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

~~oo
(Z \
\;''3'3
J?:>
\qq1 ~q't
AUDIT REPORT CITY OF JEFFERSON BOARD OF EDUCATION
A COMPONENT UNIT OF THE CITY OF JEFFERSON, GEORGIA
YEAR ENDED JUNE 30, 1998
STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

CITY OF JEFFERSON BOARD OF EDUCATION - JACKSON COUNTY - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXIllBITS

GENERAL PURPOSE FINANCIAL STATEMENTS

COMBINED STATEMENTS - OVERVIEW

A

COMBINED BALANCE SHEET

ALL FUND TYPES AND ACCOUNT GROUP

2

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

4

C

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

(NON-GAAP BASIS)

GENERAL AND SPECIAL REVENUE FUNDS

5

D NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

7

ADDITIONAL FINANCIAL INFORMATION

COMBINING STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

18

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

19

CAPITAL PROJECTS FUND

G

COMBINING BALANCE SHEET

20

H

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

22

SCHEDULES

1 SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION

24

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

25

3 SCHEDULE OF STATE REVENUE

27

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

28

5 SCHEDULE OF EXPENDITURES

29

LOTTERY PROGRAMS

CITY OF JEFFERSON BOARD OF EDUCATION - JACKSON COUNTY - TABLE OF CONTENTS -

SECTION I

FINANCIAL

ADDITIONAL FINANCIAL INFORMATION

SCHEDULES

ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS

6

OVERALL

31

7

BY PROGRAM

32

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 OMB CIRCULAR A-133

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

SECTIONN FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

RUSSELL W. HINTON
STATE AUDITOR
(404) 6562174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
April 28, 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 Jefferson 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 Jefferson Board of Education, a component unit ofthe City of Jefferson, Georgia, as of and for the year ended June 30, 1998, as listed in the table of contents. These general purpose financial statements are the responsibility ofthe City ofJefferson 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 of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit 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

* Schoolactivity accounts maintained at the individual schools are not included in the general purpose
financial statements. To conform to generally accepted accounting principles, theseaccounts should be included in the generalpurposefinancial statements.
* The Boarddid not recognize as expenditures, in the year ended June 30, 1998, a portion of salaries
and the corresponding employer's cost ofrelated benefits earned for contractual services completed prior to June 30, 1998. Also funds received, subsequent to June 30, 1998, from the Georgia Department ofEducation for the State's share of theseunrecorded salaries and related benefits were not recorded as revenue in the yearunderreview. Conversely, the similar expenditures and related revenues for contractual services completed priorto June 30, 1997, were improperly recorded in the yearendedJune 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 receivedor disbursed.
The aggregate effects on the general purposefmancial statements of these variances or omissionshave not been determined, but are believedto be material.
In our opinion, except for the effects on the general purposefmancial statements of the matters referred to in the preceding paragraph, the general purposefinancial statements referredto above present fairly, in all material respects, the financial position of the Cityof Jefferson Board ofEducationas 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 issuedour reportdatedApril 28, 1999,on our consideration ofthe CityofJeffersonBoard ofEducation's internalcontrol over fmancial reporting and our tests ofits compliance with certainprovisions oflaws, regulations, contracts and grants.
The year 2000 supplementary information on Schedule "1" is not a required part of the basic financial statements but is supplementary information required bythe Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation of the supplementary information. Howeverwe did not audit the information and do not express an opinion on it. In addition, we do not provide assurancethat City of Jefferson Board ofEducation is or will become year2000compliant, that the Board's year 2000 remediation efforts will be successful in wholeor in part,or that parties with whichCityofJeffersonBoard of Education does business are or will become year 2000 compliant.
Our audit was performed for the purposeof forming an opinionon the general purpose financial statements of the City of Jefferson Board of Education taken as a whole. The accompanying combining statements (Exhibits E throughH) 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 ofadditional analysis and are not a required part of the general purpose financial statements. Such information has been subjectedto the auditing procedures applied in the audit of the general purposefmancial statements and in our opinion, exceptfor the effects of the matters referred to in the third paragraph, such information is fairly presented in all material respects in relationto the general purposefinancial 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,
~ 4- Pr4.~ JJ2 l(). R sell W. Hinton State Auditor
RWH:jb 98ARL-13B

CITY OF JEFFERSON BOARD OF EDUCATION - JACKSON COUNTY

CITY OF JEFFERSON BOARD OF EDUCATION - JACKSON COUNTY COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUP JUNE 30. 1998

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

GOVERNMENTAL FUND

SPECIAL

GENERAL

REVENUE

FUND

FUND

$

723,656.32 $

146,581.66

39.91

269,248.85

103,932.87

8,704.26 2,524.33

$

992,945.08 $ _....2.iI6iio1i.,I.7..4..3....1...2...

Total Liabilities and Fund Equity

$

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

992,945.08 $

2.6..1",7...4..3.....1..2...

EXHIBIT"A"

TYPES CAPITAL
PROJECTS FUND

ACCOUNT GROUP GENERAL
LONG-TERM DEBT

TOTALS

(Memorandum Only)

JUNE 30, 1998

JUNE 30, 1997

$

413,502.26

$ 1,283,740.24 $

804,981.83

846.04

885.95

262,736.56

123,183.19

496,364.91

233,196.81

- - - - - $ - - - "2=89,7. .5.7. ..=9"1'-

8,704.26 2,524.33
289,757.91

9,713.50 1,385.89
285,157.62

$

537,531.49 $

289.757.91 $ 2,081,977.60 $ 1,597,172.21

$

67,282.06

8,484.10

$

$

75,766.16 $

$
289,757.91 289,757.91 $

315,054.53 $ 53,679.76 28,036.28 67,282.06 8,484.10
289,757.91
762,294.64 $

48,308.71 35,692.16 7,177.80 116,910.00 116,e58.49 285,157.62
609,904.78

$

451,526.33

10,239.00

0.00

$

461,765.33

$

537,531.49 $

$

1,296.62

8,704.26 $ 2,524.33 451,526.33 10,239.00
845,392.42
$ 1,319,682.96 $

9,713.50 1,385.89
19,018.13 957,149.91
987,267.43

289.757.91 $ 2,081,977.60 $ 1,597,172.21

-3-

The notesto the generalpurpose financial statements are an integral partof this statement -4-

