City of Chickamauga Board of Education, a component unit of the City of Chickamauga, Georgia, annual financial report for the fiscal year ended June 30, 2013 (including independent auditor's reports)

CITY OF CHICKAMAUGA BOARD OF EDUCATION
A COMPONENT UNIT OF THE CITY OF CHICKAMAUGA, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2013
(Including Independent Auditor's Reports)

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

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S REPORT

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET POSITION

B

STATEMENT OF ACTIVITIES

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET POSITION

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

G

STATEMENT OF FIDUCIARY NET POSITION

FIDUCIARY FUNDS

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

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

Page
i
1 2 3 4 5 6 7 8
21

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

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

Page
22 23 24 25

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133

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

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

SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
February 24, 2014

Honorable Nathan Deal, 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 REPORT
Ladies and Gentlemen:
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) of the City of Chickamauga Board of Education, as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise the Board's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
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 of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
2013ARL-11

expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Chickamauga Board of Education, as of June 30, 2013, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As described in Note 2 to the financial statements, in 2013, the City of Chickamauga Board of Education adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. Our opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis and the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through vii and page 21 respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Chickamauga Board of Education's basic financial statements. The accompanying supplementary information, consisting of Schedules 2 through 5, is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements.
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The accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated February 24, 2014, 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 of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City of Chickamauga Board of Education's internal control over financial reporting and compliance.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24.
Respectfully submitted,

GSG:as 2013ARL-11

Greg S. Griffin State Auditor

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013
INTRODUCTION
Our discussion and analysis of the City of Chickamauga School District's financial performance provides an overview of the School District's financial activities for the fiscal years ended June 30, 2013 and June 30, 2012. The intent of this discussion and analysis is to look at the School District's financial performance as a whole; readers should also review the notes to the basic financial statements and financial statements to enhance their understanding of the School District's financial performance.
FINANCIAL HIGHLIGHTS
Key financial highlights for the fiscal years 2013 and 2012 are as follows:
On the District-wide financial statements, the assets of the School District exceeded liabilities by $15.1 million and $15.7 million, respectively, for the fiscal years ended June 30, 2013 and 2012. Of these amounts $1,019,317 and $1,092,777, respectively, for fiscal years 2013 and 2012 are available for spending at the School District's discretion.
The School District had $11.0 million and $10.9 million, respectively, in expenses for the fiscal years ended June 30, 2013 and June 30, 2012 relating to governmental activities. Only $7.5 million of the above mentioned expenses for 2013 and 2012 were offset by program specific charges for services, grants and contributions. General revenues (primarily property and sales taxes), special items and transfers to city government totaling $3.0 million and $6.1 million, respectively, for 2013 and 2012 along with fund balance were adequate to provide for these programs.
As stated above, general revenues accounted for $3.0 million or 28.5% of all revenues totaling $10.5 million for fiscal year 2013 and $6.1 million or 45.0% of all revenues totaling $13.6 million for fiscal year 2012. Program specific revenues in the form of charges for services, grants and contribution accounted for the rest.
OVERVIEW OF THE FINANCIAL STATEMENTS
This annual report consists of three parts; management's discussion and analysis, the basic financial statements and required supplementary information. The basic financial statements include two levels of statements that present different views of the School District. These include the Districtwide and fund financial statements.
The District-wide financial statements include the Statement of Net Position and Statement of Activities. These statements provide information about the activities of the School District presenting both short-term and long-term information about the School District's overall financial status.
The fund financial statements focus on individual parts of the School District, reporting the School District's operation in more detail. The Governmental Funds statements disclose how basic services are financed in the short-term as well as what remains for future spending. The Fiduciary Funds statements provide information about the financial relationships in which the School District acts solely as a trustee or agent for the benefit of others. The fund financial statements reflect the School District's most significant funds. In the case of the Chickamauga City School District, the General Fund and District-wide Capital Projects Fund are the most significant funds.
i

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013
The financial statements also include notes that explain some of the information in the statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the financial statements. Additionally, other supplementary information (not required) is also presented that further supplements understanding of the financial statements.
District-wide Statements
The District-wide financial statements are basically a consolidation of all of the District's operating funds into one column called governmental activities. In reviewing the District-wide financial statements, a reader might ask the question, are we in a better financial position than last year? The Statement of Net Position and the Statement of Activities provides the basis for answering this question. These financial statements include all District's assets and liabilities and uses the accrual basis of accounting similar to the accounting used by most private-sector companies. This basis of accounting takes into account all of the current year's revenues and expenses regardless of when cash is received or paid.
These two statements report the School District's net position and any changes in the position. The change in net position is important because it tells the reader that, for the School District as a whole, the financial position of the School District has improved or diminished. The causes of this change may be the results of many factors, including those not under the School District's control, such as the property tax base, facility conditions, required educational programs and other factors.
The Statement of Net Position and the Statement of Activities reflects the School District's governmental activities.
Fund Financial Statements
The School District uses many funds to account for a multitude of financial transactions during the fiscal year. However, the fund financial statements presented in this report provide detail information about only the School District's significant or major funds.
Governmental Funds - Most of the School District's activities are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end available for spending in future periods. These funds are reported using the modified accrual method of accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the School District's general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The differences between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds are reconciled to the financial statements.
Fiduciary Funds - The School District is the trustee, or fiduciary, for assets that belong to others, such as school clubs and organizations within the principals' accounts. The School District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The School District excludes these activities from the District-wide financial statements because it cannot use these assets to finance its operations.
ii

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013

FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT AS A WHOLE
Recall that the Statement of Net Position provides the perspective of the School District as a whole. Table 1 provides a summary of the School District's net position for fiscal years 2013 and 2012.

