Audit report, City of Chickamauga Board of Education, a component unit of the City of Chickamauga, Georgia, year ended June 30, 1998

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AUDIT REPORT

CITY OF CmCKAMAUGA BOARD OF EDUCATION

A COMPONENT UNIT OF THE

CITY OF CmCKAMAUGA, GEORGIA

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YEAR ENDED JUNE 30, 1998

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STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

CITY OF CmCKAMAUGA BOARD OF EDUCATION - WALKER COUNTY - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXHIBITS

GENERAL PURPOSE FINANCIAL STATEMENTS

COMBINED STATEMENTS - OVERVIEW

A

COMBINED BALANCE SHEET

ALL FUND TYPES AND ACCOUNT GROUP

2

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

4

C

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

(NON-GAAP BASIS)

GENERAL AND SPECIAL REVENUE FUNDS

5

D NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

6

ADDmONAL FINANCIAL INFORMATION

COMBINING STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

18

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

20

CAPITAL PROJECTS FUND

G

COMBINING BALANCE SHEET

22

H

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

23

SCHEDULES

1 SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION

24

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

25

3 SCHEDULE OF STATE REVENUE

27

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

28

5 SCHEDULE OF EXPENDITURES

LOTIERY PROGRAMS

29

CITY OF CmCKAMAUGA BOARD OF EDUCATION - WALKER COUNTY - TABLE OF CONTENTS -

SECTION I

FINANCIAL

ADDmONAL FINANCIAL INFORMATION

SCHEDULES

ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS

6

OVERALL ,

31

7

BY PROGRAM

32

SECTIONll
COMPLIANCE AND INTERNAL CONTROL REPORTS
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-B3

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

SECTIONN FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

RUSSELL W. HINTON
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
May 12,1999

Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members of the State Board of Education
and Superintendent and Members ofthe City of Chickamauga Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying general purpose financial statements ofthe City of Chickamauga Board of Education, a component unit of the City of Chickamauga, Georgia, as of and for the year ended June 30, 1998, as listed in the table of contents. These general purpose financial statements are the responsibility ofthe City of Chickamauga Board ofEducation's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to fmancial 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 fmancial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
As described in the notes to the general purpose financial statements, the Board's financial statements have been prepared using certain accounting practices and policies which, in our opinion, vary in some respects from generally accepted accounting principles. These variances are described as follows:
* The general purpose fmancial statements of the Board did not contain a General Fixed Assets
Account Group to account for property and equipment owned by the Board which should be included to conform to generally accepted accounting principles.
98ARL-13B

* School activity accounts maintained at the individual schools are not included in the general purpose
financial statements. To conform to generally accepted accounting principles, these accounts should be included in the general purpose financial statements.
* The Board did not recognize as expenditures, in the year ended June 30, 1998, a portion of salaries
and the corresponding employer's cost ofrelated benefits earned for contractual services completed prior to June 30, 1998. Also funds received, subsequent to June 30, 1998, from the Georgia Department ofEducation for the State's share ofthese unrecorded salaries and related benefits were not recorded as revenue in the year under review. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 1997, were improperly recorded in the year ended June 30, 1998. To conform to generally accepted accounting principles, revenues should be recorded when available and measurable and expenditures should be recorded when incurred, rather than when funds are received or disbursed.
The aggregate effects on the general purpose fmancial statements ofthese variances or omissions have not been determined, but are believed to be material.
In our opinion, except for the effects on the general purpose financial statements of the matters referred to in the preceding paragraph, the general purpose financial statements referred to above present fairly, in all material respects, the financial position ofthe City ofChickamauga Board ofEducation as of June 30, 1998, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued our report dated May 12, 1999, on our consideration ofthe City of Chickamauga Board ofEducation's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants.
The year 2000 supplementary information on Schedule "1" is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe supplementary information. However we did not audit the information and do not express an opinion on it. In addition, we do not provide assurance that City of Chickamauga Board of Education is or will become year 2000 compliant, that the Board's year 2000 remediation efforts will be successful in whole or in part, or that parties with which City of Chickamauga Board ofEducation does business are or will become year 2000 compliant.
Our audit was performed for the purpose of forming an opinion on the general purpose financial statements ofthe City of Chickamauga Board ofEducation taken as a whole. The accompanying combining statements (Exhibits E through H) and the financial schedules (Schedules 2 through 7), which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the general purpose financial statements. Such information has been subjected to the auditing procedures applied in the audit of the general purpose fmancial statements and in our opinion, except for the effects ofthe matters referred to in the third paragraph, such information is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole.
98ARL-13B

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,
~0'Q!l W.~~ Russell W. Hinton State Auditor
RWH:gp 98ARL-13B

CITY OF CmCKAMAUGA BOARD OF EDUCATION - WALKER COUNTY

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUP JUNE 30,1998

ASSETS
Cash and Cash Equivalents
Investments
Accounts Receivable
Inventories Food Donated Commodities Purchased Food
Amount to be Provided in Future Years For Payment of Capital Lease Agreements

GOVERNMENTAL FUND

SPECIAL

GENERAL .

REVENUE

FUND

FUND

$

112,578.45 $

229,234,37

269,629,63

8,853,11

2,954,00

7,578,12 6,059,96

Total Assets

$

391,061.19 $

245,826,45

LIABILITIES AND FUND EQUITY
LIABILITIES
Accounts Payable Salaries Payable Expired Grant Balances Payable Contracts Payable Retainages Payable Capital Lease Agreements
Total Liabilities
FUND EQUITY
Fund Balances Reserved For Continuation of Federal Programs For Expired Grant Balances/Questioned Costs For Inventories Food Donated Commodities Purchased Food For Purposes of Bond Issue For SPLOST Projects For State Capital Outlay Projects Unreserved Deficit Undesignated
Total Fund Equity

$

89,246.52 $

3,359.29

23,211.36

718.43

$

89,246,52 $

27,289.08

$

3,748,13

$

524.55

7,578,12 6,059,96

301,290.12

201.151.16

$

301,814.67 $

218,537.37

Total Liabilities and Fund Equity

$

The notes to the general purpose financial statements are an integral part of this statement.

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391,061.19 $

245,826.45

EXHIBIT "A"

TYPES CAPITAL
PROJECTS FUND

ACCOUNT GROUP GENERAL
LONG-TERM DEBT

TOTALS

(Memorandum Only)

JUNE 30,1998

JUNE 30,1997

$

54,874.10

$

396,686.92 $

617,069.81

2,284,417.30

2,554,046.93

86,616.98

98,424.09

33,833.03

______ $

=22: .1,;,8: .:,7"",",1."", 75;:.

