Aioo , Q_\ E33 })3 \~91-~'8 AUDIT REPORT CITY OF DECATUR BOARD OF EDUCATION ACOMPONENTUNITOFTHE CITY OF DECATUR, GEORGIA YEAR ENDED JUNE 30, 1998 STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS 254 WASHINGTON STREET ATLANTA, GEORGIA 30334-8400 CITY OF DECATUR BOARD OF EDUCATION - DEKALB COUNTY - TABLE OF CONTENTS - SECTION I FINANCIAL INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS EXHIBITS GENERAL PURPOSE FINANCIAL STATEMENTS COMBINED STATEMENTS- OVERVIEW A COMBINED BALANCE SHEET ALL FUND TYPES 2 B COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES 3 C COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (NON-GAAP BASIS) GENERAL AND SPECIAL REVENUE FUNDS 5 D NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS 6 ADDmONAL FINANCIAL INFORMATION COMBINING STATEMENTS SPECIAL REVENUE FUND E COMBINING BALANCE SHEET 18 F COMBINING STATEMENT OF REVENUES, EXPENDITURES _ AND CHANGES IN FUND BALANCES 20 CAPITAL PROJECTS FUND G COMBINING BALANCE SHEET 22 H COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES 24 SCHEDULES 1 SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION 26 2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 27 3 SCHEDULE OF STATE REVENUE 29 4 SCHEDULE OF APPROVED LOCAL OPTION SALES TJ\X PROJECTS 30 5 SCHEDULE OF EXPENDITURES LOTTERY PROGRAMS 31 CITY OF DECATUR BOARD OF EDUCATION - DEKALB COUNTY - TABLE OF CONTENTS - SECTION I FINANCIAL ADDITIONAL FINANCIAL INFORMATION SCHEDULES ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS 6 OVERALL 33 7 BY PROGRAM 34 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 INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133 SECTION ID AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS SECTION I FINANCIAL RussELL W. HINTON STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400 May 21, 1999 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 Decatur Board of Education INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Ladies and Gentlemen: We have audited the accompanying general purpose financial statements of the City of Decatur Board of Education, a component unit ofthe City of Decatur, Georgia, as of and for the year ended June 30, 1998, as listed in the table of contents. These general purpose financial statements are the responsibility of the City ofDecatur Board of Education's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As described in the notes to the general purpose financial statements, the Board's financial statements have been prepared using certain accounting practices and policies which, in our opinion, vary in some respects from generally accepted accounting principles. These variances are described as follows: The general purpose 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. 98ARL-13B * School activity accounts maintained at the individual schools are not included in the general purpose financial statements. To conform to generally accepted accounting principles, these accounts should be included in the general purpose financial statements. * The Board did not recognize as expenditures, in the year ended June 30, 1998, a portion of salaries and the corresponding employer's cost of related benefits earned for contractual services completed prior to June 30, 1998. Also funds received, subsequent to June 30, 1998, from the Georgia Department of Education for the State's share of these unrecorded salaries and related benefits were not recorded as revenue in the year under review. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 1997, were improperly recorded in the year ended June 30, 1998. To conform to generally accepted accounting principles, revenues should be recorded when available and measurable and expenditures should be recorded when incurred, rather than when funds are received or disbursed. The aggregate effects on the general purpose 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 of Decatur Board of Education as of June 30, 1998, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued our report dated May 21, 1999, on our consideration of the City of Decatur Board of Education's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. The year 2000 supplementary information on Schedule "l" is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe supplementary information. However we did not audit the information and do not express an opinion on it. In addition, we do not provide assurance that City of Decatur Board ofEducation is or will become year 2000 compliant, that the Board's year 2000 remediation efforts will be successful in whole or in part, or that parties with which City of Decatur Board of Education does business are or will become year 2000 compliant. Our audit was performed for the purpose of forming an opinion on the general purpose financial statements of the City of Decatur Board of Education taken as a whole. The accompanying combining statements (Exhibits E through H) and the financial schedules (Schedules 2 through 7), which includes the Schedule of Expenditures of Federal Awards as required by U.S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part ofthe general purpose financial statements. Such information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and in our opinion, except for the effects ofthe matters referred to in the third paragraph, such information is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole. 98ARL-13B A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated Section 50-6-24. Respectfully submitted, ~~-~ Russell W. Hinton State Auditor RWH:jb 98ARL-13B CITY OF DECATUR BOARD OF EDUCATION - DEKALB COUNTY CITY OF D!;QAT!,,!R BOARD OF EDUCATIQN - DEKALB QOUNTY CQMBINED BALANCE SHEET ALL FUND TYPES J!,,!NE 30. 1998 EXHIBIT"A" ASSETS Cash and Cash Equivalents Investments Accounts Receivable Inventories Food Donated Commodities Purchased Food GOVERNMENTAL FUND TYPES SPECIAL CAPITAL GENERAL REVENUE PROJECTS FUND FUND FUND TOTALS {Memorandum Onl~l JUNE 30. 1998 JUNE 30. 