The notesto the generalpurposefinancial statements are an integral partof this statement. -5-

CITY OF JEFFERSON BOARD OF EDUCA nON - JACKSON COUNTY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 1998

EXHIBIT "D"

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
The Cityof Jefferson Boardof Education (Board) was established underthe lawsofthe Stateof Georgia and operatesunder the guidance of a school board electedby 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 issuebonds. Accordingly, the Cityof Jefferson Boardof Education is determined to be a component unit of the City of Jefferson, Georgia, which is the primarygovernment.
FUND ACCOUNTING
The Boarduses funds and an account group to reporton its financial position andthe results of its operations.. Fundaccounting is designed to demonstrate legalcompliance andto aidfinancial management by segregating transactionsrelatedto certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. An accountgroup is a financial reporting device designed to provide accountability for certainassets and liabilities that are not recorded in the funds because they do not directly affect expendable availablefinancial resources.
General Fixed Assets are recorded as expenditures in the various funds at the time of purchase. A General Fixed Assets Account Group is not presently maintained by the Board. To conform to generally accepted accounting principles, a General FixedAssets 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 reflectedin these financial statements. To conformto generally accepted accounting principles, these accounts should be recordedin the generalpurposefinancial statements.
The general purposefinancial 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 thesenotes. Funds andthe account group presented in this reportare as follows:
GOVERNMENTAL FUNDTYPES - areusedto account for all or mostof a Board's educational activities. Governmental Fund Types include:
GENERAL FUND- the fundusedto account for all financial resources of the Boardexceptthoserequired to be accounted for in another fund. Thesetransactions relate to resources obtainedand used for services provided by a board of education.
SPECIAL REVENUE FUND - the fundusedto account fortheproceeds of specific revenue sources (other than for major capital projects) that are legallyrestricted to expenditures for specified purposes. These funds are received primarily from the Georgia Department of Education and fromthe Federal government to accomplishspecificeducational objectives.
-7-

CITY OF JEFFERSON BOARD OF EDUCAnON - JACKSON COUNTY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30. 1998

EXIllBIT "D"

Note 1: 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 capitalfacilities.
ACCOUNT GROUP
GENERAL LONG-TERM DEBTACCOUNT GROUP - A financial reporting device usedto account for material capital lease obligations.
BASIS OF ACCOUNTING
The accounting and financial reporting treatment appliedto a fund is determined by its measurement focus. All governmental funds are accounted for using a currentfinancial resources measurement focus. With this measurement focus, only currentassets and currentliabilities 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 fmancing uses) in net currentassets. Their reportedfund balanceis considered a measure of available spendable resources.
Liabilities which are expectedto be financed from available spendable resources are reported as liabilities in the governmental funds. Otherliabilities, whichare not expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group.
Governmental funds are accounted for usingthe modified accrual basis ofaccounting under which:
Revenues are recognized whensusceptible to accrual (i.e.,whentheybecome bothmeasurable and available). "Measurable" meansthe amount of the transaction canbe determined and"available" meanscollectible within the current periodor soonenough thereafter to be usedto payliabilities of the current period. Thoserevenues considered susceptible to accrualare property taxes, local option salestaxes, intergovernmental grants and investment income.
Expenditures are generally recognized when the relatedfund liability is incurred.
A departure from the above definitions is the accounting treatment afforded the final two payments on. General Fund teachers' and bus drivers' contracts, and the resources available from the GeorgiaDepartment of Education for the State's share of these contracts. Duririg fiscal year 1998, a substantial number of personnel ofthe Boardwereemployed for a onehundred andninety dayperiodbeginning in lateAugust 1997 and ending in early June 1998. Personnel contracts for this employment period specifythat compensation be paid in twelve equal monthlypayments beginning in September 1997and endingin August 1998. State grants to fund the State's shareof thesecontracts 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 twelvemonthly payments, due for July andAugust 1998,had not beenmade. Payments for thesetwo months weremadeandrecorded as expenditures bythe Boardsubsequent to June 30, 1998. Also, the State'sportion of the compensation paid in July and August 1998was received
-8-

CITY OF JEFFERSON BOARD OF EDUCATION - JACKSON COUNTY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 1998

EXIDBIT "0"

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

and recorded as revenue in the fiscal year subsequent to June 30, 1998. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 1997, were recorded in the year ended June 30, 1998. Generally accepted accounting principles require that revenues be recorded when available and measurable and that expenditures be recorded when incurred, rather than when funds are received or disbursed.

BUDGET .

The City ofJefferson 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 ofgeneral circulation in the locality. At the next regular meeting ofthe Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final school budget. This fmal budget is then submitted, in accordance with provisions of the Quality Basic Education Act, OCGA Section 20-2-167, to the Georgia Department ofEducation. 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" ofthis report:

FUND BALANCE JULY 1, 1997
Adjustments Inventories - July 1, 1997 Food Donated Commodities Purchased Foods
Fund Balance July 1, 1997 (Budget Basis)
Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses
FUND BALANCE JUNE 30,1998 (Budget Basis)
-9-

Special Revenue
Fund
s 127,759.81
-9,713.50 -1,385.89
s 116,660.42
-478.69
s 116.181.73

CITY OF JEFFERSON BOARD OF EDUCAnON - JACKSON COUNTY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30,1998

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 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 of any corporation of the United States government,
(5) Prime banker's acceptances,
(6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services,
(7) Repurchase agreements, and
(8) Obligations of other political subdivisions ofthe 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
- 10-