Governmental Activities

Fiscal

Fiscal

Year 2013

Year 2012

Assets Current and Other Assets Capital Assets, Net

$

5,069,410 $

6,001,891

11,234,043

10,772,643

Total Assets

$

16,303,453 $ 16,774,534

Liabilities Current and Other Liabilities

$

1,173,316 $

1,106,958

Net Position Net Investment in Capital Assets Restricted Unrestricted

$

11,234,043 $ 10,772,643

2,876,778

3,802,156

1,019,316

1,092,777

Total Net Position

$

15,130,137 $ 15,667,576

iii

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013

Table 2 shows the Changes in Net Position for fiscal years ending June 30, 2013 and June 30, 2012.

Table 2 Change in Net Position
Revenues Program Revenues: Charges for Services Operating Grants and Contributions

Governmental Activities

Fiscal Year

Fiscal Year

2013

2012

$

997,083 $

961,681

6,476,906

6,513,907

Total Program Revenues
General Revenues: Taxes Property Taxes For Maintenance and Operations Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Sales Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Special Items Proceeds and Premium on Bonds Sold by City
Transfer to City Government

$

7,473,989 $

7,475,588

$

1,440,060 $

1,418,026

709,543 23,163
567,286 6,867
964,765
-734,868

729,442 9,983
583,413 17,737
865,645
3,186,261 -688,954

Total General Revenues, Special Items and Transfer to City Government $

Total Revenues

$

Program Expenses:

Instruction

$

Support Services

Pupil Services

Improvement of Instructional Services

Educational Media Services

General Administration

School Administration

Business Administration

Maintenance and Operation of Plant

Student Transportation Services

Central Support Services

Other Support Services

Operations of Non-Instructional Services

Enterprise Operations

Food Services

Total Expenses

$

Change in Net Position

$

2,976,816 $
10,450,805 $
7,330,117 $
267,550 68,951
198,323 481,194 741,057 187,141 948,201
87,093 3,667 6,112
43,140 625,698
10,988,244 $
-537,439 $

6,121,553
13,597,141
7,132,556
279,223 80,048
193,220 559,069 720,261 285,829 888,120 102,173
7,510
39,762 609,816
10,897,587
2,699,554

iv

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013

Governmental Activities
The Statement of Activities shows the cost of program services and the charges for services and grants offsetting these services. Table 3 shows, for governmental activities, the total cost of services and the net cost of services. Net cost of services can be defined as the total cost less fees generated by the activities and intergovernmental revenue provided for specific programs. The net cost reflects the financial burden on the School District's taxpayers by each activity.

Table 3 Governmental Activities

Total Cost of Services

Fiscal

Fiscal

Year 2013

Year 2012

Net Cost of Services

Fiscal

Fiscal

Year 2013

Year 2012

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

$

7,330,117 $

7,132,556 $

2,332,474 $

1,966,501

267,550 68,951
198,323 481,194 741,057 187,141 948,201
87,093 3,667 6,112

279,223 80,048
193,220 559,069 720,261 285,829 888,120 102,173
7,510

126,936 -20,001
8,535 200,726 244,295
-8,558 488,495
87,093 3,667 6,112

142,170 -19,321 31,090 357,864 291,956 86,416 440,565 101,479
7,092

43,140 625,698

39,762 609,816

43,140 1,341

39,762 -23,575

Total Expenses

$ 10,988,244 $ 10,897,587 $

FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT'S FUNDS

3,514,255 $

3,421,999

The School District's governmental funds are accounted for using the modified accrual basis of accounting. The governmental funds had total revenues of $11.2 million and total expenditures of $11.4 million for fiscal year 2013 and total revenues of $11.1 million and total expenditures of $11.1 million for fiscal year 2012.

General Fund Budgeting Highlights

The School District's budget is prepared according to Georgia Law. The most significant budgeted fund is the General Fund. During the course of fiscal years 2013 and 2012, the School District amended its general fund budget as needed.

During fiscal year 2013 the General Fund had final actual revenues totaling $10.4 million, which represented an increase from the original budgeted amount of $10.3 million by $0.1 million. This difference (final actual vs. original budget) was primarily due to an increase in miscellaneous revenue from original budget by $0.1 million. The School District traditionally estimates revenues on a conservative basis to avoid shortfalls in actual revenues.

v

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013

Final actual expenditures and other financing uses during fiscal year 2013 totaling $10.5 million represented a decrease from the original budgeted amount of $10.9. The decrease in actual expenditures versus original budget expenditures totaling $0.4 million was due primarily to decreases in actual instructional, general administration, and maintenance and operation of plant expenses as compared to expenses projected in the original budget. This demonstrates how the School District effectively used its budget to manage it financial affairs.
General fund expenditures and other financing uses exceeded revenue by $49,029 for the fiscal year 2013 and $62,220 for the fiscal year 2012.
Even though the use of financial reserves were required during fiscal years 2013 and 2012, the School District felt that it was able to meet the instructional and related support services needs without jeopardizing the School District's financial status during the continuous precipitous decline of the economy.
CAPITAL ASSETS
At the fiscal years ended June 30, 2013 and June 30, 2012, the School District had $11.2 million and $10.8 million, respectively, invested in capital assets, all in governmental activities. Table 4 reflects a summary of these balances net of accumulated depreciation.

