p1cdn4static.sharpschool.comp1cdn4static.sharpschool.com/UserFiles/Servers...BOARD OF EDUCATIONJanet H. Mason, Ed.D. Barry Gold, Chair Sherry Bright, Vice-Chair John Mark Bennett Jackie

RUTHERFORD COUNTY

BOARD OF EDUCATION FOREST CITY, NORTH CAROLINA

Comprehensive Annual Financial Report

For the Fiscal Year Ended June 30, 2015

Prepared by Heidi Kerns, CMA

and the Finance Department

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RUTHERFORD COUNTY BOARD OF EDUCATION

TABLE OF CONTENTS INTRODUCTORY SECTION Page

Letter of Transmittal ......................................................................................................... i Organizational Chart ......................................................................................................... viii ASBO Certificate of Excellence ........................................................................................ ix FINANCIAL SECTION Exhibit Independent Auditors’ Report ................................................................................ 1 Management’s Discussion and Analysis ................................................................ 4 Basic Financial Statements: Government – Wide Financial Statements: 1 Statement of Net Position ............................................................................... 11 2 Statement of Activities .................................................................................... 12 Fund Financial Statements: 3 Balance Sheet – Governmental Funds ............................................................ 13 4 Statement of Revenues, Expenditures, and Changes in Fund Balance – Governmental Funds ..................................................................................... 14 5 Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – General Fund ............................................................... 16 6 Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – State Public School Fund ............................................ 17 7 Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – Federal Grants Fund .................................................... 18 8 Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – Local Special Expense ................................................ 19 9 Statement of Net Position – Proprietary Fund .................................................. 20 10 Statement of Revenues, Expenses, and Changes in Fund Net Position – Proprietary Fund .......................................................................................... 21 11 Statement of Cash Flows – Proprietary Fund .................................................. 22 12 Statement of Fiduciary Net Position – Fiduciary Funds ................................... 24 13 Statement of Changes in Fiduciary Net Position – Fiduciary Funds ................ 25 Notes to the Financial Statements ...................................................................... 26 Required Supplementary Information: Schedule of the Board’s Proportionate Share of the Net Pension Liability ........ 50 Schedule of Board Contributions ...................................................................... 51


TABLE OF CONTENTS Combining and Individual Fund Statements and Schedules: Schedule 1 Schedule of Revenues, Expenditures – Individual School Funds .................... 52 2 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – Capital Outlay Fund ...................................................... 53 3 Schedule of Revenues and Expenditures – Budget and Actual (Non-GAAP) – School Food Service Fund ............................................................................ 54 4 Combining Statement of Fiduciary Net Position – Fiduciary Funds – Private Purpose Trust Funds ......................................................................... 56 5 Combining Statement of Changes in Fiduciary Net Position – Fiduciary Funds – Private Purpose Trust Funds ......................................................................... 57 6 Statement of Changes in Assets and Liabilities – Fiduciary Funds – Agency Fund ................................................................................................. 58 7 Rutherford County Head Start – (A Component Unit of Rutherford County Board of Education) Statement of Activities................................................... 59 8 Rutherford County Head Start – (A Component Unit of Rutherford County Board of Education) Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual .............................................................. 60 STATISTICAL SECTION Table Page Page

1 Net Position by Component .................................................................................. 62 2 Changes in Net Position ........................................................................................ 63 3 Governmental Funds – Fund Balances ................................................................. 65 4 Governmental Funds – Changes in Fund Balances .............................................. 66 5 Assessed Value and Actual Value of Taxable Property.......................................... 67 6 Direct and Overlapping Property Tax Rates .......................................................... 68 7 Principal Property Tax Payers ............................................................................... 69 8 Property Tax Levies and Collections for Rutherford County ................................... 70 9 Capital Expenditures .............................................................................................. 71 10 Ratios of Outstanding Debt by Type ...................................................................... 72 11 Principal Employers .............................................................................................. 73 12 Full-time Equivalent Employees by Function ......................................................... 74 13 School Building Information .................................................................................. 75 14 Operating Statistics ............................................................................................... 77 15 Teacher Salaries .................................................................................................... 78 16 Capital Projects and Expenditures ......................................................................... 79 17 School Food Service Fund Expenses .................................................................... 80 18 School Food Service Revenues and Operating Transfer in by Source ................... 81


TABLE OF CONTENTS COMPLIANCE SECTION Page 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 ............................................................................ 82

Report on Compliance With Requirements Applicable to Each Major Federal Program and Internal Control Over Compliance in Accordance With OMB Circular A-133 and the State Single Audit Implementation Act ............................................ 84

Report on Compliance With Requirements Applicable to Each Major State Program and Internal Control Over Compliance in Accordance With Applicable Sections of OMB Circular A-133 and the State Single Audit Implementation Act ... 86

Schedule of Findings and Questioned Costs ......................................................... 88

Corrective Action Plan ........................................................................................... 91

Summary Schedule of Prior Audit Findings ............................................................ 92

Schedule of Expenditures of Federal and State Awards ........................................ 93


INTRODUCTORY SECTION


BOARD OF EDUCATION Barry Gold, Chair Sherry Bright, Vice-Chair

John Mark Bennett Jackie Hampton

Ritchie Garland Carolyn Keever Brandon Gosey

In compliance with federal law, Rutherford County Schools does not discriminate on the basis of race, sex, religion, color, national or ethnic origin, age, disability, or military service in its policies, programs, activities, admissions, or employment.

Rutherford County Schools Janet H. Mason, Ed.D.

Superintendent

Rutherford County Schools Vision: All Rutherford County students will graduate prepared for college and career success.

382 West Main Street Phone (828) 288-2200

Forest City, NC 28043 Fax (828) 288-2490

January 27, 2016

To the Members of the Rutherford County Board of Education and

Citizens of Rutherford County, North Carolina

In compliance with the Public School Laws of North Carolina, the Comprehensive Annual Financial

Report of the Rutherford County Board of Education (Board) for the fiscal year ended June 30, 2015 is

herewith submitted. This report has been prepared to provide the Board, representatives of financial

institutions, the citizenry, and other interested parties information concerning the financial condition of

the Board. Responsibility for accuracy, completeness, and clarity of the report rests with the

Superintendent and the Finance Officer. The report has been prepared by the Finance Department

following the requirements and guidelines promulgated by the Governmental Accounting Standards

Board. To the best of our knowledge and belief, the enclosed information is accurate in all its material

respects. This data is reported in a manner designed to fairly present the financial and operational results

of the Board as measured by financial activities of its various funds. Disclosures necessary to enable the

reader to gain understanding of such financial operations have been included.

The Comprehensive Annual Financial Report (CAFR) is presented in four sections: Introductory,

Financial, Statistical and Compliance. The Introductory Section includes this transmittal letter, an

organizational chart, including a list of principal officials, and the Certificate of Achievement for

Excellence in Financial Reporting awarded by the Association of School Business Officials for the 2014

Comprehensive Annual Financial Report. The Financial Section includes management’s discussion and

analysis (MD&A) and basic financial statements, as well as the unmodified opinion of independent

certified public accountants on the financial statements. The MD&A provides a narrative introduction,

overview, and analysis of the basic financial statements. This letter of transmittal is designed to

complement the MD&A and should be read in conjunction with it. The Board’s MD&A can be found

immediately following the report of the independent auditors. The Statistical Section includes several

tables of unaudited data providing financial history of the Board as well as demographics and other

informative statistics, generally presented on a multi-year basis. Statistical data for Rutherford County has

been included since the Rutherford County Board of Commissioners provides significant funding to the

School system.

We believe the data presented is accurate in all material respects and that it is presented in a manner

designed to fairly reflect the financial position and results of operations of the Board. All disclosures

necessary to enable the reader to gain the maximum understanding of the Board’s financial activity have

been included.

i

REPORTING ENTITY

The Board is a Local Education Agency empowered by State law [Chapter 115C of the North Carolina

General Statutes (G.S.)] with the responsibility to oversee and control all activities related to public

school education in Rutherford County, North Carolina. The Board consists of seven citizens elected for

staggered terms of four years. The Superintendent serves as secretary to the Board. The Board has no tax

levying authority and borrowing authority is limited by State law [Chapter 115C-528] and is required to

maintain accounting records according to a uniform state format. The Board receives funds from

Rutherford County, the State of North Carolina, the United States government and other agencies and

must comply with the varying legal requirements of each source entity.

North Carolina General Statute 115C-40 empowers the Board with general control and supervision of all

matters pertaining to the schools in the system. During the year, the Board operated eighteen schools and

one center that provided a continuum of service from birth through twelfth grade. These schools include

one preschool, ten elementary schools, three middle schools, one alternative school, three high schools

and one early college high school. The average daily membership for the 2014-2015 year was 8,301

students.

In 1997, the North Carolina General Assembly passed legislation creating charter schools, an alternative

to traditional public schools. The charter school receives a per pupil allocation of local county funds as

defined by the legislation. Although the County funds to the charter school pass through the Board, the

Board has no authority or responsibility related to the charter school and, therefore, it is not a component

unit of the Board.

ACCOUNTING SYSTEM AND BUDGETARY CONTROL

Accounting records of the school system must be maintained in a uniform state format. Monthly reports

of transactions of state and federal funds and details of disbursements from these funds are submitted to

the North Carolina Department of Public Instruction for review. Financial activities throughout the year

are controlled in accordance with the North Carolina School Budget and Fiscal Control Act which

requires a pre-audit procedure to ensure availability of funds prior to the issuance of purchase orders or

payment of claims. We believe that the Board’s internal accounting controls adequately safeguard assets

and provide reasonable assurance of proper recording of financial transactions. The concept of reasonable

assurance recognizes that the cost of a control should not exceed the benefits likely to be derived and the

evaluation of cost and benefits requires estimates and judgments by management. All internal control

evaluations occur within the above framework.

North Carolina General Statutes require all governmental units to adopt a balanced budget by July 1 of

each year. The Board’s annual budget resolution authorizes expenditures by purpose on a modified

accrual basis. For internal management purposes, the budget is allocated by line item within each purpose

or function. The Board also uses a purchase order encumbrance system that records encumbrances

outstanding against each line item of expenditure. Outstanding encumbrances at the end of the fiscal year

related to normal operations are considered to be continuing contracts and are transferred at the end of the

fiscal year to appropriations in future years.

ii

ECONOMIC CONDITION AND OUTLOOK

Rutherford County’s population is estimated to be 67,606, a decrease of .3 percent from the 2010 census.

There are 25,158 in the work force. The goods-producing employment has declined over the last decade,

while the service industry employment has increased. The median age is 43.31 as compared to 38 in 2000

with over 26% of the population 60+ years of age. The fastest growth in any age group in NC is 65 and

older, representing over half of the total population growth.

The County trend in jobs, population and unemployment seems to be following the national trends in

rural America. The top employers are now local government entities and service industries rather than

privately-held manufacturing firms. The manufacturing industries that remain still render some of the top

wages in the County yet service industry wages are more prevalent and also provide top wages in the

area.

Unfortunately, the County has not had immunity from continued unemployment issues brought on by

plant slowdowns and layoffs and slow recovery from the recession. Although people commuted into the

county for employment opportunities, nearly commuted out of the county to find employment.

iii

The state and local unemployment rate saw little change in the past year although underemployment and

exits from the workforce all together have made for some dispute as to the accuracy of the quoted rates.

