City of Chickamauga Board of Education, a component unit of the City of Chickamauga, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2008

CITY OF CHICKAMAUGA BOARD OF EDUCATION
A COMPONENT UNIT OF THE CITY OF CHICKAMAUGA, GEORGIA
REPORT ON AUDIT OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER 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

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

1

B

STATEMENT OF ACTIVITIES

2

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

4

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

5

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

6

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

7

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

8

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

9

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

23

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

24

3 SCHEDULE OF STATE REVENUE

25

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

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

26

5 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

27

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133

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

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

SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
March 30, 2009

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the City of Chickamauga Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) of the City of Chickamauga Board ofEducation, a component unit ofthe City ofChickamauga, Georgia as ofand for the year ended June 30, 2008, 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 Chickamauga Board ofEducation's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free 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 ofthe City of Chickamauga Board of Education's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.

2008ARL-11

In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position ofthe governmental activities, each major fund, and the aggregate remaining fund information of the City of Chickamauga Board of Education, as of June 30, 2008, 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.
The City of Chickamauga Board of Education has not presented Management's Discussion and Analysis that accounting principles generally accepted in the United States of America has determined is necessary to supplement, although not to be part of, the basic financial statements.
In accordance with Government Auditing Standards, we have also issued our report dated March 30, 2009, on our consideration of the City of Chickamauga Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose ofthat report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.
The Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on page 23, is not a required part of the basic financial statements but is supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City ofChickamauga Board ofEducation's basic financial statements. The accompanying supplementary information which consist of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
A copy 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,
~ tJ. ~
Russell W. Hinton, CPA, CGFM State Auditor
RWH:gp 2008ARL-l l

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY STATEMENT OF NET ASSETS JUNE 30, 2008

EXHIBIT"A"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Interest Taxes State Government Federal Government Other Inventories Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation)
Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Contracts Payable Retainages Payable Deposits and Deferred Revenues
Total Liabilities
NET ASSETS
Invested in Capital Assets Restricted for
Continuation of Federal Programs Capital Projects Unrestricted
Total Net Assets
Total Liabilities and Net Assets

GOVERNMENTAL ACTIVITIES

$

787,210.69

4,511,665.74

9,999.53 139,103.60 1,109,706.80 63,589.72 26,619.58
21,771.19 403,480.35 8,292,258.36

$ ==1=5,=3=65...,.4=0=5=.5===6

$

21,652.07

1,063,895.51

5,354.55

221,049.81

24,079.50

24 778.00

$

1,360,809.44

$

8,695,738.71

226,773.38 3,474,801.77 1,607,282.26

$

14,004,596.12

$ ===1=5,=36=5=,4=0=5=56=

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

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2008

GOVERNMENTAL ACTIVITIES
Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Special Items Transfers to City Government
Total General Revenues and Special Items
Change in Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year

EXPENSES

CHARGES FOR SERVICES

$

6,942,962.13 $

403,131.00 183,734.51 187,081.01 520,632.60 738,680.15 137,288.67 995,052.71
98,380.98 8,480.59

51,695.48 576,792.82

$ 10,843,912.65 $

556,794.36
431 198.79 987,993.15

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

EXHIBIT"B"

PROGRAM REVENUES

OPERATING

CAPITAL

GRANTS AND

GRANTS AND

CONTRIBUTIONS CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

$

5,238,993.45 $

160,676.43 160,338.91 162,222.97 296,181.81 436,820.72 85,325.52 408,574.21
260.75 125.55

1,304.50 162,785.54

$

7,113,610.36 $

167,981.46 $
6,430.93 447.67
23,513.44 3,984.75
9,868.60 212,226.85 $

-979,192.86
-242,454.57 -23,395.60 -24,858.04
-218,019.86 -301,411.76
-51,963.15 -562,965.06 -98,120.23
-4,370.29
-50,390.98 27,060.11
-2,530,082.29

$

1,110,050.03

738,268.07 721,056.00 200,298.05 821,753.57

-679,938.00

$

2,911,487.72

$

381,405.43

13,623,190.69

$ ===1=4=,0=04=,5=9=6=12=

-3-

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2008

EXHIBIT"C"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Interest Taxes State Government Federal Government lnterfund Other Inventories

