LEE COUNTY SCHOOL DISTRICT BISHOPVILLE, SOUTH CAROLINA

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1 BISHOPVILLE, SOUTH CAROLINA BASIC FINANCIAL STATEMENTS AND SUPPLEMENTAL INFORMATION FISCAL YEAR ENDED JUNE 30, 2013

2 TABLE OF CONTENTS JUNE 30, 2013 FINANCIAL SECTION: PAGE Independent Auditor s Report Management s Discussion and Analysis Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Position Statement of Activities Fund Financial Statements: Balance Sheet - Governmental Funds Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Statement of Net Position - Proprietary Funds Statement of Revenues, Expenses, and Changes in Fund Net Position - Proprietary Funds Statement of Cash Flows - Proprietary Funds Statement of Fiduciary Net Position - Fiduciary Funds Notes to Financial Statements Required Supplementary Information: Budgetary Comparison Schedule - General Fund Notes to Required Supplementary Information Combining and Individual Fund Statements and Supplemental Schedules: Combining and Individual Schedules: General Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balance (Budget and Actual) Special Projects - Combining Schedule of Revenues, Expenditures, And Changes in Fund Balances Special Projects - Summary Schedule for Designated State Restricted Grants i

3 TABLE OF CONTENTS JUNE 30, 2013 FINANCIAL SECTION (continued): PAGE Combining and Individual Fund Statements and Supplemental Schedules (continued): Combining and Individual Schedules (continued): Education Improvement Act - Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances - All Programs Education Improvement Act - Summary Schedule by Program Debt Service Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balance Debt Service Fund Lee County School Facilities, Inc. Schedule of Revenues, Expenditures, and Changes in Fund Balance Capital Projects Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balance Capital Projects Fund Lee County School Facilities, Inc. Schedule of Revenues, Expenditures, and Changes in Fund Balance Food Service Fund - Schedule of Revenues, Expenses, and Changes In Net Position Pupil Activity Fund - Schedule of Receipts, Disbursements, and Changes In Student/Faculty Groups Supplemental Schedules Required by the S.C. State Department of Education: Detailed Schedule of Due to State Department of Education/Federal Government Location Reconciliation Schedule Special Projects Fund - Subfund Code List SINGLE AUDIT SECTION: Independent Auditor s 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 Independent Auditor s Report on Compliance with Requirements that Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A Schedule of Findings and Questioned Costs Schedule of Expenditures of Federal Awards Notes to Schedule of Expenditures of Federal Awards Summary Schedule of Prior Audit Findings ii

4 FINANCIAL SECTION

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6 Robert D. Harper, Jr. CPA Stacey C. Moree CPA P. O. Box Wall Street, Litchfield Pawleys Island, SC Tel (843) Fax (843) H P To the Board of Trustees Lee County School District Bishopville, South Carolina INDEPENDENT AUDITOR S REPORT Robin B. Poston CPA P. O. Box Church Street Georgetown, SC Tel (843) Fax (843) H P Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of Lee County School District, Bishopville, South Carolina, as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise the District 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; 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. Auditor s 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 of 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 auditor s 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 auditor considers 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of Lee County School District, Bishopville, South Carolina, as of June 30, 2013, and the 1 MEMBERS: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS SOUTH CAROLINA ASSOCIATION OF CERTIFIED PUBLIC ACCOUNTANTS

7 respective changes in financial position and, where applicable, cash flows, thereof for the year then ended in conformity 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 and budgetary comparison information on pages 3 through 11 and 45 through 46 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during 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 District s basic financial statements. The combining and individual fund financial statements and supplemental schedules 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 U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non- Profit Organizations, and is also not a required part of the basic financial statements. The combining and individual fund financial statements, supplemental schedules, 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, the information is fairly stated in all material respects in relation to the basic financial statements taken as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 31, 2014 on our consideration of the District 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 the District s internal control over financial reporting and compliance. Harper, Poston & Moree, P.A. Certified Public Accountants Georgetown, South Carolina January 31,

8 MANAGEMENT S DISCUSSION AND ANALYSIS

9 BISHOPVILLE, SOUTH CAROLINA MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 This discussion and analysis of the Lee County School District, Bishopville, South Carolina s financial performance provides an overview of the School District s financial activities during the fiscal year that ended June 30, The intent of this discussion and analysis is to look at the School District s financial performance as a whole. Readers should also read the basic financial statements and notes to obtain a complete understanding of the School District s performance. FINANCIAL HIGHLIGHTS Lee County School Facilities, Inc. ( LCSF ) was established in 2006 as a nonprofit corporation. LCSF was organized primarily to construct and renovate school facilities for the use of the School District and to encourage and promote public education. Although LCSF is a legally separate entity, it is controlled by the School District as all members of its board are appointed by the School District. Accordingly, LCSF is reflected as a blended component unit of the School District and the financial information of LCSF is included in individual columns throughout the basic financial statements. Total assets of governmental activities of the School District s Primary Government decreased by $2,157,482. The total net position of the Primary Government decreased by $270,224. Net position of governmental activities decreased by $182,001. Net position of the business-type activity, which represents food service, decreased by $88,223. The School District s Primary Government s general revenues accounted for $9,559,676 or 41% of all revenues. Program specific revenues, in the form of charges for services and sales and operating grants, accounted for $14,033,076 which represents 59% of total revenues. As of the close of the current fiscal year, the School District s governmental funds reported combined ending fund balances of $11,715,003, a decrease of $305,527 from the prior year fund balance. The School District purchased capital assets totaling $131,346 during the current fiscal year. The School District s long-term debt decreased by $1,796,566 during the current fiscal. The decrease was due to annual principal payments OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists of statements and notes to those statements. The statements are organized into five parts. Those parts include the management s discussion and analysis, the basic financial statements, required supplementary information, a section that presents combining and individual fund statements and schedules for major and non-major governmental funds and the compliance section. The basic financial statements include the government-wide views of the School District. 3

10 BISHOPVILLE, SOUTH CAROLINA MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 (CONTINUED) GOVERNMENT-WIDE FINANCIAL STATEMENTS The first two statements are government-wide financial statements. The government-wide financial statements report information about the School District as a whole using accounting methods similar to those used by private-sector companies. The statement of net position includes all of the government s assets and liabilities. All of the current year s revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid. The statement of net position presents information on all of the School District s assets and liabilities, with the difference between the two reported as total net position. Over time, increases or decreases in the School District s net position is an indicator of whether the financial position of the School District is improving or deteriorating, respectively. The statement of activities presents information showing how the government s net position changed during the most recent fiscal year. The cause of such change may be the result of many factors, including financial and non-financial factors such as the School District s property tax allocation from the County and Federal and State aid. The government-wide financial statements of the School District are divided into two distinct kinds of activities. Governmental Activities Most of the School District s programs and services are included here, including instruction, support services and community services. Property taxes and state and federal grants finance most of these activities. Business-type Activities This service is provided on a charge for goods and services basis in order to recover the cost of the goods and services provided. The Food Service enterprise fund is reported as a business activity. FUND FINANCIAL STATEMENTS The remaining statements are fund financial statements that focus on individual funds of the School District s government, which reports the District s operations in more detail than the government-wide statements. The District has seven major governmental funds which are the General Fund, Special Projects Fund, Education Improvement Act Fund, Debt Service LCSF Fund, Debt Service District Fund, Capital Projects District Fund and Capital Projects LCSF Fund The School District s funds are divided into governmental funds, proprietary funds and fiduciary funds. Governmental Funds These funds are used to account for the School District s basic services. These funds focus on how cash and other financial assets that can readily be converted to cash flow in and out 4

11 BISHOPVILLE, SOUTH CAROLINA MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 (CONTINUED) FUND FINANCIAL STATEMENTS (continued) and the balances left at year-end that are available for spending. Consequently, the governmental funds statements provide a detailed short-term view that helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the School District s programs. Because this information does not encompass the additional long-term focus of the government-wide statements, a reconciliation schedule that explains the relationship or differences is provided. Proprietary Funds These funds account for goods and services provided to users and the cost associated with those goods and services. The School District maintains one proprietary fund, which is used for its food service program. Proprietary funds provide the same type information as the government-wide financial statements only in more detail. Fiduciary Funds These funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to finance the School District s own programs. The School District is the trustee for the pupil activities of the various schools and accounts for this activity as an agency fund. All of the School District s fiduciary activities are reported in a separate statement of fiduciary net position and a statement of changes in fiduciary net position. The notes to the financial statements provide further information in order to provide a complete understanding of the School District s financial activities and position. The statements are followed by a section of additional supplementary information that further explains and supports the information in the financial statements. Below is a table illustrating the components of this financial report. Table 1 Required Components of the Lee County School District s Annual Financial Report Management s Discussion And Analysis Basic Financial Statements Required Supplementary Information. Government- Wide Financial Statements Fund Financial Statements 5 Notes to the Financial Statements

12 BISHOPVILLE, SOUTH CAROLINA MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 (CONTINUED) FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE Net position The following table is a summary of the School District s net position for 2013 compared to 2012 for the Governmental Type and Business-Type Entities. Table 2 Lee County School District s Net Position Governmental Activities Business - Type Activities Totals Assets Current Assets $ 16,150,835 $ 19,344,006 $ 602,726 $ 782,645 $ 16,753,561 $ 20,126,651 Capital Assets 43,685,221 42,589, , ,205 43,925,122 42,737,737 Total Assets $ 59,836,056 $ 61,933,538 $ 842,627 $ 930,850 $ 60,678,683 $ 62,864,388 Liabilities Long-Term Liabilities $ 35,685,371 $ 35,860,801 $ - $ - $ 35,685,371 $ 35,860,801 Other Liabilities 3,457,614 5,197, ,457,614 5,197,665 Total Liabilities $ 39,142,985 $ 41,058,466 $ - $ - $ 39,142,985 $ 41,058,466 Net Position Net Investment in Capital Assets $ 10,099,727 $ 12,178,717 $ 239,901 $ 148,206 $ 10,339,628 $ 12,326,923 Restricted 7,808,854 8,724, ,808,854 8,724,912 Unrestricted 2,784,490 (28,557) 602, ,644 3,387, ,087 Total Net Position $ 20,693,071 $ 20,875,072 $ 842,627 $ 930,850 $ 21,535,698 $ 21,805,922 As of June 30, 2013, the School District reported total assets of $60,678,683 and total liabilities of $39,142,985. Net position amounted to $21,535,698. This represents a decrease of 1% from the net position of $21,805,922 for the fiscal year ended June 30,

13 BISHOPVILLE, SOUTH CAROLINA MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 (CONTINUED) FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE (continued) Changes in Net Position The following table is a summary of the School District s change in net position for Table 3 Lee County School District s Sources of Revenue and Program Expenses for Fiscal Year 2013 Governmental Activities Business - Type Activities Totals Program Revenues Charges For Service $ 60 $ 66,057 $ 48,902 $ 60,725 $ 48,962 $ 126,782 Operating Grants 14,033,016 13,797,469 1,303,084 1,304,275 15,336,100 15,101,744 Capital Grants - 118, ,416 General Revenue Property Tax 5,262,308 4,756, ,262,308 4,756,196 Unrestricted State Aid 3,701,098 4,418, ,701,098 4,418,792 Investment Earnings 24,209 36,553 1,299 2,270 25,508 38,823 Other Miscellaneous Revenues 572, , , ,465 Total Revenue $ 23,592,752 $ 23,836,948 $ 1,353,285 $ 1,367,270 $ 24,946,037 $ 25,204,218 Expenses Instruction $ 11,072,134 $ 11,040,891 $ - $ - $ 11,072,134 $ 11,040,891 Support Services 10,805,173 10,484, ,805,173 10,484,955 Community Service 7,991 9, ,991 9,535 Intergovernmental 62,387 35, ,387 35,457 Interest & Other Charges 1,930,111 1,972, ,930,111 1,972,908 Food Service - 1,338,465 1,282,128 1,338,465 1,282,128 Total Expenses $ 23,877,796 $ 23,543,746 $ 1,338,465 $ 1,282,128 $ 25,216,261 $ 24,825,874 Excess (Deficiency) Before Transfers (285,044) 293,202 14,820 85,142 (270,224) 378,344 Transfers 103, ,379 (103,043) (114,379) - - Increase(Decrease) in Net Position $ (182,001) $ 407,581 $ (88,223) $ (29,237) $ (270,224) $ 378,344 Net Position, Beginning of Year (As Restated) $ 20,875,072 $ 20,467,491 $ 930,850 $ 960,087 $ 21,805,922 $ 21,427,578 Net Position, End of year $ 20,693,071 $ 20,875,072 $ 842,627 $ 930,850 $ 21,535,698 $ 21,805,922 7

14 BISHOPVILLE, SOUTH CAROLINA MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 (CONTINUED) FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE (continued) Revenues For the year ended June 30, 2013, the School District received $24,946,037 in revenue. Of this amount, 21% came from property taxes and 61% came from operating grants. The School District s general revenues provided funding for approximately 40% of the School District s expenditures in its governmental activities. Expenses For the year ended June 30, 2013, the School District incurred $25,216,261 in program expenses. Of this amount, 44% was expended in instruction and 43% was expended in support services. Table 4 Lee County School District s Cost of Functional Activities for Governmental Activities Total Cost Net Cost Instruction $11,072,134 $3,473,757 Support Services 10,805,173 4,378,463 Community Services 7,991 2 Intergovernmental 62,387 62,387 Interest and Other Charges 1,930,111 1,930,111 Total Expenses $23,877,796 $9,844,720 The statement of activities shows the cost of program services and the charges for services and grants offsetting those services. The above table shows the total cost of services and the net cost of services. FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT S FUNDS The governmental funds had total revenues of $23,537,394, expenditures of $23,945,964 and net other financing sources of $103,043. The net change in fund balance for the year in the General Fund was an increase of $22,617. The General fund s excess revenues over expenditures were $198,412 lower in 2013 than in the prior year. The School District s Special Revenue Funds are used to account for revenues derived from the State of South Carolina and the Federal Government. Special Revenue Funds generally do not have fund balances as revenues should be expended, deferred, or returned to the grantor. 8

15 BISHOPVILLE, SOUTH CAROLINA MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 (CONTINUED) FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT S FUNDS (continued) The Debt Service Funds are used to account for the accumulation of funds, primarily property taxes, for debt retirement. The District Debt Service Fund had a decrease in fund balance of $248,737. The fund balance at June 30, 2013, reflects a surplus of $158,873. The LCSF Debt Service Fund was established in fiscal year 2006 and had a decrease in fund balance of $249,111. The fund balance at June 30, 2013, reflects a surplus of $5,679,654. Two Capital Projects funds are utilized to segregate LCSF expenditures from School District capital project expenditures. The District Capital Projects Fund had total revenues for the year of $215,529 and expenditures of $48,706; therefore, the net change in fund balance for the year was an increase of $166,823. The LCSF Capital Projects Fund had total revenues for the year of $3,017 and expenditures of $136; therefore the net change in fund balance for the year was an increase of $2,881. The LCSF Capital Projects Fund has a fund balance of $1,929,304 and all is reserved for capital expenditures. This fund was established in fiscal year 2006 and reflects bond proceeds issued for construction and related costs through Lee County School Facilities, Inc. GENERAL FUND BUDGETING HIGHLIGHTS The School District s budget is prepared according to South Carolina Law and is based on accounting for certain transactions on a cash receipts, disbursements and encumbrances. The most significant budgeted fund is the General Fund. Budgeted amounts exceeded revenues in the General Fund by $656,909. Expenditures exceeded budgeted amounts by $353,492. Also, other financing sources exceeded budgeted amounts by $103,390, which resulted in a net positive variance of $200,027. CAPITAL ASSETS At the ended of FY 2013, the School District had invested $65,719,166 in a broad range of capital assets including land, buildings, furniture and equipment, vehicles and construction in progress. The amount of capital asset additions for FY 2013 is $131,347. Depreciation is calculated using the straight-line method over the useful life of the asset. More detailed information about the School District s capital assets is presented in Note 4 to the financial statements. Depreciation expense totaled $1,683,243 in the Governmental-Type Activities and $34,219 in the Business-Type Activities. 9

