$131,790,000* COUNTY BOARD OF EDUCATION OF RICHMOND COUNTY (GEORGIA) GENERAL OBLIGATION SALES TAX BONDS, SERIES 2017

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1 This Preliminary Official Statement and any information contained herein are subject to completion and amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. PRELIMINARY OFFICIAL STATEMENT DATED JANUARY 24, 2017 NEW ISSUE BOOK ENTRY ONLY RATINGS: Moody's: "Aa1" S&P: "AA+" See "MISCELLANEOUS Ratings" In the opinion of Bond Counsel, subject to the limitations and conditions described herein, interest on the Bonds (including any original issue discount properly allocable to an owner thereof) is exempt from present State of Georgia income taxation, is excluded from gross income for federal income tax purposes, and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, such interest is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. The opinion contains greater detail, and is subject to exceptions, as noted in "LEGAL MATTERS Opinion of Bond Counsel" herein. $131,790,000* COUNTY BOARD OF EDUCATION OF RICHMOND COUNTY (GEORGIA) GENERAL OBLIGATION SALES TAX BONDS, SERIES 2017 Dated: Date of Delivery Due: October 1, as shown on the inside front cover The General Obligation Sales Tax Bonds, Series 2017 (the "Bonds") are being issued by the County Board of Education of Richmond County, Georgia (the "Board"), a political subdivision of the State of Georgia, for the purpose of (i) funding all or a portion of certain capital projects for the Richmond County School System (the "School System"), (ii) funding capitalized interest on the Bonds through October 1, 2017 and (iii) paying certain costs and expenses relating to the issuance of the Bonds. For more complete information, see "ESTIMATED SOURCES AND USES OF FUNDS" herein. The Bonds are general obligations of the Board. The principal of and interest on the Bonds are payable first from the proceeds of a special one percent sales and use tax for educational purposes ("SPLOST") which will be collected in Richmond County, Georgia (the "County") for a period commencing upon the expiration of the existing SPLOST and continuing for a period of 20 calendar quarters. If the proceeds from the imposition of the SPLOST are not sufficient to pay the entire principal of and interest on the Bonds when due, then the unpaid amount shall be payable from ad valorem taxes which may be levied, without limitation as to rate or amount, upon all taxable property located within Richmond County subject to taxation for school bond purposes. In addition, to provide an additional source of repayment for the Bonds, the Board will participate in the State of Georgia Intercept Program, under which the Bonds will be payable from certain state appropriations to which the Board may be entitled. For more complete and detailed information, see "THE BONDS Security and Sources of Payment for the Bonds" and "State Intercept Program." Interest on the Bonds is payable semiannually on April 1 and October 1 of each year, commencing on April 1, All Bonds bear interest from the date of issuance. See "INTRODUCTION Description of the Bonds" herein. The principal shall mature on October 1 in the years and principal amounts set forth on the inside front cover of this Official Statement. THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A SUMMARY OF THIS ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO MAKING AN INFORMED INVESTMENT DECISION. The Bonds are offered when, as, and if issued by the Board and accepted by the Underwriters, subject to prior sale and to withdrawal or modification of the offer without notice, and are subject to the approving opinion of Sutherland Asbill & Brennan LLP, Atlanta, Georgia, Bond Counsel. Certain legal matters will be passed on for the School System by its general counsel, Fletcher, Harley & Fletcher, Augusta, Georgia, and by its special counsel, Benjamin Allen, Augusta, Georgia, and for the Underwriters by their counsel, Hull Barrett, PC, Augusta, Georgia and Greenberg Traurig, LLP, Atlanta, Georgia. The Bonds in definitive form are expected to be delivered through The Depository Trust Company in New York, New York, on or about February 16, Citigroup Dated:, * Preliminary; subject to change. Raymond James

2 MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES, PRICES, YIELDS AND CUSIPS $131,790,000 * COUNTY BOARD OF EDUCATION OF RICHMOND COUNTY (GEORGIA) GENERAL OBLIGATION SALES TAX BONDS, SERIES 2017 Maturity (October 1) Principal Amount * Interest Rate Price Yield 2018 $24,455,000 % % ,860, ,345, ,900, ,230,000 Initial CUSIP * Preliminary; subject to change. CUSIP numbers have been assigned to the Bonds by an organization not affiliated with the Board or the Underwriters and are included for the convenience of the holders of the Bonds. Neither the Board nor the Underwriters are responsible for the selection, use or accuracy of the CUSIP numbers set forth herein.

3 No dealer, broker, salesman or other person has been authorized to give any information or to make any representations, other than those contained in this Official Statement in connection with the offering contained herein, and if given or made, such other information or representations must not be relied upon. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information contained in this Official Statement has been obtained from representatives of the Board, the School System, public documents, records and other sources considered to be reliable. The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The delivery of this Official Statement at any time does not imply that any information herein is correct as of any time subsequent to this date. Any statements in this Official Statement involving estimates, assumptions and matters of opinion, whether or not so expressly stated, are intended as such and not representations of fact. NO REGISTRATION STATEMENT RELATING TO THE BONDS HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") OR ANY STATE SECURITIES AGENCY. THE BONDS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR ANY STATE SECURITIES AGENCY, NOR HAS THE SEC OR ANY STATE SECURITIES AGENCY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THIS PRELIMINARY OFFICIAL STATEMENT IS IN A FORM DEEMED FINAL BY THE BOARD FOR PURPOSES OF RULE 15c2-12 ISSUED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, EXCEPT FOR CERTAIN INFORMATION PERMITTED TO BE OMITTED PURSUANT TO RULE 15c2-12(B)(1). In making an investment decision, investors must rely on their own examination of the Board and the terms of the offering, including the merits and risks involved. The Bonds have not been recommended by any federal or state securities commission or regulatory authority. Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy of this Official Statement. Any representation to the contrary is a criminal offense. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER- ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

4 COUNTY BOARD ELECTED OFFICIALS Board Marion E. Barnes, President Jimmy Atkins, Vice President Helen Minchew Venus Cain Frank Dolan Charlie Hannah Alex Howard Jack Padgett, Jr. Dr. Wayne Frazier Patsy Scott ADMINISTRATIVE OFFICIALS Dr. Angela D. Pringle, Superintendent C. Gene Spires, Chief Financial Officer Suzanne N. A. Lentz, Director of Budget and Finance Leonard O. Fletcher, Jr., Attorney to the School System GENERAL COUNSEL Fletcher, Harley & Fletcher, LLP Augusta, Georgia BOND COUNSEL Sutherland, Asbill & Brennan LLP Atlanta, Georgia UNDERWRITERS Citigroup Raymond James UNDERWRITERS' COUNSEL Hull Barrett, P.C. Greenberg Traurig, LLP

5 TABLE OF CONTENTS Page INTRODUCTION... 1 The Board...1 Security and Sources of Payment for the Bonds...1 Purpose of the Bonds...2 Tax Exemption...2 Description of the Bonds...2 Bond Registrar and Paying Agent...3 Professionals Involved in the Offering...3 Authority for Issuance...3 Offering and Delivery of the Bonds...3 Continuing Disclosure...4 Other Information...4 ESTIMATED SOURCES AND USES OF FUNDS... 5 THE PROJECT... 5 THE BONDS... 6 Description...6 Security and Sources of Payment for the Bonds...7 State Intercept Program...9 Non-Callable Bonds...10 Registration Provisions; Transfer; Exchange...10 Book-Entry Only System...11 Authority for Issuance...13 Disbursement and Investment of Bond Proceeds and Other Moneys...13 PRINCIPAL AND INTEREST REQUIREMENTS SCHOOL SYSTEM Introduction...17 School System Administration and Officials...17 Operations...19 Schools...19 Enrollment...22 Employees, Employee Relations, and Labor Organizations...22 BOARD DEBT STRUCTURE Summary of Board Debt By Category...22 Overlapping Debt...23 Debt Ratios...23 Debt History...25 Limitations on Board Debt...25 AD VALOREM TAXATION Introduction...26 Property Subject to Taxation...26 Assessed Value...26 Annual Tax Levy and Limitation on Annual Tax Levy...28 Property Tax Collections...29 (i)

6 Historical Property Tax Data...30 Property Tax Rates...31 Property Tax Levies and Collections...31 Ten Largest Taxpayers...32 BOARD FINANCIAL INFORMATION Description of School System and Reporting Entity...33 Summary of Significant Accounting Policies...33 Basis of Accounting...34 Five Year General Fund History...35 Management Comments Concerning Material Trends in Revenues and Expenditures...37 Budgetary Process...37 Budgets...38 Employee Pension Benefits...40 Retirement Plans...40 Post-Employment Benefits...43 Capital Improvements...45 Insurance Coverage and Governmental Immunity...45 AUGUSTA-RICHMOND COUNTY, GEORGIA Introduction...46 Demographic and Economic Information...47 LEGAL MATTERS Pending Litigation...51 Opinion of Bond Counsel...51 Original Issue Discount and Premium...53 Validation Proceedings...54 Closing Certificates...54 MISCELLANEOUS Ratings...54 Underwriting...55 Independent Auditors...56 Continuing Disclosure Undertaking...56 Additional Information...57 CERTIFICATION APPENDIX A - AUDITED FINANCIAL STATEMENTS OF THE BOARD FOR THE PERIOD ENDING JUNE 30, 2016 APPENDIX B - FORM OF OPINION OF BOND COUNSEL APPENDIX C - FORM OF CONTINUING DISCLOSURE AGREEMENT (ii)

7 OFFICIAL STATEMENT OF THE COUNTY BOARD OF EDUCATION OF RICHMOND COUNTY (GEORGIA) relating to its $131,790,000 * GENERAL OBLIGATION SALES TAX BONDS, SERIES 2017 INTRODUCTION The purpose of this Official Statement, which includes the cover page and the Appendices hereto, is to furnish certain information in connection with the sale by the County Board of Education of Richmond County, Georgia (the "Board") of $131,790,000 * in aggregate principal amount of its General Obligation Sales Tax Bonds, Series 2017 (the "Bonds"). This introduction is not a summary of this Official Statement and is intended only for quick reference. It is only a brief description of and guide to, and is qualified in its entirety by reference to, more complete and detailed information contained in the entire Official Statement, including the cover page and the Appendices, and the documents summarized or described herein. Potential investors should fully review the entire Official Statement. The offering of the Bonds to potential investors is made only by means of the entire Official Statement, including the Appendices hereto. No person is authorized to detach this Introduction from the Official Statement or to otherwise use it without the entire Official Statement, including the Appendices hereto. The Board The Board is a political subdivision of the State of Georgia and is charged with managing the affairs of the Richmond County School System (the "School System"). The School System is coextensive with the territorial limits of Richmond County, Georgia (the "County"), which is located in the central eastern portion of the State of Georgia bordering on the South Carolina state line, approximately 155 miles east of Atlanta, Georgia, and 75 miles southwest of Columbia, South Carolina. For more complete information, see "SCHOOL SYSTEM" herein. Security and Sources of Payment for the Bonds The Bonds are general obligations of the Board. The principal of and interest on the Bonds are payable first from the proceeds of a special one percent sales and use tax for educational purposes ("SPLOST") which will be collected in Richmond County, Georgia (the "County") for a period commencing upon the expiration of the existing SPLOST and continuing for a period of 20 calendar quarters. If the proceeds from the imposition of the SPLOST are not sufficient to pay the entire principal of and interest on the Bonds when due, then the unpaid amount shall be payable from ad valorem taxes which may be levied, without limitation as to rate or amount, upon all taxable property located within Richmond County subject to taxation for school bond purposes. In addition, to provide an additional source of repayment for the Bonds, * Preliminary; subject to change.

8 the Board will participate in the State of Georgia Intercept Program, under which the Bonds will be payable from certain state appropriations to which the Board may be entitled. For more complete and detailed information, see "THE BONDS - Security and Sources of Payment for the Bonds" and "State Intercept Program," "AD VALOREM TAXATION" and "SALES AND USE TAX FOR EDUCATIONAL PURPOSES" herein. Purpose of the Bonds The proceeds of the Bonds, net of underwriters' discount and other issuance costs, will be used to pay the costs of (i) funding all or a portion of the Project (as herein described), (ii) funding capitalized interest on the Bonds through October 1, 2017 and (iii) paying certain costs and expenses relating to the issuance of the Bonds. For more complete information, see "ESTIMATED SOURCES AND USES OF FUNDS" and "THE PROJECT" herein. Tax Exemption In the opinion of Bond Counsel, subject to the limitations and conditions described herein, interest on the Bonds is exempt from present State of Georgia income taxation, is excluded from gross income for federal income tax purposes, and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that for the purpose of computing the alternative minimum tax imposed on certain corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings. See Appendix B hereto for the form of the opinion Bond Counsel proposes to deliver in connection with the issuance of the Bonds. For a more complete discussion of such opinion and certain other tax consequences of owning the Bonds, including certain exceptions to the exclusion of the interest on the Bonds from gross income, see "LEGAL MATTERS - Opinion of Bond Counsel" herein. Description of the Bonds Denominations. The Bonds are issuable in denominations of $5,000 or any integral multiple thereof. Registration, Transfers, and Exchanges. The Bonds will be issued in fully registered form. When in book-entry form, ownership of Bonds held by The Depository Trust Company, New York, New York ("DTC"), or its nominee, Cede & Co., on behalf of the beneficial owners thereof (the "Beneficial Owners"), may be transferred upon delivery to DTC (or its nominee, Cede & Co.) of an assignment duly executed by the Beneficial Owner or his duly authorized attorney or legal representative. When not in book-entry form, ownership of any Bond may be transferred upon surrender thereof to the Bond Registrar, together with an assignment duly executed by the registered owner or such registered owner's attorney duly authorized in writing. Bonds may be exchanged for a like aggregate principal amount of Bonds of the same maturity and interest rate and of authorized denominations. For more complete information, see "THE BONDS - Registration Provisions; Transfer; Exchange" and "Book-Entry Only System" herein. Payments. Interest on the Bonds is payable initially on April 1, 2017 and semiannually thereafter on each April 1 and October 1 by check or draft mailed to the registered owner of record as of the March 15 or September 15 immediately preceding the applicable interest 2

9 payment date. When in book-entry form, payment of the principal of and interest on the Bonds will be made by the Paying Agent directly to Cede & Co., as nominee of DTC, and will subsequently be disbursed to DTC Participants and thereafter to Beneficial Owners of the Bonds. The principal of and redemption premium, if any, on the Bonds are payable upon the presentation and surrender of the Bonds to the Paying Agent. For more complete information, see "THE BONDS - Description" herein. Bond Registrar and Paying Agent The Bank of New York Mellon Trust Company, National Association, Atlanta, Georgia, will act as bond registrar and as paying agent for the Bonds (in each of such capacities the "Bond Registrar" or the "Paying Agent"). Professionals Involved in the Offering Certain legal matters pertaining to the Board and its authorization and issuance of the Bonds are subject to the approving opinion of Sutherland Asbill & Brennan LLP, Atlanta, Georgia, Bond Counsel. Copies of such opinion will be available at the time of delivery of the Bonds, and a copy of the proposed form of such opinion is attached hereto as APPENDIX B. Certain legal matters will be passed on for the School System by its general counsel, Fletcher, Harley & Fletcher, Augusta, Georgia, and by its special counsel Benjamin Allen, Augusta, Georgia and for the Underwriters by their co-counsel, Hull Barrett, PC, Augusta, Georgia and Greenberg Traurig, LLP, Atlanta, Georgia. The basic financial statements of the Board as of June 30, 2015 and for the year then ended, attached hereto as APPENDIX A, have been audited by Serotta Maddocks Evans and Co., Augusta, Georgia, to the extent and for the period indicated in its report thereon which appears in APPENDIX A hereto. See "MISCELLANEOUS - Independent Auditors" herein. Authority for Issuance The Bonds are being issued in accordance with Article VIII, Section VI, Paragraph IV of the Georgia Constitution, and the general laws of the State of Georgia, including specifically, O.C.G.A , et seq. and a resolution of the Board authorizing the issuance of the Bonds to be adopted on February 8, 2017, prior to the issuance of the Bonds (the "Bond Resolution"). The issuance of the Bonds was approved by a majority vote of voters in the County voting in an election held November 8, For more complete information, see "THE BONDS - Authority for Issuance" herein. Offering and Delivery of the Bonds The Bonds are offered when, as, and if issued by the Board and accepted by the Underwriters, subject to prior sale and to withdrawal or modification of the offer without notice. The Bonds in definitive form are expected to be delivered through DTC on or about February 16,

10 Continuing Disclosure In order to provide continuing disclosure with respect to the Bonds and assist the Underwriters in complying with Rule 15c2-12 promulgated by the SEC, as in effect on the date hereof (the "Rule"), simultaneously with the issuance of the Bonds, the Board will execute a Disclosure Dissemination Agent Agreement by and between the Board and Digital Assurance Certification, L.L.C. ("DAC") dated the date of delivery of the Bonds (the "Continuing Disclosure Agreement") under which the Board will act as initial disclosure dissemination agent. The annual report and notices of material events (as described in the Continuing Disclosure Agreement) will be filed by DAC, or on behalf of, the Board, with the repository designated by the SEC, presently the Municipal Securities Rulemaking Board (the "MSRB"), through the Electronic Municipal Market Access system ("EMMA"), or such other electronic format prescribed by the MSRB. See "MISCELLANEOUS - Continuing Disclosure Undertaking" herein and "APPENDIX C - FORM OF CONTINUING DISCLOSURE AGREEMENT" attached hereto. Other Information This Official Statement speaks only as of its date, and the information contained herein is subject to change. This Official Statement and the Appendices hereto contain brief descriptions of, among other matters, the Board, the School System, the Bonds, and the security and sources of payment for the Bonds. Such descriptions and information do not purport to be comprehensive or definitive. The summaries of various constitutional provisions, statutes, the Bond Resolution, the Continuing Disclosure Agreement, and other documents are intended as summaries only and are qualified in their entirety by reference to such documents and laws, and references herein to the Bonds are qualified in their entirety to the form thereof included in the Bond Resolution. Copies of the Bond Resolution, the Continuing Disclosure Agreement, and other documents and information are available, upon request and upon payment to the Board of a charge for copying, mailing, and handling, from C. Gene Spires, Chief Financial Officer, Richmond County Board of Education, 864 Broad Street, Augusta, Georgia 30901, telephone (706) The Bonds have not been registered under the Securities Act of 1933, and the Bond Resolution has not been qualified under the Trust Indenture Act of 1939, in reliance on exemptions contained in such Acts. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 4

