscal year 2012.

- 16 -

CITY OF BREMEN BOARD OF EDUCATION HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2012

EXHIBIT "H"

Budgetary/GAAP Basis Reconciliation In the General Fund, accounting principles used in developing budgets on a budgetary basis differ from those used in preparing financial statements in conformity with generally accepted accounting principles (GAAP).

The primary differences between the budget basis and GAAP basis are: 1. Payments made by the State of Georgia for School District employee benefits are recognized as revenues and expenditures under GAAP and are not recognized on the budget basis. 2. Revenues and expenditures associated with Principals' Accounts and After School program are not included in the School District's Operating Budget.
Thus, there is an accounting basis difference between the budget and actual Statement of Revenues, Expenditures and Changes in Fund Balances in the General Fund that is reconciled as follows:

Actual Revenues, GAAP Basis On-Behalf Benefit Contribution Omission of Revenues from Principals' Accounts Omission of Revenues from After School Program

$ 17,686,342.47

$

-13,308.00

-830,549.00

-99,963.12

-943,820.12

Actual Revenues, Budgetary Basis

$ 16,742,522.35

Actual Expenditures, GAAP Basis

$ 17,953,075.84

On-Behalf Benefits Expenditure

$

-13,308.00

Omission of Expenditures from Principals' Accounts

-798,249.08

Omission of Expenditures from After School Program

-87,005.96

-898,563.04

Actual Expenditures, Budgetary Basis Note 4: DEPOSITS AND INVESTMENTS

$ 17,054,512.80

COLLATERALIZATION OF DEPOSITS

Official Code of Georgia Annotated (O.C.G.A.) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. Section 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 percent of the daily pool balance.

Acceptable security for deposits consists of any one of or any combination of the following:

(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,

(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,

- 17 -

CITY OF BREMEN BOARD OF EDUCATION HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2012

EXHIBIT "H"

(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
PRIMARY GOVERNMENT
Custodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2012, the bank balances were $6,522,895.96. The bank balances were entirely covered by Federal depository insurance or collateralized with securities held by the pledging financial institution or its agent in the School District's name.
COMPONENT UNIT
Custodial credit risk is the risk that in the event of a bank failure, the Foundation's deposits may not be returned to it. The Foundation does not have a deposit policy for custodial credit risk. At June 30, 2012, the bank balances were $166,619.23. The bank balances were entirely covered by Federal depository insurance.
CATEGORIZATION OF INVESTMENTS
The School District's investments as of June 30, 2012, consisted of $515,705.81 invested in Certificates of Deposit. These investments are included in the collateralization of deposits previously disclosed.
Note 5: NON-MONETARY TRANSACTIONS
The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories

- 18 -

CITY OF BREMEN BOARD OF EDUCATION HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2012

EXHIBIT "H"

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

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

Balances July 1, 2011

Increases

Decreases

Balances June 30, 2012

$ 1,734,268.50 $

3,000.00

380,419.50

4,985,151.00 $

$ 324,559.00

1,737,268.50 5,041,011.50

Total Capital Assets, Not Being Depreciated $ 2,114,688.00 $ 4,988,151.00 $

324,559.00 $ 6,778,280.00

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

$ 28,770,930.97 $ 726,768.00 268,355.00

374,059.00 $ 48,200.00

0.00 $

29,144,989.97 774,968.00 268,355.00

Less: Accumulated Depreciation: Buildings and Improvements Equipment Land Improvements

3,864,683.00 489,411.00 100,486.00

463,004.00 52,548.00 12,897.00

4,327,687.00 541,959.00 113,383.00

Total Capital Assets, Being Depreciated, Net $ 25,311,473.97 $ -106,190.00 $

0.00 $ 25,205,283.97

Governmental Activity Capital Assets - Net $ 27,426,161.97 $ 4,881,961.00 $

324,559.00 $ 31,983,563.97

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

$

$

6,427.00

15,044.00

10,524.00

20,720.00

434,106.00
52,715.00 41,628.00

$

528,449.00

Note 7: 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

- 19 -

CITY OF BREMEN BOARD OF EDUCATION HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2012

EXHIBIT "H"

claims brought against members of the system. 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.

