CIlY OF VIDALIA BOARD OF EDUCATION TOOMBS COUNTY, GEORGIA ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30,2010 (Including Independent Auditor's Reports) CITY OF VlDALlA BOARD OF EDUCATION - TOOMBS COUNTY - TABLE OF CONTENTS - SECTION I FINANCIAL INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERALAWARDS EXHIBlTS BASIC FINANCIAL STATEMENTS DISTRICT-WIDE FINANCIAL STATEMENTS A STATEMENT OF NET ASSETS B STATEMENT OF ACTIVITIES FUND FINANCIAL STATEMENTS C BALANCE SHEET GOVERNMENTAL FUNDS D RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS E STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS F RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES G STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS H STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS I NOTES TO THE BASIC FINANCIAL STATEMENTS SCHEDULES REQUIRED SUPPLEMENTARY INFORMATION 1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND SUPPLEMENTARY INFORMATION 2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 3 SCHEDULE OF STATE REVENUE CITY OF VlDALlA BOARD OF EDUCATION - TOOMBS COUNTY - TABLE OF CONTENTS - SECTION I FINANCIAL SCHEDULES SUPPLEMENTARY INFORMATION 4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 5 ALLOTMENTS AND EXPENDITURES GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM Page SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER M A l l E R S BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WlTH GOVERNMENTAUDlTlNG STANDARDS INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WlTH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WlTH 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 SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS CITY OF VlDALlA BOARD OF EDUCATION - TOOMBS COUNTY - TABLE OF CONTENTS - SECTION V MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES SECTION I FI NANClAL Russell W. Hinton STATE AUDITOR (404)656-2174 DEPARTMENOTF AUDITSAND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 March 16.2011 Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the City of Vidalia Board of Education INDEPENDENTAUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Ladies and Gentlemen: We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information (ExhibitsA through I) of the City of Vidalia Board of Education, as of and for the year ended June 30, 2010, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City of Vidalia Board of Education's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in GovernmentAuditing 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, assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Vidalia Board of Education, as of June 30, 2010, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. The City of Vidalia Board of Education has not presented Management's Discussion and Analysis that accounting principles generally accepted in the United States of America has determined is necessaryto supplement, although not to be part of, the basic financial statements. In accordance with GovernmentAuditing Standards, we have also issued our report dated March 16, 2011, on our consideration of the City of Vidalia Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Audithg Standards and should be considered in assessingthe results of our audit. Accounting principles generally accepted in the United States of America require that the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on page 25, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures, to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during the audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Vidalia Board of Education's financial statements as a whole. The accompanying supplementary information consists of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Prufit Organizations, are presented for purposes of additional analysis and are not a required part of the financial statements. Such information is the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole. A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24. Respectfully submitted, ~us)ell W. Hinton, CPA, CGFM State Auditor CITY OF VlDALlA BOARD OF EDUCATION - TOOMBS COUNTY CITY OF VIDALIA BOARD OF EDUCATION - TOOMBS COUNTY STATEMENT OF NET ASSETS JUNE 30.2010 ASSETS Cash and Cash Equivalents ~nvestments Accounts Receivable, Net Taxes State Government Federal Government Local Other l nventories Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation) Total Assets LIABILITIES Salaries and Benefits Payable NET ASSETS Invested in Capital Assets Restricted for Bus Replacement Continuation of Federal Programs Unrestricted Total Net Assets Total Liab~litiesand Net Assets EXHIBIT "A" GOVERNMENTAL ACTIVITIES The notes to the basic financial statements are an integral part of this statement. -1- CITY OF VIDALIA BOARD OF EDUCATION- TOOMBS COUNTY STATEMENT OF ACTIVITIES FOR THE YEAR ENDEDJUNE 30,2010 GOVERNMENTAL ACTIVITIES Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Malntenance and Operation of Plant Student Transportation Services Central Support Services Other Support S e ~ l c e s Operationsof Non-Instructional Services Enterprise Operations Community Services Food Services Total Governmental Activities General Revenues Taxes Property Taxes For Maintenance and Operations Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Grants and Contributions not Restrictedto Speciflc Programs Investment Earnings M~s~ellaneous Total General Revenues Change in Net Assets Net Assets - Beginningof Year Net Assets - End of Year EXPENSES CHARGES FOR SERVICES The notes to the basic financial statements are an integral part of this statement. - 2 - PROGRAM REVENUES OPERATING GRANTS AND CONTRIBUTIONS CAPITAL GRANTS AND CONTRIBUTIONS NET (EXPENSES) REVENUES AND CHANGES IN NET ASSETS CITY OF VIDALIA BOARD OF EDUCATION - TOOMBS COUNTY BAMNCE SHEET GOVERNMENTAL FUNDS JUNE 30.2010 ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net Taxes State Government Federal Government Local lnterfund Other Inventories Total Assets GENERAL FUND DISTRICTWIDE CAPITAL PROJECTS FUND LIABILITIESAND FUND BALANCES LIABILITIES Accounts Payable- lnterfund Salaries