11 ESTIMATED SOURCES AND USES OF FUNDS The estimated sources and uses of funds in connection with the issuance of the Bonds are set forth below. Sources of Funds: Par Amount of Bonds... $ Net Premium/Discount... Total Sources of Funds... $ Uses of Funds: Costs of Construction... $ Capitalized Interest... Costs of Issuance (1)... Total Uses of Funds... $ (1) Includes Underwriters' Discount, legal fees, Bond Registrar and Paying Agent fees, validation, printing and other costs of issuance. THE PROJECT The Bonds are being issued to fund all or a portion of the cost of acquiring, constructing, installing and equipping new and replacement school buildings and facilities and other buildings and facilities useful or desirable in connection therewith; adding to, renovating, removing, repairing, improving and equipping existing schools, including without limitation new classroom space, parking and athletic facilities for physical and general educational purposes and new and existing theaters and auditoriums; acquiring textbooks and technology hardware and software; acquiring school buses and other vehicles for the safety, security and maintenance of the school facilities and equipment and buildings and facilities for the repair and maintenance thereof; replacing furniture, fixtures and equipment at schools throughout the School System; acquiring the necessary property and rights in property therefor, both real and personal; to pay capitalized interest on the general obligation debt referred to below and to pay or reimburse the expenses of the Board of Education necessary to accomplish the foregoing, including the expenses of the Board of Education incurred in connection with calling the election and imposing the SPLOST (collectively, the "Project"). The Project is a planned continuation of the Board's capital improvement plan, which was first developed in 1995, integrated and coordinated with the capital improvement plan required by the State of Georgia Department of Education, and has been updated not less frequently than every five years. The Project represents Phase V of the capital improvement plan and was preceded by Phase I ( ), Phase II ( ), Phase III ( ) and Phase IV ( ), which correspond to the periods of imposition of the SPLOST for such prior years. In preparing and updating the capital improvement plan, a complete capital needs list was developed for each facility to include issues of safety, accessibility and the educational platform. Consideration was also given to the age and size of each building and whether selective 5

12 consolidation of facilities and new construction, as opposed to renovation of certain facilities would be appropriate. A policy committee meets once a month to review all projects under construction and to plan new projects. In addition, a Citizen Advisory Committee, made up of citizens from the community, meets on a monthly basis to review all construction projects to ensure fiscal responsibility and to give input into each project as it is being constructed. To date 52 projects were completed in Phase I, 59 projects were completed in Phase II, and 47 projects in Phase III. Phase IV consisted of 39 projects of which 27 have been completed and twelve are under construction. Utilizing the review process described above, which has been ongoing for 20 years, the Board approved the following construction projects for Phase V: one new school, two replacement schools, expansion, regeneration and renovations in ten high schools, and 4 elementary schools, including, without limitation, new classroom space, athletic facilities for physical and general educational purposes, as well as equipping existing school buildings and other buildings and facilities useful or desirable in connection there with acquiring textbooks and technology, hardware and software and equipment in connection with the foregoing, acquiring and equipping school buses and other vehicles and demolishing existing buildings and facilities located in school property that are no longer useful for public school purposes. Description THE BONDS The Bonds, as initially issued, will be dated as of the date of their original issue and will bear interest at the rates specified on the cover page of this Official Statement (computed on the basis of a 360-day year of twelve 30-day months) payable April 1, 2017 and semiannually thereafter on each April 1 and October 1. When in book-entry form, payment of the principal of and interest on the Bonds will be made by the Paying Agent directly to Cede & Co. as nominee of DTC, and will subsequently be disbursed to DTC Participants and thereafter to Beneficial Owners of the Bonds. See "THE BONDS - Book-Entry Only System." When not in book-entry form, interest on the Bonds is payable by check or draft mailed to the registered owner of record as of the March 15 or September 15 immediately preceding the applicable interest payment date, at such owner's address as it appears on the registration books of the Board, maintained by the Bond Registrar, or at such other address as is furnished in writing by such registered owner to the Bond Registrar. Prior to any record date, any owner of Bonds in an aggregate principal amount of not less than $1,000,000 by written instructions filed with the Paying Agent, may instruct that interest payments be made by wire transfer. The Bonds will mature on the dates and in the amounts set forth on the cover page of this Official Statement. The principal of the Bonds will be payable upon the presentation and surrender of the Bonds at the principal corporate trust office of The Bank of New York Mellon Trust Company National Association, Atlanta, Georgia, as Paying Agent. The Bonds are issuable in registered form in the denomination of $5,000 and any integral multiple thereof. 6

13 Security and Sources of Payment for the Bonds The Bonds will constitute valid and legally binding general obligations of the Board. The principal of and interest on the Bonds will be payable first from the proceeds of the SPLOST which will be collected in the County (for the benefit of the Board) and if the proceeds from the imposition of the SPLOST are not sufficient to pay the entire principal and interest on the Bonds when due, then such unpaid amount shall be payable from ad valorem taxes levied, without limitation as to rate or amount, upon all taxable property located within the County which is subject to taxation for school bond purposes, including real and personal property, privately owned utilities, motor vehicles, and mobile homes. General Obligations. The Bonds will constitute valid and legally binding general obligations of the Board. Prior to the issuance of the Bonds, the Board, as required by law, will levy an ad valorem tax on all taxable property within the County subject to taxation for school bond purposes in an amount sufficient to pay the principal of and interest on the Bonds as same become due and payable. See "BOARD DEBT STRUCTURE" and "AD VALOREM TAXATION" herein for a discussion of the Board's outstanding debt and legal ability to incur future indebtedness and for a discussion of ad valorem taxation. The realization of value from the pledge of the taxing power of the Board to the payment of the Bonds upon any default will depend upon the exercise of various remedies specified by Georgia law. These remedies may require judicial actions, which are often subject to discretion and delay and which may be difficult to pursue. The enforceability of rights or remedies with respect to the Bonds may be limited by state and federal laws, rulings, and decisions affecting remedies and by bankruptcy, insolvency, or other laws affecting creditors' rights or remedies heretofore or hereafter enacted. Notwithstanding the foregoing, Section of the Official Code of Georgia Annotated provides that no school district or other political subdivision (such as the Board) created under the constitution or laws of the State of Georgia shall be authorized to file a petition for relief from payment of its debts as they mature or a petition for composition of its debts under any federal statute providing for such relief or composition or otherwise to take advantage of any federal statute providing for the adjustment of debts of political subdivision and public agencies and instrumentalities. Section of the Official Code of Georgia Annotated also provides that no chief executive or other governmental officer, governing body or organization shall be empowered to cause or authorize the filing by or on behalf of any district created under the Constitution or laws of the State of Georgia of any petition for relief from payment of its debts as they mature or a petition for composition of its debts under any federal statute providing for such relief or composition or otherwise to take advantage of any federal statute providing for the adjustment of debts of political subdivisions and public agencies and instrumentalities. The Sales Tax. The SPLOST was first imposed in the County effective July 1, 1997 (SPLOST I) and was re-imposed effective July 1, 2002 (SPLOST II), July 1, 2007 (SPLOST III) and the current SPLOST, re-imposed effective July 1, 2012 (SPLOST IV). SPLOST IV is scheduled to expire on June 30,

14 The reimposition of the SPLOST was authorized by the approving vote of a majority of the voters voting in an election duly called and held in all the election districts of Augusta- Richmond County on November 8, The new SPLOST will be reimposed upon the expiration of SPLOST IV, which is expected to occur June 30, 2017, and will be collected for a period of 20 calendar quarters or until $225,000,000 has been collected, whichever shall occur first. The proceeds of the tax are to be used and may be expended for capital outlay projects for educational purposes. The proceeds from the imposition of SPLOST IV are committed to the Phase IV Projects and the payment of the Series 2012 Bonds, and are not available to pay the Bonds. The proceeds from the re-imposition of the SPLOST, which is expected to begin collection on July 1, 2017 are pledged to the payment of the Bonds. To the extent proceeds of the SPLOST are not sufficient to pay the Bonds, proceeds of the ad valorem taxes will be used to make up the shortfall. Pursuant to the Bond Resolution and as required by law, the proceeds of the reimposition of the SPLOST received in each bond year will be deposited into a debt service fund for the Bonds until such debt service fund contains an amount sufficient to satisfy all principal and interest requirements for the Bonds for that bond year. Proceeds of the reimposition of the SPLOST received after such debt service requirements have been satisfied may be used for the other purposes for which the SPLOST is being reimposed. The SPLOST will be imposed on the retail sales, rental, storage, use or consumption of tangible personal property and on services within the County, subject to numerous exemptions, including sales to certain governmental entities and to certain non-profit organizations, professional, insurance, and personal service transactions, sales of certain agricultural products, sales to and by certain agricultural enterprises, sales of certain types of manufacturing equipment, the sale or use of certain types of industrial materials, and sale or use of certain types of industrial materials, and sales of prescription drugs, certain medical devices and equipment, and lottery tickets. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 8

15 The SPLOST is collected for the Board by the State of Georgia Department of Revenue and is paid to the Board monthly. The following table sets forth annual collections by the Board of SPLOST in the fiscal years 2012 through 2016 and for a portion of 2017: Historical Sales Tax Proceeds Received By Board (1) Receipts By Net Amount After Adjustments (4) For Fiscal Years Ending June 30 Tax Proceeds Received Adjustments (2) 2012 $38,121, ,934, $ 613, $36,320, ,140, , ,559, ,386, , ,714, ,832, $2,284, (3)(4) 37,116, (1) There can be no assurance that future collections of the SPLOST will equal or exceed past collections of the existing SPLOST. (2) (3) (4) Adjustments for overpayments. In February 2016 the State department of revenue deducted $2,284, from the taxes earned for that month and deposited the net amount of $451, into the Board's Georgia Fund I account. The deduction was for sales taxes of $1,866, and interest of $418, which totaled to $2,284, The Board also refunded late interest charged to sales tax payoffs in the amount of $210,151.14, $133, and $74,313.43, for Fiscal Years 2013, 2014, and 2015, respectively. Returns of late interest are included in refunds made for Fiscal Year Source: County Board of Education of Richmond County. For the four month period from July 1, 2016 through October 31, 2016, $11,853, of SPLOST proceeds has been received by the Board. State Intercept Program Prior to the issuance of the Bonds, the Board, pursuant to Section of the Official Code of Georgia Annotated, will notify the State of Georgia Board of Education of the proposed issuance of the Bonds and authorize and direct the State of Georgia Board of Education to withhold from the Board sufficient moneys from any state appropriation to which the Board may be entitled and to apply so much as shall be necessary to the payment of the principal of and interest on the Bonds then due. Pursuant to Section of the Official Code of Georgia Annotated, if the State of Georgia Board of Education has received the notification described in the preceding sentence and if at any time the State of Georgia Board of Education is notified by the Paying Agent for the Bonds that the Board has failed to effect the punctual payment of the principal of or interest on the Bonds the State of Georgia Board of Education is authorized to and shall withhold from any state appropriation to which the Board may be entitled and apply so much thereof as shall be necessary to the payment of the principal of and interest on the Bonds then due. Under the terms of the Bond Resolution, the Board is required to deposit with the Paying Agent on each March 15 and September 15 (or, if such day is not a business day, the next succeeding business day) amounts sufficient to pay in full the principal of and interest on the Bonds on the following April 1 or October 1, respectively, beginning April 1, Under the terms of the Bond Resolution, if on any March 15 or September 15 (or, if such day is not a business day, the next succeeding business day) the Paying Agent has not received from the Board amounts sufficient to pay in full the principal of and interest on the Bonds on the 9

16 following April 1 or October 1, respectively then the Paying Agent is required to notify the State of Georgia Board of Education of the amount of any such deficiency. Under the terms of the Bond Resolution, all funds received by the Paying Agent from the State of Georgia Board of Education must be held by the Paying Agent in trust until paid on such April 1 or October 1. The amounts subject to interception by the State of Georgia Board of Education for the benefit of the owners of the Bonds will depend upon the amount and timing of annual appropriations made by the General Assembly of the State of Georgia to the Board. See "BOARD FINANCIAL INFORMATION - Five Year General Fund History" herein for the amounts paid to the Board by the State of Georgia for general operating purposes over the Board's past five fiscal years. The timing of the payment of any amounts subject to interception by the State of Georgia Board of Education to the Paying Agent for the benefit of the owners of the Bonds will depend upon the ability of the State of Georgia Board of Education to promptly liquidate investments of money appropriated but not disbursed by the General Assembly of the State of Georgia to the Board. No assurance can be given concerning the timing or amounts of future appropriations by the General Assembly of the State of Georgia to the Board or the timing of the payment of any amounts subject to interception by the State of Georgia Board of Education to the Paying Agent. Non-Callable Bonds The Bonds are not subject to redemption prior to maturity. Registration Provisions; Transfer; Exchange When in book-entry form, Bonds held by DTC or Cede & Co., as its nominee, on behalf of the Beneficial Owners thereof, are transferable upon delivery to DTC or Cede & Co., as its nominee of an assignment executed by the Beneficial Owner or the Beneficial Owner's duly authorized attorney. See "THE BONDS - Book-Entry Only System" herein. When not in book-entry form, ownership of any Bond may be transferred upon surrender thereof to the Bond Registrar, together with an assignment duly executed by the registered owner or his attorney or legal representative, in such form as shall be satisfactory to the Bond Registrar. Upon any such registration of transfer of ownership, the Bond Registrar shall cause to be authenticated and delivered in exchange for such Bond a new Bond or Bonds registered in the name of the transferee in any denomination that is a multiple of $5,000, as the transferee shall desire, in the same principal amount, maturity, and interest rate as the Bond surrendered for such transfer. The Bonds may be exchanged at the option of the owner for an aggregate principal amount of Bonds of the same interest rate and maturity and equal to the principal amount of the Bonds so surrendered and of any authorized denomination or denominations. For every exchange or registration of transfer of Bonds, the Bond Registrar may make a charge sufficient to reimburse it for any tax or other governmental charge required to be paid with respect to such exchange or registration of transfer, but no other charge may be made to the owner for the privilege of such exchange or registration of transfer of the Bonds. 10

17 Book-Entry Only System DTC, or its successor, New York, NY, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world's largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has a Standard & Poor's rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Series 2017 Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of the Bonds with DTC 11

18 and their registration in the name of Cede & Co., or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC's MMI procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Board as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and interest payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the Board or the Paying Agent on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC nor its nominee, the Trustee, or the Board, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Board and/or the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the Board or the Trustee. Under such circumstances, in 12

19 the event that a successor depository is not obtained, Series 2017 Bond certificates are required to be printed and delivered. The Board may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Series 2017 Bond certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC's book-entry system information has been obtained from DTC and other sources that the Board believes to be reliable, but the Board takes no responsibility for the accuracy thereof. Authority for Issuance Paragraph I(a) of Section V of Article IX of the Constitution of the State of Georgia provides (1) that no political subdivision may incur any new debt without the assent of a majority of the qualified voters of such political subdivision voting in an election held for that purpose as provided by law, and (2) that the debt incurred by any political subdivision may never exceed 10 percent of the assessed value of all taxable property within such political subdivision. The Bonds are authorized pursuant to an election in the County held on November 8, 2016, called under a resolution adopted by the Board on June 21, 2016 and are being issued pursuant to the authority granted by (i) the Georgia Constitution, including specifically Article IX, Section V, Paragraph I(a) and Article VIII, Section VI, Paragraph IV thereof, and (ii) the general laws of the State of Georgia, including specifically, O.C.G.A , et seq. The canvass of such election held in the County for this purpose, showed 49,619 "Yes" votes, and 22,646 "No" votes, an approximately 68.66% approval by those who voted in the election. Disbursement and Investment of Bond Proceeds and Other Moneys The proceeds of the sale of the Bonds will be held by and under the control of the Board and will be disbursed by the Board as the Board desires, to pay the costs of issuing the Bonds and the costs of the Project described in "THE PROJECT" herein. Paragraph VI of Section V of Article IX of the Constitution of the State of Georgia requires the proceeds of the tax assessed and collected to pay the principal of and interest on the Bonds, together with any other moneys collected for this purpose, to be placed in a sinking fund to be used exclusively for paying the principal of and interest on the Bonds and to be held and kept separate and apart from all other revenues collected by the Board. Section of the Official Code of Georgia Annotated provides that the proceeds of the Bonds may be invested and reinvested by the Board in the following investments, and no others: (1) the local government investment pool created in Chapter 83 of Title 36 of the Official Code of Georgia Annotated; 13

20 (2) bonds or obligations of the Board or bonds or obligations of the State of Georgia or other states or other counties, municipal corporations, and political subdivisions of the State of Georgia; (3) bonds or other obligations of the United States or of subsidiary corporations of the United States government which are fully guaranteed by such government; (4) obligations of and obligations guaranteed by agencies or instrumentalities of the United States government, including those issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, and any other such agency or instrumentality now or hereafter in existence; provided, however, that all such obligations shall have a current credit rating from a nationally recognized rating service of at least one of the three highest rating categories available and have a nationally recognized market; (5) bonds or other obligations issued by any public housing agency or municipal corporation in the United States, which such bonds or obligations are fully secured as to the payment of both principal and interest by a pledge of annual contributions under an annual contributions contract or contracts with the United States government, or project notes issued by any public housing agency, urban renewal agency, or municipal corporation in the United States which are fully secured as to payment of both principal and interest by a requisition, loan, or payment agreement with the United States government; (6) certificates of deposit of national or state banks located within the State of Georgia which have deposits insured by the Federal Deposit Insurance Corporation and certificates of deposit of federal savings and loan associations and state building and loan or savings and loan associations located within the State of Georgia which have deposits insured by the Savings Association Insurance Fund of the Federal Deposit Insurance Corporation or the Georgia Credit Union Deposit Insurance Corporation, including the certificates of deposit of any bank, savings and loan association, or building and loan association acting as depository, custodian, or trustee for any such bond proceeds. The portion of such certificates of deposit in excess of the amount insured by the Federal Deposit Insurance Corporation, the Savings Association Insurance Fund of the Federal Deposit Insurance Corporation, or the Georgia Credit Union Deposit Insurance Corporation, if any, shall be secured by deposit, with the Federal Reserve Bank of Atlanta, Georgia, or with any national or state bank or federal savings and loan association or state building and loan or savings and loan association located within the State of Georgia or with a trust office within the State of Georgia, of one or more of the following securities in an aggregate principal amount equal at least to the amount of such excess: direct and general obligations of the State of Georgia or other states or of any county or municipal corporation in the State of Georgia, obligations of the United States or subsidiary corporations included in clause (3) above, obligations of the agencies and instrumentalities of the United States government included in clause (4) above, or bonds, obligations, or project notes of public housing agencies, urban renewal agencies, or municipalities included in clause (5) above; (7) securities of or other interest in any no-load, open-end management type investment company or investment trust registered under the Investment Company Act of 1940, 14