The current unemployment rate of 5.5% is .1% more than a year ago. Rutherford County saw no change

and remains one of the top twenty highest unemployment rates in the state at 7.4% (counties range 4.1%

to 10.3%). The lowest unemployment over the past five years occurred in November 2007 at 5.6% and

peaked in April 2009 at 16% while the state unemployment rate during this time decreased nearly 1.5%.

The percentage of persons living below the poverty level in the US is about 15.40%, in NC the rate jumps

to 17.50% and Rutherford County continues to be one of the most economically distressed in the NC with

a poverty rate of 21.50%. In response, the Rutherford County Schools qualified for and implemented the

Community Eligibility Provision (CEP) in the Child Nutrition program so all students have a free

breakfast and lunch available to them each day.

The short-term outlook shows slight signs of improvement for the near future; however, there is more

optimism for long-term economic growth. The sprawling 1400 acre, $100 million international

equestrian center, Tryon Resort, located on US 74 held its grand opening in June, 2015. When completed

the facility is expected to draw clients and guests from around the world and will stable hundreds of

horses and feature multiple horse rings, a stadium, a full range of accommodations from luxury resorts to

luxury homes and camping facilities as well as other recreational opportunities, including golf and even

retail and dining space. Since Polk County already has one of the lowest unemployment rates in the state

iv

at 5.0%, Rutherford County citizens should have an excellent opportunity for new jobs and the demand

for area retail, dining, accommodations and other equine-related services should grow significantly. In

conjunction with these investments, County tourism is expected to keep growing. The County tourism

industry continues to expand with over 1,170 people employed. The total revenue of $157.59 million, a

4.7% over last year, Rutherford County ranks in the top third of the state in travel impact out of the 100

counties in NC.

ANNUAL OBJECTIVES

In August, 2014, the Rutherford County Board of Education adopted a new, five-year strategic plan for

the school district. The new strategic plan revises the school district's vision statement to read, "All

Rutherford County students will graduate prepared for college and career success." It revises the school

district's mission statement to read, "Rutherford County Schools will prepare all students for lifelong

learning in a global community by partnering with families and communities, providing rigorous

academic and career preparation experiences, and promoting a safe and nurturing school environment."

Against the backdrop of those updated vision and mission statements, the plan establishes unambiguous

performance targets for the school district. By June 30, 2019, Rutherford County Schools will meet or

exceed regional averages in the following indicators of school and student performance:

• Percentage of students achieving Level III or better performance on North Carolina End-of-Grade

Tests of mathematics, reading, and science

• Percentage of students achieving Level III or better performance on North Carolina End-of-

Course Tests of Math I, English II, and Biology

• Percentage of high school juniors meeting or exceeding college readiness benchmarks on the

ACT

• Percentage of Career-Technical Education completers achieving at least Silver level performance

on ACT WorkKeys assessments

• Percentage of graduates passing higher-level secondary mathematics courses

• Average subtest and total SAT scores

• Annual dropout rate

• Cohort graduation rate (four- and five-year cohort models)

Toward that end, the plan articulates three overarching transformation strategies to guide innovation

throughout the school district:

• Engage every student in rigorous 21st century instruction focused on college and career success.

• Deploy a comprehensive, integrated system of support that is responsive to students’ evolving

social, emotional, and developmental needs.

• Ensure all students’ equitable access to safe, modern educational facilities and appropriate

learning resources.

District leaders facilitate the development, monitoring, and coordination of specific, operational work

plans within each of those three transformational strategies.

v

The Rutherford County Board of Education, in conjunction with the Rutherford County Board of

Commissioners, completed work on a long-range facilities and equipment plan during this school year.

Unfortunately no timeline for action on the plan has been established since budget shortfalls and declining

enrollment continue to be problematic. The Boards have pledged to continue to work collaboratively to

appropriately maintain and enhance public education in Rutherford County.

INDEPENDENT AUDIT

The financial statements have been audited by Anderson, Smith & Wike, PLLC, independent certified

public accountants, whose opinion is included in the Financial and Compliance Sections of this report.

The goal of the independent audit was to obtain reasonable assurance that the financial statements of

Rutherford County Schools for the fiscal year ended June 30, 2015 are free of material misstatement. The

independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an

unmodified opinion that the Rutherford County Schools financial statements for the fiscal year ended

June 30, 2015 are fairly presented in conformity with accounting principles generally accepted in the US.

The independent audit of the financial statements of the Rutherford County Schools was part of a broader,

federally and State mandated “Single Audit” designed to meet the special needs of federal and State

grantor agencies. The standards governing Single Audit engagements require the independent auditor to

report not only on the fair presentation of the financial statements, but also on the audited entity’s internal

controls and legal requirements involving the administration of federal and State awards.

FINANCIAL REPORTING AWARDS

The Association of School Business Officials (ASBO) awards Certificates of Excellence (COE) in

financial reporting. This award is made to governmental units which publish a comprehensive annual

financial report that is readable, efficiently organized, and conforms to program standards, as well as

meets accounting principles generally accepted in the United States of America and applicable legal

requirements. The award is valid for a period of one year only. Rutherford County Schools has received

the COE award for the fiscal years ended 1991 through 2014. We believe the accompanying report

conforms to ASBO requirements and will submit it for award consideration again this year.

The NC Department of Public Instruction recognized Rutherford County Schools for Achievement in

Financial Resource Management this past summer. The award is presented annually to districts that

demonstrate effective cash management and use of state funds, accurate and timely financial reporting

and no salary exceptions and position overdrafts as of fiscal year end. Less than half of NC school

districts attain this accomplishment each year.

The NC Treasurer’s Office invites local government entities to share their ideas for innovation and best

practices in the Award for Excellence in Accounting and Financial Management program. The

submission of Rutherford County Schools was chosen to receive this recognition in 2012.

ACKNOWLEDGMENTS

The preparation of this CAFR could not have been accomplished without the efficient and dedicated

services of the staff district-wide, the Finance Department, and our independent audit firm. We would like

to express our appreciation to all of the employees who contributed to the financial results contained

within this report and all who assisted in its compilation. Special thanks to the Finance Department of

Rutherford County for providing the necessary statistical data.

vi

Lastly and appreciatively, we would like to thank the members of the Rutherford County Board of

Education for their dedication and concern in planning and conducting the business and financial

operations of the school system in such a consistent and responsible manner.

Respectfully submitted,

Janet Mason, Ed.D Heidi Faber Kerns

Superintendent Finance Officer

vii

Dr. Janet Mason, Superintendent Charlie Freeman, Director Career Technical Education

Dr. David Sutton, Assistant Superintendent--Curriculum/Instruction Lisa Blanton, Director Exceptional Children

Benny Hendrix, Director Operations/Technology Renee Collins, Director Secondary Education

Dr. Martha Robinson, Director Human Resources Steven Helton, Director Elementary Education

Heidi Kerns, Finance Officer Janice Baynard, Director Federal Programs and Staff Development

Sybil Houser, Administrative Assistant Brian McClung, Director Transportation

Cindy Hogston, Director Accountability and Research Marty Hopper, Director Maintenance

Justin Conner, NCWISE Lori Moore, Director Child Nutrition

Administrative Personnel

Brandon Gosey

Carolyn Keever

Ritchie Garland

Chief Operations Officer Finance Officer

Board of Education

Superintendent

Assistant Superintendant

Curriculum/InstructionPrincipals

Jackie Hampton

Human Resources Director

Sherry Bright, Vice-Chair

Barry Gold, Chairman


ORGANIZATIONAL CHART

Dr. John Mark Bennett

viii

Association of School Business Officials International

The Certificate of Excellence in Financial Reporting Award

is presented to

Rutherford County Schools

For Its Comprehensive Annual Financial Report (CAFR)

For the Fiscal Year Ended June 30, 2014

The CAFR has been reviewed and met or exceeded

ASBO International’s Certificate of Excellence standards

Mark C. Pepera, MBA, RSBO, SFO John D. Musso, CAE, RSBA

President Executive Director

ix


FINANCIAL SECTION


www.asw-cpa.com

Member • American Institute of Certified Public Accountants • North Carolina Association of Certified Public Accountants

Certified Public Accountants

ANDERSON SMITH & WIKE PLLCA S W

INDEPENDENT AUDITORS’ REPORT

To the Chairman and Members of the Rutherford County Board of Education Forest City, North Carolina Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component unit, each major fund, and the aggregate remaining fund information of the Rutherford County Board of Education, North Carolina, as of and for the year then ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the Rutherford County Board of Education’s basic financial statements 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 the 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. Auditors’ Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to the 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 opinions.

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Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, business-type activities, the aggregate discretely presented component unit, each major fund, and the aggregate remaining fund information of the Rutherford County Board of Education, North Carolina as of June 30, 2015, and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparison for the General, the State Public School, the Federal Grants and the Local Special Expense funds for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information

Accounting principles generally accepted in the United States of America require that Management’s Discussion and Analysis on pages 4 through 10 and the Schedule of the Board’s Proportionate Share of the Net Pension Liability and the Schedule of Board Contributions on pages 50 and 51, respectively, 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 the 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. Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements of Rutherford County Board of Education, North Carolina. The introductory section, combining and individual nonmajor fund financial statements and schedules, budgetary schedules, other schedules and statistical tables, as well as the accompanying schedule of expenditures of federal and State awards as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and the State Single Audit Implementation Act, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund statements and schedules, budgetary schedules, other schedules and the accompanying schedule of expenditures of federal and State 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 combining and individual non-major fund financial statements and schedules, budgetary schedules, other schedules, and the schedule of federal and State awards are fairly stated in all material respects in relation to the financial statements taken as a whole. The introductory section and statistical tables have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them.

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Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 15, 2015 on our consideration of Rutherford County Board of Education’s internal control over financial reporting and our tests of its compliance with certain laws, regulations, contracts, 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 and opinion on the 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 Rutherford County Board of Education’s internal control over financial reporting and compliance.

Gastonia, North Carolina October 15, 2015

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MANAGEMENT'S DISCUSSIONAND ANALYSIS


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RUTHERFORD COUNTY BOARD OF EDUCATION MANAGEMENT’S DISCUSSION AND ANALYSIS June 30, 2015 This section of the Rutherford County Board of Education’s financial report represents our discussion and analysis of the financial performance of the Board for the year ended June 30, 2015. This information should be read in conjunction with the audited financial statements included in this report. Financial Highlights • Rutherford County Schools was awarded the Certificate of Excellence in Financial Reporting

(COE) for the 24th consecutive year. • The NC Department of Public Instruction recognized Rutherford County Schools for Achievement

in Financial Resource Management this summer. The award is presented annually to districts who have effective cash management and use of state funds, accurate and timely financial reporting and no salary exceptions and position overdrafts as of fiscal year end. Less than half of NC school districts attain this accomplishment each year.

• Rutherford County Schools was named an Apple Distinguished Program for 2014-2015. The Going Global initiative has placed laptops in the hands of all middle and high school students and teachers. This investment in technology should help guide the District’s delivery of curriculum and allow our students to be on the cutting edge of technologies going into the 21st Century.