16 BISHOPVILLE, SOUTH CAROLINA MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 (CONTINUED) CAPITAL ASSETS (continued) Table 5 Lee County School District s Capital Assets Governmental Business-Type Activities Activities Totals Land & Improvements $ 5,007,852 $ 5,007,852 $ - $ - $ 5,007,852 $ 5,007,852 Buildings & Improvements 56,194,323 56,194, ,194,323 56,194,323 Furniture & Equipment 3,159,331 3,164,763 1,117,201 1,243,116 4,276,532 4,407,879 Vehicles 135, , , ,612 Less Accumulated Depreciation (19,107,586) (20,790,829) (968,996) (1,003,215) (20,076,582) (21,794,044) Totals $ 45,389,532 $ 43,711,721 $ 148,205 $ 239,901 $ 45,537,737 $ 43,951,622 DEBT ADMINISTRATION At year-end the School District had $34,020,000 in bonds outstanding and compensated absences of $144,073. The School District paid principal on its long term bonds and capital leases during the year of $1,685,000 and $40,953, respectively. More detailed information about the School District s long-term liabilities is presented in Note 5 and Note 6 of the financial statements. Table 6 Lee County School District s Outstanding Debt Governmental Governmental Activities Activities Governmental Activities: 2003 General Obligation Bond $ 360,000 $ General Obligation Bond 740, General Obligation Bond 4,605,000 4,020,000 LCSF Series 2007 IPR Bond 30,000,000 30,000,000 Compensated Absences 114, ,073 Capital Lease Payable 40,953 - Total Long-Term Debt $ 35,860,800 $ 34,164,073 10

17 BISHOPVILLE, SOUTH CAROLINA MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 (CONTINUED) FINANCIAL ISSUES The School District relies heavily on property taxes as the primary local support for the General Fund and the source for the retirement of its debt. Although Lee County assesses a school millage rate for property taxes collection, the County only approves and allocates a fixed dollar amount of property taxes to the School District each year. Once the School District receives its allocation for the year from the County, the School District does not receive any more funds from the County until the next fiscal year unless the County approves additional funding. This allocation is based on a school budget submitted to the County by the School District. CONTACTING THE DISTRICT S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overview of the School District s finances and to demonstrate the School District s accountability for the money it receives. Questions about this report or additional financial information should be directed to the finance department at the Lee County School District, P.O. Box 507, Bishopville, South Carolina

18 BASIC FINANCIAL STATEMENTS

19 STATEMENT OF NET POSITION JUNE 30, 2013 ASSETS GOVERNMENTAL BUSINESS-TYPE ACTIVITIES ACTIVITIES TOTAL Cash Held by County Treasurer $ 13,243,260 $ - $ 13,243,260 Cash - 2,571 2,571 Taxes Receivable (Net of Allowance) 470, ,016 Other Receivables 69,715-69,715 Due From State and Federal Government 1,878,161 17,873 1,896,034 Internal Balances (563,766) 563,766 - Inventories 33,593 18,516 52,109 Deferred Charges 993, ,356 Capital Assets (Not Being Depreciated): Land 26,500-26,500 Capital Assets (Net of Accumulated Depreciation): Building and Improvements 42,998,978-42,998,978 Vehicles, Machinery, and Equipment 686, , ,144 TOTAL ASSETS $ 59,836,056 $ 842,627 $ 60,678,683 LIABILITIES Accounts Payable $ 728,870 $ - $ 728,870 Accrued Interest Payable 180, ,256 Withholding and Benefits Payable 414, ,064 Accrued Salaries 964, ,040 Due To State Department of Education 24,896-24,896 Unearned Grant Revenues 1,145,488-1,145,488 Noncurrent Liabilities: Due Within One Year 1,318,815-1,318,815 Due In More Than One Year 34,366,556-34,366,556 TOTAL LIABILITIES $ 39,142,985 $ - $ 39,142,985 NET POSITION Net Investment In Capital Assets $ 10,099,727 $ 239,901 $ 10,339,628 Restricted For: Debt Service 5,879,550-5,879,550 Capital Projects 1,929,304-1,929,304 Unrestricted 2,784, ,726 3,387,216 TOTAL NET POSITION $ 20,693,071 $ 842,627 $ 21,535,698 The accompanying notes are an integral part of these financial statements. 12

20 STATEMENT OF ACTIVITIES FOR FISCAL YEAR ENDED JUNE 30, PROGRAM REVENUES NET (EXPENSE) REVENUE AND OPERATING CAPITAL CHANGES IN NET POSITION CHARGES FOR GRANTS AND GRANTS AND GOVERNMENTAL BUSINESS-TYPE FUNCTIONS/PROGRAMS EXPENSES SERVICES CONTRIBUTIONS CONTRIBUTIONS ACTIVITIES ACTIVITIES TOTAL Governmental Activities: Instruction $ 11,072,134 $ 60 $ 7,598,317 $ - $ (3,473,757) $ - $ (3,473,757) Supporting Services 10,805,173-6,426,710 - (4,378,463) - (4,378,463) Community Services 7,991-7,989 - (2) - (2) Intergovernmental 62, (62,387) - (62,387) Interest and Other Charges 1,930, (1,930,111) - (1,930,111) Total Governmental Activities $ 23,877,796 $ 60 $ 14,033,016 $ - $ (9,844,720) $ - $ (9,844,720) Business-Type Activities: Food Service $ 1,338,465 $ 48,902 $ 1,303,084 $ - $ - $ 13,521 $ 13,521 Total Business-Type Activities $ 1,338,465 $ 48,902 $ 1,303,084 $ - $ - $ 13,521 $ 13,521 TOTALS $ 25,216,261 $ 48,962 $ 15,336,100 $ - $ (9,844,720) $ 13,521 $ (9,831,199) GENERAL REVENUES Taxes: Property Taxes, Levied for General Purposes $ 3,705,173 $ - $ 3,705,173 Property Taxes, Levied for Debt Service 1,557,135-1,557,135 Unrestricted State Aid and Grants 3,701,098-3,701,098 Investment Earnings 24,209 1,299 25,508 Other Miscellaneous Revenues 572, ,061 Transfers In (Out) 103,043 (103,043) - TOTAL GENERAL REVENUES $ 9,662,719 $ (101,744) $ 9,560,975 CHANGE IN NET POSITION $ (182,001) $ (88,223) $ (270,224) NET POSITION BEGINNING OF YEAR (As Restated - Note 17) 20,875, ,850 21,805,922 NET POSITION END OF YEAR $ 20,693,071 $ 842,627 $ 21,535,698 The accompanying notes are an integral part of these financial statements.

21 BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2013 ASSETS EDUCATION SPECIAL IMPROVEMENT GENERAL PROJECTS ACT Cash Held by County Treasurer $ 4,044,524 $ - $ - Taxes Receivable (Net of Allowance for Uncollectibles) 207, Due From Other Funds ,148 Due From State and Federal Government 84,816 1,587, ,506 Other Receivables 4,326 65, Inventories 33, TOTAL ASSETS $ 4,374,641 $ 1,653,052 $ 350,830 LIABILITIES AND FUND BALANCES Liabilities Accounts Payable $ 618,234 $ - $ - Accrued Payroll Liabilities 259, Accrued Retirement 154, Accrued Salaries 964, Compensated Absences Payable 17, Due To Other Funds 859, ,498 - Due To Other Governments ,696 Deferred Tax Revenue 79, Deferred Grant Revenue - 819, ,134 Total Liabilities $ 2,953,224 $ 1,653,052 $ 350,830 Fund Balances Non-Spendable For Inventory $ 33,593 $ - $ - Restricted For: Debt Service Capital Projects - Facilities Improvements Assigned To: Capital Projects Unassigned 1,387, Total Fund Balances $ 1,421,417 $ - $ - TOTAL LIABILITIES AND FUND BALANCES $ 4,374,641 $ 1,653,052 $ 350,830 The accompanying notes are an integral part of these financial statements. 14

22 DEBT DEBT CAPITAL CAPITAL TOTAL SERVICE SERVICE PROJECTS PROJECTS GOVERNMENTAL LCSF DISTRICT DISTRICT LCSF FUNDS $ 5,298,093 $ 576,326 $ 785,298 $ 2,539,019 $ 13,243, ,570 87,556 17, , ,991-1,722,949-2,092, ,878, , ,593 $ 5,679,654 $ 663,882 $ 2,525,755 $ 2,539,019 $ 17,786,833 $ - $ - $ - $ - $ 618, , , , , , ,715 2,766, ,896-41, , ,145,488 $ - $ 505,009 $ - $ 609,715 $ 6,071,830 $ - $ - $ - $ - $ 33,593 5,679, , ,838, ,929,304 1,929, ,525,755-2,525, ,387,824 $ 5,679,654 $ 158,873 $ 2,525,755 $ 1,929,304 $ 11,715,003 $ 5,679,654 $ 663,882 $ 2,525,755 $ 2,539,019 $ 17,786,833 15

23 RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION JUNE 30, 2013 Amounts reported for governmental activities in the statement of net position are different because: Ending fund balances - governmental funds balance sheet $ 11,715,003 Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. 43,711,721 Other long-term assets are not available to pay for current period expenditures and, therefore, are deferred in the funds. 120,855 Long-term liabilities, including bonds payable (net of premiums and deferred costs), capital leases, notes payable, compensated absences, and accrued interest, are not due and payable in the current period and, therefore, are not reported in the funds. (34,854,508) Net position of governmental activities $ 20,693,071 The accompanying notes are an integral part of these financial statements. 16

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25 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR FISCAL YEAR ENDED JUNE 30, 2013 REVENUES EDUCATION SPECIAL IMPROVEMENT GENERAL PROJECTS ACT Local $ 3,883,407 $ 515,841 $ - State 9,295, ,914 2,258,038 Federal - 3,450,299 - Intergovernmental - 417,348 - TOTAL REVENUES $ 13,179,388 $ 4,734,402 $ 2,258,038 EXPENDITURES Current Instructional Services $ 6,266,630 $ 2,427,133 $ 1,260,799 Supporting Services 7,550,771 1,756, ,305 Community Services - 7,991 - Intergovernmental Expenditures - 62,387 - Debt Service Redemption of Principal 40, Interest and Fiscal Agent Fees 1, Capital Outlay 8, , ,936 TOTAL EXPENDITURES $ 13,868,721 $ 4,477,493 $ 1,906,040 Excess Revenues Over (Under) Expenditures $ (689,333) $ 256,909 $ 351,998 OTHER FINANCING SOURCES (USES) Transfers From Other Funds $ 711,950 $ - $ - Transfers To Other Funds - (256,909) (351,998) TOTAL OTHER FINANCING SOURCES (USES) $ 711,950 $ (256,909) $ (351,998) Net Change in Fund Balances $ 22,617 $ - $ - FUND BALANCE BEGINNING OF YEAR (As Restated) 1,398, FUND BALANCE END OF YEAR $ 1,421,417 $ - $ - The accompanying notes are an integral part of these financial statements. 17

26 DEBT DEBT CAPITAL CAPITAL TOTAL SERVICE SERVICE PROJECTS PROJECTS GOVERNMENTAL LCSF DISTRICT DISTRICT LCSF FUNDS $ 13,084 $ 1,583,046 $ 523 $ 3,017 $ 5,998,918 1,540,160 10, ,006-13,670, ,450, ,348 $ 1,553,244 $ 1,593,776 $ 215,529 $ 3,017 $ 23,537,394 $ - $ - $ - $ - $ 9,954, ,500-9,821, , ,387-1,685, ,725,953 1,802, , ,961, , ,079 $ 1,802,355 $ 1,842,513 $ 48,706 $ 136 $ 23,945,964 $ (249,111) $ (248,737) $ 166,823 $ 2,881 $ (408,570) $ - $ - $ - $ - $ 711, (608,907) $ - $ - $ - $ - $ 103,043 $ (249,111) $ (248,737) $ 166,823 $ 2,881 $ (305,527) 5,928, ,610 2,358,932 1,926,423 12,020,530 $ 5,679,654 $ 158,873 $ 2,525,755 $ 1,929,304 $ 11,715,003 18

27 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR FISCAL YEAR ENDED JUNE 30, 2013 Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances - total governmental funds $ (305,527) Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This amount is the amount by which capital outlays were exceeded by depreciation expense in the current period. (1,677,811) Revenues and other items in the statement of activities, that will not be collected for several months after year end and do not provide for current financial resources, are not reported as revenues in the funds. 55,358 The issuance of long-term debt (e.g. bonds, leases, notes) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items. 1,725,953 Some expenses reported in the statement of activities, do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. 20,026 Change in net position of governmental activities $ (182,001) The accompanying notes are an integral part of these financial statements. 19

28 STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30, 2013 BUSINESS-TYPE ACTIVITY ENTERPRISE FUND (FOOD SERVICE) ASSETS Current Assets Cash $ 2,571 Due From Federal Government 17,873 Inventories 18,516 Due From Other Funds 563,766 Total Current Assets $ 602,726 Noncurrent Assets Equipment $ 1,243,116 Less: Accumulated Depreciation (1,003,215) Total Noncurrent Assets $ 239,901 TOTAL ASSETS $ 842,627 LIABILITIES Current Liabilities $ - TOTAL LIABILITIES $ - NET POSITION Net Investment in Capital Assets $ 239,901 Unrestricted 602,726 TOTAL NET POSITION $ 842,627 The accompanying notes are an integral part of these financial statements. 20

29 STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS FOR FISCAL YEAR ENDED JUNE 30, 2013 OPERATING REVENUES BUSINESS-TYPE ACTIVITY ENTERPRISE FUND (FOOD SERVICE) Proceeds from Sales of Meals $ 48,902 TOTAL OPERATING REVENUES $ 48,902 OPERATING EXPENSES Food Costs $ 625,810 Salaries and Employee Benefits 474,263 Utilities 16,850 Depreciation 34,219 Supplies and Materials 182,037 Other Operating Costs 5,286 TOTAL OPERATING EXPENSES $ 1,338,465 Operating Income (Loss) $ (1,289,563) NONOPERATING REVENUES (EXPENSES) Interest $ 1,299 USDA Reimbursements 1,218,572 Commodities Received From USDA 82,094 Other Federal and State Aid 2,418 TOTAL NONOPERATING REVENUES (EXPENSES) $ 1,304,383 INCOME (LOSS) BEFORE TRANSFERS 14,820 Transfer Out (103,043) CHANGE IN NET POSITION $ (88,223) NET POSITION BEGINNING OF YEAR 930,850 NET POSITION END OF YEAR $ 842,627 The accompanying notes are an integral part of these financial statements. 21