and Benefits Payable Deposits and Deferred Revenue Total Liabilities FUND BALANCES Reserved for: Bus Replacement Continuation of Federal Programs Unrese~ed Designated for Student Activities Undesignated Reported in: General Fund Capital Projects Total Fund Balances Total Liabilities and Fund Balances EXHIBIT "C" TOTAL The notes to the basic financial statements are an integral part of this statement. - 4 - CIW OF VlDALlA BOARD OF EDUCATION - TOOMBS COUNTY RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS JUNE 30.2010 Total Fund Balances - Governmental Funds (Exhibit "C") Amounts reportedfor GovernmentalActivities in the Statement of Net Assets are different because: Capital Assets used in Governmental Activities are not financial resources and therefore are not rewrted in the funds. These assets conslst of: Land Land Improvements Buildings Equipment Accumulated Depreciation Total Capital Assets Taxes that are not availableto pay for current period expendituresare deferred in the funds. Net Assets of Governmental Activities (Exh~bi"tA") EXHIBIT " D The notes to the basic financial statements are an integral part of this statement. -5- CITY OF VIDALIA BOARD OF EDUCATION - TOOMBS COUNTY STATEMENTOF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED JUNE 30,2010 REVENUES Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous Total Revenues EXPENDITURES Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Community Servlces Food Services Operation Capital Outlay Total Expenditures Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending GENERAL FUND DISTRICTWIDE CAPITAL PROJECTS FUND EXHIBIT " E TOTAL The notes to the basic financ~asl tatements are an integral part of this statement. 6- CITY OF VlDALlA BOARD OF EDUCATION - TOOMBS COUNTY RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30,2010 Total Net Change in Fund Balances - Governmental Funds (Exhibit " E ) Amounts reported for GovernmentalActivities in the Statement of Activlties are different because: Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activlties, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are: Capital Outlay Depreciation Expense Excess of Capital Outlay over Depreciation Expense Taxes reported In the Statement of Activities that do not provide current financial resourcesare not reported as revenues in the funds. The net effect of various rnlscellaneoustransactions ~nvolvlngcapital assets (i.e., disposals) is to decrease net assets. Change in Net Assets of GovernmentalActivities (Exhibit "B") EXHIBIT "F" The notes to the basic financial statements are an integral part of this statement. -7- CITY OF VlDALlA BOARD OF EDUCATION - TOOMBS COUNTY STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30,2010 ASSETS Cash and Cash Ecluivalents l nvestrnents Total Assets PRIVATE PURPOSE TRUSTS LIABILITIES Funds Held for Others NET ASSETS Held in Trust for Private Purposes Total Liabilities and Net Assets EXHIBIT "G" AGENCY FUNDS The notes to the basic financial statements are an integral part of this statement. - 8 - CITY OF VlDALlA BOARD OF EDUCATION - TOOMBS COUNTY STATEMENTOF CHANGES IN FIDUCIARYNET ASSETS FIDUCIARY FUNDS JUNE 30,2010 ADDITIONS Investment Earnings Net Increase (Decrease)in Fair Value of Investments Dividends Total Additions DEDUCTIONS None Reported Change in Net Assets Net Assets - Beginning Net Assets - Ending EXHIBIT "H" PRIVATE PURPOSE TRUSTS The notes to the basic financial statements are an integral part of this statement. - 9- (This page left intentionally blank) CITY OF VIDALIA BOARD OF EDUCATION - TOOMBS COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2010 EXHIBIT "I" NOTE 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY REPORTING ENTITY The City of Vidalia Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity. NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the City of Vidalia Board of Education. District-wide Statements: The Statement of Net Assets and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expensesof the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs. Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. Fund Financial Sbtemenk The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. The School District reports the following major governmental funds: General Fund is the School District's primary operating fund. It accounts for all financial resources of the School District, except those resources required to be accounted for in another fund. CITY OF VIDAUA BOARD OF EDUCATION - TOOMBS COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2010 EXHIBlT "I" District-wide Capital Projects Fund accounts for financial resources includingspecial Purpose Local Option Sales Tax (SPLOST) and grants from Georgia State Financing and Investment Commission to be used for the acquisition, construction or renovation of major capital facilities. The School District reports the following fiduciary fund types: Private Purpose Trust fund reports a trust arrangement under which income may be expended to provide college scholarships to Vidalia City High School seniors. Agency funds account for assets held by the School District as an agent for various funds, governments or individuals. BASIS OF ACCOUNTING The basis of accounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations are recognized in the fiscal year in which all eligibility requirements have been satisfied. The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred. Capital asset acquisitions are reported as expenditures in governmental funds. The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues. CITY OF VIDALIA BOARD OF EDUCATION - TOOMBS COUNTY NOTESTO M E BASIC FINANCIAL STATEMENTS JUNE 30,2010 EXHIBIT "I" The State of Georgia reimburses the School District for teachers' salaries and operating costs through the Quality Basic Education Formula Earnings program (QBE). Generally teachers are contracted for the school year (July 1- June 30) and paid over a twelve month contract period, generally September 1through August 31. In accordance with the respective rules and regulations of the QBE program, the State of Georgia reimburses the School District