City of Dalton Board of Education, Whitfield County, report on audit of the financial statements, year ended June 30, 2000

CITY OF DALTON BOARD OF EDUCATION - WHITFIELD COUNTY - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXHffiITS

GENERAL PURPOSE FINANCIAL STATEMENTS

COMBINED STATEMENTS - OVERVIEW

A

COMBINED BALANCE SHEET

ALL FUND TYPES AND ACCOUNT GROUP

2

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

4

C

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

(NON-GAAP BASIS)

GENERAL AND SPECIAL REVENUE FUNDS

6

D NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

7

ADDmONAL FINANCIAL INFORMATION

COMBINING STATEMENTS

SPECIAL REVENUE.FUND

E

COMBINING BALANCE SHEET

20

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

22

CAPITAL PROJECTS FUND,

G

COMBINING BALANCE SHEET

24

H

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

26

SCHEDULES

1 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

28

2 SCHEDULE OF STATE REVENUE

30

3 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

31

ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS

4

OVERALL

33

5

BY PROGRAM

34

CITY OF DALTON BOARD OF EDUCATION - WHITFIELD COUNTY -TABLEOFCONTENTS-
SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
SECTIONID AUDITEE'S RESPONSE TO PRIOR YEAR FINDiNGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTIONN FINDINGS AND QUESTIONED COSTS SCHEDULE OF Fll:IDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

RUSSELL W. HINTON
STATE AUDITOR (404) 6562174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
June 6, 2001

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Educati9n
and Superintendent and Members of the City of Dalton Board of Education

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

Ladies and Gentlemen:

We have audited the accompanying general purpose financial statements ofthe City ofDalton Board of Education, as of and for the year ended June 30, 2000,as listed in the table of contents. These general purpose financial statements are the responsibility ofthe City ofDalton Board ofEducation's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United

States ofAmerica and the standards applicable to financial audits contained in Government Auditing

Standards, issued by the Comptroller General ofthe United States. Those standards require that we

plan

and

perfoI.lJl

the

audit

to

obtain

reasonable .

assurance

about

whether

the

fmancial

statements

are

free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the

amounts and disclosures in the financial statements. An audit also includes assessing the accounting

principles used and significant estimates made by management, as well as evaluating the overall

fin.an.cial

statement
.

presentation.

We believe that our audit provides a reasonable basis for our

opmlOn.

As described in the notes to the general purpose financial statements, the Board's financial statements have been prepared using certain accounting practices and policies which, in our opinion, vary in some respects from generally accepted accounting principles. These variances are described as follows:

2000ARL-13A.

* The general purpose financial statements of the Board did not contain a General Fixed
Assets Account Group to' account for property and equipment owned by the Board which should be included to conform to generally accepted accounting principles.
* School activity accounts maintained at the individual schools are not included in the
general purpose financial statements. To conform to generally accepted accounting principles, these accounts should be included in the general purpose financial statements.
The aggregate effects on the general purpose financial statements of these variances or omissions have not been determined, but are believed to be material.
In our opinion, except for the effects on the general purpose financial statements of the matters referred to in the preceding paragraph, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of.the City ofDalton Board ofEducation as of June 30, 2000, and the results of its operations for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated June 6, 2001, on our consideration ofthe City ofDalton Board ofEducation's internal control over financial reporting and our tests of its compliance with certain provisions ofiaws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
Our audit was performed for the purpose of forming an opinion on the general purpose financial statements of the City of Dalton Board of Education taken as a whole. The accompanying combining statements (Exhibits.E through H) and the financial schedules (Schedules 1 through 5), which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A- B3, Audits of States, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the general purpose financial statements. Such information has been subjected to the auditing procedures applied in the audit ofthe general purpose financial statements and in our opinion, except for the effects ofthe matters referred to in the third paragraph, such information is fairly stated, in all material respects, in relation to the general purpose financial statements taken as a whole.
2000ARL-13A

A copy ofthis report has been filed as a permanent record in the office ofthe State Auditor and made available to the press ofthe State, as provided for by Official Code ofGeorgia Annotated Section 506-24.
Respectfully submitted,

RWH:gp 2000ARL-13A

R sell W. Hinton State Auditor

CITYOFDALTONBOARDOFEDUCATION-WH~ffiLDCOUNTY

CITY OF DALTON BOARD OF EDUCATION - WHITFIELD COUNTY COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUP JUNE 30, 2000

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

GOVERNMENTAL FUND

SPECIAL

GENERAL

REVENUE

FUND

FUND

$

627,402.93

2,787,606.14 $

58,061,99

3,016,046.80

1,085,518,33

36,046.79

36,098.53 7,035.99

Total Assets

$ 6,467.102.66 $ 1,186,714.84

LIABILITIES AND FUND EQUITY
LIABILITIES
Cash Overdraft Accounts Payable Salaries Payable Loans Payable Expired Grant Balances Payable Contracts Payable Retainages Payable Due to Other Funds Capital Lease Agreements
Total Liabilities
FUND EQUITY
Fund Balances Reserved For Continuation of Federal Programs For Expired Grant Balances/Questioned Costs For Inventories Food Donated Commodities Purchased Food For SPLOST Projects Unreserved Designated for Local Capital OuUay Undesignated
Total Fund Equity

$

$

997,460.80

3,302,875.72

264,024.30 129,929.73 389,546.50
5,602.31

36,046.79

$ 4,300,336.52 $ 825,149.63

$

4,190.41

$

36,534.98

36,098.53 7,035.99

2,130,231.16 $ 2,166,766,14 $

314,240.28 361,565.21

Total Liabilities and Fund Equity

$ 6,467,102.66 $ 1,186,714.84

The notes to the general purpose financial statements are an integral part of this statement -2-

EXHIBIT "A"

TYPES CAPITAL
PROJECTS FUND

$

51,851.84

22,003.925.45

2,480,447.19

ACCOUNT GROUP GENERAL
LONG-TERM DEBT

TOTALS

(Memorandum Only)

JUNE 30, 2000

JUNE 30, 1999

$

679,254.77 $ 8.874,853.20

24,849.593.58

21,892,761.26

6,582.012.32

4,151,532.84

36.046.79

36.098.53 7,035.99
_ _ _ _ _ _ $ _--=1..::.6,,,,,,84.;.:0,,,,,O::,.:0.::.;0.,,,,00=- 16,840,000.00

38,196.13 7,080.41
13,845,000.00

$ 24.536,224.48 $

16,840,000.00 $ 49,030.041.98 $ 48,809.423.84

$

264,024.30

$

797,069.95

1.924.460.48 $

958,035.91

3,692.422.22

3,373,611.40 .

7,000,000.00

5,602.31,

19,955.20

869,566.04

869,566.04

729,958.81

84,830.10

84,830.10

42,369.00

36,046.79'

$

16.840,000.00

16,840,000.00

13,845,000.00

$ 1,751.466.09 $

16,840.000.00 $ 23,716,952,24 $ 25,968,930.32

.

$ 19,535,540.28
1,072,330.63 2.176,887.48
$ 22.784,758.39

$

4,190.41 $

36,534.98

548.94

36,098.53 7,035.99
19,535,540.28

38,196.13 7,080.41
19,328,120.25

1,072,330.63 4.621.358.92

3.466,547.79

$ 25,313,089.74 $ 22.840,493.52

$ 24.536,224.48 $

16,840.000.00 $ 49.030.041.98 $ 48.809.423.84

-3-

CITY OF DALTON BOARD OF EDUCATION - WHITFIELD COUNTY COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30, 2000

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

GENERAL FUND

SPECIAL . REVENUE
FUND

$ 16,721,981.02 $
19,482,281,82 1,539,955.81
$ 37,744,218,65 $

2,575,349.55 4,550,194.27
396,570.03
7,522,113.85

$ 23,879,095,79 $
1,551,423.83 1,764,124,29 1,076,298,75
547,746,56 1,951,053,06
430,658,85 3; 138,563, 13 1,397,033,73
560,723,85 3,842,69
85,017:12 178,929,50

3,098,811,35
604,574.37 1,834,628.43
27,641,65 162,619.65 166,861.42
40,465,53 2,000.00
12,769,20 1,577,440,98

$ 36,564,511.15 $ $ 1,179,707,50 $

7,527,812,58 -5,698.73

$

21,655,18 $

-1,036,801,20

$ -1,015,146,02 $

36,801,20 -19,37
36,781,83

$

164,561,48 $

31,083,10

2,002,204,66

. 332,624,13

-2,097,60 -44.42

FUND BALANCE JUNE 30

$ 2,166,766.14 $ -=....=:36..,1=,5=6=5,=2,;",,1

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

EXHIBIT"B"

