Financial Audit Presentation Year Ended June 30, 2016 Greene, Finney & Horton, CPAs ANDERSON COUNTY SCHOOL DISTRICT ONE Financial Audit Presentation Year Ended June 30, 2016

HIGHLIGHTS Unmodified opinion 2016 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs HIGHLIGHTS Unmodified opinion General Fund – fund balance increased $2.7M; the District budgeted no increase. Local option sales tax - $6.8M 20% Debt Service - $1.3M 80% Capital Projects - $5.5M

2016 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs OPINION The School District’s responsibility: Effective internal controls Financial statements GF&H responsibility: Opinion-reasonable assurance that financial statements are materially correct Issued unmodified opinion BEST OPINION THE SCHOOL DISTRICT CAN RECEIVE

2016 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs General Fund Total fund balance increased $2.7M to $14.1M Nonspendable fund balance of $197k for prepaids and inventory

2016 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs General Fund Unassigned fund balance is $13.9M, which is 22.5% of 2016 actual expenditures and 21.0% of 2017 budgeted expenditures GFOA recommends a minimum of 16.7% (two months)

2016 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs Major Reasons To Maintain An Adequate Fund Balance: Cash flow through second half of calendar year; property taxes are cyclical Significant emergencies and unanticipated expenditures Flexibility for discretionary funding needs Potential for better interest rates on debt issues (can save the School District money) To cover potential shortfalls from the state (a) due to budget cuts or (b) as a result of the change in legislation (i.e. Act 388) Planned future capital expenditures or significant repairs and maintenance Fast growing area with student enrollment – capital expenditures & increased staffing

2016 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs General Fund Revenues: $62.7M for 2016: $18.0M from property taxes $43.9M from the state gov’t $728k for all other revenues $3.1M (5.2%) increase from 2015 $572k increase in property taxes $2.3M increase in state gov’t $1.6M (2.5%) over budget $964k over budget in state gov’t $303k over budget in property taxes $293k over budget in other revenues GENERAL FUND REVENUES

GENERAL FUND EXPENDITURES 2016 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs General Fund Expenditures: GENERAL FUND EXPENDITURES $61.7M for 2016: $38.6M in instruction $21.3M in support services $1.8M in other expenditures $1.9M (3.3%) increase from 2015 $550k increase in instruction (salaries & benefits) $380k increase in support services (salaries & benefits) $988k increase in capital outlay $1.1M (1.7%) under budget Mainly due to lower budgeted salaries and benefits in support services

2016 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs Debt Service The Debt Service Fund had a $3.5M fund balance; County must collect enough revenue for District to make debt payments; $1.4M in local option sales tax Capital Projects The Capital Projects Fund had a $5.2M fund balance: $137k unspent bond proceeds $5.0M unspent local option sales tax Special Revenues $2.0M of carryover at year end Restricted in how funds can be used Approximately 30 special programs and 21 EIA programs Food Service had a fund balance of $1.8M, increase of $43k

2016 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs District-Wide (GASB #34) Net Position – ($13.4M) $39.4M net investment in capital assets $9.7M restricted ($62.5M) unrestricted Revenues - $92.1M Expenses - $83.6M - $4.8M is non-cash depreciation District-Wide (GASB #34) Assets - $151.5M $116.4M is capital assets $28.3M is cash and investments $6.8M in receivables other assets Deferred Outflows of Resources - $6.7M Deferred pension charges Liabilities - $170.6M $78.0M is long-term debt. Accounts payable and other accrued liabilities of $8.8M Net pension liability - $83.8M Deferred Inflows of Resources - $967k Deferred pension credits

2016 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs GASB 68 and GASB 71: Accounting & Financial Reporting for Pensions– implemented in 2015: As noted last year, the District is required to record its pro-rata portion of the net pension liability associated with the SCRS and PORS pension plans in its government-wide financial statements - Net pension liability (including related deferred inflows / outflows of resources) at 6/30/16 was $78.1M Increase in the net liability of $1.2M for fiscal 2016 Bond rating agencies have already taken the impact of these statements into consideration NO IMPACT on the General Fund or other governmental funds The District will continue to report expenditures in the amount of the contributions as required by the South Carolina Public Employee Benefit Authority Expect the employer and employee rates to continue to increase

2016 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs Other Items of Note: Total capital assets were $116.4M at 6/30/16 – decrease of $2.6M from 6/30/15: Current year additions of $2.2M Equipment and technology $1.1M Building and improvements $701k Land $372k Depreciation in the current year of $4.8M $5.0M of local option sales tax available for capital projects as of June 30, 2016

2016 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs Other Items of Note: Total debt outstanding as of 6/30/16 were $74.7M – decrease of $5.8M from 6/30/15 Principal payments of $5.8M for 2016 Total debt service payments for 2017 on outstanding debt are expected to be $8.1M ($5.5M for principal and $2.7M for interest) The District has $5.0M bonded debt subject to the 8% limit of $15.4M and thus has the capacity to issue $10.4M of additional debt without a referendum

2016 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs Accounting Update: Future Significant Changes in Accounting Principles: Beginning in FY 2017, tax abatement disclosures will be added to the School District’s notes. Beginning in FY 2018, OPEB liabilities associated with the State plan are to be recognized similar to how the pension liability was recognized in the current year.

2016 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs Compliance No findings, significant deficiencies, or material weaknesses were noted. Single Audit was required for 2016 USDA No issues noted Management Letter Required communications to management and those charged with governance – one management letter comment regarding school bookkeepers and the lack of segregation of duties

2016 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs Summary Unmodified opinion on the financial statements from GF&H Strong financial condition as of June 30, 2016