30 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR FISCAL YEAR ENDED JUNE 30, 2013 BUSINESS-TYPE ACTIVITY ENTERPRISE FUND (FOOD SERVICE) CASH FLOWS FROM OPERATING ACTIVITIES Cash Received from Patrons $ 48,902 Cash Payments to Employees for Services (416,815) Cash Payments for Fringe Benefits (57,448) Cash Payments to Suppliers for Goods and Services (742,955) Net Cash Provided (Used) By Operating Activities $ (1,168,316) CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES USDA Federal Reimbursements $ 1,336,318 Decrease in Due from Other Funds 59,193 Operating Transfers to Other Funds (103,043) Non-Operating Grants Received 2,418 Net Cash Provided (Used) By Non-Capital Financing Activities $ 1,294,886 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Purchases of Capital Assets $ (125,915) Net Cash Provided (Used) By Capital and Related Financing Activities $ (125,915) CASH FLOWS FROM INVESTING ACTIVITIES Interest on Investments $ 1,299 Net Cash Provided (Used) By Investing Activities $ 1,299 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ 1,954 CASH AND CASH EQUIVALENTS BEGINNING OF YEAR 617 CASH AND CASH EQUIVALENTS END OF YEAR $ 2,571 The accompanying notes are an integral part of these financial statements. 22

31 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR FISCAL YEAR ENDED JUNE 30, 2013 BUSINESS-TYPE ACTIVITY ENTERPRISE FUND (FOOD SERVICE) RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Operating Income (Loss) $ (1,289,563) Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided (Used) By Operating Activities: Depreciation 34,219 Non-Cash Commodities Used 82,094 Changes in Assets and Liabilities (Increase) Decrease in Inventory 4,934 Net Cash Provided (Used) By Operating Activities $ (1,168,316) Supplemental Non-Cash Financing and Investing Information: Non-Cash Commodities Received from USDA $ 82,094 The accompanying notes are an integral part of these financial statements. 23

32 STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS JUNE 30, 2013 AGENCY FUND ASSETS Cash $ 1,000 Due From Fiscal Agent 3,123 Due from Others 110,635 TOTAL ASSETS $ 114,758 LIABILITIES Due To Third Parties $ 114,758 TOTAL LIABILITIES $ 114,758 NET POSITION $ - The accompanying notes are an integral part of these financial statements. 24

33 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Lee County School District have been prepared in conformity with accounting principles generally accepted in the United States of America as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. Following are the more significant of the School District s accounting policies. Reporting Entity Lee County School District (the School District ) is controlled by a Board of Trustees (the Board ), which has oversight responsibility over the public education activities in the School District. The School District receives funding from local, state and federal government sources and must comply with the related requirements of these funding source entities. As required by accounting principles generally accepted in the United States of America, these basic financial statements present the School District and its component units, entities for which the School District is considered to be financially accountable or for which exclusion of a component unit would render the financial statements incomplete or misleading. Blended component units are combined with the data of the primary government. Lee County School District has one component unit. Blended Component Unit: Lee County School Facilities, Inc. (LCSF) (the Corporation ) was created by the Lee County School District as a nonprofit corporation under the laws of the State of South Carolina for the specific purpose of providing support for capital projects of the School District. The board members are appointed by the board of the School District. Because the organization exclusively benefits the School District, the Corporation s financial information is blended with that of the School District in the basic financial statements. Separate financial statements for Lee County School Facilities, Inc. are not issued. Government-Wide and Fund Financial Statements The financial statement presentation for the District meets the requirements of Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements - and Management s Discussion and Analysis - for State and Local Governments and related amendments, pronouncements, and interpretations. The financial statement presentation provides a comprehensive, entity-wide perspective of the District s net position, revenues, expenses and changes in net position and cash flows that replaces the fund-group perspective previously required and provides for the inclusion of Management s Discussion and Analysis as required supplementary information. The District implemented the provisions of GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position during the current year. The reader will note a change in the terminology from net assets to net position ; otherwise, the implementation of this statement does not have any impact on the District s financial statements. The government-wide financial statements (i.e., the statement of net position and the statement of changes in net position) report information on all of the nonfiduciary activities of the District as a whole. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. 25

34 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Indirect expense allocations that have been made in the funds have been eliminated for the statement of activities. Program revenues include 1) charges to customers or applicants who purchase, use or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Internally dedicated resources are also reported as general revenues. The District segregates transactions related to certain functions or activities in separate funds in order to aid financial management and demonstrate legal compliance. Separate fund financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Each major fund is determined in accordance with criteria established by the Governmental Accounting Standards Board. All non-major funds are aggregated and reported in a single column of the fund financial statements. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. When both restricted and unrestricted resources are available for use, it is the District s policy to use restricted resources first, then unrestricted resources as they are needed. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, intergovernmental revenue, interest, and charges for services associated with the current fiscal period are all considered susceptible to accrual and so have been recognized as revenues of the current fiscal year. All other items are considered to be measurable and available only when cash is received. The remainder of this page intentionally left blank. 26

35 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund s principal ongoing operations. The principal operating revenues of the District s enterprise fund are charges to customers for food sales and services. Operating expenses for enterprise funds include cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. The focus of proprietary fund measurement focus is upon determination of operating income, changes in net position, financial position, and cash flows. Proprietary funds are similar to businesses operating in the private sector where fees are charged to external users for goods and services provided. Fiduciary funds are used to report assets held in a trustee capacity for others. Since by definition these assets are being held for the benefit of a third party and cannot be used to finance activities or obligations of the District, these funds are not incorporated into the government-wide statements. The funds are, however, reported in the fund financial statements. The District utilizes the following governmental funds: General Fund: The general fund is the primary operating fund of the District. The general fund accounts for all financial resources except those that are required to be reported in another fund. Special Revenue Fund - Special Projects Fund: Accounts for the proceeds of specific revenue sources that are legally or contractually restricted to expenditures for specified purposes. Special Revenue Fund - Education Improvement Act Fund: Accounts for the proceeds of the additional one percent sales and use tax that are restricted to expenditures for the Education Improvement Act strategies. Debt Service Fund - Lee County School Facilities, Inc.: Is used to account for the accumulation of resources for and the payment of general long-term debt, principal, interest and related cost of the Lee County Facilities, Inc. Debt Service Fund - District: Accounts for the accumulation of resources for and the payment of general long-term debt, principal and interest. Capital Projects Fund - District: Accounts for major capital expenditures other than the acquisition of machinery, furniture, and vehicles which is usually accounted for in the fund responsible for financing the expenditures. It also excludes capital assets financed through the Lee County School Facilities, Inc. Capital Projects Fund - Lee County School Facilities, Inc.: Is used to record transactions for acquiring new school sites, buildings, equipment for new buildings and major equipment additions, including remodeling of, or additions to, existing facilities of the School District. The District utilizes the following proprietary fund: Enterprise Fund - Food Service Fund: Accounts for the operations of the breakfast and lunch food service programs within the District. 27

36 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Additionally, the District utilizes the following fiduciary fund: Agency Fund - Pupil Activity Fund: Reports resources held by the District in a custodial capacity for students and student organizations. The District reports the General Fund, Special Revenue Fund - Special Projects Fund, Special Revenue Fund - Education Improvement Act Fund, the Debt Service Fund - District, the Debt Service Fund Lee County School Facilities, Inc., the Capital Projects Fund District, and the Capital Projects Fund Lee County School Facilities, Inc. as major governmental funds. The District reports the Enterprise - Food Service Fund as a major proprietary fund. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and revenues, expenditures/expenses, and other sources and uses recognized during the reporting period. Actual results could differ from those amounts. Deposits and Investments The District s cash and cash equivalents are considered to be cash on hand, demand deposits and shortterm investments with original maturities of three months or less from the date of acquisition. State statutes authorize the District to invest in obligations of the United States and its agencies, general obligations of the State of South Carolina and its subdivisions, savings and loan associations to the extent of federal depository insurance, certificates of deposit collaterally secured, and repurchase agreements secured by the foregoing obligations. Any investments held by the School District or the County Treasurer are stated at fair value in accordance with GASB Statement No. 31. The School District did not have any investments at June 30, Receivables All receivables are shown at their gross value and where appropriate, are reduced by the estimated portion that is expected to be uncollectible. Such allowances are estimated based upon such factors as length of delinquency, historical analysis, and available means for collection enforcement. Interfund Receivables and Payables Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either due to/from other funds (i.e., the current portion of interfund loans) or advances to/from other funds (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as due to/from other funds. Advances between funds, as reported in the fund financial statements, are offset by a nonspendable fund balance account in applicable governmental funds to indicate they are not available for appropriation and are not expendable available financial resources. Interfund receivables and payables are eliminated in the government-wide financial statements. Any residual balances outstanding between the governmental activities and businesstype activities are reported in the government-wide financial statements as internal balances. 28

37 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Inventories and Prepaid Items Inventory in the food service fund (enterprise fund) consists of food and supplies held for resale. Inventories are valued at cost using the first-in/first-out (FIFO) method except for commodities received from the United States Department of Agriculture which are stated at values assigned by the USDA. Inventory in the general fund consist of purchased supplies and materials and are carried in an inventory account of cost using the first-in/first-out (FIFO) method of accounting. Payments to vendors that reflect costs applicable to future accounting periods are recorded as prepaid items in both the government-wide and fund financial statements. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Estimated historical cost was used to value many of the assets acquired prior to July 1, Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. Property, plant, and equipment of the District is depreciated using the straight line method over the following estimated useful lives: Asset Years Buildings & Improvements Machinery & Equipment 5-10 Vehicles 10 Depreciation for capital assets that can be specifically identified with a function is included in the direct expenses for that function. Compensated Absences It is the District s policy to permit employees to accumulate earned but unused vacation and sick pay benefits. There is no liability for unpaid accumulated sick leave since the District does not have a policy to pay any amounts when employees separate from service with the District, unless as a result of retirement. 29

38 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) All vacation pay and salary related expenses are accrued when incurred in the government-wide, and fiduciary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. Employees can earn up to 20 vacation days for subsequent use. The portion of time that is estimated to be used in the next fiscal year has been designated as a current liability in the government-wide statements. Deferred Revenues Deferred revenues arise when a potential revenue does not meet the criteria for recognition in the current period. In subsequent periods, when revenue recognition criteria are met, the government has a legal claim to the resources, or the revenue has been earned, the liability is removed and revenue is recognized. Long-Term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Net Position/Fund Balances The District s net position in the government-wide financial statements and proprietary fund financial statements are classified as follows: Net Investment in Capital Assets: This represents the District s total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of net investment in capital assets. Restricted Net Position: This represents resources in which the District is legally or contractually obligated to spend in accordance with restrictions externally imposed by third parties or imposed by law through constitutional provisions or enabling legislation. Unrestricted Net Position: Any remaining balance of net position is reported as unrestricted, including management designations. 30

39 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) In the governmental fund financial statements, equity is classified as fund balance. The following classifications describe the relative strength of spending constraints placed on the purposes for which resources can be used: Nonspendable Fund Balance: Consists of amounts that are not in a spendable form (such as inventory) or are required to be maintained intact. Restricted Fund Balance: Consists of amounts constrained to specific purposes by their providers (such as grantors, bondholders, and higher levels of government), through constitutional provisions, or by enabling legislation. Committed Fund Balance: Consists of amounts constrained to specific purposes by a government itself, using its highest level of decision-making authority; to be reported as committed, amounts cannot be used for any other purpose unless the government takes the same highest level action to remove or change the constraint. Assigned Fund Balance: Consists of amounts a government intends to use for a specific purpose; intent can be expressed by the governing body or by an official or body to which the governing body delegates the authority. Unassigned Fund Balance: Consists of amounts that are available for any purpose; positive amounts are reported only in the general fund. The Board establishes (and modifies or rescinds) fund balance commitments by passage of an ordinance or resolution. Assigned fund balance is established by the Board through adoption or amendment of the budget as intended for a specific purpose. When fund balance resources are available for a specific purpose in more than one classification, it is the District s policy to use the most restrictive funds first in the following order: restricted, committed, assigned, and unassigned as they are needed. Property Taxes Property taxes are assessed and collected under a joint billing and collection agreement with Lee County. The District s property taxes are levied each October (except for vehicles which are annually assessed on the first day of the month the automobiles are registered) on the assessed value listed as of the prior January 1 st for all real and personal property located in the County. The tax levy is considered due upon receipt by the taxpayer, however, the actual due date is January 15 th. All unpaid taxes become delinquent on January 16 th and are put into execution on March 1 st. Vehicle taxes are levied monthly and are due within the period they are levied. Property taxes are recognized under the standards established by GASB Statement No. 33 for imposed nonexchange revenues. The remainder of this page intentionally left blank. 31

40 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Nonexchange Transactions The standards established by GASB Statement No. 33, Accounting and Financial Reporting for Nonexchange Transactions, provide accounting and reporting for the following four categories of nonexchange transactions: 1) Derived tax revenues, 2) Imposed nonexchange revenues, 3) Governmentmandated nonexchange transactions, and 4) Voluntary nonexchange transactions. Nonexchange transactions involve financial or capital resources in which the government either gives value to another party or receives value from another party without directly receiving equal value in exchange. Assets from derived tax revenues are recognized when the underlying exchange has occurred or when the resources are received, whichever first. Revenues are recognized when the underlying exchange has occurred and resources are available to the government. Assets from imposed nonexchange revenues are recognized when an enforceable legal claim has arisen or when resources are received, whichever occurs first. Revenues are recognized when resources are required to be used or the first period that use is permitted. Resources must also be available to the government. Assets, liabilities, revenues, and expenditures from government-mandated and voluntary nonexchange transactions are generally recognized when all eligibility requirements have been met. Resources received before the eligibility requirements are fulfilled are reported as deferred revenues. Eligibility requirements can include one or more of the following: 1. The recipient has the characteristics specified by the provider. 2. Time requirements specified by the provider have been met. 3. The provider offers resources on a reimbursement basis and allowable costs have been incurred under the applicable program. 4. The provider s offer of resources is contingent upon a specified action and that action has occurred. NOTE 2 - DEPOSITS AND INVESTMENTS At year end, the District s carrying amount of deposits was $3,571, included agency fund cash of $1,000, and the corresponding bank balance was $9,923. Custodial Credit Risk - Deposits: Custodial credit risk is the risk that, in the event of a bank failure, the District s deposits might not be recovered. The District does not have a policy for custodial credit risk, but follows the investment policy statutes of the State of South Carolina. As of June 30, 2013, all of the District s bank balances of $9,923 were insured and not exposed to custodial credit risk. Cash Held by County Treasurer The School District deposits the majority of receipts to a bank account controlled by Lee County. The County invests in short-term funds such as certificates of deposits and repurchase agreements. When funds are needed to cover accounts payable checks or payroll checks, a draft is prepared in the Lee County account to deposit in the School District s bank account. The balance of cash and investments held by the County for the School District is identified in the financial statements as cash held by County Treasurer. The total cash held on deposit by the County Treasurer as of June 30, 2013 was $13,243,