• The Board’s total net position decreased by $16,853,478, or 18.0%. Overview of the Financial Statements The audited financial statements of the Rutherford County Board of Education consist of four components. They are as follows: • Independent Auditors’ Report • Management's Discussion and Analysis (required supplementary information) • Basic Financial Statements • Required supplemental section that presents combining and budgetary statements for non-major

governmental funds and budgetary statements for enterprise funds The Basic Financial Statements include two types of statements that present different views of the Board’s finances. The first is the government-wide statements. The government-wide statements are presented on the full accrual basis of accounting and include the statement of net position and the statement of activities. The statement of net position includes all of the Board’s assets and liabilities. Assets and liabilities are classified in the order of relative liquidity for assets and due date for liabilities. This statement provides a summary of the Board's investment in assets and obligations to creditors. Liquidity and financial flexibility can be evaluated using the information contained in this statement. The Statement of Activities summarizes the Board’s revenues and expenses for the current year. A net (expense) revenue format is used to indicate to what extent each function is self-sufficient. The second set of statements included in the basic financial statements is the Fund Financial Statements, which are presented for the Board’s governmental and proprietary funds. These statements present the governmental funds on the modified accrual basis of accounting, measuring the near term inflows and outflows of financial resources and what is available at year-end to spend in the next fiscal year. The proprietary fund is presented on the full accrual basis of accounting. The fund financial statements focus on the Board’s most significant funds. Because a different basis of accounting is used in the government-wide statements, reconciliation from the governmental fund financial statements to the government-wide statements is required. The government-wide

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RUTHERFORD COUNTY BOARD OF EDUCATION MANAGEMENT’S DISCUSSION AND ANALYSIS June 30, 2015 statements provide information about the Board as an economic unit while the fund financial statements provides information on the financial resources of each of the Board’s major funds. Government-wide Statements The government-wide statements report information about the Board as a whole using accounting methods similar to those used by private-sector companies. The Statement of Net Position includes all of the Board’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 two government-wide statements report the Board’s net position and how they have changed. Net position – the difference between the Board’s assets and liabilities – are one way to measure the unit’s financial health or position.

• Over time, increases or decreases in the Board’s net position are an indicator of whether its financial position is improving or deteriorating.

• To assess the Board’s overall health, you need to consider additional non-financial factors such as changes in the County’s property tax base and the condition of its school buildings and other physical assets.

The unit’s activities are divided into two categories in the government-wide statements:

• Governmental activities: Most of the Board’s basic services are included here, such as regular and special education, transportation, and administration. County funding and state and federal aid finance most of these activities.

• Business-type activities: The Board charges fees to help it cover the costs of certain services it provides. School food service is included here.

The government-wide statements are shown as Exhibits 1 and 2 of this report. Fund Financial Statements The fund financial statements provide more detailed information about the Board’s funds, focusing on its most significant or “major” funds – not the unit as a whole. Funds are accounting devices the Board uses to keep track of specific sources of funding and spending on particular programs.

• Some funds are required by State law, such as the State Public School Fund. • The Board has established other funds to control and manage money for a particular purpose

or to show that it is properly using certain revenues, such as in the Federal Grants fund. Rutherford County Board of Education has three types of funds: Governmental funds: Most of the Board’s basic services are included in the governmental funds, which generally focus on two things – how cash and other assets can readily be converted to cash flow in and out, and the balances left at year-end that are available for spending. As a result of this focus, the governmental funds statements provide a detailed short-term view that helps the reader determine whether there are more or fewer financial resources that can be spent in the coming year to finance the Board’s programs. Because this information does not encompass the additional long-term focus of the government-wide statements, additional information at the bottom of the governmental funds statements, in the form of a reconciliation, explains the relationship (or differences) between the government-wide and the fund financial statements.

Page 6

RUTHERFORD COUNTY BOARD OF EDUCATION MANAGEMENT’S DISCUSSION AND ANALYSIS June 30, 2015 The Board has several governmental funds: the General Fund, the State Public School Fund, the Federal Grants Fund, the Local Special Expense Fund, the Individual Schools Fund, and the Capital Outlay Fund. The governmental fund statements are shown as Exhibits 3, 4, 5, 6, 7 and 8 of this report. Proprietary fund: Services for which the Board charges a fee are generally reported in the proprietary funds. The proprietary fund statements are reported on the same full accrual basis of accounting as the government-wide statements. Rutherford County Board of Education has one proprietary fund – an enterprise fund – the School Food Service Fund. The proprietary fund statements are shown as Exhibits 9, 10, and 11 of this report. Fiduciary funds: Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Rutherford County Board of Education, North Carolina has fifteen private purpose trust funds and one agency fund. The fiduciary funds are shown as Exhibits 12 and 13 of this report. Financial Analysis of the Schools as a Whole Net position is an indicator of the fiscal health of the Board. Assets exceeded liabilities by $78,626,329 as of June 30, 2015. The largest component of net position is investment in capital assets of $90,913,387. It comprises 115% of the total net position. Following is a summary of the Statement of Net Position:

Note that net position decreased during the year. The decrease in net position (18.0%) was due largely to the restatement for the pension liability. Unrestricted net position decreased in the business-type activities primarily because of the restatement for the pension liability. Also note that the Board carries capital assets for which Rutherford County carries the offsetting debt.

6/30/2015 6/30/2014 6/30/2015 6/30/2014 6/30/2015 6/30/2014

Current assets 7,846,764$ 7,762,990$ 274,906$ 351,207$ 8,121,670$ 8,114,197$

Capital assets 92,503,561 97,167,303 205,380 187,794 92,708,941 97,355,097

Total assets 100,350,325 104,930,293 480,286 539,001 100,830,611 105,469,294

Deferred outflows of resources 4,047,579 - 140,563 - 4,188,142 -

Current liabilities 4,690,892 5,422,495 82,926 101,648 4,773,818 5,524,143 Long-term liabilities 6,504,708 4,454,733 131,721 10,611 6,636,429 4,465,344

Total liabilities 11,195,600 9,877,228 214,647 112,259 11,410,247 9,989,487

Deferred inflows of resources 14,479,345 - 502,832 - 14,982,177 - Net investment in capital assets 90,708,007 93,617,322 205,380 187,794 90,913,387 93,805,116 Restricted net position 6,980,158 5,859,679 - - 6,980,158 5,859,679

Unrestricted net position (18,965,206) (4,423,936) (302,010) 238,948 (19,267,216) (4,184,988) Total net position 78,722,959$ 95,053,065$ (96,630)$ 426,742$ 78,626,329$ 95,479,807$

Total Primary GovernmentGovernmental Activities Business-type Activities

Table 1Condensed Statement of Net Position

as of June 30, 2015 and 2014

Page 7

RUTHERFORD COUNTY BOARD OF EDUCATION MANAGEMENT’S DISCUSSION AND ANALYSIS June 30, 2015 Financial Analysis of the Schools as a Whole (Continued) The following table shows the revenues and expenses for the Board for the current fiscal year.

Table 2 Condensed Statement of Revenues, Expenses, and Changes in Net Position

For the year ended June 30, 2015 and 2014 Governmental Activities Business-type Activities Total Primary Government

6/30/2015 6/30/2014 6/30/2015 6/30/2014 6/30/2015 6/30/2014 Revenues: Program revenues: Charges for services $ 531,988 $ 191,171 $ 584,217 $ 1,026,559 $ 1,116,205 $ 1,217,730 Operating grants and contributions 56,155,545 56,671,409 3,892,215 3,904,146 60,082,760 60,575,555 Capital grants and contributions -- -- 63,042 -- 63,042 -- General revenues: Other revenues 20,886,872 18,413,158 -- -- 20,851,872 18,413,158 Total revenues 77,574,405 75,275,738 4,539,474 4,930,705 82,113,879 80,206,443 Expenses: Governmental activities: Instructional programs 58,660,264 58,711,692 -- -- 58,660,264 58,711,692 Supporting services 14,598,257 15,016,671 -- -- 14,598,257 15,016,671 Community services 37,858 30,876 -- -- 37,858 30,876 Non-programmed charges 1,654,775 1,517,460 -- -- 1,654,775 1,517,460 Unallocated depreciation 2,053,779 2,033,752 -- -- 2,053,779 2,033,752 Business-type activities: Food service -- -- 4,522,528 4,851,580 4,522,528 4,851,580 Total expenses 77,004,933 77,310,451 4,522,528 4,851,580 81,527,461 82,162,031 Transfer in (out) (45,000) (57,343) 45,000 57,343 -- -- Increase (decrease) in net position 524,472 (2,092,056) 61,946 136,468 586,418 (1,955,588) Beginning net position, previously reported 95,053,065 97,145,121 426,742 290,274 95,479,807 97,435,395 Beginning net position, restated 78,198,487 -- (158,576) -- 78,039,911 -- Ending net position $ 78,722,959 $ 95,053,065 $ (96,630) $ 426,742 $ 78,626,329 $ 95,479,807

Page 8

RUTHERFORD COUNTY BOARD OF EDUCATION MANAGEMENT’S DISCUSSION AND ANALYSIS June 30, 2015 Financial Analysis of the Board’s Funds Total governmental activities generated revenues of $77.5 million while expenses in this category totaled $77.0 million for the year ended June 30, 2015. Comparatively, revenues were $75.3 million and expenses totaled $77.3 million for the year ended June 30, 2014. After transfers to the business-type activities, the decrease in net position stands at $16.9 million at June 30, 2015, compared to $2.1 million in 2014. Instructional expenses comprised 76% of total governmental-type expenses while supporting services made up 19% of those expenses. County funding comprised 17% of total governmental revenue while unrestricted State funding added another 1% for 2015. In 2014, county funding was 18% and unrestricted State funding added 1%. Much of the remaining 82% of total governmental revenue for 2015 consists of restricted State and federal money. This revenue represented 81% of total revenue in 2014. Business-type activities generated revenue of $4.5 million and had expenses of $4.5 million. Net position decreased in the business-type activities by $523,372, after transfers in from the governmental activities of $45,000. Governmental Funds: The focus of Rutherford County Board of Education’s governmental funds is to provide information on near-term inflows, outflows, and balances of usable resources. Such information is useful in assessing the Board’s financing requirements. The Board’s governmental funds reported a combined fund balance of $7,331,426, a $682,931 increase over last year. All of the Board’s governmental funds had revenues that exceeded expenditures and other financing uses, except for the General and Individual School funds thus the increase in total fund balance. Proprietary Fund: Net position decreased by $523,372, after a transfer in from the governmental activities of $45,000. This was due primarily to the restatement for the pension liability. Categorization of Expenditures for Governmental Funds The expenditures for instructional, supporting, and other services were $58,403,015, $14,446,182, and $4,042,710 for the year ended June 30, 2015, respectively. These expenditures are presented on the modified accrual basis of accounting. General Fund Budgetary Highlights Over the course of the year, the Board revised the general fund expenditures several times to account for changes in actual spending as compared with projections and actual proceeds from other sources of funds. The only positive revenue variance was due to collections of fines and forfeitures in excess of projections. The budget for this line item is conservative since those collections fluctuate each month, dependent upon financial collections through the court system, which are beyond the control of the Board. The final funds from this revenue source are not received until after the close of the school year. The board approves the general fund budget only at the broad categorical level so all spending fell well within the budget. Support services are less predictable than those for instructional services and therefore require more significant budget adjustments throughout the year.

Page 9

RUTHERFORD COUNTY BOARD OF EDUCATION MANAGEMENT’S DISCUSSION AND ANALYSIS June 30, 2015 Capital Assets Capital assets decreased by $4,646,156 (or 5.0%) from the previous year. This was due to depreciation exceeding additions. The following is a summary of the capital assets, net of depreciation at year-end. Additional information regarding the Board’s debt can be found in the notes to the financial statements on page 36 of the report.