1997 $ 7,176,785.48 $ 140,640.39 $ 1,852,686.95 $ 9,170,112.82 $ 3,334,016.77 4,121,277.37 10,000.00 4,131,277.37 3,884,299.41 443,513.84 270,643.59 446,483.99 1,160,641.42 457,718.38 18,136.67 8416.54 18,136.67 8 416.54 16,693.06 7 371.31 Total Assets $ 11:741,576.69 $ 447 837.19 $ 2,299,170.94 $ 14A881584.82 $ 7,700,098.93 LIABILITIES AND FUND EQUITY LIABILITIES Accounts Payable Salaries Payable Expired Grant Balances Payable Contracts Payable Retainages Payable Total Liabilities FUNDEQ!,,!ITY Fund Balances Reserved For Continuation of Federal Programs For Inventories Food Donated Commodities Purchased Food For State Capital Outlay Projects For SPLOST Projects Unreserved Undesignated Total Fund Equity $ 54,542.99 $ 58,348.71 $ 194,459.28 500.00 3,392.93 $ 55,042.99 $ 256,200.92 $ $ 8,164.49 18,136.67 8,416.54 $ $ 11.686,533.70 $ 11,686,533.70 s 156,918.57 191,636.27 $ 5,972.10 $ 171,996.99 19 107.38 197 076.47 $ 118,863.80 $ 194,459.28 3,892.93 171,996.99 19 107.38 508,320.38 $ 79,663.23 167,652.46 247,315.69 $ 8,164.49 72,880.00 2,016,704.11 12,510.36 2,102,094.47 s 18,136.67 $ 8,416.54 72,880.00 2,016,704.11 11,855,962.63 13,980,264.44 $ 16,693.06 7,371.31 178,947.69 7,249,TT1.18 7,452,783.24 Total Liabilities and Fund Equity s 11:741,576.69 S 447,837.19 $ 2,299,170.94 $ 14,488,584.82 $ 1,100,098.93 The notes to the general purpose financial statements are an integral part of this statement. -2- CITY OF DECATUR BOARD OF EDUCATION - DEKALB COUNTY COMBINED STATEMENT OF REVENUES. EXPENDITURES AND CHANGES JN FUND BALANCES ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30, 1998 EXHIBIT"B" 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 Total Expenditures Excess of Revenues over (under) Expenditures FUND BALANCE JULY 1 Food Inventory - Net Change in Period Donated Commodities Purchased Food GENERAL FUND SPECIAL REVENUE FUND CAPITAL PROJECTS FUND TOTALS {Memorandum Onlz:l YEAR ENDED JUNE 301 1998 JUNE 301 1997 $ 10,091,338.57 $ 55,689.93 11,005,242.89 1,011,229.55 636,933.90 $ 2,005,631.18 347,034.81 34,344.44 $ 2,329,354.09 16,310.83 10,762,616.91 $ 2,061,321.11 13,334,596.98 1,434,575.19 9,699,534.02 1,748,890.07 9,414,345.08 1,065,364.96 $ 22,223,500.94 $ 2,989,599.89 $ 2,380,009.36 $ 27,593,110.19 $ 21,928,134.13 $ 10,723,341.89 $ 996,239.63 442,324.56 529,630.54 707,672.87 1,312,433.35 348,353.44 1,952,734.19 374,812.59 5,781.61 30,436.72 130,829.93 5,583.33 $ 17,560,174.65 $ $ 4,663,326.29 $ 7,023,207.41 1,599,492.12 89,412.62 36,460.46 212,122.64 3,105.98 21,104.94 15,197.11 1,074,184.73 $ 3,051,080.60 $ -61,480.71 $ 250,628.14 $ 12,322,834.01 $ 11,565,670.32 456,862.58 1,085,652.25 478,785.02 529,630.54 919,795.51 1,312,433.35 348,353.44 1,955,840.17 395,917.53 5,781.61 45,633.83 1,205,014.66 5,583.33 456,862.58 1,041,532.11 280,960.07 501,313.10 1,000,356.74 1, 190,936.43 391,021.98 1,791,107.92 384,652.49 4,078.34 49,965.46 1,134,620.73 62,633.19 205,278.31 456,862.58 $ 21,068,117.83 $ 19,604,127.19 1,923,146.78 $ 6,524,992.36 $ 2,324,006.94 178,947.69 7,452,783.24 5,124,073.35 1,443.61 1,045.23 1,443.61 1,045.23 6,015.30 -1,312.35 fU!:!IP BALANCE JUNE ~ $ 1116861533.70 $ 1911636.27 $ 211021094.47 $ 1319801264.44 $ 71452i783.24 The notes to the general purpose financial statements are an Integral part of this statement. -3- CITY OF DECATUR BOARD OF EDUCATION - DEKALB COUNTY COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL - (NON-GAAP BASIS) GENERAL AND SPECIAL REVENUE FUNDS YEAR ENDED JUNE 30, 1998 EXHIBIT"C" GENERAL FUND ACTUAL (BUDGET BUDGET BASIS} REVENUES State Funds Federal Funds Taxes Other Funds $ 9,538,976.74 $ 10,091,338.57 5,000.00 55,689.93 8,834,598.00 11,005,242.89 414,410.00 1,071,229.55 Total Revenues $ 18,792,984.74 $ 22,223,500.94 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 $ 11,512,987.00 $ 10,723,341.89 896,738.00 387,491.00 527,372.00 885,653.00 1,408,840.00 407,512.00 2,053,266.00 427,930.00 5,000.00 1,100.00 149,093.00 996,239.63 442,324.56 529,630.54 707,672.87 1,312,433.35 348,353.44 1,952,734.19 374,812.59 5,781.61 30,436.72 130,829.93 51583.33 Total Expenditures $ 18,6621982.00 $ 1715601174.65 Excess of Revenues over (under) Expenditures $ 130,002.74 $ 4,663,326.29 aa1 FUND BALANCE JI.ILY 1, 1 6,698,349.45 7,023,207.41 Adjustments -670.55 El.!~D BALANCE J!.!NE ~!2. 199 $ 6,827,681.64 $ 1116861533.70 SPECIAL REVENUE FUND ACTUAL (BUDGET BUDGET BASIS} $ 446,992.00 $ 636,933.90 1,856,670.00 2,005,631.18 384,000.00 347,034.81 $ 2,687,662.00 $ 2,989,599.89 $ 1,315,299.00 $ 1,599,492.12 72,313.00 31,773.00 89,412.62 36,460.46 176,039.00 212,122.64 37,566.00 35,719.00 1,085,000.00 3,105.98 21,104.94 15,197.11 1,074,184.73 $ 2?53,709.00 $ 3,051,080.60 $ -66,047.00 $ -61,480.71 318,453.20 226,563.77 31,562.93 $ - 283,969.13 $ 1651083.06 The notes to the general purpose financial statements are an integral part of this statement -5- CITY OF DECATUR BOARD OF EDUCATION - DEKALB COUNTY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 1998 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REPORTING ENTITY The City of Decatur 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 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 Decatur, Georgia. Accordingly, the City of Decatur Board of Education is determined to be a component unit of the City of Decatur, Georgia, which is the primary government. FUND ACCOUNTING The Board 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. General Fixed Assets are recorded as expenditures in the various funds at the time of purchase. A General Fixed Assets Account Group is not presently maintained by the Board. To conform to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types. Although "school activity accounts" are maintained at the individual schools, neither the assets, liabilities and fund equity, nor the revenues, expenditures and changes in fund balances of these accounts are reflected in these financial statements. To conform to generally accepted accounting principles, these accounts should be recorded in the general purpose financial statements. The general purpose financial statements account for all State, Federal, Taxes and Other funds under control ofthe Board, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds presented in this report are as follows: GOVERNMENTAL FUND TYPES - are used to account for all or most ofa Board's educational activities. Governmental Fund Types include: GENERAL FUND - the fund used to account for all financial resources ofthe Board except those required to be accounted for in another fund. These transactions relate to resources obtained and used for services provided by a board of education. SPECIAL REVENUE FUND - the fund used to account for the procee~ ofspecific revenue sources (other than for major capital projects) that are legally restricted to expenditures for specified purposes. These funds are received primarily from the Georgia Department ofEducation and from the Federal government to accomplish specific educational objectives. -6- CITY