CITY OF JEFFERSON BOARD OF EDUCAnON - JACKSON COUNTY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE30. 1998

EXlllBIT "D"

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 Jefferson fixed the property tax levy for the 1997 tax year (calendar year) on October 20, 1997 (levy date). Taxes were due on December 20, 1997. The lien date for property taxes was January 1, 1997. Taxes collected within the current fiscal year or within 60 days after year-end are reported as revenue in fiscal year 1998. The Jefferson 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 1997 tax year (calendar year) for the City ofJefferson Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

lL2lmills

SALES TAXES

Special Purpose Local Option Sales Tax (SPLOST) is to be used for capital outlay for educational purposes and debt service. SPLOST revenue during the fiscal year amounted to $694,749.85 and was recorded in the Capital Projects Fund. The State will terminate collection ofthis tax once an additional $3,560,250.15 has been collected or on June 30, 2002 whichever occurs first,

The City ofJefferson (City Government) sold general obligation bonds to provide advance funding for Capital Outlay Projects associated with issuance of a SPLOST. In fiscal year, 1998, the Board ofEducation provided $50,000.00 of SPLOST proceeds to the City Government 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 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.

- 11 -

CITY OF JEFFERSON BOARD OF EOUCAnON - JACKSON COUNTY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998

EXHIBIT "0"

Note 1: SUMMARY OF SIGNIFICANT ACCOuNTING POLICIES
INTERFUND TRANSACTIONS
The Board has the following types ofinterfund transactions:
Reimbursements ofexpenditures initially madefrom a fundthat are properly applicable to anotherfund, are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed.
Operating transfers are recorded for all interfund transactions other than reimbursements.
MEMORANDUM ONLY - TOTAL COLUMNS
Totalcolumns on the general purpose financial statements are captioned "Memorandum Only" to indicate that they arepresented onlyto facilitate financial analysis.. Datain thesecolumns do not presentfinancial position or results of operationsin conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation ofthis data. Certain reclassifications have been made to the comparative data to conform to the current year classifications.
Note 2: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Official Codeof Georgia Annotated (OCGA) Section45-8-12 provides that there shall not be on deposit at any time in any depository for a time longerthan ten days a sum of moneywhich has not been secured by surety bond,by guarantee of insurance, or by collateral. The aggregate ofthe face value of such surety bond andthe marketvalueof securities pledged shallbe equalto not lessthan 110percentofthe publicfundsbeing secured after the deduction ofthe amountof depositinsurance. OCGASection45-8-11 provides an officer holding public funds may, in his discretion, waivethe requirement for security in the case of operatingfunds placed in demand deposit checkingaccounts.
Acceptable securityfor depositsconsists of anyone of or any combination ofthe following:
(1) Suretybond signedby a suretycompany dulyqualified and authorized to transact business within the State of Georgia,
(2) Insuranceon accounts providedby the Federal DepositInsurance Corporation,
(3) Bonds,bills,notes, certificates of indebtedness or otherdirect obligations of the United States or of the State of Georgia,
(4) Bonds,bills,notes, certificates of indebtedness or otherobligations of the counties or municipalities ofthe State of Georgia,
- 12-

CITY OF JEFFERSON BOARD OF EDUCAnON - JACKSON COUNTY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30,1998

EXHIBIT "0"

Note 2: DEPOSITS AND INVESTMENTS

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

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

(7) Bonds, bills, notes, certificates of 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 $1,642,029.93. The amounts of the total bank balances are classified into three categories of credit risk:

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

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

Risk Category
1 2 3
Total

Bank Balance
$ 216,411.33 1,040,411.39 385,207.21
$ 1,642.029.93

CATEGORIZATION OF INVESTMENTS At June 30, 1998, the carrying value of the Board's total investments was $885.95 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:

- 13-

CITY OF JEFFERSON BOARD OF EDUCATION - JACKSON COUNTY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE30. 1998

EXHIBIT "0"

Note 2: DEPOSITS AND INVESTMENTS
The Primary Liquidity Portfolio consists of Georgia Fund 1, which is a combination local and state government investment pool, and Fund 6. Georgia Fund 1 is a stable net asset value investmentpool which follows Standard and Poor's criteria for AAAm rated money market funds. However, Georgia Fund 1 operates in a mannerconsistent with Rule 2a-7 ofthe Investment Company Act of 1940 and is consideredto be a 2a-7like pool. The pool is not registered with the SEC as an investmentcompany. The pool's primary objectives are safetyofcapital, investment income, liquidityand diversification while maintainingprincipal ($1.00 per sharevalue). Net assetvalueis calculated weeklyto ensure stability. The pool distributes earnings (net of managementfees) on a monthlybasis 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 legallybindingguarantees to support the value ofthe shares. Participation in the pool is voluntary and deposits consistoffunds from local governments; operating . and trust funds ofGeorgia's stateagencies, colleges and universities; and currentoperating funds of the State. of Georgia'sGeneral Fund.
Investments in Georgia Fund 1 and Fund 6 are directed toward short-term instruments such as U. S. Treasury obligations, securities issuedor guaranteed as to principal and interestby the U. S. Governmentor any ofits agencies or instrumentalities, banker's acceptances and repurchase agreements. The weighted average maturity ofGeorgiaFund 1 maynot exceed 60 days. Fund6 maintains a duration ofapproximately one year. The weighted average maturity for GeorgiaFund I on June 30, 1998was29 days. The average investment duration for Fund 6 on June 30, 1998was .96 years.
Note 3: NON-MONETARY TRANSACTIONS
The Boardreceives food commodities from the UnitedStates Department ofAgriculture (USDA) for school breakfast and lunchprograms. Thesecommodities are recorded at their Federallyassignedvalue. See Note 1 - Inventories
Note 4: RISK MANAGEMENT
The Board is exposed to various risks of loss relatedto torts; theft of, damage to, and destructionof assets; errors or omissions; job related illness or injuries to employees; natural disaster and unemployment compensation.
The Board has obtained commercial insurance for risk of loss associated with torts, assets, errors or omissions, and natural disaster. The Board has neither significantly reduced coverage for these risks nor incurredlosses (settlements) which exceeded the Board'sinsurance coverage in any of the past three years.
The Boardis self-insured with regard to unemployment compensation claims. The Boardaccounts for claims within the General Fund with expenditure and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. The Board has not incurred any Unemployment compensationclaims liabilityduringthe last two fiscal years.
- 14-

CITY OF JEFFERSON BOARD OF EDUCAnON - JACKSON COUNTY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998

EXHIBIT "D"

Note 4: RISK MANAGEMENT

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 Board pays 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 of loss.