The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the same fund from that employee's salary and benefits were paid. The School District accounts for claims with expenses/expenditures with the 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:

Claims and

Beginning of Year

Changes in

Claims

End of Year

Liability

Estimates

Paid

Liability

2011 $ 2012 $

0.00 $ 0.00 $

12,532.00 $ 728.00 $

12,532.00 $ 728.00 $

0.00 0.00

The School District has obtained commercial insurance for job related illness or injuries to employees. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years.

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

Position Covered

Amount

Superintendent

$50,000.00

Note 8: OPERATING LEASES

The City of Bremen Board of Education has as entered into various leases as lessee for various copiers. These leases are considered for accounting purposes to be operating leases. Lease expenditures for the year ended June 30, 2012, for governmental funds amounted to $47,298.98. Future minimum lease payments for these leases are as follows:

Year Ending
2013 2014 2015 2016

Governmental Funds

$

35,613.70

34,182.72

16,233.56

3,223.00

Total

$

89,252.98

- 20 -

CITY OF BREMEN BOARD OF EDUCATION HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2012

EXHIBIT "H"

Note 9: LONG-TERM DEBT
CAPITAL LEASES
The City of Bremen Board of Education entered into various lease agreements with the Dell Financial Services for various computers and equipment. Under the terms of the agreements, the School District will make annual payments through October 1, 2013. These lease agreements qualify as capital leases for accounting purposes, and therefore, have been recorded at the present value of the future minimum lease payments as of the date of their inception.
GENERAL OBLIGATION DEBT OUTSTANDING
General Obligation Bonds currently outstanding are as follows:

Purpose

Interest Rates

Amount

General Government - Series 2006 General Government - Series 2007 General Government - Series 2011

4.10% - 4.38% 3.869% 2.64%

$ 6,000,000.00 3,460,000.00 2,940,000.00

$ 12,400,000.00
The changes in Long-Term Debt during the fiscal year ended June 30, 2012, were as follows:

Balance July 1, 2011

Additions

Governmental Funds

Balance

Deductions

June 30, 2012

Due Within One Year

G. O. Bonds Capital Leases

$ 13,070,000.00 0.00 $

$ 417,822.14

670,000.00 $ 12,400,000.00 $

146,498.73

271,323.41

695,000.00 132,173.33

$ 13,070,000.00 $ 417,822.14 $ 816,498.73 $ 12,671,323.41 $ 827,173.33

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

Fiscal Year Ended June 30:

General Obligation Debt

Principal

Interest

Capital Leases

Principal

Interest

2013 2014 2015 2016 2017 2018 - 2022 2023

$ 695,000.00 $ 1,190,000.00 1,265,000.00 1,310,000.00 1,355,000.00 5,530,000.00 1,055,000.00

454,344.89 $ 426,874.99 386,065.11 342,774.54 297,604.49 779,003.30
23,078.13

132,173.33 $ 139,150.08

14,325.37 7,348.61

Total Principal and Interest

$ 12,400,000.00 $ 2,709,745.45 $ 271,323.41 $

21,673.98

- 21 -

CITY OF BREMEN BOARD OF EDUCATION HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2012

EXHIBIT "H"

Note 10: ON-BEHALF PAYMENTS

The School District has recognized revenues and costs in the amount of $1,354,334.00 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.

Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Certified Personnel In the amount of $1,341,026.00

Office of State Treasurer Paid to the Public School Employees' Retirement System For Public School Employees' Retirement (PSERS) Employer's Cost In the amount of $13,308.00

Note 11: SIGNIFICANT COMMITMENTS

The following is an analysis of significant outstanding construction or renovation contracts executed

by the School District as of June 30, 2012:

Unearned

Executed

Project

Contracts

Hamilton-McPherson Fine Arts Center

$

635,307.92

The amount described in this note is not reflected in the basic financial statements.
Note 12: SIGNIFICANT CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.
The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the basic financial statements.
Note 13: POST-EMPLOYMENT BENEFITS
Georgia School Personnel Post-employment Health Benefit Fund
Plan Description. The Georgia School Personnel Post-employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Benefit Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (O.C.G.A.) assigns the authority to establish and amend the benefit provisions of the group health plans, including
- 22 -

CITY OF BREMEN BOARD OF EDUCATION HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2012