21 as from time to time amended, or any common trust fund maintained by any bank or trust company which holds such proceeds as trustee or by an affiliate thereof so long as: (a) the portfolio of such investment company or investment trust or common trust fund is limited to the obligations described in clause (3) above and repurchase agreements fully collateralized by any such obligations; (b) such investment company or investment trust or common trust fund takes delivery of such collateral either directly or through an authorized custodian; (c) such investment company or investment trust or common trust fund is managed so as to maintain its shares at a constant net asset value; and (d) securities of or other interests in such investment company or investment trust or common trust fund are purchased an redeemed only through the use of national or state banks having corporate trust powers and located within the State of Georgia; and (8) interest-bearing time deposits, repurchase agreements, reverse repurchase agreements, rate guarantee agreements, or other similar banking arrangements with a bank or trust company having capital and surplus aggregating at least $50 million or with any government bond dealer reporting to, trading with, and recognized as a primary dealer by the Federal Reserve Bank of New York having capital aggregating at least $50 million or with any corporation which is subject to registration with the Board of Governors of the Federal Reserve System pursuant to the requirements of the Bank Holding Company Act of 1956, provided that each such interest-bearing time deposit, repurchase agreement, reverse repurchase agreement, rate guarantee agreement, or other similar banking arrangement shall permit the moneys so placed to be available for use at the time provided with respect to the investment or reinvestment of such moneys. In addition, Section (a)(1) of the Official Code of Georgia Annotated authorizes the Board, or the financial officer of the Board to whom investment authority is delegated, to invest and reinvest any money subject to its control and jurisdiction in: (1) obligations of the State of Georgia or of 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 bankers' acceptances; (6) the local government investment pool established by Section of the Official Code of Georgia Annotated; (7) repurchase agreements; and 15

22 (8) obligations of other political subdivisions of the State of Georgia. Section of the Official Code of Georgia Annotated provides that the Board, or the financial officer of the Board to whom investment authority is delegated pursuant to Section of the Official Code of Georgia Annotated, may invest and reinvest money subject to its control and jurisdiction in: (1) obligations of the United Stated and of its agencies and instrumentalities; (2) bonds or certificates of indebtedness of the State of Georgia and of its agencies and instrumentalities; and (3) certificates of deposit of banks which have deposits insured by the Federal Deposit Insurance Corporation; provided, however, that portion of such certificates of deposit in excess of the amount insured by the Federal Deposit Insurance Corporation must be secured by direct obligations of the State of Georgia or the United States which are of a par value equal to that portion of such certificates of deposit which would be uninsured. Section of the Official Code of Georgia Annotated provides that the Board shall designate one or more solvent banks, insured federal savings and loan associations, or insured state chartered building and loan associations as depositories of moneys belonging to the school funds of the School System. Section of the Official Code of Georgia Annotated prohibits the Board and the School System from having on deposit at any one time in any depository for a time longer than ten days a sum of money which has not been secured by a surety bond, by federal deposit insurance, or by pledged securities, with a market value of not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. Section of the Official Code of Georgia Annotated allows the Superintendent or the Finance Director of the Board, in his or her discretion, to waive the requirement for security in the case of operating funds placed in demand deposit checking accounts. The Board presently deposits its general funds with SunTrust Bank, Augusta, Georgia. The Board may, in its discretion, but subject to the provisions of Georgia law described in the above paragraph, deposit these funds with other financial institutions. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 16

23 PRINCIPAL AND INTEREST REQUIREMENTS Set forth below are the principal and interest payment requirements for the Bonds and the Board's General Obligation Bonds, Series 2012 (the "Prior Bonds") for the years shown below. For purposes of calculating the principal payable in any year, the relevant maturity or mandatory redemption amount is used. Prior Bonds (1) Year Ending December 31 Principal Interest Bonds Total Debt Service Requirements Principal Interest Total Debt Service Requirements Combined Total Debt Service Requirements 2017 $24,535, $1,126, $25,661, $ $ $ $ Totals $24,535, $1,126, $25,661, $ $ $ $ (1) The final debt payments for the 2012 bonds will be paid during calendar year On April 1, 2017 an interest payment of $563, is due. On October1, 2017 a principal payment of $24,535, and an interest payment of $563, is due. Introduction SCHOOL SYSTEM The School System is a political subdivision of the State of Georgia, separate from and legally and fiscally independent of Augusta-Richmond County and all other political subdivisions. The boundaries of the School System are coextensive with the territorial limits of the County. The Board is the only public school system in the entire County and is vested with the power to conduct a system of public education within the territorial limits of the County. School System Administration and Officials Under Georgia law, the School System is confined to the control and management of the Board. The Board consists of ten members. For the purpose of electing Board members, Georgia law divides the School System into ten school board districts and requires one member to be elected to the Board from each of the ten school board districts by the voters of the school board district he or she seeks to represent. Georgia law requires each member of the Board to have been a resident of the school board district from which he or she seeks election for at least one year prior to the election to such office and to remain a resident of that school board district during his or her term of office. Georgia law also requires each member of the Board to have been a resident of the County for at least two years prior to the date of election and to be a citizen of the United States of America and a qualified elector of the County. All members of the Board are elected to office for terms of four years. Every other January, the members of the Board of Education select a President and a Vice President to serve for terms of two years. 17

24 Information concerning the current members of the Board is set forth below: Name and Office Held Expiration of Term (December 31) Principal Occupation Marion E. Barnes, President 2020 Retired Educator Jimmy Atkins, Vice President 2020 Human Resources Manager Helen Minchew 2020 Former Social Worker/Homemaker Venus Cain 2018 Logistics Specialist Frank Dolan 2018 Business Owner Charlie Hannah 2018 Maintenance Contractor Alex Howard 2018 Sales/Marketing Jack Padgett, Jr Retired Businessman Dr. Wayne Frazier 2020 Retired Educator Patsy Scott 2020 Retired Nurse The Superintendent of the School System is the executive officer of the Board and is employed by the Board under written contract for a term of three years. The Superintendent may be removed by the Board during his or her term of office upon written notice and after an opportunity to be heard thereon at a public meeting. The Superintendent acts as the Secretary of the Board, ex officio. No person will be eligible to be appointed or employed as Superintendent unless such person is of good moral character, has never been convicted of any crime involving moral turpitude, and possesses acceptable business or management experience as specified by the Professional Standards Commission or the minimum valid certificate or a letter of eligibility for such certificate required by the Professional Standards Commission. In addition, Georgia law requires the Superintendent to reside within the County during his or her term of office. Moreover, the School System's charter requires that the Superintendent hold a six-year professional administrator's certificate. Dr. Angela D. Pringle, Superintendent, has been the Superintendent of the School System since September She is responsible for the day-to-day operations of the School System. Dr. Pringle served in Virginia Beach and Danville, Virginia as a mathematics teacher and assistant principal for ten years. Following her career as a teacher and assistant principal, she served the students in Danville, Virginia and in Gwinnett and DeKalb Counties Georgia as a principal for more than seventeen years in the elementary, middle and high school settings. She began her career in district-level leadership in 2010 in DeKalb County, Georgia as the Regional Superintendent where she supervised more than thirty school communities through Dr. Pringle has a Bachelor of Science in Mathematics and Business Management from Averett University, received in 1985, a Master of Secondary Leadership from Hampton University, received in 1990, and an Ed.D. in Educational Leadership from Virginia Tech, received in C. Gene Spires, Chief Financial Officer, has been employed by the Board since 1989 and is responsible for the financial affairs of the Board. Mr. Spires serves at the pleasure of the Board. From 1975 to 1979, Mr. Spires was with an accounting firm in Columbia, South Carolina. From 1979 to 1989 he was with an accounting firm in Sumter, South Carolina, serving as a partner from 1982 to Mr. Spires is a licensed certified public accountant in South Carolina and Georgia. He received a B.S. degree in Accounting in 1975 from the University of 18

25 South Carolina. Mr. Spires will retire as Chief Financial Officer effective June 30, 2017 after approximately 27 years of service to the Board. His replacement has not yet been determined. Suzanne N. A. Lentz, Director of Budget and Finance, has been employed by the Board since 2015 and is responsible for the accounting function of the Board. Mrs. Lentz serves at the pleasure of the Board. From , Mrs. Lentz was with an accounting firm in Atlanta, Georgia. From 2007 to 2013, she was with an accounting firm in Kansas City, Missouri, and from she was with an accounting firm in Augusta, Georgia. Mrs. Lentz is a licensed certified public accountant in Georgia. She received a B.S. in Accounting and Business Administration degree in 2004 and a Master of Accounting and Information Systems degree in 2005 from The University of Kansas. Operations The Board serves all of the area within the County. Funds for the general maintenance and operation of the School System are derived from local, state, and federal sources. Local revenues consist primarily of ad valorem property taxes. See "AD VALOREM TAXATION." Funds received from the State of Georgia are determined by certain formulas, generally based upon the number of students served and the relative wealth of the School System in relation to other school systems in Georgia, established by the State of Georgia Department of Education. Funds received from the federal government are primarily for programs for disadvantaged and handicapped students and for the school food service program. Over the past five fiscal years of the Board, approximately 31.48% of the Board's total general fund revenues were derived from local sources, 50.38% from state sources, and 18.14% from federal sources. See "BOARD FINANCIAL INFORMATION - Five Year General Fund History" herein. Schools The present teaching facilities in the School System consist of 57 schools made up of: 34 elementary schools, 10 middle schools, 11 high schools, two alternative education schools, and the elementary Literacy and Mathematics Center and Reaching Potential through Manufacturing programs. In addition, within the School System there is one administrative facility, one maintenance facility, one transportation facility, multiple warehouses located on the same facility. The following table sets forth each school in the School System: [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 19

26 Site (acres) Occupied Classrooms Year (1) Rooms (2) Portable Classrooms School Name Grades Enrollment Elementary Schools Barton Chapel PK Bayvale PK Blythe K Copeland PK Craig-Houghton PK Deer Chase K Diamond Lakes K Freedom Park PK Garrett PK Glenn Hills K Goshen PK Gracewood PK Hains PK Hephzibah PK W.S. Hornsby (6) PK / Jamestown (3) K Jenkins-White PK Lake Forest Hills PK McBean PK Meadowbrook PK Merry K Lamar-Milledge PK Monte Sano PK Reynolds K Rollins K Southside PK Terrace Manor PK Tobacco Road PK Walker K Warren Road PK Wheeless Road PK Wilkinson Gardens PK Willis Foreman (4) PK Windsor Spring PK (1) Represents the year during which the school was initially opened and utilized for instructional purposes, but does not reflect the most recent year of subsequent additions, improvements, or renovations, if any, to such facility. (2) Includes classrooms, cafeterias, libraries, shops, gymnasiums, auditoriums, and art and music classrooms. (3) Jamestown and Morgan Road are located on the same site (4) Willis Foreman Elementary and Spirit Creek Middle Schools are located on the same site. (5) Murphy students were moved to Bungalow Road while a new school is being built on the site of the TW Josey High School. (6) W.S. Hornsby Elementary and W.S. Hornsby Middle School are located on the same site. (*) The acreage with two buildings on the site is only counted once. Source: County Board of Education of Richmond County. [TABLE CONTINUED ON NEXT PAGE] 20

27 [TABLE CONTINUED FROM PREVIOUS PAGE] Site (acres) Occupied Classrooms Year (1) Rooms (2) Portable Classrooms School Name Grades Enrollment Middle Schools Glenn Hills Hephzibah Langford Morgan Road (3) (*) Murphy at Bungalow Rd. (5) Sego Spirit Creek (4) (*) Tutt Pine Hill Middle W.S. Hornsby (6) (*) High Schools ARC , Butler Cross Creek , Davidson Glenn Hills Hephzibah , Johnson l Josey Laney Westside 9-12&PK Richmond County Technical Career Magnet Alternative Learning Center at Lamar Performance Learning Center at Tubman Totals 31,156 1, , (1) Represents the year during which the school was initially opened and utilized for instructional purposes, but does not reflect the most recent year of subsequent additions, improvements, or renovations, if any, to such facility. (2) Includes classrooms, cafeterias, libraries, shops, gymnasiums, auditoriums, and art and music classrooms. (3) Jamestown and Morgan Road are located on the same site. (4) Willis Foreman Elementary and Spirit Creek Middle Schools are located on the same site. (5) Murphy students were moved to Bungalow Road while a new school is being built on the site of the TW Josey High School. (6) W.S. Hornsby Elementary and W.S. Hornsby Middle School are located on the same site. (*) The acreage with two buildings on the site is only counted once. Source: County Board of Education of Richmond County. There are currently 1,929 certificated personnel serving 31,159 students in the various schools. Specialists are available in the fields of speech, hearing, vision, learning disabilities, emotionally disturbed, psychological testing, physically handicapped, mentally retarded, hospital-home bound, and gifted children. The pupil-teacher ratio for all schools is approximately 14 to 1, including non-teaching personnel such as counselors and librarians. All teachers employed by the Board hold Bachelor's degrees, most have Master's degrees, and many have Specialist's and Doctoral degrees. All schools in the School System are accredited by the Georgia Accrediting Commission and have met the requirements for Standard Schools as set forth by the Georgia Department of Education. The School System's schools are also accredited by the Southern Association of Colleges and Schools/Advanced Standards For Quality School Systems. 21

28 Enrollment Set forth below is information concerning enrollment in the School System over the past five school years, as of the end of the seventh (7 th ), twenty-day reporting period. Grades Pre- Kindergarten Kindergarten * Total School Year ,306 2,406 2,445 2,541 2,473 2,584 2,339 2,110 2,132 2,163 2,786 2,140 2,015 1,719 31, ,301 2,649 2,679 2,731 2,515 2,323 2,327 2,268 2,333 2,222 2,495 2,086 1,820 1,598 31, ,322 2,717 2,809 2,563 2,383 2,334 2,360 2,373 2,277 2,301 2,458 2,138 1,832 1,634 31, ,283 2,832 2,629 2,424 2,432 2,454 2,466 2,349 2,371 2,299 2,488 2,066 1,866 1,779 31, ,212 2,635 2,478 2,476 2,515 2,478 2,485 2,434 2,338 2,231 2,494 2,074 1,983 1,782 31,615 Source: County Board of Education of Richmond County. Employees, Employee Relations, and Labor Organizations The Board had approximately 4,284 employees as of December 31, 2016 in the following categories: Classroom Teachers 1,929 Teaching Support Specialists 78 Administrators and Supervisors 206 Media specialists, Guidance Counselors & Psychologists 149 Professional/Technical Support 141 Teaching Assistants, Clerical and Attendance Officers 748 Transportation and Maintenance 591 School Nutrition Personnel 412 Nurses 30 TOTAL 4,284 Source: County Board of Education of Richmond County. Summary of Board Debt By Category BOARD DEBT STRUCTURE The Board's only outstanding debt obligation as of the date of this Official Statement is its Prior Bonds, which are currently outstanding in the aggregate principal amount of $24,535,000. The last time the Board was obligated for a capital lease was during fiscal year Currently there are no plans to enter into any capital leases. Should the Board elect to enter into one or more capital leases in the future, the Board's obligations under any such leases will not constitute debt of the Board for purposes of the constitutional debt limit described in "BOARD DEBT STRUCTURE - Limitations on Board Debt" herein and do not count against the Board's debt limitation. For a description of a legal limitation on the ability of the Board to enter into lease and installment purchase contracts subject to annual appropriation, see "BOARD DEBT STRUCTURE - Limitations on Board Debt" herein. The information set forth below should be read in conjunction with the Board's financial statements included as APPENDIX A hereto. 22

29 The Board has never defaulted in the payment of any of its general obligation debt. After the issuance of the Bonds, the Board has no plans to issue additional general obligation bonds for the next five years. Overlapping Debt In addition to the Board's debt obligations, property owners in the County are responsible for any debt obligations of other taxing entities in the proportion to which the jurisdiction of the Board overlaps such entities. Set forth below is the estimated overlapping general obligation debt and estimated overlapping property tax supported debt as of June 30, Although the Board has attempted to obtain accurate information as to the outstanding overlapping debt, it does not warrant its completeness or accuracy, as there is no central reporting entity which has this information available, and the amounts are based on information supplied by others. Amount of Authorized but Unissued Debt Amount of Outstanding Debt (Less Sinking Fund) Percent of Outstanding Debt Chargeable to Property in the County (1) Name of Overlapping Entity Richmond County General Obligation Bonds $0 $55,255, % Coliseum Authority (2) 0 21,440, Downtown Development Authority (2) 0 8,000, Totals $0 $84,695, % (1) The percentage of each overlapping entity's estimated outstanding debt chargeable to property in the County which is coterminous with the area of operation of the School System is calculated by dividing the gross assessed valuation of property in the County by the gross assessed valuation of property in the overlapping entity. (2) Represents intergovernmental contract pledged to the payment of revenue bonds issued by the named authority. Intergovernmental contract amounts are not "debt" for purposes of the debt limitation imposed under the State of Georgia Constitution. Source: Augusta-Richmond County. Debt Ratios Set forth below is the property tax supported debt per capita of the Board as of the end of each of the Board's past five fiscal years. Fiscal Year Ended Direct Tax Supported Overlapping Tax Supported Overall Tax Supported June 30 Debt Debt Debt 2011 $ $ $ , Source: Augusta-Richmond County. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 23