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

Position Covered

Amount

All Employees

$ 200,000.00

Note 5: GENERAL LONG-TERM DEBT

CAPITAL LEASES The City of Jefferson Board of Education has entered into various lease agreements as lessee for buses and equipment. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of the future minimum lease payments as of the date oftheir inception.

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

Balance July 1, 1997
Retroactive Restatement ofPrior Year Balances
Balance July 1, 1997 Restated
Additions
Deductions Payments
Balance June 30, 1998

Capital Leases $ 294,877.91
-9,720.29
$ 285,157.62 52,695.00
48,094.71 $ 289.757.91

- 15 -

CITY OF JEFFERSON BOARD OF EDUCA nON - JACKSON COUNTY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998

EXHIBIT "D"

Note 5: GENERAL LONG~TERM DEBT

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

Fiscal Year Ended June 30

Capital Leases

1999 2000 2001 2002 2003

$ 77,349.43 77,349.23 77,349.23 65,341.33 41,899.09

Total Principal and Interest

$ 339,288.31

Deduct: Imputed Interest

49,530.40

Net Present Value of Future Minimum Lease Payments

$ 289.757.91

Note 6: ON-BEHALF PAYMENTS

The Boardhas recognized revenues and-expenditures in the amount of $79,187.48 for health insurance and retirement contributions paid on the Board'sbehalf by the following State Agencies.

GeorgiaDepartmentof Education Paid to the State Merit System of Personnel Administration For Health Insurance ofNon-Certified Personnel In the amount of $64,016.26

Paid to the TeachersRetirement System of Georgia For TeachersRetirementSystem (TRS) Employer's Cost In the amount of $5,478.22

Office of Treasuryand Fiscal Services Paid to the Public SchoolEmployees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of$9,693.00

Note 7: SIGNIFICANT COMMITMENTS

'Thefollowing is an analysis of significant outstanding construction or renovation contracts executed by the Board as of June 30, J998:

- 16-

CITY OF JEFFERSON BOARD OF EDUCATION - JACKSON COUNTY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998

EXHIBIT "0"

Note 7: SIGNIFICANT COMMITMENTS
Project Jefferson High School Renovations

Unearned Executed Contracts
$ 516,813.70

The amount described in this note is not reflected in the general purpose fmancial statements.

Note 8: CONTINGENT LIABILITIES

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

Note 9: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school systems are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer defmed 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 of Trustees 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:

Fiscal Year

Percentage Contributed

Required Contribution

1998 1997 1996

100% 100% 100%

$ 447,125.61 $ 389,455.97 $ 355,645.76

- 17 -

ASSETS Cashand Cash Equivalents AccountsReceivable Inventories
Food Donated Commodities Purchased Food
Total Assets

CITY OF JEFFERSON BOARD OF EDUCATION - JACKSON COUNTY COMBINING BALANCE SHEET SPECIALREVENUE FUND JUNE 30. 1998

EXHIBIT"E"

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

FEDERAL PROGRAMS

TOTALS JUNE 30, 1998 JUNE 30,1997

$ 140,962.75 $

23,485.21

$ 164,447.96 $ 127,238.87

3,745.87

4,747.00 $

95,440.00

103,932.87

39,904.05

8,704.26 2,524.33

8,704.26 2,524.33

9,713.50 1,385.89

$ 155,937.21 $

28,232.21 $

95.440.00 $ 279.609.42 $ 178.242.31

See notes to the general purposefinancialstatements.

-18 -

CITYOF JEFFERSON BOARD OF EDUCATION - JACKSON COUNTY COMBINING STATEMENT OF REVENUES, EXPENDITURES ANDCHANGES IN FUNDBALANCES
SPECIAL REVENUE FUND YEARENDED JUNE30,1998

EXHIBIT"P

REVENUES
StateFunds Federal Funds OtherFunds
Total Revenues
EXPENDITURES
Current Instruction SupportServices Pupil Services Improvement of Instructional Services General Administration Business Administration Central SupportServices OtherSupportServices FoodServices Operation Community Services Operations
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES
Operating TransfersIn
Excess of Revenues and OtherFinancing Sources over (under) Expenditures
FUNDBALANCE JULY 1
FoodInventory - Net Changein Period Donated Commodities Purchased Food

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

FEDERAL PROGRAMS

TOTALS YEAR ENDED JUNE30,1998 JUNE30,1997

$

28,860,00 $ 113,870,82

$

181,414.91

$ 180,210,84

162,622.49

$ 372,897.40 $ 113,870.82 $ 180,210,84 $

142,730,82 $ 361,625,75 162,622.49
666,979.06 $

78,632,00 329,181.43 138,632,07
546,445.50

$ 114,321.71 $ 139,982,70 $

10,300,79 11,580,28 20,998.79

$ 374,672.71

2,592.00 2,000.00
2,605,50

$ 374,672,71 $ 114,321,71 $ 190,060.06 $

$

-1,775,31 $

-450.89 $

-9,849,22 $

254,304,41 $
10,300,79 11,580.28 20,998,79
2,592.00 2,000.00 374,672,71 2,605,50
679,054.48 $
-12,075.42 $

182,736.01
4,517,13 11,484,50 6,203.24
1,002,19 . 330.00
351,837,23 750.00
558,860,30
-12,414.80

$

-1,775.31 $

127,759.81

-1,009,24 1,138.44

450.89

11,145.84

11,596,73

0,00 $ 0,00

1,296.62 $ 0.00

-478.69 $ 127,759.81

-12,414.80 136,977.24

-1,009.24 1,138.44

2,330.45 866.92

FUNDBALANCE JUNE 30

$ 126,113,70 $

0,00 $

1,296,62 $

127,410,32 $

127,759,81

See notesto the general purpose financial statements.