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

TOTAL

$ 718,147.32 $ 69,063.37 $ 1,183,116.63 3,328,549.11

9,999.53 75,973.02 897,479.95 63,589.72 3,561.51 26,619.58 21 771.19

121,556.73 212,226.85

787,210.69 4,511,665.74
9,999.53 197,529.75 1,109,706.80 63,589.72
3,561.51 26,619.58 21 771.19

Total Assets

$ 3,000,258.45 $ 3,731,396.06 $===6,,..7=31..,,6=5=4-=5=1

LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable lnterfund Payable Salaries and Benefits Payable Payroll Withholdings Payable Contracts Payable Retainages Payable Deposits and Deferred Revenue
Total Liabilities
FUND BALANCES
Reserved for: Continuation of Federal Programs Inventories Capital Projects
Unreserved Designated for Student Activities Undesignated for General Fund
Total Fund Balances

$

13,748.60 $

1,063,895.51 5,354.55

24,778.00 $ 1,107,776.66 $

7,903.47 $ 3,561.51
221,049.81 24,079.50
256,594.29 $

21,652.07 3,561.51
1,063,895.51 5,354.55
221,049.81 24,079.50 24 778.00
1,364,370.95

$ 205,002.19

$

21,771.19

$ 3,474,801.77

107,558.60 1,558,149.81

$ 1,892,481.79 $ 3,474,801.77 $

205,002.19 21,771.19
3,474,801.77
107,558.60 1,558,149.81
5,367,283.56

Total Liabilities and Fund Balances

$ 3,000,258.45 $ 3,731,396.06 $===6'=,7=31=,6=5=4=.5=1

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

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2008

EXHIBIT"D"

Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Assets are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of:
Land Construction in Progress Land Improvements Buildings Equipment Accumulated Depreciation
Total Capital Assets
Some of the School District's property tax revenues will be collected after year-end but are not available soon enough to pay for the current period's expenditures.

$ 5,367,283.56

$

98,343.93

305,136.42

345,211.40

9,457,615.60

1,364,712.48

-2,875,281.12

8,695,738.71

-58,426.15

Net Assets of Governmental Activities (Exhibit "A")

$ 14,004,596.12

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

CITY OF CHICKAMAUGA BOARD OF EDUCATION -WALKER COUNTY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2008

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 Other Support Services Enterprise Operations Food Services Operation
Capital Outlay
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING USES
Transfers Out
Net Change in Fund Balances
Fund Balances - Beginning
Fund Balances - Ending

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

TOTAL

$ 1,170,684.60

$ 1,170,684.60

$ 738,268.07

738,268.07

7,436,692.51

212,226.85

7,648,919.36

397,973.84

397,973.84

987,993.15

987,993.15

61,415.66

138,882.39

200,298.05

821,403.57

350.00

821,753.57

$ 10,876,163.33 $ 1,089,727.31 $ 11,965,890.64

$ 6,789,276.05 $ 98,462.10 $ 6,887,738.15

403,131.00 183,734.51 192,373.01 509,614.99 738,112.52 136,967.29 947,887.86
59,012.73 3,428.05
51,695.48 558,453.75
1 000.00

2,863.39 321.38
51,820.71
18,132.30 641,336.92

403,131.00 183,734.51 192,373.01 512,478.38 738,112.52 137,288.67 999,708.57
59,012.73 3,428.05
51,695.48 576,586.05 642,336.92

$ 10,574,687.24 $ 812,936.80 $ 11,387,624.04

$ 301,476.09 $ 276,790.51 $ 578,266.60

-679,938.00

-679,938.00

$ 301,476.09 $ -403,147.49 $ -101,671.40

1,591,005.70 3,877,949.26

5,468,954.96

$ 1,892,481.79 $ 3,474,801.77 $ 5,367,283.56

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

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2008

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
Excess of Capital Outlay over Depreciation Expense
Because some property taxes will not be collected for several months after the School District's fiscal year ends, they are not considered "available" revenues.

