Financial Audit Presentation Year Ended June 30, 2015 Greene, Finney & Horton, CPAs ANDERSON COUNTY SCHOOL DISTRICT ONE Financial Audit Presentation Year Ended June 30, 2015

HIGHLIGHTS Unmodified opinion 2015 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs HIGHLIGHTS Unmodified opinion General Fund – fund balance increased $2.1M; planned decrease was $254k Local option sales tax - $1.9M

2015 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

2015 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs General Fund Total fund balance increased $2.1M to $11.5M Nonspendable fund balance of $1.3M for prepaids and inventory

2015 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs General Fund Unassigned fund balance is $10.1M, which is 16.9% of 2015 actual expenditures and 16.2% of 2016 budgeted expenditures GFOA recommends a minimum of 16.7% (two months)

2015 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 Extremely important given the uncertain economic times

2015 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs General Fund Revenues: $59.6M for 2015: $17.5M from property taxes $41.6M from the state gov’t $481k for all other revenues $3.9M(7.1%) increase from 2014 $977k increase in property taxes $2.9M increase in state gov’t $571k (1.0%) over budget $566k over budget in state $66k over budget in other revenues $62k under budget in property taxes GENERAL FUND REVENUES

GENERAL FUND EXPENDITURES 2015 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs General Fund Expenditures: GENERAL FUND EXPENDITURES $59.8M for 2015: $38.0M in instruction $20.9M in support services $815k in other expenditures $1.8M (3.2%) increase from 2014 $1.6M increase in instruction $855k increase in support services $613k decrease in capital outlay Increase mainly due to increase in salaries and benefits $929k (1.5%) under budget Mainly due to lower salaries and benefits in support services than budgeted

2015 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs Debt Service The Debt Service fund had a $2.4M fund balance; County must collect enough revenue for District to make debt payments; $384k in local option sales tax Capital Projects The Capital Projects fund had a $3.0M fund balance: $1.5M unspent bond proceeds $1.5M unspent local option sales tax Special Revenues $1.4M of carryover at year end Restricted in how funds can be used Approximately 30 special programs and 22 EIA programs Food Service had a fund balance of $1.8M, increase of $54k

2015 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs District-Wide (GASB #34) Assets - $146.8M $119.0M is capital assets $20.1M is cash and investments $7.7M in receivables other assets Deferred Outflows of Resources - $6.7M Deferred Pension Charges Liabilities - $168.9M $83.9M is long-term debt. Accounts payable and other accrued liabilities of $7.9M Net pension liability - $77.1M Deferred Inflows of Resources - $6.5M Deferred Pension Credits District-Wide (GASB #34) Net Position – ($21.9M) $37.5M net investment in capital assets $5.0M restricted ($64.3M) unrestricted Revenues - $84.2M Expenses - $81.5M - $4.9M is non-cash depreciation

2015 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs Other Items of Note: Implemented GASB Statement No. 68, Accounting and Financial Reporting for Pensions – an amendment of GASB Statement No. 27 and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date – an amendment of GASB Statement No. 68 in 2015: School District participates in cost sharing multiple-employer plans – South Carolina Retirement System and South Carolina Police Officers Retirement System. School District was required to record its pro-rata portion of the net pension liability and deferred outflows/inflows of resources associated with these plans in its Statement of Net Position which has significantly decreased the School District’s net position by approximately $76.0M. Net pension liability is approximately $77.1M at June 30, 2015.

2015 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs Other Items of Note: Total capital assets were $119.0M at 6/30/15 – decrease of $3.3M from 6/30/14: Current year additions of $1.5M Depreciation in the current year of $4.9M $1.5M of local option sales tax available for capital projects as of June 30, 2015

2015 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs Other Items of Note: Total long-term obligations outstanding as of 6/30/15 were $83.9M – decrease of $5.7M from 6/30/14 Principal payments of $5.6M for 2015 Total debt service payments for 2016 on outstanding debt is expected to be $8.6M ($5.8M for principal and $2.8 for interest) The District has $6.3M bonded debt subject to the 8% limit of $14.8M and thus has the capacity to issue $8.5M of additional debt without a referendum

2015 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs AUDITING/ACCOUNTING UPDATE: Future Significant Changes in Auditing Principles: None Future Significant Changes in Accounting Principles: 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.

2015 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs Compliance One significant deficiency noted regarding the Debt Service Fund Single Audit was required for 2015 IDEA 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

PROCUREMENT AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs District spent more than $75M in total expenditures a few years ago Triggered the State requirement for a procurement audit Fiscal year 2014 was the first year required to be audited District completed audits for fiscal years 2014 and 2015 during July 2015 Few areas of improvement needed – see procurement audit report Staff was very accommodating during this new audit

2015 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs Summary Unmodified opinion on the financial statements from GF&H Good financial condition as of June 30, 2015