-19 -

CITY OF JEFFERSON BOARD OF EDUCATION - JACKSON COUNTY COMBINING BALANCE SHEET CAPITAL PROJECTS FUND JUNE 30, 1998

ASSETS Cash and Cash Equivalents Investments Accounts Receivable

REGULAR

GEORGIA STATE FINANCING AND
INVESTMENT COMMISSION

$

5,464.00

$

846.04

Total Assets

$

846.04 $=====l::::5:,=4:6:4i=.0=0=

LIABILITIES AND FUND EQUITY
LIABILITIES
Cash Overdraft Contracts Payable Retainages Payable
Total Liabilities
FUND EQUITY
Fund Balances Reserved For SPLOSTProjects For State Capital OutlayProjects Unreserved Undesignated
Total Fund Equity

$

846.04

$

846.04

$

5,464.00

$

0.00

0.00

$

0.00 $

5,464.00

Total Liabilities and FundEquity

$

846.04 $=====r:=5,:4::6:4=.=00=

See notesto the general purpose financial statements. -20 -

EXHIBIT"G"

SPECIAL PURPOSE LOCALOPTION SALES TAX

$

404,109.30 $

123,183.19

LOTTERY PROJECT

TOTALS

JUNE 30,1998

JUNE 30, 1997

4,775.00 $

414,348.30 $

147,780.11

846.04

262,736.56

123,183.19

105,358.30

$

527,292.49 $

4,775.00 $

538,377.53 $ =====:5:l1=5=,8=7=4=.9=7=

$

67,282.06

8,484.10

$

75,766.16

$

846.04

67,282.06 $

116,910.00

8,484.10

116,658.49

$

76,612.20 $

233,568.49

$

451,526.33

$

0.00

$

451,526.33 $

$

527,292.49 $

$ 4,775.00
0.00
4,775.00 $

451,526.33 10,239.00 $

19,018.13

0.00

263,288.35

461,765.33 $_--2-8:2,3=0= 6.4~8

4,775.00 $

538,377.53 $ =====:5:l1=5=,8=7=4=.9=7=

- 21 -

CITY OF JEFFERSON BOARD OF EDUCATION - JACKSON COUNTY COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
CAPITAL PROJECTS FUND YEAR ENDEDJUNE 30, 1998

FUND BALANCE JUNE 30

$

0.00 $ =======::15=,=4=6=4=.=0=0=

See notes to the general purpose financial statements, -22 -

EXHIBIT"H"

SPECIAL PURPOSE LOCAL OPTION SALES TAX

LOTTERY PROJECT

TOTALS

YEAR ENDED

JUNE 30,1998

JUNE 30,1997

$

694,749.85

$

- - - - - - $----..=..:.::0;.0=0-

$

694,749.85 $

0.00 $

$
694,749.85 5,333.99
700,083.84 $

1,167,744.00 55,650.38
1,223,394.38

$

116,672.18 $

35,645.81

$

152,317.99 $

$

542.431.86 $

$

-90,905.53

$

-90,905.53

$

451,526.33 $

0.00

$

451,526.33 $

0.00 $
0.00 $ 0.00 $

$
449,067.81 82,088.45
531,156.26 $ 168,927.58 $

16,514.70 41.83
2,606,898.18 75,701.32
2,699,156.03
-1.475,761.65

$

133,686.73 $

2,864,912.05

-123,155.46

-1,232,194.22

$

10,531.27 $

1,632,717.83

0.00 $
4,775.00

179,458.85 $
282,306.48

156,956.18 125,350.30

4,775.00 $

461,765.33 $=======2=8:12=,3=0=6=.=4=8=

-23 -

CITY OF JEFFERSONBOARD OF EDUCAnON - JACKSONCOUNTY SCHEDULE"1" SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMAnON YEAR 2000 DISCLOSURES YEAR ENDED JUNE 30. 1998
At June 30, 1998, the City ofJefferson BoardofEducation had no outstanding contractual commitments for the purpose ofmakingcomputer systems and otherelectronic equipment year2000 compliant. The year2000 issueis the resultof shortcomings in manyelectronic dataprocessing systems and other equipment that make operations beyond year 1999troublesome. Theyear2000issueis of primary concern for the Board's financial accounting systemand studentinformation system. The following stages have been identified as necessary to implementa year 2000 compliantsystems.
Awareness Stage- Encompasses establishing a budgetand project plan for dealing with the year 2000 Issue.
Assessment Stage - The actualprocess of identifying all of its systems and individualcomponents of the systemsto 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 compliantsystem.
It will be necessary for the Board to progress through all four of these stages for each computer and/or electronic system, not already year2000 compliant, in orderto assure that these systems will not be adversely affected. As ofJune 30, 1998, the financial accountingsystem was determined to be at the Awareness Stage and the student informationsystemwas determined to be in the validation/testing stage.
The Board's fmancial accounting software (GENESIS) and hardware (Wang VS) is owned by the State (Georgia Department of Education). These systems have beendetermined to be critical to the Board's ability to successfully conductoperations. As ofJune 30, 1998, the Statehad not contractedfor the remediation of either the Wang VS operating system or the GENESIS accounting software. In the subsequent period, the Georgia Department of Education remediated the Wang VS operating system and the updated operating system was installed at all GENESIS sites as ofDecember 9, 1998. The GeorgiaDepartmentofEducation has remediated the GENESIS software and conducted tests at nine pilot sites. The remediated GENESIS software has been providedto all boards of education currently utilizingthe GENESIS accounting software.
See notes to the generalpurpose financial statements.
- 24-