Table 4 Capital Assets (Net of Depreciation)

Governmental Activities

Fiscal

Fiscal

Year 2013

Year 2012

Land

$

98,344 $

Construction In Progress

801,311

Building and Improvements

8,056,892

Equipment

582,312

Land Improvements

1,695,184

98,344 60,000 8,079,536 722,616 1,812,147

Total

$

11,234,043 $

10,772,643

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CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013
Current Issues Currently known facts, decisions or conditions that are expected to have a significant effect on financial positions or results of operations.
The School District is operating with financial stability showing a positive financial position at the end of fiscal year 2013 with unrestricted net position of $1.0 and a General Fund unassigned fund balance of $0.8 million. The School District's operating millage rate for fiscal year 2013 was 12.00, which produced approximately $117,700 per mill.
The School District is financially challenged by the State's continuing reduction of revenue estimates and subsequent reduction of state revenue appropriations to local school districts known as "austerity reductions". The School District has suffered from these "austerity reductions" in state funding of $1.0 million in fiscal year 2013 and 2012. A reduction of approximately $0.9 is expected in fiscal year 2014 and has been included in budgetary projections.
The Board anticipates continued pressure to provide an increasing amount of local monies to meet various mandated educational requirements and operating costs. Approximately 75% of actual expenditures in fiscal year 2013 were related to salaries and benefits. There was a reduction in work calendar days of four during fiscal year 2013 and initial budgetary projections for fiscal year 2014 included the same. State revenue has remained flat and costs, especially health insurance for employees, have continued to rise. In spite of these challenges, the School District remains confident in the ability to maximize resources to provide a quality education for all our students.
CONTACTING THE SCHOOL DISTRICT'S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overview of the School District's finances and to show the School District's accountability for the money it receives. If you have questions about this report or need additional financial information, contact City of Chickamauga Board of Education, Attention: Finance Director, 402 Cove Road, Chickamauga, GA 30707.
vii

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY STATEMENT OF NET POSITION JUNE 30, 2013

EXHIBIT "A"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
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 Retainages Payable
Total Liabilities
NET POSITION
Investment in Capital Assets Restricted for
Continuation of Federal Programs Capital Projects Unrestricted

GOVERNMENTAL ACTIVITIES

$ 1,539,203.17 2,462,136.45
136,401.83 808,483.24
83,009.61 23,629.32 16,547.07 899,654.91 10,334,388.08
$ 16,303,453.68

$

1,330.27

1,100,586.96

71,399.15

$ 1,173,316.38

$ 11,234,042.99
345,153.70 2,531,623.95 1,019,316.66

Total Net Position

$ 15,130,137.30

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, 2013

EXHIBIT "B"

EXPENSES

PROGRAM REVENUES

OPERATING

CHARGES FOR

GRANTS AND

SERVICES

CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET POSITION

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 Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services

$ 7,330,117.45 $
267,550.24 68,950.85
198,322.85 481,193.54 741,057.11 187,140.60 948,200.92
87,093.51 3,666.60 6,112.45
43,139.82 625,697.60

564,159.81 $ 4,433,483.99 $
140,614.17 88,951.69
189,788.30 280,467.51 496,762.01 195,698.74 459,706.11

432,922.89

191,433.16

-2,332,473.65
-126,936.07 20,000.84 -8,534.55
-200,726.03 -244,295.10
8,558.14 -488,494.81
-87,093.51 -3,666.60 -6,112.45
-43,139.82 -1,341.55

Total Governmental Activities

$ 10,988,243.54 $ 997,082.70 $ 6,476,905.68 $

-3,514,255.16

General Revenues Taxes Property Taxes For Maintenance and Operations Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Sales Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Transfers to City Government

$

1,440,060.36

709,543.38 23,163.24
567,286.00 6,867.31
964,764.88 -734,868.75

Total General Revenues and Transfers to City Government

$

2,976,816.42

Change in Net Position

$

-537,438.74

Net Position - Beginning of Year

15,667,576.04

Net Position - End of Year

$ 15,130,137.30

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

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2013

EXHIBIT "C"

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

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

TOTAL

$ 1,445,679.60 $ 93,523.57 $ 1,539,203.17 2,462,136.45 2,462,136.45

89,038.75 808,483.24
83,009.61 23,629.32 16,547.07

47,363.08

136,401.83 808,483.24
83,009.61 23,629.32 16,547.07

$ 2,466,387.59 $ 2,603,023.10 $ 5,069,410.69

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

$

1,330.27

1,100,586.96

$

24,616.06

$ 1,126,533.29 $

$ 71,399.15

1,330.27 1,100,586.96
71,399.15 24,616.06

71,399.15 $ 1,197,932.44

$ 16,547.07

$ 16,547.07

328,606.63 $ 2,531,623.95 2,860,230.58

198,553.38

198,553.38

796,147.22

796,147.22

$ 1,339,854.30 $ 2,531,623.95 $ 3,871,478.25

$ 2,466,387.59 $ 2,603,023.10 $ 5,069,410.69

The notes to the basic financial statements are an integral part of this statement. - 3 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION JUNE 30, 2013

EXHIBIT "D"

Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Position are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported as assets in governmental funds. These assets consist of:
Land Construction in Progress Land Improvements Buildings Equipment Accumulated Depreciation
Total Capital Assets
Taxes that are not available to pay for current period expenditures are deferred in the governmental funds.
Net Position of Governmental Activities (Exhibit "A")

$ 3,871,478.25

$

98,343.93

801,310.98

2,106,325.11

11,083,513.02

1,717,161.92

-4,572,611.97

11,234,042.99

24,616.06

$ 15,130,137.30

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

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2013

EXHIBIT "E"