7,578.12 6,059.96
22,871.75

4,657.60 5,718.97
33,249.50

$ 2,425,908.38 $

22,871.75 $ 3,085,667.77 $ _.....6.9.;",;04,.52_8;;,;;.9-.1

$

99,373.11

70,927.10

$

$

170,300.21 $

$
22,871.75 22,871.75 $

92,605.81 $ 23,211.36
718.43 99,373.11 70,927.10 22,871.75
309,707.56 $

2,692.47 27,112.42
8.20
33,249.50
63,062.59

$ 1,942,671.91 318,299.92
-5,363.66 0.00
$ 2,255,608.17
$ 2,425,908.38 $

$

3,748.13 $

524.55

7,578.12 6,059.96 1,942,671.91 318,299.92

-5,363.66 502,441.28
$ 2,775,960.21 $

2,730.80 27,136.95
4,657.60 5,718.97
43,227.00
547,995.00 631,466.32

22,871.75 $ 3,085,667.77 $

694,528.91

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CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY COMBINED STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES
YEAR ENDED JUNE 30. 1998

EXHIBIT"B"

FUND BALANCE JUNE 30

$ 301.814.67 $ 218.537.37 $ 2.255.608.17 $ 2.775.960.21 $ 631:466.32

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

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY COMBINED STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - (NON-GAAP BASIS) GENERAL AND SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 3D. 1998

EXHIBIT"C"

FUND BALANCE JUNE 30.1998

$ 226,851.61 $ _...;;3,;;,01;,:;,8::;,;1:.:,4,;,;;.6.;,.7

$

11,533.95 $ 218.537.37

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

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30. 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REPORTING ENTITY

The City of Chickamauga Board ofEducation (Board) was established under the laws ofthe State ofGeorgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is not organized as a separate legal entity and does not have the power to levy taxes or issue bonds. Its budget is subject to approval by the City of Chickamauga, Georgia. Accordingly, the City of Chickamauga Board of Education is determined to be a component unit of the City of Chickamauga, Georgia, which is the primary government.

FUND ACCOUNTING

The Board uses funds and an account group to report on its financial position and the results ofits 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. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available financial resources.

General Fixed Assets are recorded as expenditures in the various funds at the time of purchase. A General Fixed Assets Account Group is not presently maintained by the Board. To conform to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types.

Although "school activity accounts" are maintained at the individual schools, neither the assets, liabilities and

fund equity, nor the revenues, expenditures and changes in fund balances ofthese accounts are reflected in

these financial statements. To conform to generally accepted accounting principles, these accounts should

be recorded in the general purpose financial statements.

.

The general purpose financial statements account for all State, Federal, Taxes and Other funds under control ofthe Board, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds and the account group presented in this report are as follows:

GOVERNMENTAL FUND TYPES - are used to account for all or most ofa Board's educational activities. Governmental Fund Types include:

GENERAL FUND - the fund used to account for all financial resources ofthe Board except those required to be accounted for in another fund. These transactions relate to res<:>urces obtained and used for services provided by a board of education.

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CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY EXHIBIT liD" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30,1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SPECIAL REVENUE FUND - the fund used to account for the proceeds ofspecific revenue sources (other than for major capital projects) that are legally restricted to expenditures for specified purposes. These funds are received primarily from the Georgia Department ofEducation and from the Federal government to accomplish specific educational objectives.

CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction of major capital facilities.

ACCOUNT GROUP

GENERAL LONG-TERM DEBT ACCOUNT GROUP - A financial reporting device used to account for capital lease obligations.

BASIS OF ACCOUNTING

The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (Le., revenues and other financing sources) and decreases (Le., expenditures and other financing uses) in net current assets. Their reported fund balance is considered a measure ofavailable spendable resources.

Liabilities which are expected to be fmanced from available spendable resources are reported as liabilities in the governmental funds. Other liabilities, which are not expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group.

Governmental funds are accounted for using the modified accrual basis of accounting under which:

Revenues are recognized when susceptible to accrual (Le., when they become both measurable and available).

"Measurable" means the amount ofthe transaction can be determined and "available" means collectible within

the current period or soon enough thereafter to be used to pay liabilities ofthe .current period. Those revenues

considered susceptible to accrual are property taxes, local option sales taxes, intergovernmental grants and

investment income.

\

Expenditures are generally recognized when the related fund liability is incurred.

A departure from the above definitions is the accounting treatment afforded the fmal two payments on General Fund teachers' and bus drivers' contracts, and the resources available from the Georgia Department of Education for the State's share of these contracts. During fiscal year 1998, a substantial number of personnel ofthe Board were employed for a one hundred and ninety day period beginning in late August 1997 and ending in early June 1998. Personnel contracts for this employment period specify that compensation