$ -101,671.40

$ 808,885.18 -265,173.78

543,711.40 -60,634.57

Change in Net Assets of Governmental Activities (Exhibit "B")

$ 381,405.43

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

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30, 2008

EXHIBIT"G"

ASSETS Cash and Cash Equivalents
LIABILITIES Funds Held for Others

AGENCY FUNDS
$ 31,148.77
$ 31,148.77

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

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY EXHIBIT "H" NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008
Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The City ofChickamauga Board ofEducation (School District) was established under the laws ofthe State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is 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 ofChickamauga Board ofEducation is determined to be a component unit of the City of Chickamauga, Georgia, which is the primary government.
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements ofthe City of Chickamauga Board of Education.
District-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support ofthe School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients ofgoods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting ofinternal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.
-9-

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund.
District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST), Bond Proceeds and grants from Georgia State Financing and Investment Commission to be used for the acquisition, construction or renovation ofmajor capital facilities.
The School District reports the following fiduciary fund type:
Agency funds account for assets held by the School District as an agent for various funds, governments, or individuals.
BASIS OF ACCOUNTING
The basis ofaccounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless ofwhen 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 ofaccounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred. Capital asset acquisitions are reported as expenditures in governmental funds.

- 10 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The School District funds certain programs by a combination ofspecific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorize the School District to deposit its funds in one or more solvent banks, 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 ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market 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 ofGeorgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(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 Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services,
(7) Repurchase agreements, and
- 11 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY EXHIBIT "H" NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(8) Obligations of other political subdivisions of the State of Georgia.

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

RECEIVABLES

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

PROPERTY TAXES

The City ofChickamauga fixed the property tax levy for the 2007 tax digest year (calendar year) on October 1, 2007 (levy date). Taxes were due on December 20, 2007 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2007 tax digest are reported as revenue in the governmental funds for fiscal year 2008. The Chickamauga City Clerk bills and collects the property taxes for the School District and remits taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2008, for maintenance and operations amounted to $1,170,684.60.

The tax millage rate levied for the 2007 tax year (calendar year) for the City ofChickamauga Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

10.25 mills

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $738,268.07 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 City of Chickamauga (City Government) sold general obligation bonds to provide advance funding for Capital Outlay Projects associated with issuance ofSpecial Purpose Local Option Sales Tax (SPLOST). In fiscal year 2008, the School District provided $679,938.00 ofSPLOST proceeds to the City Government for debt services on said general obligation debt.

- 12 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY EXHIBIT "H" NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INVENTORIES

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

CAPITAL ASSETS

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

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

Capitalization Policy

Estimated Useful Life

Land Land Improvements Buildings and Improvements Equipment

Any Amount $ 5,000.00 $ 5,000.00 $ 5,000.00

NIA 15 to 80 years 15 to 80 years 5 to 25 years

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives.

NET ASSETS

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

- 13 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY EXHIBIT "H" NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net ofoutstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.
Restricted net assets - These represent resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation ofFederal 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.
Note 3: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. Ifa depository elects the pooled method (OCGA 45-8-13 .1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
- 14 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY EXHIBIT "H" NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008

Note 3: DEPOSITS AND INVESTMENTS

(6) Industrial revenue bonds and bonds of development authorities created by the laws ofthe 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.

CATEGORIZATION OF DEPOSITS At June 30, 2008, the bank balances were $2,395,313.14. The amounts ofthe total uninsured bank balances are classified into three categories of custodial credit risk:

Category I - Uncollateralized, Category 2 - Cash collateralized with securities held by the pledging financial institution, or Category 3 - Cash collateralized with securities held by the pledging financial institution's
trust department or agent but not in the School District's name.

The School District's uninsured deposits are classified by custodial credit risk category at June 30, 2008, as follows:

Custodial Credit Risk Category

Bank Balance

I

$

0.00

2

2,093,120.05

3

0.00

Total

$ 2,093,120.05

CATEGORIZATION OF INVESTMENTS At June 30, 2008, the carrying value of the School District's total investments was $3,328,549.11, which is materially the same as fair value. This investment consisted entirely of funds invested in the Georgia Fund I, formerly referred to as LGIP, administered by the State of Georgia, Office of Treasury and Fiscal Services which are not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office ofTreasury and Fiscal Services for the Georgia Fund I (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund I is disclosed in the State ofGeorgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at http://www.audits. state.ga.us/internet/searchRpts.html.