OF DECATUR BOARD OF EDUCATION - DEKALB COUNTY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998 Note I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction of major capital facilities. BASIS OF ACCOUNTING The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Their reported fund balance is considered 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. Governmental funds are accounted for using the modified accrual basis of accounting under which: Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount ofthe transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities ofthe current period. Those revenues considered susceptible to accrual are property taxes, local option sales truces, intergovernmental grants and investment income. Expenditures are generally recognized when the related fund liability is incurred. A departure from the above definitions is the accounting treatment afforded the fmal two payments on General Fund teachers' and bus drivers' contracts, and the resources available from the Georgia Department of Education for the State's share of these contracts. During fiscal year 1998, a substantial number of personnel ofthe Board were employed for a one hundred and ninety day period beginning in late August 1997 and ending in early June 1998. Personnel contracts for this employment period specify that compensation be paid in twelve equal monthly payments beginning in September 1997 and ending in August 1998. State grants to fund the State's share ofthese contracts were disbursed from the Georgia Department of Education to the Board in the same twelve months. As of June 30, 1998, compensation under these employment contracts had been earned, but two ofthe twelve monthly payments, due for July and August 1998, had not been made. Payments for these two months were made and recorded as expenditures by the Board subsequent to June 30, 1998. Also, the State's portion ofthe compensation paid in July and August 1998 was received and recorded as revenue in the fiscal year subsequent to June 30, 1998. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 1997, were recorded in the year ended June 30, I 998. Generally accepted accounting principles require that revenues be recorded when available and measurable and that expenditures be recorded when incurred, rather.than when funds are received or disbursed. -7- CITY OF DECATUR BOARD OF EDUCATION - DEKALB COUNTY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998 Note I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BUDGET The City of Decatur 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 of budget control was established by the Board at the aggregate level. The budget for governmental funds was prepared on a basis other than generally accepted accounting principles. The budget process begins when the Board's administration prepares a tentative budget for the Board's approval. After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper of general circulation in the locality. At the next regular meeting ofthe Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final school budget. This final budget is then submitted, in accordance with provisions of the Quality Basic Education Act, OCGA Section 20-2-167, to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end. The Statement ofRevenues, 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 I, 1997 $ 250,628.14 Adjustments Inventories - July I, 1997 Food Donated Commodities Purchased Foods -16,693.06 -7,371.31 Fund Balance July 1, 1997 (Budget Basis) $ 226,563.77 Excess ofRevenues and Other Financing Sources over (under) Expenditures and Other Financing Uses -61,480.71 FUND BALANCE JUNE 30, 1998 (Budget Basis) $ 165,083.06 -8- CITY OF DECATUR BOARD OF EDUCATION - DEKALB COUNTY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998 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 authorize the Board to deposit its funds in one or more solvent banks, insured Federal savings and loan associations, or insured State chartered building and loan associations. INVESTMENTS COMPOSITION OF INVESTMENTS Investments made by the Board in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market 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 Board to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following: (1) Obligations issued by the State of Georgia or by other states, (2) Obligations issued by the United States government, (3) Obligations fully insured or guaranteed by the United States government or a United States government agency, (4) Obligations ofany corporation of the United States government, (5) Prime banker's acceptances, (6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services, (7) Repurchase agreements, and (8) Obligations of other political subdivisions ofthe State of Georgia. -9- CITY OF DECATUR BOARD OF EDUCATION - DEKALB COUNTY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998 Note I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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. PROPERTY TAXES The City of Decatur fixed the property tax levy for the 1997 tax year (calendar year) on March 17, 1997 (levy date). Taxes were due on June 1, 1997 and could be paid in two installments on June 1, 1997 and December 20, 1997 (due dates). The lien date for property taxes was January 1, 1997. Taxes collected within the current fiscal year or within 60 days after year-end are reported as revenue in fiscal year 1998. The City of Decatur 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 1997 tax year (calendar year) for the City of Decatur Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value): School Operations ~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 $2,329,354.09 and was recorded in the Capital Projects Fund. The State will terminate collection ofthis tax once an additional $13,092,845.91 has been collected or on June 30, 2002, whichever occurs first. INVENTORIES FOOD INVENTORIES Inventories of donated food commodities used in the preparation of meals are reported on the Combined Balance Sheet at their Federally assigned value. Purchased foods inventories are reported on the Combined Balance Sheet at cost (first-in, first-out). Donated food commodities are recorded as revenues and expenditures at the time commodity items are received. Purchased foods inventories are recorded as expenditures at the time of purchase. The inventories reported on the balance sheet for donated food commodities