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CITY OF CmCKAMAUGA BOARD OF EDUCAnON - WALKER COUNTY EXlllBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30.1998
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
be paid in twelve equal monthly payments beginning in September 1997 and ending in August 1998. State grants to fund the State's share ofthese contracts were disbursed from the Georgia Department ofEducation to the Board in the same twelve months. As of June 30, 1998, compensation under these employment contracts had been earned, but two ofthe twelve monthly payments, due for July and August 1998, had not been made. Payments for these two months were made and recorded as expenditures by the Board subsequent to June 30, 1998. Also, the State's portion of the compensation paid in July and August 1998 was received and recorded as revenue in the fiscal year subsequent to June 30, 1998. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 1997, were recorded in the year ended June 30, 1998. Generally accepted accounting principles require that revenues be recorded when available and measurable and that expenditures be recorded when incurred, rather than when funds are received or disbursed.
BUDGET
The City of Chickamauga Board ofEducation's budget is a complete financial plan for the Board's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure of the budget at any level. The budget for all governmental funds is prepared by fund, function and object. The legal level of budget control was established by the Board at the aggregate level. The budget for governmental funds was prepared on a basis other than generally accepted accounting principles.
The budget process begins when the Board's administration prepares a tentative budget for the Board's approval. After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper ofgeneral circulation in the locality. At the next regular meeting ofthe Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and with the approval of the City Council adopts a final school budget. This final budget is then submitted, in accordance with provisions of the Quality Basic Education Act, OCGA Section 20-2-167, 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.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist of deposits in authorized financial institutions. Georgia Laws authorize the Board to deposit its funds in one or more solvent banks, insured Federal savings and loan associations, or insured State chartered building and loan associations.
INVESTMENTS
COMPOSITION OF INVESTMENTS Investments made by the Board in nonparticipating interest~earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market
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CITY OF CHICKAMAUGA BOARD OF EDUCAnON - WALKER COUNTY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30.1998
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
investments with a maturity at purchase ofone 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 Board to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(1) Obligations issued by the State of Georgia or by other states,
(2) Obligations issued by the United States government,
(3) Obligations fully insured or guaranteed by the United States government or a United States government agency,
(4) Obligations of any corporation ofthe United States government,
(5) Prime banker's acceptances,
(6) The Local Government Investment Poolad.ministered by the State of Georgia, Office ofTreasury and Fiscal Services,
(7) Repurchase agreements, and
(8) Obligations of other political subdivisions ofthe State of Georgia.
RECEIVABLES
Receivables consist ofgrant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the general purpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.
PROPERTY TAXES
The City of Chickamauga fixed the property tax levy for the 1997 tax year (calendar year) on October 6, 1997 (levy date). Taxes were due on December 20, 1997. The lien date for property taxes was January 1, 1997. Taxes collected within the current fiscal year or within 60 days after year-end are reported as revenue in fiscal year 1998. The Chickamauga City Clerk bills and collects the property taxes for the Board of Education and remits the taxes collected to the Board.
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CITY OF CHICKAMAUGA BOARD OF EDUCAnON - WALKER COUNTY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30,1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The tax millagerate levied for the 1997 tax year (calendar year) for the City of Chickamauga Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

~mills

SALES TAXES

The City of Chickamauga (City Government) sold $2,430,000.00 in general obligation bonds to provide advance funding for Capital Outlay Projects associated withissuance ofa Special Purpose Local Option Sales Tax (SPLOST). In fiscal year, 1998, the Board ofEducation provided $167,206.21 ofSPLOST proceeds to the City Government for debt service on said general obligation debt.

Special Purpose Local Option Sales Tax is to be used for capital outlay for educational purposes and .debt service. Special Purpose Local Option Sales Tax revenue during the fiscal year amounted to $481,337.55 and was recorded in the Capital Projects Fund. The State will terminate collection of this tax once an additional $3,295,002.45 has been collected or on June 30, 2002, whichever occurs first.

INVENTORIES

FOOD INVENTORIES Inventories of donated food commodities used in the preparation of meals are reported on the Combined Balance Sheet at their Federally assigned value. Purchased foods inventories are reported on the Combined Balance Sheet at cost (first-in, first-out). Donated food commodities are recorded as revenues and expenditures at the time commodity items are received. Purchased foods inventories are recorded as expenditures at the time of purchase. The inventories reported on the balance sheet for donated food commodities and for purchased foods are equally offset by reservations of fund balance which indicates that these amounts do not constitute "available spendable resources" even though they are a component of net current assets.

INTERFUND TRANSACTIONS

The Board has the following types ofinterfund transactions:

Reimbursements of expenditures initially made from a fund that are properly applicable to another fund, are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed.

Operating transfers are recorded for all interfund transactions other than reimbursements.

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CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30.1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

MEMORANDUM ONLY - TOTAL COLUMNS

Total columns on the general purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position or results of operations in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data.

DEFICIT FUND BALANCE

The fund reporting a deficit fund balance position at June 30, 1998, is as follows:

Fund Type/Fund Name

Deficit Balance

Capital Projects Fund Lottery Project

$ 5.363.66

This deficit fund balance will be funded with Lottery proceeds in future periods.

Note 2: DEPOSITS AND INVESTMENTS

COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee ofinsurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value ofsecurities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount of deposit insurance. OCGA Section 45-8-11 provides an officer holding public funds may, in his discretion, waive the requirement for security in the case of operating funds placed in demand deposit checking accounts.

Acceptable security for deposits consists of anyone of or any combination of the fo.1lowing:

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

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

(3) Bonds, bills, notes, certificates ofindebtedness or other direct obligations of the United States or of the State of Georgia,

(4) Bonds, bills, notes, certificates ofindebtedness or other obligations ofthe counties or municipalities of the State of Georgia,

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CITY OF CmCKAMAUGA BOARD OF EDUCAnON - WALKER COUNTY EXIllBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 1998

Note 2: DEPOSITS AND INVESTMENTS

(5) Bonds of any public authority created by the laws ofthe State of Georgia, providing that the statute that created the authority authorized the use ofthe bonds for this purpose,

(6) Industrial revenue bonds and bonds of development authorities created by the laws ofthe State of Georgia, and

(7) Bonds, bills, notes, certificates of iIidebtedness, 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.

CATEGORIZAnON OF DEPOSITS At June 30, 1998, the bank balances were $1,017,651.84. The amounts of the total bank balances are classified into three categories of credit risk:

Category 1 - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the Board or by the Board's agent in the Board's name.
Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the Board's name.
Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the Board's name.)

The Board's deposits are classified by risk category at June 30, 1998, as follows:

Risk Category
1 2 3
Total
CATEGORIZATION OF INVESTMENTS Investments are classified as to risk by the three categories described below:

Bank Balance
$ 100,000.00 917,651.84 0.00
$ 1.017.651.84

Category 1 - Insured or registered, or securities held by the Board or the Board's agent in the Board's name.
Category 2 - Uninsured or unregistered, with securities held by the counterparty's trust department or agent in the Board's name.
Category 3 - Uninsured or unregistered, with securities held by the counterparty, or by its trust department or agent but not in the Board's name.