- 15 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY EXHIBIT "H" NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008

Note 3: DEPOSITS AND INVESTMENTS

The Primary Liquidity Portfolio consists ofGeorgia Fund 1 which is not registered with the SEC as an investment company but does operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share. The pool is an AAAm rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2008, was 40 days.

Note 4: NON-MONETARY TRANSACTIONS

The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories

Note 5: CAPITAL ASSETS

The following is a summary of changes in the Capital Assets during the fiscal year:

Balances July 1, 2007

Increases

Balances Decreases June 30, 2008

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

$ 98,343.93

$ 98,343.93

87,500.00 $ 381,436.42 $ 163,800.00 305,136.42

Total Capital Assets Not Being Depreciated $ 185,843.93 $ 381,436.42 $ 163,800.00 $ 403,480.35

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements

$ 9,163,513.05 $ 294,102.55 1,186,592.10 186,605.38 $ 234,670.57 110,540.83

$ 9,457,615.60 8,485.00 1,364,712.48
345,211.40

Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements

1,837,458.91 608,833.19 172,300.24

158,523.47 97,393.59
9,256.72

8,485.00

1,995,982.38 697,741.78 181,556.96

Total Capital Assets, Being Depreciated, Net $ 7,966,183.38 $ 326,074.98 $

0.00 $ 8,292,258.36

Governmental Activity Capital Assets - Net $ 8,152,021.31 $ 1{l7i51 l.4Q $ 163,8QQ,QQ $ 8,695,138,11

Current year depreciation expense by function is as follows:

- 16 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008

EXHIBIT "H"

Note 5: CAPITAL ASSETS

Instruction Support Services
General Administration School Administration Maintenance and Operation ofPlant Student Transportation Services Other Support Services Food Services

$ 171,095.63

$ 8,035.34 559.35
29,379.64 38,794.30
4,978.88

81,747.51 12,330.64

$ 265,173.78

Note 6: RESTRICTED ASSETS

Special Purpose Local Option Sales Tax (SPLOST) and general obligation bond proceeds are restricted assets in the Statement ofNet Assets because their use is limited by statutory provisions. Restricted assets at June 30, 2008, were as follows:

District-wide Capital Projects

Bond

SPLOST

Proceeds

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

$ 5,193.09 $ 63,870.28 $ 1,046,050.13 $ 2,282,498.98

Note 7: INTERFUND ASSETS AND LIABILITIES

Due to and due from other funds are recorded for interfund receivables and payables which arise from interfund transactions. Interfund balances at June 30, 2008, consisted of the following:

Due From Other Funds

Due To Other Funds

General Fund District-wide Capital Projects

$ 3,561.51 $ 3,561.51

$ 3,561.51 $ 3.561,51

Transfers are used to repay the General Fund for invoices paid incorrectly.

- 17 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY EXHIBIT "H" NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008

Note 8: INTERFUND TRANSFERS

Interfund transfers for the year ended June 30, 2008, consisted of the following:

Transfer to

Transfers From District-wide
Capital Projects

City of Chickamauga

$ 679,938.00

The City of Chickamauga (City Government) sold general obligation bonds to provide advance funding for Capital Outlay Projects associated with issuance ofSpecial Purpose Local Option Sales Tax (SPLOST). In fiscal year 2008, the School District provided $679,938.00 ofSPLOST proceeds to the City Government for debt services on said general obligation debt.

Note 9: RISK MANAGEMENT

The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation.

The School District has obtained commercial insurance for risk ofloss associated with torts, assets, errors or omissions and 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 elected to self-insure for all losses related to acts of God. The School District has not experienced any losses related to this risk in the past three years.

The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount ofthat loss can be reasonably estimated. The City of Chickamauga has not incurred any liabilities for unemployment compensation during the past two fiscal years.