30 Set forth below is the property tax supported debt of the Board expressed as a percentage of total assessed value of taxable property within the County as of the end of each of the Board's past five fiscal years for which assessed value figures are available. Fiscal Year Ended June 30 Direct Tax Supported Debt (1) Overlapping Tax Supported Debt Overall Tax Supported Debt % 0.62% 2.87% Source: Augusta-Richmond County. Set forth below is the property tax supported debt of the Board expressed as a percentage of total estimated market value of taxable property within the County as of the end of each of the Board's past five fiscal years. Fiscal Year Ended June 30 Direct Tax Supported Debt (1) Overlapping Tax Supported Debt Overall Tax Supported Debt % 0.25% 1.15% Source: Augusta-Richmond County. Set forth below is the property tax supported debt per capita of the Board expressed as a percentage of per capita income as of the end of each of the Board's past five fiscal years. Fiscal Year Ended June 30 Direct Tax Supported Debt (1) Overlapping Tax Supported Debt % 0.50% 2.32% Source: Augusta-Richmond County. Overall Tax Supported Debt [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 24

31 Debt History Set forth below is information concerning long-term and short-term liabilities (excluding interfund payables) of the Board outstanding as of the end of each of its past five fiscal years. Category of Liabilities Short-Term (1) $ 35,350,195 $ 28,080,195 $ 29,165,195 $30,440,195 $31,695,195 Long-Term 145,616, ,477,857 88,308,697 57,880,968 26,435,287 Total $180,966,754 $145,558,052 $117,473,892 $88,321,163 $58,130,482 (1) Consists primarily of current maturities (due within 12 months) of long term debt and salaries and benefits owed at year end but not paid until July and August of the following fiscal year. Source: County Board of Education of Richmond County. Limitations on Board Debt Article IX of Section V of Paragraph I(a) of the Constitution of the State of Georgia provides that the Board may not incur new long-term obligations payable out of general property taxes without the approval of a majority of the qualified voters of the School System voting at an election called to approve the obligations. In addition, under said provision of the Constitution of the State of Georgia, the Board may not incur long-term obligations payable out of general property taxes in excess of ten percent of the assessed value of all taxable property within the County. Lease and installment purchase obligations subject to annual appropriation (such as the capital leases described in "BOARD DEBT STRUCTURE - Summary of Board Debt by Category" herein) and intergovernmental obligations are not subject to the legal limitations described above. In addition, refunded obligations cease to count against the Board's debt limitation upon being refunded. As computed in the table below, based upon its 2016 assessed value and after the issuance of the Bonds, the Board could incur (upon necessary voter approval) approximately $284,913,337 * of long-term obligations (or general obligation bonds) payable out of general property taxes. Assessed Value of Taxable Property as of August 3, 2016 $4,494,483,373 Debt Limit (10% of Assessed Value) 449,448,337 Amount of Debt Applicable to Debt Limit 156,325,000 (1) Legal Debt Margin 293,123,337 * (1) Includes $131,790,000 for the Bonds to be issued. Source: County Board of Education of Richmond County. Section (a)(4) of the Official Code of Georgia Annotated provides that lease and installment purchase contracts subject to annual appropriation must contain provisions limiting the total combined annual payments for such contracts and intergovernmental contracts in any calendar year to an amount equal to 7.5 percent of the total local revenue collected for maintenance and operation of the School System in the most recently completed fiscal year. * Preliminary; subject to change. 25

32 7.5% of the total local revenue collected for maintenance and operation of the School System in fiscal year 2016 was $6,970,416 ($92,938,880 x 7.5%), and the total combined annual payments for lease and installment purchase contracts of the Board subject to annual appropriation and intergovernmental contracts of the Board in calendar year 2016 is currently anticipated to be $0. Introduction AD VALOREM TAXATION An important source of revenue to fund the Board's operations is ad valorem property taxes. Ad valorem property taxes accounted for an annual average of approximately percent of Board general fund revenues for the fiscal year ending June 30, 2016 and are budgeted to account for approximately percent of general fund revenues for the year ending June 30, Ad valorem property taxes are levied annually in mills (one tenth of one percent) upon each dollar of assessed property value. Property Subject to Taxation Ad valorem property taxes are levied, based upon value, against real and personal property within the County. There are, however, certain classes of property which are exempt from taxation, including public property, religious property, charitable property, property of nonprofit hospitals, nonprofit homes for the aged, and nonprofit homes for the mentally handicapped, college and certain educational property, public library property, certain farm products, certain air and water pollution control property, and personal effects. In addition, the County allows exemptions from ad valorem taxation for school purposes for (1) homesteads or owner-occupied residences, of disabled veterans, not to exceed the greater of $50,000 or an amount determined under federal law, (2) homesteads, or owner-occupied residences, of persons 62 years of age or older with income, together with income of all members of the family residing in the homestead, not exceeding $10,000 for the immediately preceding taxable year, up to $10,000 of assessed value, (3) homesteads, or owner-occupied residences, of all persons, up to $5,000 of assessed value (this exemption, however, is inapplicable to taxes levied to pay bonded indebtedness), (4) homesteads, or owner-occupied residences, of totally and permanently disabled persons, up to $10,000 of assessed value (this exemption, however, is inapplicable to taxes levied to pay bonded indebtedness), (5) homesteads, or owner-occupied residences, of persons 65 years of age or older as of January 1 of the taxable year, are entitled to an exemption from all school taxes and (6) the inventory of companies that manufacture or warehouse goods in the County, known as the "freeport" exemption. The County also has a homestead exemption for all school taxes including bonded indebtedness for totally and permanently disabled taxpayers whose net income is less than $20,000. Assessed Value Assessed valuation, which represents the value upon which ad valorem property taxes are levied, is calculated as a percentage of fair market value. Georgia law requires taxable real and tangible property to be assessed, with certain exceptions, at 40 percent of its fair market value and to be taxed on a levy made by each respective tax jurisdiction according to 40 percent of the 26

33 property's fair market value. Georgia law requires certain agricultural real property to be assessed for ad valorem property tax purposes of 75 percent of the value of which other real property is assessed and requires certain historical property to be valued at a lower fair market value for ad valorem property tax purposes, and requires certain agricultural, timber and environmentally sensitive real property (otherwise known as conservation use property) and certain single-family real property located in transitional developing areas to be valued at their "current uses" (as opposed to fair market value). The chief appraiser of the County is required to submit a certified list of assessments for all taxable property, except motor vehicles and property owned by public utilities, within the County to the Richmond County Board of Tax Assessors. The Tax Commissioner is required to present the tax returns of the County to the Richmond County Board of Tax Assessors by April 1 of each year. The Richmond County Board of Tax Assessors is required to complete its revision and assessment of returns by June 1 of each year and to forward a copy of the completed digest to the State of Georgia Revenue Commissioner for examination and approval. The State of Georgia Revenue Commissioner has the authority to examine the digest for the purpose of determining if the valuations of property are reasonably uniform and equalized between and within counties. Assessments may also be subject to review at various stages by the Richmond County Board of Equalization and by state courts. The State of Georgia Motor Vehicle Tax Unit assesses the value of motor vehicles by make, model, and year by county and provides this information to each county tax office. The State of Georgia Property Tax Unit assesses the value of the property of public utilities and divides the assessment into two parts, assessed value of property and assessed value of franchise, and provides these amounts to the County which bills these taxes to the utilities. In 2012, the Georgia General Assembly passed legislation providing for a new method of taxation for motor vehicles purchased or leased on or after March 1, 2013 and titled in Georgia. These vehicles are exempt from sales and use tax and annual ad valorem tax, also known as the "birthday tax". These taxes are replaced by a one-time tax that is imposed on the fair market value of the vehicle called the title ad valorem tax fee ("TAVT"). The fair market value is the taxable base of the motor vehicle. In calendar years 2015, 2018, and 2022 respectively, the law requires the Department of Revenue ("Department") to evaluate TAVT revenues to determine if the TAVT rate will change for the calendar year following the year of the calculation. The law sets forth the specific methodology to be followed by the Department in determining whether the rate is to change or stay the same. Based on the statutory calculation, the rate of TAVT will remain at 7% for calendar years 2016, 2017, and 2018 respectively. For future years the rate may be adjusted, but in no event can the rate exceed 9%. The rate for the subsequent tax years, if increased, will be set by the Commissioner of the Department and will be published by August 31. Applications for title and TAVT payments are to be submitted directly to the county in which the purchaser registers the vehicle (i.e. county of residence) and must be paid at the time application for title and registration are made. Vehicles purchased prior to March 1, 2013 continue to be subject to the yearly "birthday tax". The State of Georgia Motor Vehicle Tax Unit assesses the value of these motor vehicles by make, model, and year by county and provides the 27

34 information to each county tax office for billing. The State of Georgia Property Tax Unit also assesses the value of the property of public utilities and divides the assessment into two parts, assessed value of property and assessed value of franchise, and provides these amounts to the County which bills these taxes to the utilities. Annual Tax Levy and Limitation on Annual Tax Levy Although the Board has the power to levy ad valorem property taxes, the Augusta- Richmond County Commission annually levies the ad valorem property taxes for the Board. The Board is required by Georgia law to annually certify to the Augusta-Richmond County Commission the rate of levy needed to produce the necessary amount of property tax revenues to support and maintain the School System. The Board determines a rate of levy for each fiscal year by computing a rate which, when levied upon the assessed value of taxable property within the territorial limits of the County, will produce the necessary amount of property tax revenues. Under Georgia law, the Augusta-Richmond County Commission is required to annually levy the ad valorem property tax certified to it by the Board, upon the assessed value of all taxable property within the County. In 1980, the voters of the County approved a local amendment to the Constitution of the State of Georgia which prohibits the Board from levying or collecting ad valorem taxes in any tax year at a mill rate higher than the ad valorem tax mill rate described below, unless the mill rate is approved by a majority of the qualified electors of the County voting in a referendum called for such purpose. The maximum mill rate the Board may levy in any tax year without a referendum is determined as follows: (1) multiply the mill rate levied by the Board for the tax year beginning January 1, 1979, exclusive of any grants from the State of Georgia which may have been used to reduce the net millage for 1979, by 107 percent; (2) then multiply the mill rate determined in (1) above by a fraction the numerator of which is the net taxable digest for the School System for the tax year preceding the year the tax is to be levied, rounded off to the nearest $10,000,000, and the denominator of which is the net taxable digest for the School System for the tax year in which the levy is to be made, rounded off to the nearest $10,000,000; and (3) then, reduce the mill rate determined in (2) above by the mill rate which, if levied against the taxable property within the County, would produce an amount of revenue equal to the amount of any proceeds received by the Board in the immediately preceding tax year form a local sales and use tax. The millage rate for operations and maintenance for calendar year 2016 was mills, which is the maximum mill rate of , which could have been levied by or on behalf of the Board in calendar year 2016 except as described below. In the event the Board desires to seek approval of a millage rate that exceeds the maximum millage rate as computed using the formula described above, the Board must hold a public referendum requesting the voters of the County approve the higher millage rate. If the Board sets a tentative millage rate which is higher than the rollback millage rate computed by the Richmond County Tax Commissioner, the Board must 28

35 advertise its intent to do so by placing an advertisement in a newspaper of general circulation serving the residents of the County titled "Notice of Property Tax Increase" and shall conduct at least three public hearings thereon. The advertisement shall appear at least one week prior to each hearing and shall be posted on an appropriate website at least one week prior to each hearing. In addition, the Board must cause a report to be published in a newspaper of general circulation throughout the County at least two weeks prior to its establishment of the millage rates for ad valorem taxes for educational purposes. The tax limitation described above excludes any expenditures made or caused to be made by the Board as determined from time to time on a case by case basis for the following express purposes: (a) Bonded indebtedness incurred as a result of a referendum by the voters approving such bonded indebtedness including the Bonds; and (b) Any expenditure for the replacement of or provision for any direct loss suffered by the Board as the result of any peril, catastrophe, or emergency which includes, but is not limited to, fire, lightning, wind, hail, water, storm, war, insurrection, riot, earthquake, nuclear occurrence, seizure, explosion, freezing, aircrafts, vehicles, or other similar catastrophe or acts of God; with the amount to be levied to cover such emergency not to exceed the actual cash outlay, considering all insurance payments from other sources to which the Board may be entitled, which the Board actually incurs as the result of said loss, including professional fees and other similar expenses required to place the Board in the same position in which it would have been had such perils, catastrophe, or emergency not occurred; provided, however, the Board declares by twothirds majority that the emergency does exist and the expenditures are in fact to be made as the result of the emergency. The General Assembly of the State of Georgia is permitted by local law to authorize the levy of additional assessments to provide for capital improvements; judicial commands and precepts; or mandated programs not funded by state or federal funds. Property Tax Collections The County bills and collects the property taxes of the Board on behalf of the Board. Under Georgia law, the tax collector of the County is required to pay over to the Board once a month all taxes collected for school purposes, after deducting a commission for collecting the taxes. Augusta-Richmond County charges the Board a collection fee of 2.5 percent of taxes collected for the Board. Real and personal property taxes are normally levied on January 1 of each year on the assessed value listed on January 1. Taxes are normally billed in September and are payable on or before November 15. Interest of 12 percent per annum applies to taxes paid after November 15, and a one-time penalty of 10 percent applies to taxes paid after December 20. All taxes levied on real and personal property, together with interest thereon and penalties for late payment constitute a perpetual lien on and against the property taxed arising after January 1 in the year in which taxed. The lien normally becomes enforceable on December 20 of 29

36 each year. Georgia law provides that taxes must be paid before any other debt, lien or claim of any kind, except for certain claims against the estate of a decedent and except that the title and operation of a security deed is superior to the taxes assessed against the owner of property when the tax represents an assessment upon property of the owner other than the property specifically subject to the title and operation of the security deed. Collection of delinquent real property taxes is enforceable by a tax sale of such realty. Delinquent personal property taxes are similarly enforceable by seizure and sale of the taxpayer's personal property. There can be no assurance, however, that the value of property sold, in the event of a tax sale, will be sufficient to produce the amount required to pay in full delinquent taxes, including any interest and penalties thereon or collection expenses incurred in connection therewith. At any time after the last day for the payment of taxes has arrived, the tax collector may notify the taxpayer in writing of the fact that the taxes have not been paid and that, unless paid, an execution will be issued. At any time after 30 days from giving the notice described in the preceding sentence, the Richmond County Sheriff (the "Sheriff") may issue an execution for nonpayment of taxes. The Sheriff may then publish a notice of the sale in a local newspaper weekly for four weeks and shall provide the taxpayer an additional 10 days written notice by registered or certified mail. A public sale of the property may then be made by the Sheriff at the Richmond County Courthouse on the first Tuesday of the month after the required notices are given. Historical Property Tax Data Set forth below is information concerning the assessed (40% of fair market value) and estimated actual (fair market) value of taxable property within the County for the past five calendar years. Calendar Year Real & Personal Property Public Utilities Motor Vehicles Mobile Homes Assessed Values Gross Tax Digest Bond Exemptions General Obligation Bond Tax Digest (1) Maintenance & Support Exemptions Maintenance & Support Tax Digest (2) Estimated Actual Value 2012 $4,721,907,120 $144,940,136 $338,312,190 $18,756,473 $5,223,915,919 $ 749,405,660 $4,474,510,259 $883,100,780 $4,340,815,139 $13,059,789, ,800,855, ,574, ,089,090 18,944,271 5,334,463, ,293,635 4,557,169, ,368,095 4,429,095,212 13,336,158, ,861,574, ,111, ,397,550 17,837,393 5,342,921, ,770,512 4,555,150, ,351,116 4,429,570,103 13,357,303, ,938,793, ,514, ,670,460 16,849,509 5,358,827, ,532,662 4,542,295, ,976,072 4,415,851,885 13,397,069, ,341,150, ,037, ,290,850 16,044,366 5,682,523,050 1,092,282,157 4,590,240,893 1,215,268,759 4,467,254,291 14,206,307,625 (1) Total assessed value, after deducting exemptions, for purpose of levying tax for District's general obligation bonds. (2) Total assessed value, after deducting exemptions, for purpose of levying tax for the support and maintenance of the District's school system. Source: Richmond County Tax Commissioner. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 30

37 Property Tax Rates Set forth below is information concerning the rate of levy of property taxes per $1,000 of assessed value (millage rates) of the Board and all overlapping governments for the past five calendar years: School System (Bond Year (M&O Levy) Subject to Legal Limit (1) Legal Limit Levy) Not Subject to Legal Limit Total Richmond County (2)(5) State of Georgia County- Wide Total (5) Fire District (3) Augusta (4) Hephzibah Blythe (1) The M&O (maintenance and support) Levy is subject to the legal millage rate limit set forth in the following column. (2) Millage rates for the Suburban Services District of the consolidated government. (3) Consists of the Suburban Services District of the consolidated government. (4) Millage rates for the Urban Services District of the consolidated government. (5) All motor vehicles purchased or leased on or after March 1, 2013 and titled in Georgia are exempt from sales and use tax and annual ad valorem tax, also known as the "birthday tax" and replaced by a one-time tax referred to as the TAVT. Source: Richmond County Tax Commissioner. Property Tax Levies and Collections Set forth below is information concerning property tax levies and collections of the Board for the past five fiscal years: Tax Collections (1) Percentage of Collections of Current Year's Levy to Percentage of Total Tax Collections to Tax Levy Delinquent Taxes Outstanding as of Year End Percentage of Delinquent Taxes to Tax Levy Fiscal Year Tax Levy Current Year's Levy Prior Years Total Tax Levy 2012 $81,645,641 $78,025,822 $1,224,617 $79,250, % 97.07% $3,558, % ,066,408 80,431,743 1,363,848 81,795, ,280, ,602,139 86,568,023 1,520,054 88,088, ,169, ,550,933 87,951,949 1,196,409 89,148, ,851, ,277,577 87,140,210 1,113,525 88,253, ,019, (1) Amounts shown are net of collection fees of 2.50% paid to the County. Source: Richmond County Tax Commissioner. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 31