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CITY OF CmCKAMAUGA BOARD OF EDUCATION - WALKER COUNTY EXIllBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 1998
Note 2: DEPOSITS AND INVESTMENTS
Funds invested in an investment pool managed by another government are not required to be categorized unless the investing entity owns specific, identifiable investment securities in the pool.
At June 30, 1998, the carrying value of the Board's total investments was $2,284,417.30. The investments are classified as to risk categories as follows:
The carrying amounts shown above includes amounts maintained in an investment pool by the State of Georgia, Office of Treasury and Fiscal Services in which the Board owns no identifiable securities. The investment policy ofthe State of Georgia, Office of Treasury and Fiscal Services for the Local Government Investment Pool (primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. A description ofthe Primary Liquidity Portfolio is as follows:
The Primary Liquidity Portfolio consists of Georgia Fund 1, which is a combination local and state government investment pool, and Fund 6. Georgia Fund 1 is a stable net asset value investment pool which follows Standard and Poor's criteria for AAAm rated money market funds. However, Georgia Fund 1 operates in a manner consistent with Rule 2a-7 ofthe Investment Company Act of 1940 and is considered to be a 2a-7 like pool. The pool is not registered with the SEC as an investment company. The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($1.00 pershare value). Net asset value is calculated weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and determines participant's shares sold and redeemed based on $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost which approximates fair value. The pool does not issue any legally binding guarantees to support the value ofthe shares. Participation in the pool is voluntary and deposits consist of funds from local governments; operating and trust funds of Georgia's state agencies, colleges and universities; and current operating funds of the State of Georgia's General Fund.
Investments in Georgia Fund 1 and Fund 6 are directed toward short-term instruments such as D. S. Treasury obligations, securities issued or guaranteed as to principal and interest by the D. S. Government or any of its agencies or instrumentalities, banker's acceptances and repurchase agreements. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. Fund 6 maintains a duration of approximately one year. The weighted average maturity for Georgia Fund 1 on June 30, 1998 was 29 days. The average investment duration for Fund 6 on June 30, 1998 was .96 years.
- 13-

CITY OF CmCKAMAUGA BOARD OF EDUCAnON - WALKER COUNTY EXlllBIT "0" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 1998

Note 3: NON-MONETARY TRANSACTIONS

The Board receives food commodities from the United States Dep~ent ofAgriculture (USDA) for school breakfast and lunch programs. These commodities ar~ recorded at their Federally assigned value. See Note 1 - Inventories

Note 4: RISK MANAGEMENT

The Board 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; natural disaster and unemployment compensation.

The Board has obtained commercial insurance for risk ofloss associated with torts, assets, errors or omissions and job related illness or injuries to employees. The Board has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the Board's insurance coverage in any ofthe past three years.

The Board has elected to self-insure for a1110sses related to natural disaster. The Board has not experienced any losses related to this risk in the past three years.

The Board is self-insured with regard to unemployment compensation claims. The Board accounts for claims within the General Fund with expenditure and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. The Board has not experienced any unemployment claims during the last two years.

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

Position Covered

Amount

Superintendent

$ 10,000.00

Note 5: GENERAL LONG-TERM DEBT

CAPITAL LEASES The.City of Chickamauga Board ofEducation has entered into a lease agreement as lessee for a bus purchase. This lease agreement qualifies as a capital lease for accounting purposes and, therefore, has been recorded at the present value of the future minimum lease payments as of the date ofits inception.

The changes in General Long-Term Debt during the fiscalyear ended June 30, 1998, were as follows:

- 14-

CITY OF CmCKAMAUGA BOARD OF EDUCATION - WALKER COUNTY EXlllBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30,1998

Note 5: GENERAL LONG-TERM DEBT

Balance July 1, 1997
Deductions Payments
Balance June 30, 1998

Capital Leases $ 33,249,50
10.377,75 $ 22,871.75

At June 30, 1998, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30
1999 2000
Total Principal and Interest
Deduct: Imputed Interest
Net Present Value ofFuture Minimum Lease Payments

Capital Leases $ 12,588,84 12,588,84 $ 25,177,68
2,305.93
$ 22.871.75

Note 6: ON-BEHALF PAYMENTS

The Board has recognized revenues and expenditures in the amount of $58,324,50 for health insurance and retirement contributions paid on the Board's behalf by the following State Agencies.

Georgia Department ofEducation Paid to the State Merit System ofPersonnel Administration For Health Insurance ofNon-Certified Personnel In the amount of $42,677.50

Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $4,985.00

Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of$10,662.00

- 15 -

CITY OF CmCKAMAUGA BOARD OF EDUCATION - WALKER COUNTY EXHIBIT "0" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30.1998

Note 7: SIGNIFICANT COMMITMENTS

The following is an analysis of significant outstanding construction or renovation contracts executed by the Board as ofJune 30, 1998, together with funding available:

Project

Unearned Executed Contracts

Funding Available From State

Lottery 98/97S-769-050 Gordon Lee High School!
Gordon Lee Middle School Gym

$ 181,457.20 $ 29,877.30 392.805.90

$ 574.263.10 $ 29.877.30

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

Note 8: 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 expenditures which are disallowed under grant terms. The Board believes that such disallowances, if any, will be immaterial to its overall financial position.

Note 9: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school systems are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone fmancial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe Board who are covered by TRS are required by State statute to contribute 5% oftheir gross earnings to TRS. The Board makes monthly employer contributions to TRS at rates adopted by the TRS Board ofTrustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 11.81% and employer contributions fer the current fiscal year and the preceding two fiscal years are as follows:

- 16-

CITY OF CmCKAMAUGA BOARD OF EDUCATION - WALKER COUNTY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30.1998

Note 9: RETIREMENT PLANS
Fiscal Year 1998 1997 1996

Percentage Contributed
100% 100% 100%

Required Contribution
$ 391,993.26 $ 371,329.42 $ 336,438.96

- 17 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30. 1998

ASSETS
Cash and Cash Equivalents
Accounts Receivable
Inventories Food Donated Commodities Purchased Food

SCHOOL FOOD
SERVICES FUND

LOTIERY PROGRAMS

$

102,649.01 $

341.72

2,954.00

7,578.12 6,059.96

Total Assets

$

119,241.09 $ 0::=======34=1:=.7==.2

Total Liabilities and Fund Equity
See notes to the general purpose financial statements. -18 -

$

119,241.09 $====34...1..,,;,,;.7==.2

EXHIBIT"E"

FEDERAL PROGRAMS

OTHER PROGRAMS

TOTALS
JUNE 30,1998 JUNE 30,1997

$

5,399.71 $ 120,843.93 $ 229,234.37 $ 190,226.85

2,954.00

14,089.02

7,578.12 6,059.96

4,657.60 5,718.97

$

5,399.71 $ 120,843.93 $ 245,826.45 $ 214,692.44

$

366.87

566.28

718.43

$

1,651.58

$

7,127.03

$

3,359.29

2,658.04

23,211.36

26,662.42

718.43

8.20

$

27,289.08 $

36,455.69

$

3,748.13

$

3,748.13 $

2,730.80

7,578.12 6,059.96

4,657.60 5,718.97

0.00 $ 120,843.93

201,151.16

165,129.38

$

3,748.13 $ 120,843.93 $ 218,537.37 $ 178,236.75

$

5,399.71 $ 120,843.93 $ 245,826.45 $ 214,692.44

-19 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUND YEAR ENDED JUNE 30,1998

REVENUES
State Funds Federal Funds Other Funds
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration Maintenance and Operation of Plant Student Transportation Services Food Services Operation
Debt Service Principal Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Operating Transfers In Operating Transfers Out
Total Other Financing Sources (Uses)
Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses
FUND BALANCE JULY 1
Food Inventory - Net Change in Period Donated Commodities Purchased Food

FUND BALANCE JUNE 30

See notes to the general purpose financial statements.