CITY OF JEFFERSON BOARD OF EDUCATION - JACKSON 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

Agriculture, U, S, 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)

* 10,553
* 10,555
10,550

.,

N/A

$

36,106,39

N/A

122,646,30 $

N/A

22,662,22

(2)
352,010.49 (3) 22,662,22

Total U. S. Department of Agriculture

$ 181,414,91 $

374,672,71

Education, U, S, Department of Pass-Through from Georgia Department of Education Elementary and Secondary Education Act Title I Grants to Local Educational Agencies 1998 Grant Title II Eisenhower Professional Development 1998 Grant Title VI Innovative Education Program Strategies 1998 Grant Individuals with Disabilities Education Act Part B - Special Education Flow Through 1998 Grant Preschool 1998 Grant Safe and Drug-Free Schools 1998 Grant Vocational Education - Basic Grants to States High School Program Basic Grant 1998 Grant

84.010 84.281 84.298
84,027 84.173 84,186
84.048

N/A

$

90,756.00 $

N/A

15,000.00

N/A

5,045,70

N/A

55,948.14

N/A

5,175.00

N/A

5,286.00

N/A

3,000.00

91,672.72 (3) 13,703.38
5,045,70
55,948,14 8,663.12 (3) 5,286,00
9,741.00 (3)

Total U, S. Department of Education

$ 180,210.84 $

190,060.06

Total Federal Financial Assistance
N/A = Not Available

$ 361,625,75 $ _ _.5..6..4..,.7..3.2,77_

- 25-

CITYOF JEFFERSON BOARD OF EDUCATION - JACKSON COUNTY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE30,1998

SCHEDULE "2"

Notes to the Schedule of Expenditures of Federal Awards
(1) The amounts shown for the FoodDistribution Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/orconsumed by the system duringthe currentfiscal year.
(2) Expenditures for the School Breakfast Program were not maintained separately, and are included in the 1998National School Lunch Program,
(3) Expenditures for this program include State, and/orOtherFunds. Expenditures are not maintained by fund source.
MajorPrograms are identified by an asterisk (*) in front of the CFDA number.
The Board did not provideFederal Assistance to any Subrecipient.
The accompanying schedule of expenditures of Federal awards includes the Federal grantactivityof the City of Jefferson Boardof Education and is presented on the modified accrual basisof accounting which is the samebasis, of accounting used in the presentation of the general purpose financial statements.

See notesto the generalpurpose financial statements.

-26-

CITY OF JEFFERSON BOARD OF EDUCATION - JACKSON COUNTY . SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 1998

SCHEDULE "3"

AGENCY/FUNDING

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

GRANTS Education, Georgia Department of QualityBasic Education General and CareerEducation Programs $ Special Education Programs Remedial Education Program Media CenterPrograms Staff Development Programs IndirectCost Pupil Transportation Regular Bus Replacement Special Instructional Assistance In-School Suspension Mid-term Adjustment Counselors Grades4 and 5 Technology Training Local Fair Share Educational Equalization Funding Grant Food Services Other State Programs Ad Valorem Tax Adjustment At-Risk SummerSchool Program Environmental Science Program Health Insurance Innovative Programs Mentor Teacher Program Preschool Handicapped Program Short Term Adult AgriCUlture Teachers'Retirement Lottery Programs Instructional Technology Assistive Technology Classroom Technology

2,428,491.00 669,170.00 53,725.00 103,520.00 33,054.00 708,599.00
28,421.00 8,222.00
128,321.00 41,866.00 41,659.00 10,745.00 28,842.00 -334,123.00 327,124.00
$
17,917.00 2,746.96
500.00 64,016.26
5,000.00 9,024.00 5,945.00
468.00 5,478.22

$
28,860.00
4,747.00 53,000.00

Office of School Readiness Pre-Kindergarten Program

56,123.82

Office of Treasury and Fiscal Services Public School Employees Retirement

9,693.00

TOTAL
2,428,491.00 669,170.00 53,725.00 103,520,00 33,054.00 708,599.00
28,421.00 8,222.00
128,321.00 41,866.00 41,659.00 10,745.00 28,842.00 -334,123.00 327,124.00 28,860.00
17,917.00 2,746.96
500.00 64,016,26
5,000.00 9,024.00 5,945.00
468.00 5,478.22
4,747.00 53,000.00
56,123.82
9,693.00

$ 4,398,424.44 $ See notesto the general purpose financial statements.
-27 -

142,730.82 $ 4,541,155.26

CITY OF JEFFERSON BOARD OF EDUCATION - JACKSON COUNTY SCHEDULE OF SPECIAL LOCAL OPTION SALES TAX PROJECTS YEAR ENDED JUNE 30.1998

SCHEDULE "4"

$ 4,255,000.00 $ 4,577,296.95 $ 565,520.47 $======0=.=00=
(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 Jackson 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 project.
See notes to the general purpose financial statements. - 28-

CITY OF JEFFERSON BOARD OF EDUCATION - JACKSON COUNTY SCHEDULE OF EXPENDITURES LOTIERY PROGRAMS YEAR ENDED JUNE 30. 1998

SCHEDULE "5"

EXPENDITURES
Current Instruction

INSTRUCTIONAL TECHNOLOGY

ASSISTIVE .

CLASSROOM

TECHNOLOGY

TECHNOLOGY

PRE-KINDERGARTEN PROGRAM

TOTAL

$

5,176.50 $

53,021.39 $

56,123.82 $====1=1~4,=3=21=.7=1=

RECAP: Salariesand Benefits Pre-Kindergarten Program $ Other Expenditures Instructional Technology Assistive Technology Classroom Technology Pre-Kindergarten Program

39,799.42
5,176.50 53,021.39 16,324.40

$

114,321.71

See notes to the general purposefinancial statements.