over the same twelve month period in which teachers are paid. At June 30, the amount of teachers' salaries incurred but not paid until July and August of the subsequent year are accrued. Since the State of Georgia recognizes its QBE liability for the July and August salaries at June 30, the School District recognizes the same QBE as a receivable and revenue, consistent with symmetrical recognition. NEW ACCOUNTING PRONOUNCEMENTS In fiscal year 2010, the School District adopted the Governmental Accounting and Standards Board (GASB) Statement No. 51, Accounting and Reporting for Intangible Asset3 The provisions of this Statement generally require retroactive reportingfor intangible assets acquired after June 30, 1980, with the exception of those intangible assets that have indefinite useful lives and those that are considered internally generated. In addition, the School District adopted GASB Statement No. 53, Accounting and Financial Reporting for Derivative Instruments. The provisions of this Statement impacts disclosure regarding derivative instruments entered into by the state and local governments. Derivative disclosures, if any, will be identified in Note 3. CASH AND CASH EQUIVALENTS Composition of Deposits Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations. INVESTMENTS Composition of Investments lnvestments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interestearning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year and equity investments are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following: 1. Obligations issued by the State of Georgia or by other states, 2. Obligations issued by the United States government, 3. Obligations fully insured or guaranteed by the United States government or a United States government agency, CrrY OF VIDALIA BOARD OF EDUCATION - TOOMBS COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2010 EXHIBIT "I" 4. Obligations of any corporation of the United States government, 5. Prime banker's acceptances, 6. The Georgia Fund 1administered by the State of Georgia, Office of Treasury and Fiscal Services, 7. Repurchase agreements, and 8. Obligations of other political subdivisions of the State of Georgia. The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks. RECEIVABLES Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. PROPERTY TAXES The City of Vidalia fixed the property tax levy for the 2009 tax digest year (calendar year) on December 11,2009 (levy date). Taxes were due on February 9, 2010 (lien date). Taxes collected within the current fiscal year or within 6 0 days after year-end on the 2009 tax digest are reported as revenue in the governmental funds for fiscal year 2010. The Vidalia City Clerk bills and collects the property taxes for the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30,2010, for maintenance and operations amounted to $3,864,688.74. The tax millage rate levied for the 2009 tax year (calendar year) for the City of Vidalia Board of Education was as follows (a mill equals $1per thousand dollars of assessed value): School Operations 15.00 mills SALES TAXES Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $2,212,621.08 and is to be used for capital outlay for educational purposes. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years. INVENTORIES Food Inventories On the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used. CITY OF VIDALIA BOARD OF EDUCATION - TOOMBS COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2010 EXHIBIT "I" CAPITAL ASSETS Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District. Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide statements are as follows: Capitalization Policy Estimated Useful Life Land Land Improvements Buildings and Improvements Equipment Intangible Assets All $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 100,000.00 N/A 6 0 years 25 to 6 0 years 1 0 to 1 5 years 1 0 years Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives, with the exception of intangible assets which are amortized. Amortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, copyrights and internally generated software is computed using the straight-line method over the estimated useful lives of the assets, for 10 years. NET ASSETS The School District's net assets in the District-wide Statements are classified as follows: Invested in capital assets -This represents the School District's total investment in capital assets. Restricted net assets - These represent resources for which the School District is legally or contractually obligated to spend resources for bus replacement and continuation of Federal Programs in accordance with restrictions imposed by external third parties. Unrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes. CJTY OF VIDAUA BOARD OF EDUCATION - TOOMBS COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010 EXHIBIT "I" FUND BALANCES Reserved Reserves represent those portions of fund balance equity that are legally segregated for a specific future use. Unreserved - Designated Designatedfund balances represent tentative plans for future use of financial resources. DEFICIT FUND BALANCES The fund reporting a deficit fund balance at June 30,2010, is as follows: Fund Type/Fund Name Deficit Balance District-wideCapital Projects Fund $ 171,761.72 The collection of SPLOST receipts in the subsequent period will fund the deficit. USE OF EST1MATES The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. NOTE 3: DEPOSITS AND INVESTMENTS COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (O.C.G.A.) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. Section 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 1 1 0 percent of the daily pool balance. Acceptable security for deposits consists of any one of or any combination of the following: 1. Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia, 2. lnsurance on accounts provided by the Federal Deposit lnsurance 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, CrPl OF VIDALIA BOARD OF EDUCATION - TOOMBS COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010 EXHIBIT "I" 5. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose, 6. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and 7. Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association. CATEGORIZATION OF DEPOSITS Custodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2010, the bank balances were $2,013,333.81. The amounts exposed to custodial credit risk are classified into three categories as follows: Category 1Category 2 - Category 3 - Uncollateralized, Cash collateralized with securities held by the pledging financial institution, 0 r Cash collateralized with securities held by the pledging financial institution's trust department or agent but not in the School District's name. The School District's deposits by custodial risk category at June 30, 2010, are as follows: Custodial Credit Risk Category Bank Balance Total $ 1,364,755.95 CATEGORIZATION OF INVESTMENTS Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, the School District will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The School District does not have a formal policy for managing custodial credit risk. At June 30, 2010, the fair value of the School District's total investments was $262.60 and this entire amount consisted of common stock which was insured or registered or sercurities held by the School District or the School District's agent in the School District's name. CITY OF VIDAUA BOARD OF EDUCATION - TOOMBS COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2010 EXHIBIT "I" NOTE 4: NON-MONETARY TRANSACTIONS The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories NOTE 5: CAPITAL ASSETS The following is a summary of changes in the Capital Assets during the fiscal year: Governmental Activities Capital Assets, Not B e ~ n gDepreciated: Land Construction Work In Progress Balances July 1,2009 increases Decreases Balances June 30,2010 $ 722,804.05 $ 6,289,465.67 0.00 $ $ 6,289,465.67 722,804.05 0.00 Total Capital Assets, Not Being Depreciated $ 7,012,269.72 $ 0.00 $ 6,289,465.67 $ 722,804.05 Capital Assets, Being Depreciated: Buildings and Improvements Equipment Land Improvements $ 18,870,794.04 $ 10,912,106.61 $ 1,575.185.98 43,440.00 2,682,771.65 38,409.33 $ 29,744,491.32 1,618,625.98 2,682,771.65 Less: Accumulated Depreciation: Buildings and lmprovements Equipment Land lmprovements Total Capital Assets, Being Depreciated, Net $ 16,871,492.08 $ 10,389,946.43 $ 15,363.77 $ 27,246,074.74 Governmental Activity Capital Assets - Net $ 23,883,761.80 $ 10,389,946.43 $ 6,304,829.44 $ 27,968,878.79 Current year depreciation expense by function is as follows: Instruction Support Services Pupil Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Enterprise Operations Food Services CITY OF VIDALIA BOARD OF EDUCATION - TOOMBS COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010 EXHIBIT "I" NOTE 6: INTERFUNDASSETS AND LIABILITIES Due to and due from other funds are recorded for interfund receivables and payables which arise from intetfund transactions. lnterfund balances at June 30, 2010, consisted of the following: Due From Other Funds Due To Other Funds General Fund District-wideCapital Projects Cash was borrowed from the General Fund to pay for some SPLOST project expenditures. These funds will be paid back with sales tax revenue. NOTE 7: RISK MANAGEMENT The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation. The School District has obtained commercial insurance for risk of loss associated with torts, assets, and errors or omissions. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years. The School District has elected to self-insure for all losses related to acts of God. The School District has not experienced any losses related to this risk in the past three years. The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the same fund that the employee's salary and benefits were paid. Claims are accounted for with expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. Changes in the unemployment compensation claims liability during the last two fiscal years are as follows: Beginningof Year Liability Claims and Changes in Estimates Claims Paid End of Year Liability The School District participates in the Georgia Education Workers' Compensation Trust, a public entity risk pool organized on December 1,1991, to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Trust for its general insurance coverage. Additional insurance coverage is CrrY OF VIDALIA BOARD OF EDUCATION - TOOMBS COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2010 EXHIBIT "I" provided through an agreement by the Trust with the Midwest Employers Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $700,000.00 loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided by Midwest Employers Casualty Company to provide coverage for potential losses sustained by the Fund in excess of $700,000.00 loss per occurrence, up to $1,000,000.00, with an aggregate limit of $2,000,000.00. The School District has purchased surety bonds to provide additional insurance coverage as follows: Position Covered Amount Superintendent Board Treasurer Board Vice-Treasurer All Employees NOTE 8: SHORT-TERM DEBT The School District issues tax anticipation notes in advance of property tax collections, depositing the proceeds in its General Fund. This short-term debt is to provide cash for construction until SPLOST tax collections are received by the School District. Article IX, Section V, Paragraph V of the Constitution of the State of Georgia limits the aggregate amount of short-term debt to 75 percent of the total gross income from taxes collected in the preceding year and requires all short-term debt to be repaid no later than December 3 1of the calendar year in which the debt was incurred. Short-term debt activity for the fiscal year is as follows: Beginning Balance Issued Redeemed Ending Balance Tax Anticipation Notes $ 0.00 $ 697.010.00 $ 697,010.00 $ 0.00 NOTE 9: ON-BEHALF PAYMENTS The School District has recognized revenues and costs in the amount of $43,054.40 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies. Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $26,410.89 Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $10,028.44 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 $6,615.07 CITY OF VIDALIA BOARD OF EDUCATION - TOOMBS COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010 EXHIBIT "I" NOTE 10: SIGNIFICANT CONTINGENT LIABILITIES Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position. The School District is a defendant in various legal proceedings pertainingto matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the basic financial statements. NOTE 11: POST-EMPLOYMENT BENEFITS GEORGIA SCHOOL PERSONNEL EMPLOYEES POST-EMPLOYMENT HEALTH BENEFIT FUND Plan Description. The Georgia School Personnel Post-employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fun provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Insurance Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (OCGA) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board). Funding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately 25 percent of the cost of health insurance coverage. Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected "pay-as-you-go"financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30, 2010: For certificated teachers, librarians and regional educational service agencies: July 2009 August 2009 -October 2009 November 2009 -June 2010 18.534% of covered payroll for August Coverage 14.492% of covered payrollfor September - November Coverage 18.534% of covered payrollfor December - July Coverage For non-certificated school personnel: July 2009 -June 2010 $162.72 per member per month plus Department of Education contribution of $22,838,311.00 CITY OF VIDAUA BOARD OF EDUCATION - TOOMBS COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010 EXHIBJT "I" No additional contribution was required by the Board for fiscal year 2010 nor contributed to the State OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the State plan for other postemployment benefits and are subject to appropriation. The School District's combined active and retiree contributions to the health insurance plans, which equaled the required contribution, for the current fiscal year and the preceding two fiscal years were as follows: Percentage Required FiscaI Year Contributed Contribution NOTE 12: RETIREMENT PLANS TEACHERS RETIREMENTSYSTEM OF GEORGIA (TRS) Plan Description. The TRS is a cost-sharing multiple-employer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts. On October 25, 1996, the Board created the Supplemental Retirement Benefits Plan of the Georgia Teachers Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1,1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits. TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 3 0 years of creditable service, regardless of age, or after 1 0 years of service and attainment of age 60. A member is eligible for early retirement after 2 5 years of creditable service. Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 4 0 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 3 0 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available. CITY OF VIDALIA BOARD OF EDUCATION - TOOMBS COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010 EXHIBlT "I" Funding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 1 0 years of service. If a member terminates with less than 1 0 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2010, were 5.25% of annual salary. The member contribution rate will increase to 5.53%effective July 1,2010. Employer contributions required for fiscal year 2010 were 9.74%of annual salary as required by the June 30, 2007, actuarial valuation. The employer contribution rate will increase to 10.28% effective July 1,2010. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows: Fiscal Year Percentage Contributed Required Contribution (This page left intentionally blank) CITY OF VlDALlA BOARD OF EDUCATION- TOOMBS COUNTY GENERAL FUND SCHEDULE OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL YEAR ENDED JUNE 30.2010 SCHEDULE "1" REVENUES Property Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous Total Revenues EXPENDITURES Current lnstructlon Support Sew~ces Pup11Sew~ces Improvementof lnstructlonal Serv~ces Educat~onaMl ed~aServices General Admlnlstration School Admlnlstratlon Busmess Admlnlstrat~on Maintenance and Operat~onof Plant Student Transportat~onSewlces Central Support Servlces Other Support SewIces Enterprise Operat~ons Comrnunlty Sew~cesOperat~ons Food Sewlces Ooeratlon Total Expendltures Excessof Revenuesover (under) Expend~tures OTHER FINANCING SOURCES USES1 OperatingTransfers From Other Funds OperatingTransfersTo Other Funds Total Other FinancingSources (Uses) Net Change In Fund Balances Fund Balances - Beg~nn~ng Adjustments NONAPPROPRIATED BUDGETS ORIGINAL FINAL ACTUAL AMOUNTS $ 0.00 $ 0.00 $ -124.460.55 $ -104,311.41 $ 187,312.82 2,109,315.26 2,109,315.26 2,109,315.26 26.536.98 39,408.90 Fund Balances- End~ng Notesto the Scheduleof Revenues. Ex~endlturesand Chanees In Fund Balances Budeet and Actual The accompanying scheduleof revenues,expenditures and changes ln fund balances budget and actual IS presented on the rnod~fiedaccrual bas~sof accountlng whlch 1s the bass of accountlng used In the presentation of the fund flnanclal statements. See notes to the baslc financ~asl tatements. CITY OFVlDALlA BOARD OF EDUCATIONTOOMBS COUNTY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30.2010 SCHEDULE "2" FUNDING AGENCY PROGRAM/SRANT Agriculture. U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program Nat~onaSl chool Lunch Program Total Ch~ldNutrltlon Cluster ather Programs Pass-Through From Georgia Department of Educat~on Food Services ARRA- Child Nutr~tlonDlscret~onaryGrants L~mltedAvailablllty Total U. S. Department of Agr~culture Education, U. S. Department of Educat~onTechnology State Grants Cluster Pass-Through From Georgia Department of Educat~on ARRA Education TechnologyState Grants Special Education Cluster Pass-Through From Georg~aDepartment of Educat~on Special Education ARRA - Grants to States ARRA - Preschool Grants Grants to States Preschool Grants Total S ~ e c ~Eadlucat~onCluster State F~scaSl tablllrabon Fund Cluster Pass-Through From Georgia Department of Education ARRA- Educat~onState Grants Title