Table 3Summary of Capital Assets

as of June 30, 2015 and 2014

Governmental Activities Business-type Activities Total Primary Government

6/30/2015 6/30/2014 6/30/2015 6/30/2014 6/30/2015 6/30/2014

Land 3,543,827$ 3,543,827$ -$ -$ 3,543,827$ 3,543,827$ Building and improvements 84,741,514 87,174,872 - - 84,741,514 87,174,872 Equipment and furniture 2,834,791 4,659,710 205,380 187,794 3,040,171 4,847,504 Vehicles 1,383,429 1,788,894 - - 1,383,429 1,788,894 Construction in process - - - - - - Total 92,503,561$ 97,167,303$ 205,380$ 187,794$ 92,708,941$ 97,355,097$

Debt Outstanding The Board is limited by North Carolina General Statutes with regards to the types of debt it can issue and for what purposes that debt can be used. The County holds virtually all debt issued for school capital construction. The long-term obligations shown on the statement of net position represent the long-term liability for compensated absences and an installment financing agreement. Additional information regarding the Board’s debt can be found in the notes to the financial statements on page 42 of the report. Economic Factors County funding is a major source of income for the Board; therefore the County’s economic outlook directly affects that of the Board of Education. The following factors have affected the economic outlook of Rutherford County:

• Unfortunately, the economy has still not completely rebounded in North Carolina or especially Rutherford County. Recovery has been slow and in addition to the tax reform passed in 2013, additional revenue limiting legislation is being proposed in the 2015 biennial budget. Teacher and school administrator salaries are expected to increase but most other employees may only see a modest one-time bonus. Locally there has been some retail growth attributed to development of the Tryon Equestrian Center which was dedicated last fall. This multi-million dollar facility opened on the border of Rutherford and Polk counties and is expanding tourism in our area which is hoped to bring additional investment and positive exposure to the community. Facebook also announced construction of a third building in their data center here which will represent an investment of over $200 million and bring over 100 jobs to the County.

Page 10

RUTHERFORD COUNTY BOARD OF EDUCATION MANAGEMENT’S DISCUSSION AND ANALYSIS June 30, 2015 Economic Factors (Continued) The Board's budget decisions are complicated due to continued shrinking enrollment and competition from charter schools which decreases available funding. Rutherford County has one of the top ten highest concentrations of charter school students in the state. County funding is a major source of revenue, so the economic outlook for the County is critical to the financial planning of the school district. The state unemployment rate started ticking back up this spring and is currently 5.8%, after hitting a low of 5.3%, so it has hovered around the national average. Rutherford County's unemployment rate improved but is still well over the state and national average at 8.4% and is one of the top 15 in NC. Reports indicate that although these statistics do point toward an improving economy, the shrinking work force and underemployment of many workers has to be taken into consideration as well. Due to the high poverty in our district, the decision was made to continue the Community Eligibility Program (CEP) in child nutrition for a second year even though first year financial results and participation were disappointing. This program allows all of our students to eat a healthy breakfast and lunch each day for free. Multiple grants have been received and different meal delivery patterns and changes to the menu are being tested in an attempt to improve results. Studies confirm that good nutrition positively impacts the lives and academic performance of our children so we are making every effort to make the program successful. Rutherford County Schools and the Rutherford County government worked on long-range capital plans last year but have not yet identified funding sources to move forward. Total funding from all sources has still not rebounded to pre-recession levels. Requests for Information This report is intended to provide a summary of the financial condition of Rutherford County Board of Education, North Carolina. Questions or requests for additional information should be addressed to:

Heidi Kerns, CMA, Finance Officer Rutherford County Board of Education

382 West Main Street Forest City, North Carolina 28043


BASIC FINANCIAL STATEMENTS


June 30, 2015Exhibit 1

Governmental Activities

Business-type Activities Total

Rutherford County Head

StartASSETSCash and cash equivalents 7,123,865$ 43,333$ 7,167,198$ -$ Due from other governments 411,480 - 411,480 - Receivables (net) 311,419 163,472 474,891 111,460 Internal balances - - - - Inventories - 68,101 68,101 - Capital assets

Land and construction in progress 3,543,827 - 3,543,827 - Other capital assets, net of depreciation 88,959,734 205,380 89,165,114 -

Total capital assets 92,503,561 205,380 92,708,941 -

Total assets 100,350,325 480,286 100,830,611 111,460

DEFERRED OUTFLOWS OF RESCOURCES 4,047,579 140,563 4,188,142 -

LIABILITIESAccounts payable and accrued expenses 444,979 - 444,979 104,260 Accrued salaries and wages payable - - - - Unearned revenue 70,359 12,323 82,682 7,200 Long-term liabilities:

Net pension liabiity 3,792,954 131,721 3,924,675 Due within one year 4,175,554 70,603 4,246,157 - Due in more than one year 2,711,754 - 2,711,754 -

Total liabilities 11,195,600 214,647 11,410,247 111,460

DEFERRED INFLOWS OF RESCOURCES 14,479,345 502,832 14,982,177 -

NET POSITIONNet investment in capital assets 90,708,007 205,380 90,913,387 - Restricted for:

Stabilization by State Statue 112,250 - 112,250 - School Capital Outlay 528,290 - 528,290 - Individual School Funds 735,398 - 735,398 - Local Special Expense 5,604,220 - 5,604,220 -

Unrestricted (18,965,206) (302,010) (19,267,216) - Total net position 78,722,959$ (96,630)$ 78,626,329$ -$

The accompanying notes are an integral part of the financial statements. Page 11

RUTHERFORD COUNTY BOARD OF EDUCATIONSTATEMENT OF NET POSITION

Primary GovernmentComponent

Unit

STATEMENT OF ACTIVITIESFor the Year Ended June 30, 2015

Exhibit 2

Functions/Programs ExpensesCharges for

Services

Operating Grants and

Contributions

Capital Grants and

ContributionsPrimary government:Governmental Activities:

Instructional services:Regular instructional 32,201,869$ 531,988$ 28,475,562$ -$ Special populations 7,583,046 - 7,425,798 - Alternative programs 5,752,869 - 5,719,833 - School leadership 4,073,547 - 2,387,565 - Co-curricular 3,005,722 - 46,724 - School-based support 6,043,211 - 4,206,088 -

System-wide support services:Support and development 548,477 - 250,549 - Special populations support and development 125,012 - 73,747 - Alternative programs and services support and development 179,601 - 177,657 - Technology support 1,024,394 - 890,702 - Operational support 10,532,364 - 5,557,497 - Financial and human resource 1,032,872 - 519,503 - Accountability 136,780 - - - System-wide pupil support 328,509 - 91,938 - Policy, leadership and public relations 690,248 - 141,094 -

Ancillary Services 37,858 - 20,074 - Non-programmed charges 1,554,255 - 171,214 - Interest on long-term debt 100,520 - - - Unallocated depreciation expense** 2,053,779 - - -

Total governmental activities 77,004,933 531,988 56,155,545 -

Business-type activities:School food service 4,888,477 584,217 4,258,164 63,042

Total business-type activities 4,888,477 584,217 4,258,164 63,042

Total primary government 81,893,410$ 1,116,205$ 60,413,709$ 63,042$

Component Unit:Head Start 2,316,066$ -$ 2,316,066$ -$

General revenues:Unrestricted county appropriations - operatingUnrestricted county appropriations - capitalUnrestricted State appropriations - operatingUnrestricted State appropriations - capitalUnrestricted federal appropriations - operatingInvestment earnings, unrestrictedMiscellaneous, unrestricted

TransfersTotal general revenues and transfersChange in net position

Net position-beginning previously reportedRestatementNet position-beginning restatedNet position-ending

** This amount excludes the depreciation that is included in the direct expenses of the various programs



Program Revenues

Component Unit

Governmental Activities

Business-type Activities Total

Rutherford County Head

Start

(3,194,319)$ -$ (3,194,319)$ -$ (157,248) - (157,248) - (33,036) - (33,036) -

(1,685,982) - (1,685,982) - (2,958,998) - (2,958,998) - (1,837,123) - (1,837,123) -

(297,928) - (297,928) - (51,265) - (51,265) -

(1,944) - (1,944) - (133,692) - (133,692) -

(4,974,867) - (4,974,867) - (513,369) - (513,369) - (136,780) - (136,780) - (236,571) - (236,571) - (549,154) - (549,154) - (17,784) - (17,784) -

(1,383,041) - (1,383,041) - (100,520) - (100,520) -

(2,053,779) - (2,053,779) -

(20,317,400) - (20,317,400) -

- 16,946 16,946 - - 16,946 16,946 -

(20,317,400) 16,946 (20,300,454) -

-$

12,669,713 - 12,669,713 - - - - - - - - - - - - - - - - - - - - -

8,217,159 - 8,217,159 - (45,000) 45,000 - -

20,841,872 45,000 20,886,872 - 524,472 61,946 586,418 -

95,053,065 426,742 95,479,807 - (16,854,578) (585,318) (17,439,896) 78,198,487 (158,576) 78,039,911 78,722,959$ (96,630)$ 78,626,329$ -$

Primary GovernmentNet (Expense) Revenue and Changes in Net Position


FUND FINANCIAL STATEMENTS

June 30, 2015Exhibit 3

GeneralState Public

SchoolFederal Grants

FundLocal Special

ExpenseASSETSCash and cash equivalents 788,620$ -$ -$ 5,423,658$ Receivables (net) 38,221 - - 271,218 Due from other funds 60,000 - - - Due from other governments - - - -

Total assets 886,841$ -$ -$ 5,694,876$

LIABILITIES AND FUND BALANCESLiabilities:

Accounts payable and accrued liabilities 423,323$ -$ -$ 21,656$ Due to other funds - - - 60,000 Accrued salaries and wages payable - - - - Unearned revenue - - - 9,000

Total liabilities 423,323 - - 90,656

Fund balances:Restricted:

Stabilization by State Statue 112,250 - - - School Capital Outlay - - - - Individual School Funds - - - - Local Special Expense - - - 5,604,220

Assigned:Subsequent year's expenditures 300,000 - - - County debt - - - -

Unassigned: 51,268 - - -

Total fund balances 463,518 - - 5,604,220

Total liabilities and fund balances 886,841$ -$ -$ 5,694,876$

Deferred outflows of resources related to pensions

Net position of governmental activities


Net pension liabilityDeferred inflows of resources related to pensions

Some liabilities, including bonds payable and accrued interest, are not dueand payable in the current period and therefore are not reported in thefunds.

RUTHERFORD COUNTY BOARD OF EDUCATIONBALANCE SHEET - GOVERNMENTAL FUNDS

Amounts reported for governmental activities in the statement of netposition (Exhibit 1) are different because:Capital assets used in governmental activities are not financial resourcesand therefore are not reported in the funds.