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

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

TOTAL

$ 1,440,418.16

$ 1,440,418.16

23,163.24 $ 709,543.38

732,706.62

6,496,559.62

6,496,559.62

547,632.06

547,632.06

997,082.70

997,082.70

2,020.42

4,846.89

6,867.31

938,304.19

26,460.69

964,764.88

$ 10,445,180.39 $ 740,850.96 $ 11,186,031.35

$ 6,925,382.92 $ 21,347.00 $ 6,946,729.92

267,550.24 68,950.85
198,322.85 466,435.89 738,836.13 187,140.60 915,591.77
42,716.77
5,592.00 43,139.82 600,800.16

1,640.25 6,685.84 3,666.60
955,843.90

267,550.24 68,950.85
198,322.85 466,435.89 740,476.38 187,140.60 922,277.61
42,716.77 3,666.60 5,592.00
43,139.82 600,800.16 955,843.90

$ 10,460,460.00 $ 989,183.59 $ 11,449,643.59

$

-15,279.61 $ -248,332.63 $ -263,612.24

$ 33,748.92 $

33,748.92

$

-33,748.92

-734,868.75

-768,617.67

$

-33,748.92 $ -701,119.83 $ -734,868.75

$

-49,028.53 $ -949,452.46 $ -998,480.99

1,388,882.83 3,481,076.41

4,869,959.24

$ 1,339,854.30 $ 2,531,623.95 $ 3,871,478.25

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

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 YEAR ENDED JUNE 30, 2013

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
The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, donations, and disposals) is to decrease net position.
Taxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds.
Change in Net Position of Governmental Activities (Exhibit "B")

$ -998,480.99

$ 955,843.90 -476,245.25

479,598.65 -18,198.60
-357.80

$ -537,438.74

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

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS JUNE 30, 2013

EXHIBIT "G"

ASSETS Cash and Cash Equivalents
LIABILITIES Funds Held for Others

AGENCY FUNDS

$

16,840.56

$

16,840.56

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

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2013

EXHIBIT "H"

NOTE 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The City of Chickamauga Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is 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.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the City of Chickamauga Board of Education.
District-wide Statements: The Statement of Net Position and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds.
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for and reports all financial resources not accounted for and reported in another fund.
District-wide Capital Projects Fund accounts for and reports financial resources including Special Purpose Local Option Sales Tax (SPLOST) and Bond Proceeds that are restricted, committed or assigned to the expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets.
The School District reports the following fiduciary fund type:
Agency funds account for assets held by the School District as an agent for various School Activity Account Agency Funds.

- 8 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2013

EXHIBIT "H"

BASIS OF ACCOUNTING
The basis of accounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. The School District considers all intergovernmental revenues to be available if they are collected within 120 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.
The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, both restricted and unrestricted resources are available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
CASH AND CASH EQUIVALENTS
Composition of Deposits Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations.
INVESTMENTS
Composition of Investments Investments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interestearning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
1. Obligations issued by the State of Georgia or by other states,
2. Obligations issued by the United States government,
- 9 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2013

EXHIBIT "H"

3. Obligations fully insured or guaranteed by the United States government or a United States government agency,
4. Obligations of any corporation of the United States government,
5. Prime banker's acceptances,
6. The Georgia Fund 1 administered by the State of Georgia, Office of the State Treasurer,
7. Repurchase agreements, and
8. Obligations of other political subdivisions of the State of Georgia.
The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks.
RECEIVABLES
Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.
PROPERTY TAXES
The City of Chickamauga adopted the property tax levy for the 2012 tax digest year (calendar year) on October 1, 2012 (levy date) based on property values as of January 1, 2012. Taxes were due on December 20, 2012 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2012 tax digest are reported as revenue in the governmental funds for fiscal year 2013. The Chickamauga City Clerk bills and collects the property taxes for the School District and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2013, for maintenance and operations amounted to $1,412,571.39.
The tax millage rate levied for the 2012 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

12.00 m ills

Additionally, Title Ad Valorem Taxes in the amount of $27,846.77 were collected during the fiscal year.
SALES TAXES
Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $709,543.38 and is to be used for capital outlay for educational purposes or debt services. 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 of Special Purpose Local Option Sales Tax (SPLOST). In fiscal year 2013, the School District provided $734,868.75 of SPLOST proceeds to the City Government for debt services on said general obligation debt.

- 10 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2013

EXHIBIT "H"

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

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

C a pita liz a tio n Policy

Estim ated Useful Life

Land Land Im provem ents Buildings and Im provem ents Equipm ent Intangible Assets

All

N/A

$

5,000.00 15 to 80 years

$

5,000.00 15 to 80 years

$

5 ,0 0 0 .0 0

5 to 25 years

$

100,000.00 15 to 80 years

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives, with the exception of intangible assets which are amortized.
Amortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, copyrights and internally generated software is computed using the straight-line method over the estimated useful lives of the assets, generally 15 to 80 years.
NET POSITION
The School District's net position in the District-wide Statements is classified as follows:
Investment in capital assets - This represents the School District's total investment in capital assets.
Restricted net position - This represents resources for which the School District is legally or contractually obligated to spend resources for continuation of Federal Programs and capital projects in accordance with restrictions imposed by external third parties.

- 11 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2013

EXHIBIT "H"

Unrestricted net position - Unrestricted net position represents resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes.
FUND BALANCES

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

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

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

Committed Amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board of Education. The Board of Education is the School District's highest level of decision-making authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Committed fund balance also should incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements.
Assigned Amounts that are constrained by the School District's intent to be used for specific purposes, but are neither restricted nor committed. The intent should be expressed by (1) the Board of Education or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes.