and for purchased foods are equally offset by reservations of fund balance which indicates that these amounts do not constitute "available spendable resources" even though they are a component of net current assets. -10- CITY OF DECATUR BOARD OF EDUCATION - DEKALB COUNTY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 1998 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES COMPENSATED ABSENCES Compensated absences represent obligations of the Board relating to employees' rights to receive compensation for future absences based upon service already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. No liability has been recorded in the individual funds for the current portion of this obligation as this amount is deemed immaterial to the general purpose financial statements. Additionally, the dollar value of accumulated compensated absences at June 30, which will be payable from future resources has not been recorded in the General Long-Term Debt Account Group as this liability is also deemed to be immaterial to the fair presentation of these financial statements. INTERFUND TRANSACTIONS The Board has the following type of interfund transactions: Reimbursements of expenditures initially made from a fund that are properly applicable to another fund, are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed. MEMORANDUM ONLY -TOTAL COLUMNS Total columns on the general purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position or results of operations in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggre~ation 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 of money which has not been secured by surety bond, by guarantee ofinsurance, or by collateral. The aggregate of the face value of such surety bond and the market value ofsecurities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount of deposit insurance. OCGA Section 45-8-11 provides an officer holding public funds may, in his discretion, waive the requirement for security in the case of operating funds placed in demand deposit checking accounts. Acceptable security for deposits consists ofany one of or any combination of the following: - 11 - CITY OF DECATUR BOARD OF EDUCATION - DEKALB COUNTY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998 Note 2: DEPOSITS AND INVESTMENTS (1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia, (2) Insurance on accounts provided by the Federal Deposit Insurance Corporation, (3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia, (4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia, (5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose, (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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association. CATEGORIZATION OF DEPOSITS At June 30, 1998, the bank balances were $10,302,112.44. The amounts of the total bank balances are classified into three categories of credit risk: Category 1 - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the Board or by the Board's agent in the Board's name. Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the Board's name. Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the Board's name.) The Board's deposits are classified by risk category at June 30, 1998, as follows: - 12- CITY OF DECATUR BOARD OF EDUCATION - DEKALB COUNTY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998 Note 2: DEPOSITS AND INVESTMENTS Risk Cate~ozy Bank Balance 1 $ 300,000.00 2 8,074,629.56 3 1,927,482.88 Total $10.302.112.44 CATEGORIZATION OF INVESTMENTS At June 30, 1998, the carrying value ofthe Board's total investments was $4,121,277.37 which is materially the same as fair value. This investment consisted entirely of funds invested in the Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services which are not required to be categorized since the Board did not own any specific identifiable securities in the pool. The investment policy ofthe State of Georgia, Office of Treasury and Fiscal Services for the Local Government Investment Pool (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. A description of the Primary Liquidity Portfolio is as follows: The Primary Liquidity Portfolio consists of Georgia Fund I, which is a combination local and state government investment pool, and Fund 6. Georgia Fund 1 is a stable net asset value investment pool which follows Standard and Poor's criteria for AAAm rated money market funds. However, Georgia Fund 1 operates in a manner consistent with Rule 2a-7 ofthe Investment Company Act of 1940 and is considered to be a 2a-7 like pool. The pool is not registered with the SEC as an investment company. The pool's primary objectives are safety ofcapital, 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 determines participant's shares sold and redeemed based on $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost which approximates fair value. The pool does not issue any legally binding guarantees to support the value of the shares. Participation in the pool is voluntary and deposits consist offunds from local governments; operating and trust funds of Georgia's state agencies, colleges and universities; and current operating funds of the State of Georgia's General Fund. Investments in Georgia Fund 1 and Fund 6 are directed toward short-term instruments such as 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 ofGeorgia Fund 1 may not exceed 60 days. Fund 6 maintains a duration ofapproximately one year. The weighted average maturity for Georgia Fund 1 on June 30, 1998 was 29 days. The average investment duration for Fund 6 on June 30, 1998 was .96 years. -13 - CITY OF DECATUR BOARD OF EDUCATION - DEKALB COUNTY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998 Note 3: NON-MONETARY TRANSACTIONS The Board 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 1 - Inventories Note 4: RISK MANAGEMENT The Board is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; natural disaster and unemployment compensation. The Board 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 ofloss on account ofgeneral 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 Board 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, general liability (including coverage for sexual harassment, molestation and abuse) and automobile risks. Payment of excess insurance for the system varies by line of coverage. The Board is self-insured with regard to unemployment compensation claims. The Board accounts for claims within the General Fund