-29 -

CITY OF JEFFERSON BOARD OF EDUCATION - JACKSON 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
131,389.00

$

3,352,386.49

231,245.29 $ _ _-=2-.:1..1:..,.8t.:6=3:...:4.:.7...

$

3,583,631,78

-37,497.33
$ _ _~.3...,:.5.::4:..6r..,.:1.::3..:4..:..4..:5..:::.

$

O.OO$===~0.0~0

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

CITYOF JEFFERSON BOARD OF EDUCATION - JACKSON COUNTY ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS - BY PROGRAM
GENERAL FUND" QUALITY BASIC EDUCATION PROGRAMS YEARENDED JUNE30, 1998

GENERAL AND CAREER EDUCATION PROGRAMS Kindergarten (*) Grades1 - 3 (*) Sub-Total- K-3 Grades 4 - 5 (*) Grades6 - 8 (*) Grades 9 - 12 (*) HighSchoolLaboratories (*) Vocational Education Laboratories (*) Total General and CareerEducation Programs
SPECIAL EDUCATION PROGRAMS RegularPrograms Category I (*) Category II (*) category III (*) Sub-Total - Regular Category VI (Gifted)(*) Total Special Education Programs
REMEDIAL EDUCATION PROGRAM M Total Fourteen WeightedPrograms
MEDIACENTER PROGRAMS Salaries Operations Total MediaCente~ Programs
Total Fourteen Weighted and Mediacenter Programs

ALLOTMENTS FROMDEPARTMENT OF EDUCATION

REQUIRED

ORIGINAL -!L

ORIGINAL

MID-TERM

$

310,191.00

$

279,171,90 $

727,731,00

654,957.90

$ 1,037,922,00 90 $

934,129.80 $

320,287.00 90

288,258.30

468,791,00 90

421,911,90

257,245.00 90

231,520.50

187,814.00 90

169,032,60

156,432.00 90

140,788.80

$ 2,428,491.00

$ 2,185,641,90 $

0,00 0.00 41,659,00
41,659.00

$

644,216.00

$

579,794,40 $

0.00

$

644,216.00 90 $

579,794,40 $

24,954.00 90

22,458.60

$

669,170,00

$

602,253,00 $

$

53,725.00 90 $

48,352,50 $

$ 3,151,386.00

$ 2,836,247.40 $

0,00
0,00 0.00 41,659.00

$

84,733,00 90 $

76,259.70 $

0.00

18,787.00 90

16,908,30

$

103,520,00

$

93,168,00 $

0.00

$ 3,254,906,00

$ 2,929,415.40 $

41,659.00

STAFFDEVELOPMENT PROGRAMS Costof Instruction Professional Development
Total Staff Development Programs (*) Identifies Fourteen WeightedPrograms, See notesto the generalpurpose financial statements,

$

9,578,00

$

9,578.00 $

0.00

23,476.00

23,476.00

0.00

$

33,054,00 100 $

33,054.00 $ =====0;.0;0.

- 32 -

SCHEDULE "1"

TOTAL REQUIRED

ACTUAL EXPENDITURES

SALARIES

OPERATIONS

TOTAL

AMOUNT OF UNDEREXPENDITURE
FOR REQUIRED ALLOTMENT

$

279,171.90 $

310,380.19 $

8,865.99 $

319,246.18

654,957.90

617,977.66

25,542.56

643,520.22

$

934,129.80 $

928,357.85 $

34,408.55 $

962,766.40 $

0.00

288,258.30

284,300.92

23,669.17

307,970.09

0.00

463,570.90

496,796.26

31,652.60

528,448.86

0.00

231,520.50

451,534.91

31,137.71

482,672.62

0.00

169,032.60

173,248.51

11,109.17

184,357.68

0.00

140,788.80

176,487.33

26,291.09

202,n8.42

0.00

$ 2,227.300.90 $ 2,510,725.78 $

158.268.29 $ 2,668,994.07

$

579,794.40

$

$ 176,498.08 415,318.57

2,872.26 $ 787.63
47,667.06

2,872.26 177,285.71 462,985.63

$

579,794.40 $

591,816.65 $

51,326.95 $

643,143.60

0.00

22,458.60

40,958.43

1,268.23

42,226.66

0.00

$

602,253.00 $

632,n5.08 $

52,595.18 $

685,370.26

$

48,352.50 $

87,250.12 $

1,000.00 $

88,250.12

0.00

$ 2,8n,906.40 $ 3,230,750.98 $

211,863.47 $ 3,442,614.45

$

76,259.70 $

121,635.51

$

121,635.51

0.00

16,908.30

$

19.381.82

19,381.82

0.00

$

93,168.00 $

121,635.51 $

19,381.82 $

141,017.33

$ 2,971,074.40 $ 3,352,386.49 $

231,245.29 $ 3,583,631.78 $

0.00

$

9,578.00

23,476.00

33,054.00

$

17,173.86 $

17,173.86

24.382.72

24,382.72

$

41,556.58 $

- 33 -

SECTIONll COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w" Suite 214 Atlanta, Georgia 30334-8400
April 28, 1999