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

Position Covered

Amount

Superintendent Driver Education School Each Employee

$ 10,000.00 $ 2,500.00 $ 10,000.00

- 18 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY EXHIBIT "H" NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008

Note 10: ON-BEHALF PAYMENTS

The School District has recognized revenues and costs in the amount of $163,339.56 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.

Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $158,878.55

Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $3,645.01

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 $816.00

Note 11: SIGNIFICANT COMMITMENTS

The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2008, together with funding available:

Project

Unearned Executed Contracts

Funding Available From State

09/08S-769-070

$ 108,810.69 $ 75,837.15

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

Note 12: SIGNIFICANT CONTINGENT LIABILITIES

Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.

The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance ofroutine School District operations. The ultimate disposition ofthese proceedings is not presently determinable, but is not believed to be material to the basic financial statements.

- 19 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY EXHIBIT "H" NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008

Note 13: POSTEMPLOYMENTBENEFITS

Georgia Retiree Health Benefit Fund

Plan Description. The School District contributes to the Georgia Retiree Health Benefit Fund ("GRHBF"), a cost-sharing multiple-employer defined benefit postemployment healthcare plan administered by the Department ofCommunity Health. GRHBF provides health insurance benefits to eligible retirees and their qualified beneficiaries. Pursuant to Title 45, Chapter 18 ofthe Official Code ofGeorgia Annotated, the authority to establish and amend the benefit provisions ofthe plan is assigned to the Board of Community Health. The Department of Community Health issues a publicly available financial report that includes financial statements and required supplementary information for GRHBF. That report may be obtained from the Department ofCommunity Health at 2 Peachtree Street, Atlanta, Georgia 30303.

Funding Policy. The contribution requirements of plan members and participating employers are established and may be amended by the Board of Community Health. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately twenty-five percent (25%) of the cost of health insurance coverage.

Participating employers are statutorily required to contribute in accordance with the employer contribution rate established by the Board of Community Health. This contribution rate is established to fund both the active and retired employee health insurance plans based on projected pay-as-you-go financing requirements. The employer contribution rates for the combined active and retiree plans for the fiscal year ended June 30, 2008, were as follows:

Teachers Non-Certificated Employees

18.534% of state-based salaries $162.72 per month

The School District's contribution to the health insurance plans for the fiscal year ended June 30, 2008, was $913,892.39, which equaled the required contribution.

Note 14: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

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

- 20-

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY EXHIBIT "H" NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008

Note 14: RETIREMENT PLANS

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.28% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$ 514,663.55 $ 485,502.32 $ 449,609.14

- 21 -

(This page left intentionally blank)

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2008

SCHEDULE "1"

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

NONAPPROPRIATED BUDGETS

ORIGINAL

FINAL

ACTUAL AMOUNTS

$ 1,100,000.00 $ 1,100,000.00 $ 1,170,684.60

7,006,922.00

7,236,567.00

7,436,692.51

397,541.00

405,219.00

397,973.84

979,264.00

987,964.00

987,993.15

45,100.00

74,400.00

61,415.66

842,132.00

932,032.00

821,403.57

$ 10,370,959.00 $ 1o,736, 182.00 $ 10,876,163.33

$ 6,551,629.02 $ 6,695,860.85 $ 6,789,276.05

443,632.91 173,799.93 184,676.20 487,354.08 769,914.86 141,762.49 735,295.48 113,050.00
4,000.00 55,000.00 585,000.00

444,657.89 193,099.62 191,503.18 534,809.96 766,432.60 145,966.49 982,595.97 120,650.00
3,900.00 55,000.00 602,500.00

403,131.00 183,734.51 192,373.01 509,614.99 738,112.52 136,967.29 947,887.86 59,012.73
3,428.05 51,695.48 558,453.75
1 000.00

$ 10,245,114.97 $ 1o,736,976.56 $ 10,574,687.24

$

125,844.03 $

-794.56 $

301,476.09

1,591,005.70

1,591,005.70

1,591,005.70

6 418.34

8,356.23

Fund Balances - Ending

$ 1,723,268.07 $ 1,598,567.37 $ 1,892,481.79

Notes to the Schedule of Revenues. Expenditures and Changes in Fund Balances Budget and Actual
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.