with expenditure and liability being reported when it is probable that a loss has occurred, and the amount ofthat loss can be reasonably estimated. Changes in the unemployment compensation claims liability during the last two fiscal years are as follows: 1997 1998 Beginning ofYear Liability Claims and Changes in Estimates $ 0.00 $ 8,861.00 $ $ 0.00 $ 5,871.00 $ Claims Paid End ofYear Liability 8,861.00 $ 0.00 5,871.00 $ 0.00 The Board 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 Boarcfpays an annual premium to the Fund for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Fund with the United States Fidelity and Guaranty Company to provide coverage for potential losses sustained by the Fund in excess of $350,000.00 loss per occurrence, up to the statutory limit. Also, should losses within the retained limit of $350,000.00 aggregate to more than seventy-five percent (75%) of the standard experience rated premium during the policy term, the policy with the United States Fidelity and Guaranty Company will pay the next $1,000,000.00 ofloss. - 14- CITY OF DECATUR BOARD OF EDUCATION - DEKALB COUNTY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998 Note 4: RISK MANAGEMENT The Board has purchased surety bonds to provide additional insurance coverage as follows: Position Covered Amount Superintendent All Other Employees $ 100,000.00 $ 50,000.00 Note 5: ON-BEHALF PAYMENTS The Board has recognized revenues and expenditures in the amount of$328,558.83 for health insurance and retirement contributions paid on the Board's behalf by the following State Agencies. Georgia Department of Education Paid to the State Merit System of Personnel Administration For Health Insurance of Non-Certified Personnel In the amount of $272,479.45 Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of$24,577.38 Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $31,502.00 Note 6: SIGNIFICANT COMMITMENTS The following is an analysis of significant outstanding construction or renovation contracts executed by the Board as ofJune 30, 1998. Project Unearned Executed Contracts Project Management Services Renovation of Decatur High School $ 453,205.00 259,398.59 $ 112.fiQJ.~2 The amounts described in this note are not reflected in the general purpose financial statements. - 15 - CITY OF DECATUR BOARD OF EDUCATION - DEKALB COUNTY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 1998 Note 7: 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 8: ACCUMULATED EMPLOYEES' LEAVE Regular full-time, twelve (12) month employees earn vacation leave with pay. Employees earn from ten (10) to fifteen (15) days per year based on years ofcontinuous service with a maximum accumulation ofthirty (30) days. Upon retirement from the school system, employees may be paid for unused vacation leave up to a maximum of twenty (20) days at the current rate of pay or $100.00 per day, whichever is less. Regular employees earn sick leave with pay at a rate of one (I) to fifteen (15) days per year based on years of continuous service with a maximum accumulation of one-hundred and five (105) days. When an employee, eligible for contract renewal, retires from the school system with a minimum often (10) years of continuous service, and is able to draw retirement from the state retirement system, that employee may be paid for accumulated sick leave up to a maximum of one hundred (100) days at the rate of $20.00 per day. See Note 1_ - Compensated Absences Nore9: RETIREMENTPLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS) TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school systems are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts. TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe Board who are covered by TRS are required by State statute to contribute 5% oftheir gross earnings to TRS. The Board makes monthly employer contributions to TRS at rates adopted by the TRS Board ofTrustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 11.81% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows: - 16- CITY OF DECATUR BOARD OF EDUCATION - DEKALB COUNTY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998 Note 9: RETIREMENT PLANS Fiscal Year 1998 1997 1996 Percentage Contributed 100% 100% 100% Required Contribution $ 1,383,545.12 $ 1,297,920.80 $ 1,301,155.73 - 17 - CITY OF DECATUR BOARD OF EDUCATION - DEKALB COUNTY COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30, 1998 ASSETS Cash and Cash Equivalents Investments Accounts Receivable Inventories Food Donated Commodities Purchased Food SCHOOL FOOD SERVICES FUND LOTTERY PROGRAMS $ 131,644.31 $ 66,912.82 10,000.00 91,682.37 18,136.67 8,416.54 Total Assets $ 259,879.89 $ ___ss_,9_1_2_.s_2 LIABILITIES AND FUND EQUITY LIABILITIES Cash Overdraft: Accounts Payable Salaries Payable Expired Grant Balances Payable Total Liabilities FUNDEOUITY 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 p1,.irpose financial statements. -18- $ 19,281.71 $ 14,889.04 57,126.40 52,023.78 $ 76,408.11 $ 66,912.82 $ 18,136.67 8,416.54 156,918.57 $ $ 183,471.78 $ 0.00 0.00 s___ . $ 259,879.89 ss_,9_1_2_.s_2 EXHIBIT"E" FEDERAL PROGRAMS OTHER PROGRAMS TOTALS JUNE 30, 1998 JUNE 30, 1997 $ 198,557.13 $ 344,831.04 10,000.00 $ 167,358.31 $ 11,602.91 270,643.59 194,164.22 18,136.67 8,416.54 16,693.06 7,371.31 $ 167,358.31 $ 11,602.91 $ 505,753.93 $ 563,059.63 $ 46,313.83 $ 24,177.96 85,309.10 3,392.93 $ 159,193.82 $ 11,602.91 $ 11,602.91 $ 57,916.74 $ 58,348.71 194,459.28 3,392.93 314,117.66 $ 101,191.95 43,587.08 167,652.46 312,431.49 $ 8,164.49 0.00 $ $ 8,164.49 $ $ 8,164.49 0.00 0.00 $ 18,136.67 $ 8,416.54 156,918.57 191,636.27 $ 16,693.06 7,371.31 226,563.77 250,628.14 $ 167,358.31 $ 11,602.91 $ 505,753.93 $ 563,059.63 -19- CITY OF DECATUR BOARD OF EDUCATION-DEKALB COUNTY COMBINING STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES SPECIAL REVENUE FUND YEAR ENDED JUNE 30. 1998 REVENUES State Funds Federal Funds Other Funds Total Revenues EXPENDITURES Current Instruction Support Services Pupil Services Improvement of Instructional Services General Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Food Services Operation Community Services Operations Total Expenditures Excess of Revenues over (under) Expenditures FUND BALANCE JULY 1 Food Inventory - Net Change in Period Donated Commodities Purchased Food FUND BALANCE JUNE 30 SCHOOL FOOD SERVICES FUND LOTTERY PROGRAMS $ 64,654.00 $ 592,850.72 347,034.81 $ 1,004,539.53 $ 522,279.90 522,279.90 $ 477,559.61 32,735.72 11,905.97 $ 1,074,184.73 78.60 $ 1,074,184.73 $ $ -69,645.20 $ 250,628.14 522,279.90 0.00 . 