HonorableRoy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education
and Superintendentand Members of the City ofJefferson Board ofEducation
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITINGSTANDARDS
Ladies and Gentlemen:
We have auditedthe financial statements ofCity of Jefferson BoardofEducation as ofand for the year ended June 30, 1998,and have issuedour reportthereondatedApril28, 1999. This reportwas qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Compliance
As part of obtaining reasonable assurance about whether City of Jefferson Board of Education's financial statements are :free ofmaterialmisstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with whichcouldhave a direct and material effect on the determination offinancial statement amounts. However, providing an opinionon compliance with those provisions was not an objective ofour auditand 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 planningand performing our audit, we considered City of JeffersonBoard ofEducation'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 a certainmatterinvolving the internal control over financial reporting and its
98YB-40

operation that we considered to be a reportable condition. Reportable conditions involve matters comingto our attention relating to significant deficiencies in the design or operation of the internal control overfinancial reporting that, in our judgement, could adversely affect City of Jefferson Board of Education's ability to record, process, summarize andreportfinancial dataconsistent withassertions of management in the financial statements. The reportable condition is described in the accompanying Schedule of Findings and Questioned Costs as item FS-7791-98-01.
A material weakness is a conditionin which the designor operation of one or more of the internal control componentsdoes not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements beingauditedmay occur and not be detected within a timely period by employees in the normal courseofperforming their assigned functions. Our consideration of the internal control overfinancial reporting wouldnot necessarily disclose all mattersin the. internalcontrolthat mightbe reportable conditions and accordingly, would not necessarily disclose all reportable conditions that are also considered to be materialweaknesses. However, the reportable conditiondescribed above is also considered to be a materialweakness.
This reportis intended for the information of management, the Federal cognizant agency, Federal awarding agencies andpassthrough entities. Thisrestriction is not intended to limitthe distribution ofthis reportwhich is a matter ofpublic record.
Respectfully submitted,

RWH:jb 98YB-40

Russell W. Hinton State Auditor

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
April 28, 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 Jefferson Board of Education
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM ANDINTERNALCONTROLOVERCOMPLIANCEINACCORDANCEWITHOMBCIRCULARA-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of City of Jefferson Board of Education with the types of compliance requirements described in the U.S. Office ofManagement and Budget (OMB) Circular A-I33 Compliance Supplement that are applicable to each ofits major Federal programs for the year ended June 30, 1998. City of Jefferson Board of Education's major Federal programs are identified in the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements oflaws, regulations," contracts and grants applicable to each ofits major Federal programs is the responsibility ofCity ofJefferson Board ofEducation's management. Our responsibility is to express an opinion on City of Jefferson Board of Education's compliance based on our audit.
We conducted our audit of compliance in accordance with generally accepted auditing standards; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and OMB Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the City of Jefferson Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on City of Jefferson Board of Education's compliance with those requirements.

98SA-I0

In our opinion, the City of Jefferson Board of Education complied, in all material respects, with the requirements referred to above that are applicableto each of its major Federalprograms for the year ended June 30, 1998.
Internal Control Over Compliance
The management of City of Jefferson Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federalprograms. In planningand performing our audit, we considered CityofJeffersonBoard ofEducation's internalcontrolover compliance with requirements that couldhave a direct and materialeffect on a major Federalprogramin order to determine our auditingproceduresfor the purpose of expressing our opinionon complianceand to test and report on internal control over compliancein accordancewith OMB Circular A-l33.
Our consideration of the internal control over compliance would not necessarilydisclose all matters in the internal controlthat might be material weaknesses. A material weaknessis a condition in which the design or operation ofone or more ofthe internal control components doesnot reduceto a relatively low level of risk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be materialin relationto a major Federalprogrambeingauditedmay occur and not be detectedwithin a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal controlover compliance and its operation that we considerto be material weaknesses.
This report is intendedfor the information ofmanagement, the Federal cognizantagency, Federal awarding agencies and pass throughentities. Thisrestriction is not intended to limitthe distribution ofthis reportwhich is a matter of public record.
Respectfully submitted,
~ fIQ W.~~ Russell W. Hinton State Auditor
RWH:jb 98SA-1O

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

CITY OF JEFFERSON BOARD OF EDUCATION - JACKSON COUNTY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1998

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

7791-93-03 FS-7791-97-01 FS-7791-97-02

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

CORRECTIVE ACTIONIRESPONSES

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: FS-7791-97-02

Due to current staffing limitation and budgetary considerations, the Board has decided not to pursue the recording of general fixed assets on the fmancial statements. This finding will appear on subsequent audit reports until resolved by the local Board.

SECTION IV FINDINGS AND QUESTIONED COSTS

CITY OF JEFFERSON BOARD OF EDUCATION - JACKSON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1998
I SUMMARY OF AUDITOR'S RESULTS
1. Type of Report Issued on the Financial Statements The auditor's opinion on the City ofJefferson Board ofEducation'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 Jefferson 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 ofJefferson Board of Education disclosed no instances of noncompliance that were deemed to be material to the financial statements.
4. Reportable Conditions in Internal Control Over Major Programs The audit report for the City of Jefferson Board of Education did not disclose any reportable conditions in internal control over major programs.
5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the City of Jefferson Board of Education's report on compliance with requirements applicable to major programs was unqualified.
6. Audit Findings Required to be Reported by Section .510Ca) ofOMB Circular A-133 The City of Jefferson Board of Education's audit did not disclose audit findings required to be reported by section .510(a) ofQMB Circular A-133.
7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food and Nutrition Program - Food Services - School Breakfast Program 10.555 Food and Nutrition Program - Food Services - National School Lunch Program
8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00.
9. Low Risk Auditee The City ofJefferson Board ofEducation was audited as a low risk auditee based on a waiver granted by the U. S. Department of Education.
- 1-

CITY OF JEFFERSON BOARD OF EDUCATION - JACKSON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEARENDED JUNE 30, 1998
n FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL FIXED ASSETS Failureto Maintain General Fixed Assets AccountGroup Reportable Condition - Material Weakness Repeated from Prior Year Finding ControlNumber: FS-7791-98-01 The Cityof Jefferson Boardof Education did not maintain a General FixedAssets Account Group withinthe formal accounting records as required by generally accepted accounting principles. This conditionresults in the general purpose financial statements of the Boardbeingincomplete 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 of a General Fixed Assets Account Group. These subsidiaryrecords should include an inventory of land, buildings and equipment owned by the Board and shouldinclude, but maynot be limited to, dateacquired, acquisition cost,estimated replacement cost, location and description. Detailedrecords should be maintained of all additions and deletions to the General Fixed Assets Account Group. ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.
-2-