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

Fund Balances of the Governmental Funds at June 30, 2013, are as follows:

N o nspe nda ble In v e n to rie s
Restricted Continuation of Federal Program s Capital Projects
Com m itted School Activity Accounts
Unassigned

$

1 6 ,5 4 7 .0 7

$

3 2 8 ,6 0 6 .6 3

2 ,5 3 1 ,6 2 3 .9 5

2 ,8 6 0 ,2 3 0 .5 8

1 9 8 ,5 5 3 .3 8 7 9 6 ,1 4 7 .2 2

Fund Balance, June 30, 2013

$ 3,871,478.25

When multiple categories of fund balance are available for expenditure, the School District will start with the most restricted category and spend those funds first before moving down to the next category with available funds.
USE OF ESTIMATES
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.

- 12 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2013

EXHIBIT "H"

NOTE 3: BUDGETARY DATA
The budget is a complete financial plan for the School District's fiscal year, and is based upon careful estimates of expenditures together with probable funding sources. The budget is legally adopted each year for the general and capital projects funds. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds is prepared and adopted by fund. The legal level of budgetary control was established by the Board at the aggregate fund level. The budget for the General Fund was prepared in accordance with accounting principles generally accepted in the United States of America.
The budgetary process begins with the School District's administration presenting an initial budget for the Board's review. The administration makes revisions as necessary based on the Board's guidelines and a tentative budget is approved. After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper of general circulation in the locality. At the next regularly scheduled meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. The approved budget is then submitted, in accordance with provisions of Official Code of Georgia Annotated section 20-2167(c), to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.
The Superintendent is authorized by the Board to approve adjustments of no more than 5 percent of the amount budgeted for expenditures in any budget function for any fund. The Superintendent shall report any such adjustments to the Board. If expenditure of funds in any budget function for any fund is anticipated to be more than 5 percent of the budgeted amount, the Superintendent shall request Board approval for the budget amendment. Any position or expenditure not previously approved in the annual budget that exceeds $5,000.00 shall require Board approval unless the Superintendent deems the position or purchase an emergency. In such case, the expenditure shall be reported to the Board at its regularly scheduled meeting. Under no circumstance is the Superintendent or other staff person authorized to spend funds that exceed the total budget without approval by the Board.
See Schedule 1 General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual for a detail of any over/under expenditures during the fiscal year under review.
NOTE 4: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS
Official Code of Georgia Annotated (O.C.G.A.) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. Section 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 percent of the daily pool balance.
Acceptable security for deposits consists of any one of or any combination of the following:
1. Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
2. Insurance on accounts provided by the Federal Deposit Insurance Corporation,
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,
- 13 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2013

EXHIBIT "H"

5. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
6. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
7. Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
CATEGORIZATION OF DEPOSITS
Custodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2013, the bank balances were $2,125,225.16. The bank balances were entirely covered by Federal depository insurance or collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name.
CATEGORIZATION OF INVESTMENTS
At June 30, 2013, the carrying value of the School District's total investments was $2,462,136.45, which is materially the same as fair value. This investment consisted entirely of funds invested in the Georgia Fund 1, formerly referred to as LGIP, administered by the State of Georgia, Office of the State Treasurer which is 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 of the State Treasurer for the Georgia Fund 1 (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1 is disclosed in the State of Georgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at http://www.audits.ga.gov/SGD/cafr.html.
The Primary Liquidity Portfolio consists of Georgia 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 AAAf 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, 2013, was 43 days.
NOTE 5: NON-MONETARY TRANSACTIONS
The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories

- 14 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2013

EXHIBIT "H"

NOTE 6: CAPITAL ASSETS

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

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

Balances July 1, 2012

Increases

Decreases

Balances June 30, 2013

$

98,343.93

$

98,343.93

60,000.00 $

801,310.98 $

60,000.00

801,310.98

Total Capital Assets, Not Being Depreciated $

158,343.93 $

801,310.98 $

60,000.00 $

899,654.91

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

$ 10,883,980.10 $ 1,745,161.90 2,106,325.11

199,532.92 15,000.00 $

$ 42,999.98

11,083,513.02 1,717,161.92 2,106,325.11

Less: Accumulated Depreciation: Buildings and Improvements Equipment Land Improvements

2,804,444.53 1,022,545.95
294,177.62

222,176.78 137,104.84 116,963.63

24,801.38

3,026,621.31 1,134,849.41
411,141.25

Total Capital Assets, Being Depreciated, Net $ 10,614,299.01 $

-261,712.33 $

18,198.60 $ 10,334,388.08

Governmental Activity Capital Assets - Net

$ 10,772,642.94 $

539,598.65 $

78,198.60 $ 11,234,042.99

Current year depreciation expense by function is as follows:

In s tru c tio n

Support Services

General Adm inistration

$

School Adm inistration

M aintenance and Operation of Plant

Student Transportation Services

Other Support Services

Food Services

$
1 4 ,2 1 4 .48 5 5 9 .3 5
2 4 ,9 6 9 .17 4 2 ,7 4 3 .40
5 0 1 .3 0

3 6 9 ,2 7 6 .5 0
8 2 ,9 8 7 .7 0 2 3 ,9 8 1 .0 5

$

4 7 6 ,2 4 5 .2 5

NOTE 7: INTERFUND TRANSFERS Interfund transfers for the year ended June 30, 2013, consisted of the following:

Transfer to

Transfers From

District-w ide

General

Capital

Fund

Projects

District-wide Capital Projects City of Chickam auga

$

3 3 ,7 4 8 .9 2

$

7 3 4 ,8 6 8 .7 5

Total

$

33,748.92 $

7 3 4 ,8 6 8 .7 5

Transfers are used to move property tax revenues collected by the General Fund to the District-wide Capital Projects Fund as supplemental funding source for capital construction projects.