38 As of October 31, 2016, the property tax collections of the Board is at $57,630,278. Set forth below is the estimated value of total tax title liens (or fi. fas.) owned by the Board as of the end of its past five fiscal years. The amounts set forth below are cumulative amounts from all preceding years. Estimated Value as of June $3,109,789 $2,851,789 $3,169,885 $3,280,585 $3,558,284 Source: Richmond County Tax Commissioner. The values reflected fall within projections for the years indicated. The Board has a high collection rate for delinquent property taxes. Delinquent property taxes of the Board are written off when the statute of limitations for their collection (seven years) expires or if no property is found to levy upon earlier. The delinquent taxes written off are usually for personal property, which are more difficult to collect than taxes on real property. Ten Largest Taxpayers Set forth below are the ten largest taxpayers in Augusta-Richmond County for the 2016 calendar year. A determination of the largest taxpayers within Augusta-Richmond County can be made only by manually reviewing individual tax records. Therefore, it is possible that owners of several parcels may have paid aggregate taxes in excess of those set forth in the table below. Furthermore, the taxpayers shown in the table below may own additional parcels within the County. No independent investigation has been made of, and consequently no representation can be made as to, the financial condition of any of the taxpayers listed below or that such taxpayers will continue to maintain their status as major taxpayers in the County. Augusta-Richmond County (Georgia) Largest Taxpayers For Calendar Year 2015 Taxpayer Business 2015 Taxes Levied Percent of Total Taxes Levied PCS Nitrogen Fertilizer $ 1,832, % Georgia Power Utility 1,803, International Paper Co Paper and Saw Mill 1,516, Fibrant LLC Chemical Products 1,217, Augusta National, Inc. Golf Club 1,112, BellSouth Telecom/AT&T Georgia Communications 751, Augusta Newsprint Newsprint 639, Doctor's Hospital Hospital 595, Berkman Residential Properties LLC Developers 416, National Life and Accident Insurance 407, TOTAL $10,292, % Source: Richmond County Tax Commissioner. 32

39 BOARD FINANCIAL INFORMATION Description of School System and Reporting Entity Reporting Entity The Board was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School System is a primary government and consists of all the organizations that compose its legal entity. Summary of Significant Accounting Policies Basis of Presentation The Board's basic financial statements are collectively comprised of the School Systemwide financial statements, fund financial statements and notes to the basic financial statements of the Richmond County Board of Education. School System-wide Statements The Statement of Net Assets and the Statement of Activities display information about the financial activities of the overall Board, 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 non-exchange transactions. The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the Board's governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the Board related to the administration and support of the Board'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. 33

40 Fund Financial Statements The fund financial statements provide information about the Board'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. All remaining governmental funds are aggregated and reported as nonmajor funds. The Board reports the following major governmental funds: General Fund is the Board's primary operating fund. It accounts for and reports all financial resources not accounted for and reported in another fund. School System-wide Capital Projects Fund accounts for and reports financial resources including Educational Special Purpose Local Option Sales Tax (ESPLOST), Bond Proceeds, and grants from Georgia State Financing and Investment Commission that are restricted, committed, or assigned to the expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets. Debt Service Fund accounts for and reports financial resources that are restricted, committed, or assigned, including taxes (property and sales) legally restricted for the payment of general long-term principal and interest. The Board reports the following fiduciary fund types: The Private Purpose Trust fund reports a trust arrangement under which principal and income may be expended to provide scholarships for selected students. Agency funds account for assets held by the Board 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 School System-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. Non-exchange transactions, in which the Board gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes and grants. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. 34

41 The Board uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. 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 Board 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, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources. The Board 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 Board's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues. The State of Georgia reimburses the Board for teacher's 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 period, generally September 1 through August 31. In accordance with the respective rules and regulations of the QBE program, the State of Georgia reimburses the Board over the same twelve month period in which the teachers are paid. On June 30, the amount of teachers' salaries incurred but not paid until July and August of the subsequent year is accrued. Since the State of Georgia recognizes it QBE liability for the July and August salaries at June 30, the Board recognizes the same QBE as a receivable and revenue, consistent with symmetrical recognition. Five Year General Fund History Set forth below is a historical, comparative summary of the revenues, expenditures, and changes in fund balance of the Board's General Fund for the past five fiscal years. Information in the following table for fiscal years ended 2012 to 2016, has been extracted from audited financial statements of the Board as available, including the audited financial statements of the Board for the fiscal year ended June 30, 2016 which are attached as Appendix A. Although taken from audited financial statements, no representation is made that the information is comparable from year to year, or that the information as shown taken by itself presents fairly the financial condition of the Board for the fiscal years shown. For more complete information, reference is made to the audited financial statements for fiscal years 2012 to 2015, copies of which are available from the Board upon request, and for fiscal year 2016, which are attached as Appendix A. 35

42 Richmond County Board Of Education Historical Income Statement Summary School System General Fund Year Ended June Revenues State Funds $148,029,740 $143,428,229 $142,185,276 $148,827,470 $149,150,029 Federal Funds 60,800,698 52,955,101 54,381,529 51,186,921 44,013,662 Local and Other Funds 85,269,593 89,509,640 93,103,791 94,640,855 94,582,507 Total Revenues $294,100,031 $285,892,970 $289,670,596 $294,655,246 $287,746,198 Expenditures Current Instruction $187,773,069 $177,968,021 $173,871,920 $174,848,121 $173,890,423 Support Services Pupil Services 9,024,446 9,115,395 9,257,531 9,763,776 10,445,118 Improvements of Instructional 16,754,874 17,141,492 15,395,059 14,304,435 14,503,172 Services Educational Media Services 5,633,036 5,877,535 5,859,416 6,066,964 4,835,391 General Administration 2,849,914 2,176,119 2,027,306 2,162,242 3,233,502 School Administration 17,375,904 16,807,327 17,012,398 17,841,798 21,188,994 Support Services Business 1,575,812 1,606,781 1,579,999 1,772,698 2,168,344 Maintenance and Operation of 26,982,943 25,698,651 26,928,319 27,138,091 26,448,390 Plant Student Transportation Services 10,233,136 10,855,547 10,964,539 11,026,411 11,166,907 Central Support Services 2,725,187 2,944,117 3,197,303 2,871,935 4,122,415 Other Support Services 2,168,109 1,724,150 1,904,513 2,039,719 1,592,796 Food Services Operation 16,107,686 17,886,994 18,154,921 18,619,322 19,228,666 Community Services Operations 80, , , ,682 20,043 Capital Outlay Debt Service Principal Interest Total Expenditures $299,284,253 $289,904, ,294, ,635, ,844,161 Excess of Revenues over (under) Expenditures ($5,184,222) ($4,011,618) $3,375,874 $6,020,052 ($5,097,963) Other Financing Sources (Uses) Sale of Equipment $21,101 $33,631 $251,187 $346,891 $69,263 Capital Leases Operating Transfers In 726 Operating Transfers Out (1) (726) Total Other Financing Sources (Uses) $21,101 $33,631 $251,187 $346,891 $69,263 Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses ($5,163,121) ($3,977,987) $3,627,061 $6,366,943 ($5,028,700) Fund Balance, Beginning of Year 42,234,522 37,071,401 33,093,414 36,720,475 43,087,419 Fund Balance, End of Year $37,071,401 $33,093,414 $36,720,475 $43,087,419 $38,058,719 (1) These funds represent transfers to fund capital outlay projects, athletic programs and matching funds for federal grants. Source: County Board of Education of Richmond County. 36

43 Management Comments Concerning Material Trends in Revenues and Expenditures In fiscal year 2012, the Board had an Excess of Revenues under Expenditures of $5,184,222. After Other Financing Sources from Sale of Equipment and Transfers in from other funds, the Board's total General Fund Balance decreased by $5,163,121 to $37,071,401. In fiscal year 2013, the Board had an Excess of Revenues under Expenditures of $4,011,618. After Other Financing Sources from Sale of Equipment, the Board's total General Fund Balance decreased by $3,977,987 to $33,093,414. In fiscal year 2014, the Board had an Excess of Revenues over Expenditures of $3,375,874. After Other Financing Sources from Sale of Equipment, the Board's total General Fund Balance increased by $3,627,061 to $36,720,475. In fiscal year 2015, the Board had an Excess of Revenues over Expenditures of $6,020,052. After Other Financing Sources from Sale of Equipment, the Board's total General Fund Balance increased by $6,366,943 to $43,087,419. In fiscal year 2016, the Board had an Excess of Revenues under Expenditures of $5,097,963. After Other Financing Sources from Sale of Equipment, the Board's total General Fund Balance is estimated to decrease by $5,028,700 to $38,058,719. In fiscal year 2017, the Board is projecting in its General Fund budget a reduction of $5,005,615 in its General Fund Balance to $33,053,104. This estimated Fund Balance is 11.29% of the FY 2017 budgeted expenditures. Budgetary Process The Board adopts an operating budget for its General Fund each year. The operating budget contains proposed expenditures and the means for financing them. The Board is not legally required to stay within the budget, but under Georgia law it must meet certain minimum expenditure requirements for allotted state funds, unless granted a waiver to spend less. The Board, as required by the State of Georgia Department of Education, uses a modified accrual basis of accounting in its adopted General Fund budget, which is not in conformity with generally accepted accounting principles and which is not consistent with the basis of accounting used in the Board's general fund financial statements summarized in this Official Statement under the caption "BOARD FINANCIAL INFORMATION - Five Year General Fund History." The administration of the Board generally begins budget preparations in January of each year. After various budget meetings, a tentative budget is usually adopted by the Board by May and is advertised in the legal organ of the County, inviting public comment beginning at the May meeting of the Board. After consideration of any public comment, the final budget is adopted by the Board in June and, as required by Georgia law, is submitted to the State of Georgia Department of Education by August 31, each year for acceptance or rejection. The budget is developed on a zero base each year, under which each program must substantiate its request rather than ask for an increment over the previous year's allocation. 37

44 Initial budget preparation, as well as control of individual budgeted expenditures, are vested with the Superintendent, with assistance form program directors, supervisors, and the Deputy, Superintendent and Leadership Team who have the responsibility of performing the various functions of the specific programs. The Board's Chief Financial Officer's office serves as a resource function to aid in finding the best economic use of available revenues and to assure compliance with the Board's policies relative to budgetary control. The Chief Financial Officer's office furnishes the Board a monthly "budget" versus "actual" financial report and a summary financial statement to keep the Board apprised of the its financial condition. Georgia law requires the budget of the Board to reflect all anticipated revenues from each source, to designate all of such anticipated revenues among the several funds or accounts of the Board, and to not leave any anticipated revenues undesignated. Except as otherwise described below, Georgia law requires all amounts allocated to each fund or account and any existing balance in each fund or account to be intended for expenditure within the budget year for the purposes of that fund or account. Georgia law allows no fund or account in the nature of a "surplus" or "unobligated surplus" fund or account. The Board is permitted, however, under Georgia law to establish a single reserve fund or reserve account intended to cover unanticipated deficiencies in revenue or unanticipated amounts which, when combined with the existing balance in such fund or account, exceed 15 percent of that year's total budget. The Board is permitted under Georgia law to also establish one or more capital accumulation funds or accounts, and the Board may allocate amounts to such capital accumulation funds or accounts for expenditure in future budget years only if the purpose for which such amounts will be expended and the anticipated date of expenditure of such amounts are clearly and specifically identified. The stated purpose of the provisions of Georgia law described above is to prohibit local school systems from accumulating surplus funds through taxation without accounting to the taxpayers for how such funds will be expended. Encumbrance accounting, under which purchase order, contracts, and other commitments for the expenditure of moneys are recorded in order to reserve that portion of the applicable appropriation, is employed as a technique of accomplishing budgetary control. Encumbrances outstanding at year-end are reported as reservations of fund balances under generally accepted accounting principles, since they do not constitute expenditures or liabilities. Unencumbered appropriations lapse at the end of the Board's fiscal year. Encumbrances are re-appropriated in the following fiscal year. Budgets Set forth below is a summary of the Board's adopted budget for its General Fund for the year ending June 30, This budget is based upon certain assumptions and estimates of the Board regarding future events, transactions, and circumstances. Realization of the results projected in this budget will depend upon implementation by the Board of policies and procedures consistent with the assumptions. There can be no assurance that actual events will correspond with such assumptions, that uncontrollable factors will not affect such assumptions, or that the projected results will be achieved. Accordingly, the actual results achieved could materially vary from those projected in the budget set forth below. 38

45 REVENUES General Fund Budget for Year Ending June 30, 2017 (Non-GAAP Budgetary Basis of Accounting) GENERAL FUND Property Taxes $ 90,099,510 Sales Taxes 1,247,552 State Funds 149,150,028 Federal Funds 44,013,662 Charges for Services 945,710 Investment Earnings 12,289 Miscellaneous 2,277,447 EXPENDITURES Total Revenues $287,746,198 Current Instruction $174,187,826 Support Services Pupil Services 10,495,308 Improvement of Instructional Services 14,209,910 Educational Media Services 4,835,391 General Administration 2,783,166 School Administration 21,188,994 Business Administration 2,168,344 Maintenance and Operation of Plant 26,821,310 Student Transportation Services 11,166,907 Central Support Services 4,122,415 Other Support Services 1,592,796 Community Services 20,043 Food Services Operation 19,228,666 Capital Outlay - Debt Services Principal - Dues and Fees - Interest - Total Expenditures $292,821,076 Revenues over (under) Expenditures $ (5,074,878) OTHER FINANCING SOURCES (USES) Sale of Capital Assets $ 69,263 Transfers In - Transfers Out - Total Other Financing Sources (Uses) $ 69,263 Net Change in Fund Balances (5,005,615) Fund Balances - Beginning 38,058,719 Fund Balances - Ending $ 33,053,104 Source: County Board of Education of Richmond County. 39

46 Employee Pension Benefits Substantially all teachers and administrative and clerical personnel of the Board are covered by the Teachers' Retirement System of Georgia, a cost-sharing, multiple-employer retirement system administered by the State of Georgia for the benefit of education personnel. Bus drivers, lunchroom personnel and maintenance and custodial personnel are covered by the Public School Employees' Retirement System of Georgia, a cost-sharing, multiple employer retirement system administered by the State of Georgia. The Board makes no contribution to this plan. Reference is made to Note 16 of the Board's financial statements included as APPENDIX A for a description of the Board's retirement (pension) plans. The Board also offers its employees deferred compensation plans created in accordance with Internal Revenue Code Section 403(b) and 457. The plans are available to all Board employees and permits them to defer income taxation of a portion of their salary to future years. Participation in the plans is optional. The deferred compensation is not available to employees until termination, retirement, death or unforeseeable emergency. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts and all income attributable to those amounts, property or rights are (until paid or made available to the employee or other beneficiary) solely the property and rights of the Board subject only to the claims of the Board's general creditors. Participants' rights under the plan are equal to those of general creditors of the Board in an amount equal to the fair market value of the deferred account for each participant. The Board believes that it is unlikely that it will use these assets to satisfy the claims of general creditors in the future. The Board believes that it has no liability for losses under the plan but does have the duty of care that would be required of an ordinary prudent investor in making plan investments. Board employees accrue vacation and sick leave in different amounts, depending upon the period of time the Board has employed them. The maximum amount of vacation leave that employees may accumulate is 20 days. The Board pays accrued vacation leave upon termination of employment and has reflected a liability for accumulated vacation pay in its financial statements. The maximum amount of sick leave that Board employees may accumulate is 90 days. The Board does not, however, pay accrued sick leave upon termination of employment and has not reflected accumulated sick leave as a liability in the Board's financial statements. Retirement Plans Richmond County Board of Education participates in various retirement plans administered by the State of Georgia, as further explained below: Teachers Retirement System of Georgia (TRS) Plan Description: All teachers of the School System as defined in O.C.G.A and certain other support personnel as defined by are provided a pension through the Teachers Retirement System of Georgia (TRS). TRS, a cost-sharing multiple- employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State 40

47 Legislature. The Teachers Retirement System of Georgia issues a publicly available separate financial audit report that can be obtained at Benefits Provided: TRS provides service retirement, disability retirement, and death benefits. Normal retirement benefits are determined as 2% of the average of the employee s two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. An employee is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. Ten years of service is required for disability and death benefits eligibility. Disability benefits are based on the employee s creditable service and compensation up to the time of disability. Death benefits equal the amount that would be payable to the employee s beneficiary had the employee retired on the date of death. Death benefits are based on the employee s creditable service and compensation up to the date of death. Contributions: Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. Pursuant to O.C.G.A , the employer contributions for certain full-time public school support personnel are funded on behalf of the employer by the State of Georgia. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees were required to contribute 6% of their annual pay during fiscal year The School System s contractually required contribution rate for the year ended June 30, 2016 was 14.27%, excluding payroll attributable to those personnel funded on behalf of the School System by the state. For the current fiscal year, employer contributions to the pension plan were $22,255,266 and $225,369 from the School System and the State, respectively. Employees Retirement System Plan description: The Employees' Retirement System of Georgia (ERS) is a cost sharing multiple employer defined benefit pension plan established by the Georgia General Assembly during the 1949 Legislative Session for the purpose of providing retirement allowances for employees of the State of Georgia and its political subdivisions. ERS is directed by a Board of Trustees. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. ERS issues a publicly available financial report that can be obtained at Benefits provided: The ERS Plan supports three benefit tiers: Old Plan, New Plan, and Georgia State Employees Pension and Savings Plan (GSEPS). Employees under the old plan started membership prior to July 1, 1982 and are subject to plan provisions in effect prior to July 1, Members hired on or after July 1, 1982 but prior to January 1, 2009 are new plan members subject to modified plan provisions. Effective January 1, 2009, new state employees and rehired state employees who did not retain membership rights under the Old or New Plans are members of GSEPS. ERS members hired prior to January 1, 2009 also have the option to irrevocably change their membership to GSEPS. Under the old plan, the new plan, and GSEPS, a member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60 or 41

48 30 years of creditable service regardless of age. Additionally, there are some provisions allowing for early retirement after 25 years of creditable service for members under age 60. Retirement benefits paid to members are based upon the monthly average of the member s highest 24 consecutive calendar months, multiplied by the number of years of creditable service, multiplied by the applicable benefit factor. Annually, postretirement cost-of-living adjustments may also be made to members benefits, provided the members were hired prior to July 1, The normal retirement pension is payable monthly for life; however, options are available for distribution of the member s monthly pension, at reduced rates, to a designated beneficiary upon the member s death. Death and disability benefits are also available through ERS. Contributions: Member contributions under the old plan are 4% of annual compensation, up to $4,200.00, plus 6% of annual compensation in excess of $4, Under the old plan, the state pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these state contributions are included in the members accounts for refund purposes and are used in the computation of the members earnable compensation for the purpose of computing retirement benefits. Member contributions under the new plan and GSEPS are 1.25% of annual compensation. The School System s contractually required contribution rate, actuarially determined annually, for the year ended June 30, 2016 was 24.72% of annual covered payroll for old and new plan members and 21.69% for GSEPS members. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employer contributions to the pension plan were $27,153 for the current fiscal year. Public School Employees' Retirement System (PSERS) Plan description: PSERS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly in 1969 for the purpose of providing retirement allowances for public school employees who are not eligible for membership in the Teachers Retirement System of Georgia. The ERS Board of Trustees, plus two additional trustees, administers PSERS. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. PSERS issues a publicly available financial report that can be obtained at Benefits provided: A member may retire and elect to receive normal monthly retirement benefits after completion of ten years of creditable service and attainment of age 65. A member may choose to receive reduced benefits after age 60 and upon completion of ten years of service. Upon retirement, the member will receive a monthly benefit of $14.75, multiplied by the number of years of creditable service. Death and disability benefits are also available through PSERS. Additionally, PSERS may make periodic cost of living adjustments to the monthly benefits. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contribution, the member forfeits all rights to retirement benefits. 42