0.00 1,443.61 1,045.23 ------ $ 183,471.78 $ 0.00 See notes to the general purpose financial statements. -20- EXHIBIT"F" FEDERAL PROGRAMS OTHER PROGRAMS TOTALS YEAR ENDED JUNE 30, 1998 JUNE 30, 1997 $ $ 1,412,780.46 $ 1,412,780.46 $ 50,000.00 $ 50,000.00 $ 636,933.90 $ 2,005,631.18 347,034.81 2,989,599.89 $ 792,805.94 1,707,233.72 359,375.02 2,859,414.68 $ 1,121,932.51 35,825.12 $ 36,460.46 171,068.45 3,105.98 21,104.94 15,118.51 $ 1,404,615.97 $ $ 8,164.49 $ 0.00 $ 20,851.78 29,148.22 50,000.00 $ 0.00 $ 0.00 1,599,492.12 $ 89,412.62 36,460.46 212,122.64 3,105.98 21,104.94 15,197.11 1,074,184.73 3,051,080.60 $ --61 ,480.71 $ 250,628.14 1,400,196.17 114,829.68 39,935.70 173,772.00 14,724.55 20,476.96 15,2~7.57 1,062,233.89 52,373.94 2,893,810.46 -34,395.78 280,320.97 1,443.61 1,045.23 6,015.30 -1,312.35 $ 8,164.49 $ _ _ _ _o_.o_o $ 191,636.27 $ 250,628.14 -21- CITY OF DECATUR BOARD OF EDUCATION - DEKALB COUNTY COMBINING BALANCE SHEET CAPITAL PROJECTS FUND JUNE 30, 1998 ASSETS Cash and Cash Equivalents Accounts Receivable REGULAR GEORGIA STATE FINANCING AND INVESTMENT COMMISSION $ 12,510.36 $ 21,846.00 Total Assets $ 12,s1 o.36 $ ======-2=1.,.8_4_s,,..,.o_o LIABILITIES AND FUND EQUITY LIABILITIES Accounts Payable Contracts Payable Retainages Payable Total Liabilities FUND EQUITY Fund Balances Reserved For Capital Outlay Projects For State Capital Outlay Projects For SPLOST Projects Unreserved Undesignated Total Fund Equity $ 21,846.00 $ _____12;.i.;,5;..;1.0....._3_6__ 0.00 $ 12,510.36 $ _ _ _2_1_._,8_4_6._00_ Total Liabilities and Fund Equity $ 12,s10.3s $ _ _ _2_1s.46..,0.0. 11111 See notes to the general purpose financial statements. -22- EXHIBIT"G" SPECIAL PURPOSE LOCAL OPTION SALES TAX $ 1,801,641.03 $ 412,139.55 LOTTERY PROJECT TOTALS JUNE 30, 1998 JUNE 30, 1997 16,689.56 $ 1,852,686.95 $ 178,947.69 34,344.44 446,483.99 $ 2,213,780.58 $ 51,034.00 $ 2,299,170.94 $ ===-=17==8=,9=4=7..6..9...,. $ 5,972.10 171,996.99 19,107.38 $ 197,076.47 $ 5,972.10 171,996.99 19,107.38 $ 197,076.47 $ $ 2,016,704.11 0.00 $ 2,016,704.11 $ 51,034.00 $ 0.00 51,034.00 $ $ 72,880.00 2,016,704.11 12,510.36 2,102,094.47 $ 178,947.69 0.00 178,947.69 $ 2.213.780.58 $ 51,034.00 $ 2 1299, 170.94 $ _ _1_,7_.8._947.69 11111111111111111 -23- CITY OF DECATUR BOARD OF EDUCATION - DEKALB COUNTY COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES CAPITAL PROJECTS FUND YEAR ENDED JUNE 30, 1998 REVENUES State Funds Taxes Other Funds Total Revenues EXPENDITURES Capital Outlay Building and Building Improvements Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES {USES} Operating Transfers In Operating Transfers Out Total Other Financing Sources (Uses) Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses FUND BALANCE JULY 1 Residual Equity Transfer FUND BALANCE JUNE 30 REGULAR GEORGIA STATE FINANCING AND INVESTMENT COMMISSION $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 10,384.99 $ 54,810.28 $ -10,384.99 $ -54,810.28 $ -10,384.99 $ -54,810.28 22,895.35. 156,052.34 -79,396.06 $ 12,51 o.36 $ ____21.,,a..,4_,6_,.o.o.. See notes to the general purpose financial statements. -24- EXHIBIT"H" SPECIAL PURPOSE LOCAL OPTION SALES TAX LOTTERY PROJECT TOTALS YEAR ENDED JUNE 30, 1998 . JUNE 30, 1997 $ 34,344.44 $ 34,344.44 $ 0.00 $ 2,329,354.09 2,329,354.09 16,310.83 16,310.83 $ 2,345,664.92 $ 34 344.44 $ 2,380,009.36 $ 0.00 $ 324,100.87 $ $ 2,021 ,564.05 $ 67,566.44 $ -33,222.00 $ 456,862.58 $ ___20_5__,2__7_8._3_1 1,923.146.78 $ _ _-2_0___.5._2_7_8_.3_1 $ $ -4.859.94 $ -4,859.94 $ $ 2,016,704.11 $ 0.00 4,859.94 $ 4,859.94 $ 4,859.94 -4,859.94 0.00 -28,362.06 $ 0.00 79.396.06 1,923,146.78 $ 178,947.69 -205,278.31 384,226.00 $ 2,01 s,704.11 $ 51,034.00 $ 2.1021094.47 $ _ _ _11_81,.9111411,.7.6..9,.. -25- CITY OF DECATUR BOARD OF EDUCATION - DEKALB COUNTY SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION YEAR 2000 DISCLOSURES YEAR ENDED JUNE 30. 1998 SCHEDULE "l" At Jtllle 30, 1998, the City of Decatur Board of Education had no outstanding contractual commitments for the purpose ofmaking computer systems and other electronic equipment year 2000 compliant. The year 2000 issue is the result of shortcomings in many electronic data processing systems and other equipment that make operations beyond year 1999 troublesome. The year 2000 issue is ofprimary concern for the Board's financial accotlllting system. The following stages have been identified as necessary to implement a year 2000 compliant systems. Awareness Stage - Encompasses establishing a budget and project plan for dealing with the year 2000 issue. Assessment Stage - The actual process of identifying all of its systems and individual components of the systems to check for compliance. Remediation Stage - When changes are made to systems and equipment. Validationffesting Stage - The process of ensuring that the changes made to systems and equipment will produce a year 2000 compliant system. It will be necessary for the Board to progress through all four of these stages for each computer and/or electronic system, not already year 2000 compliant, in order to assure that these systems will not be adversely affected. As of Jtllle 30, 1998, the financial accotlllting system was determined to be at the Awareness Stage. The Board's financial accotlllting software (GENESIS) and hardware (Wang VS) are owned by the State (Georgia Department ofEducation). These systems have been determined to be critical to the Board's ability to successfully conduct operations. As ofJtllle 30, 1998, the State had not contracted for the remediation of either the Wang VS operating system or the GENESIS accotlllting software. In the subsequent period, the Georgia Department of Education remediated the Wang VS operating system and the updated operating system was installed at all GENESIS sites as of December 9, 1998. The Georgia Department of Education has remediated the GENESIS software and conducted tests at nine pilot sites. The remediated GENESIS software has been provided to all boards of education currently utilizing the GENESIS accotlllting software. See notes to the general purpose financial statements. -26- CITY OF DECATUR BOARD OF EDUCATION- DEKALB COUNTY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 301 1998 SCHEDULE"2" FUNDING AGENCY PROGRAM/GRANT Agriculture, U. 5. Department of Pass-Through from Georgia Department of Education Food and Nutrition Program Food Services School