CAPITAL PROJECTS
FUND

TOTALS

(Memorandum Only)

YEAR ENDED

JUNE 30, 2000

JUNE 30, 1999

$ 5,728,166.10 $ 25,025,496.67 $ 17,968,387.14

4,550,194.27

3,751,989.77

5,028,394.69

24,510,676.51

22,597,900.51

2,015,398.79

3,951,924.63

2,861,995.89

$ 12,771,959.58 $ 58,038,292.08 $ 47,180,273.31

$ 26,977,907.14 $ 24,316,448.31

$

219,612.45

13,600,732.66

2,155,998.20 3,598,752.72 1,103,940.40
710,366.21 2,117,914.48
650,271.30 3,179,028.66 1,399,033.73
560,723.85 16,611.89
1,577,440.98 85,017.12
13,779,662.16

2,300,177.28 3,599,264.07 1,044,068.37
506,438.86 2, 1~,630.21
420,793.26 3,527,567.13 1,260,256.32
541,138.14 6,063.96
1,465,091.06 111,824.49
2,925,718.80

3,725,000.00 645,885.00

3,725,000.00 645,885.00

1,156,160.00 692,085.00

$ 18,191,230.11 $ 62,283,553.84 $ 46,017,725.26

$ -5,419,270.53 $ -4,245,261.76 $ 1,162,548.05

$ 6,720,000.00 $ 6,720,000.00

1,000,000.00

1,058,456.38 $

-21,635.81

-1,058,456.38

$ 7,698,364.19 $ 6,720,000.00 $

734,844.59 -734,844.59
0.00

$ 2,279,093.66 $ 2,474,738.24 $ 1,162,548.05

20,505,664.73

22,840,493.52

21,680,450.32

-2,097.60 -44.42

-1,893.31 -611.54

$ 22,784,758.39 $ 25,313,089.74 $ 22,840,493.52

-5-

CITY OF DALTON BOARD OF~EDUCATION WHITFIELD COUNTY COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL lNONGAAP BASIS) GENERAL AND SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30, 2000

EXHIBIT "COO

The notes to the general purpose financial statements are an integral part of this statement
6

CITY OF DALTON BOARD OF EDUCAnON - WHITFIELD COUNTY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 2000

EXHIBIT "D"

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
The City of Dalton Board of Education (Board) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity as defined by generally accepted accounting principles and has the power to levy taxes and set its budget without approval by the City Government or any other entity. Accordingly, the Board is a primary government for accounting purposes.
. FUND ACCOUNTING
The Board uses funds and an account group 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. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available financial resources.
General Fixed Assets are recorded as expenditures in the various funds at the time ofpurchase. A General Fixed Assets Account Group is not presently maintained by the Board, To conform to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types,
Although "school activity accounts" are maintained at the individual schools, neither the assets, liabilities and fund equity, nor the revenues, expenditures and changes in fund balances of these accounts are reflected in these fmancial statements. To conform to generally accepted accounting principles, these accounts should be recorded in the general purpose fmancial statements,
The general purpose fmancial statements account for all State, Federal, Taxes and Other funds under control of the Board, in compliance with generally accepted accounting pnnciples applicable to governmental units, unless otherwise disclosed in these notes. Funds and the account group presented in this report are as follows:
GOVERNMENTAL FUND TYPES - are used to account for all or most ofa Board's educational activities. Governmental Fund Types include:
GENERAL FUND - the fund used to account for all fmancial resources ofthe Board except those required to be accounted for in another fund. These transactions relate to resources obtained and used for services provided by a board of education.

-7-

CITY OF DALTON BOARD OF EDUCAnON - WHITFIELD COUNTY

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

.

JUNE 30, 2000

EXHIBIT"D"

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SPECIAL REVENUE FUND. - the fund used to account for the proceeds of specific revenue sources (other than for major capital projects) that are legally restricted to expenditures for specified purposes.' These funds are received primarily. from the Georgia Department of Education and from th~ Federal government to accomplish specific educational objectives.
CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction of major capital facilities.
ACCOUNT GROUP
GENERAL LONG-TERM DEBT ACCOUNT GROUP - A financial reporting device used to account for capital lease obligations.
BASIS OF ACCOUNTING
The accounting and financial reporting treatment applied to a fund is detemiined by its measurement focus. All governmental fu. nds are acc.ounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements ofthese funds present increases (i.e., revenues , and other financing sources) and decreases (i.e., c::xpenditures and other financing uses) in net current assets.. Their reported fund balance is conside~ed a measure of available spendable resources.
Liabilities' which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds. Other liabilities, which are not expected to be financed from available spendaple resources, are reported in the General Long-Term Debt Account Group.
Governmental funds are accounted for using the modified accrual basis ofaccounting under which:.
Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable'~ means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the currentperiod. Those revenues considered susceptible to accrual are property taxes, local option sales taxes, intergovernmental grants and investment income.
Expenditures are .generally recognized when'~e related fund liability is incurred.
A substantial number of personnel of the Board were employed for a one hundred and ninety day period beginning in early August of 1999 and ending in late May 2000. Employment contracts for these employment periops typically specify that compensation be paid in twelve equal monthly payments beginning in August 1999 and ending in July 20QO. State grants to fund the State's share of these contracts are disbursed to the Board beginning in September 1999 and ending in August 2000. In accordance with generally accepted accounting. principles, salary and fringe benefit expenditures and the related revenue from the State to fund these contracts are recorded in the fiscal period covered by these fmancial statements.
- 8-

CITY OF DALTON BOARD OF EDUCATION - WHITFIELD COUNTY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 2000

EXHIBIT"D"

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUDGET

The City of Dalton Board of Education's budget is a complete financial plan for the Board's fiscal year and is based upon estimates of expenditures together with probable funding sources, There is no statutory prohibition regarding overexpenditure of the budget at any level. The budget for all governmental funds is prepared by fund, function and object. The legal level ofbudget control was established by the Board at the aggregate level. The budget for governmental funds was prepared on a basis other than generally accepted accounting principles.

The budget process begins when the Board's administration prepares a tentative budget for the Board's approval. After approval ofthis tentative budget by the Board, such budget is advertised at least once in a newspaper of general circulation in the locality. At the next regular meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final school budget. This final budget is then submitted, in accordance with provisions of the Quality Basic Education' Act, OCGA Section 20-2-167(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 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual presents actual and budgeted data for the General Fund and Special Revenue Fund. To facilitate comparison with the budget, the following adjustments have been made to fund balance as reflected on Exhibit "B" of this report:

Special Revenue
Fund

FUND BALANCE JULY 1, 1999

$ 332,624.13

Adjustments ' Inventories - July 1, 1999 Food Donated Commodities Purchased Foods

-38,196.13 -7,080.41

, Fund Balance July 1, 1999 (Budget Basis)

$ 287,347.59

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

31.083.10

FUND BALANCE JUNE 30, 2000 (Budget Basis)

$ 318.430,69

-9 -

CITY OF DALTON BOARD OF EDUCATION - WHITFIELD COUNTY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 2000 .

EXHIBIT"D"

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist of deposits in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the Board to deposit its funds in one or more solvent. banks, insured Federal savings and loan associations, or insured State chartered building and loan associations.
INVESTMENTS
COMPOSITION OF INVESTMENTS
Investments made.bythe Board in nonparticipating interest-earning contracts (such as certificates of
deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone year or less are reported at amortized , cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year 'are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the Board to invest its funds. In selecting among options for investment or among institutional bids for'deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity, Funds may be invested in the following:
(1) Obligations issued by the State of Georgia or by other states, '
(2) Obligations issued by the United States government,
(3) Obligations fully insured or guaranteed by the United States government or a United , States government agency,
(4) Obligations of any corporation of the United States government,
(5) Prime banker's acceptances,
(6) The Local Government Investment Pool administered by the'State ofGeorgia, Office of Treasury and Fiscal Services,
, (7) Repurchase agreements, and
(8) 'Obligations of other political subdivisions of the State of Georgia,
RECEIVABLES
Receivables consist of 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 general purpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.
- 10-

CITY OF DALTON BOARD OF EDUCAnON - WHITFIELD COUNTY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 2000

EXHIBIT"D"

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PROPERTY TAXES

The City of Dalton, Georgia fixed the property tax levy for the 1999 tax year (calendar year) on October 4, 1999 (levy date). Taxes were due on December 20, 1999. The lien date for property taxes was January 1, 1999. Taxes collected within the current fiscal year or within 60 days after year-end are reported as revenue in fiscal year 2000.. The Dalton City Clerk bills and collects the property taxes for the Board of Education and remits the taxes collected to the Board.