- 15 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2013

EXHIBIT "H"

The City of Chickamauga (City Government) sold general obligation bonds to provide advance funding for Capital Outlay Projects associated with issuance of Special Purpose Local Option Sales Tax (SPLOST). In fiscal year 2013, the School District provided $734,868.75 of SPLOST proceeds to the City Government for debt services on said general obligation debt.
NOTE 8: RISK MANAGEMENT
The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation.
The School District participates in the Georgia School Boards Association Risk and Insurance Management System, a public entity risk pool organized on July 1, 1994, to develop and administer a plan to reduce risk of loss on account of general liability, motor vehicle liability, or property damage, including safety engineering and other loss prevention and control techniques, and to administer one or more groups of self-insurance funds, including the processing and defense of claims brought against members of the system. The School District pays an annual premium to the system for its general insurance coverage. Additional coverage is provided through agreements by the system with other companies according to their specialty for property, boiler and machinery (including coverage for flood and earthquake), general liability (including coverage for sexual harassment, molestation and abuse), errors and omissions, crime and automobile risks. Payment of excess insurance for the system varies by line of coverage.
The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. The City of Chickamauga Board of Education has not incurred any liabilities for unemployment compensation during the past two fiscal years.
The School District participates in the Georgia School Boards Association Workers' Compensation Fund, a public entity risk pool organized on July 1, 1992, to develop, implement, and administer a program of workers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Fund for its Workers' Compensation insurance coverage. Excess insurance coverage is provided through an agreement by the Fund with the Safety National Casualty Corporation to provide coverage for potential losses sustained by the Fund in excess of $550 thousand loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided by Safety National Casualty Corporation to provide coverage for potential losses sustained by the Fund in excess of $550 thousand loss per occurrence, up to $2 million.
The School District has purchased surety bonds to provide additional insurance coverage as follows:

Position Covered

Am ount

Superintendent Driver Education School

$

1 0 ,0 0 0 .0 0

$

1 0 ,0 0 0 .0 0

NOTE 9: ON-BEHALF PAYMENTS

The School District has recognized revenues and costs in the amount of $659,667.38 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 Certificated Personnel In the amount of $643,908.00

- 16 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2013

EXHIBIT "H"

Paid to the Teachers' Retirement System of Georgia For Teachers' Retirement System (TRS) Employer's Cost In the amount of $2,090.38

Office of the State Treasurer Paid to the Public School Employees' Retirement System For Public School Employees' Retirement (PSERS) Employer's Cost In the amount of $13,669.00

Funds paid to the Georgia Department of Community Health by the Georgia Department of Education on behalf of the School District are reported as part of the Quality Basic Education revenue allotments on Schedule 3 Schedule of State Revenue.
NOTE 10: SIGNIFICANT COMMITMENTS

The following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2013, together with funding available:

Project

Unearned Executed Contracts

Funding Available From State

14LW-769-015

$ 1,986,213.55 $

665,355.00

The amounts described in this note are not reflected in the basic financial statements.
NOTE 11: SIGNIFICANT CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.
The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the basic financial statements.
NOTE 12: POST-EMPLOYMENT BENEFITS
GEORGIA SCHOOL PERSONNEL POST-EMPLOYMENT HEALTH BENEFIT FUND
Plan Description. The Georgia School Personnel Post-employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Benefit Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (O.C.G.A.) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board). The Department of Community Health, which includes the School OPEB Fund, issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.
Funding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. For members with fewer than five years of service as of January 1, 2013, contributions also vary based on years of service. On

- 17 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2013

EXHIBIT "H"

average, members with five years or more of service as of January 1, 2013, pay approximately 25 percent of the cost of the health insurance coverage. In accordance with the Board resolution dated December 8, 2011, for members with fewer than five years of service as of January 1, 2013, the State provides a premium subsidy in retirement that ranges from 0% for fewer than 10 years of service to 75% (but no greater than the subsidy percentage offered to active employees) for 30 or more years of service. The subsidy for eligible dependents ranges from 0% to 55% (but no greater than the subsidy percentage offered to dependents of active employees minus 20%). No subsidy is available to Medicare eligible members not enrolled in a Medicare Advantage Option. The Board of Community Health sets all member premiums by resolution and in accordance with the law and applicable revenue and expense projections. Any subsidy policy adopted by the Board may be changed at any time by Board resolution and does not constitute a contract or promise of any amount of subsidy.
Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected "pay-as-you-go" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.
The combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30, 2013:
For certificated teachers, librarians and regional educational service agencies and certain other
eligible participants:

July 2012 - February 2013 March 2013 - June 2013

$912.34 per member per month $937.34 per member per month

For non-certificated school personnel:

July 2012 - June 2013

$446.20 per member per month

No additional contribution was required by the Board for fiscal year 2013 nor contributed to the School OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the School plan for other post-employment benefits and are subject to appropriation.