49 Contributions: The general assembly makes an annual appropriation to cover the employer contribution to PSERS on behalf of local school employees (bus drivers, cafeteria workers, and maintenance staff). The annual employer contribution required by statute is actuarially determined and paid directly to PSERS by the State Treasurer in accordance with O.C.G.A (a) and 60(b). Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Individuals who became members prior to July 1, 2012 contribute $4 per month for nine months each fiscal year. Individuals who became members on or after July 1, 2012 contribute $10 per month for nine months each fiscal year. The State of Georgia, although not the employer of PSERS members, is required by statute to make employer contributions actuarially determined and approved and certified by the PSERS Board of Trustees. The current fiscal year contribution was $161,297. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions: At June 30, 2016, the School System reported a liability of $219,887,247 for its proportionate share of the net pension liability for TRS ($219,730,377) and ERS ($156,870). The TRS net pension liability reflected a reduction for support provided to the School System by the State of Georgia for certain public school support personnel. The amount recognized by the School System as its proportionate share of the net pension liability, the related State of Georgia support, and the total portion of the net pension liability that was associated with the School System were as follows: School System's proportionate share of the Net Pension Liability $219,730,377 State of Georgia's proportionate share of the Net Pension Liability associated with the School System 3,042,061 Total $222,772,438 The net pension liability for TRS and ERS was measured as of June 30, The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, An expected total pension liability as of June 30, 2015 was determined using standard roll-forward techniques. The School System s proportion of the net pension liability was based on contributions to TRS and ERS during the fiscal year ended June 30, Post-Employment Benefits Georgia School Personnel Post-employment Health Benefit Fund Plan Description: The Georgia School Personnel Post-employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Benefit Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (O.C.G.A.) assigns the authority to establish and amend the 43

50 benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board). The Department of Community Health, which includes the School OPEB Fund, issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts. Funding Policy: The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. For members with fewer than five years of service as of January 1, 2012, contributions also vary based on years of service. On average, members with five years or more of service as of January 1, 2012 pay approximately 25 percent of the cost of the health insurance coverage. In accordance with the Board resolution dated December 8, 2011, for members with fewer than five years of service as of January 1, 2012, the State provides a premium subsidy in retirement that ranges from 0% for fewer than 10 years of service to 75% (but no greater than the subsidy percentage offered to active employees) for 30 or more years of service. The subsidy for eligible dependents ranges from 0% to 55% (but no greater than the subsidy percentage offered to dependents of active employees minus 20%). No subsidy is available to Medicare eligible members not enrolled in a Medicare Advantage Option. The Board of Community Health sets all member premiums by resolution and in accordance with the law and applicable revenue and expense projections. Any subsidy policy adopted by the Board may be changed at any time by Board resolution and does not constitute a contract or promise of any amount of subsidy. Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected "pay-as-you-go" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30, 2016: For certificated teachers, librarians and regional educational service agencies and certain other eligible participants - July 1, June 30, $945 per member per month For non-certificated school personnel - July 1, June 30, $ per member per month No additional contribution was required by the Board for fiscal year 2016 nor contributed to the School OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the School plan for other post-employment benefits and are subject to appropriation. 44

51 The School System's combined active and retiree contributions to the health insurance plans, which equaled the required contribution, for the fiscal year 2016 and the preceding two fiscal years were as follows: Fiscal Year Required Contribution Percent Contributed 2016 $29,436, % ,084, ,421, Source: County Board of Education of Richmond County. Capital Improvements The Board plans capital improvements as future capital needs arise due to increased student population and facility repair and maintenance needs, capital improvement needs and facility expansions, renovations, repair and maintenance. Specific capital expenditure plans are formalized in conjunction with individual general obligation bond issues, sales tax for educational purposes referendums and anticipated annual receipts of capital outlay funds from the State of Georgia Department of Education. The Board regularly monitors anticipated capital outlay needs. The following table summarizes total capital expenditures for the Board's general fixed assets during fiscal years 2012 through Fiscal Years Ended June Total Capital Expenditures $33,967,435 $8,397,743 $41,871,138 $45,857,068 $53,582,262 Source: County Board of Education of Richmond County. Insurance Coverage and Governmental Immunity Under Georgia law, the defense of sovereign immunity is available to the Board, except for actions for the breach of written contracts and actions for the recovery of damages for any claim for which automobile liability insurance protection has been provided, but only to the extent of the liability insurance provided. The Board, however, may be unable to rely upon the defense of sovereign immunity and may be subject to liability in the event of suits alleging causes of action founded upon various federal laws, such as suits filed pursuant to 42 U.S.C alleging the deprivation of federal constitutional or statutory rights of an individual and suits alleging anti-competitive practices and violations of the federal antitrust laws by the Board in the exercise of its delegated powers. The Board carries liability insurance for the types of claims and in amounts that are customary for similar entities for those categories of claims that are not subject to the defense of sovereign immunity. The Board also carries property and casualty damage insurance on buildings and other physical assets. 45

52 Present insurance coverage is summarized below: Type Amount in Force Property and Casualty $1,000,000,000 Boiler and Machinery 100,000,000 Flood Insurance 75,000,000 Source: County Board of Education of Richmond County. Limits of Liability Type Each Occurrence Aggregate School Leaders' Liability $1,000,000 $2,000,000 Automobile Liability 1,000,000 None Public Employee Dishonesty Bond 0 None School Superintendent Surety Bond 50,000 $50,000 Workers' Compensation 1,000,000 $2,000,000 Public Official Surety Bond for each officials 1,000,000 $1,000,000 ROTC Bonds for each official 200,000 None ($150,000 for Butler) General Liability 2,000,000 $2,000,000 Law Enforcement Liability 1,000,000 $1,000,000 Source: County Board of Education of Richmond County. The Board is self-insured for unemployment compensation and workers' compensation claims through a self-insurance program that is periodically reviewed for actuarial soundness by insurance carriers that reinsure for excess insurance coverage. Estimated unemployment compensation and workers' compensation claims are budgeted by the Board based upon known claims and prior experience. The Board participates in the Georgia School Boards Association Risk and Insurance Management System, a public entity risk pool organized in July 1994 (the "GSBA Risk Pool"), which includes, among other coverages, coverage for losses relating to natural disasters. Reference is made to Note 9 (Risk Management) of the Board's financial statements included as APPENDIX A for a discussion of the Board's risk management program. The Board requires payment and performance surety bonds and builders' risk insurance of all contractors and subcontractors involved in construction related to the Board's facilities. Introduction AUGUSTA-RICHMOND COUNTY, GEORGIA The consolidated government of Augusta-Richmond County (the "Consolidated Government") is a political subdivision created and existing under the laws of the State of Georgia and presently has as its formal or legal name "Augusta, Georgia." The Consolidated Government was created on January 1, 1996 pursuant to Acts of the General Assembly of the State of Georgia (collectively the "Consolidation Act") which authorized the consolidation of the municipal corporation known as "The City of Augusta" and the political subdivision known as "Richmond County, Georgia." The Consolidation Act and the consolidation of The City of Augusta and Richmond County, Georgia were separately approved by a majority of the qualified voters of the City of Augusta and Richmond County at an election held on June 20, On January 1, 1996, the Consolidated Government became a consolidated city-county government, 46

53 with territorial limits covering all of what was formerly Richmond County. The Cities of Blythe and Hephzibah still hold their own municipal charters within the consolidated territory. The relationship between the Consolidated Government and Blythe and Hephzibah is similar to that of counties to municipalities located within the territorial limits of such counties. For purposes of this Official Statement, Richmond County is sometimes referred to herein as the "County" because there are two municipal corporations which are not included as a part of the Consolidated Government, but are included in the territorial limits of the School System. Augusta-Richmond County is located in the central eastern portion of the State of Georgia on the south bank of the Savannah River, which is the Georgia-South Carolina state boundary, approximately 155 miles east of Atlanta, Georgia and 75 miles southwest of Columbia, South Carolina. Augusta-Richmond County has a land area of approximately 325 square miles. At its highest point, Augusta-Richmond County is situated at 520 feet above sea level. Augusta-Richmond County is located on the Fall Line, which is the natural division of the Piedmont Plateau and the Coastal Plain of Georgia. Its physical features include rolling slopes in the north, transitioning to more level terrain in the south. Average rainfall is 43 inches per year, and average temperatures range from a high of 91 degrees in the summer to a low of 34 degrees in the winter. In addition to Augusta-Richmond County which is treated as both a county and a municipality, other incorporated municipalities in Augusta-Richmond County are (i) Blythe, with a population of 721, and (ii) Hephzibah, with a population of 4,011 in the 2010 census. The form of government of the Consolidated Government is the municipal form of government. Under the Consolidation Act, the governing authority of the Consolidated Government is a board of commissioners designated as the Augusta-Richmond County Commission. The Augusta-Richmond County Commission consists of a Mayor, who is the chief executive officer of the Commission, and ten commissioners. The present members of the Commission are Hardie Davis, Jr., who serves as Mayor, William Fennoy, Dennis Williams, Mary Davis, Sammie Sias, Bill Lockett, Ben Hasan, Sean Frantom, Wayne Guilfoyle, Marion Williams, and Grady Smith. Demographic and Economic Information The following table reflects the population growth of Augusta-Richmond County according to the United States Census figures: Year Richmond County Percent Change (County) , , % , , , , , (projected) 207, Source: Augusta Commission. 47

54 The following table reflects per capita and median household income for calendar years : Income County Median Household County Per State Per State Median Household Year Population Income Capita Income Capita Income Income ,509 $38,928 $32,174 $36,588 $46, ,850 37,154 31,436 37,254 47, ,156 35,649 31,637 37,596 47, ,149 37,793 32,549 38,980 49, ,793 37,704 34,015 40,511 n/a Source: U.S. Department of Commerce, Bureau of Census, Bureau of Economic Analysis. (Reflects the latest year for which this data is currently available.) Summary of New Building Permits Residential Single Family Multi-Family Year Units Value Units Value $46,287, ,671, ,219, , ,179, ,220, ,610, ,821,291 Source: U.S. Department of Commerce, Bureau of the Census, Construction Statistics Division. (Reflects the latest year for which this data is currently available.) Statistics regarding new building permits for commercial/industrial and other nonresidential buildings are not available for any year after [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 48

55 Following is a table showing the percentage of the 2015 payroll distribution in the County for each major sector of the local economy. Percentage of 2015 Payroll Distribution in Richmond County by Sector Industry Percentage of 2015 Payroll Distribution Mining 0.1% Construction 3.8 Manufacturing 6.9 Utilities 0.2 Wholesale Trade 2.8 Retail Trade 10.8 Transportation and Warehousing 2.2 Information 1.9 Finance and Insurance 1.7 Real estate and Rental and Leasing 0.9 Professional, Scientific, and Technical Services 4.1 Management of Companies and Enterprises 0.3 Administrative, Support, and Waste Management and Remediation Services 8.6 Educational Services 0.7 Healthcare and Social Assistance 17.0 Arts, Entertainment and Recreation 1.6 Accommodation and Food Services 10.1 Federal Government 7.1 State Government 9.1 Local Government 7.2 Other Services (Except Public Administration) 2.9 Total 100.0% Source: Georgia Department of Labor, Labor Market Analysis. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 49

56 Set forth below are the ten largest employers (including the Board) located in Augusta- Richmond County as of 2016, their products/services, and their approximate number of employees. There can be no assurance that any employer listed below will continue to be located in Augusta-Richmond County or will continue employment at the level stated. No independent investigation has been made of, and no representation can be made as to, the stability or financial condition of the employers listed below. Richmond County Ten Largest Employers Employer Product/Service Employees Fort Gordon (1) U.S. Army Signal Center 25,264 (1) Augusta University Public Education 4,656 The Board/The School System Public Education 4,418 University Hospital Healthcare 3,200 Georgia Health Sciences Hospitals Healthcare 3,054 Augusta-Richmond County Consolidated Government Municipal Services 2,612 VA Medical Centers Hospital 2,082 East Central Regional Hospital Healthcare 1,488 EZGo Textron Golf Cart Manufacturer 1,277 Doctors Hospital Hospital 1,210 (1) Includes military and civilian employees. Source: Development Authority of Richmond County (data as of 2016). Set forth below are labor statistics for Augusta-Richmond County for the past five years, with comparative data for the State of Georgia (1) Employment 78,988 78,219 78,341 78,063 80,641 Unemployment 9,389 8,522 7,436 6,146 5,298 Total Labor Force 88,377 86,741 85,777 84,209 85,939 County Unemployment Rate 10.6% 9.8% 8.7% 7.3% 6.2% State Unemployment Rate 9.2% 8.2% 7.2% 5.9% 5.3% (1) Data as of November Source: State of Georgia Department of Labor. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 50

57 Set forth below is deposits in financial institutions for the past five years. Total Deposits in Augusta-Richmond County Financial Institutions as of June 30 Total Deposits Year (in thousands) 2012 $3,129, ,164, ,251, ,423, ,526,729 Source: Federal Deposit Insurance Corporation. According to the Federal Deposit Insurance Corporation, as of June 30, 2016, Augusta- Richmond County had 12 financial institutions with a total of 41 branch offices. Pending Litigation LEGAL MATTERS The Board, like other similar bodies, is subject to a variety of suits and proceedings arising in the ordinary conduct of its affairs. The Board, after reviewing the current status of all pending and threatened litigation with its general counsel, believes that, while the outcome of litigation cannot be predicted, the final settlement of all lawsuits which have been filed and of any actions or claims pending or threatened against the Board or its officials in such capacity are adequately covered by insurance or will not have a material adverse effect upon the financial position or results of operations of the Board. There is no litigation now pending or, to the knowledge of the Board, threatened against the Board (i) which restrains or enjoins the issuance or delivery of the Bonds, the levy of a sales and use tax or an ad valorem tax for the payment of the Bonds, or the use of the proceeds of the Bonds or (ii) which questions or contests the validity of the Bonds or the proceedings and authority under which they are to be issued, or the sales and use tax or ad valorem tax to be levied to pay the Bonds. Neither the creation, organization, or existence of the Board, nor the title of the present members or other officials of the Board to their respective offices, is being contested or questioned. Opinion of Bond Counsel Legal matters incident to the authorization, validity, and issuance of the Bonds are subject to the unqualified approving opinion of Sutherland Asbill & Brennan LLP, Atlanta, Georgia, Bond Counsel, whose opinion will be available at the time of delivery of the Bonds. It is anticipated that the approving opinion will be in substantially the form attached to this Official Statement as Appendix B. 51

58 In the opinion of Bond Counsel, under existing law, interest on the Bonds (including any original issue discount properly allocable to an owner thereof) is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, such interest is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. Except as provided below with respect to original issue discount and premium, no opinion will be expressed with respect to any other federal tax consequences of the receipt or accrual of interest on, or the ownership of, the Bonds. In rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, Bond Counsel will rely as to questions of material fact on certificates and certified proceedings of public officials, including officials of the School System, and covenants of the Board with respect to the use of the proceeds of the Bonds s and the nature and use of the facilities being financed or refinanced thereby without undertaking to verify the same by independent investigation. In addition, the Board has covenanted in the Bond Resolution that it will not, subsequent to the date hereof, intentionally use any portion of the proceeds of the Bonds to acquire higher yielding investments or to replace funds which were used directly or indirectly to acquire higher yielding investments, except as may be otherwise permitted by Section 148 of the Internal Revenue Code of 1986, as amended (the "Code"), and that it will comply with the arbitrage rebate requirements of Section 148(f) of the Code. Failure to comply with these covenants could result in interest on the Bonds being includable in gross income for federal income tax purposes retroactive to the date of issuance. Bond Counsel expresses no opinion regarding other federal tax consequences arising with respect to the Bonds. For example, prospective purchasers should be aware that Section 265 of the Code denies a deduction for interest on indebtedness incurred or continued to purchase or carry tax-exempt obligations or, in the case of a financial institution (within the meaning of Section 265(b)(5) of the Code), that portion of such financial institution's interest expense allocable to tax-exempt interest. Prospective purchasers of the Bonds should be aware that ownership of the Bonds may also result in collateral federal income tax consequences to certain taxpayers, including, without limitation, financial institutions, insurance companies, individual recipients of Social Security or Railroad Retirement benefits, certain S corporations with "excess net passive income," and foreign corporations subject to the branch profits tax. Bond Counsel will not express any opinion as to such collateral consequences. Prospective purchasers of the Bonds should consult their tax advisors as to collateral federal income tax consequences. In the opinion of Bond Counsel, under existing law, interest on the Bonds is exempt from present State of Georgia income taxation. Interest on the Bonds may or may not be subject to state or local income taxation in jurisdictions other than the State of Georgia. Each purchaser of the Bonds should consult his or her own tax advisor regarding the tax-exempt status of interest on the Bonds in a particular state or local jurisdiction other than the State of Georgia. From time to time, there are legislative proposals in Congress that, if enacted, could cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation, adversely affect the market value of the Bonds or otherwise prevent owners of the Bonds from 52