The tax millage rate levied for the 1999 tax year (calendar year) for the City of Dalton Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

7,59 mills

SALES TAXES

Special Purpose Local Option Sales Tax is to be used for capital outlay for educational purposes.
Special Purpose Local Option Sales Tax revenue during the fiscal year amounted to $5,028,394.69 and was recorded in the Capital Projects Fund. The State will term~nate collection of this tax once an additional $7,303,082.09 has been collected or on June 30, 2002, w~chever occurs first.

The City ofDalton Building Authority (City Government) sold general obligation bonds to provide advance funding for Capital Outlay ProjeCts associated with issuance of a Special Purpose Local Option Sales Tax (SPLOST). In fiscal year 2000, the Board ofEducation provided $4,370,885.00 of SPLOST proceeds to the City of Dalton Building Authority for debt service on said general obligation debt.

INVENTORIES

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

INTERFUND TRANSACTIONS

The Board has the following types of interfund transactions:

- 11 -

CITY OF DALTON BOARD OF EDUCAnON - WHITFIELD COUNTY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 2000

EXHIBIT "D"

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reimbursements ofexpenditures initially made from a fund that are properly applicable to another fund are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the' fund that is reimbursed. '.
Operating transfers ar~ recorded for all interfund transactions other than reimbursements.
MEMORANDUM ONLY - TOTAL COLUMNS
Total columns on the general purpose financial statements are.captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis, Data in these columns do not present financial position or results ofoperations in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data.
Note 2: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum ofmoney which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate ofthe face . value of such surety bond and the marketvalue of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. Ifa depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance, OCGA Section 45~8-11(b) provides an officer holding public funds may, in his discretion, waive the requirement for security in the case ofoperating funds placed in demand deposit checking accounts.
Acceptable security for deposits consists of anyone 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 ofthe State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
.. 12-

CITY OF DALTON BOARD OF EDUCAnON - WHITFIELD COUNTY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 2000

EXHIBIT"D"

Note 2: DEPOSITS AND INVESTMENTS

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

(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a .subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.

CATEGORIZATION OF DEPOSITS

At June 30, 2000, the bank balances were $1,790,489.13. The amounts ofthe total bank balances are

classified into three categories of credit risk:

'

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

The Board's deposits are classified by risk category at June 30, 2000, as follows:

Risk Category

Bank Balance

1

$ 212,130.64

2

943,750.00

3

634,608.49

Total

$ 1,790.489.13

CATEGORIZATION OF INVESTMENTS Investments are classified as to risk by the three categories described below:

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

- 13 -

CITY OF DALTON BOARD OF EDUCATION - WHITFIELD COUNTY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 2000

EXHIBITUD"

Note 2: DEPOSITS AND INVESTMENTS

At June 30, 2000, the carrying value of the Board's total investments was $24',791,531.59. The investments are classified as to risk categories as follows:

Type of Investment
U. S. Government Repurchase Agreements
Total
Local Government Investment Pools
Total Investments

Risk Categories 2

$15,525,584.47 $ 6.500.000.00

0.00 $ :

$22025 584.47 $

000 $

. Carrying

Fair"

3

Amount

Value

'0.00 $15,525,584.47 $15,525,584.47 6,500,000.00 6.500,000.00

000 $22,025,584.47 $22,025,584.47

2,765,947.12 2.765.947.12 . $2479153\.59 $24791 531 59

The carrying amounts shown above includes amounts maintained in an investment pool by the State of Georgia, Office of Treasury and Fiscal Services in which the Board owns no identifiable securities. The investment policy ofthe State ofGeorgia, Office ofTreasury and Fiscal Services for the Local Government Investment Pool (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. A description ofthe Primary Liquidity Portfolio is as follows:

The Primary Liquidity Portfolio consists of Georgia Fund 1, which is a combination local and state government investment pool, and Fund 6, GeorgiaFund 1 is a stable net asset value investment pool which follows Standard and Poor's criteria for AAAm rated money market funds, The pool is not registered with the Securities and Exchange Commission as an investment company but does operate Georgia Fund 1 in a manner consistent with Rule 2a-7 ofthe Investment Company Act of 1940 and is considered to be a 2a-7 like pool. The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($1.00 per share value). Net asset value is calculated weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and values participant's shares sold and redeemed based on $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost which approximates fair value. The pool does not issue any legally binding guarantees to support the value of the shares. Participation in the pool is voluntary and deposits consist of funds from local governments; operating and trust funds ofGeorgia's state agencies, colleges arid universities; and current operating funds of the State of Georgia's General Fund.

Investments in Georgia Fund 1 and Fund 6 are directed toward short-term instruments such as U. S. Treasury obligations, securities issued or guaranteed as to principal and interest by the U. S. Government or any of its agencies or instrumentalities, banker's acceptances and repurchase agreements. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Food 1 on June 30, 2000, was 23 days.. The average investment duration for Fund 6 on June 30, 2000, was .80 year.

- 14-

CITY OF DALTON BOARD OF EDUCATION - WHITFIELD COUNTY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 2000

EXHffiIT"D"

Note 3: NON-MONETARY TRANSACTIONS

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

Note 4: RISK MANAGEMENT

The Board is exposed to various risks ofloss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; natural disaster and unemployment compensation.

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

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

The Board is self-insured with regard to unemployment compensation claims. The Board accounts

for claims within thesame fund that the employee's salary and benefits were paid. Claims are

accounted for with expenditure and liability being reported when it is probable that a loss has

occurred, and the amount of that loss can be reasonably estimated.

-

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

follows:

.

1999 2000

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End ofYear Liability

$

0.00 $

1.386.00 $

1.386.00 $

0.00

$

0.00 $

0.00 $

0.00 $

0.00

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

Position Covered

Amount

Superintendent All Other Employees

$ 100,000.00 $ 25,000.00

- 15 -

CITY OF DALTON BOARD OF EDUCATION - WHITFIELD COUNTY
NOTES to THE GENERALPURPOSE FINANCIAL STATEMENTS
JUNE 30, 2000

EXHIBIT"D"

Note 5: OPERATING LEASES

City of Dalton Board of Education has entered into various leaSes as lessee for pupil transportation .and equipment. These leases are considered for accounting purposes to be operating leases. Lease expenditures for the year ended June.30, 2000, amounted to $916,534.39. Future minimum lease payments for these leases are as follows:

Year Ending

Amount

2001 2002

$ 1,074,570.00 23,600.00

Total

$ 1,098,170.00

Note 6: GENERAL LONG-TERM DEBT

CAPITAL LEASES

)

The City ofDaltonBoard ofEducation entered into two agreements with the City ofDalton Building

Authority for the purpose of acquiring, constructing and equipping buildings and facilities. Under

the terms ofthe agreements the Board will assure that payments ofprincipal and interest on the City

ofDalton Building Authority Revenue Bonds (Dalton Public School System Project), Series 1997

: and Series 2000 are made in a timely manner through July 1, 2003, and March 1,2015, respectively,

These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value ofthe future minimum lease payments as ofthe date oftheir inception.

The changes in General Long-Term Debt during the fiscal year ended June 30, 2000, were as follows:

Capital Leases

City ofDalton Building Authority

1997 Issue

2000 Issue

Total

Balance July 1, 1999

$ 13,845,000.00

$ 13,845,000.00

Additions

$ 6,720,000.00 6,720,000,00

Deductions Payments
Balance June 30, 2000

3,725,000.00

3,725,000,00

,
$ 10,12(},000.00 $ 6,720,000.00 $ 16,840,000,00

At June 30, 2000, payments due by fiscal year which includes principal and interest for these items are as follows:

.-16-

CITY OF DALTON BOARD OF EDUCAnON - WHITFIELD COUNTY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 2000

EXHIBIT"D"

Note 6: GENERAL LONG-TERM DEBT

Fiscal Year Ended June 30

Capital Leases

City of Dalton Building Authority.