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

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

as follows:

Pe rce n ta ge

Required

Fiscal Year

C o ntrib ute d

C o ntrib utio n

2013 2012 2011

100% 100% 100%

$ 894,921.06 $ 949,796.03 $ 924,233.67

NOTE 13: RETIREMENT PLANS TEACHERS' RETIREMENT SYSTEM OF GEORGIA (TRS)

Plan Description. The TRS is a cost-sharing multiple-employer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS. The Teachers' Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.
- 18 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2013

EXHIBIT "H"

On October 25, 1996, the Board created the Supplemental Retirement Benefits Plan of the Georgia Teachers' Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1, 1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits.
TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service.
Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 30 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available.
Funding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 10 years of service. If a member terminates with less than 10 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2013, were 6.00% of annual salary. Employer contributions required for fiscal year 2013 were 11.41% of annual salary as required by the June 30, 2010, actuarial valuation. The employer contribution rate will increase to 12.28% effective July 1, 2013.
Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2013 2012 2011

100% 100% 100%

$ 625,539.26 $ 560,361.03 $ 563,206.11

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

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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, 2013

SCHEDULE "1"

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

NONAPPROPRIATED BUDGETS

ORIGINAL

FINAL

ACTUAL AMOUNTS

VARIANCE OVER/UNDER

$ 1,435,000.00 $ 1,390,000.00 $ 1,440,418.16 $

23,163.24

6,469,101.00

6,488,947.00

6,496,559.62

546,500.00

582,431.00

547,632.06

1,007,075.00

1,019,575.00

997,082.70

14,240.00

5,720.00

2,020.42

828,425.00

844,925.00

938,304.19

50,418.16 23,163.24
7,612.62 -34,798.94 -22,492.30
-3,699.58 93,379.19

$ 10,300,341.00 $ 10,331,598.00 $ 10,445,180.39 $ 113,582.39

$ 7,036,567.00 $ 6,915,843.00 $ 6,925,382.92 $

-9,539.92

282,500.00 80,407.00
195,725.00 551,336.00 747,571.00 166,949.00 1,000,663.00
93,249.00 6,274.00
40,000.00 650,000.00

260,836.00 73,692.00
199,152.00 474,120.00 743,899.00 164,918.00 969,967.00
93,749.00 6,274.00
43,000.00 650,000.00
34,000.00

267,550.24 68,950.85
198,322.85 466,435.89 738,836.13 187,140.60 915,591.77
42,716.77 5,592.00
43,139.82 600,800.16

-6,714.24 4,741.15
829.15 7,684.11 5,062.87 -22,222.60 54,375.23 51,032.23
682.00 -139.82 49,199.84 34,000.00

$ 10,851,241.00 $ 10,629,450.00 $ 10,460,460.00 $ 168,990.00

$ -550,900.00 $ -297,852.00 $

-15,279.61 $ 282,572.39

$

24,425.00

$ -24,425.00

$

-33,748.92

-33,748.92

$

24,425.00 $

-33,748.92 $ -58,173.92

$ -550,900.00 $ -273,427.00 $

-49,028.53 $ 224,398.47

1,388,882.83

1,388,882.83

1,388,882.83

0.00

4,749.13

-3,666.77

3,666.77

$ 842,731.96 $ 1,111,789.06 $ 1,339,854.30 $ 228,065.24

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.

- 21 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2013

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total U. S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Title I, Part A Cluster Pass-Through From Georgia Department of Education Title I Grants to Local Educational Agencies
Other Programs Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Education Jobs Fund Improving Teacher Quality State Grants
Total Other Programs
Total U. S. Department of Education

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

* 10.553 * 10.555

N/A

(2)

N/A

$ 583,015.39 (1)

$ 583,015.39

84.027 84.173

N/A

$ 221,212.60

N/A

3,853.00

$ 225,065.60

84.010

N/A

$

84,378.67

84.048 84.410 84.367

N/A

$

22,187.00

N/A

522.00

N/A

38,163.63

$

60,872.63

$ 370,316.90

Total Expenditures of Federal Awards

$ 953,332.29

N/A = Not Available

Notes to the Schedule of Expenditures of Federal Awards

(1) Includes the Federally assigned value of donated commodities for the Food Donation Program in the amount of $10,260.56. (2) Expenditures for the funds earned on the School Breakfast Program ($24,667.05) were not maintained separately and are included
in the 2013 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.

- 22 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2013
AGENCY/FUNDING
GRANTS Education, Georgia Department of Quality Basic Education (1) Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Gifted Student - Category VI Remedial Education Program Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Amended Formula Adjustment Categorical Grants Nursing Services Education Equalization Funding Grant Other State Programs Food Services Math and Science Supplements Preschool Handicapped Program Teachers' Retirement Vocational Education
Office of the State Treasurer Public School Employees' Retirement

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

445,707.00

15,856.00

1,008,098.00

72,146.00

543,445.00

39,335.00

993,501.00

768,378.00

281,824.00

413,418.00

628,907.00

150,623.00

73,130.00

160,197.00

49,150.00

29,171.00

381,132.00 394,672.00 385,215.00 -1,019,727.00

45,000.00 567,286.00

14,118.00 1,128.60 5,550.00 2,090.38
33,539.64

13,669.00

$ 6,496,559.62

(1) Payments to the Georgia Department of Community Health by the Georgia Department of Education on behalf of the School District in the amount of $643,908.00 are included as part of the Quality Basic Education revenue allotments. above.

See notes to the basic financial statements.

- 23 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS YEAR ENDED JUNE 30, 2013

SCHEDULE "4"

PROJECT

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3) (4)

AMOUNT EXPENDED IN PRIOR YEARS (3) (4)

TOTAL COMPLETION
COST

EXCESS PROCEEDS NOT
EXPENDED

ESTIMATED COMPLETION
DATE

2007 ESPLOST

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;

$ 1,800,000.00 $ 1,679,960.00

$ 1,453,169.61

January 2014

Construction of additions, renovations and improvements to various athletic facilities and sites;

1,600,000.00 1,770,375.00

1,761,574.70

January 2014

System-wide security and safety improvements and HVAC upgrades;

300,000.00

28,050.00 $ 28,056.00

$ 28,056.00 $

0.00 Completed

Acquisition, construction, improvement, repair and equipping of facilities, including acquisition of any necessary property therefore, both real and personal.