EXHIBIT "H"

benefits for retirees, to the Board of Community Health (Board). The Department of Community Health, which includes the School OPEB Fund, issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.
Funding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. For members with fewer than five years of service as of January 1, 2012, contributions also vary based on years of service. On average, members with five years or more of service as of January 1, 2012, pay approximately 25 percent of the cost of the health insurance coverage. In accordance with the Board resolution dated December 8, 2011, for members with fewer than five years of service as of January 1, 2012, the State provides a premium subsidy in retirement that ranges from 0% for fewer than 10 years of service to 75% (but no greater than the subsidy percentage offered to active employees) for 30 or more years of service. The subsidy for eligible dependents ranges from 0% to 55% (but no greater than the subsidy percentage offered to dependents of active employees minus 20%). No subsidy is available to Medicare eligible members not enrolled in a Medicare Advantage Option. The Board of Community Health sets all member premiums by resolution and in accordance with the law and applicable revenue and expense projections. Any subsidy policy adopted by the Board may be changed at any time by Board resolution and does not constitute a contract or promise of any amount of subsidy.

Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected "pay-as-you-go" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.

The combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30, 2012:

For certificated teachers, librarians and regional educational service agencies and certain other eligible participants:

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

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

For non-certificated school personnel:

July 2011 - August 2011

$246.20 per member per month

September 2011 - June 2012 $296.20 per member per month

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

- 23 -

CITY OF BREMEN BOARD OF EDUCATION HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2012

EXHIBIT "H"

The School District's combined active and retiree contributions to the health insurance plans, which

equaled the required contribution, for the current fiscal year and the preceding two fiscal years were

as follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

2012 2011 2010
Note 14: RETIREMENT PLANS

100%

$

100%

$

100%

$

1,777,314.61 1,588,215.37 1,691,791.31

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

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

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

Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 30 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available.
Funding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 10 years of service. If a member terminates with less than 10 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2012, were 5.53% of annual salary. The member contribution rate will increase to 6.00% effective July 1, 2012. Employer contributions required for fiscal year 2012 were 10.28% of annual salary as required by the June 30, 2009, actuarial valuation. The employer contribution rate will increase to 11.41% effective July 1, 2012.

- 24 -

CITY OF BREMEN BOARD OF EDUCATION HARALSON COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2012

EXHIBIT "H"

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

Fiscal Year

Percentage Contributed

Required Contribution

2012 2011 2010

100%

$

100%

$

100%

$

1,070,048.17 1,042,283.53
993,162.32

PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM (PSERS)

Bus drivers, lunchroom personnel, and maintenance and custodial personnel are members of the Public School Employees' Retirement System of Georgia. The System is funded by contributions by the employees and by the State of Georgia. The School District makes no contribution to this plan.

Note 15: COMPONENT UNIT

The Bremen Educational Foundation, Inc. (Foundation) is a legally separate tax-exempt component unit of the City of Bremen 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 of receipts from the Foundation, the majority of resources 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 of Financial Standards (SFAS) 117, "Financial Statement of Not-for-Profit Organizations". As such, certain revenue recognition criteria and presentation features are different from GASB revenue 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, 2011, through June 30, 2012.

During the year ended June 30, 2012, the Foundation made contributions in the form of grants and gifts to the District in the amount $827,819.22. These contributions consisted of gifts to the District of $819,820.22 for a New Fine Arts Center and $2,000.00 for a billboard; and grants of $1,500.00 to Bremen High School, $1,500.00 to Bremen Middle School, $1,499.00 to Bremen Academy and $1,500.00 to Jones Elementary School.

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. Dave Pollard, President, 201 Maple Street, Carrollton, Georgia 30117, 770-214-7277, e-mail address, david.pollard@raymondjames.com or
Ms. Joanie Lowe, Treasurer, 214 Tallapoosa Street, Bremen, Georgia 30110, 770-537-1110, e-mail address, joanielowe@bellsouth.net.