Major Funds

Individual Schools Capital Outlay

Total Governmental

Funds

735,398$ 176,189$ 7,123,865$ - 1,980 311,419 - - 60,000 - 411,480 411,480

735,398$ 589,649$ 7,906,764$

-$ -$ 444,979$ - - 60,000 - - - - 61,359 70,359 - 61,359 575,338

- - 112,250 - 528,290 528,290

735,398 - 735,398 - - 5,604,220

- - 300,000 - - - - - 51,268

735,398 528,290 7,331,426

735,398$ 589,649$

92,503,561 4,047,579

(6,887,308) (3,792,954)

(14,479,345)

78,722,959$

Non-major Funds

For the Year Ended June 30, 2015 , Exhibit 4

Major Funds

GeneralState Public

SchoolFederal Grants

FundLocal Special

ExpenseREVENUESState of North Carolina -$ 50,989,465$ -$ 1,561,293$ Rutherford County 12,669,713 - - - U.S. Government - - 6,422,144 151,692 Other 222,076 - - 2,361,504

Total revenues 12,891,789 50,989,465 6,422,144 4,074,489

EXPENDITURESCurrent:

Instructional services:Regular instructional 1,188,775 28,997,561 443,497 464,445 Special populations 169,674 5,819,156 1,876,338 372 Alternative programs 41,517 1,018,759 3,354,369 1,531,032 School leadership 1,694,278 2,407,287 79,105 81,480 Co-curricular 400,728 - - 78,471 School-based support 1,843,863 3,711,107 181,156 460,314

System-wide support services: - Support and development 299,480 69,498 75,032 139,741 Special populations support and 53,213 101,007 15,084 - Alternative programs and services support and development 2,607 - 164,147 27,916 Technology support 134,313 827,048 - 77,145 Operational support 4,492,757 5,596,751 30,826 84,882 Financial and human resource 514,830 533,411 17,598 240 Accountability 5,761 135,020 - - System-wide pupil support 239,042 70,678 - 21,260 Policy, leadership and public relations 550,326 166,569 - -

Ancillary Services 17,935 - 13,778 9,583 Non-programmed charges 1,383,041 - 171,214 -

Debt service:Principal payments 306,007 1,408,040 - - Interest and other charges 17,947 82,573 - -

Capital outlay:Real property and buildings - - - - Furniture and equipment - - - - Buses and motor vehicles - - - -

Total expenditures 13,356,094 50,944,465 6,422,144 2,976,881

Revenues over expenditures (464,305) 45,000 - 1,097,608

OTHER FINANCING SOURCES (USES)Installment purchase obligations issued - - - - Transfers from other funds - (45,000) - -

Total other financing sources (uses) - (45,000) - - Net change in fund balance (464,305) - - 1,097,608

Fund balances-beginning 927,823 - - 4,506,612 Fund balances-ending 463,518$ -$ -$ 5,604,220$


RUTHERFORD COUNTY BOARD OF EDUCATIONSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - GOVERNMENTAL FUNDS

Individual Schools Capital Outlay

Total Governmental

Funds

-$ 40,380$ 52,591,138$ - 626,709 13,296,422 - - 6,573,836

2,540,644 34,218 5,158,442 2,540,644 701,307 77,619,838

- - 31,094,278 - - 7,865,540 - - 5,945,677 - - 4,262,150

2,559,731 - 3,038,930 - - 6,196,440

- - - 583,751 - - 169,304

- - 194,670 - - 1,038,506 - - 10,205,216 - - 1,066,079 - - 140,781 - - 330,980 - - 716,895 - - 41,296 - - 1,554,255

- - 40,380 1,754,427 - - 100,520

- - 33,475 33,475 - 474,965 474,965 - 83,772 83,772

2,559,731 632,592 76,891,907

(19,087) 68,715 727,931

- - - - - (45,000) - - (45,000)

(19,087) 68,715 682,931 754,485 459,575 6,648,495 735,398$ 528,290$ 7,331,426$

Non-major Funds

For the Year Ended June 30, 2015 Exhibit 4

(Continued)

Net changes in fund balances - total governmental funds 682,931$

(4,618,309)

4,047,579

1,754,427

(1,417,721)(45,433)

Compensated absences 120,998

Total changes in net position of governmental activities 524,472$


Remaining net book value on disposed capital assets

Some expenses reported in the statement of activities do not require the useof current financial resources and, therefore, are not reported asexpenditures in governmental funds.

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - GOVERNMENTAL FUNDS


Amounts reported for governmental activities in the statement of activities are differentbecause:

Governmental funds report capital outlays as expenditures. However, in theStatement of Activities the cost of those assets is allocated over theirestimated useful lives and reported as depreciation expense. This is theamount by which depreciation exceeded capital outlays in the currentperiod.

The issuance of long-term debt provides current financial resources togovernmental funds, while the repayment of the principal of long-term debtconsumes the current financial resources of governmental funds. Neithertransaction has any effect on net position. Also, governmental funds reportthe effect of issuance costs, premiums, discounts and similar items whendebt is first issued, whereas these amounts are deferred and amortized inthe statement of activities. This amount is the net effect of these differencesin the treatment of long-term debt and related items.

Contribution to the pension plan in the current fiscal year are not included onthe Statement of Activities

Pension liability

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE -

For the Year Ended June 30, 2015Exhibit 5

Original Final Actual Amounts

Variance with Final Budget -

Positive (Negative)

Revenues:State of North Carolina -$ -$ -$ -$ Rutherford County 12,669,713 12,669,713 12,669,713 - U.S. Government - - - - Other 210,000 210,000 222,076 12,076 Total revenues 12,879,713 12,879,713 12,891,789 12,076

Expenditures:Current:Instructional sevices:

Regular 1,628,520 1,584,246 1,188,775 395,471 Special populations - 40,000 169,674 (129,674) Alternative programs - - 41,517 (41,517) School leadership 2,191,944 1,931,764 1,694,278 237,486 Co-curricular 404,000 389,500 400,728 (11,228) School-based support 1,147,793 1,554,113 1,843,863 (289,750)

Support services:Support and development 1,335,589 998,500 299,480 699,020 Special population support and development - - 53,213 (53,213) Alternative programs and services support and development - - 2,607 (2,607) Technology support - 122,000 134,313 (12,313) Operational support 4,931,867 4,443,820 4,492,757 (48,937) Financial and human resource 600,000 514,416 514,830 (414) Accountability - - 5,761 (5,761) System-wide pupil support - 64,200 239,042 (174,842) Policy, leadership, and public relations - 255,200 550,326 (295,126)

Ancillary services - 18,000 17,935 65 Non-programmed charges 1,390,000 1,390,000 1,383,041 6,959

Debt service:Principal payments - 306,007 306,007 - Interest payments - 17,947 17,947 -

Total expenditures 13,629,713 13,629,713 13,356,094 273,619

Revenues over (under) expenditures (750,000) (750,000) (464,305) 285,695

Other financing uses:Capital lease obligation issued - - - - Transfers from other funds - - - -

(750,000) (750,000) (464,305) 285,695

Appropriated fund balance 750,000 - - -

Revenue and appropriated fund balance over expenditures and other uses -$ (750,000)$ (464,305) 285,695$

Fund balances, beginning of year 927,823 Fund balances, end of year 463,518$


Revenues over (under) expenditures and other uses


General Fund

BUDGET AND ACTUAL - GENERAL FUND


For the Year Ended June 30, 2015

Exhibit 6

State Public School Fund



Positive (Negative)

Revenues:State of North Carolina 50,932,223$ 51,514,009$ 50,989,465$ (524,544)$ Rutherford County - - - - U.S. Government - - - - Other - - - -

Total revenues 50,932,223 51,514,009 50,989,465 (524,544)

Expenditures:Current:

Instructional sevices:Regular 32,224,429 30,616,413 28,997,561 1,618,852 Special populations 5,234,927 5,273,032 5,819,156 (546,124) Alternative programs 1,178,226 1,133,703 1,018,759 114,944 School leadership 2,122,417 2,128,238 2,407,287 (279,049) Co-curricular - - - - School-based support 3,105,151 3,205,108 3,711,107 (505,999)

Support services:Support and development 23,061 25,973 69,498 (43,525) Special population support and development 900 900 101,007 (100,107) Alternative programs and services support and development - - - - Technology support 876,224 915,920 827,048 88,872 Operational support 5,240,144 5,751,168 5,596,751 154,417 Financial and human resource 852,373 892,373 533,411 358,962 Accountability - 5,091 135,020 (129,929) System-wide pupil support - - 70,678 (70,678) Policy, leadership, and public relations - - 166,569 (166,569)

Ancillary services - - - - Non-programmed charges - - - -

Debt service:Principal payments - 1,408,040 1,408,040 - Interest payments - 82,573 82,573 -

Total expenditures 50,857,852 51,438,532 50,944,465 494,067

Revenues over (under) expenditures - 75,477 45,000 (30,477)

Other financing uses:Capital lease obligation issued - - - - Transfers from other funds - (75,477) (45,000) 30,477

Total other financing uses - (75,477) (45,000) 30,477

- - - -

Appropriated fund balance - - - -

Revenue and appropriated fund balance over expenditures and other uses -$ -$ - -$

Fund balances, beginning of year - Increase in reserve for inventories - Fund balances, end of year -$



BUDGET AND ACTUAL - STATE PUBLIC SCHOOL FUND




Exhibit 7



Positive (Negative)

Revenues:State of North Carolina -$ -$ -$ -$ Rutherford County - - - - U.S. Government - 8,160,632 6,422,144 1,738,488 Other 6,289,671 - - -

Total revenues 6,289,671 8,160,632 6,422,144 1,738,488


Instructional sevices:Regular 453,291 562,373 443,497 118,876 Special populations 1,889,141 2,667,782 1,876,338 791,444 Alternative programs 3,059,879 3,514,308 3,354,369 159,939 School leadership - 79,490 79,105 385 Co-curricular - - - - School-based support 56,578 179,600 181,156 (1,556)

Support services: - Support and development 186,088 78,701 75,032 3,669 Special population support and development - 55,411 15,084 40,327 Alternative programs and services support and development 179,880 200,460 164,147 36,313 Technology support - 210,128 - 210,128 Operational support 18,616 57,500 30,826 26,674 Financial and human resource 10,315 11,426 17,598 (6,172) Accountability - - - - System-wide pupil support - - - - Policy, leadership, and public relations - - - -

Ancillary services - 13,778 13,778 - Non-programmed charges 435,883 529,675 171,214 358,461

Debt service:Principal paymentsInterest payments


Revenues over (under) expenditures - - - -

Other financing uses:Capital lease obligation issuedTransfers from other funds - - - -

Total other financing uses

- - - -

Appropriated fund balance - - - -

Revenue and appropriated fund balance over expenditures and other uses -$ -$ - -$

Fund balances, beginning of year - Increase in reserve for inventoriesFund balances, end of year -$



BUDGET AND ACTUAL - FEDERAL GRANTS FUND

Federal Grants Fund




Exhibit 8



Positive (Negative)

Revenues:State of North Carolina 2,004,676$ 2,073,554$ 1,561,293$ 512,261$ Rutherford County - - - - U.S. Government 580,000 216,500 151,692 64,808 Other 779,246 2,589,402 2,361,504 227,898

Total revenues 3,363,922 4,879,456 4,074,489 804,967


Instructional sevices:Regular 822,346 1,426,346 464,445 961,901 Special populations - - 372 (372) Alternative programs 1,631,303 1,814,698 1,531,032 283,666 School leadership 121,000 121,000 81,480 39,520 Co-curricular 110,000 110,000 78,471 31,529 School-based support 524,681 861,140 460,314 400,826