- 20-

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

$

35,020.00 $

115,262.81

284,374.71

$ 434,657.52 $

57,039.00 57,039.00

$

57,039.00

$ 429,475.40

$ 429,475.40 $

$

5,182.12 $

57,039.00 0.00

$

5,182.12 $

0.00

85,501.68

0.00

2,920.52 340.99

$

93,945.31 $-=====........==="'0.=0,;,,0

EXHIBIT"F"

FEDERAL PROGRAMS

OTHER PROGRAMS

TOTALS YEAR ENDED JUNE 30, 1998 JUNE 30, 1997

.$ $ 190,003.57
_ _ _ _ _ $_---:1.;;.05;;.r.,.;;.;95:;.;;6;.:...;.4~1

$

190,003.57 $

105,956.41 $

92,059.00 $ 305,266.38 390,331.12
787,656.50 $

186,309.73 209,831.12 379,988.87
776,129.72

$ 126,752.00
41,877.60 16,260.50 4,096.14
$

$

188,986.24 $

$

1,017.33 $

$
21,718.82 1,380.00
14,429.09
10,377.75 2,211.09 50,116.75 $ 55,839.66 $

183,791.00 $
41,877.60 16,260.50 4,096.14 21,718.82
1,380.00 14,429.09 429,475.40
10,377.75 2,211.09
725,617.39 $
62,039.11 $

225,682.85
41,288.63 17,023.07 5,819.07
601.36 14,830.83 14,590.49 427,643.03
9,730.66 2,858.18
760,068.17
16,061.55

$

7,192.28

$

-25,000.00 $

-25,000.00

-74,194.35

$

-25,000.00 $

-25,000.00 $

-67,002.07

$

1,017.33 $

30,839.66 $

37,039.11 $

-50,940.52

2,730.80

90,004.27:

178,236.75

230,771.41

2,920.52 340.99

-1,948.08 353.94

$

3,748.13 $

120,843.93 $

218,537.37 $

178,236.75

- 21 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY COMBINING BALANCE SHEET CAPITAL PROJECTS FUND JUNE 30. 1998

EXHIBIT"G"

ASSETS Cash and Cash Equivalents Investments Accounts Receivable
Total Assets

BOND PROCEEDS

SPECIAL PURPOSE LOCAL OPTION SALES TAX

LOTTERY PROJECT

TOTALS JUNE 30, 1998 JUNE 30, 1997

$

336.78 $

1.24 $ 54,536.08 $

54,874.10 $

43,227.00

2,052,735.60

231,681.70

2,284,417.30

86,616.98

86,616.98

$ 2,053,072.38 $

318,299.92 $ 54,536.08 $ 2.425,908.38 $ ......==04=3=,2;;;2.7...;;;;0=0

LIABILITIES AND FUND EQUITY

LIABILITIES

Contracts Payable Retainages Payable

$ 67,633.92 42,766.55

Total Liabilities

$ 110,400.47

FUND EQUITY

Fund Balances Reserved For Purposes of Bond Issue For SPLOST Projects For State Capital Outlay Projects Unreserved Deficit Undesignated

$ 1,942,671.91 $
0.00

Total Fund Equity

$ 1,942,671.91 $

$ 31,739.19 $ 28,160.55
$ 59,899.74 $

99,373.11 70,927.10
170,300.21

318,299.92

$ 1,942,671.91 318,299.92 $

$ -5,363.66

0.00

0.00

-5,363.66 0.00

318,299.92 $ -5,363.66 $ 2,255,608.17 $

43,227.00
0.00 43,227.00

Total Liabilities and-Fund Equity

$ 2,053,072.38 $

318,299.92 $ 54,536.08 $ 2.425,908.38 $==4=3=,2;;;2.7...;;;;00=

See notes to the general purpose financial statements.

- 22-

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY COMBINING STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
CAPITAL PROJECTS FUND YEAR ENDED JUNE 30. 1998

EXHIBIT"H"

BOND PROCEEDS

SPECIAL PURPOSE LOCAL OPTION SALES TAX

LOTTERY PROJECT

TOTALS YEAR ENDED JUNE 30; 1998 JUNE 30,1997

REVENUES

State Funds Taxes Other Funds

$ 268,985.70 $ 268,985.70 $

0.00

$ 481,337.55

481,337.55

$ 111,970.41

4.168.58

116,138.99

Total Revenues

$ 111,970.41 $ 485,506.13 $ 268,985.70 $ 866,462.24 $

0.00

EXPENDITURES

Current Support Services Business Administration
Capital Outlay Building and BUilding Improvements Equipment

$ 83,435.63 $ 515,862.87

0.00

$

$ 417,576.36

83,435.63 933,439.23 $

41,096.15 748.93

Total Expenditures

$ 599,298.50 $

0.00 $ 417,576.36 $ 1,016,874.86 $

41,845.08

Excess of Revenues over (under) Expenditures

$ -487,328.09 $ 485,506.13 $ -148,590.66 $ -150,412.62 $ -41,845.08

OTHER FINANCING SOURCES (USES)

Proceeds from General Obligation Bonds Par Value
Operating Transfers In Operating Transfers Out

$ 2,430,000.00 $

$ $ 100,000.00 -167,206.21

2,430,000.00 100,000.00 $ -167,206.21

85,072.08

Total Other Financing Sources (Uses)

$ 2,430,000.00 $ -167,206.21 $ 100,000.00 $ 2,362.793.79 $

85.072.08

Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses $ 1.942.671.91 $

318,299.92 $ -48,590.66 $ 2.212,381.17 $

43,227.00

FUND BALANCE JULY 1

0.00

0.00

43.227.00

43,227.00

0.00

FUND BALANCE JUNE 30

$ 1,942,671.91$ 318.299.92 $ -5,363.66 $ 2,255,608.17 $ _......4.-.3.1;;022_7..0..0.

See notes to the general purpose financial statements.