1997 Issue

2000 Issue

Total

2001 2002 2003 .2004 2005 2006 - 2010 2011 - 2015

$ 4,383,160.00 4,388,660.00 2,234,160.00

$ 532,206.25 $ 4,915,366.25

662,647.50 5,051,307.50

661,902.50 2,896,062.50

660,277.50

660,277.50

657,757.50

657,757.50

3,298,385.00 3,298,385.00

3,294.220.00 3.294,220.00

Total Principal and Interest $ 11,00S,980.00 $ 9,767,396.25 $ 20,773,376.25

Deduct: Imputed Interest

885,980.00 3,047.396.25 3,933,376.25

Net Present Value of Future Minimum Lease Payments $ 10,120,000.00 $ 6,720,000.00 $ 16,840,000.00

Note 7: ON-BEHALF PAYMENTS

The Board has recognized revenues and expenditures in the amount of $639,754.70 for health insurance and retirement contributions paid on the Board's behalfby the following State Agencies.

Georgia Department of Education Paid to the Georgia Department of Commuirity Health For Health Insurance of Non-Certified Personnel In the amount of$535,701.87

Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of$25,122.83

Office ofTreasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $78,930,00

Note 8: SIGNIFICANT COMMITMENTS

The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the Board as of June 30, 2000, together with funding available:

- 17 -

CITY OF DALTON BOARD OF EDUCATION ~ WHITFIELD COUNTY NOTESTO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 2000

EXHIBIT"D"

Note 8: SIGNIFICANT COMMITMENTS

Project

Unearned Executed Contracts

Funding Available From State

99-772-091 Dalton High School HVAC New City Park New Elementary

$ ~,309,005.80 53,792.09
5,884,740.84 2,581,168.82

$ 636,462.90

$16,828,707.55 $ 636.462.90

-

.

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

Note 9: CONTINGENT LIABILITIES

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

Note 10: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

TRS PLAN DESCRIPTION

..

Substantially all teachers, administrative and clerical personnel employ~d by local school systems

are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple

employer defined benefit pension plan. TRS provides service retirement, disability retirement and

survivors benefits for its members in accordance with State statute. The Teachers Retirement

System of Georgia issues a separate stand alone financial audit repQrt and a copy can be obtained

from the Georgia Department of Audits and Accounts,

TRS CONTRIBUTIONS REQUIRED AND MADE Employees of the Board who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The Board makes monthly employer contributio~s to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 11,29%and employer contributions . for the current fiscal year and the preceding two fiscal years are as follows:

, '- 18-

CITY OF DALTON BOARD OF EDUCATION - WHITFIELD COUNTY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 2000

EXHIBIT"D"

Note 10: RETIREMENT PLANS
Fiscal Year
2000 1999 . 1998

Percentage Contributed
100% 100% 100%

Required Contribution
$ 2,699,914.92 $ 2,614,157.59 $ 2,369,852.11

- 19-

'OF ell')' DALTON BOARD OF EDUCATION - WHITFIELD COUNTY
COMBINING BALANCE SHEET SPECIAL REVENUE FUND .JUNE 30. 2000

ASSETS Cash 'and Cash Equivalents Investments Accounts Receivable Inventories
Food Donated Commodities Purchased Food
Total Assets

. SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

$

299.274.48 $

59,605.78

58.061.99

9.530.58

36.098.53 . 7,035.99

$

400,470.99 $ ===6=96:,1=:36=:.3=6.'..

LIABILITIES AND FUND EQUITY
LIABILIT-IES
Cash Overdraft Accounts Payable Salaries Payable Expired GrantBalances Payable Due to Other Funds
Total Liabilities
FUND EQUITY
Fund Balances Reserved For Continuation of Federal Programs For Inventories Food Donated Commodities Purchased Food Unreserved Undesignated
Total Fund Equity
Total Liabilities and Fund Equity
See notes to the general purpose financial statements. - 20-

$

3.127.07 $

17,430.36

12,863.52

51.638.18

67.82

36.046.79

$

52.037.38 $

69.136.36

$

36.098.53

7,035.99

305,299.09 $

0.00

$

348,433.61 $

0.00

$

400,470.99. $ ===6=96:.1,;;,;36=:.3==:6=

EXHIBIT "E" .

FEDERAL PROGRAMS

OTHER PROGRAMS

TOTALS

JUNE 30, 2000

JUNE 30, 1999

$

358,880.26 $

290,615.22

58,061.99

55,293.59

$ 1,060,569.51 $

15,418.24

1,085,518.33

633,048.78

36,098.53 7,035.99

38,196.13 7,080.41

$ 1,060,569.51 $

15,418.24 $ 1,545,595.10 $ 1,024,234.13

$

611,353.44 $

105,505.18

325,044.80

5,534.49

$ 1,047,437.91 $

11,551.12 $ 3,867.12
15,418.24 $

622,904.56 $ 129,929.73 389,546.50
5,602.31 36,046.79
1,184,029.89 $

251,648.63 97,742.19
322,263.98 19,955.20
691,610.00

$

4,190.41

8,941.19 $

$

13,131.60 $

$

4,190.41 $

548.94

0.00 0.00 $

36,098.53 7,035.99
314,240.28
361,565.21 $

38,196.13 7,080.41
286,798.65
332,624.13

$ 1,060,569.51 $

15,418.24 $ 1,545,595.10 $ 1,024,234.13

- 21 -

CITY OF DALTON BOARD OF EDUCATION - WHITFIELD COUNTY COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUND YEAR ENDED JUNE 30, 2000

REVENUES
State Funds Federal Funds Other Funds
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Food Services Operation
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Operating T~ansfers In Operating Transfers Out
Total Other Financing Sources (Uses)
Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses
FUND BALANCE JULY 1
Food Inventory - Net Change in Period Donated Commodities Purchased Food
FUND BALANCE JUNE 30
See notes to the general purpose financial statements. -22 -

SCHOOL FOOD
SERVICES FUND

L.OTIERY PROGRAMS

$

112,110.00 $

1,132,757.13

357,878.28

$ 1,602,745.41 $

596,671.46 596,671.46

$

539,298.06

80,379.86 650.61

8,153.90

$ 1,577,440.98

$ 1,577,440.98 $

$

25,304.43 $

1,632.39
630,114.82
-33,443.3~

$

$

$

25,304.43 $

325,271.20

-2,097.60 -44.42

33,443.36 33,443.36
0.00 0.00

$

348,433.61 $ ====0:=.=00....

EXHIBIT"F"

FEDERAL PROGRAMS

)
OTHER
PROGRAMS

TOTALS

YEAR ENDED

JUNE 30, 2000

JUNE 30, 1999

$ 1,754,475.36 $ 3,412,065.14 38,691.75
$ 5,205,232.25 $

112,092.73 $ 5,372.00

2,575,349.55 $ 4,550,194.27
396,570.03

.117,464.73 $ , 7,522,113.85 $

2,333,875.77 3,748,606.58
400,048.64
6,482,530.99

$ 2,529,365.82 $
438,509.78 1,830,134.68
27,641.65 154,465.75 166,861.42 40,465.53
2,000.00 11,136.81

$ 5,200,581.44 $

$

4,650.81 $

30,147.47 $ 3,098,811.35 $

85,684.73 3,843.14

604,574.37 1,834,628.43
27,641.65 162,619.65 166,861.42 40,465.53
2,000.00 12,769.20 1,577,440.98

119,675.34 $' 7,527,812.58 $

-2,210.61 $

-5,698.73 $

2,661,850.55
521,864.87 1,372,214.89
20,915.03 164,794.07 217,870.32 41,982.22
14,000.00 5,423.80 1,465.091.06
6,486,006.81
-3,475.82

$

1,147.23 $

2,210.61 $

36,801.20 $

34,844.59

-19.37

~19.37

$

1,127.86 $

2,210.61 $

36,781.83 $

34,844.59

$

5,778.67 $

7,352.93

0.00 $ 0.00

31,083.10 $ 332,624.13

31,368.77 303,760.21

-2,097.60 -44.42

-1,893.31 -611.54

$

13,131.60 $

0.00 $

361.565.21 $ =====3=3=2=,6=24=.1::.;3....

- 23-

CITY OF DALtON BOARD OF EDUCATION - WHITFIELD COUNTY COMBINING BALANCE SHEET CAPITAL PROJECTS FUND JUNE 30, 2000

ASSETS Cash and Cash Equivalents Investments Accounts Receivable
Total Assets

REGULAR $ 3,249,218.11

GEORGIA STATE FINANCING AND
INVESTMENT
COMMISSION

_ _ _ _ _ _ $ _----:.1.L::,6~4.=.5,'_='6::.;25::.:..:..74.:...