- 25 -

(This page left intentionally blank)

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET TO ACTUAL
YEAR ENDED JUNE 30, 2012

SCHEDULE "1"

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

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

VARIANCE OVER/UNDER

$ 3,119,343.00 $ 3,119,343.00 $ 3,124,305.10 $

27,696.00

27,696.00

32,212.15

10,612,246.00 10,932,246.00 11,027,935.40

1,064,364.00

1,142,467.20

720,000.00

1,137,750.00

1,493,064.86

30,000.00

30,000.00

24,945.68

70,000.00

70,915.00

841,412.08

4,962.10 4,516.15 95,689.40 78,103.20 355,314.86 -5,054.32 770,497.08

$ 14,579,285.00 $ 16,382,314.00 $ 17,686,342.47 $ 1,304,028.47

$ 10,872,031.55 $ 11,847,734.81 $ 12,206,365.51 $

458,906.92 81,586.54
307,072.21 488,461.12 1,134,840.81 173,390.16 1,319,272.09 131,720.74
24,220.00 162,248.54

543,212.92 107,256.80 307,072.21 553,856.98 1,134,840.81 173,390.16 1,319,272.09 131,720.74
24,220.00 162,248.54
776,424.54

577,824.21 77,382.10
291,781.77 599,738.84 1,145,762.06 158,357.59 1,263,992.04 103,619.02
16,921.79 270,790.82 388,812.14 850,602.50

1,125.45

$ 15,153,750.68 $ 17,081,250.60 $ 17,953,075.84 $

$ -574,465.68 $ -698,936.60 $ -266,733.37 $

-358,630.70
-34,611.29 29,874.70 15,290.44 -45,881.86 -10,921.25 15,032.57 55,280.05 28,101.72
7,298.21 -108,542.28 -388,812.14
-74,177.96
-1,125.45
-871,825.24
432,203.23

3,181.53

$ -574,465.68 $ -698,936.60 $ -263,551.84 $

3,728,897.49

4,246,588.61

4,302,399.93

10,072.18

3,181.53 435,384.76
55,811.32 -10,072.18

$ 3,154,431.81 $ 3,557,724.19 $ 4,038,848.09 $ 481,123.90

Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual
(1) Original and Final Budget amounts do not include actual revenues ($830,549.21) or expenditures ($798,249.08) 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, 2012

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total 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
Title I, Part A Cluster Pass-Through From Georgia Department of Education Title I Grants to Local Educational Agencies
Other Programs Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Education Jobs Fund Improving Teacher Quality State Grants
Total Other Programs
Total U. S. Department of Education
Health and Human Services, U. S. Department of Child Care and Development Fund Cluster Pass-Through From Bright From the Start: Georgia Department of Early Care and Learning ARRA - Child Care and Development Block Grant

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

* 10.553 * 10.555

N/A

(2)

N/A

$ 826,444.50 (1)

$ 826,444.50

84.027 84.173
84.010
84.048 84.410 84.367

N/A

$ 399,878.00

N/A

30,266.00

$ 430,144.00

N/A

$ 258,138.00

N/A

$

21,039.00

N/A

5,020.00

N/A

46,583.37

$

72,642.37

$ 760,924.37

93.575

N/A

$

300.00

Total Expenditures of Federal Awards

$ 1,587,668.87

N/A = Not Available

Notes to the Schedule of Expenditures of Federal Awards

(1) Includes the Federally assigned value of donated commodities for the Food Donation Program in the amount of $54,751.21.
(2) Expenditures for the funds earned on the School Breakfast Program ($59,433.18) were not maintained separately and are included in the 2012 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.

- 28 -

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2012
AGENCY/FUNDING
GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle Grades (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Mid-term Adjustment Hold-Harmless Amended Formula Adjustment Vocation Supervisors Categorical Grants Pupil Transportation Regular Education Equalization Funding Grant Food Services Nursing Services State Health Reimbursement Other State Programs Dual Enrollment Funding Preschool Handicapped Program Virtual Schools Grant Vocational Education Vocational Construction Related Equipment - State Bonds
Human Resources, Georgia Department of Family Connection
Office of the State Treasurer Public School Employees Retirement

See notes to the basic financial statements.