41 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 3 - RECEIVABLES Receivables as of the year end for individual major governmental funds, including applicable allowances for uncollectible accounts, are as follows: Special Revenue Projects Special Revenue EIA Debt Service Debt Service LCSF Capital Projects General Total Receivables: Taxes $ 273,051 $ - $ - $ 118,899 $ 157,570 $ 17,508 $ 567,028 State & Federal 84,816 1,587, , ,878,161 Other Agencies 4,326 65, ,715 Gross Receivables $ 362,193 $ 1,653,052 $ 205,682 $ 118,899 $ 157,570 $ 17,508 $ 2,514,904 Less: Allowance for Uncollectibles (65,669) - - (31,343) - - (97,012) Net Receivables $ 296,524 $ 1,653,052 $ 205,682 $ 87,556 $ 157,570 $ 17,508 $ 2,417,892 Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, deferred revenues in the governmental funds consisted of $120,855 for property taxes which are considered unavailable to liquidate current liabilities and $1,145,488 for grant resources that have been received, but not yet expended. The remainder of this page intentionally left blank. 33

42 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 4 - CAPITAL ASSETS Capital asset activity for the year ended June 30, 2013 was as follows: Beginning Balance Increases Decreases Ending Balance Governmental Activities: Capital Assets, not Being Depreciated: Land $ 26,500 $ - $ - $ 26,500 Total Capital Assets, not Being Depreciated $ 26,500 $ - $ - $ 26,500 Capital Assets, Being Depreciated: Land Improvements $ 4,981,352 $ - $ - $ 4,981,352 Buildings and Improvements 56,194, ,194,323 Furniture and Equipment 3,159,331 5,432-3,164,763 Vehicles 135, ,612 Total Capital Assets Being Depreciated $ 64,470,618 $ 5,432 $ - $ 64,476,050 Less Accumulated Depreciation for: Land Improvements $ (3,062,992) $ (250,758) $ - $ (3,313,750) Building and Improvements (13,623,271) (1,239,676) - (14,862,947) Furniture and Equipment (2,332,169) (183,672) - (2,515,841) Vehicles (89,154) (9,137) - (98,291) Total Accumulated Depreciation $ (19,107,586) $ (1,683,243) $ - $ (20,790,829) Total Capital Assets, Being Depreciated, Net $ 45,363,032 $ (1,677,811) $ - $ 43,685,221 Governmental Activities Capital Assets, Net $ 45,389,532 $ (1,677,811) $ - $ 43,711,721 Business-Type Activities: Capital Assets, Being Depreciated: Equipment $ 1,117,201 $ 125,915 $ - $ 1,243,116 Total Capital Assets Being Depreciated $ 1,117,201 $ 125,915 $ - $ 1,243,116 Less Accumulated Depreciation for: Equipment $ (968,996) $ (34,219) $ - $ (1,003,215) Total Accumulated Depreciation $ (968,996) $ (34,219) $ - $ (1,003,215) Total Capital Assets, Being Depreciated, Net $ 148,205 $ 91,696 $ - $ 239,901 Business-Type Activities Capital Assets, Net $ 148,205 $ 91,696 $ - $ 239,901 34

43 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 4 - CAPITAL ASSETS (continued) Depreciation expense was charged to functions/programs of the District as follows: Governmental Activities: Instruction $ 791,125 Supporting Services 892,118 Total Depreciation Expense - Governmental Activities $ 1,683,243 Business-Type Activities: Food Service $ 34,219 Total Depreciation Expense - Business-Type Activities $ 34,219 During the fiscal year ended June 30, 2007, the Board authorized the formation of Lee County School Facilities, Inc., a nonprofit corporation which assisted the School District in the formulation of an Installment Purchase Plan, whereby the School District has leased the applicable buildings to the Corporation for the purpose of capital improvements, and is in the process of purchasing them back, utilizing General Obligation Debt over a 25 year period, allowing the School District to leverage its constitutional debt limit to complete the capital needs of the School District. NOTE 5 - LONG-TERM DEBT General Obligation Bonds General obligation bonds are direct obligations issued on a pledge of the general taxing power for the payment of the debt obligations. The bonds have been issued to provide funds for the acquisition and construction of major facilities and improvements. On February 17, 2009, the School District issued general obligation refunding and improvement bonds totaling $6,085,000 with annual principal and interest payment due each March 1 and semi-annual interest payments due September 1 and March 1 of each year. The bonds range in maturity dates from 2009 to The interest rate ranges from 2% to 3%. Installment Purchase Revenue Bonds The School District has entered into a facilities agreement with Lee County School Facilities, Inc. The agreement permits the School District to construct, renovate and operate the facilities in exchange for the payment of principal and interest by the School District, as such amounts come due, on the Installment Purchase Revenue Bond (IPR Bonds) issued by Lee County School Facilities, Inc. The remainder of this page intentionally left blank. 35

44 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 5 - LONG-TERM DEBT (continued) Installment Purchase Refunding and Revenue Bonds, Series 2007 On December 20, 2007, the Lee County School Facilities, Inc. issued Installment Purchase Refunding and Revenue Bonds, Series 2007 (IPR Bonds) in the amount of $30,000,000. Annual principal and interest is due December 1 beginning 2016 and semi-annual interest payments are due June 1 and December 1 of each year beginning 2008 at a fixed rate of 6%. The bonds are used for future interest cost, for debt service reserve funds and bond issuance costs. The refunding bonds are used to defease the 2006 Series IPR Bonds which totaled $5,000,000. At June 30, 2013, $3,900,608 of the defeased debt is still outstanding. The Lee County School Facilities, Inc. Installment Purchase Revenue Bonds (IPR Bonds) are not an obligation of the School District; however, as Lee County School Facilities, Inc. is blended in the operations of the School District, the Corporation s debt is included with the School District s other obligations as required by accounting principles generally accepted in the United States of America. A summary of the outstanding General Obligation Bonds and IPR Bonds issued for the governmental activities and currently outstanding is as follows: Date of Issue Interest Rate Maturity Original Issue Outstanding June 30, GO Bond % March 1, 2016 $ 6,085,000 $ 4,020, IPRB Bond 6.00% December 1, ,000,000 30,000,000 Totals $ 36,085,000 $ 34,020,000 Annual debt service requirements to maturity for general obligation bonds are as follows: Governmental Activities Year Ending June 30 Principal Interest Total 2014 $ 1,270,000 $ 1,907,500 $ 3,177, ,350,000 1,875,750 3,225, ,400,000 1,842,000 3,242, ,150,000 1,765,500 2,915, ,220,000 1,694,400 2,914, ,345,000 7,239,750 14,584, ,915,000 4,670,250 14,585, ,370,000 1,290,900 11,660,900 Totals $ 34,020,000 $ 22,286,050 $ 56,306,050 36

45 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 5 - LONG-TERM DEBT (continued) The following is a summary of changes in long term obligations and balances for June 30, 2013: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental Activities: Bonds Payable: General Obligation Bonds 2003 Bonds $ 360,000 $ - $ (360,000) $ - $ Bonds 740,000 - (740,000) Bonds 4,605,000 - (585,000) 4,020,000 1,270,000 Plus Issuance Premiums 54,320 - (6,404) 47,916 - Total Bonds Payable $ 5,759,320 $ - $ (1,691,404) $ 4,067,916 $ 1,270,000 IPR Bonds: 2007 Bond $ 30,000,000 $ - $ - $ 30,000,000 $ - Plus Issuance Premium 1,549,053 - (75,671) 1,473,382 - Total Bonds $ 37,308,373 $ - $ (1,767,075) $ 35,541,298 $ 1,270,000 Lease Obligations: BB&T $ 19,159 $ - $ (19,159) $ - $ - BB&T 21,794 - (21,794) - - Compensated Absences 114, ,073 (114,848) 144,073 48,815 Totals $ 37,464,174 $ 144,073 $ (1,922,876) $ 35,685,371 $ 1,318,815 The general fund liquidates other long-term liabilities such as compensated absences. NOTE 6 DEBT ISSUANCE COSTS The Lee County School Facilities, Inc. issued the Installment Purchase Revenue Bonds, Series 2006 ( IPR Bonds ) in the amount of $5,000,000 during the fiscal year ended June 30, 2007, and incurred issue costs of $77,634. The bond was paid off on December 20, 2007, with the issuance of a new installment purchase refunding and revenue bond. The Series 2006 bond issuance cost continues to be amortized over the shorter life of the 2007 bond. The amount of amortization of these costs for the current fiscal year is $5,972. The unamortized bond issuance costs amount at June 30, 2013, was $44,788. The Lee County School Facilities, Inc. issued the Installment Purchase Revenue and Refunding Bonds, Series 2007 ( IPR Bonds ) in the amount of $30,000,000 during the fiscal year ended June 30, 2008 and incurred issue costs of $1,147,892. These costs are being amortized on the straight-line method over the life of the bond issue. The amount of amortization of these costs for the current fiscal year is $45,916. The unamortized bond issuance costs amount at June 30, 2013, was $894,017. Also, the bond was issued at a premium. The amount of premium is being amortized on the straight-line method over the life of the bond issue and, accordingly, is considered as a decrease in interest expense. The amount of amortization of the premium reduced interest expense for the current fiscal year by $75,671. The unamortized premium amount at June 30, 2013, was $1,473,382. The 2005 Bond, which was paid off in the current year, amortized $3,470 of the bond premium which reduced interest expense in the current year. 37

46 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 6 DEBT ISSUANCE COSTS (continued) The District issued General Obligation Refunding and Improvement Bonds in the amount of $6,085,000 during the fiscal year ended June 30, 2009, and incurred issue costs of $79,347. These costs are being amortized on the straight-line method over the life of the bond issue. The amount of amortization of these costs for the current fiscal year is $3,719. The unamortized bond issuance costs amount at June 30, 2013, was $54,551. Also, the bond was issued at a premium. The amount of premium is being amortized on the straight-line method over the life of the bond issue and, accordingly, is considered as a decrease in interest expense. The amount of amortization of the premium reduced interest expense for the current fiscal year by $2,934. The unamortized premium amount at June 30, 2013, was $47,916. NOTE 7 CONTINGENT RENTALS The District rents copiers that meet the definition of contingent rentals. Total costs for such leases were $49,387 for the year ended June 30, NOTE 8 - INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS Outstanding balances between funds result mainly from the time lag between the dates the (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made. At June 30, 2013, interfund receivables and payables resulting from various interfund transactions were as follows. All balances are expected to be repaid within the following year. Due From Other Funds Due To Other Funds General Fund $ - $ 859,290 Special Projects - 833,498 EIA 145,148 - Debt Service Fund - 463,986 Debt Service Fund LCSF 223,991 - Capital Projects 1,722,949 - Capital Projects LCSF - 609,715 Pupil Activity Fund 110,635 - Food Service Fund 563,766 - Total $ 2,766,489 $ 2,766,489 The remainder of this page intentionally left blank. 38

47 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 8 - INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS (continued) Transfers are used to move certain revenues to finance various programs that the government must account for in other funds in accordance with budgetary authorizations, including indirect cost allocations. A schedule of operating transfers is as follows: Transfers From Other Funds Transfers To Other Funds General Fund $ 711,950 $ - Special Projects - 256,909 EIA - 351,998 Food Service Fund - 103,043 Total $ 711,950 $ 711,950 NOTE 9 - POSTEMPLOYMENT BENEFITS Plan Description In accordance with the South Carolina Code of Laws and the Annual Appropriations Act, the State of South Carolina provides certain health care, dental, life insurance, and long-term disability (OPEB) benefits to certain retired State and school district employees and their covered dependents. All permanent full-time and certain permanent part-time employees of the District are eligible to receive these benefits. The State created two postemployment benefit trust funds, the South Carolina Retiree Health Insurance Trust (SCRHITF) and the Long Term Disability Insurance Trust (LTDITF), to account for postemployment benefits. The State issues a publically available financial report that includes financial statements and required supplementary information for these trusts. That report may be obtained by writing to Employee Insurance Program, 1201 Main Street, Suite 360, Columbia, South Carolina Funding Policy Sections and of the South Carolina Code of Laws of 1976, as amended, requires these postemployment healthcare and long-term disability benefits be funded through annual appropriations by the General Assembly for active employees to the EIP and participating retirees to the SBCB except the portion funded through the pension surcharge and provided from other applicable sources of the EIP for its active employees who are not funded by State General Fund appropriations. Employers participating in the healthcare plan are mandated by State statute to contribute at a rate assessed each year by the Office of the State Budget, 4.55% of annual covered payroll for fiscal year The EIP sets the employer contribution rate based on a pay-as-you-go basis. The District recorded fringe benefit expenses for insurance benefits for active employees in the amount of $1,404,681 for the year ended June 30, The District also paid $537,560 applicable to the 4.55% surcharge included with the employer contributions for retirement benefits. (The District paid $515,628 and $508,419 in 2012 and 2011, respectively.) These amounts were remitted to the South Carolina Retirement Systems for distribution to the Division of Insurance Services for retiree health and dental insurance benefits. 39

48 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 9 - POSTEMPLOYMENT BENEFITS (continued) Information regarding the cost of insurance benefits applicable to the District s retirees is not available. By State law, the District has no liability for retirement benefits. Accordingly, the cost of providing these benefits for retirees is not included in the accompanying financial statements. NOTE 10 - RETIREMENT PLAN South Carolina Retirement System Plan Description District employees participate in a plan administered by the South Carolina Retirement Systems (SCRS) which is classified as a cost-sharing multiple-employer public employee retirement system (PERS). The plan provides retirement, disability and death benefits to plan members and beneficiaries. Benefit provisions are established under authority of Title 9 of the South Carolina Code of Laws. The South Carolina Retirement Systems issues a Comprehensive Annual Financial Report which discloses detailed information regarding benefit provisions and actuarial information. That report is available to the public and may be obtained by writing to South Carolina Retirement Systems, Post Office Box 11960, Capital Station, Columbia, South Carolina or by accessing their website at Funding Policy Members of the SCRS are required to contribute at the rate of 7.00% of their covered wages. The District is required to contribute at actuarially determined rates, currently 10.60% of SCRS member wages, which includes a.15% group life contribution. The contribution requirements of plan members and the District are established by the South Carolina Retirement Systems under authority of Title 9 of the South Carolina Code of Laws. The District s contributions to the SCRS for the plan years ending June 30, 2013, 2012, and 2011 were $1,209,469, $1,120,365, and $1,205,087, respectively. Actual contributions were equal to the required contributions each year. Optional Retirement Program Plan Description Certain employees may elect to participate in the Optional Retirement Program (ORP), a defined contribution plan. The ORP was established in 1987 under Title 9, Chapter 17, of the South Carolina Code of Laws. The ORP provides retirement and death benefits through the purchase of individual fixed or variable annuity contracts which are issued to, and become the property of, the participants. The state assumes no liability for this plan other than for payment of contributions to designated insurance companies. ORP participation is limited to personnel who meet all eligibility requirements for membership in the SCRS. To elect participation in the ORP, eligible employees must irrevocably waive SCRS membership within the first ninety days of employment. 40