- 23 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2008

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Food Donation (1)
Total U. S. Department of Agriculture
Education, U.S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Other Programs Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States English Language Acquisition Grants Improving Teacher Quality State Grants State Grants for Innovative Programs Title I Grants to Local Educational Agencies
Total U.S. Department of Education

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

* 10.553 * 10.555

NIA N/A $
$

(2) 513,098.40
513,098.40

10.550

N/A
$

18,669.35 531,767.75

84.027 84.173

NIA $ NIA
$

175,418.00 3,897.00
179,315.00

84.048 84.365 84.367 84.298 84.010

NIA NIA N/A NIA N/A
$

2,271.00 336.00
37,227.00 1,130.00
41,595.30
261,874.30

Total Federal Financial Assistance
NIA = Not Available

$==1..,9.3..,.6..4..2...0...5..

Notes to the Schedule of Expenditures of Federal Awards

(1) The amount shown for the Food Donation Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year.
(2) Expenditures for the fund earned on School Breakfast Program ($18,304.11) were not maintained separately and are included in the 2008 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 Chickamauga 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.

-24-

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2008

SCHEDULE "3"

AGENCY/FUNDING

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

GRANTS

Education, Georgia Department of

Quality Basic Education

Direct Instructional Cost

Kindergarten Program

$ 356,116.00

$

Kindergarten Program - Early Intervention Program

18,520.00

Primary Grades (1-3) Program

922,670.00

Primary Grades - Early Intervention (1-3) Program

82,554.00

Upper Elementary Grades (4-5) Program

462,054.00

Upper Elementary Grades - Early Intervention (4-5) Program

34,563.00

Middle School (6-8) Program

1,008,784.00

High School General Education (9-12) Program

875,978.00

Vocational Laboratory (9-12) Program

311,463.00

Students with Disabilities

433,392.00

Gifted Student - Category VI

288,098.00

Remedial Education Program

76,175.00

Alternative Education Program

80,285.00

Media Center Program

145,943.00

20 Days Additional Instruction

47,776.00

Staff and Professional Development

26,542.00

Indirect Cost

Central Administration

349,318.00

School Administration

379,597.00

Facility Maintenance and Operations

370,653.00

Categorical Grants

Sparsity

20,000.00

Nursing Services

41,928.00

Vocational Supervisors

7,844.64

Education Equalization Funding Grant

721,056.00

Food Services

26,686.00

Vocational Education

18,219.00

Amended Formula Adjustment

-112,976.00

Other State Programs

Graduation Coaches

84,192.00

Health Insurance

158,878.55

National Teacher Certification

48,425.00

Preschool Handicapped Program

11,073.00

Remedial Summer Middle School

1,142.00

Special Education Low Incidence Grant

5,216.00

Teachers' Retirement

3,645.01

Georgia State Financing and Investment Commission Reimbursement on Construction Projects

$ 212,226.85

Governor's Office of Highway Safety Drivers Education Grant

130,066.31

Office of Treasury and Fiscal Services Public School Employees Retirement

816.00

TOTAL
356,116.00 18,520.00
922,670.00 82,554.00 462,054.00 34,563.00 1,008,784.00 875,978.00 311,463.00 433,392.00 288,098.00 76,175.00 80,285.00 145,943.00 47,776.00 26,542.00
349,318.00 379,597.00 370,653.00
20,000.00 41,928.00
7,844.64 721,056.00
26,686.00 18,219.00 -112,976.00
84,192.00 158,878.55 48,425.00
11,073.00 1,142.00 5,216.00 3,645.01
212,226.85
130,066.31
816.00

See notes to the basic financial statements.