- 29 -

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

289,978.40

591,274.00 61,697.00
1,295,886.00 136,863.00 581,532.00 132,872.00 936,985.00 993,169.00 244,103.00
1,177,193.00 853,523.00 116,816.00 79,791.00 7,413.00 199,573.00 56,552.00 43,783.00
409,988.00 473,129.00 535,396.00
53,924.00 -1,485,988.00
7,047.00
11,957.00 1,609,364.00
24,158.00 47,081.00 1,341,026.00
3,633.00 77,129.00
100.00 23,680.00 40,000.00
44,000.00
13,308.00
$ 11,027,935.40

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2012

SCHEDULE "4"

PROJECT
HARALSON COUNTY III ALL PROJECTS
i) Funding a portion of the costs of the acquisition, construction and equipping, and furnishing of new school buildings and facilities, including, but not limited to, additional classrooms, a new middle school,
ii) a new fine arts center,
iii) and new physical education/athletic facilities,
iv) 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,
v) 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,
vi) the acquisition and purchase of school vehicles, including, but not limited to, school buses and maintenance vehicles,
vii) the addition, renovation, repair, paving and improvement to driveways and parking facilities,
viii) the acquisition and purchase of any property necessary and desirable therefore, both real and personal and the purchase of land (the "Bremen Projects"),
Interest on Bonds and Bond Administrative Fees
Total Haralson County SPLOST III Projects
CARROLL COUNTY III (TANS and Lease Purchase) ALL PROJECTS
i) consisting of acquiring, constructing, adding to, renovating, modifying, repairing, improving and equipping schools and other buildings and facilities and acquiring any property necessary or desirable therefor, both real and personal;
ii) acquiring real estate for the construction of new schools and facilities;
iii) constructing and equipping new schools and facilities and acquiring any property necessary or desirable therefor, both real and personal; including but not limited to the following without prioritizing any of such items: completion and equipping of Bremen Middle School;
iv) constructing and equipping a fourth and fifth grade academy at the Bremen Middle School site;
v) acquiring real estate for the construction of new schools and facilities, including a new 3-5 school site;
vi) constructing and equipping a performing arts center;
vii) making system-wide technology improvements; and acquiring maintenance and transportation vehicles.
Total Carroll County SPLOST III Projects

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

$ 9,390,000.00 $ 17,940,145.65

AMOUNT EXPENDED IN PRIOR YEARS (3)

TOTAL COMPLETION
COST

EXCESS PROCEEDS NOT
EXPENDED

ESTIMATED COMPLETION
DATE

$ 12,488,301.40

117,962.00

$

5,200.00

346,997.02

6/30/2013 6/30/2013 6/30/2013

90,118.26

2,040,007.54

6/30/2013

414,732.86

320,724.36

22,134.00 12,050.00

6/30/2013 6/30/2013 6/30/2013

9,378.75

404,234.81

1,668,304.65

$ 9,390,000.00 $ 17,940,145.65 $ 914,285.93 $ 17,025,859.72 $

$ 5,530,000.00 $ 5,530,000.00

0.00 $

0.00

6/30/2013 6/30/2013

$ 131,863.94 $ 711,947.91 22,246.00

6/30/2013 6/30/2013

3,000.00

723,578.64

6/30/2013

2,118,806.51

44,212.23

6/30/2013

$ 5,530,000.00 $ 5,530,000.00 $ 2,253,670.45 $ 1,501,984.78 $

0.00 $

0.00

- 30 -

PROJECT
HARALSON COUNTY IV ALL PROJECTS
i) Funding the cost of the retirement of principal and interest on a portion of the City of Bremen School District General Obligation Bonds, Series 2006 and 2007, in the maximum amount of $5,449,918 and;
ii) the cost of acquiring, constructing, and equipping a new fine arts center;
iii) renovations and improvements to the stadium at Bremen High School;
iv) renovations to athletic facilities, maintenance and transportation equipment and facilities;
v) real estate acquisition, and any real or personal property necessary in connection with such projects within the Bremen School District in a maximum amount equal to the greater of $2,470,082 or the maximum amount of net proceeds to be raised by the tax for the Bremen School District after the retirement of said previously incurred general obligation debt. Total Haralson County SPLOST IV Projects
CARROLL COUNTY IV ALL PROJECTS
i) Funding the cost of acquiring, constructing, and equipping a new fine arts center;
ii) renovations and improvements to the stadium at Bremen High School;
iii) renovations to athletic facilities, maintenance and transportation equipment and facilities;
iv) real estate acquisition, and any real or personal property necessary in connection with such projects within the Bremen School District, together with funding capitalized interest on the Bremen School District Debt hereinafter referred to (the "Bremen School Projects"), the maximum cost of such Bremen School Projects to be funded from the one percent sales and use tax in an amount not to exceed $4,147,500.
Interest on Bonds, Bond Issuance Fees and Bond Administrative Fees
Total Carroll County SPLOST IV Projects