$ 3,249,218.11 $ 1,645,625.74

LIABILITIES AND FUND EQUITY
LIABILITIES
Cash Overdraft Accounts Payable Contracts Payable Retainages Payable
Total Liabilities
FUND EQUITY
Fund Balances Reserved For SPLOST Projects Unreserved Designated for Local Capital Outlay Undesignated
Total Fund Equity
Tolc!1 Liabilities and Fund Equity

$

627,041.24

478,417.60

491,080.90

49,086.00

$ 1,645,625.74

$ 1.072.330.63

2,176,887.48 $

0.00

$ 3,249.218.11 $

0.00

$ 3,249.218.11 . $ ===1.:;,6.4..=5,=6=25=.7=4=

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

EXHIBIT"G"

SPECIAL PURPOSE LOCAL OPTION
SALES TAX

TOTALS

JUNE 30, 2000

JUNE 30,1999

$ 3,249,218.11 $ 1,948,990.29

$ 22,003,925.45

22,003,925.45

19,003,336.09

834,821.45

2.480.447.19

749,604.48

$ 22,838,746.90 $ 27,733,590.75 $ 21,701,930.86

$ 2,570,325.03 $ 3,197,366.27 $

318,652.35

797,069.95

378.485.14

869,566.04

35,744.10

84,830.10

423,938.32
729,958.81 42,369.00

$ 3,303,206.62 $ 4,948,832.36 $ 1.196,266.13

/
$ 19,535,540.28 $ 19,535,540.28 $ 19,328,120.25

1,072,330.63

0.00

2,176,887.48

1,177,544.48

$ 19,535,540.28 $ 22,784l58.39 $ 20,505,664.73

$ 22,838,746.90 $ 27,733,590.75 $ 21,701,930.86

- 25-

CITY OF DALTON BOARD OF EDUCATION - WHITFIELD COUNTY COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
CAPITAL PROJECTS FUND YEAR ENDED JUNE 30, 2000

FUND BALANCE JUNE 30

$ 3,249,218.11 $ =====0;:,;,,0;;;,;0=

See notes to the general purpose financial statements. - 26-

EXHIBIT"H"

SPECIAL PURPOSE LOCAL OPTION SALES TAX

TOTALS

YEAR ENDED

JUNE 30, 2000

JUNE 30, 1999

$ 5,728,166.10 $

33,579.03

$ 5,028,394.69

5,028,394.69

4,564,705.27

913,555.45

2,015,398.79

1,055,573.85

$ 5,941,950.14 $ 12,771,959.58 $ 5,653,858.15

$

218,955.45 $

219,612.45 $

112,639.02 4,986,846.75
331,018.60

829,614.90 12,151,445.36
619,672.40

3,725,000.00 645,885.00

3,725,000.00 645,885.00

$ 10,020,344.82 $ 18,191,230.11 $

$ -4,078,394.68 $ -5A19,270.53 $

600.00
576,197.28 2,166,633.79
46,339.76
1,155,000.00 692,085.00
4,636,855.83
1,017,002.32

$ 6,720,000.00 $ 6,720,000.00

3,412,549.48 $

-2,434,185.29

-2,434,185.29

$ 4,285,814.71 $ 7,698,364.19 $

1,658,006.55 -958,006.55
700,000.00

$

207,420.03 $ 2,279,093.66 $ 1,717,002.32

19,328,120.25

20,505,664.73

18,788,662.41

$ 19,535,540.28 $ 22,784,758.39 $ 20,505,664.73

- 27-

CITY OF DALTON BOARD OF EDUCATION - WHITFIELD COUNTY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2000

SCHEDULE "1"

CITY OF DALTON BOARD OF EDUCATION - WHITFIELD COUNTY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2000

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT
Education. U. S. Department of Other Programs Pass-Through From Georgia Department of Education Stewart B, McKinney Homeless Assistance Act Education for Homeless Children and Youth' Vocational Education - Basic Grants to States High School Program Basic Grant
Pass-Through From Hall County Board of Education d/b/a Piedmont Migrant Education Agency Elementary and Secondary Education Act Tille I Migrant Education
Total U, S, Department of Education
Defense. U, S. Department of Direct Defense Activity for Nontraditional Education Support Troops to Teachers
Health and Human Services. U. S, Department of Pass-Through From Georgia Department of Human Resources Block Grants For Prevention and Treatment of Substance Abuse
Labor. U. S. Department of Pass-Through From Coosa Valley Regional Development Center Job Training Partnership Act

CFDA NUMBER

PASSTHROUGH
ENTITY 10
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

84.196 84.048

N/A

$ 37.657.48 $

N/A

30.671,18

37.657,48 30.671.. 18

84,011

N/A

108.394.47

106.994.01

$ 3.004.626,24 $ 3.032,550.39

$ 107.748.22 $

107,748,22

93.959

NlA

$

5.372.00 $

85.684,73 (3)

17.250

NlA

$

5,798.56 $

5.798.56

Total Federal Financial Assistance
= N/A Not Available

$ 4.550,194,27 $ 5.109.231.79

Notes to the Schedule of Expenditures of Federal Awards

(1) The amounts shown for the Food Distribution Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the system during the current fiscal year.
(2) Expenditures for the School Breakfast Program were not maintained separately and are included in the 2000 National School Lunch Program,
(3) Expenditures for this program include State, and/or Other Funds. Expenditures are not maintained by fund source.
r) Major Programs are Identified by an asterisk in front of the CFDA number.

The Board did not provide Federal Assistance to any Subrecipient.

The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the City of Dalton 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 general purpose financial statements.

See notes to the general purpose financial statements,

- 29-

CITY OF DALTON BOARD OF EDUCATION" WHITFIELD COUNTY SCHEDULE OF STATE REVENUE' YEAR ENDED JUNE 30, 2000

SCHEDULE "2"

CITY OF DALTON BOARD OF EDUCATION - WHITFIELD COUNTY SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 3D. 2000

SCHEDULE "3"

PROJECT

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3)(4)

AMOUNT EXPENDED
IN PRIOR YEARS

New elementary school, parking areas, grounds, furnishings, equipment and fixtures

$ 5,968,346.00 $ 8,876,796.00 $ 5,011,002.70 $ 952,445.55

New middle school, parking areas, grounds, furnishings, equipment and fixtures

9,789,266.00 18,156,483.00

8,142,558.92 1,532,786.24

Renovations and modifications of eXisting schools, including conversion of Dalton Junior High School to an intermediate school, renovation of Brookwood School, Westwood School and Dalton High and the upgrading of communications equipment and a fiber optic network

5,202,427.00

9,597,818.00

419,003.00 2,430,851.92

$ 20,960,039.00 $ 36,631,097.00 $ 13,572,564.62 $ 4,916,083.71

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

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

(3) The voters of the City of Dalton and Whitfield County approved the imposition of a 1% sales tax to fund the above projects. 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 Board has incurred interest expense to provide advance funding for the above projects as follows:

Prior Years

$ 1,153,475.00

Current Year

645,885.00

Total

$ 1,799,360.00

See notes to the general purpose financial statements.

- 31 -

CITY OF DALTON BOARD OF EDUCATION - WHITFIELD COUNTY ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS - OVERALL
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 30, 2000

SCHEDULE "4"

Minimum Expenditure Requirements (Total Allotment)
Expenditures on Combined Program Basis Salaries (1) (2) Operations
Less: Expenditures for Media Center Programs in Excess of Total Media Allotment
Expenditures per Audit

FOURTEEN WEIGHTED AND MEDIA CENTER
PROGRAMS

100% TEST FOR OPERATIONS PORTION OF FOURTEEN WEIGHTED PROGRAMS

$

14,833,240.00 $

4...:-1;...;4",7-."..;;.3.;;.;6.~90.;;.;

$

19,691,723,28

1,507.719.89 $ _ _1.:.l:.2=.:9:.:2:.:.:,6:..::;6..:.:1.~75~

$

21,199.443,17

-551 ,497,73 $ _--:2=.:0:.r.;,6::..;4:..;.7.t.:,9:..:.4.:.;5.:..:,44..:,.

Amount of Underexpenditure for Total Allotment

$

0.00 $=====0=:.0:=0

Note: (1) Salary accruals (July and August 2000 Deferred Salaries) rep~rted as expenditures in the General Purpose Financial Statements are not included on this analysis in order to comply with program guidelines.
(2) Salary accruals (July and August 1999 Deferred Salaries) reported as expenditures in the prior year General Purpose Financial Statements are included on this analysis as required by program guidelines.