- 23-

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY SCHEDULE OF REOUIRED SUPPLEMENTARY INFORMATION YEAR 2000 DISCLOSURES YEAR ENDED JUNE 30. 1998

SCHEDULE" 1"

At June 30, 1998, the City of Chickamauga Board ofEducation had no outstanding contractual commitments for the purpose ofmaking computer systems and other electronic equipment year 2000 compliant. The year 2000 issue is the result of shortcomings in many electronic data processing systems and other equipment that make operations beyond year 1999 troublesome. The year 2000 issue is of primary concern for the Board's financial accounting system. The following stages have been identified as necessary to implement a year 2000 compliant systems.
Awareness Stage - Encompasses establishing a budget and project plan for dealing with the year 2000 Issue.
Assessment Stage - The actual process of identifying all of its systems and individual components of the systems to check for compliance.
Remediation Stage - When changes are made to systems and equipment.
Validationffesting Stage - The process of ensuring that the changes made to systems and equipment will produce a year 2000 compliant system.
It will be necessary for the Board to progress through all four of these stages for each computer and/or electronic system, not already year 2000 compliant, in order to assure that these systems will not be adversely affected. As ofJune 30, 1998, the financial accounting system was determined to be at the Awareness Stage.
The Board's financial accounting software (GENESIS) and hardware (Wang VS) is owned by the State (Georgia Department of Education). These systems have been determined to be critical to the Board's ability to successfully conduct operations. As of June 30, 1998, the State had not contracted for the remediation of either the Wang VS operating system or the GENESIS accounting software. In the subsequent period, the Georgia Department of Education remediated the Wang VS operating system and the updated operating system was installed at all GENESIS sites as of December9, 1998. The Georgia Department of Education has remediated the GENESIS software and conducted tests at nine pilot sites. The remediated GENESIS software has been provided to all boards of education currently utilizing the GENESIS accounting software.

See notes to the general purpose fmancial statements. - 24-

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30,1998

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture,U. S. Deparbnent of Pass-Through from Georgia Deparbnent of Education Food and Nutrition Program Food Services School Breakfast Program 1998 Grant National School Lunch Program 1998 Grant Food Distribution Program (1)
Total U. S. Deparbnent of Agriculture
Education, U. S. Deparbnent of Pass-Through from Georgia Deparbnent of Education Elementary and Secondary Education Act Title I Grants to Local Educational Agencies 1998 Grant Title II Eisenhower Professional Development 1997 Grant 1998 Grant Title VI Innovative Education Program Strategies 1998 Grant Goals 2000 State and Local Education Systemic Improvement Grants 1998 Grant Individuals with Disabilities Education Act Part B - Special Education Flow Through 1998 Grant Preschool 1998 Grant Safe and Drug-Free Schools 1998 Grant Vocational Education - Basic Grants to States High School Program Basic Grant 1998 Grant Tech-Prep Education 1998 Grant
Total U. S. Department of Education

CFDA NUMBER

PASSTHROUGH
ENTITY 10
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

* 10,553
* 10.555 10.550

N/A $
N/A NlA
$

11,253.54
73,419.06 $ 30,590.21.
115,262.81 $

(2)
398,885.19 (3) 30,590.21
429,475.40

84.010
84.281 84.281
84,298

N/A $
N/A N/A
N/A

33,798.00 $ 17,500,00 3,153.79

33,798.00
2,730.80 13,751.87
3,153.79

84.276

N/A

70,000.00

70,000.00

84.027

N/A

84.173

NlA

84.186

N/A

39,600,00 2,300.00 5,526.78

39,600.00 2,300.00 5,526.78

84.048 84.243

NlA N/A
$

13,125.00 . 5,000.00
190,003.57 $

13,125.00 5,000.00
188,986.24

Total Federal Financial Assistance
= NlA Not Available

- 25-

$

305,266.38 $ =====6=1~8,=46=1,;,c.64==

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30.1998

SCHEDULE "2"

Notes to the Schedule of Expenditures of Federal Awards
(1) The amounts shown for the Food Distribution Program represent the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the system during the current fiscal year.
(2) Expenditures for the School Breakfast Program were not maintained separately and are included in the 1998 National School Lunch Program.
(3) Expenditures for this program include State, and/or Other Funds. Expenditures are not maintained by fund source.
Major Programs are identified by an asterisk (*) in front of the CFDA number.
The Board 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 Chickamauga Board of Education and is presented on the modified accrual basis of accounting which is the same basis of accounting used in the presentation of the general purpose financial statements.

See notes to the general purpose financial statements.

-26-

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 1998

SCHEDULE "3"

AGENCY/FUNDING
GRANTS Education, Georgia Department of Quality Basic Education General and Career Education Programs Special Education Programs Remedial Education Program Media Center Programs Staff Development Programs Indirect Cost Middle School Incentive Program In-School Suspension Counselors Grades 4 and 5 Technology Training Local Fair Share Educational Equalization Funding Grant Food Services Other State Programs Ad Valorem Tax Adjustment At-Risk Summer School Program Health Insurance Innovative Programs Remedial Summer School Program Student Records Teachers' Retirement Lottery Programs Exceptional Growth-Capital Outlay Instructional Technology Assistive Technology Classroom Technology
Office of Treasury and Fiscal Services Public School Employees Retirement
Walker County Board of Education Georgia Youth Apprenticeship Grant

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

GENERAL

REVENUE

PROJECTS

FUND

FUND

FUND

TOTAL

$ 2,690,450,00 333,499,00 47,790,00 107,763.00 32,566.00 772,961.00 109,687.00 41,619.00 10,152.00 28,842.00 -145,951.00 439,630.00 $
6,092.00 2,664.41 42,677.50 4,850.00 2,282.02 2,061.00 4,985.00

35,020.00

$ 2,690,450,00 333,499,00 47,790.00 107,763.00 32,566.00 772,961.00 109,687,00 41,619.00 10,152.00 28,842.00 -145,951.00 439,630.00 35,020.00

6,092.00 2,664.41 42,677.50 4,850.00 2,282.02 2,061.00 4,985.00

$ 268,985.70

268,985.70

4,039.00 53,000.00

4,039.00 53,000.00

10,662.00

10,662.00

4,967.70

4,967.70

$ 4,550,249.63 $ 92,059.00 $ 268,985.70 $ 4,911,294.33

See notes to the general purpose financial statements.

