Financial Audit Presentation Year Ended June 30, 2017

2017 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ OPINION The District’s responsibility: Maintain effective internal controls There are limitations on internal controls. Regular risk assessment is important, including assessing the risk of fraud.

2017 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ OPINION The District’s responsibility: Financial Statements Accuracy, completeness, and propriety of balances, amounts, and disclosures

2017 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ GF&H responsibility: Opinion – reasonable assurance that financial statements are materially correct Does not address the financial condition of the Organization Purpose of the audit is not to detect fraud. We cannot take responsibility for finding fraud, if it existed. Issued unmodified opinion – this is the best opinion you can receive

2017 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ General Fund Total fund balance increased $1.7M to $15.9M Nonspendable fund balance of $236k for prepaids and inventory

2017 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ General Fund Unassigned fund balance is $15.6M, which is 23.1% of FY 2017 actual expenditures and 21.9% of FY 2018 budgeted expenditures GFOA recommends a minimum of 16.7% (two months)

2017 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Reasons To Maintain An Adequate Fund Balance: Cash flow for 2nd 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 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) Future capital expenditures or significant repairs & maintenance Fast growing area with increasing student enrollment – capital expenditures & increased staffing The State requires one month reserve (8.3%) to avoid being placed on “Fiscal Watch” or “Fiscal Caution” by the State Dept. of Ed. Under the new Fiscal Practices and Budgetary Conditions policy

2017 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ General Fund Revenues: $67.2M for 2017: $18.9M from property taxes $47.7M from the state gov’t $599k for all other revenues $4.6M (7.3%) increase from 2017 $824k increase in property taxes (increased millage) $3.9M increase in state gov’t revenues $1.2M (1.8%) over budget $898k over budget in state gov’t $260k over budget in property taxes

2017 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ General Fund Expenditures: $67.6M for 2017: $40.9M in instruction $22.7M in support services $4.0M in other expenditures $5.9M (9.5%) increase from 2016 $2.3M increase in instruction (salaries & benefits) $1.4M increase in support services (salaries & benefits) $2.2M increase in capital outlay $370K (0.5%) under budget Mainly due to lower than budgeted salaries and benefits in support services

2017 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Debt Service The Debt Service Fund had a $3.6M fund balance; County must collect enough revenue for District to make debt payments; $1.4M in local option sales tax revenues Capital Projects The Capital Projects Fund had a $5.0M fund balance: $5.0M unspent local option sales tax Outstanding commitments at year-end or subsequently entered into for $1.6M at Wren High School (CIP), $1.6M at Palmetto High School and $1.3M for purchase of Chromebooks Special Revenues $1.7M of carryover at year end Restricted in how funds can be used Approximately 33 special programs and 23 EIA programs Food Service had a fund balance of $2.1M, increase of $216k

2017 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ District-Wide (GASB #34) Assets - $157.2M $118.8M is capital assets $31.4M is cash and investments $7.0M in receivables and other assets Deferred Outflows of Resources - $13.7M Deferred pension charges Liabilities - $174.4M $72.3M is long-term obligations Accounts payable and other accrued liabilities of $10.3M Net pension liability - $91.8M Deferred Inflows of Resources - $2.3M Deferred pension credits District-Wide (GASB #34) Net Position – ($5.8M) $47.4M net investment in capital assets $9.9M restricted ($63.1M) unrestricted Revenues - $97.6M Expenses - $90.0M - $4.6M is non-cash depreciation

2017 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Other Items of Note: Total capital assets were $118.8M at 6/30/17 – increase of $2.4M from 6/30/16: Current year additions of $7.1M Equipment and technology $531K Building and improvements $222k Construction in Progress $6.3M (Concrete Primary School, Powdersville High School, Wren High School) Depreciation in the current year of $4.8M $5.0M of local option sales tax available for capital projects as of June 30, 2017 Outstanding commitments to date total $4.5M

2017 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Other Items of Note: Total debt outstanding as of 6/30/17 were $69.3M – decrease of $5.5M from 6/30/16 Principal payments of $5.5M for 2017 Total debt service payments for 2018 on outstanding debt are expected to be $8.1M ($5.6M for principal and $2.5M for interest) The District has $4.2M bonded debt subject to the 8% limit of $16.1M and thus has the capacity to issue $11.9M of additional debt without a referendum

2017 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Accounting Update: GASB 77 on Tax Abatements was implemented in FY 2017 – property taxes reduced by $3.4M in FY 2017 under tax abatement agreements The GASB issued GASB 75 on Other Post Employment Benefits (retiree health insurance) that will become effective in FY 2018 The School District will have an OPEB liability for its participation in the State Health Plan Based on the latest available information, the District’s liability is estimated to be $74.0M at July 1, 2017 Upon implementation, beginning net position will be reduced by $74.0M

2017 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Compliance No findings or material weaknesses were noted Significant deficiency noted related to proper recording of accrued expenditures / expenses Single Audit was required for 2017 Title I and JROTC No issues noted Management Letter Required communications to management and those charged with governance – management letter comment regarding school bookkeepers and the lack of segregation of duties

2017 FINANCIAL AUDIT Anderson County School District One ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Summary Unmodified opinion on the financial statements from GF&H Strong financial condition as of June 30, 2017