See notes to the general purpose financial statements. - 33 -

, CITY OF DALToN BOARD OF EDUCATION - WHITFIELD COUNTY . ANAL YSIS OF MINIMUM EXPENDITURE REQUIREMENTS BY PROGRAM
GENERAL FUND- qUALITY BASIC EDUCATION pROGRAMS YEAR ENDED JUNE 30 2000

GENERAL AND CAREER EDUCATION PROGRAMS
Kindergarten (oj
Grades 1 3 (0) Sub-Total K3
Grades 4 - 5 (0) Grades 6 - 8 (0) Grades 9 - 12 (0) High School Laboratories (0) Vocational Education Laboratories (0)
Total General and Career Education Programs SPECIAL EDUCATION PROGRAMS
Regular Programs Category I (0) Category II (0) Category III (0) Category IV (0) Category V (0) Sub-Total- Regular Category VI (Gifted) (*) Total Special Education Programs
REMEDIAL EDUCATION pROGRAM (*) Total Fourteen Weighted Programs
MEDIA CENTER pROGRAMS Salaries Operations Total Media Center Programs
Total Fourteen Weighted and Media Center Programs

ALLOTMENTS FROM GEORGIA DEPARTMENT OF

REQUIRED

ORIGINAL

~

ORIGINAL

MID-TERM

$ 1,400,322.00

$ 1,260,289.80 $

3,487,631.00

3;138,867.90

$ 4,887,953:00 90 $ 4,399,157.70 $

1,454,798.00 90

1,309,318.20

2,320,129.00 90

. 2,088,116.10'

1,340,524.00 90

1,206,471.60

879,121.00 90

791,208.90

560,876.00 90

504,788.40 .

$ 11,443,401.00

$ 10,299,060.90 $

-16,794.90 69,859.90 53,065.00 35,828.00 36,846.00 -25,551.00
1.029.00 37,343.00 138,560.00

$ '.1,617;606.00

$ 1,455,845.40 $

101,845.00

$ 1,617,606.00 90 $ 1,455,845.40 $

632,330.00 90

569,097.00

$ 2,249;936.00

$ 2,024,942.40 $

$

300,901.00 90 $

.270,810.90 $

$ 13,994,238.00

$ 12,594,814.20 $

101,845.00 114,082.00 215,927.00 -14,524.20 339,962.80

$

398,189.00 90 $

358,352.10 $

92,659.00 100

92,659.00

$

490,828.00

$

451,011.10 $

5,571.10 2,640.10
8,211.20

s' 14,485,066.00

$ . 13,045,825.30 $

348,174.00

STAFF DEVELOPMENT PROGRAMS
Cost of Instruction Professional Development
Total Staff Development Programs
(0) Identifies Fourteen Weighted Programs.
(1) Salary accruals (July and August 2000 Deferred Salaries) reported as expenditures In the General Purpose Financial Statements are not Included on this analysis In order to comply with program guidelines.
See notes to the general purpose financial statements.

$

41,285.00

85,870.00

$

41,285.00 $

85,870.00

1,453.00 0.00

$

127,155.00 100 $

127,155.00 $

1,453.00

(2) Salary accruals (July and August 1999 Deferred Salaries) reported as expenditures In the prior year General Purpose Financial Statements are InCluded on this analysis as required by program guidelines.

34

SCHEDULE "5"

EDUCATION TOTAL
REQUIRED

ACTUAL EXPENDITURES

SALARIES (1)(2) OPERATIONS

TOTAL

AMOUNT OF UNDEREXPENDITURE
FOR REQUIRED ALLOTMENT

$ 1,243,494.90 $ 1,686,430.02 $

59,338.21 $ 1,745,768.23

3,208,727.80

4,671,902.58

225,584.52

4,897,487.10

$ 4,452,222.70 $ 6,358,332.60 $

284,922.73 $ 6,643,255.33 $

0.00

1,345,146.20

2,297,767.08

125,437.56

2,423,204.64

0.00

2,124,962.10

3,371,321.78

218,709.33

3,590,031.11

0.00

1,180,920.60

1,565,033.56

230,615.58

1,795,649.14

0.00

792,237.90

796,022.28

90,129.15

886,151.43

0.00

542,131.40

661,004.84

186,623.75

847,628.59

0.00

$ 10,437,620.90 $ 15,049,482.14 $ 1,136,438.10 $ 16,185,920.24

$ 1,557,690.40 $

14,051.95 $ 456,186.40 1,697,504.01 276,619.52
59,919.37

1,292.76 $ 13,932.98 104,147.91 4,648,84
42.60

15,344.71 470,119.38 1,801,651.92 281,268.36
59,961.97

$ 1,557,690.40 $ 2,504,281,25 $

124,065.09 $ 2,628,346.34

0.00

683,179.00

1,020,564.25

26,118.90

1,046,683.15

0.00

$ 2,240,869.40 $ 3,524,845.50 $

150,183.99 $ 3,675,029.49

$

256,286.70 $

281,916.85 $

6,039.66 $

287,956.51

0,00

$ 12,934,777,00 $ 18,856,244.49 $ 1,292,661.75 $ 20,148,906.24

$

363,923.20 $

835,478,79

S

835,478.79

0.00

95,299.10

$

215,058.14

215,058.14

0.00

$

459,222.30 $

835,478.79 $

215,058.14 $ 1,050,536.93

$ 13,393,999.30 $ 19,691,723.28 $ 1,507,719.89 $ 21,199,443.17 $

0.00

s

42,738.00

85,870.00

$ ==1;,;2;;;8,.;;,6;,;;0;;;;8.;,;;,00~

$

333,328.89 $

333,328,89

82,860.81

82,860,81

$

416,189,70 $

416,189.70 $ .....= ....===...;;;0.;.00;;,

- 35

SECTIONll COMPLIANCE AND INTERNAL CONTROL REPORTS

RUSSELL W. HINTON
STATE AUDITOR
(404) 6562174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
June 6,2001

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the City of Dalton Board of Education
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements ofCity ofDalton Board ofEducation as ofand for the year ended June 30, 2000, and have issued our report thereon dated June 6, 2001. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements. We conducted our audit in accordance with 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.
Compliance
As part of obtaining reasonable assurance about whether City of Dalton Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grants, 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 ofour tests disclosed no instances ofnoncompliance that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered City of Dalton Board of Education's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the fmancial statements and not to provide assurance on the internal
2000YB-40A

control over financial reporting. However, we noted a certain matter involving the internal control over financial reporting and its operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over financial reporting that, in ourjudgment, could adversely affect City of Dalton Board of Education's ability to record, process, summarize and report financial data consistent with assertions of management in the financial statements. The reportable condition is described in the accompanying Schedule ofFindings and Questioned Costs as item FS-7721-00-02.
A material weakness is a condition in which the desigTI or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period ,by employees in the normal course of performing their assigned functions. Our consideration ofthe.internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions, and accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, the reportable condition noted above is considered to be a material weakness..
This report is intended solely for the information and use of management, members of the City of . Dalton Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
- -Respectfully submitted, ....

RWH:gp 2000YB-40A

Ru sell W. Hinton State Auditor

RUSSELL W. HINTON
STATE AUDITOR
(404) 6562174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
June 6, 2001

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the City of Dalton Board of Education

REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133

Ladies and Gentlemen:

Compliance

We have audited the compliance ofCity ofDalton B~ijfd ofEducation with the typesofcompliance

u.s. requirements described in the

Office of Management and Budget (OMB) Circular A-133

Compliance Supplement that are applicable to each ofits major Federal programs for the year ended

June 30, 2000. City of Dalton Board of Education's major Federal programs are identified in the

accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of

laws, regulations; contracts and grants applicable to each of its major Federal programs is the

responsibility of City ofDalton Board ofEducation's management. Our responsibility is to express

an opinion on City of Dalton Board of Education's compliance based on our audit.

We conducted our audit ofcompliance 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 ofthe United States; and OMB Circular A133, 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 ofcompliance requirements referred to above that could have a directand material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the City of Dalton Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on City ofDalton Board of Education's compliance with those requirements.

2000SA-55A

As described in item FA-7721-00-0 1 in the accompanying Schedule of Findings and Questioned

Costs, City of Dalton Board of Education did not comply with requirements regarding Activities

Allowed or Unallowed that are applicable to its Elementary and Secondary Education Act - Title II-

Eisenhower Professional Development (CFDA 84.281) and Elementary and Secondary Education

Act - Title VI - Innovative Education Program Strategies (CFDA 84.298) programs. Compliance

with this requirement is necessary, in our opinion, for City ofDalton Board of Education to comply

with requirements applicable to those programs.