Support services: - Support and development 150,000 157,300 139,741 17,559 Special population support and development - - - - Alternative programs and services support and development 28,775 27,916 27,916 - Technology support - 75,000 77,145 (2,145) Operational support 296,230 591,546 84,882 506,664 Financial and human resource - 200 240 (40) Accountability - - - - System-wide pupil support - - 21,260 (21,260) Policy, leadership, and public relations - - - -

Ancillary services 6,777 11,500 9,583 1,917 Non-programmed charges 274,051 284,051 - 284,051

Debt service:Principal payments - - - - Interest payments - - - -


Revenues over (under) expenditures (601,241) (601,241) 1,097,608 1,698,849

Other financing uses:Capital lease obligation issuedTransfers from other funds - - - -

Total other financing uses

(601,241) (601,241) 1,097,608 1,698,849

Appropriated fund balance 601,241 601,241 - (601,241)

Revenue and appropriated fund balance over expenditures and other uses -$ -$ 1,097,608 1,097,608$

Fund balances, beginning of year 4,506,612 Increase in reserve for inventoriesFund balances, end of year 5,604,220$




BUDGET AND ACTUAL - LOCAL SPECIAL EXPENSE

Local Special Expense

June 30, 2015 , Exhibit 9

Major FundSchool Food

ServiceASSETSCurrent assets:

Cash and cash equivalents 43,333$ Receivables (net) 163,472 Inventories 68,101

Total current assets 274,906

Noncurrent assets:Capital assets, net 205,380

Total assets 480,286

DEFERRED OUTFLOWS OF RESOURCES 140,563

LIABILITIESCurrent liabilities:

Accounts payable and accrued expenses - Compensated Absences 70,603 Due to other funds - Unearned revenue 12,323

Total current liabilities 82,926

Noncurrent liabilities:Pension liability 131,721 Compensated absences -

Total noncurrent liabilities 131,721

Total liabilities 214,647

DEFERRED INFLOWS OF RESOURCES 502,832

NET POSITIONNet Investment in capital assets 205,380 Unrestricted (302,010)

Total net position (96,630)$


STATEMENT OF NET POSITION - PROPRIETARY FUNDSRUTHERFORD COUNTY BOARD OF EDUCATION



ServiceOPERATING REVENUESFood sales 584,217$

Total operating revenues 584,217

OPERATING EXPENSES

Food costs 1,819,020 Salaries and benefits 2,430,640 Pension expense 49,235 Indirect costs 365,949 Travel 15,883 Contracted services 1,078 Materials and supplies 136,593 Repairs and maintenance 15,708 Depreciation 45,456 Other 8,915 Total operating expenses 4,888,477

Operating loss (4,304,260)

NONOPERATING REVENUES Federal reimbursements 3,622,588 Federal commodities 269,627 Indirect costs not paid 365,949 Miscellaneous -

Total nonoperating revenues 4,258,164

Income (loss) before transfers (46,096)

Transfers from other funds 45,000 Capital contributions 63,042

Change in net position 61,946

Total net position - beginning 426,742 Restatement (585,318) Total net position - beginning, restated (158,576)

Total net position - ending (96,630)$


STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION - PROPRIETARY FUNDS




ServiceCASH FLOWS FROM OPERATING ACTIVITIES

Cash received from customers 557,385$ Cash paid for goods and services (1,689,719) Cash paid to employees for services (2,583,211) Other operating revenues -

Net cash used by operating activities (3,715,545)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES

Federal reimbursements 3,622,588 Miscellaneous - Decrease in due to other funds -

Net cash provided by noncapital financing activities 3,622,588

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES

Acquisition of capital assets -

Net decrease in cash and cash equivalents (92,957)

Balances-beginning of the year 136,290

Balances-end of the year 43,333$


RUTHERFORD COUNTY BOARD OF EDUCATIONSTATEMENT OF CASH FLOWS - PROPRIETARY FUNDS

For the Year Ended June 30, 2015 Exhibit 11

(Continued)


Service

Reconciliation of operating loss to net cash used by operating activities

Operating loss (4,304,260)$ Adjustments to reconcile operating loss to net cash used by operating activities:

Depreciation 45,456 Pension expense 49,235 Donated commodities consumed 269,627 Salaries paid by special revenue fund 45,000 Indirect costs not paid 365,949

Changes in assets and liabilities:Increase in accounts receivable (9,672) Increase in inventory (6,984) Decrease in accounts payable and accrued liabilities (165) Decrease in unearned revenue (17,160)

Increase in deferred outflows of resources for pension plan contributions in the current fiscal year (140,563) Decrease in compensated absences (12,008)

Total adjustments 588,715

Net cash used by operating activities (3,715,545)$

Noncash investing, capital, and financing activities:


RUTHERFORD COUNTY BOARD OF EDUCATIONSTATEMENT OF CASH FLOWS - PROPRIETARY FUNDS

The State Public School Fund paid salaries and benefits of $45,000 to administrative personnel of the School Food Service Fund during the fiscal year. The payment is reflected by a transfer in and an operating expense on Exhibit 8.

The School Food Service Fund received donated commodities with a value of $269,627 during the fiscal year.The receipt of the commodities is recognized as a nonoperating revenue on Exhibit 10.

Indirect costs of $365,949 that would be due to the General Fund were not paid. These unpaid costs arereflected as a nonoperating revenue and an operating expense on Exhibit 10.

RUTHERFORD COUNTY BOARD OF EDUCATIONSTATEMENT OF FIDUCIARY NET POSITION - FIDUCIARY FUNDSJune 30, 2015

Exhibit 12

PrivatePurpose Agency

Trust Funds Fund

ASSETS

Cash and cash equivalents 116,312$ 57,090$

LIABIITIES

Due to other sources - 57,090$

NET POSITION

Assets held in trust for private purpose 116,312$


RUTHERFORD COUNTY BOARD OF EDUCATIONSTATEMENT OF CHANGES IN FIDUCIARY NET POSITION - FIDUCIARY FUNDSFor the Year Ended June 30, 2015

Exhibit 13

PrivatePurpose

Trust Funds

ADDITIONSContributions and investment earnings 448$

DEDUCTIONSScholarships and grants 8,600

Change in net position (8,152)

NET POSITIONBeginning of year 124,464

End of year 116,312$


NOTES TO THE FINANCIAL STATEMENTS


Page 26

RUTHERFORD COUNTY BOARD OF EDUCATION NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2015 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of Rutherford County Board of Education, North Carolina and its discretely presented component unit conform to generally accepted accounting principles as applicable to governments. The following is a summary of the more significant accounting policies: Reporting Entity The Rutherford County Board of Education (Board) is a Local Education Agency empowered by State law [Chapter 115C of the North Carolina General Statutes] with the responsibility to oversee and control all activities related to public school education in Rutherford County, North Carolina. The Board receives State, local, and federal government funding and must adhere to the legal requirements of each funding entity. The reporting entity is comprised of the primary government and its component unit. Component units are legally separate organizations for which the Board is financially accountable. The Board is financially accountable if the Board appoints a voting majority of the organization’s governing board and (1) the Board is able to significantly influence the programs or services performed or provided by the organization; or (2) the Board is legally entitled to or can otherwise access the organization’s resources; the Board is legally obligated or has assumed responsibility to finance the deficits of, or provide financial support to, the organization; or the Board is obligated for the debt of the organization. Blended component units, although legally separate entities, are, in substance, part of the government’s operations. The Board is a primary government because it is a special purpose government that is legally separate and is fiscally independent of other State or local governments. The Board is not included in any other governmental reporting entity. Basis of Presentation Government-wide Financial Statements: The statement of net position and the statement of activities display information about the Board. These statements include the financial activities of the overall government. Eliminations have been made to minimize the effect of internal activities upon revenues and expenses. These statements distinguish between the governmental and business-type activities of the Board. Governmental activities generally are financed through intergovernmental revenues, and other non-exchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties. The statement of activities presents a comparison between direct expenses and program revenues for the different business-type activities of the Board and for each function of the Board’s governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expense allocations that have been made in the funds have been reversed for the statement of activities. Program revenues include (a) fees and charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues are presented as general revenues.

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RUTHERFORD COUNTY BOARD OF EDUCATION NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2015 Basis of Presentation- (continued) Fund Financial Statements: The fund financial statements provide information about the Board’s funds, including its fiduciary funds. Separate statements for each fund category – governmental, proprietary, and fiduciary – are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as non-major funds. The fiduciary funds are presented separately. Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Non-operating revenues, such as subsidies and investment earnings, result from non-exchange transactions or ancillary activities. The Board reports the following major governmental funds: General Fund. The General Fund is the general operating fund of the Board. The General Fund accounts for all financial resources except those that are required to be accounted for in another fund. This fund is the “Local Current Expense Fund,” which is mandated by State law [G.S. 115C-426]. State Public School Fund. The State Public School Fund includes appropriations from the Department of Public Instruction for the current operating expenditures of the public school system. Federal Grants Fund. The Federal Grants Fund is used to account for funds provided by the federal government under various federal programs. Local Special Expense Fund. Revenues from reimbursements, including indirect costs, fees for actual costs, tuition, sales tax revenues distributed using the ad valorem method pursuant to G.S. 105-472(b)(2), sales tax refunds, gifts and grants restricted as to use, trust funds, federal grants restricted as to use, federal appropriations made directly to local school administrative units, funds received for pre-kindergarten programs, and special programs. The Board reports the following major enterprise fund: School Food Service Fund. The School Food Service Fund is used to account for the food service program within the school system and is reported as an enterprise fund. The Board reports the following fiduciary funds: Private-Purpose Trust Funds. The private-purpose trust funds consist of the T.W. Smart Scholarship, Alexander School Scholarship, Teacher of the Year Award, Don Waters Scholarship, Hargreen Scholarship, Linda Cantrell Scholarship, G.A. Wilson Scholarship, Daniel Scholarship, Johnnie Glover Scholarship, Rebecca Smith Scholarship, Free Enterprise, Mark Perry Memorial, Project Graduation, Clothing, and Tanner Foundation funds. Each fund was created by donations from various individuals and organizations and is subject to the terms of the respective agreements drawn up by the donors.

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RUTHERFORD COUNTY BOARD OF EDUCATION NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2015 Basis of Presentation- (continued) Agency Fund. The agency fund is used to account for assets held by the Board as an agent for others. An agency fund is custodial in nature (assets equal liabilities) and does not involve measuring the results of operations. The Board maintains one agency fund, the Flexible Spending Fund, which accounts for assets held for Board employees in accordance with the provisions of Internal Revenue Code Section 125. Measurement Focus and Basis of Accounting Governmental-Wide, Proprietary and Fiduciary Fund Financial Statements. The government-wide, proprietary, fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Non-exchange transactions, in which the Board gives (or receives) value without directly receiving (or giving) equal value in exchange, include grants and donations. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Governmental Fund Financial Statements. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The Board considers all revenues reported in the governmental funds to be available if the revenues are collected within 60 days after year-end. These could include federal, State, and county grants, and some charges for services. Expenditures are recorded when the related fund liability is incurred, except for claims and judgments and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Acquisitions under capital leases are reported as other financing sources. Under the terms of grant agreements, the Board funds certain programs by a combination of specific cost-reimbursement grants and general revenues. Thus when program expenses are incurred, there are both restricted and unrestricted net position available to finance the program. It is the Board’s policy to first apply cost-reimbursement grant resources to such programs and then general revenues. All governmental and business-type activities and enterprise funds of the Board follow FASB Statements and Interpretations issued on or before November 30, 1989, Accounting Principles Board Opinions, and Accounting Research Bulletins, unless those pronouncements conflict with GASB pronouncements.