49 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 10 - RETIREMENT PLAN (continued) Funding Policy Under state law, contributions to the ORP are required at the same rates as for the SCRS. A direct remittance is required from the employer to the investment provider for the employee contribution and a portion of the employer contribution (5.00%). Also, a direct remittance is required to the SCRS for a portion of the employer contribution (5.45%), which must be retained by the SCRS. The District s contributions to the ORP for the year ended June 30, 2013 were $13,115, excluding the 4.55% health surcharge. The District contributed amounts equal the required contribution to the State ORP of $10,945 for 2012 and $8,896 for Teacher and Employee Retention Incentive Program Plan Description The Teacher and Employee Retention Incentive Program (TERI), is a deferred retirement option program offered under the SCRS. Upon reaching normal retirement eligibility, a member can elect to retire and continue working under the TERI program for a maximum of five years, after which employment will cease. During the TERI period, retirement annuity is not paid to retirees, but monthly benefits are accumulated in TERI accounts and distributed to members upon termination of employment. Funding Policy - Teacher and Employee Retention Incentive Program TERI participants who entered the program after June 30, 2005, must continue to contribute at the same rate as active plan members of the SCRS. Those participants who entered the TERI program prior to July 1, 2005, make no employee contributions while participating in the program. The District is required to contribute at the current actuarially determined rates of the SCRS for all TERI participants. NOTE 11 - DEFERRED COMPENSATION PLAN The District offers a deferred compensation plan to all its employees under a plan administered by the South Carolina Deferred Compensation Commission, and established in accordance with Internal Revenue Code Section 457. Employees are permitted to defer portions of their salaries until future years. Only upon termination, retirement, disability, death or an approved hardship is the deferred compensation available to an employee. In 1996, Congress passed new legislation to govern IRC section 457 plans. Specifically, the new legislation concludes that a plan shall not be treated as an eligible deferred compensation plan unless all assets and income of the plan are held in trust for the exclusive benefit of participants and their beneficiaries. During the year ended June 30, 1999, the South Carolina Deferred Compensation Commission modified their plan to comply with the new legislative requirements. GASB Statement No. 32 was issued to address the financial reporting ramifications of the new federal legislation and states that a fiduciary relationship must exist for a governmental entity to report the balances and transactions related to the plan in its financial statements. According to the provisions of the statement, it was determined that a fiduciary relationship did not exist for the District s IRC section 457 plan. 41

50 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 12 - RISK MANAGEMENT The District is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The District pays an annual premium to the South Carolina School Board Insurance Trust for its general insurance. The South Carolina School Board Insurance Trust reinsures through commercial companies for certain claims. There were no significant reductions in insurance coverage from the previous year and no settlements have exceeded insurance coverage for the past three fiscal years ended June 30, 2013, 2012, and The District also acquires insurance from the South Carolina School Board Insurance Trust for job related injury and illness (workers compensation) for its employees. Workers compensation is insured under a retrospectively rated policy where premiums paid are estimated throughout the year and adjusted subsequent to the policy period based on actual experience. NOTE 13 - CONTINGENCIES The District participates in a number of federal and state assisted grant programs. These programs are subject to program compliance audits by the grantors or their representatives. The amount of expenditures which may be disallowed by the granting agencies cannot be determined at this time, although the District expects such amounts, if any, to be immaterial. NOTE 14 - RELATED ORGANIZATIONS GASB Statement No. 39, Determining Whether Certain Organizations are Component Units, requires certain legally separate tax-exempt organizations for which the primary government is not financially accountable to be included in the financial reporting entity if certain criteria are met. The standard is directed principally toward fund-raising organizations, such as foundations, parent teacher organizations, and booster clubs. The District reviewed its relationship with its related organizations and determined they should not be included in the reporting entity because their economic resources are not significant to the District. NOTE 15 - RECONCILIATION OF GOVERNMENT-WIDE AND FUND STATEMENTS The governmental fund balance sheet includes a reconciliation between fund balance - total governmental fund and net position - governmental activities as reported in the government-wide statement of net position. The following explains certain elements of that reconciliation: Long-Term Assets Not Available to Pay Current Expenditures: Property Taxes $ 120,855 Total $ 120,855 The remainder of this page intentionally left blank. 42

51 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 15 - RECONCILIATION OF GOVERNMENT-WIDE AND FUND STATEMENTS (continued) Long-Term Liabilities Not Reported in the Funds: Bonds Payable $ (34,020,000) Plus: Premium on Bonds Payable (to be amortized as interest expense) (1,521,298) Less: Deferred Charge for Issuance Costs (to be amortized over life of debt) 993,356 Accrued Interest Payable (180,256) Compensated Absences Payable (126,310) Total $ (34,854,508) The governmental fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation between net changes in fund balances - governmental funds and changes in net position of governmental activities as reported in the government-wide statement of activities. The following explains certain elements of that reconciliation: Capital Outlays: Depreciation Expense $ (1,683,243) Capital Outlays 5,432 Total $ (1,677,811) Revenues and Other Items Not Recognized in the Funds: Property Taxes $ 55,358 Total $ 55,358 Issuance and Repayment of Long-Term Debt: Principal Repayments on General Obligation Debt $ 1,685,000 Principal Repayments on Capital Leases 40,953 Total $ 1,725,953 Reduction of Liabilities and Other Expenses Not Recognized in the Funds: Compensated Absences $ (11,463) Accrued Interest on Long-Term Debt 17,800 Amortization of Issuance Costs (68,386) Amortization of Bond Premiums 82,075 Total $ 20,026 43

52 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 16 RESTATEMENT OF PRIOR YEARS FUND EQUITY Governmental Funds: General Fund, Fund Balance As Originally Reported $ 1,496,187 Prepaid Health Insurance Overstated in Prior Year (114,702) Inventory Balance Overstated in Prior Year (24,892) Compensated Absences Overstated in Prior Year on Fund Financial Statement 40,739 Interest Accrued Erroneously in General Fund 1,468 General Fund, Fund Balance As Restated $ 1,398,800 Debt Service Fund LCSF, Fund Balance As Originally Reported $ 5,786,142 Interest Expense Accrued in Error on Fund Financial Statements 142,623 Debt Service Fund LCSF, Fund Balance As Restated $ 5,928,765 Debt Service Fund, Fund Balance As Originally Reported $ 353,645 Interest Expense Accrued in Error on Fund Financial Statements 53,965 Debt Service Fund, Fund Balance As Restated $ 407,610 Total Governmental Fund, Fund Balance As Originally Reported $ 11,921,329 General Fund Corrections (97,387) Debt Service Fund LCSF Corrections 142,623 Debt Service Fund Corrections 53,965 Total Governmental Fund, Fund Balance, As Restated, June 30, 2012 $ 12,020,530 NOTE 17 - NET POSITION RESTATEMENT Government-Wide Statements Governmental Activities Total Net Position, As Originally Reported $ 21,014,666 Health Insurance Overstated in Prior Year (114,702) Inventory Balance Overstated in Prior Year (24,892) Total Net Position, As Restated, June 30, 2012 $ 20,875,072 44

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54 REQUIRED SUPPLEMENTARY INFORMATION

55 REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE GENERAL FUND FOR FISCAL YEAR ENDED JUNE 30, 2013 VARIANCE WITH FINAL BUDGET BUDGETED AMOUNTS POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES Local $ 3,521,329 $ 3,553,013 $ 3,883,407 $ 330,394 State 8,860,646 8,969,466 9,295, ,515 TOTAL REVENUES $ 12,381,975 $ 12,522,479 $ 13,179,388 $ 656,909 EXPENDITURES Current Instructional Services $ 5,926,513 $ 5,897,328 $ 6,266,630 $ (369,302) Supporting Services 7,578,814 7,601,223 7,550,771 50,452 Debt Service Redemption of Principal ,953 (40,953) Interest and Fiscal Agent Fees - - 1,595 (1,595) Capital Outlay 9,838 16,678 8,772 7,906 TOTAL EXPENDITURES $ 13,515,165 $ 13,515,229 $ 13,868,721 $ (353,492) Excess Revenues Over (Under) Expenditures $ (1,133,190) $ (992,750) $ (689,333) $ 303,417 OTHER FINANCING SOURCES (USES) Transfers From Other Funds $ 822,298 $ 815,340 $ 711,950 $ (103,390) TOTAL OTHER FINANCING SOURCES (USES) $ 822,298 $ 815,340 $ 711,950 $ (103,390) Net Change in Fund Balance $ (310,892) $ (177,410) $ 22,617 $ 200,027 FUND BALANCE BEGINNING OF YEAR (As Restated) 1,398,800 1,398,800 1,398,800 - FUND BALANCE END OF YEAR $ 1,087,908 $ 1,221,390 $ 1,421,417 $ 200,027 45

56 NOTES TO REQUIRED SUPPLEMENTARY INFORMATION FOR FISCAL YEAR ENDED JUNE 30, 2013 NOTE 1 - BUDGETS AND BUDGETARY ACCOUNTING Annual budgets are prepared and legally adopted on a basis consistent with generally accepted accounting principles (GAAP) as applicable to governments for the general fund. Amounts presented in the Original budget column in the budgetary comparison schedule reflect amounts originally adopted. Amounts presented in the Final budget column include any amendments or supplemental appropriations formally authorized by the District s Board of Education. All annual appropriations lapse at fiscal year-end. The annual budget is prepared by the District and approved by the Board of Education. Prior to July 1, the budget is legally enacted through the passage of a resolution by the Board. The budget is prepared by function, object, and location as dictated by the S.C. State Department of Education. District administration has discretionary authority to make transfers of appropriations between and within functions; however, the total budget cannot be increased without approval by the Board. The legal level of control is at the fund level. Formal budgetary accounting is employed as a management control for the District. Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of money are recorded in order to reserve that portion of the applicable appropriations, is not utilized by the District. NOTE 2 - PRESENTATION The budgetary comparison schedule presents the general fund and each major individual special revenue fund for which an annual budget is legally adopted. Budgets are not legally adopted for the Special Projects and Education Improvement Act special revenue funds. As such, they have been excluded from the budgetary comparison presentation. NOTE 3 - EXPENDITURES IN EXCESS OF BUDGET For the fiscal year ended June 30, 2013, actual expenditures in the general fund exceeded budgeted appropriations by $353,

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58 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES

59 GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR FISCAL YEAR ENDED JUNE 30, 2013 REVENUES VARIANCE FAVORABLE BUDGET ACTUAL (UNFAVORABLE) 1000 Revenue from Local Sources 1200 Revenue From Local Governmental Units Other Than LEAs 1210 Ad Valorem Taxing - Including Delinquent $ 3,154,108 $ 3,224,974 $ 70, Penalties and Interest on Taxes 34,194 26,652 (7,542) 1280 Revenue in Lieu of Taxes 152, ,777 77, Other Taxes 159, ,938 (15,077) 1300 Tuition 1350 From Patrons for Summer School Earnings on Investments 1510 Interest on Investments 10,717 6,171 (4,546) 1900 Other Revenue from Local Sources 1950 Refund of Prior Year's Expenditures 37,184 32,727 (4,457) 1990 Miscellaneous Local Revenue 1994 Receipt of Legal Settlements - 6,150 6, Revenue from Other Local Sources 5, , ,458 Total Local Sources $ 3,553,013 $ 3,883,407 $ 330, Revenue from State Sources 3100 Restricted State Funding 3130 Special Programs 3131 Handicapped Transportation $ 600 $ 654 $ Home Schooling 1,500 - (1,500) 3133 IDEA Contingency Fund - 128, , School Bus Driver's Salary 204, ,036 64, Transportation Workers' Compensation 24,027 24, Fringe Benefits Employer Contributions 1,987,322 1,988, Retiree Insurance 441, , Education Finance Act 3310 Full-Time Programs 3311 Kindergarten 385, ,155 (17,411) 3312 Primary 939, ,005 (72,264) 3313 Elementary 1,174,400 1,160,499 (13,901) 3314 High School 183, ,756 (4,037) 3315 Trainable Mentally Handicapped 39,346 43,334 3, Speech Handicapped (Part-Time Program) 284, ,515 71, Homebound 7,852 16,218 8, Part-time Programs 3321 Emotionally Handicapped 37,498 42,931 5, Educable Mentally Handicapped 65,028 66,273 1, Learning Disabilities 457, ,786 2, Hearing Handicapped 12,699 12,696 (3) 47

60 GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR FISCAL YEAR ENDED JUNE 30, 2013 REVENUES (continued) VARIANCE FAVORABLE BUDGET ACTUAL (UNFAVORABLE) 3000 Revenue from State Sources (continued) 3300 Education Finance Act (continued) 3320 Part-time Programs (continued) 3325 Visually Handicapped 4,233 - (4,233) 3326 Orthopedically Handicapped 6,720 3,359 (3,361) 3327 Vocational 868, ,603 (5,945) 3330 Other EFA Programs 3331 Autism 25,398 25,392 (6) 3800 State Revenue in Lieu of Taxes 3810 Reimbursement for Local Residential Property Tax Relief (Tier 1) 770, , Homestead Exemption (Tier 2) 382, , Reimbursement for Property Tax Relief (Tier 3) 625, , , Merchant's Inventory Tax 40,000 34,079 (5,921) Total State Sources $ 8,969,466 $ 9,295,981 $ 326,515 TOTAL REVENUE ALL SOURCES $ 12,522,479 $ 13,179,388 $ 656,909 EXPENDITURES 100 Instruction 110 General Instruction 111 Kindergarten Programs 100 Salaries $ 360,036 $ 375,209 $ (15,173) 200 Employee Benefits 125, ,913 (10,158) 300 Purchased Services 2,000-2, Supplies and Materials 1,521 1, Primary Programs 100 Salaries 883, ,092 (2,142) 200 Employee Benefits 313, ,233 9, Purchased Services 2,000-2, Supplies and Materials 5,268 4, Elementary Programs 100 Salaries 1,138,674 1,250,036 (111,362) 200 Employee Benefits 387, ,291 (26,536) 300 Purchased Services 1,500-1, Supplies and Materials 5,400 4,227 1, High School Programs 100 Salaries 753, ,135 (66,295) 200 Employee Benefits 235, ,568 (36,648) 300 Purchased Services 5,447 2,722 2,725 48

61 GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR FISCAL YEAR ENDED JUNE 30, 2013 EXPENDITURES (continued) VARIANCE FAVORABLE BUDGET ACTUAL (UNFAVORABLE) 100 Instruction (continued) 110 General Instruction (continued) 114 High School Programs (continued) 400 Supplies and Materials 4,894 16,909 (12,015) 115 Career and Technology Education Programs 100 Salaries 424, ,241 (30,094) 200 Employee Benefits 171, ,494 13, Purchased Services 1, Supplies and Materials 15,180 14, Driver Education Program 100 Salaries 34,740 34, Employee Benefits 10,444 10,731 (287) 400 Supplies and Materials 960 1,105 (145) 120 Exceptional Programs 121 Educable Mentally Handicapped 100 Salaries 347, ,917 10, Employee Benefits 125, ,142 8, Purchased Services 6,760 2,086 4, Supplies and Materials Trainable Mentally Handicapped 100 Salaries 8,293 8,315 (22) 200 Employee Benefits 4,340 4,431 (91) 400 Supplies and Materials Orthopedically Handicapped 100 Salaries 9,237 8, Employee Benefits 3,220 2, Purchased Services 2,750 9,350 (6,600) 125 Hearing Handicapped 100 Salaries (304) 200 Employee Benefits - 69 (69) 126 Speech Handicapped 100 Salaries 86,496 69,835 16, Employee Benefits 27,255 20,587 6, Purchased Services 1,800 1, Supplies and Materials Learning Disabilities 100 Salaries 100, ,729 (3,320) 200 Employee Benefits 43,788 37,337 6, Purchased Services 6, ,449 (98,123) 400 Supplies and Materials (26) 49