.

In our opinion, except for the noncompliance described in the preceding paragraph, the City of Dalton Board ofEducation complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 2000.

Internal Control Over Compliance

The management of City of Dalton Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered City ofDalton Board ofEducation's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133.

We noted certain matters involving the internal control over compliance and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over compliance that, in our judgment, could adversely affect the City of Dalton Board of Education's ability to administer a major Federal program in accordance with applicable requirements oflaws, regulations, contracts and grants. Reportable conditions are described in the accompanying Schedule ofFindings and Questioned Costs as items FA-7721-00-01, FA~7721-00-02, FA-772 1-00-03, FA-772 1-00-04, FA-7721-00-05 and FA-7721-00-06.

A material weakness is a condition inwhich the design or operation of one or more of the internal control components does not reduce to a relatively low level of risk that noncompliance with the applicable requirements oflaws, regulations, contracts and grants that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, ofthe reportable conditions described above, we consider items FA-772 1-00-01 and FA-7721-00-02 to be material weaknesses.

2000SA-55A

This report is intended solely for the infonnation and use of management, members of the City of Dalton Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
4J.~~
Ru ell W. Hinton State Auditor
RWH:gp
2ooosA-55A

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

CITY OF DALTON BOARD OF EDUCATION - WHITFIELD COUNTY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2000

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-7721-98-01 FS-772l-99-01 FS-7721-99-02 FS-7721-99-03 FS-772 1-99-04

Further Action Not Warranted Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Unresolved - No Corrective Action Implemented Unresolved - No Corrective Action Implemented

CORRECTIVE ACTIONIRESPONSES

EXPENDITURESILIABILITIESIDISBURSEMENTS Principal and Interest Payments for Capital Leases in Excess of Allowable Amount . Finding Control Number: FS-772l-99-03

No corrective action noted.

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: FS-772l-99-04

Due to current staffing limitations and budgetary considerations prohibiting the hiring of additional administrative staff, the Board has decided not to pursue the recording ofgeneral fixed assets on the financial statements.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FA-772l-99-0l

Unresolved - See Corrective ActionlResponses

CORRECTIVE ACTIONIRESPONSES

SPECIAL TESTS AND PROVISIONS Inadequate Controls Over Accounting Functions for Central Warehouse Inventories Finding Control Number: FA-772l-99-01

Implemented for fiscal year 2001 since the fiscal year 1999 audit was completed at the end of fiscal year 2000, so fiscal year 2000 operated as in fiscal year 1999. A review of fiscal year 2001 records would prove complete implementation of corrective action plan.

SECTION IV FINDINGS AND QUESTIONED COSTS

CITY OF DALTON BOARD OF EDUCATION - WHITFIELD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2000

I SUMMARY OF AUDITOR'S RESULTS

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

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

General Fixed Assets

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

3. Noncompliance Material to the Financial Statements The audit ofthe City ofDalton Board ofEducation disclosed no instances ofnoncompliance deemed material to the financial statements.

4. Reportable Conditions in Internal Control Over Major Programs The audit report for the City ofDalton Board ofEducation disclosed reportable conditions in internal control over major programs for the following compliance requirements.

Activities Allowed or Unallowed Special Tests and Provisions'

Allowable Costs/Cost Principles

Of the reportable conditions described above, Activities Allowed or Unallowed and Allowable Costs/Cost Principles included items that. are considered to be material weaknesses.

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

6. Audit Findings Required to be Reported by Section .510(a) ofOMB Circular A-133 The City of Dalton Board of Education's audit disclosed audit findings required to be reported by se~tion .51O(a) ofOMB Circular A-133. These audit findings are included in section IV of this report.

- 1-

CITY OF DALTON BOARD OF EDUCATION - WHITFIELD COUNTY' SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2000

I SUMMARY OF AUDITOR'S RESULTS

7. Major Programs

.'

Federal awards audited as major programs areas follows:

84.010 ' Elementary and Secondary Education Act - Title I - Grants to Local Educational

Agencies

84.281 Elementary and Secondary Education Act - Title II - Eisenhower Professional

Development

84.298 Elementary and Secondary Education Act''- Title VI - Innovative Education

Program Strategies\

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

9. Low Risk Auditee ,. The City of Dalton Board ofEducation was audited as a low risk auditee based' on a waiver granted by the U. S. Department of Education. .

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EXPENDITURESILIABILITIESIDISBURSEMENTS Principal and Interest Payments for Capital Leases in Excess of Allowable Amount Nonmaterial Noncompliance Repeated From Prior Year Finding Control Number: FS-7721-00-01

The City ofDalton Board ofEducation made principal and interest payments totalling $5,287,419.39 on installment purchase agreements in excess of the 7.5% limitation ($1,909,492.23) imposed by Georgia Laws during fiscal year 2000. The Official Code of Georgia Annotated (OCGA) Section 20-2-506 provides, in part, as follows:

"The total combined annual payments for contracts under this Code section and contracts of

such school system under Article IX, Section ill, Paragraph I of the Constitution in any

calendar year, excluding guaranteed energy savings contracts, shall not exceed an amount equal

to 7.5 percent ofthe total local revenue collected for maintenance and operation ofthe school

system in the most recent year..."

..

Expenditures for principal and interest for installment purchase agreements under this Code Section should not exceed the maximum limit set by Georgia Laws. This noncompliance occurred because ofmanagement's decision to disregard specific limitation imposed upon the Board by OCGA 20-2506. Appropriate action should be taken by the Board to ensure the payments for principal and interest are not in excess of the maximum limitation imposed by Georgia Laws.

-2-

CITY OF DALTON BOARD OF EDUCATION - WHITFIELD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2000

IT FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EXPENDITURES/LIABILITIESIDISBURSEMENTS Principal and Interest Payments for Capital Leases in Excess of Allowable Amount Nonmaterial Noncompliance Repeated From Prior Year Finding Control Number: FS-7721-00-01

Management's Response:

A request for opinion from the attorney general has been requested. This request has been filed in light of the law being in existence prior to the SPLQST funding, therefore, we continue to have different interpretations from the audit department.

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-7721-00-02

The City of Dalton Board of Education did not maintain a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. This condition results in the general purpose financial statements of the Board being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the Board to establish accounting controls and procedures to provide for maintenance ofa General Fixed Assets Ac~ount Group. These subsidiary records should include.an inventory of land, buildings and equipment owned by the Board and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained of all additions and deletions to the General Fixed Asset Account Group.

Management's Response:

GASB Statement 34 will be implemented in July 2002; therefore no action will be taken in FY 00 or

01.

.

-3-

CITY OF DALTON BOARD OF EDUCATION - WHITFIELD COUNTY SCHEDULE OF-FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2000

III FEDERAL AWARD FINDINGS AND OUESTIONED COSTS

ACTNITIES ALLOWED OR UNALLOWED Failure to Establish Administrative Agreement/Contracts' Reportable Condition - Material Weakness Material Noncompliance U. S. Department of Education Through Georgia Department of Education Finding Control Number: FA-772l-00-0l

y- >

~,

The Board did not have.written agreements or contracts in place to' assure that the Elementary and Secondary Education Act - Title II (CFDA 84.281) and Title VI (CFDA 84.298) program funds were properly administered. The following deficiencies were noted:

1. There was no formal aweement between Georgia Department of Education (GDOE) and the City ofDalton Board ofEducation to define the responsibilities ofthe Board as a fiscal .agent. The Board primarily served as a fiscal agent for GDOE in managing the Innovative Program activities, which essentially involved the Board establishing afund account for each Federal program, requesting and receiving funds and making payments based on invoices approved by other entities.

2. The Board made payments to two contractors totaling $112,475.87 for contracted services

during fiscal year 2000. There were no written contractual agreements executed with the

two contractors detailing services to be performed. The payments to the contractors were

based on GDOE approved contractor invoices. Additionally, the rate, which was paid to

the contractors, was increased from $37.50 to $45.00 per hour during the fiscal year

without any documentation.

.

According to OMB Circular A-133, a written agreement should have been in place to describe the specific activities to be carried out by the'Board relative to.the Innovative Program'Center funds.

Management should establish a formal agreement with the Georgia Department of Education to ensure that the Board's responsibilities as a fiscal agent are clearly defined. Additionally, procedures should be implemented to assure that fully executed current contracts are in place that clearly define the work/services to be performed, the amount of compensation and other related provisions which would ensure that funds are paid for appropriate purposes.