Page 29

RUTHERFORD COUNTY BOARD OF EDUCATION NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2015 Budgetary Data The Board’s budgets are adopted as required by the North Carolina General Statutes. Annual budgets are adopted for all funds, except for the individual schools special revenue funds, as required by the North Carolina General Statutes. No budget is required by State law for individual school funds. All appropriations lapse at the fiscal year-end. All budgets are prepared using the modified accrual basis of accounting. Expenditures may not legally exceed appropriations at the functional level for all annually budgeted funds. The Board has authorized the Superintendent to move moneys (up to a certain limit) from one function to another within a fund. Amendments are required for any revisions that alter total expenditures of any fund or that change functional appropriations by more than the limit. All amendments must be approved by the governing board. During the year, several immaterial amendments to the original budget were necessary. The budget ordinance must be adopted by July 1 of the fiscal year or the governing board must adopt an interim budget that covers that time until the annual ordinance can be adopted. Assets, Liabilities and Fund Equity Deposits and Investments All deposits of the Board are made in board-designated official depositories and are secured as required by State law [G.S. 115C-444]. The Board may designate, as an official depository, any bank or savings association whose principal office is located in North Carolina. Also, the Board may establish time deposit accounts such as NOW and SuperNOW accounts, money market accounts, and certificates of deposit. The Board also has money credited in its name with the State Treasurer and may issue State warrants against these funds. State law [G.S. 115C-443] authorizes the Board to invest in obligations of the United States or obligations fully guaranteed both as to principal and interest by the United States; obligations of the State of North Carolina; bonds and notes of any North Carolina local government or public authority; obligations of certain non-guaranteed federal agencies; certain high quality issues of commercial paper and bankers' acceptances; the North Carolina Capital Management Trust (NCCMT), an SEC-registered (2a-7) money market mutual fund; and the North Carolina State Treasurer’s Short Term Investment Fund (STIF). The STIF is managed by the staff of the Department of State Treasurer and operated in accordance with state laws and regulations. It is not registered with the SEC. It consists of an internal portion and an external portion in which the Board participates. Investments are restricted to those enumerated in G.S. 147-69.1. The Board’s investments are reported at fair value as determined by quoted market prices. The NCCMT Cash Portfolio’s securities are valued at fair value, which is the NCCMT’s share price. The STIF securities are reported at cost and maintain a constant $1 per share value. Under the authority of G.S. 147-69.3, no unrealized gains or losses of the STIF are distributed to external participants of the fund.

Page 30

RUTHERFORD COUNTY BOARD OF EDUCATION NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2015 Assets, Liabilities and Fund Equity (continued) Cash and Cash Equivalents

The Board pools money from several funds to facilitate disbursement and investment and to maximize investment income. Therefore, all cash and investments are essentially demand deposits and are considered cash and cash equivalents. Inventories The inventories maintained in the proprietary fund are valued at cost and the Board uses the first-in, first-out (FIFO) flow assumption in determining cost. Proprietary fund inventories consist of food and supplies and federal commodities and are recorded as expenses when consumed. Capital Assets

The Board's capital assets are recorded at original cost. Donated assets are listed at their estimated fair value at the date of donation or forfeiture. Improvements are capitalized and depreciated over the remaining useful lives of the related capital assets. Certain items acquired before July 1, 1978 are recorded at an estimated original historical cost. The total of these estimates is not considered large enough that any errors would be material when capital assets are considered as a whole. It is the policy of the Board to capitalize all capital assets costing more than $5,000 with an estimated useful life of two or more years. In addition, other items that are purchased and used in large quantities such as student desks are capitalized. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Rutherford County holds title to certain properties which are reflected as capital assets in the financial statements to the Board. The properties have been deeded to the County to permit installment purchases financing of acquisition and construction costs and to permit the County to receive refunds of sales tax paid for construction costs. Agreements between the County and the Board give the schools full use of the facilities, full responsibility for maintenance of the facilities, and provide that the County will convey title of the property back to the Board once all restrictions of the financing agreements and all sales tax reimbursement requirements have been met. Capital assets, excluding land and construction in progress, are depreciated using the straight-line method over the following estimated useful lives: Buildings 50 years Building improvements 15 to 25 years Equipment and furniture 5 to 20 years Vehicles 8 years Depreciation for buildings and equipment that serve multiple purposes cannot be allocated ratably and is therefore reported as “unallocated depreciation” on the Statement of Activities.

Page 31

RUTHERFORD COUNTY BOARD OF EDUCATION NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2015 Assets, Liabilities and Fund Equity (continued) Deferred outflows and inflows of resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflow of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period and so will not be recognized as an expense or expenditure until then. The Board has two items that meet this criterion – a pension related deferral and contributions made to the pension plan in the current fiscal year. The statement of financial position also reports a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period and so will not be recognized as revenue until then. The Board has an item that meet this criterion – pension related deferrals. Long-term obligations In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable government activities. Compensated Absences The Board follows the State’s policy for vacation and sick leave. Employees may accumulate up to thirty (30) days earned vacation leave with such leave being fully vested when earned. For the Board, the current portion of the accumulated vacation pay is not considered to be material. The Board’s liability for accumulated earned vacation and the salary-related payments as of June 30, 2015 is recorded in the government-wide and proprietary fund financial statements on a FIFO basis. An estimate has been made based on prior years’ records, of the current portion of compensated absences. The sick leave policy of the Board provides for an unlimited accumulation of earned sick leave. Sick leave does not vest, but any unused sick leave accumulated at the time of retirement may be used in the determination of length of service for retirement benefit purposes. Since the Board has no obligation for accumulated sick leave until it is actually taken, no accrual for sick leave has been made. Net Position/Fund Balances Net position in the government-wide and proprietary fund financial statements are classified as investment in capital assets; restricted; and unrestricted. Restricted net position represent constraints on resources that are either externally imposed by creditors, grantors, contributors, or the laws or regulations of other governments, or imposed by law through state statute. Fund Balance In the governmental fund financial statements, fund balance is composed of five classifications designed to disclose the hierarchy of constraints placed on how fund balance can be spent.

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RUTHERFORD COUNTY BOARD OF EDUCATION NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2015 Assets, Liabilities and Fund Equity (continued) The governmental fund types classify fund balances as follows: Non-spendable Fund Balance – This classification includes amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact. Inventories – portion of fund balance that is not an available resource because it represents the

year-end balance of ending inventories, which are not spendable resources. Assets held for resale – portion of fund balance that is not an available resource because it

represents the year-end balance of assets held for resale, which are not spendable resources. Restricted Fund Balance – This classification includes amounts that are restricted to specific purposes externally imposed by creditors or imposed by law. Restricted for Stabilization by State Statute – portion of fund balance that is restricted by State

Statute [G.S. 115C-425(a)]. Restricted for School Capital Outlay – portion of fund balance that can only be used for School

Capital Outlay. [G.S. 159-18 through 22]. Restricted for Individual Schools – revenue sources restricted for expenditures for the various

clubs and organizations, athletic events, and various fund raising activities for which they were collected.

Restricted for Local Special Expense Fund – specific revenue sources restricted for expenditures

that are required by Federal, state, and other providers to be spent for specific purposes. Committed Fund Balance – portion of fund balance that can only be used for a specific purpose imposed by a majority vote by quorum of the Board of Education’s governing body (highest level of decision-making authority) and in certain instances approval by the County’s governing body is required. Any changes or removal of specific purpose requires majority action by the governing bodies that approved the original action. Assigned Fund Balance – portion of fund balance that Rutherford County Board of Education, North Carolina intends to use for specific purposes. Subsequent year’s expenditures – portion of fund balance that is appropriated in the next year’s

budget that is not already classified in restricted or committed. The governing body approves the appropriation; however the budget ordinance authorizes the manager to modify the appropriations by resource or appropriation within funds up to $100,000.

County debt – portion of fund balance that is assigned to the county for possible debt repayment Unassigned Fund Balance – the portion of fund balance that has not been restricted, committed, or assigned to specific purposes or other funds. Negative unassigned fund balance may be reported in other governmental funds, if expenditures incurred for specific purposes exceed the amounts restricted, committed, or assigned to those purposes.

Page 33

RUTHERFORD COUNTY BOARD OF EDUCATION NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2015 Reconciliation of Government-wide and Fund Financial Statements Rutherford County Board of Education, North Carolina has a revenue spending policy that provides guidance for programs with multiple revenue sources. The Finance Officer will use resources in the following hierarchy: bond proceeds, federal funds, State funds, local non-board of education funds, board of education funds. For purposes of fund balance classification, expenditures are to be spent from restricted fund balance first, followed in-order by committed fund balance, assigned fund balance and lastly unassigned fund balance. The Finance Officer has the authority to deviate from this policy if it is in the best interest of the Board of Education. A. Explanation of certain differences between the governmental fund balance sheet and the

government-wide statement of net position. The governmental fund balance sheet includes a reconciliation between fund balance - total governmental funds and net position – governmental activities as reported in the government-wide statement of net position. The net adjustment of $71,391,533 consists of several elements as follows:

Description Amount Capital assets used in governmental activities are not financial resources and are therefore not reported in the funds (total capital assets on government-wide statement in governmental activities column)

$ 167,526,262 Less accumulated depreciation (75,022,701) Net capital assets 92,503,561

Pension related deferred outflows of resources Differences between contributions and proportional share of contributions and changes in proportion (780,204) Contributions made to the pension plan in current fiscal year 4,047,579

Liabilities for revenue deferred but earned and therefore recorded in the fund statements but not the government-wide

-- Liabilities that, because they are not due and payable in the current period, do not require current resources to pay and are therefore not recorded in the fund statements:

Compensated absences (5,091,754) Installment purchases (1,795,554) Net pension liability (3,792,954) Deferred inflows of resources related to pensions Differences between expected and actual experience (884,119) Difference between projected and actual earnings on plan investments (12,815,022) Total adjustment $ 71,391,533

Page 34

RUTHERFORD COUNTY BOARD OF EDUCATION NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2015 Reconciliation of Government-wide and Fund Financial Statements (continued) B. Explanation of certain differences between the governmental fund statement of revenues,

expenditures, and changes in fund balance and the government-wide statement of activities. The governmental fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation between net changes in fund balances – total governmental funds and changes in net position of governmental activities as reported in the government-wide statement of activities. There are several elements of that total adjustment of $(158,459) as follows:

Description Amount Capital outlay expenditures recorded in the fund statements but capitalized as assets in the statement of activities. $ 421,937 Depreciation expense, the allocation of those assets over their useful lives, that is recorded on the statement of activities but not in the fund statements. (5,040,246) Principal payments on debt owed are recorded as a use of funds on the fund statements but affect only the statement of net position in the government-wide statements. 1,754,427 Contribution to the pension plan in the current fiscal year are not included on the Statement of Activities 4,047,579 Expenses reported in the statement of activities that do not require the use of current resources to pay are not recorded as expenditures in the fund statements: Pension expense (1,417,721) Compensated absences are accrued in the government-wide statements but not in the fund statements because they do not use current resources. 120,998 Loss on disposal of assets (45,433) Total adjustment $ (158,459)