- 25-

CITY OF CHICKAMAUGA BOARD OF EDUCATION -WALKER COUNTY SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS YEAR ENDED JUNE 30, 2008

SCHEDULE "4"

PROJECT
Construction and equipping additional instructional space at Chickamauga Elementary School; Constructing, modifying, renovating and equipping Gordon Lee Middle School; Modifying and upgrading HVAC at WareJewell Activities Building at Gordon Lee High School; Constructing new physical education and athletic facilities at Gordon Lee High School; and acquiring, constructing, repairing, improving, retrofitting, upgrading, and equipping other building and facilities useful or desirable in connection therewith, including acquiring any necessary property therefore, both real and personal.
Construction of additions, renovations and improvements to Gordon Lee High School, Gordon Lee Middle School and Chickamauga Elementary School, including the upgrading and expansion of technology and equipment; Construction of additions, renovations and improvements to various athletic facilities and sites; System-wide security and safety improvements and HVAC upgrades; Acquisition of new school buses, textbooks, desks, rolling science labs and driver education simulators; Upgrading and equipping cafeterias; and acquisition, construction, improvement, repair and equipping of facilities, including acquisition of any necessary property therefore, both real and personal.

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3) (4)

AMOUNT EXPENDED
IN PRIOR YEAR (3) (4)

PROJECT STATUS

$ 3,575,000.00 $ 3,575,000.00 $ 242,642.89 $ 2,488,721.04 Ongoing

4,244,857.00 4,244,857.00

570,293.91

457,715.49 Ongoing

$ 7,819,857.00 $ 7,819,857.00 $ 812,936.80 $ 2,946,436.53

(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 the City of Chickamauga approved the imposition of a 1% sales tax to fund the above projects and retire associated debt incurred by the City of Chickamauga City Government on the Board's behalf. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects.

(4) In addition to the expenditures shown above, the School District has incurred interest to provide advance funding for the above projects as follows:

Prior Years

$ 388,653.03

Current Year

119,438.00

Total

$ 508,091.03

See notes to the basic financial statements.

- 26 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE) ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2008

SCHEDULE "5"

DESCRIPTION

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

ELIGIBLE QBE PROGRAM COSTS

SALARIES OPERATIONS

TOTAL

Direct Instructional Programs

Kindergarten Program

$

Kindergarten Program-Early Intervention Program

Primary Grades (1-3) Program

Primary Grades-Early Intervention (1-3) Program

Upper Elementary Grades (4-5) Program

Upper Elementary Grades-Early Intervention (4-5)

Program

Middle School (6-8) Program

High School General Education (9-12) Program

Vocational Laboratory (9-12) Program

Students with Disabilities

Category Ill

Gifted Student - Category VI

Remedial Education Program

Alternative Education Program

English Speakers of Other Languages (ESOL)

382,582.00 $
20,024.00 990,102.00
91,241.00 499,752.00

336,300.81 $
19,274.83 957,761.86 102,900.12 459,596.13

36,403.00 1,089,965.00
950,367.00 344,553.00 453,848.00
308,199.00 76,246.00 87,612.00

30,545.46 1,186,929.31 1,157,434.10
318,712.70
334,030.16 297,942.48
74,529.27 45,412.12
2,928.33

10,661.91 $
93.77 46,094.64
803.58 22,099.59

346,962.72 19,368.60
1,003,856.50 103,703.70 481,695.72

191.00 51,030.25 46,634.66 26,274.41

30,736.46 1,237,959.56 1,204,068.76
344,987.11

10,849.15 4,337.99 700.76 885.71

344,879.31 302,280.47
75,230.03 46,297.83
2,928.33

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

$

5,330,894.00 $ 5,324,297.68 $ 220,657.42 $ 5,544,955.10

Media Center Program Staff and Professional Development

157,493.00 28 872.00

166,112.58

18,418.83 29 104.87

184,531.41 29 104.87

TOTAL QBE FORMULA FUNDS

$

5,517,259.00 $ 5,490,410.26 $ 268,181.12 $ 5,758,591.38

(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.