62 GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR FISCAL YEAR ENDED JUNE 30, 2013 EXPENDITURES (continued) VARIANCE FAVORABLE BUDGET ACTUAL (UNFAVORABLE) 100 Instruction (continued) 120 Exceptional Programs (continued) 128 Emotionally Handicapped 100 Salaries 36,523 51,615 (15,092) 200 Employee Benefits 12,063 16,262 (4,199) 300 Purchased Services 7,750 2,750 5, Supplies and Materials Pre-School Programs 137 Pre-School Handicapped - Self-Contained (3 & 4 yr.-olds) 200 Employee Benefits - 14 (14) 140 Special Programs 141 Gifted and Talented - Academic 100 Salaries 38,466 36,382 2, Employee Benefits 12,537 12,946 (409) 145 Homebound 100 Salaries 23,561 17,641 5, Employee Benefits 5,000 3,180 1, Purchased Services 3,128 3,299 (171) 147 CDEPP 100 Salaries 16,841 55,310 (38,469) 200 Employee Benefits 16,718 14,172 2, Other Exceptional Programs 161 Autism 100 Salaries 14,162 13, Employee Benefits 3,412 3, Purchased Services 22,000 22, Summer School Programs 173 High School Summer School 100 Salaries Adult/Continuing Education Programs 182 Adult Secondary Education Programs 100 Salaries 3,000 2, Employee Benefits

63 GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR FISCAL YEAR ENDED JUNE 30, 2013 EXPENDITURES (continued) VARIANCE FAVORABLE BUDGET ACTUAL (UNFAVORABLE) 100 Instruction (continued) 180 Adult/Continuing Education Programs (continued) 188 Parenting/Family Literacy 100 Salaries 13,129 13,950 (821) 200 Employee Benefits 7,574 6, Purchased Services Total Instruction $ 5,897,328 $ 6,266,630 $ (369,302) 200 Supporting Services 210 Pupil Services 212 Guidance Services 100 Salaries $ 255,157 $ 239,609 $ 15, Employee Benefits 77,207 73,087 4, Purchased Services Supplies and Materials Health Services 100 Salaries 116, ,795 (3,576) 200 Employee Benefits 41,590 43,915 (2,325) 300 Purchased Services 20,003 19, Supplies and Materials 3,265 2, Psychological Services 300 Purchased Services 47,000 49,890 (2,890) 220 Instructional Staff Services 221 Improvement of Instruction - Curriculum Development 100 Salaries 341, ,189 14, Employee Benefits 109, ,201 4, Purchased Services 13,579 32,587 (19,008) 400 Supplies and Materials Other Objects Library and Media Services 100 Salaries 180, ,391 10, Employee Benefits 57,112 53,851 3, Supplies and Materials 4,574 4, Supervision of Special Programs 100 Salaries 123, ,454 22, Employee Benefits 37,698 30,219 7, Purchased Services Supplies and Materials (138) 51

64 GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR FISCAL YEAR ENDED JUNE 30, 2013 EXPENDITURES (continued) VARIANCE FAVORABLE BUDGET ACTUAL (UNFAVORABLE) 200 Supporting Services (continued) 220 Instructional Staff Services (continued) 224 Improvement of Instruction - Inservice Training 100 Salaries 2,636 2, Employee Benefits (78) 300 Purchased Services 4,930 3,660 1, Supplies and Materials 6,285 5, Capital Outlay General Administration Services 231 Board of Education 100 Salaries 25,700 25, Employee Benefits 166, ,009 (53,224) 300 Purchased Services 150, ,294 1, Audit Services 29,859 29, Supplies and Materials Other Objects 23,275 20,353 2, Office of the Superintendent 100 Salaries 155, , Terminal Leave - 6,193 (6,193) 200 Employee Benefits 41,083 42,046 (963) 300 Purchased Services 25,782 23,058 2, Supplies and Materials 7,854 2,562 5, Capital Outlay 1,277-1, Other Objects School Administration 100 Salaries 1,026,794 1,003,135 23, Terminal Leave - 6,355 (6,355) 200 Employee Benefits 338, ,436 (1,653) 300 Purchased Services 14,074 10,802 3, Supplies and Materials 32,343 29,805 2, Capital Outlay Other Objects 4,350 4, Finance and Operations Services 252 Fiscal Services 100 Salaries 209, ,661 (12,893) 200 Employee Benefits 59,269 68,922 (9,653) 300 Purchased Services 8,772 7,534 1, Supplies and Materials 7,159 7,336 (177) 500 Capital Outlay 2,012 2, Other Objects

65 GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR FISCAL YEAR ENDED JUNE 30, 2013 EXPENDITURES (continued) VARIANCE FAVORABLE BUDGET ACTUAL (UNFAVORABLE) 200 Supporting Services (continued) 250 Finance and Operations Services (continued) 254 Operation and Maintenance of Plant 100 Salaries 543, ,386 (20,103) 200 Employee Benefits 240, ,760 (8,683) 300 Purchased Services 435, ,411 2, Public Utilities 46,915 41,309 5, Supplies and Materials 128, ,890 (14,762) 470 Energy 661, ,786 52, Capital Outlay 6,489 6, Student Transportation 100 Salaries 686, ,803 (56,871) 200 Employee Benefits 300, ,076 77, Purchased Services 129, ,342 (22,745) 400 Supplies and Materials 13,115 13,236 (121) 600 Other Objects Food Services 100 Salaries (225) 200 Employee Benefits 196, ,219 23, Security 300 Purchased Services 87,800 71,094 16, Supplies and Materials 1,200 1, Capital Outlay 4,875 4, Central Support Services 263 Information Services 300 Purchased Services 3,327 1,171 2, Supplies and Materials 1, Other Objects Staff Services 100 Salaries 185, ,367 12, Employee Benefits 57,202 54,618 2, Purchased Services 9,920 8,043 1, Supplies and Materials 8,381 7,170 1, Capital Outlay 1,213-1, Technology and Data Processing Services 200 Employee Benefits (352) 300 Purchased Services - 46 (46) 53

66 GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR FISCAL YEAR ENDED JUNE 30, 2013 EXPENDITURES (continued) VARIANCE FAVORABLE BUDGET ACTUAL (UNFAVORABLE) 200 Supporting Services (continued) 270 Supporting Services Pupil Activity 271 Pupil Services Activities 100 Salaries 55,038 73,363 (18,325) 200 Employee Benefits 10,799 14,591 (3,792) 300 Purchased Services 21,000 32,978 (11,978) 600 Other Objects 2,100-2,100 Total Supporting Services $ 7,617,901 $ 7,559,543 $ 58, Debt Service 610 Redemption of Principal $ - $ 40,953 $ (40,953) 620 Interest - 1,595 (1,595) Total Debt Service $ - $ 42,548 $ (42,548) TOTAL EXPENDITURES $ 13,515,229 $ 13,868,721 $ (353,492) Excess Revenues Over (Under) Expenditures $ (992,750) $ (689,333) $ 303,417 OTHER FINANCING SOURCES (USES) Interfund Transfers, From (To) Other Funds 5230 Transfer from Special Revenue EIA Fund $ 588,625 $ 351,998 $ (236,627) 5280 Transfer from Other Funds Indirect Costs 226, , ,237 TOTAL OTHER FINANCING SOURCES (USES) $ 815,340 $ 711,950 $ (103,390) Excess (Deficiency) of Revenues and Expenditures Over Other Financing Source (Uses) $ (177,410) $ 22,617 $ 200,027 FUND BALANCE JULY 1, 2012 (As Restated) 1,398,800 FUND BALANCE JUNE 30, 2013 $ 1,421,417 54

67 SPECIAL PROJECTS FUND COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR FISCAL YEAR ENDED JUNE 30, 2013 REVENUES PRESCHOOL TITLE I IDEA HANDICAPPED (BA Projects) (CA Projects) (CG Projects) (201/202) (203/204) (205/206) 1000 Revenue From Local Sources 1900 Other Revenue From Local Sources 1930 Medicaid $ - $ - $ Receipt of Insurance Proceeds Revenue from Other Local Sources Total Local Sources $ - $ - $ Intergovernmental Revenue 2100 Payments from Other Governmental Units $ - $ - $ Payments from Non-Profit Entities (for First Steps) Total Intergovernmental Revenue $ - $ - $ Revenue From State Sources 3100 Restricted State Funding 3110 Occupational Education Months (Ag.) Program $ - $ - $ EEDA Career Specialist General Education 3127 Student Health and Fitness - PE Teachers Special Programs 3136 Student Health and Fitness - Nurses Miscellaneous Restricted State Grants 3193 Education License Plates Other Restricted State Grants Education Lottery Act Revenue Enhancement K-5 Enhancement Total State Sources $ - $ - $ Revenue From Federal Sources 4200 Occupational Education 4210 Vocational Aid, Title I $ - $ - $ Elementary and Secondary Education Act of 1965 (ESEA) 4310 Title I 1,589, Rural and Low-Income School Program, Title VI School Improvement Grant School Improvement Grant - ARRA 4351 Improving Teacher Quality Teacher Incentive Grant - TAP

68 OTHER OTHER OCCUPATIONAL DRUG DESIGNATED SPECIAL EDUCATION FREE ADULT RESTRICTED REVENUE (VA Projects) (FP/FQ Projects) EDUCATION STATE GRANTS PROGRAMS (207/208) (209/210) (EA Projects) (900s) (200s/800s) TOTAL $ - $ - $ - $ - $ 195,638 $ 195, ,158 31, , ,045 $ - $ - $ - $ - $ 515,841 $ 515,841 $ - $ - $ - $ - $ 322,080 $ 322, ,268-95,268 $ - $ - $ - $ 95,268 $ 322,080 $ 417,348 $ - $ - $ - $ - $ 8,562 $ 8, ,496-81, ,276-17, ,405-94, ,077-1, ,577-9, , ,335 $ - $ - $ - $ 342,166 $ 8,748 $ 350,914 $ 60,964 $ - $ - $ - $ - $ 60, ,729 1,609, ,413 55, ,391 67, , , , , ,410 12,410 56

69 SPECIAL PROJECTS FUND COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR FISCAL YEAR ENDED JUNE 30, 2013 REVENUES (continued) PRESCHOOL TITLE I IDEA HANDICAPPED (BA Projects) (CA Projects) (CG Projects) (201/202) (203/204) (205/206) 4000 Revenue From Federal Sources (continued) 4400 Adult Education 4410 Basic Adult Education $ - $ - $ State Literacy Resource Programs for Children with Disabilities 4510 IDEA - 674, Pre-School Grants , USDA Reimbursement 4810 School Lunch and After School Snacks School Breakfast Program Other Federal Sources 4999 Revenue from Other Federal Sources Total Federal Sources $ 1,589,116 $ 674,819 $ 80,166 TOTAL REVENUE ALL SOURCES $ 1,589,116 $ 674,819 $ 80,166 EXPENDITURES 100 Instruction 110 General Instruction 111 Kindergarten Programs 100 Salaries $ 45,931 $ - $ Employee Benefits 15, Primary Programs 100 Salaries 140, Employee Benefits 41, Purchased Services 11, Supplies and Materials 38, Capital Outlay 37, Elementary Programs 100 Salaries 87, Employee Benefits 28, Purchased Services 245, Supplies and Materials 19, Capital Outlay 81, High School Programs 100 Salaries 197, Employee Benefits 69, Purchased Services

70 OTHER OTHER OCCUPATIONAL DRUG DESIGNATED SPECIAL EDUCATION FREE ADULT RESTRICTED REVENUE (VA Projects) (FP/FQ Projects) EDUCATION STATE GRANTS PROGRAMS (207/208) (209/210) (EA Projects) (900s) (200s/800s) TOTAL $ - $ - $ 54,919 $ - $ - $ 54, , , , , ,337 14, ,914 4, , ,243 $ 60,964 $ - $ 57,908 $ - $ 987,326 $ 3,450,299 $ 60,964 $ - $ 57,908 $ 437,434 $ 1,833,995 $ 4,734,402 $ - $ - $ - $ 14,446 $ 19,107 $ 79, ,344 8,831 34, , , , ,722 78, , ,970 6,233 22, ,094 66, , , , ,491 44, , ,054 35, ,361 90, , , ,203 83,

71 SPECIAL PROJECTS FUND COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR FISCAL YEAR ENDED JUNE 30, 2013 EXPENDITURES (continued) PRESCHOOL TITLE I IDEA HANDICAPPED (BA Projects) (CA Projects) (CG Projects) (201/202) (203/204) (205/206) 100 Instruction (continued) 110 General Instruction (continued) 114 High School Programs (continued) 400 Supplies and Materials $ 7,956 $ - $ Capital Outlay Career and Technology Education Programs 100 Salaries Employee Benefits Purchased Services Capital Outlay Other Objects Exceptional Programs 121 Educable Mentally Handicapped 100 Salaries Employee Benefits Purchased Services Supplies and Materials - 2, Capital Outlay - 14, Trainable Mentally Handicapped 100 Salaries Employee Benefits Purchased Services Supplies and Materials - 4, Capital Outlay - 5, Orthopedically Handicapped 100 Salaries - 12, Employee Benefits - 6, Hearing Handicapped 300 Purchased Services - 19, Speech 100 Salaries - 158, Employee Benefits - 55, Supplies and Materials Learning Disabilities 100 Salaries - 12, Employee Benefits - 4, Purchased Services Supplies and Materials - 5, Capital Outlay - 3,655-59

72 OTHER OTHER OCCUPATIONAL DRUG DESIGNATED SPECIAL EDUCATION FREE ADULT RESTRICTED REVENUE (VA Projects) (FP/FQ Projects) EDUCATION STATE GRANTS PROGRAMS (207/208) (209/210) (EA Projects) (900s) (200s/800s) TOTAL $ - $ - $ - $ - $ 15,380 $ 23, ,664 6,664 20, ,505 26,505 10, ,057 12,129 4, ,003 9, ,171 1, , ,344 1, , , , , , , , , , , , , ,655 60

73 SPECIAL PROJECTS FUND COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR FISCAL YEAR ENDED JUNE 30, 2013 EXPENDITURES (continued) PRESCHOOL TITLE I IDEA HANDICAPPED (BA Projects) (CA Projects) (CG Projects) (201/202) (203/204) (205/206) 100 Instruction (continued) 120 Exceptional Programs (continued) 128 Emotionally Handicapped 100 Salaries $ - $ 10,650 $ Employee Benefits - 6, Supplies and Materials - 4, Capital Outlay - 4, Pre-School Programs 137 Pre-School Handicapped Self-Contained (3 & 4 Yr. Olds) 100 Salaries , Employee Benefits , Supplies and Materials - 1,506 4, Capital Outlay - - 3, Special Programs 149 Other Special Programs 100 Salaries - 7, Employee Benefits - 1, Purchased Services - 1, Other Exceptional Programs 161 Autism 100 Salaries Employee Benefits Summer School Programs 172 Elementary Summer School 100 Salaries 12, Employee Benefits 2, Purchased Services Instructional Programs Beyond Regular School Day 100 Salaries Employee Benefits Supplies and Materials Adult/Continuing Educational Programs 181 Adult Basic Education Programs 100 Salaries Employee Benefits Purchased Services