- 27-

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30.1998

SCHEDULE "4"

PROJECTS
Construction of a new physical education facility for Gordon Lee Middle School; Construct and equip a new Science/Math classroom bUilding for Gordon Lee High School; Repair, renovate, modify, retrofit, and reroof selected classrooms and buildings; renovate and retrofit for accommodation of computers and other technology for and purchasing technology equipment for, Chickamauga Elementary School, Gordon Lee Middle School and Gordon Lee High School

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED
COST (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED
IN PRIOR YEARS

$ 3,776,340.00 $ 3,776,340.00 $ 515,862.87 $

0...0..0..

(1) The Board's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax.
(2) The Board's current estimate of total cost for these projects. Includes all cost from project inception to completion.
(3) The voters of the City of Chickamauga 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 general purpose financial statements.

-28 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY SCHEDULE OF EXPENDITURES LOTTERY PROGRAMS YEAR ENDED JUNE 30, 1998

SCHEDULE "5"

EXPENDITURES
Current Instruction

INSTRUCTIONAL TECHNOLOGY

ASSISTIVE

CLASSROOM

TECHNOLOGY

TECHNOLOGY

TOTAL

$

4,039,00 $

53,000.00 $===57=,=03=9=,0=0

See notes to the general purpose financial statements. - 29-

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS - OVERALL
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS
YEAR ENDED JUNE 30, 1998

SCHEDULE "6"

Minimum Expenditure Requirements (Total Allotment) Expenditures on Combined Program Basis
Salaries Operations
Less: Expenditures for Media Center Programs in Excess of Total Media Allotment
Expenditures per Audit
Amount of Underexpenditure for Total Allotment

FOURTEEN WEIGHTED AND MEDIA CENTER
PROGRAMS

100% TEST FOR
OPERATIONS PORTION OF FOURTEEN WEIGHTED PROGRAMS

$

3, 179,502,00 $ _ _~9=6,...;.44=2;;.;;'0~0

$

3,043,669,27

179,556,09 $

$

3,223,225,36

1=6=O,.:..;70=0=,0~6

-25,224,57 $ _ _.=.3z..1:.=,.;98;J.,;.0:.:0:.:.0:.:.,7.;;,.9

$

0.00 $=====0,;,,;:,0=0

See notes to the general purpose financial statements.
- 31 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY ANALYSIS OF MINIMUM EXPENDITURE REqUIREMENTS - BY PROGRAM
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 30, 1998

GENERAL AND CAREER EDUCATION PROGRAMS
Kindergarten C')
Grades 1 - 3 (*) Sub-Total - K-3
Grades 4 - 5 (*) Grades 6 - 8 (*) Grades 9 -12 (*) High School Laboratories (*) Vocational Education Laboratories (*)
Total General and Career Education Programs SPECIAL EDUCATION PROGRAMS
Regular Programs
category III C')
Sub-Total- Regular
Category VI (Gifted) C')
Total Special Education Programs REMEDIAL EDUCATION PROGRAM (*)
Total Fourteen Weighted Programs MEDIA CENTER PROGRAMS
Salaries Operations
Total Media Center Programs
Total Fourteen Weighted and Media Center Programs

ALLOTMENTS FROM DEPARTMENT OF EDUCATION

REQUIRED

ORIGINAL ~

ORIGINAL

MID-TERM

$

206,541.00

$

185,886.90 $

0.00

606,000.00

545,400.00

$

812,541.00 90 $

731,286.90 $

0.00

302,622.00 90

272,359.80

652,123.00 90

586,910.70

.433,999.00 90

390,599.10

290,883.00 90

261,794.70

198,282.00 90

178,453.80

$ 2,690,450.00

$ 2,421,405.00 $

0.00

$

152,741.00

$

137,466.90 $

0.00

$

152,741.00 90 $

137,466.90 $

0.00

180,758.00 90

162,682.20

$

333,499.00

$

300,149.10 $

0.00

$

47,790.00 90 $

43,011.00 $

0.00

$ 3,071,739.00

$ 2,764,565.10 $

0.00

$

86,892.00 90 $

78,202.80 $

0.00

20,871.00 90

18,783.90

$

107,763.00

$

96,986.70 $

0.00

$ 3,179,502.00

$ 2,861,551.80 $

0.00

STAFF DEVELOPMENT PROGRAMS Cost of Instruction Professional Development
Total Staff Development Programs (*) Identifies Fourteen Weighted Programs. See notes to the general purpose financial statements.

$

9,460.00

$

9,460.00 $

0.00

23,106.00

23,106.00

0.00

$

32,566.00 100 $

32,566.00 $ ========0=.0;;;;.0

- 32 -

SCHEDULE "7"

TOTAL REQUIRED

ACTUAL EXPENDITURES

SALARIES

OPERATIONS

TOTAL

AMOUNT OF UNDEREXPENDITURE
FOR REQUIRED ALLOTMENT

$

185,886.90 $

158.279.66 $

3.949.80 $

162,229.46

545,400.00

644,753.11

41.575.92

686,329.03

$

731.286.90 $

803.032.77 $

45.525.72 $

848.558.49 $

0.00

272,359.80

262,404.38

32,417.11

294,821.49

0.00

586,910.70

573,293.12

32.460.47

605,753.59

0.00

390,599.10

445,042.22

12,061.53

457.103.75

0.00

261.794.70

289.816.25

9.952.73

299,768.98

0.00

178,453.80

191,177.12

19,113.23

210.290.35

0.00

$ 2,421,405.00 $ 2.564.765.86 $

151.530.79 $ 2,716,296.65

$

137,466.90

$

164.321.71 $

2.354.10 $

166.675.81

$

137,466.90 $

164,321.71 $

2.354.10 $

166.675.81

0.00

162.682.20

156.063.36

6.619.73

162,683.09

0.00

$

300.149.10 $

320.385.07 $

8,973.83 $

329,358.90

$

43,011.00 $

44,386.80 $

195.44 $

44.582.24

0.00

$ 2,764.565.10 $ 2.929,537.73 $

160,700.06 $ 3.090.237.79

$

78,202.80 $

114,131.54

$

114.131.54

0.00

18,783.90

$ _ _...;.18:.:,8;;;;5;.::6,;,;:.0;;;.3

18,856.03

0.00

$

96,986.70 $

114,131.54 $

18,856.03 $_--:1:.::32=.:,;;;;98;.:.7,;,;:.5~7

$ 2,861,551.80 $ 3,043,669.27 $

179,556.09 $ 3,223,225.36 $ ===========0...0.=0

$

9.460.00

23,106.00

$ ====32~,5=6=6.=00=

$

30,581.19 $

30,581.19

2,418.12

2,418.12

$

32,999.31 $

32,999.31 $-=========0=:.0..0..