I. PartA Cluster Pass-Through From Georgia Department of Education ARRA - T~tleI Grants to Local Educatlonal Agencles Tltle I Grants to Local Educational Agencies Total Title I, Part A Cluster Other Programs Pass-Through From Georgia Department of Educat~on Career and Technical Educat~on- Bas~cGrants to States lmprov~ngTeacher Quality State Grants Rural Education Total Other Programs Total U. S. Department of Education Health and Human Services, U. S. Department of Child Care and Development Fund Cluster Pass-Through From Bright From the Start: Georga Department of Early Care and Learning ARRA- Chlld Care and Development Block Grant Total Federal F~nanclaAl ssstance N/A = Not Available CFDA NUMBER PASSTHROUGH ENTITY 1 D NUMBER EXPENDITURES IN PERIOD anOF VIDALIA BOARD OF EDUCATION - TOOMBS COUNTY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDEDJUNE 30,2010 SCHEDULE " 2 Notes to the Schedule of Exoendltures of Federal Awards (1) Includes the Federally assigned value of donated commodltles for the F w d Donation Program In the amount of $130,234.25. (2) Expenditures for the funds earned on the School Breakfast Program ($207.378.04) were not mainta~nedseparately and are lncluded in the 2010 Nat~onaSl chool Lunch Program. Major Programsare identified by an asterisk (*) in front of the CFDA number. The School Distrlct did not prov~deFederal Assistance to any Subrec~p~ent. The accompanyingschedule of expenditures of Federal awards Includes the Federal grant actlvlty of the City of V~daliaBoard of Education and is presented on the m o d ~ f ~ aecdcrual bass of account~ngwhlch1s the bas~sof accounting used In the presentation of the fund f~nanc~satal tements. See notes to the basic flnanclal statements. CITY OF VlDALlA BOARD OF EDUCATION - TOOMBS COUNlY SCHEDULE OF STATE REVENUE YEAR ENDEDJUNE 30,2010 SCHEDULE "3" GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program - Primary Grades Early Intervention (1-3) Program Upper ElementaryGrades (4-5) Program Upper ElementaryGrades - Early Intervention (4-5) Program Middle Grades (6-8) Program High School General Education ( 4 1 2 ) Program Vocational Laboratoty (9-12) Program Students with Disabilities Gifted Student - Category VI Remedial Education Program Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Sparsity Nursing Services Vocational Supervisors Mid-term Adjustment Hold-Harmless Education Equalization Funding Grant Food Services Vocational Education Amended Formula Adjustment 3 Day Furlough-Austerity Reduct~on Other State Programs Dual Enrollment Health Insurance National Teacher Certification Preschool Handicapped Program Teachers' Retirement Virtual Schools Grant Georgia State Financingand Investment Commission Reimbursementon Construction Projects Office of Treasury and Fiscal Services Public School Employees Retirement GOVERNMENTAL FUND TYPES CAPITAL GENERAL PROJECTS FUND FUND TOTAL See notes to the basic financial statements. C I N OF VlDALlA BOARD OF EDUCATION- TOOMBS COUNN SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS YEAR ENDEDJUNE30,2010 SCHEDULE "4" PROJECT l (I) TOpurchasetextbooks and addltlonal ~nstruct~onmalaterials and equipment for all sltes; (11)To expand technologyusage and Improve communlcatlon and safety capabllltles to Include but not be l~m~tetodthe upgradeof electr~cacl apaclty at JDDP. SDM, and VCHS, safety and securlty upgrades a t all fac~llt~es. and technology upgrades system-wlde. (111)To acqulre, Improve and malntain fac~l~tlefosr VCS to ~ncludebut not be l ~ m ~ t etodan athlet~c/physlcal education tralnlng faclllty at VCHS and JRT; kltchen expanslons at VCHS. SDM, and JDDP. and malntaln rooflng warranbes throughout the system. (IV) To expand and maintaln student transportatlon to ~ncludebut not be ilmlted to purchase of addlt~onasl tudent regular transportatlon and actlvlty buses PROJECT II TOpurchase textbooks and additional instructlonal mater~alsand equipment for all sites; To renovate J.D. Dickerson Primary School and complete Phase Ill renovationsat Sally D. Meadows Elementary School; To expand technology usage and improve mmmunicatlon and safety capabil~t~etos include but not be l~m~tetodthe upgrade of electrical capacity at J.D. DlckersonPrimary School, Sally D. Meadows Elementary School, and Vidalia Comprehensive High school, safety and securlty upgradesat all facllltles. and technology upgrades system-wide; To acqulre, improve. and maintain facilit~esfor Vldalia Schools to include but not be llmlted to an athletic/phys~caltralnlngfaclllty at J.R. Trlppe Mlddle School; k~tchenexpansions at Vldalla Comprehensive H~ghSchool and J. D. Dlckerson PrlmalySchool. and ma~nta~ronoflngwarranties throughout the system; To expand and malntaln student transportatlon to inciude but not be limlted to purchase of addit~onasl tudent regular transportation and actlvlty vehicles. ORIGINAL ESTIMATED COST (1) CURRENT ESTIMATED COSTS (2) AMOUNT EXPENDED IN CURRENT YEAR (3) AMOUNT EXPENDED IN PRIOR YEARS (3) $ 9,696,000.00 $ 12,283,121.00 $ 2.073.579.86 $ 10.209.541.14 6,160.000.00 6,160,000.00 700,000.00 700,000.00 PROJECT STATUS Completed Ongoing Ongoing $ 27.936.000.00 $ 30.523.121.00 $ 4.120.231.11 $ 10,209,541.14 (1)The School District's orlgmal cost estlmate as specified In the resolution calling for the imposltlon of the Local Optlon Sales Tax. (2) The School D~str~ctc'surrent estimate of total cost for the projects. Includes all cost from project Inception to mmpletlon. (3) The voters of Toombs County approvedthe Imposition of a 1%sales tax to fund the above projects. Amounts expended for these projects may Include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects. See notes to the baslc flnanclal Statements. (This page left intentionally blank) CITY OF VlDALlA BOARD OF EDUCATIONTOOMBS COUNTY GENERAL FUND -QUALITY BASIC EDUCATION PROGRAM (QBE) ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDEDJUNE 30.2010 SCHEDULE " 5 DESCRIPTION Direct lnstruct~onaPl rograms Kindergarten Program Kindergarten Program-Early Intewentlon Program Pr~maryGrades (1-3) Program Primary Grades-Early l n t e ~ e n t i o n(1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early