74 OTHER OTHER OCCUPATIONAL DRUG DESIGNATED SPECIAL EDUCATION FREE ADULT RESTRICTED REVENUE (VA Projects) (FP/FQ Projects) EDUCATION STATE GRANTS PROGRAMS (207/208) (209/210) (EA Projects) (900s) (200s/800s) TOTAL $ - $ - $ - $ - $ - $ 10, , , , , , , , , , , ,889 39, ,131 8, , , ,050 28, , , , ,

75 SPECIAL PROJECTS FUND COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR FISCAL YEAR ENDED JUNE 30, 2013 EXPENDITURES (continued) PRESCHOOL TITLE I IDEA HANDICAPPED (BA Projects) (CA Projects) (CG Projects) (201/202) (203/204) (205/206) 100 Instruction (continued) 180 Adult/Continuing Educational Programs (continued) 181 Adult Basic Education Programs (continued) 400 Supplies and Materials $ - $ - $ Capital Outlay Adult Secondary Education Programs 100 Salaries Employee Benefits Purchased Services Supplies and Materials Capital Outlay Adult English Literacy (ESL) 100 Salaries Employee Benefits Purchased Services Supplies and Materials Capital Outlay Parenting/Family Literacy 100 Salaries 27, Employee Benefits 9, Purchased Services 5, Supplies and Materials 9, Capital Outlay 1, Total Instruction $ 1,139,708 $ 345,321 $ 53, Supporting Services 210 Pupil Services 212 Guidance Services 100 Salaries $ - $ - $ Employee Benefits Health Services 100 Salaries - 8, Employee Benefits - 4, Purchased Services - 7,997 2, Supplies and Materials , Capital Outlay Psychological Services 100 Salaries - 73, Employee Benefits - 23, Purchased Services - 18,343-63

76 OTHER OTHER OCCUPATIONAL DRUG DESIGNATED SPECIAL EDUCATION FREE ADULT RESTRICTED REVENUE (VA Projects) (FP/FQ Projects) EDUCATION STATE GRANTS PROGRAMS (207/208) (209/210) (EA Projects) (900s) (200s/800s) TOTAL $ - $ - $ 6,915 $ - $ 156 $ 7, , , ,965-6,581 17, ,306-1,503 4, , , , , , , ,033 29,957 82, ,540 5,509 17, ,230 8, ,625 14, ,549 $ 44,646 $ - $ 53,946 $ 163,708 $ 807,838 $ 2,608,881 $ - $ - $ - $ 63,404 $ - $ 63, ,092-18, ,715 7,509 86, ,690 4,907 33, , ,611 5, ,830 3, , , ,343 64

77 SPECIAL PROJECTS FUND COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR FISCAL YEAR ENDED JUNE 30, 2013 EXPENDITURES (continued) PRESCHOOL TITLE I IDEA HANDICAPPED (BA Projects) (CA Projects) (CG Projects) (201/202) (203/204) (205/206) 200 Supporting Services (continued) 220 Instructional Staff Services 221 Improvement of Instruction - Curriculum Development 100 Salaries $ 117,083 $ - $ Employee Benefits 39, Supplies and Materials Library and Media 100 Salaries Employee Benefits Purchased Services Supervision of Special Programs 100 Salaries 44,432 21, Employee Benefits 13,744 7, Purchased Services 8,801 11, Supplies and Materials 1,650 7,972 5, Capital Outlay - 12, Other Objects Improvement of Instruction - Inservice Training 100 Salaries 6,150 8,300 2, Employee Benefits 1,417 1, Purchased Services 27,178 12, Supplies and Materials 1,694 9,179 10, Other Objects General Administration Services 233 School Administration 100 Salaries Employee Benefits Purchased Services Supplies and Materials Other Objects Finance and Operations Services 251 Student Transportation 100 Salaries - 46, Employee Benefits - 7, Purchased Services 13, Fiscal Services 500 Capital Outlay

78 OTHER OTHER OCCUPATIONAL DRUG DESIGNATED SPECIAL EDUCATION FREE ADULT RESTRICTED REVENUE (VA Projects) (FP/FQ Projects) EDUCATION STATE GRANTS PROGRAMS (207/208) (209/210) (EA Projects) (900s) (200s/800s) TOTAL $ - $ - $ - $ 7,159 $ 57,624 $ 181, ,632 13,129 53, ,738-1, ,596 12, ,878 2, ,087 9, ,050 66, , ,645 25,875 65, ,400-4,280 25, ,337-2,800 19, , ,057 44,152 62, ,981 14,136 10,619-1,225 5, , , ,278 24, ,385 3, ,398 4, ,205 1, ,659 5, , , ,000 14,251 37, ,366 2,366 66

79 SPECIAL PROJECTS FUND COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR FISCAL YEAR ENDED JUNE 30, 2013 EXPENDITURES (continued) PRESCHOOL TITLE I IDEA HANDICAPPED (BA Projects) (CA Projects) (CG Projects) (201/202) (203/204) (205/206) 200 Supporting (continued) 250 Finance and Operations Services (continued) 254 Operation and Maintenance of Plant 100 Salaries $ - $ - $ Employee Benefits Purchased Services 1, Supplies and Materials 470 Energy Capital Outlay Student Transportation (State Mandated) 300 Purchased Services Supplies and Materials Food Service 100 Salaries Employee Benefits Supplies and Materials Central Support Services 263 Information Services 300 Purchased Services Supplies and Materials Staff Services 100 Salaries Employee Benefits Purchased Services Technology and Data Processing Services 100 Salaries Employee Benefits Purchased Services Supplies and Materials Capital Outlay Support Services - Pupil Activity 271 Pupil Service Activities 300 Purchased Services Pupil Activity 2, Total Supporting Services $ 279,078 $ 284,605 $ 24,193 67

80 OTHER OTHER OCCUPATIONAL DRUG DESIGNATED SPECIAL EDUCATION FREE ADULT RESTRICTED REVENUE (VA Projects) (FP/FQ Projects) EDUCATION STATE GRANTS PROGRAMS (207/208) (209/210) (EA Projects) (900s) (200s/800s) TOTAL $ - $ - $ - $ - $ 1,564 $ 1, ,256 19, ,872 9, ,811 9, ,457 1, ,312 1, ,809 6, ,520 1, ,102 11, ,937 5, ,590 4, ,500 18, ,192 4, ,274 89, ,579 22, , , ,141 2,052 4, ,952 16,952 3, ,800 1, ,248 58,415 $ 16,318 $ - $ 3,962 $ 273,726 $ 916,352 $ 1,798,234 68

81 SPECIAL PROJECTS FUND COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR FISCAL YEAR ENDED JUNE 30, 2013 EXPENDITURES (continued) PRESCHOOL TITLE I IDEA HANDICAPPED (BA Projects) (CA Projects) (CG Projects) (201/202) (203/204) (205/206) 300 Community Services 360 Welfare Services 400 Supplies and Materials $ 5,034 $ - $ Other Community Services 100 Salaries Employee Benefits Supplies and Materials - - $ - Total Community Services $ 5,034 $ - $ Other Charges 410 Intergovernmental Expenditures 411 Payments to South Carolina Department of Education 720 Transits $ - $ - $ - Total Intergovernmental Expenditures $ - $ - $ - TOTAL EXPENDITURES $ 1,423,820 $ 629,926 $ 77,907 Excess Revenues Over (Under) Expenditures $ 165,296 $ 44,893 $ 2,259 OTHER FINANCING SOURCES (USES) Interfund Transfers From (To) Other Funds Special Revenue Fund Indirect Costs $ (165,296) $ (44,893) $ (2,259) TOTAL OTHER FINANCING SOURCES (USES) $ (165,296) $ (44,893) $ (2,259) Excess Revenues and Expenditures Over (Under) Other Financing Sources (Uses) $ - $ - $ - FUND BALANCE JULY 1, FUND BALANCE JUNE 30, 2013 $ - $ - $ - 69

82 OTHER OTHER OCCUPATIONAL DRUG DESIGNATED SPECIAL EDUCATION FREE ADULT RESTRICTED REVENUE (VA Projects) (FP/FQ Projects) EDUCATION STATE GRANTS PROGRAMS (207/208) (209/210) (EA Projects) (900s) (200s/800s) TOTAL $ - $ - $ - $ - $ - $ 5, ,976 1, $ - $ - $ - $ - $ 533 $ 533 $ - $ - $ - $ - $ 2,957 $ 7,991 $ - $ - $ - $ - $ 62,387 $ 62,387 $ - $ - $ - $ - $ 62,387 $ 62,387 $ 60,964 $ - $ 57,908 $ 437,434 $ 1,789,534 $ 4,477,493 $ - $ - $ - $ - $ 44,461 $ 256,909 $ - $ - $ - $ - $ (44,461) $ (256,909) $ - $ - $ - $ - $ (44,461) $ (256,909) $ - $ - $ - $ - $ - $ $ - $ - $ - $ - $ - $ - 70

83 SPECIAL PROJECTS FUND SUMMARY SCHEDULE FOR DESIGNATED STATE RESTRICTED GRANTS FOR FISCAL YEAR ENDED JUNE 30, 2013 SPECIAL PROJECTS INTERFUND OTHER FUND SUBFUND REVENUE TRANSFERS TRANSFERS DEFERRED CODE CODE PROGRAMS REVENUES EXPENDITURES IN/(OUT) IN/(OUT) REVENUE Education License Plates $ 1,077 $ 1,077 $ - $ - $ EEDA Career Specialist 81,496 81, Student Health and Fitness - Nurses 94,405 94, Student Health and Fitness - PE Teachers 17,276 17, K-5 Enhancement 138, , , Enhancement 9,577 9, First Steps Payroll and Fringe 95,268 95, TOTALS $ 437,434 $ 437,434 $ - $ - $ 24,336 71

84 EDUCATION IMPROVEMENT ACT COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - ALL PROGRAMS FOR FISCAL YEAR ENDED JUNE 30, 2013 REVENUES ACTUAL 3000 Revenue from State Sources 3100 Restricted State Funding 3161 EAA Bus Driver Salary and Fringe $ 1, Education Improvement Act 3502 ADEPT 5, Professional Development 16, Formative Assessment 11, Career and Technology Education Equipment 43, National Board Certification (NBC) Salary Supplement 36, Teacher of the Year Awards 1, Students At Risk of School Failure 460, Child Development Education Pilot Program (CDEPP) 348, High Achieving Students 14, Teacher Salary Increase 166, Teacher Salary Supplement State Share 120, School Employer Contributions 65, Adult Education 115, Reading 16, Palmetto Priority Technical Assistance 395, Palmetto Priority Assistance 167, Teacher Supplies 36, High Schools That Work/Making Middle Grades Work 4, Aid to Districts - Special Education 181, Work - Based Learning 10, Aid to Districts 33, Cost Savings Allocations 5,165 Total State Sources $ 2,258,038 TOTAL REVENUE ALL SOURCES $ 2,258,038 EXPENDITURES 100 Instruction 110 General Instruction 112 Primary Programs 100 Salaries $ 61, Employee Benefits 16, Purchased Services 16, Supplies and Materials 62, Capital Outlay 91, Elementary Programs 100 Salaries 119, Employee Benefits 34, Purchased Services 18, Supplies and Materials 28,465 72

85 EDUCATION IMPROVEMENT ACT COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - ALL PROGRAMS FOR FISCAL YEAR ENDED JUNE 30, 2013 EXPENDITURES (continued) ACTUAL 100 Instruction (continued) 110 General Instruction (continued) 114 High School Programs 100 Salaries 159, Employee Benefits 52, Purchased Services 49, Supplies and Materials 11, Capital Outlay 17, Career and Technology Education Programs 100 Salaries 10, Employee Benefits 2, Supplies and Materials 2, Capital Outlay 43, Exceptional Programs 121 Educable Mentally Handicapped 300 Purchased Services 80, Trainable Mentally Handicapped 100 Salaries 23, Employee Benefits 12, Speech Handicapped 400 Supplies and Materials Learning Disabilities 100 Salaries 17, Employee Benefits 11, Pre-School Programs 137 Pre-School Handicapped Self-Contained (3&4 Yr. Olds) 100 Salaries 29, Employee Benefits 6, Special Programs 145 Homebound 100 Salaries 1, Employee Benefits CDEPP 100 Salaries 255, Employee Benefits 92, Gifted and Talented - Artistic 300 Purchased Services 8,700 73

86 EDUCATION IMPROVEMENT ACT COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - ALL PROGRAMS FOR FISCAL YEAR ENDED JUNE 30, 2013 EXPENDITURES (continued) ACTUAL 100 Instruction (continued) 170 Summer School Program 172 Elementary Summer School 100 Salaries 8, Employee Benefits 1, Instructional Programs Beyond Regular School Day 100 Salaries 32, Employee Benefits 7, Purchased Services 2, Supplies and Materials 5, Adult/Continuing Educational Programs 181 Adult Basic Education Programs 100 Salaries 9, Employee Benefits 1, Adult Secondary Education Programs 100 Salaries 4, Employee Benefits Parenting/Family Literacy 300 Purchased Services Supplies and Materials 466 Total Instruction $ 1,412, Supporting Services 210 Pupil Services 212 Guidance Services 100 Salaries 3, Employee Benefits Purchased Services 2, Supplies and Materials 3, Instructional Staff Services 221 Improvement of Instruction - Curriculum Development 100 Salaries 32, Employee Benefits 8, Purchased Services 5, Supplies and Materials 1, Library and Media 400 Supplies and Materials

87 EDUCATION IMPROVEMENT ACT COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - ALL PROGRAMS FOR FISCAL YEAR ENDED JUNE 30, Supporting Services (continued) ACTUAL 220 Instructional Staff Services (continued) 223 Supervision of Special Programs 100 Salaries 76, Employee Benefits 22, Purchased Services Improvement of Instruction - Inservice and Staff Training 100 Salaries 12, Employee Benefits 2, Purchased Services 94, Supplies and Materials 17, General Administration Services 233 School Administration 100 Salaries 73, Employee Benefits 23, Purchased Services 4, Supplies and Materials 9, Finance and Operations Services 251 Student Transportation (Federal/District Mandated) 300 Purchased Services 20, Student Transportation (State Mandated) 300 Purchased Services 6, Supporting Services Pupil Activities 271 Pupil Service Activities 300 Purchased Services 60, Pupil Activity 9,612 Total Supporting Services $ 493,305 TOTAL EXPENDITURES $ 1,906,040 Excess Revenues Over (Under) Expenditures $ 351,998 75