59 realizing the full current benefit of the tax status of such interest. It cannot be predicted whether or in what form any such proposal might be enacted or whether if enacted, such legislation would apply to bonds issued prior to enactment. Purchasers of the Bonds should consult their tax advisors regarding the effect of any such legislation. The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of issuance and delivery of the Bonds, and Bond Counsel has expressed no opinion with respect to any proposed legislation or as to the tax treatment of interest on the Bonds, or as to the consequences of owning or receiving interest on the Bonds, as of any future date. Bond Counsel has not agreed to notify the Board or the owners of the Bonds as to any event subsequent to the issuance of the Bonds that might affect the tax treatment of interest on the Bonds, the market value of the Bonds or the consequences of owning or receiving interest on the Bonds. The opinion of Bond Counsel will be dated the date of issuance of the Bonds, and Bond Counsel has not undertaken to notify the Board, the Underwriters, or the purchasers of the Bonds of any change in law or fact after the date of issuance of the Bonds which might affect any of the opinions expressed in the opinion of Bond Counsel. Original Issue Discount and Premium Original Issue Discount. In the opinion of Bond Counsel, under existing law, the original issue discount in the selling price of each Bond, to the extent properly allocable to each owner of such Bond, is excludable from gross income for federal income tax purposes with respect to such owner. The original issue discount is the excess of the stated redemption price at maturity of such Bond over its initial offering price to the public, excluding underwriters and other intermediaries, at which price a substantial amount of the Bonds of such maturity were sold. Under Section 1288 of the Code, original issue discount on tax-exempt obligations accrues on a constant yield to maturity basis. The amount of the original issue discount that accrues to an owner of a Bond who acquires such Bond in this offering during any accrual period generally equals (i) the issue price of such Bond plus the amount of original issue discount accrued in all prior accrual periods, multiplied by (ii) the yield to maturity of such Bond (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period), less (iii) any interest payable on such Bond during such accrual period. The amount of original issue discount so accrued in a particular accrual period will be considered to be received ratably on each day of the accrual period, will be excluded from gross income for federal income tax purposes, and will increase the owner's tax basis in such Bond for the purpose of determining gain or loss upon a subsequent sale, exchange, payment, or redemption. Any gain realized by an owner from a sale, exchange, payment, or redemption of a Bond would be treated as gain from the sale or exchange of such Bond. Purchasers of any Bond at an original issue discount should consult their own tax advisors with respect to the state and local tax consequences of owning Discount Bonds. 53

60 Bond Premium. An amount equal to the excess of the purchase price of a Bond over its stated redemption price at maturity constitutes premium on such Bond. A purchaser of a Bond must amortize any premium over such Bond's term using constant yield principles, based on the purchaser's yield to maturity. As premium is amortized, the purchaser's basis in such Bond is reduced by a corresponding amount, resulting in an increase in the gain (or decrease in the loss) to be recognized for federal income tax purposes upon a sale or disposition of such Bond prior to its maturity. Even though the purchaser's basis is reduced, no federal income tax deduction is allowed. Purchasers of any Bond at a premium, whether at the time of initial issuance or subsequent thereto, should consult with their own tax advisors with respect to the determination and treatment of premium for federal income tax purposes and with respect to state and local tax consequences of owning such Bonds. The foregoing is a general discussion of certain federal income tax consequences of original issue discount and premium and does not propose to deal with all tax questions that may be relevant to particular investors or circumstances. Holders of the Bonds should consult their own tax advisors with respect to the apportionment for federal income tax purposes of accrued tax-exempt interest upon a sale or exchange (including redemption) and with respect to the state and local tax consequences of original issue discount and premium. Validation Proceedings The State of Georgia instituted proceedings in the Superior Court of Richmond County, Georgia to validate the Bonds. The State of Georgia was the plaintiff in the proceeding, and the Board was the defendant. A final judgment confirming and validating the Bonds was entered on December 28, Under Georgia law, the judgment of validation is final and conclusive with respect to the validity and legality of the Bonds. Closing Certificates At closing of the sale of the Bonds by the Underwriters, the Board will deliver to the Underwriters a certificate stating (1) that no litigation is pending or threatened against it which would have a material effect on the issuance or validity of the Bonds or the levy and collection of a sales and use tax or an ad valorem tax to pay the Bonds or on the financial condition of the Board and (2) that the information contained in this Official Statement does not contain any misstatement of a material fact and does not omit to state any material fact necessary to make the statements herein contained, in light of the circumstances under which they were made, misleading. Ratings MISCELLANEOUS Moody's Investors Service, Inc. ("Moody's") and S&P Global Ratings, a Division of The McGraw-Hill Companies, Inc. ("S&P"), have assigned ratings of "Aa1" and "AA+ (stable)," respectively, to the Bonds based on the understanding of the rating agencies that payment of the Bonds will be secured by the State of Georgia Board of Education's Intercept Program. See 54

61 "THE BONDS - State Intercept Program." The Board has also received underlying standalone ratings of "Aa2" by Moody's and "AA-" by S&P. The ratings reflect only the respective views of the rating agencies, and any desired explanation of the significance of each rating should be obtained from the rating agency furnishing such rating, at the following addresses: Moody's Investors Service, Inc., 7 World Trade Center at 250 Greenwich Street, Public Finance Group - 23rd Floor, New York, NY 10007, and Standard & Poor's Ratings Services, 25 Broadway, New York, New York Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies, and assumptions of its own. There is no assurance that either or both of such ratings will remain unchanged for any given period of time or that they will not be revised downward or withdrawn entirely by the rating agency furnishing the same, if, in its judgment, circumstances so warrant. Any such downward revision or withdrawal of such ratings, or either of them, may have an adverse effect on the liquidity and market price of the Bonds. A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time. Underwriting Citigroup Global Markets Inc., on behalf of itself and Raymond James & Associates, Inc. (collectively, the "Underwriters"), has entered into a Bond Purchase Agreement to purchase the Bonds subject to certain conditions at a purchase price of $ (comprised of the par amount of the Bonds, plus original issue premium of $, and less an Underwriters' discount of $ ), plus accrued interest, if any, to the date of delivery. The Underwriters are obligated to purchase all the Bonds, if any are purchased, the obligation to make such purchases being subject to certain terms and conditions set forth in the Bond Purchase agreement with respect to the Bonds, the approval of certain legal matters by counsel and there having been no material adverse change in Board's condition (financial or otherwise) from that set forth in this Official Statement. The Underwriters intend to offer the Bonds to the public initially at the offering prices set forth on the cover page of this Official Statement, which offering prices may subsequently be changed from time to time by the Underwriters without any requirement of prior notice. The Underwriters have reserved the right to permit other securities dealers who are members of the National Association of Securities Dealers, Inc. to assist in selling the Bonds. The Underwriters may offer and sell the Bonds to certain dealers (including dealers depositing Bonds into investment trusts) at prices lower than the public offering prices set forth on the cover page of this Official Statement or otherwise allow concessions to such dealers who may re-allow concessions to other dealers. Any discounts or commissions that may be received by such dealers in connection with the sale of the Bonds will be deducted from the Underwriters' underwriting profits. The Underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage activities. Certain of the Underwriters and their respective affiliates have, from 55

62 time to time, performed, and may in the future perform, various investment banking services for the Board for which they received or will receive customary fees and expenses. In addition, affiliates of some of the Underwriters are lenders, and in some cases agents or managers for the lenders, under our credit facility. In the ordinary course of their various business activities, the Underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (which may include bank loans and/or credit default swaps) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve securities and instruments of the Board. Citi, has entered into a retail distribution agreement with UBS Financial Services Inc. ("UBSFS"). Under this distribution agreement, Citi may distribute municipal securities to retail investors through the financial advisor network of UBSFS. As part of this agreement, Citi may compensate UBSFS for their selling efforts with respect to the Series 2016 Bonds. Independent Auditors The basic financial statements of the Board for the fiscal year ended June 30, 2015, attached hereto as APPENDIX A, have been audited by Serotta Maddocks Evans and Co., Augusta, Georgia, to the extent and for the period indicated in its report thereon, which appears in APPENDIX A. Such financial statements have been included herein in reliance upon the report of Serotta Maddocks Evans and Co. The auditors have not been engaged to perform and have not performed any procedures relating to this Official Statement. Continuing Disclosure Undertaking At the request of the Underwriters in order to assist the Underwriters in complying with paragraph (b)(5) of Rule 15c2-12, the Board has agreed to enter into the Continuing Disclosure Agreement with DAC, as the initial exclusive disclosure dissemination agent (the "Dissemination Agent"), in substantially the form set forth in APPENDIX C herein. Pursuant to the Continuing Disclosure Agreement, the Board will covenant for the benefit of the holders and beneficial owners of the Bonds (i) to furnish certain financial information and operating data relating to the Board (the "Annual Report") by not later than March 31 following the end of each fiscal year of the Board, commencing with the fiscal year ending June 30, 2017, and (ii) to provide notices of the occurrence of certain enumerated events within ten business days following their occurrence. The Board will agree to file each Annual Report with the Dissemination Agent for filing with EMMA maintained by the MSRB, and to file the notices of enumerated events with the Dissemination Agent for filing with EMMA. The specific nature of the information to be contained in the Annual Report or the notices of enumerated events and the procedures for filings are set forth in the form of Continuing Disclosure Agreement included as APPENDIX C herein. The Dissemination Agent will assume only the duties specifically set forth in the Continuing Disclosure Agreement. The Dissemination Agent's obligation to deliver the information at the times and with the contents described in the Continuing Disclosure Agreement will be limited to the extent the Board has provided such information to the Dissemination Agent 56

63 as required by the Continuing Disclosure Agreement. The Dissemination Agent will have no duty with respect to the content of any disclosure filing or notice prepared by the Board pursuant to the terms of the Continuing Disclosure Agreement, will have no duty or obligation to review or verify any information in any disclosure filing or any other information, disclosures or notices provided to it by the Board, and will not be deemed to be acting in any fiduciary capacity for the Board, the beneficial owners of the Bonds or any other party. The Dissemination Agent will have no responsibility for the Board's failure to report to the Dissemination Agent a Listed Event or a duty to determine the materiality thereof. The Dissemination Agent will have no duty to determine or liability for failing to determine whether the Board has complied with the Continuing Disclosure Agreement. The Dissemination Agent may conclusively rely upon certifications of the Board at all times. In connection with the issuance of the Series 2012 Bonds and earlier bond issues, the Board entered into continuing disclosure undertakings similar to the Continuing Disclosure Agreement for the 2017 Bonds. Those undertakings required the Board to file an annual report together with its audited financial statements, when and if available, within 180 days after the end of each fiscal year. The Board did not timely file its annual report or its audited financial statements for the fiscal years ended June 30, 2011, 2012, 2013, 2014 and The continuing disclosure undertaking applicable to the fiscal year ended June 30, 2011, has terminated. The audited financial statements for the fiscal years ended June 30, 2012 through 2015 were all filed with EMMA on July 28, 2016 and the annual reports for such fiscal years were filed November 15, The Board has taken steps to ensure future compliance with its continuing disclosure undertakings. For 2016 and future fiscal years, the Board has engaged DAC as its dissemination agent for continuing disclosure. In addition, the Board has assigned compliance responsibilities for continuing disclosure reporting to its Director of Budget and Finance. Additional Information Use of the words "shall," "must," or "will" in this Official Statement in summaries of documents or laws to describe future events or continuing obligations is not intended as a representation that such event or obligation will occur but only that the document or law contemplates or requires such event to occur or obligation to be fulfilled. Any statements made in this Official Statement involving estimates or matters of opinion, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates or matters of opinion will be realized. Neither this Official Statement nor any statement which may have been made orally or in writing is to be construed as a contract with the owners of the Bonds. 57

64 CERTIFICATION The execution and delivery of this Official Statement, and its distribution and use by the Underwriters, have been duly authorized and approved by the Board. COUNTY BOARD OF EDUCATION OF RICHMOND COUNTY By: President, County Board of Education of Richmond County 58

65 APPENDIX A AUDITED FINANCIAL STATEMENTS OF THE BOARD FOR THE PERIOD ENDING JUNE 30, 2016

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67 RICHMOND COUNTY BOARD OF EDUCATION TABLE OF CONTENTS PAGE INTRODUCTORY SECTION... i-iv SECTION I FINANCIAL INDEPENDENT AUDITORS REPORT..... v-vii REQUIRED SUPPLEMENTARY INFORMATION MANAGEMENT S DISCUSSION AND ANALYSIS viii-xix EXHIBITS BASIC FINANCIAL STATEMENTS A-1 A GOVERNMENT-WIDE FINANCIAL STATEMENTS STATEMENT OF NET POSITION B STATEMENT OF ACTIVITIES C D E F G H FUND FINANCIAL STATEMENTS BALANCE SHEET GOVERNMENTAL FUND.. 4 RECONCILIATION OF THE GOVERNMENTAL FUND BALANCE SHEET TO THE STATEMENT OF NET POSITION STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS... 6 RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE TO THE STATEMENT OF ACTIVITIES... 7 STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS I NOTES TO THE BASIC FINANCIAL STATEMENT

68 RICHMOND COUNTY BOARD OF EDUCATION TABLE OF CONTENTS SCHEDULES REQUIRED SUPPLEMENTARY INFORMATION PAGE A-2 1 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY - TEACHERS RETIREMENT SYSTEM OF GEORGIA SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY - EMPLOYEES RETIREMENT SYSTEM OF GEORGIA SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY - PUBLIC SCHOOLS EMPLOYEES RETIREMENT SYSTEM OF GEORGIA SCHEDULE OF CONTRIBUTIONS - TEACHERS RETIREMENT SYSTEM OF GEORGIA SCHEDULE OF CONTRIBUTIONS - EMPLOYEES RETIREMENT SYSTEM OF GEORGIA NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION SUPPLEMENTAL INFORMATION 7 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS SCHEDULE OF STATE REVENUE SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS. 46 SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE SECTION III AUDITEE S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY OF SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS.. 51 FINDINGS AND QUESTIONED COSTS SECTION IV SCHEDULE OF FINDINGS AND QUESTIONED COSTS [THIS PAGE INTENTIONALLY LEFT BLANK]

69 SUPERINTENDENT A-3 INTRODUCTORY SECTION Augusta is the second largest and oldest city in Georgia with a population of about 200,000. The city of Augusta was named after Princess Augusta of Saxe-Gotha-Altenburg. Situated on the bank of the Savannah River, Augusta is best known as the Garden City and home of the Masters Golf Tournament held the first full week in April. It is also known for its rich medical heritage and the Fort Gordon military installation. The Richmond County School System was chartered as a public education system on August 23, The School System s central office is located at 864 Broad Street, Augusta, GA. Vision Create a world class school system where 90 percent of students graduate, are college/career ready and globally competitive. Motto Learning Today Leading Tomorrow Mission The mission of the Richmond County School System is to educate students to become lifelong learners and productive citizens. Belief Statements Every person has the right to a quality education. Message from the Superintendent: Dr. Angela Pringle is a native of Danville, Virginia. She received a dual undergraduate degree in Mathematics and Business Management; a Master s Degree from Hampton University in Secondary Education; and, her doctorate from Virginia Tech. She has over 25 years of experience as an Educator and Administrator. Dr. Pringle has received numerous awards for her work with the community. In 2005, she was recognized as High School Principal of the Year for her work in building the capacity of the PTSA with diverse communities. She was also recognized by the Governor s Office of Accountability with the Bronze Award for student achievement. I am truly honored to serve as Superintendent of the Richmond County School System. On behalf of the Board of Education and Administration, it is with a great deal of pride that I serve a district where we are focused on preparing all students to be college and career ready. The very focal point of our mission is students. By working together, we have an opportunity to build upon our successes to ensure that all students are learning at high levels and every job in the district supports classroom efforts. Our partnership with parents and community members has a focus of teaching and learning with an emphasis on learning. Significant increases in academic achievement requires engagement and commitment from families and community. I invite every community member, parent, grandparent, aunt, uncle, and all caregivers who touch the lives of children, to be on board with our focus. I close with thoughts from John Dewey, Education is not preparation for life; education is life itself. Education is the shared responsibility of the individual, home, school, and community. Respect and acceptance are essential for learning and personal development. A safe, orderly, and healthy environment is essential to learning. Communication is the key to understanding among people. Excellence cannot be compromised. Dr. Angela Pringle, Superintendent i ii

70 School Board Profile The Board of Education of the City of Augusta is composed of ten citizens representing each of the city systems and each serving four-year terms. The Board of Education is a policy-making body and serves as a legislative body in the development and evaluation of policies. While the board is responsible for school programs and operations by law, it delegates some portion of that authority to the Superintendent. The board is governed by a President and a Vice-President who are elected by and from the board membership every two years on the Saturday preceding the second Thursday in January. As representatives of the people, board members are responsible for ensuring that school system operations are efficient, financially and legally sound, and focused on the best interest of Richmond County s children. The mission of the Richmond County School System is to educate students to become lifelong learners and productive citizens. STUDENT DEMOGRAPHICS Total Enrollment - 31,476 Grade Range: PreK-12 th SCHOOLS Comprehensive High Schools Middle Elementary Magnet Special Charter A-4 STUDENT DEMOGRAPHICS African American % Asian... 1% Hispanic % Multicultural % White % EMPLOYEES Certified.... 2,315 Non Certified.. 1,962 CERTIFIED PERSONNEL DATA Education/Certification Level of School Professional Staff Board Members 4 Yr Bachelor s % 5 Yr Master s % 6 Yr Specialist s % Doctorate.... 3% SCHOOL NUTRITION Serves approximately 13,599 breakfasts, 24,415 lunches, and 969 snacks each day. iii iv

71 A-5 INDEPENDENT AUDITORS' REPORT To the Superintendent and Members of the Richmond County Board of Education Augusta, Georgia Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Richmond County Board of Education, as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the Board s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America ( GAAP ); this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. Opinions In our opinion, the financial statements referred to above 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 Richmond County Board of Education, as of June 30, 2016, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis, proportionate share of net pension liability, schedule of contributions and budgetary comparison information, on pages viii through xix and pages 35 through 41 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, which 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 our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Richmond County Board of Education s basic financial statements. Schedules 9 and 10 are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements. Schedules 9 and 10 and the schedule of expenditures of federal awards are the responsibility of management and were derived from, and relate directly to, the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, Schedules 9 and 10, and the schedule of expenditures of federal awards are fairly stated in all material respects in relation to the basic financial statements as a whole. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. vi

72 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 18, 2017, on our consideration of the Richmond County 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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Richmond County Board of Education's internal control over financial reporting and compliance. SEROTTA MADDOCKS EVANS & CO., CPA S Augusta, Georgia January 18, 2017 FINANCIAL SECTION A-6 vii