144,857.00

117,415.00 94,915.00

January 2014

2007 ESPLOST Total

$ 3,844,857.00 $ 3,595,800.00 $ 122,971.00 $ 3,214,744.31 $ 28,056.00 $

0.00

2012 ESPLOST

Acquiring, constructing, and equipping of a new facility for the Health Occupations educational program; $ 2,000,000.00 $ 2,746,065.00 $ 801,310.98

August 2014

Installation of a parent notification system;

3,650.00

3,650.00

3,666.60

$ 3,666.60 $

0.00 Completed

Acquisition of band equipment, school buses, textbooks, desks, rolling science labs, and driver education simulators;

200,000.00

75,000.00 21,347.00

June 2015

Adding to, remodeling, renovating, improving, and equipping existing educational buildings, properties, and facilities of the school district, including athletic facilities and sites, and acquiring any property, both real and personal; and

2,018,850.00

777,640.00

$ 507,140.85

June 2017

System-wide security and safety improvements and upgrade of technology and equipment.

100,000.00

25,000.00

June 2016

2012 ESPLOST Total

$ 4,322,500.00 $ 3,627,355.00 $ 826,324.58 $ 507,140.85 $ 3,666.60 $

0.00

$ 8,167,357.00 $ 7,223,155.00 $ 949,295.58 $ 3,721,885.16 $ 31,722.60 $

0.00

(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax.

(2) The School District's current estimate of total cost for the projects. Includes all cost from project inception to completion.

(3) The voters of 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

$ 421,608.89

Current Year

109,368.75

Total

$ 530,977.64

See notes to the basic financial statements.

- 24 -

CITY OF CHICKAMAUGA BOARD OF EDUCATION - WALKER COUNTY GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2013

SCHEDULE "5"

DESCRIPTION
Direct Instructional Programs Kindergarten Program Kindergarten Program-Early Intervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category III Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL)
TOTAL DIRECT INSTRUCTIONAL PROGRAMS
Media Center Program Staff and Professional Development

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) (2) (3)

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

$

490,193.00 $ 398,966.29 $ 7,016.60 $ 405,982.89

20,862.00

34,678.74

34,678.74

1,103,018.00

825,988.20

23,809.28

849,797.48

82,330.00

58,429.29

58,429.29

588,473.00

574,235.36

16,620.86

590,856.22

44,223.00

50,490.63

17.58

50,508.21

1,098,270.00 1,248,944.56

41,000.38 1,289,944.94

847,861.00 1,053,759.52

44,727.40 1,098,486.92

308,719.00

294,346.81

29,844.35

324,191.16

457,762.00

362,894.11

6,613.94

369,508.05

680,367.00

429,800.11

5,763.45

435,563.56

158,778.00

148,746.80

652.00

149,398.80

81,084.00

61,254.50

380.00

61,634.50

11,693.67

11,693.67

$

5,961,940.00 $ 5,554,228.59 $ 176,445.84 $ 5,730,674.43

175,148.00 31,977.00

168,535.18 1,692.18

16,721.10

185,256.28 1,692.18

TOTAL QBE FORMULA FUNDS

$

6,169,065.00 $ 5,724,455.95 $ 193,166.94 $ 5,917,622.89

(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State amended formula adjustment. (3) Allotments do not include the State Health payments made by GDOE to the Department of Community Health for the certified employees.

See notes to the basic financial statements.

- 25 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
February 24, 2014

Honorable Nathan Deal, 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 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, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of City of Chickamauga Board of Education as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise City of Chickamauga Board of Education's basic financial statements and have issued our report thereon dated February 24, 2014.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered City of Chickamauga Board of Education's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City of Chickamauga Board of Education's internal control. Accordingly, we do not express an opinion on the effectiveness of the City of Chickamauga Board of Education's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

2013YB-10

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether City of Chickamauga Board of Education's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, not to provide an opinion on the effectiveness of the City of Chickamauga Board of Education's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City of Chickamauga Board of Education's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Respectfully submitted,

GSG:as 2013YB-10

Greg S. Griffin State Auditor

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
February 24, 2014

Honorable Nathan Deal, 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 REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133
Ladies and Gentlemen:
Report on Compliance for Each Major Federal Program
We have audited City of Chickamauga Board of Education's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2013. City of Chickamauga Board of Education's major Federal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs.
Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its Federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of City of Chickamauga Board of Education's major Federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the City of 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 on compliance for each major Federal program. However, our audit does not provide a legal determination of City of Chickamauga Board of Education's compliance.
2013SA-10

Opinion on Each Major Federal Program
In our opinion, the City of Chickamauga Board of Education complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2013.
Report on Internal Control over Compliance
Management of City of Chickamauga Board of Education is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered City of Chickamauga Board of Education's internal control over compliance with the types of requirements that could have a direct and material effect on each major Federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major Federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City of Chickamauga Board of Education's internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a Federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a Federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a Federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.
Respectfully submitted,

GSG:as 2013SA-10

Greg S. Griffin State Auditor

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, 2013
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, 2013

I SUMMARY OF AUDITOR'S RESULTS

Financial Statements

Type of auditor's report issue: Governmental Activities; General Fund; Capital Projects Fund; Aggregate Remaining Fund Information

Unmodified

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

No None Reported

Noncompliance material to financial statements noted:

No

Federal Awards

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

No None Reported

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

Unmodified

Any audit findings disclosed that are required to be reported in

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

No

Identification of major programs: CFDA Numbers

Name of Federal Program or Cluster

10.553, 10.555

Child Nutrition Cluster

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

$300,000.00

Auditee qualified as low-risk auditee?

Yes

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported.

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.