- 27 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
March 30, 2009

Honorable Sonny Perdue, Governor Members of the General Assembly Members ofthe State Board of Education
and Superintendent and Members of the City of Chickamauga Board of Education
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information ofCity ofChickamauga Board ofEducation as ofand for the year ended June 30, 2008, which collectively comprise City of Chickamauga Board ofEducation's basic financial statements and have issued our report thereon dated March 30, 2009. We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
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 as a basis for designing our auditing procedures for the purpose ofexpressing our opinions on the financial statements, but not for the purpose ofexpressing an opinion on the effectiveness of the City of Chickamauga Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness ofthe City of Chickamauga Board of Education's internal control over financial reporting.
A control deficiency exists when the design or operation ofa control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affect the City of Chickamauga Board of Education's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally
2008YB-10

accepted accounting principles such that there is more than a remote likelihood that a misstatement of the City of Chickamauga Board of Education's financial statements that is more than inconsequential will not be prevented or detected by the City ofChickamauga Board ofEducation's internal control.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement ofthe financial statements will not be prevented or detected by the City of Chickamauga Board of Education's internal control.
Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph ofthis section and would not necessarily disclose all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether City ofChickamauga Board ofEducation's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
This report is intended solely for the information and use of management, members of the City of Chickamauga Board of Education, others within the entity, Federal awarding agencies and passthrough entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,

RWH:gp 2008YB-10

Russell W. Hinton, CPA, CGFM State Auditor

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
March 30, 2009

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the City of Chickamauga Board of Education
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of City of Chickamauga Board of Education with the types of compliance requirements described in the U.S. Office ofManagement and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each ofits major Federal programs for the year ended June 30, 2008. City of Chickamauga Board of Education's major Federal programs are identified in the Summary ofAuditor's Results Section ofthe accompanying Schedule ofFindings and Questioned Costs. Compliance with the requirements oflaws, regulations, contracts and grants applicable to each ofits major Federal programs is the responsibility ofCity ofChickamauga 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 auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types 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.
2008SA-10

In our opinion, the City ofChickamauga Board ofEducation 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, 2008.
Internal Control Over Compliance
The management of City of Chickamauga Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered City of Chickamauga Board of Education's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose ofexpressing our opinion on compliance, but not for the purpose 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 Chickamauga Board of Education's internal control over compliance.
A control deficiency in an entity's internal control over compliance exists when the design or operation ofa control does not allow management or employees, in the normal course ofperforming their assigned functions, to prevent or detect noncompliance with a type ofcompliance requirement of a Federal program on a timely basis. A significant deficiency is a control deficiency, or combination ofcontrol deficiencies, that adversely affects the entity's ability to administer a Federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a Federal program that is more than inconsequential will not be prevented or detected by the entity's internal control.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a Federal program will not be prevented or detected by the entity's internal control.
Our consideration ofthe internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above.
This report is intended solely for the information and use of management, members of the City of Chickamauga Board of Education, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
~ tJ . :t1::t;.
Russell W. Hinton, CPA, CGFM State Auditor
RWH:gp
2008SA-10

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

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008
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 CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008
I SUMMARY OF AUDITOR'S RESULTS
1. Type of Report Issued on the Financial Statements The auditor's opinion on the City ofChickamauga Board ofEducation's financial statements was unqualified.
2. Significant Deficiencies in Internal Control Disclosed by the Audit ofthe Financial Statements The audit report for the City of Chickamauga Board of Education did not disclose any significant deficiencies related to the financial statements.
3. Noncompliance Material to the Financial Statements The audit of the City of Chickamauga Board of Education disclosed no instances of noncompliance that were deemed to be material to the financial statements.
4. Significant Deficiencies in Internal Control Over Major Programs The audit report for the City of Chickamauga Board of Education did not disclose any significant deficiencies in internal control over major programs.
5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the City of Chickamauga Board of Education's report on compliance with requirements applicable to major programs was unqualified.
6. Audit Findings Required to be Reported by Section .5 IO(a) of 0MB Circular A-133 The City ofChickamauga Board ofEducation's audit did not disclose audit findings required to be reported by section .510(a) ofOMB Circular A-133.
7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food Services - School Breakfast Program 10.555 Food Services - National School Lunch Program
8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00.
9. Low Risk Auditee The City of Chickamauga Board of Education qualified as a low risk auditee as defined by Section .530 ofOMB Circular A-133.
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
No matters were reported.
- 1-

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.
-2 -