88 EDUCATION IMPROVEMENT ACT COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - ALL PROGRAMS FOR FISCAL YEAR ENDED JUNE 30, 2013 OTHER FINANCING SOURCES (USES) ACTUAL Interfund Transfers From (To) Other Funds Tranfer to General Fund (Excludes Indirect Costs) $ (351,998) TOTAL OTHER FINANCING SOURCES (USES) $ (351,998) Excess Revenues and Expenditures Over (Under) Other Financing Sources (Uses) $ - FUND BALANCE JULY 1, FUND BALANCE JUNE 30, 2013 $ - 76

89 EDUCATION IMPROVEMENT ACT SUMMARY SCHEDULE BY PROGRAM FOR FISCAL YEAR ENDED JUNE 30, 2013 PROGRAM REVENUES 3100 Restricted State Funding 3161 Eaa Bus Driver Salary and Fringe $ 1, Education Improvement Act: 3502 ADEPT 5, Professional Development 16, Formative Assessment 11, Career and Technology Education Equipment 43, Refurbishment of K8 Science Kits National Board Certification (NBC) Salary Supplement 36, Teacher of the Year Awards 1, Students At Risk of School Failure 460, Child Development Education Pilot Program (CDEPP) 348, High Achieving Students 14, Teacher Salary Increase 166, Teacher Salary Supplement State Share 120, School Employer Contributions 65, Adult Education 115, Reading 16, Palmetto Priority Technical Assistance 395, Palmetto Priority Assistance 167, Teacher Supplies 36, High Schools That Work/Making Middle Grades Work 4, Aid to Districts - Special Education 181, Work Based Learning 10, Aid to Districts 33, Cost Savings Allocations 5, Other EIA Revenue - TOTALS $ 2,258,038 77

90 EIA INTERFUND OTHER FUND TRANSFERS TRANSFERS DEFERRED EXPENDITURES IN/(OUT) IN/(OUT) REVENUE $ 1,171 $ - $ - $ - 5, ,809 16, , , ,383 36, , , , , , (166,336) (120,307) (65,355) , ,892 16, , , , , ,000 36, , , , , ,153 33, , ,153 $ 1,906,040 $ (351,998) $ - $ 326,134 78

91 DEBT SERVICE FUND - DISTRICT SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE FOR FISCAL YEAR ENDED JUNE 30, 2013 REVENUES ACTUAL 1000 Revenue From Local Sources 1200 Revenue from Local Governmental Units Other than LEAs 1210 Ad Valorem Taxes - Fiscally Dependent LEA $ 1,497, Penalties and Interest on Taxes 16, Revenue in Lieu of Taxes 67, Earnings on Investments 1510 Interest on Investments 1,437 Total Local Sources $ 1,583, Revenue From State Sources 3800 State Revenue in Lieu of Taxes 3830 Merchant's Inventory Tax $ 10,730 Total State Sources $ 10,730 TOTAL REVENUE ALL SOURCES $ 1,593,776 EXPENDITURES 500 Debt Service 610 Redemption of Principal $ 1,685, Interest 156, Other Objects (Includes Fees for Servicing Bonds) 858 TOTAL EXPENDITURES $ 1,842,513 Excess Revenues Over (Under) Expenditures $ (248,737) FUND BALANCE JULY 1, 2012, AS RESTATED 407,610 FUND BALANCE JUNE 30, 2013 $ 158,873 79

92 DEBT SERVICE FUND - LEE COUNTY SCHOOL FACILITIES, INC SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE FOR FISCAL YEAR ENDED JUNE 30, 2013 REVENUES ACTUAL 1000 Revenue From Local Sources 1500 Earnings on Investments 1510 Interest on Investments $ 13,084 Total Local Sources $ 13, Revenue From State Sources 3800 State Revenue in Lieu of Taxes 3827 $2.5 Million Bonus $ 1,540,160 Total State Sources $ 1,540,160 TOTAL REVENUE ALL SOURCES $ 1,553,244 EXPENDITURES 500 Debt Service 620 Interest $ 1,799, Other Objects (Includes Fees for Servicing Bonds) 2,500 TOTAL EXPENDITURES $ 1,802,355 Excess Revenues Over (Under) Expenditures $ (249,111) FUND BALANCE JULY 1, 2012, AS RESTATED 5,928,765 FUND BALANCE JUNE 30, 2013 $ 5,679,654 80

93 CAPITAL PROJECTS FUND - DISTRICT SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE FOR FISCAL YEAR ENDED JUNE 30, 2013 REVENUES ACTUAL 1000 Revenue From Local Sources 1500 Earnings on Investments 1510 Interest on Investments $ 523 Total Local Sources $ Revenue From State Sources 3500 Education Improvement Act 3590 School Building Funds $ 43, State Revenue in Lieu of Taxes 3827 $2.5 Million Bonus 171,125 Total State Sources $ 215,006 TOTAL REVENUE ALL SOURCES $ 215,529 EXPENDITURES 200 Supporting Services 250 Finance and Operations 253 Facilities Acquisition & Construction 300 Purchased Services $ 20, Capital Outlay 520 Construction Services 4, Equipment 23,506 Total Supporting Services $ 48,706 TOTAL EXPENDITURES $ 48,706 Excess Revenues Over (Under) Expenditures $ 166,823 FUND BALANCE JULY 1, ,358,932 FUND BALANCE JUNE 30, 2013 $ 2,525,755 81

94 CAPITAL PROJECTS FUND - LEE COUNTY SCHOOL FACILITIES, INC SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE FOR FISCAL YEAR ENDED JUNE 30, 2013 REVENUES ACTUAL 1000 Revenue From Local Sources 1500 Earnings on Investments 1510 Interest on Investments $ 2, Other Revenue from Local Sources 1950 Refund of Prior Year's Expenditures 23 Total Local Sources $ 3,017 TOTAL REVENUE ALL SOURCES $ 3,017 EXPENDITURES 500 Debt Service 620 Interest $ 136 TOTAL EXPENDITURES $ 136 Excess Revenues Over (Under) Expenditures $ 2,881 FUND BALANCE JULY 1, ,926,423 FUND BALANCE JUNE 30, 2013 $ 1,929,304 82

95 FOOD SERVICE FUND SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION FOR FISCAL YEAR ENDED JUNE 30, 2013 REVENUES ACTUAL 1000 Revenue From Local Sources 1500 Earnings on Investments 1510 Interest on Investments $ 1, Food Service 1610 Lunch Sales to Pupils 24, Breakfast Sales to Pupils Special Sales to Pupils Lunch Sales to Adults 19, Breakfast Sales to Adults Special Sales to Adults 2, Other Revenue From Local Sources 1990 Revenue from Other Local Sources 1,781 Total Local Sources $ 50, Revenue From State Sources 3100 Restricted State Funding 3140 School Lunch 3142 Program Aid $ 116 Total State Sources $ Revenue From Federal Sources 4800 USDA Reimbursement 4810 School Lunch Program $ 867, School Breakfast Program 350, Other Federal Sources 4991 USDA Commodities 82, Revenue from Other Federal Sources 2,302 Total Federal Sources $ 1,302,968 TOTAL REVENUE ALL SOURCES $ 1,353,285 83

96 FOOD SERVICE FUND SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION FOR FISCAL YEAR ENDED JUNE 30, 2013 EXPENSES ACTUAL 250 Finance and Operations 256 Food Service 100 Salaries $ 416, Employee Benefits 57, Purchased Services 70, Supplies and Materials 721, Capital Outlay 66, Other Objects 5,286 TOTAL EXPENSES $ 1,338,465 OPERATING TRANSFERS IN (OUT) Interfund Transfers, From (To) Other Funds Food Service Indirect Cost $ (103,043) TOTAL OPERATING TRANSFERS IN (OUT) $ (103,043) Change in Net Position $ (88,223) NET POSITION JULY 1, ,850 NET POSITION JUNE 30, 2013 $ 842,627 84

97 PUPIL ACTIVITY FUND SCHEDULE OF RECEIPTS, DISBURSEMENTS, AND CHANGES IN STUDENT/FACULTY GROUPS FOR FISCAL YEAR ENDED JUNE 30, 2013 RECEIPTS ACTUAL 1000 Receipts From Local Sources 1700 Pupil Activities 1710 Admissions $ 48, Pupil Organization Membership Dues and Fees Student Fees 1, Other 180, Other Revenue from Local Sources 1910 Rentals 10, Contributions & Donations Private Sources 4, Revenue from Other Local Sources 5,791 Total Receipts from Local Sources $ 252,031 TOTAL RECEIPTS ALL SOURCES $ 252,031 DISBURSEMENTS 270 Supporting Services Pupil Activity 271 Pupil Service Activities 200 Employee Benefits $ Pupil Activity 100, Enterprise Activities 200 Employee Benefits Pupil Activity 78, Trust and Agency Activities 660 Pupil Activity 80,803 TOTAL DISBURSEMENTS $ 260,563 OTHER FINANCING SOURCES (USES) 5300 Sale of Fixed Assets $ 3,000 TOTAL OTHER FINANCING SOURCES (USES) $ 3,000 EXCESS (DEFICIENCY) OF RECEIPTS OVER DISBURSEMENTS AND OTHER FINANCING SOURCES (USES) $ (5,532) DUE TO STUDENT/FACULTY GROUPS JULY 1, ,290 DUE TO STUDENT/FACULTY GROUPS JUNE 30, 2013 $ 114,758 Note: This schedule is presented as prescribed by the S.C. State Department of Education. 85

98 SUPPLEMENTAL SCHEDULES REQUIRED BY THE S.C. STATE DEPARTMENT OF EDUCATION

99 DETAILED SCHEDULE OF DUE TO STATE DEPARTMENT OF EDUCATION/FEDERAL GOVERNMENT FOR FISCAL YEAR ENDED JUNE 30, 2013 REVENUE & PROJECT/GRANT SUBFUND AMOUNT DUE TO PROGRAM NUMBER CODE DESCRIPTION SDE/FED GOV'T Adult Education 13ED /243 Unexpended Funds $ 200 Refurbishment of Science Kits N/A 3526/326 Unexpended Funds 12,902 Palmetto Priority Technical Assistance N/A 3571/371 Unexpended Funds 6,818 Palmetto Priority Assistance N/A 3572/372 Unexpended Funds 2,916 Teacher Supplies N/A 3577/377 Unexpended Funds 2,060 TOTALS $ 24,896 86

100 LOCATION RECONCILIATION SCHEDULE FOR FISCAL YEAR ENDED JUNE 30, 2013 LOCATION EDUCATION COST TOTAL LOCATION DESCRIPTION LEVEL TYPE EXPENDITURES 01 District Office Non-Schools Central $ 4,035, Mt. Pleasant High Schools School Bishopville Primary Elementary Schools School 3,387, Dennis Intermediate Middle Schools School 54, Lower Lee Primary Elementary Schools School 1,941, West Lee Elementary Elementary Schools School 2,055, Lee Central High School High Schools School 3,888, Lee Central Middle School Middle Schools School 3,577, Fleming Lighthouse Center Other Schools School 2, Adult Education Other Schools School 208, Family Literacy Other Schools School 51, MLD Learning Center Other Schools School 1, Superintendent Board Non-Schools Central 673, Special Programs Non-Schools Central 667, Finance Non-Schools Central 113, Technology Non-Schools Central 230, Maintenance Non-Schools Central 572, Bus Transportation Non-Schools Central 1,185, Food Service Non-Schools Central 91, Instruction Non-Schools Central 1,164, Personnel Non-Schools Central 245, Lee County Academic Other Schools School 285, First Steps Other Schools School 96, Lee County Career Center Other Schools School 1,013,235 TOTAL EXPENDITURES/DISBURSEMENTS FOR ALL FUNDS $ 25,544,992 General Fund (Subfunds 100s) $ 13,868,721 Special Revenue Fund (Subfunds 200s, 800s, 900s) 4,477,493 Special Revenue EIA Fund (Subfunds 300s) 1,906,040 Debt Service Funds (Subfunds 400s) 3,644,868 Capital Projects Fund (School Building) (Subfunds 500s) 48,842 Proprietary Fund (Food Service) (Subfunds 600s) 1,338,465 Trust and Agency Fund (Pupil Activity) (Subfunds 700s) 260,563 TOTAL EXPENDITURES/DISBURSEMENTS FOR ALL FUNDS $ 25,544,992 87

101 SPECIAL PROJECTS FUND SUBFUND CODE LIST FOR FISCAL YEAR ENDED JUNE 30, 2013 OTHER RESTRICTED STATE GRANTS 919 Education License Plates 928 EEDA Career Specialist 936 Student Health and Fitness - Nurses 937 Student Health and Fitness - PE Teachers 960 K-5 Enhancement Enhancement 985 First Steps - Parenting OTHER SPECIAL REVENUE GRANTS 226 School Improvement Grant ARRA 234 School Improvement Grant Discretionary ARRA 237 Title I School Improvement 251 Rural and Low-Income School Progam, Title VI 262 Teacher Incentive Grant - TAP 264 Language Instruction 267 Improving Teacher Quality 274 ROTC 285 SC Gear Up 811 Drop Out Prevention 815 Insurance Proceeds Month Agriculture 817 Save the Children 842 Medicaid Outreach Rural Health 845 Proteam LCMS 847 Adult Education Start Up Funds 850 Palmetto Youth Continuing Adult Education 860 Summer Feeding 864 Family and Community Outreach 865 Martech/Biological Research 879 Medicaid Outreach Rural Helth 893 Profoundly Mentally Handicapped 894 E-Rate 88

102 SINGLE AUDIT SECTION

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104 Robert D. Harper, Jr. CPA Stacey C. Moree CPA P. O. Box Wall Street, Litchfield Pawleys Island, SC Tel (843) Fax (843) H P Robin B. Poston CPA P. O. Box Church Street Georgetown, SC Tel (843) Fax (843) H P INDEPENDENT AUDITOR S 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 To the Board of Trustees Lee County School District Bishopville, South Carolina We have audited, in accordance with the 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, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of Lee County School District as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise the District s basic financial statements and have issued our report thereon dated January 31, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the District s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District s internal control. Accordingly, we do not express an opinion on the effectiveness of the District s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant 89 MEMBERS: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS SOUTH CAROLINA ASSOCIATION OF CERTIFIED PUBLIC ACCOUNTANTS

105 deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the District s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. We noted certain other matters that we reported to management of the District in a separate letter dated January 31, Purpose of the Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Harper, Poston & Moree, P.A. Certified Public Accountants Georgetown, South Carolina January 31,

106 Robert D. Harper, Jr. CPA Stacey C. Moree CPA P. O. Box Wall Street, Litchfield Pawleys Island, SC Tel (843) Fax (843) H P Robin B. Poston CPA P. O. Box Church Street Georgetown, SC Tel (843) Fax (843) H P INDEPENDENT AUDITOR S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 To the Board of Trustees Lee County School District Bishopville, South Carolina Report on Compliance for Each Major Federal Program We have audited Lee County School District s with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the District s major federal programs for the year ended June 30, The District s major federal programs are identified in the summary of auditor s results section of the accompanying schedule of findings and questioned costs. Management s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its federal programs. Auditor s Responsibility Our responsibility is to express an opinion on compliance for each of the District s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the District s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the District s compliance. 91 MEMBERS: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS SOUTH CAROLINA ASSOCIATION OF CERTIFIED PUBLIC ACCOUNTANTS