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2012

SCHEDULE "4"

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

$ 7,920,000.00 $ 7,920,000.00

AMOUNT EXPENDED IN PRIOR YEARS (3)

TOTAL COMPLETION
COST

EXCESS PROCEEDS NOT
EXPENDED

ESTIMATED COMPLETION
DATE

6/30/2017

$ 7,920,000.00 $ 7,920,000.00 $

0.00 $

$ 4,147,500.00 $ 4,147,500.00

$ 2,760,181.64

0.00 $

0.00 $

0.00 6/30/2013

$ 68,517.20 $ $ 4,147,500.00 $ 4,147,500.00 $ 2,828,698.84 $

76,650.00 76,650.00 $

0.00 $

$ 26,987,500.00 $ 35,537,645.65 $ 5,996,655.22 $ 18,604,494.50 $

0.00 $

0.00

6/30/2019

0.00

(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.

- 31 -

(This page left intentionally blank)

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

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 School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category III Category IV Category V Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL)
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

$

660,437.00 $

734,887.51 $

12,764.29 $

747,651.80

67,002.00

149,999.29

292.41

150,291.70

1,440,471.00

2,311,422.99

50,528.95

2,361,951.94

150,110.00

96,572.83

1,031.64

97,604.47

654,128.00

1,110,245.74

35,165.22

1,145,410.96

133,060.00 1,044,537.00 1,093,471.00
273,756.00 1,310,115.00
928,054.00 123,874.00
88,969.00 8,188.00

1,190,227.26 1,544,433.12
486,163.25
203,430.12 66,731.79
506,877.60 179,899.13 171,371.15 820,356.18 183,401.98 163,126.67
21,645.06

53,271.16 117,254.81
40,418.03
629.72 3,009.08

1,243,498.42 1,661,687.93
526,581.28
203,430.12 66,731.79
506,877.60 179,899.13 171,371.15 820,985.90 183,401.98 166,135.75
21,645.06

$

7,976,172.00 $ 9,940,791.67 $ 314,365.31 $ 10,255,156.98

221,077.00 48,544.00

257,923.12

33,601.13

291,524.25

TOTAL QBE FORMULA FUNDS

$

8,245,793.00 $ 10,198,714.79 $ 347,966.44 $ 10,546,681.23

(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.

- 33 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
February 28, 2013

Honorable Nathan Deal, 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 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 of Education as of and for the year ended June 30, 2012, which collectively comprise City of Bremen Board of Education's basic financial statements and have issued our report thereon dated February 28, 2013. The 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 of the 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
Management of City of Bremen Board of Education is responsible for establishing and maintaining effective 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 of expressing an opinion 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.

2012YB-10X

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis.
Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether City of Bremen Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
We noted certain matters that we have reported to management of City of Bremen Board of Education in a separate letter dated February 28, 2013.
This report is intended solely for the information and use of management, members of the City of Bremen Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,

GSG:as 2012YB-10X

Greg S. Griffin State Auditor

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
February 28, 2013

Honorable Nathan Deal, 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 REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
Ladies and Gentlemen:
Compliance
We have audited City of Bremen Board of Education's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2012. 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 of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the City of Bremen Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on 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 compliance requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2012.

2012SA-10

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

GSG:as 2012SA-10

Greg S. Griffin State Auditor

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

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

SECTION IV FINDINGS AND QUESTIONED COSTS

CITY OF BREMEN BOARD OF EDUCATION - HARALSON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2012

I SUMMARY OF AUDITOR'S RESULTS

Financial Statements

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

Unqualified Disclaimer

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

No None Reported

Noncompliance material to financial statements noted:

No

Federal Awards

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

No None Reported

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

Unqualified

Any audit findings disclosed that are required to be reported in

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

No

Identification of major programs:

CFDA Numbers

Name of Federal Program or Cluster

10.553, 10.555

Child Nutrition Cluster

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

$300,000.00

Auditee qualified as low-risk auditee?

No

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

No matters were reported.

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.