lntervent~on(4-5) Program Middle School ( 6 8 ) Program High School General Education (9-12) Program Vocational Laboratory (912)Program Students wlth Dlsablllties Category I Category II Category Ill Category IV G~ftedStudent - Category VI Remedial Education Program Alternative Education Program TOTAL DIRECT INSTRUCTIONALPROGRAMS Media Center Program Staff and Professional Development TOTAL QBE FORMULA FUNDS ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1)(2) ELIGIBLE QBE PROGRAM COSTS SALARIES OPERATIONS TOTAL (1) Comprlsed of State Funds plus Local Five Mill Share. (2) Allotments do nat include the lmpact of the State amended formula adjustment. See notes to the bas~cfinancial statements. SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS Russell W. Hinton STATE AUDITOR (404) 656-2174 DEPARTMENOTF AUDITSAND ACCOUNTS 270 Washington Street, S.W., Suite 1- 156 Atlanta, Georgia 30334-8400 March 16,2011 Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the City of Vidalia Board of Education INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MAlTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Ladies and Gentlemen: We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of City of Vidalia Board of Education as of and for the year ended June 30, 2010, which collectively comprise City of Vidalia Board of Education's basic financial statements and have issued our report thereon dated March 16, 2011. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered City of Vidalia Board of Education's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressingour opinions on the financial statements, but not for the purpose of expressingan opinion on the effectiveness of the City of Vidalia Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City of Vidalia Board of Education's internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. However, we consider item FS-7931-10-01, described in the accompanying Schedule of Findings and Questioned Costs to be a significant deficiency in internal control over financial reporting. A significant deficienqv is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Compliance and Other Matters As part of obtaining reasonable assurance about whether City of Vidalia 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 grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we have reported to management of City of Vidalia Board of Education in a separate letter dated March 16, 2011. City of Vidalia Board of Education's response to the finding identified in our audit is described in the accompanying Schedule of Management's Responses. We did not audit City of Vidalia Board of Education's response and, accordingly, we express no opinion on it. This report is intended solely for the information and use of management, members of the City of Vidalia Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, usd dell W. Hinton, CPA, CGFM State Auditor Russell W. Hinton STATE AUDITOR (404)656-2174 DEPARTMENOTF AUDITSAND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 March 16,2011 Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the City of Vidalia Board of Education INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WlTH REOUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAIOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WlTH OMB CIRCULAR A-133 Ladies and Gentlemen: We have audited City of Vidalia Board of Education's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2010. City of Vidalia Board of Education's major Federal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major Federal programs is the responsibility of City of Vidalia Board of Education's management. Our responsibility is to express an opinion on City of Vidalia Board of Education's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Nun-Profit Organtzations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the City of Vidalia 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 Vidalia Board of Education's compliance with those requirements. In our opinion, the City of Vidalia Board of Education complied, in all material respects, with the compliance requirements referred t o above that could have a direct and material effect on each of its major Federal programs for the year ended June 30,2010. Internal Control Over Comlsliance Management of City of Vidalia Board of Education is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to Federal programs. In planning and performing our audit, we considered City of Vidalia Board of Education's internal control over compliance with the requirements that could have a direct and material effect on a major Federal program to determine the auditing proceduresfor the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City of Vidalia Board of Education's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a Federal program on a timely basis. A material weakness in internal control over compllbnce is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a Federal program will not be prevented, or detected and corrected, on a timely basis. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report is intended solely for the information and use of management, members of the City of Vidalia Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. - RespectfuIly submitted, I ~ u s $ e lWl . Hinton, CPA, CGFM State Auditor SECTION Ill AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS CITY OF VlDALlA BOARD OF EDUCATION - TOOMBS COUNTY AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30,2010 PRIOR YEAR FINANCIALSTATEMENT FINDINGSAND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS FS-793 1 - 0 8 - 0 1 FS-7931-09-01 Further Action Not Warranted Partially Resolved - See Corrective Action/Responses CORRECTIVE ACTION/RESPONSES CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDlTURES/LIABILITIES/DISBURSEMENTS GENERAL LEDGER Inadequate Internal Controls over School Activity Accounts Finding Control Number: FS-7931-09-01 Additional controls are currently being implemented including but not limited to: dual signature requirements, new lock boxes and vaults, replacement of one school