Breakfast Program 1998 Grant National School Lunch Program 1998 Grant Food Distribution Program (1) Total U. 5. Department of Agriculture Education, U. 5. Department of Direct Impact Aid 1998 Grant Pass-Through from Georgia Department of Education Safe and Drug-Free Schools 1998 Grant Elementary and Secondary Education Act Trtlel Grants to Local Educational Agencies 1998 Grant Even Start 1998 Grant Trtlell Eisenhower Professional Development 1998 Grant Foreign Languages Assistance 1998 Grant TrtleVI Innovative Education Program Strategies 1998 Grant Technology Literacy Challenge Fund Grant 1998 Grant lncfrviduals with Disabilities Education Act Part B - Special Education Flovv Through 1998 Grant Preschool 1998 Grant Vocational Education - Basic Grants to States High School Program Basic Grant 1998 Grant Tech-Prep Education 1998 Grant Learn and Serve America School and Community Based Programs 1998 Grant Stewart B. McKinney Homeless Assistance Act Education for Homeless Children and Youth 1998 Grant Total U. S. Department of Education CFDA NUMBER PASSTHROUGH ENTITY ID NUMBER FEDERAL REVENUE IN PERIOD EXPENDITURES IN PERIOD * 10.553 * 10.555 10.550 NIA $ 119,411.68 (2) N/A 422,865.44 $ 1,023,611.13 (3) N/A 501573.60 50,573.60 $ 5921850.72 $ 110741184.73 84.041 $ 8,964.94 (5) 84.186 N/A 14,005.00 $ 14,005.00 84.010 N/A 84.213 NIA 84.281 NIA 684,482.65 185,713.74 17,500.00 684,482.65 185,713.74 17,500.00 84.298 NIA 84.318 NIA 18,154.00 190,400.00 18,154.00 184,338.13 84.027 NIA 84.173 NIA 161,020.00 23,121.00 161,020.00 23,121.00 84.048 84.243 94.004 84.196 NIA 71,043.95 71,043.95 NIA 5,000.00 5,000.00 NIA 10,000.00 7,897.38 NIA 19,210.12 19,210.12 $ 1.408.615.40 $ 1.391.485.97 - 'Zl- CITY OF DECATUR BOARD OF EDUCATION- DEKALB COUNTY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 1998 SCHEDULE "2'' FUNDING AGENCY PROGRAM/GRANT CFDA NUMBER PASSTHROUGH ENTITY ID NUMBER FEDERAL REVENUE IN PERIOD EXPENDITURES IN PERIOD Health and Human Resources, U. S. Department of Pass-Through from Georgia Department of Human Resources Child Care Development Block Grant 427-93-71522 93.037 N/A $ 131130.00 $ 13 130.00 OTHER FEDERAL ASSISTANCE Defense, U. S. Department of Direct Department of the Army R.O.T.C. Program 1998 Grant $ 46?24.99 (4) Total Federal Financial Assistance N/A = Not Available $ 2,061,321.11 $ 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 1998 National School Lunch Program. (3) Expenditures for this program include State and/or Other Funds. Expenditures are not maintained by fund source. (4) Expenditures on this program were not maintained by fund source. (5) Funds earned on this program do not require reporting of expenditures. 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 Decatur Board of Education and is presented on the modified accrual basis of accounting which is the same basis of accounting used in the presentation of the general purpose financial statements. 2,478,800.70 See notes to the general purpose financial statements. -28- CITY OF DECATUR BOARD OF EDUCATION - DEKALB COUNTY SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 1998 SCHEDULE "3" AGENCY/FUNDING GRANTS Education, Georgia Department of Quality Basic Education General and Career Education Programs Special Education Programs Remedial Education Program Media Center Programs Staff Development Programs Indirect Cost Pupil Transportation Regular Bus Replacement Middle School Incentive Program Special Instructional Assistance In-School Suspension Mid-term Adjustment Counselors Grades 4 and 5 Technology Training Local Fair Share Educational Equalization Funding Grant Food Services Other State Programs Ad Valorem Tax Adjustment Alternative Program At-Risk Summer School Program Gifted Technology Health Insurance Preschool Handicapped Program Remedial Summer School Program Teachers' Retirement Lottery Programs Alternative School Program Exceptional Growth-Capital Outlay Instructional Technology Assistive Technology Classroom Technology Office of School Readiness Pre-Kindergarten Program Office of Treasury and Fiscal Services Public School Employees Retirement CONTRACTS Human Resources, Georgia Department of Family Connection Program Office of Planning and Budget State of Georgia Georgia Challenge Program GOVERNMENTAL FUND TYPES SPECIAL CAPITAL GENERAL REVENUE PROJECTS FUND FUND FUND TOTAL $ 5,805,233.00 1,654,600.00 321,161.00 258,641.00 79,145.00 1,686,044.00 65,416.00 23,583.00 204,070.00 304,252.00 86,492.00 15,446.00 23,303.00 86,527.00 -1,463,467 .00 344,327.00 $ 76,716.00 98,000.00 8,725.65 6,695.00 272,479.45 52,537.00 3,333.09 24,577.38 64,654.00 4,132.00 $ 6,789.00 76,326.00 435,032.90 31,502.00 $ 34,344.44 5,805,233.00 1,654,600.00 321,161.00 258,641.00 79,145.00 1,686,044.00 65,416.00 23,583.00 204,070.00 304,252.00 86,492.00 15,446.00 23,303.00 86,527.00 -1,463,467.00 344,327.00 64,654.00 76,716.00 98,000.00 8,725.65 6,695.00 272,479.45 52,537.00 3,333.09 24,577.38 4,132.00 34,344.44 6,789.00 76,326.00 435,032.90 31,502.00 50,000.00 50,000.00 22,000.00 22,000.00 $ 1010911338.57 $ 6361933.90 $ 341344.44 $ 1oi7a21a1a.91 See notes to the general purpose financial statements. -29- CITY OF DECATUR BOARD OF EDUCATION - DEKALB COUNTY SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS YEAR ENDED JUNE 30, 1998 SCHEDULE 4 PROJECT Renovations, modification, additions and equipment for the Central Office, Clairemont Elementary, College Heights Elementary, Decatur High School, Fifth Avenue Elementary, Glenwood Elementary, Oakhurst Elementary, Renfroe Middle School, Westchester Elementary and Winnona Park Elementary The maximum cost of this project is $15,422,200.00 ORIGINAL ESTIMATED COST(1) CURRENT ESTIMATED COST (2) AMOUNT EXPENDED IN CURRENT YEAR(3) AMOUNT EXPENDED IN PRIOR YEARS $ 15,422,200.00 $ 15,422,200.00 $ 32a,0ao.a1 s_ _ _ _o_.o_o (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 each project. Includes all cost from project inception to completion. (3) The voters of DeKalb County approved the lmposHion 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 project. See notes to the general purpose financial statements. -30- EXPENDITURES Current Instruction Support Services Pupil Services General Administration Other Support Services Total Expenditures CITY OF DECATUR BOARD Of EDUCATION - DEKALB COUNTY SCHEDULE OF EXPENDITURES LOTTERY PROGRAMS YEAR ENDED JUNE 30. 