- 33 -

SECTIONll COMPLIANCE AND INTERNAL CONTROL REPORTS

RUSSELL W. HINTON
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
May 12,1999

Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members ofthe State Board of Education
and Superintendent and Members ofthe City of Chickamauga Board of Education
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements ofCity of Chickamauga Board of Education as of and for the year ended June 30,1998, and have issued our report thereon dated May 12, 1999. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Compliance
As part ofobtaining reasonable assurance about whether City ofChickamauga Board ofEducation's financial statements are free ofmaterial misstatement, we performed tests ofits compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination offinancial 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 that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered City of Chickamauga Board of Education'S internal control over financial reporting in order to determine our auditing -procedures for the purpose of expressing our opinion on the fmancial statements and not to provide assurance on the internal control over financial reporting. However, we noted a certain matter involving the internal control over financial reportmg and its
98YB-40

operation that we consider to be a reportable condition. Reportable conditions involve matters coming to om attention relating to significant deficiencies in the design or operation of the. internal control over fmancial reporting that, in om judgement, could adversely affect City ofChickamauga Board ofEducation's ability to record, process, summarize and report financial data consistent with assertions ofmanagement in the financial statements. The reportable condition is described in the accompanying Schedule ofFindings and Questioned Costs as item FS-7691-98-01.
A material weakness is a condition in which the design or operation of one or more ofthe internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occm and not be detected within a timely period by employees in the normal comse of performing their assigned functions. Om consideration ofthe internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, the reportable condition noted above is considered to be a material weakness.
This report is intended for the information of management, the Federal cognizant agency, Federal awarding agencies and pass thrO\~gh entities. This restriction is not intended to limit the distribution ofthis report which is a matter ofpublic record.
Respectfully submitted,
~ ... QQ 10:.;H Russell W. Hinton State Auditor
RWH:gp 98YB-40

RUSSELL W. HINTON
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
May 12, 1999

Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members of the State Board ofEducation
and Superintendent and Members of the City of Chickamauga Board ofEducation
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULARA-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of City of Chickamauga Board ofEducation with the types of compliance requirements described in the U.S. Office ofManagement and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each ofits major Federal programs for the year ended June 30, 1998. City of Chickamauga Board ofEducation's major Federal programs are identified in 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 Chickamauga Board of Education's management. Our responsibility is to express an opinion on City of Chickamauga Board of Education's compliance based on our audit.
We conducted our audit of compliance in accordance with generally accepted auditing standards; 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 ofStates, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-l33 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 Chickamauga 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 Chickamauga Board of Education's compliance with those requirements.
98SA-I0 '

In our opinion, the City of Chickamauga Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 1998.
Internal Control Over Compliance
The management ofCity ofChickamauga Board ofEducation is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contractsand grants applicable to Federal programs. In planning and performing our audit, we considered City of Chickamauga Board ofEducation's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose ofexpressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133.
Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level ofrisk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the nonnal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses.
This report is intended for the infonnation of management, the Federal cognizant agency, Federal awarding agencies and pass through entities. This restriction is not intended to limit the distribution ofthis report which is a matter of public record.
Respectfully submitted,
~ ... QQ W.:4 Russell W. Hinton State Auditor
RWH:gp 98SA-I0

SECTIONID AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

CITY OF CmCKAMAUGA BOARD OF EDUCATION - WALKER COUNTY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1998

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

7691-93-02 7691-95-01 7691-96-01

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

CORRECTIVE ACTIONIRESPONSES

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: 7691-93-02

The Board has staffing limitations and budgetary considerations prohibiting the hiring ofadditional administrative staff which would be necessary to resolve this finding.

EXPENDITURESILIABILITIESIDISBURSEMENTS Failure to Meet Expenditure Requirements Amount: $524.55 Finding Control Number: 7691-96-01

Funds will be returned to the Georgia Department ofEducation through an increase in the Board's local fair share in a subsequent fiscal period.

SECTION IV FINDINGS AND QUESTIONED COSTS


CITY OF CmCKAMAUGA BOARD OF EDUCATION - WALKER COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1998

I SUMMARY OF AUDITOR'S RESULTS

1. Type ofReport Issued on the Financial Statements The auditor's opinion on the City of Chickamauga Board of Education's financial statements was qualified for various departures from generally accepted accounting principles.

2. Reportable Conditions in Internal Control Disclosed by the Audit of the Financial Statements The audit report for the City of Chickamauga Board of Education disclosed a financial statement reportable condition related to the following control category.

General Fixed Assets

The reportable condition described above is considered to be a material weakness.

3. Noncompliance Material to the Financial Statements The audit ofthe City of Chickamauga Board ofEducation disclosed no instances of noncompliance that were deemed to be material to the financial statements.

4. Reportable Conditions in Internal Control Over Major Programs The audit report for the City of Chickamauga Board of Education did not disclose any reportable conditions in internal control over major programs.

5. Type ofReport Issued on Compliance for Major Programs The auditor's opinion on the City of Chickamauga Board ofEducation's report on compliance with requirements applicable to major programs was unqualified.

6. Audit Findings Required to be Reported by Section .51O(a) ofOMB Circular A-133 The City of Chickamauga Board ofEducation's audit did not disclose audit findings required to be reported by section .510(a) ofQMB Circular A-133.

7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food and Nutrition Program - Food Services - School Breakfast Program 10.555 Food and Nutrition Program - Food Services - National School Lunch Program

8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00.

9. Low Risk Auditee

The City of Chickamauga Board of Education was audited as a low risk auditee based on a waiver

granted by the U. S. Department ofEducation.

-

- 1-

CITY OF CmCKAMAUGA BOARD OF EDUCATION - WALKER COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1998
IT FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-7691-98-01 The City of Chickamauga Board ofEducation did not maintain a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. This condition results in the general purpose financial statements of the Board being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the Board to establish accounting controls and procedures to provide for maintenance ofa General Fixed Assets Account Group. These subsidiary records should include an inventory ofland, buildings and equipment owned by the Board and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained of all additions and deletions to the General Fixed Assets Account Group. Management's Response: We concur with this recommendation. Due to current staffing limitations and budgetary considerations prohibiting the hiring ofadditional administrative staffthe Board has decided not to pursue the recording of general fixed assets on the fmancial statements. ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.
-2-