bookkeeper, and additional controls from the Central Office level as far as reporting requirements to insure that all procedures established in the handbook are actually being followed. We believe this finding will be resolved by the end of fiscal year 2011. PRIOR YEAR FEDERAL AWARD FINDINGS AND OUESTIONED COSTS No matters were reported. SECTION IV FINDINGS AND QUESTIONED COSTS CITY OF VlDALlA BOARD OF EDUCATION - TOOMBS COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30.2010 I SUMMARY OF AUDITOR'S RESULTS Financial Statements Type of auditor's report issue: Governmental Activities; General Fund; Capital Projects Fund; Aggregate Remaining Fund Information Unqualified Internal control over financial reporting: Material weakness identified? N 0 Significant deficiency identified? Yes Noncompliance material to financial statements noted: Federal Awards Internal Control over major programs: Material weakness identified? Significant deficiency identified? N 0 None Reported Type of auditor's report issued on compliance for major programs: All major programs Unqualified Any audit findings disclosed that are required to be reported in accordance with OMB Circular A-133, Section 510(a)? Identification of major programs: CFDA Nurnber(s) Name of Federal Program or Cluster Title I, Part A Cluster Special Education Cluster State Fiscal Stabilization Fund Cluster Dollar threshold used to distinguish between Type A and Type B programs: Auditee qualified as low-risk auditee? II FINANCIALSTATEMENT FINDINGS AND QUESTIONED COSTS CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls over School Activity Accounts Significant Deficiency Finding Control Number: FS-7931-10-01 Condition: This is a repeat finding (FS-7931-09-01 and FS-7931-08-01) from the years ended June 30, 2009, and June 30, 2008, respectively. The accounting procedures of the School District were insufficient to provide for adequate internal controls over the school activity accounts. c l n OF VIDALIA BOARD OF EDUCATION - TOOMBSCOUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30,2010 II FINANCIALSTATEMENT FINDINGSAND QUESTIONEDCOSTS CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LlABILlTlES/DISBURSEMENTS Inadequate Internal Controls over School Activity Accounts Significant Deficiency Finding Control Number: FS-7931-10-01 Criteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are processed according to established procedures. Questioned Cost: N/A Information: Cash and Cash Equivalents: The bank reconciliation function was not separated from the check writing function. Revenues/Receiva ble/Receipts: The cash receipts function was not separated from the record keepingfunction. Several receipts lacked adequate supporting documentation. One school failed to maintain adequate documentation for nonresident student tuition. The auditor was unable to determine if all fees collected were properly deposited and recorded. It was noted that several checks were erroneously written off as nonsufficient funds (NSF). The School District's policy regarding NSF checks was not followed and checks that were allegedly cashed were credited against revenue. Expenditures/Liabilities/Disbursements: Instances were noted where vouchers did not contain complete purchase orders, invoices and/or lacked proper approvals for payments. Some checks were written with the amounts left blank and the vendor filled in the amounts. Some vouchers lacked evidence of receipt of goods. These deficiencies lead to an apparent theft of funds. Charges have been filed in this case. Cause: These deficiencies were a result of management's decision to limit the number of administrative staff made responsible for accounting functions and management's failure to ensure that internal controls were established, implemented and functioning at the school level. Effect: Errors and/or irregularities may not be detected in a timely manner. CITY OF VlDALlA BOARD OF EDUCATION - TOOMBS COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30,2010 II FINANCIALSTATEMENT FINDINGSAND QUESTIONEDCOSTS CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls over School Activity Accounts Significant Deficiency Finding Control Number: FS-7931-10-01 Recommendation: The School District should implement procedures to ensure that the key accounting functions of custody, record keeping and authorization are separated and/or utilize oversight for these incompatible activities. In addition, management should monitor controls to provide reasonable assurance that transactions are processed according to established policies and implement those procedures deemed necessary to strengthen internal controls over the accounting functions. Ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported. SECTION V MANAGEMENT'S RESPONSES CITY OF VlDALlA BOARD OF EDUCATION - TOOMBS COUNTY SCHEDULE OF MANAGEMENT'S RESPONSES YEAR ENDED JUNE 30,2010 Finding Control Number: FS-7931-10-01 We concur with this finding. The City of Vidalia Board of Education has established procedures for bank reconciliations to be reviewed by someone from the Central Office as well as the school principal. The cash receipts function will now require that two individuals will be made responsible for all deposits at the school level - both will sign off on the receipt and one will take deposits to the bank. New procedures have been established and standardized for handling Non-Sufficient Funds (NSF) checks and procedures have been established regarding transfer of funds. Periodic reviews will be done at the schools by a central office employee to make sure that supporting documentation is being properly provided for all revenue and that voucher packets are complete including purchase orders produced for all expenditures in a timely manner. The School Activities Account Handbook will be updated and reviewed with all bookkeepers and principals to reiterate proper procedures and establish internal controls to be implemented immediately. These procedures will be established by FY2011. Contact Person: Telephone: Fax: Email: Norma D. Croft, Finance Director (912) 537-3088 (912) 538-0938 ncroft@vidalia-cityk. 12.ga.u~