73 A-7 Introduction RICHMOND COUNTY BOARD OF EDUCATION MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2016 The discussion and analysis of the Richmond County Board of Education s (subsequently referred to as the School System) financial performance provides an overall review of the School System s financial activities for the fiscal year ended June 30, The intent of this discussion and analysis is to look at the School System s financial performance as a whole. Readers are encouraged to review the transmittal letter, the basic financial statements, and the accompanying notes to the basic financial statements to enhance their understanding of the School System s financial performance. The basic financial statements are comprised of three components: 1) Government-wide financial statements which include the Statement of Net Position and the Statement of Activities. 2) Fund financial statements. 3) Notes to the financial statements. Financial Highlights Key financial highlights for the fiscal year ended June 30, 2016 are as follows: On the government-wide financial statements: The School System maintained increased class sizes to compensate for the reductions in state funding. Furlough days were eliminated in FY 2016 as compared to 4 days in FY In a comprehensive tax reform bill, state legislators changed the method of taxing motor vehicles. As of March 1, 2013, the state implemented a Title Ad Valorem Tax in lieu of the state sales tax and annual vehicle ad valorem tax. The Title Ad Valorem Tax applies when ownership of the vehicle changes and applies to dealer and private sales. For the fiscal year ended June 30, 2016 the School System collected $1.5 million in Title Ad Valorem Taxes, a decrease of $400 thousand compared to the prior fiscal year. The School System s assets exceeded its liabilities by $370.1 million at June 30, This represents an increase in net position of $26.0 million. This total increase is due to governmental activities since the School System has no business-type activities. General revenues accounted for $133.8 million or 41% of all revenues. Program specific revenues in the form of capital and operating grants and contributions and charges for services accounted for $192.0 million of all revenues. Total Revenues decreased by $9.8 million. Program specific revenues decreased by $6.4 million and general revenues decreased by $3.4 million. The School System had $299.7 million in expenses related to governmental activities of which $192.0 million were offset by program specific charges for services or grants and contributions. RICHMOND COUNTY BOARD OF EDUCATION MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, ) Net investment in capital assets include property and equipment, net of accumulated depreciation, and are reduced for outstanding debt related to the construction or purchase of capital assets. 2) Restricted net position of $43.8 million, constraints which are imposed outside of the School System. This includes restrictions for debt covenants and continuance of grants, and capital projects. 3) Unrestricted net position, net of pension liability, of $26.6 million represents the net position available to sustain the School System s continuing obligations to its citizens and creditors. On the fund financial statements: The School System s General Fund reported a fund balance of $38.1 million at June 30, 2016, which represents a decrease of $5.0 million from the prior fiscal year. The financial highlights noted above are explained in more detail within the financial analysis section of this document. Overview of the Basic Financial Statements This annual report consists of a series of financial statements, the government-wide, and fund statements, and notes to those statements. The government-wide financial statements, the Statement of Net Position, and the Statement of Activities are designed to illustrate the School System as an aggregate of its financial activities and present a longer-term view of its finances. Increases or decreases to net position may provide an informative indicator of the financial position of the school system as a whole. The next level of detail is provided by the fund financial statements. These statements reflect the short-term finances as well as the balances available for future needs. Fund financial statements are useful in assessing annual financing requirements and the commitment of existing spendable resources. The fund level statements report the School System s operations in more detail than the government-wide statements. The notes to the financial statements serve to supplement and clarify the information contained within the financial statements and will provide the reader a more comprehensive understanding of the School System s financial position. Figure 1 summarizes the significant features of the Richmond County Board of Education s annual financial statements and provides information on the School System s activities and the types of information found in the financial statements. Total net position includes the following: viii ix

74 RICHMOND COUNTY BOARD OF EDUCATION MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2016 RICHMOND COUNTY BOARD OF EDUCATION MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2016 Figure 1. Significant Features of the Government-Wide and Fund Level Financial Statements Reporting the School System as a Whole (Government-Wide) Statement of Net Position and the Statement of Activities A-8 Scope Required Financial Statements Accounting Basis and Measurement Focus Government-wide Statements Governmental Funds Fiduciary Funds Entire School System (excluding fiduciary funds) Statement of Net Position; Statement of Activities Accrual accounting and economic resources focus Type of Asset/Liability All assets and liabilities(financial, capital, short-term and long-term). Type of Inflow/Outflow Information All revenues and expenditures earned or incurred during the fiscal year regardless of when cash is received or paid out. The activities of the School System that are not proprietary or fiduciary. This includes instruction, support services, administration, transportation, and maintenance. Balance Sheet; Statement of Revenues, Expenditures, and Changes in Fund Balance Modified accrual accounting and current financial focus Fund Level Financial Statements Generally includes assets expected to be consumed and liabilities that are due within the year or soon thereafter. No capital assets or long-term liabilities are included. Revenues for which cash is received during the year or soon thereafter. Expenditures for which goods or services have been received and the related liability is due and payable. Funds for which the School System administers resources on behalf of someone else. This includes scholarships and student funds. Statement of Fiduciary Net Position Statement of Changes in Fiduciary Net Position Accrual accounting and economic resources focus All assets and liabilities. Includes short-term and longterm and may include capital assets. All additions and deductions during the year, regardless of when cash is received or paid out. The analysis of the School System as a whole looks at all financial transactions and enables the reader of the financial statements to ascertain whether the School System s financial position has improved or diminished. The statements include all assets and liabilities using the accrual basis of accounting and the economic resources measurement focus. This methodology is similar to the accounting of most private-sector businesses. This basis of accounting considers all the current year s revenues and expenses regardless of when cash is received or paid. There are many factors, some financial, some not, affecting the financial position of the School System. Some of these factors include the School System s property tax base, state austerity reductions, state and federal mandates that are unfunded, the age and condition of school facilities, and the economy of the area. In the Statement of Net Position and the Statement of Activities, all of the School System s activities are reflected as governmental activities. The governmental activities of the Richmond County Board of Education are financed through taxes, state QBE funds, competitive and non-competitive grants. The Statement of Net Position provides information about the overall financial activities of the School System; whereas, the Statement of Activities provides a comparison of direct expenses and program revenues. Direct expenses are incurred in association with a specific program or function. Program and services reported here include instruction, support services, operation and maintenance of plant, pupil transportation, food service, school activity accounts and various others. Reporting the School System s Most Significant Funds (Fund Financials) Governmental Funds: The fund financial statements provide detailed information about the School System s most significant funds. The School System s major governmental funds are the General Fund, Capital Projects Fund, and the Debt Service Fund. Most of the School System s activities are reported in governmental funds which focus on how money flows into and out of these funds and the balances remaining at year-end that are available for spending in future periods. These funds are reported using an accounting methodology called modified accrual accounting. This methodology measures cash and all other financial assets that may be readily converted to cash. The fund statements offer a detailed short-term view of the School System s general government operations and the basic services it provides. Governmental fund information helps one determine whether there are more or fewer financial resources available to finance educational programs in the near future. The relationship (or differences) between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds is reconciled in these statements. Fiduciary Funds: The School System is the trustee, or fiduciary, for assets that belong to others. The School System serves as a fiduciary for school clubs and organizations within the principals account and various scholarships. These activities are reported in a separate statement of Fiduciary Net Position and Changes in Net Position. The School System is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. These activities have been excluded from the School System s other financial statements because the school system may not use these assets to finance its operations. x xi

75 RICHMOND COUNTY BOARD OF EDUCATION MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2016 RICHMOND COUNTY BOARD OF EDUCATION MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2016 A-9 Reporting the School System as a Whole The Statement of Net Position provides the perspective of the School System as a whole. Table 1 provides a comparative summary of the School System s net position for fiscal years 2016 and TABLE 1 NET POSITION (in Thousands) Governmental Governmental Activities Activities June 30, 2016 June 30, 2015 Assets Current and Other Assets $ 135,000 $ 190,993 Capital Assets, Net 580, ,370 Total Assets $ 715,667 $ 733,363 Deferred Outflows of Resources 22,308 19,997 Liabilities Current and Other Liabilities $ 55,306 $ 57,061 Long-Term Liabilities 278, ,153 Total Liabilities $ 333,324 $ 334,214 Deferred Inflows of Resources 34,550 75,057 Net Position Net Investment in Capital Assets $ 531, ,706 Restricted 43,815 44,799 Unrestricted (205,500) (216,416) Total Net Position $ 370,100 $ 344,089 The School System s net position increased $26.0 million. This increase may be attributed to the collection of SPLOST proceeds and an increase in capital assets. Table 2 shows the comparative changes in net position for fiscal years 2016 and TABLE 2 CHANGE IN NET POSITION (in Thousands) Governmental Governmental Activities Activities June 30, 2016 June 30, 2015 Revenues Program Revenues Charges for Services $ 946 $ 1,237 Operating Grants and Contributions 188, ,007 Capital Grants and Contributions 2,610 4,108 Total Program Revenues $ 191,953 $ 198,352 General Revenues Taxes Property Taxes $ 90,490 $ 88,924 Sales Tax 36,035 37,994 Grants and Contributions not Restricted 4,834 7,454 Investment Earnings Miscellaneous 2,277 2,484 Gain on Sale of Assets Total General Revenues $ 133,802 $ 137,182 Total Revenues $ 325,755 $ 335,534 Program Expenses Instruction $ 169, ,462 Support Services Pupil Services 10,665 10,052 Improvement of Instruction 13,989 13,847 Educational Media Services 4,865 6,397 General Administration 2,639 2,213 School Administration 20,792 17,980 Business Administration 2,305 1,959 Maintenance and Operations of Plant 37,802 34,766 Student Transportation Services 11,638 11,813 Central Support Services 4,760 4,843 Other Support Services 2,144 1,976 Operations of Non-Instructional Services Community Services 24 1,037 Food Services 19,294 19,152 Interest on Short-Term and Long-Term Debt (590) 1,081 Total Expenses $ 299,744 $ 301,578 Change in Net Position $ 26,011 $ 33,956 xii xiii

76 RICHMOND COUNTY BOARD OF EDUCATION MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2016 RICHMOND COUNTY BOARD OF EDUCATION MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2016 Governmental Activities Figure 2. A-10 The Statement of Activities details the cost of program services and the charges for services and grants offsetting those services. Table 3 shows the total cost of services and the net cost of services for governmental activities. It identifies the cost of these services supported by tax revenue and unrestricted state entitlements. Cost of service comparisons are provided for fiscal years 2016 and TABLE 3 Governmental Activities (In Thousands) Total Cost of Services Net Cost of Services Fiscal Year Fiscal Year Fiscal Year Fiscal Year Instructional $ 169,417 $ 174,462 $ 47,025 $ 49,730 Support Services Pupil Services 10,665 10,052 7,193 6,483 Improvement of Instruction 13,989 13,847 2,565 1,198 Educational Media Services 4,865 6, ,087 General Administration 2,639 2,213 (446) (1,699) School Administration 20,792 17,980 11,088 8,150 Support Services Business 2,305 1,959 2,212 1,481 Maintenance and Operation of Plant 37,802 34,766 26,434 22,827 Student Transportation 11,638 11,813 7,735 7,986 Central Support Services 4,760 4,843 4,501 4,523 Other Support Services 2,144 1, (6) Operations of Non-Instructional Services Community Services 24 1, Food Services 19,294 19,152 (1,314) (1,252) Interest on Short-Term and Long-Term Debt (590) 1,081 (590) 1,081 Total Expense $ 299,744 $ 301,578 $ 107,790 $ 103,226 Instructional Pupil Services Interest on Debt 0% Governmental Activities Cost of Services Instructional 56% Non Instructional 7% Support Services 37% Improve Instruction Educational Media School Admin Business Services Maintenance Transportation Food Services Net Cost 47,025 7,193 2, ,088 2,212 26,434 7,735 (1,314) Total Cost 169,417 10,665 13,989 4,865 20,792 2,305 37,802 11,638 19,294 The State s Quality Basic Education Funding (QBE) is not sufficient to provide basic education services or to provide adequate maintenance of the School System s facilities. To provide further funding, the School System levies a millage rate of mills in addition to a 1% Education Special Purpose Local Option Sales Tax (SPLOST) authorized by local referendum. Instruction expenditures include activities related to the interaction between students and teachers. Instruction expenditures account for the largest percentage of the cost of service for governmental activities. The net cost reflects the financial burden placed on the School System s local taxpayers. The increase in the net cost of services indicates that the School System s taxpayers have had to provide a larger percentage of the total cost of services. xiv xv

77 RICHMOND COUNTY BOARD OF EDUCATION MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2016 RICHMOND COUNTY BOARD OF EDUCATION MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2016 Figure 3. Support Services Business 2% School Administration 19% General Administration 2% Educational Media Services 4% Improvement of Instruction 13% Maintenance and Operation 34% Pupil Services 10% Support Services Student Transportation 10% Central Support Services Other 4% Support Services 2% For the general fund, the final budgeted revenues of $299.7 million exceeded the original budget of $272.2 million by $27.5 million. The budgeted revenues were less than the actual revenues by $12.0 million. In FY 2016, the state continued the reduction of Quality Basic Education (QBE) funding to local school systems. Throughout the year, the School System made a concerted effort to reduce expenditures and was successful in mitigating the loss of funding through the reduction of spending. The actual expenditures were $25.7 million less than the final budgeted amount. The significant difference in the comparison of the budget to actual expenditures is the result of many of the federal program funds being budgeted for periods exceeding the fiscal year or crossing two fiscal years. The actual fund balance decreased by $5.0 million. Capital Assets and Debt Administration At the end of fiscal year 2016, the School System had capital assets of $580.7 million, net of accumulated depreciation. The primary increase occurred in construction work in progress. Due to funding from a Special Purpose Local Option Sales Tax and a bond issue, the School System is building and renovating numerous schools. Table 4 shows comparative statements for 2016 and A-11 Support services include activities that assess and supplement the teaching process, assist teachers in developing and evaluating the technique of providing instruction, operation of the educational media centers, administration of the policy of the School System, maintenance of the fiscal responsibilities of the School System, transportation costs, and upkeep of the grounds and facilities. The School System s Funds The School System s funds are accounted for using the modified accrual basis of accounting. All governmental funds had revenues and other financing sources of $325.2 million and expenditures and other financing uses of $381.9 million. The general fund s fund balance reflected a decrease of $5.0 million, and the district-wide capital projects funds decreased by $51.6 million. The general fund operation s revenues increase may be attributed to an increase in state funds and property taxes. The capital projects fund operation s decrease is related to the completion of several projects addressed in the Phase 3 Bond and Sales Tax issuance. General Fund Budgeting Highlights The School System s budget is prepared according to Georgia law. The most significant budgeted fund is the General Fund. Throughout fiscal year 2016, the School System amended its general fund budget several times. Site-based budgeting is used by the School System and is designed to tightly control total site budgets but allow some management flexibility. The School System s top management monitors a detailed report comparing actual revenues and expenditures to budget on a monthly basis. Site management has access to this information on a demand basis through a report available using the School System s accounting software. TABLE 4 CAPITAL ASSETS (Net of Depreciation, in Thousands) Governmental Governmental Activities Activities June 30, 2016 June 30, 2015 Land $ 16,395 $ 15,353 Construction Work in Progress 82,915 48,090 Works of Art Building and Building Improvements 439, ,564 Equipment 27,006 26,429 Land Improvements 14,889 15,892 Total Capital Assets, Net of Depreciation $ 580,667 $ 542,370 xvi xvii

78 Debt RICHMOND COUNTY BOARD OF EDUCATION MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2016 At June 30, 2016, the School System had $52.9 million in general obligation bonds, with $28.3 million due within one year. Debt comparisons between fiscal year 2016 and 2015 are shown below. TABLE 5 DEBT (in Thousands) Governmental Governmental Activities Activities June 30, 2016 June 30, 2015 General Obligation Bonds $ 52,880 $ 79,970 Compensated Balances 1,900 1,651 Unamortized Bond Premium 3,350 6,700 Total Debt $ 58,130 $ 88,321 RICHMOND COUNTY BOARD OF EDUCATION MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2016 The amended formula adjustment, the reduction in state funding, for fiscal year 2016 was $8.3 million. The School System has maintained classroom size waivers and made certain efforts to reduce operating expenses to help offset the reduction in state funding. Contacting the School System s Financial Management This financial report is designed to provide our citizens, taxpayers, investors, and creditors with a general overview of the School System s finances and to reflect the School System s accountability for the funds it receives. For questions about this report or additional financial information, please contact the Director of Budget and Finance, Richmond County Board of Education, 864 Broad Street, Augusta, GA Current Issues A-12 The Richmond County Board of Education has maintained its economic stability by budgeting conservatively and monitoring its expenditures. Areas of concern are the State of Georgia s continued amended formula reduction to the QBE funding formula, the rising costs in employee benefits and declining student growth. Student enrollment is the driving factor in the State s education funding formula. Student enrollment is converted to a Full Time Equivalent (FTE) for funding purposes. As student enrollment and FTE decrease so does State funding. The School System showed a decrease in the weighted average of full time equivalent students. From 2015 to 2016 the weighted average of full time equivalent students decreased by 153 students. The figure shown below shows the trend in the School System s enrollment over the past five years. WEIGHTED AVERAGE FTE xviii xix

79 RICHMOND COUNTY BOARD OF EDUCATION STATEMENT OF NET POSITION YEAR ENDED JUNE 30, 2016 EXHIBIT "A" GOVERNMENTAL ACTIVITIES ASSETS Cash and Cash Equivalents $ 100,457,046 Investments 123,295 Receivables, Net Taxes 6,384,600 State Government 20,320,447 Federal Government 5,921,708 Other 280,403 Inventories 1,512,136 Capital Assets, Non-Depreciable 99,352,712 Capital Assets, Depreciable (Net of Accumulated Depreciation) 481,314,510 Total Assets 715,666,857 DEFERRED OUTFLOWS OF RESOURCES Related to Defined Benefit Pension Plans 22,307,509 Total Deferred Outflows of Resources 22,307,509 LIABILITIES A-13 Accounts Payable 2,989,345 Salaries and Benefits Payable 40,851,105 Claims Incurred but not Reported (IBNR) 584,728 Interest Payable 607,661 Contracts Payable 6,768,270 Retainages Payable 3,304,711 Deposits and Unearned Revenues 200,568 Net Pension Liability 219,887,247 Long-Term Liabilities Due Within One Year 31,695,195 Due in More Than One Year 26,435,287 Total Liabilities 333,324,117 DEFERRED INFLOWS OF RESOURCES Related to Defined Benefit Pension Plans 34,549,929 Total Deferred Inflows of Resources 34,549,929 NET POSITION Net Investment in Capital Assets 531,785,491 Restricted for Continuation of Federal Programs 6,712,882 Debt Service 28,959,490 Capital Projects 8,142,180 Unrestricted Deficit (205,499,723) Total Net Position $ 370,100,320 The notes to the basic financial statements are an integral part of this statement. 1