Management's Response:

The Innovation Center is a program of the State of Georgia Department of Education. However, Dalton Public Schools has been the fiscal agent for many years.

-4-

CITY OF DALTON BOARD OF EDUCATION - WHITFIELD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2000
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ACTIVITIES ALLOWED OR UNALLOWED Failure to Establish Administrative Agreement/Contracts Reportable Condition - Material Weakness Material Noncompliance U. S. Department of Education Through Georgia Department of Education Finding Control Number: FA-7721-00-0J
Mariagement's Response:
It is the procedure ofDPS as a fiscal agent to process the documents for payment as submitted by the program director. 'Therefore, all payment requests submitted on behalfofthe Innovation Center were approved by the Innovation Center Director and DOE. All payments issued by DPS were made in accordance with the budget approved by the Department of Education. Contractual arrangements were never established by the DOE with DPS. All communication, correspondence and budget related matters were arrangements between DOE and the Innovation Center. Establishment ofrates' for contractual persons was not a function ofthe DPS responsibility. The Innovation Center Director and the DOE Liaison established all salary rates. The verification of work completed by the consultants was approved by the Center and/or the DOE. Dalton Public Schools was authorized only to process payments and requisition funds as a reimbursement to the district.
ALLOWABLE COSTS/COST PRINCIPLES Improper Expenditures Reportable Condition - Material Weakness U. S. Department of Education Through Georgia Department of Education Finding Control Number: FA-7721-00-02
The following direct costs charged to Elementary and Secondary Education Act - Title VI Innovative Program Strategies - Innovative Program Center (CFDA 84.298), either did not conform to OMB Circular A-87 requirements, or lacked sufficient documentation to support charges to the program.
1. An employee ofthe Innovative Program Center, whom was being paid a salary through the payroll system of the City of Dalton Board of Education, did not have on file within the personnel records an annual contract approved by the Board, teachers certification documentation, time sheets and payroll withholding information. Without proper documentation for these charges, the payments to the individual are not allowable program costs.
-5-

,---------------------------------------~-----------
CITY OF DALTON BOARD OF EDUCATION - WHITFIELD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2000

ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ALLOWABLE COSTS/COST PRINCIPLES Improper Expenditures Reportable Condition - Material Weakness U. S. Department of Education Through Georgia Department of Education Finding Control Number: FA-7721-00-02

2. A review of the documentation supporting seven vendor payments disclosed that in four cases, payments were made without proper approval. Purchase orders and invoices should be reviewed and approved prior to payment.

Management should establish internal controls to ensure that all expenditures of Federal programs

are properly documented and conform to requirements ofOMB Circular A-87 and be approved prior to payment. The Georgia Department of Education should review this matter and take appropriate

action to resolve the items noted above.

.
ALLOWABLE COSTS/COST PRINCIPLES
Improper Expenditures ..
..Reportable Condition;

. U. S. Department of Education

Through Georgia Department of Education Amount: $19,603.28 Finding Control Number: FA-7721-00-03

/

A review of direct cost charged to Elementary and Secondary Education Act - Title I - Grants to

Local Educational Agencies (CFDA 84.010), noted $19,603.28 in expenditures for cafeteria tables

which did not meet the requirements ofallowable expenditures for this program. In accordance with

OMB Circular A-87, costs charged to Federal programs must be reasonable and necessary for the

performance and administration ofthe program. Additionally, expenditures should not be made for items that should b~ paid for from. other Federal or non-Federal funds. Title I funds may only he

spent for instructional purposes.

'.

Management should establish internal controls to ensure that all expenditures charged to Federal programs are reviewed to ensure that all charges made are allowable by program guidelines. The Georgia Department ofEducation should review this matter and determine ifany reclaim offunds is appropriate.

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CITY OF DALTON BOARD OF EDUCATION - WHITFIELD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2000

. ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ALLOWABLE COSTS/COST PRINCIPLES. Improper Indirect Cost Expenditures Reportable Condition Amount: $36,534.98 Finding Control Number: FA-7721-00-04

An examination ofFederal programs revealed excessive and unallowable costs being charged to the Federal programs through an indirect cost rate.

In accordance with OMB Circular A-87, costs can be charged to Federal programs as long as they are necessary and reasonable. Indirect costs are claimed against Federal Grants through a Georgia Department of Education (GDOE) approved indirect cost rate. Such a rate is applied to those Federal funds where the Board carries out program and administrative responsibilities ofthe grant. For fiscal year 2000, GDOE approved a 2.14% indirect c9st rate for the Board. However, Federal programs had indirect cost rates of either 3% or 5% and.other Federal programs had indirect cost rates based on a remaining balance of the grant award..

The Federal programs and the amount of the excessive indirect costs charged are noted below:

Corporation for National and Community Services Pass-Through From Georgia Department ofEducation Learn and Serve America Schools and Community Based Programs (CFDA 94.004)

$19,860.73

Education, U. S. Department of Pass-Through From Georgia Department of Education Elementary and Secondary Education Act Title I - Grants to Local Educational Agencies (CFDA 84.010) Title II - Eisenhower Professional Development (CFDA 84.281) Title VI - Innovative Education Program Strategies (CFDA 84.298) Safe and Drug-Free Schools (CFDA 84.186)

5,675.99 840.82
5,358.64 1,781.56

Defense, U. S. Department of . Defense Activity for Non-Traditional Education Support
Troops to Teachers (CFDA N/A)

3,017.24

$36.534.98

The Board should document and obtain approval for an appropriate indirect cost rate for Federal programs in compliance 'withOMB Circular A-87. The $36,534.98 in excessive indirect cost charges should be refunded to the Georgia Department of Education.

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CITY OF DALTON BOARD OF EDUCATION - WHITFIELD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2000
III FEDERAL AWAim FINDINGS AND QUESTIONED COSTS
ALLOWABLE COSTS/COST PRINCIPLES Improper Indirect Cost Expenditures Reportable Condition Amount: $36,534.99 Finding Control Number: FA-7721-00-04
Management's Response:
The administrative payments to DPS was established as part of the Innovation Center budget and approved by DOE. This amount was in excess ofthe DPS Indirect Cost rate. These funds shall be refunded to the DOE.
SPECIAL TESTS AND PROVISIONS Failure to Invite Private Schools to Participate Reportable Condition U. S. Department of Education Through Georgia Department of Education Finding Control Number: FA-772 1-00-05
The Board could not provide documentation ofcontact with appropriate private schools,officials to determine whether they intended to participate in the Elementary and Secondary Education Act Title I - Grants to Local Educational Agencies (CFDA 84.010) program. This contact is required by 34 CFR 200.34 which states, in part, as follows:
"An LEA may receive funds under this part only if it implements progfams, activities, and procedures for the involvement ofparents ofparticipating public ~d private school chjldren."
This noncompliance occurred because of the Board's failure to monitor the Title I Program requirements as set forth in 34 CFR 200.34. Procedures should he established to ensure that all eligible private schools are invited to include their eligible students in the participation of Title I programs as requ~red.
Management's Response:
Failure to invite private schools to participate in Title I was an error on behalf of the district. The district has established a job description and responsibility assignments to correct the error. This responsibility has been assigned to the Coordinator ofTeaching and Learning and Special Programs.
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CITY OF DALTON BOARD OF EDUCATION - WHITFIELD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 2000
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS SPECIAL TESTS AND PROVISIONS Inadequate Controls Over Accounting Functions for Central Warehouse Inventories Reportable Condition U. S. Department of Education Through Georgia Department of Education Repeated From Prior Year Finding Control Number: FA-772 1-00-06 Our review of the Board's National School Lunch Program and School Breakfast Program (CFDA 10.553 and 10.555) revealed that the Board did not provide for adequate controls over administrative duties in the performance of the following accounting function and related procedures: The School Food Services Bookkeeper did not properly reconcile and account for Donated
Commodities stored at the central warehouse. The lunchroom managers in charge of receiving inventory items did not notify the central
office ifthe inventory items received did not match the lunchroom's request for inventory items from the central warehouse. These internal control deficiencies were the result ofmanagement's decision not to review controls relative to the donated commodities storage warehouse during the period under review. The Board should review accounting procedures in place, design procedures that enhance internal controls . related to the above control categories and implement procedures to strengthen internal controls over accounting functions to ensure adequate controls over donated commodities. Management's Response: This matter was brought to the att~ntion ofthe district during the FY 99 audit which was concluded in July of2000, therefore, it was too late to correct the problem for FY 99 or 00; a corrective action plan was immediately established and followed for FY 01.
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