1998 SCHEDULE "5" ALTERNATIVE SCHOOL PROGRAM !:-.JSTRUCTIONAL TECHNOLOGY ASSISTIVE CLASSROOM TECHNOLOGY TECHNOLOGY PRE-KINDERGARTEN PROGRAM TOTAL $ 4,132.00 $ 6,789.00 $ 76,326.00 $ 390,312.61 $ 477,559.61 32,735.72 11,905.97 78.60 32,735.72 11,905.97 78.60 $ 4,132.00 $ 6,789.00 $ 76,326.oo s _ _ _ _4_3s_.,0_3_2_.e_o s s22,21s.so RECAP: Salaries and Benefits Pre-Kindergarten Program Other Expenditures Alternative School Program Instructional Technology Assistive Technology Classroom Technology Pre-Kindergarten Program $ 419,330.03 4,132.00 6,789.00 76,326.00 15,702.87 $ 522,279.90 See notes to the general purpose financial statements. -31- TIDS PAGE LEFT BLANK CITY OF DECATUR BOARD OF EDUCATION - DEKALB COUNTY ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS - OVERALL GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 30, 1998 SCHEDULE "6" Minimum Expenditure Requirements (Total Allotment) Expenditures on Combined Program Basis Salaries Operations Less: Expenditures for Media Center Programs in Excess of Total Media Allotment Expenditures per Audit Amount of Underexpenditure for Total Allotment FOURTEEN WEIGHTED AND MEDIA CENTER PROGRAMS 100% TEST FOR OPERATIONS PORTION OF FOURTEEN WEIGHTED PROGRAMS $ 8,055,081.00 $ 211,501.00 $ 9,550,792.71 542,458.92 $ _ _ _4..:.;64;..;.,.;,9;.;.4.;.;7...;.14.;. $ 10,093,251.63 -261, 142.41 $ _ _-=.9.1..:,8.=.:32~,1.:.;:0;.=.9.:=.2=-2 $ o.oo $=====o=.o=o See notes to the general purpose financial statements. - 33 - CITY OF DECATUR BOARD OF EDUCATION - DEKALB COUNTY ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS - BY PROGRAM GENERAL FUND- QUALITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 30, 1998 GENERAi,. AND CAREER EDUCATION PROGRAMS Kindergarten r) Grades 1 - 3 (") Sub-Total - K-3 Grades 4 - 5 (*) Grades 6 - 8 (*) Grades 9-12 r) High School Laboratories r> Vocational Education Laboratories (*) Total General and Career Education Programs SPECIAL EDUCATION PROGRAMS Regular Programs Category I r> Category II r> Category Ill r) Category IV r) Category V r) Sub-Total- Regular Category VI (Gifted) r) Total Special Education Programs REMEDIAi. EDUCATION PRQSiRAM C Total Fourteen Weighted Programs MEDIA CENTER PROGRAMS Salaries Operations Total Media Center Programs Total Fourteen Weighted and Media Center Programs ALLOTMENTS FROM DEPARTMENT OF EDUCATION REQUIRED ORIGINAL % ORIGINAL MID-TERM $ 802,022.00 $ 721,819.80 $ 1,884,698.00 1,696,228.20 $ 2,686,720.00 90 $ 2,418,048.00 $ 694,039.00 90 624,635.10 1,233,067.00 90 1,109,760.30 577,954.00 90 520,158.60 343,368.00 90 309,031.20 270,085.00 90 243,076.50 $ 5,805,233.00 $ 5,224,709.70 $ -72,230.29 -105,028.20 -177,258.49 192,704.49 15,446.00 $ 1,275,576.00 $ 1,148,018.40 $ 0.00 $ 1,275,576.00 90 $ 1,148,018.40 $ 379,024.00 90 341,121.60 $ 1,654,600.00 $ 1,489,140.00 $ $ 321,161.00 90 $ 289,044.90 $ $ 7,780,994.00 $ 7,002,894.60 $ 0.00 0.00 0.00 15,446.00 $ 213,431.00 90 $ 192,087.90 $ 0.00 45,210.00 90 40,689.00 $ 258,641.00 $ 232,TTS.90 $ 0.00 $ 8,039,635.00 $ 7,235,671.50 $ 15,446.00 TAFF DEVELOPMENT PROGRAMS Cost of Instruction Professional Development Total Staff Development Programs M Identities Fourteen Weighted Prog..ms. $ 22,932.00 $ 22,932.00 $ 0.00 56,213.00 56,213.00 0.00 $ 79,145.00 100 $ 79,145.oo s_____o_.oo.., - 34 - SCHEDULE"r TOTAL REQUIRED ACTUAL EXPENDITURES SALARIES OPERATIONS TOTAL AMOUNT OF UNDEREXPENDITURE FOR REQUIRED ALLOTMENT $ 649,589.51 $ 574,154.53 $ 28,068.61 $ 602,223.14 1,591,200.00 1,564,335.44 74,230.93 1,638,566.37 $ 2,240,789.51 $ 2,138,489.97 $ 102,299.54 $ 2,240,789.51 $ 0.00 624,635.10 802,603.64 50,903.91 853,507.55 0.00 1,109,760.30 1,473,709.48 71,984.67 1,545,694.15 0.00 712,863.09 1,099,243.95 101,024.03 1,200,267.98 0.00 309,031.20 402,335.13 12,299.15 414,634.28 0.00 243,076.50 559,632.46 47,973.34 607,605.80 0.00 $ 5,240,155.70 $ 6,476,014.63 $ 386,484.64 $ 6,862,499.27 $ 1,148,018.40 $ 149,674.85 176,993.87 $ 1,354,359.69 152,060.31 46,857.19 $ 302.56 49,094.81 383.96 689.95 149,674.85 177,296.43 1,403,454.50 152,444.27 47,547.14 $ 1,148,018.40 $ 1,879,945.91 $ 50,47128 $ 1,930,417.19 0.00 341,121.60 375,805.51 6,394.01 382,199.52 0.00 $ 1,489,140.00 $ 2,255,751.42 $ 56,865.29 $ 2,312,616.71 $ 289,044.90 $ 376,755.03 $ 21,597.21 $ 398,35224 0.00 $ 7,018,340.60 $ 9,108,521.08 $ 464,947.14 $ 9,573,46822 $ 192,087.90 $ 442,271.63 $ 442,271.63 0.00 40,689.00 $ 77,511.78 77,511.78 0.00 $ 232,776.90 $ 442,271.63 $ 77,511.78 $ 519,783.41 $ 7,251,117.50 $ 9,550,792.71 $ 542,458.92 $ 10,093,251.63 $ 0.00 $ 22,932.00 56,213.00 s_ _ _79_,.145_.oo_ $ 60,199.32 $ 60,199.32 32,80727 32,80727 $ 93,006.59 $ 93,006.59 s______o_.oo_ 35 SECTION IT COMPLIANCE AND INTERNAL CONTROL REPORTS RussELL W. HINTON STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400 May 21, 1999 Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members ofthe City of Decatur 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 of City of Decatur Board ofEducation as of and for the year ended June 30, 1998, and have issued our report thereon dated May 21, 1999. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Compliance As part of obtaining reasonable assurance about whether City of Decatur Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination offinancial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered City ofDecatur 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 financial statements and not to provide assurance on the internal control over financial reporting. However, we noted certain matters involving the internal control over financial reporting and its 98YB-40 operation thafwe 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 financial reporting that, in our judgement, could adversely affect City of Decatur Board of Education's ability to record, process, summarize and report financial data consistent with assertions of management in the financial statements. Reportable conditions are described in the accompanying Schedule of Findings and Questioned Costs as items FS-7731-98-01, FS-7731-98-02 and FS-7731-98-03. A material weakness is a condition in which the design 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 of the 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, all of the reportable conditions described above, are also considered to be material weaknesses. This report is intended for the information of management, the Federal cognizant agency, Federal awarding agencies and pass through entities. This restriction is not intended to limit the distribution ofthis report which is a matter of public record. Respectfully submitted, ~0.