Page 35

RUTHERFORD COUNTY BOARD OF EDUCATION NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2015 NOTE 2 – DETAIL ON ALL FUNDS Assets Deposits All of the Board's deposits are either insured or collateralized by using one of two methods. Under the Dedicated Method, all deposits exceeding the federal depository insurance coverage level are collateralized with securities held by the Board's agents in the unit’s name. Under the Pooling Method, which is a collateral pool, all uninsured deposits are collateralized with securities held by the State Treasurer's agent in the name of the State Treasurer. Since the State Treasurer is acting in a fiduciary capacity for the Board, these deposits are considered to be held by the agent in the entity’s name. The amount of the pledged collateral is based on an approved averaging method for non-interest bearing deposits and the actual current balance for interest-bearing deposits. Depositories using the Pooling Method report to the State Treasurer the adequacy of their pooled collateral covering uninsured deposits. The State Treasurer does not confirm this information with the Board or with the escrow agent. Because of the inability to measure the exact amount of collateral pledged for the Board under the Pooling Method, the potential exists for under-collateralization, and this risk may increase in periods of high cash flows. However, the State Treasurer of North Carolina enforces strict standards of financial stability for each depository that collateralizes public deposits under the Pooling Method. The Board has no policy regarding custodial credit risk for deposits. At June 30, 2015, the Board had deposits with financial institutions with a carrying amount of $5,062,850 and with the State Treasurer of $ 1,208,334. The bank balances with the financial institutions and the State Treasurer were $6,897,945 and $2,890,006, respectively. Of these balances, $985,398 was covered by federal depository insurance and $8,802,553 was covered by collateral held by authorized escrow agents in the name of the State Treasurer. Investments At June 30, 2015, the Board of Education had $0 invested with the North Carolina Capital Management Trust’s Cash Portfolio which carried a credit rating of AAAm by Standard and Poor’s. There was $896,014 invested with the State Treasurer in the Short Term Investment Fund (STIF). The STIF is unrated and had a weighted average maturity of 1.5 years at June 30, 2015. The Board has no policy for managing interest rate risk or credit risk.

Page 36

RUTHERFORD COUNTY BOARD OF EDUCATION NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2015 Accounts Receivable Receivables at the government-wide level at June 30, 2015 were as follows:

Net Due from (to)

Other Funds (Internal

Balances)

Due from Other

Governments

Other

Total Governmental activities: General Fund $ 60,000 $ -- $ 38,221 $ 98,221 Other governmental activities (60,000) 411,480 273,198 624,678 Total $ -- $ 411,480 $ 311,419 $ 722,899 Business-type activities: School Food Service Fund $ -- $ -- $ 163,472 $ 163,472 Internal balances are repaid based on management’s assessment of cash needs and availability between funds and therefore it is possible that not all amounts would be repaid in the next fiscal year. Due from other governments consists of the following: Governmental activities: Capital Outlay $ 411,480 Capital due from county Total $ -- Business-type activities: School Food Service Fund $ -- State reimbursement

Page 37

RUTHERFORD COUNTY BOARD OF EDUCATION NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2015 Capital Assets Capital asset activity for the year ended June 30, 2015 was as follows:

Beginning Balances

Increases

Decreases

Transfers

Ending Balances

Governmental activities: Capital assets not being depreciated:

Land $ 3,543,827 $ -- $ -- $ -- $ 3,543,827 Construction in progress -- -- -- -- -- Total capital assets not being depreciated

3,543,827

--

--

--

3,543,827

Capital assets being depreciated:

Buildings 142,264,596 63,869 -- -- 142,328,465 Equipment and furniture 12,034,272 274,293 142,177 -- 12,166,388 Vehicles 9,587,362 83,775 183,555 -- 9,487,582 Total capital assets being depreciated

163,886,230 421,937 325,732

--

163,982,435

Less accumulated depreciation for:

Buildings 55,089,724 2,497,227 -- -- 57,586,951 Equipment and furniture 7,374,562 2,053,779 96,744 -- 9,331,597 Vehicles 7,798,468 489,240 183,555 -- 8,104,153 Total accumulated depreciation

70,262,754 5,040,246 280,299

--

75,022,701

Total capital assets being depreciated, net

93,623,476

88,959,734

Governmental activity capital assets, net

$ 97,167,303

$ 92,503,561

Depreciation was charged to governmental functions as follows: Unallocated depreciation $ 2,053,779 Operational support services 2,986,467 Total $ 5,040,246 Capital asset activity for the business-type activities for the year ended June 30, 2015 was as follows:

Beginning Balances

Additions

Disposals

Ending Balances

Business-type activities: School Food Service Fund: Capital assets being depreciated:

Furniture and office equipment $1,249,769 $ 63,042 $ 26,745 $1,286,066 Less accumulated depreciation for: Furniture and office equipment

1,061,975

45,456

26,745

1,080,686

School Food Service capital assets, net

$187,794

$205,380

Page 38

RUTHERFORD COUNTY BOARD OF EDUCATION NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2015 Liabilities

Pension Plan Obligations

a. Teachers’ and State Employees’ Retirement System

Plan Description. The Board is a participating employer in the statewide Teachers’ and State Employees’ Retirement System (TSERS), a cost-sharing multiple-employer defined benefit pension plan administered by the State (state agencies and institutions), universities, community colleges, and certain proprietary component units along with the employees of Local Education Agencies and charter schools. Article 1 of G.S retirement benefits to plan members and beneficiaries. Article 1 of G.S. Chapter 135 assigns the authority to establish and amend benefit provisions to the North Carolina General Assembly. Management of the plan is vested in the TSERS Board of Trustees, which consist of 13 members – nine appointed by the Governor, one appointed by the state Senate, one appointed by the state House of Representatives, and the State Treasurer and State Superintendent, who serve as ex-officio members. The Teachers’ and State Employees’ Retirement System is included in the Comprehensive Annual Financial Report (CAFR) for the State of North Carolina. The State’s CAFR includes financial statements and required supplementary information for TSERS. That report may be obtained by writing to the Office of the State Controller, 1410 Mail Service Center, Raleigh, North Carolina 27699-1410, by calling (919) 981-5454, or at www.osc.nc.gov. Benefits Provided. TSERS provides retirement and survivor benefits. Retirement benefits are determined as 1.82% of the member’s average final compensation times the member’s years of creditable service. A member’s average final compensation is calculated as the average of a member’s four highest consecutive years of compensation. General employee plan members are eligible to retire with full retirement benefits at age 65 with five years of creditable service (or 10 years of creditable services for members joining TSERS on or after August 1, 2011), at age 60 with 25 years of creditable service, or at any age with 30 years of creditable service. General employee plan members are eligible to retire with partial retirement benefits at age 50 with 20 years of creditable service or at age 60 with five years of creditable service (or 10 years of creditable service for members joining TSERS on or after August 1, 2011). Survivor benefits are available to eligible beneficiaries of members who die while in active service or within 180 days of their last day of service and who have either completed 20 years of creditable regardless of age or have completed five years of service and have reached age 60 (10 years for members joining on or after August 1, 2011). Eligible beneficiaries may elect to receive a monthly Survivor’s Alternate Benefit for life or a return of the member’s contributions. The plan does not provide for automatic post-retirement benefit increases. Increases are contingent upon actuarial gains of the plan.

http://www.osc.nc.gov/

Page 39

RUTHERFORD COUNTY BOARD OF EDUCATION NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2015

TSERS plan members who are LEOs are eligible to retire with full retirement benefits at age 55 with five years of creditable service as an officer (or 10 years of creditable service for members joining TSERS on or after August 1, 2011), or at any age with 30 years of creditable service. LEO plan members are eligible to retire with partial retirement benefits at age 50 with 15 years of creditable service as an officer. Survivor benefits are available to eligible beneficiaries of LEO members who die while in active service or within 180 days of their last day of service and who also have either completed 20 years of creditable service regardless of age, or have completed 15 years of service as a LEO and have reached age 50, or have completed five years of creditable service as LEO and have reached age 55, or have completed 15 years of creditable service as a LEO if killed in the line of duty. Eligible beneficiaries may elect to receive a monthly Survivor’s Alternate Benefit for life or a return of the member’s contributions. Contributions. Contributions provisions are established by General Statute 135-8 and may be amended only by the North Carolina General Assembly. Board employees are required to contribute 6% of their compensation. Employer contributions are actuarially determined and set annually by the TSERS Board of Trustees. The Board’s contractually required contribution rate for the year ended June 30, 2015, was 9.15% of covered payroll, actuarially determined as an amount that, when combined with employee contributions, is expected to finance the costs of benefits earned by employees during the year. Contributions to the pension plan from the Board were $4,188,142 for the year ended June 30, 2015. Refunds of Contributions. Board employees who have terminated service as a contributing member of TSERS, may file an application for a refund of their contributions. By state law, refunds to members with at least five years of service include 4% interest. State law requires a 60 day waiting period after service termination before the refund may be paid. The acceptance of a refund payment cancels the individual’s right to employer contributions or any other benefit provided by TSERS. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2015, the Board reported a liability of $3,924,675 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2014. The total pension liability used to calculate the net pension asset was determined by an actuarial valuation as of December 31, 2013. The total pension liability was then rolled forward to the measurement date of June 30, 2014 utilizing update procedures incorporating the actuarial assumptions. The Board’s proportion of the net pension liability was based on a projection of the Board’s long-term share of future payroll covered by the pension plan, relative to the projected future payroll covered by the pension plan of all participating TSERS employers, actuarially determined. At June 30, 2014 and at June 30, 2013, the Board’s proportion was .335% and .350%, respectively.

Page 40

RUTHERFORD COUNTY BOARD OF EDUCATION NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2015

For the year ended June 30, 2015, the Board recognized pension expense of $1,466,956. At June 30, 2015, the Board reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred

Outflows of Resources

Deferred Inflows of Resources

Differences between expected and actual experience $ - $ 914,822 Changes of assumptions - - Net difference between projected and actual earnings on pension plan investments - 13,260,057 Changes in proportion and differences between Board contributions and proportionate share of contributions - 807,298 Board contributions subsequent to the measurement date 4,188,142 - Total $ 4,188,142 $ 14,982,177 $39,000 reported as deferred outflows of resources related to pensions resulting from Board contributions subsequent to the measurement date will be recognized as a decrease of the net pension liability in the year ended June 30, 2016. Other amounts reported as deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year ended

June 30 2016 $ 3,769,399 2017 3,769,399 2018 3,769,379 2019 3,673,978 2020 - Thereafter - Actuarial Assumptions. The total pension liability in the December 31, 2013 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Inflation 3.0 percent Salary increases 4.25 to 9.10 percent, including inflation and productivity factor Investment rate of return 7.25 percent, net of pension plan investment expense, including inflation

Page 41

RUTHERFORD COUNTY BOARD OF EDUCATION NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2015 The plan currently uses mortality tables that vary by age, gender, employee group (i.e. general, law enforcement officer) and health status (i.e. disabled and healthy). The current mortality rates are based on published tables and based on studies that cover significant portions of the U.S. population. The healthy mortality rates also contain a provision to reflect future mortality improvements. The actuarial assumptions used in the December 31, 2013 valuation were based on the results of an actuarial experience study for the period January 1, 2005 through December 31, 2009. Future ad hoc COLA amounts are not considered to be substantively automatic and are therefore not included in the measurement. The projected long-term investment returns and inflation assumptions are developed through review of current and historical capital markets data, sell-side investment research, consultant whitepapers, and historical performance of investment strategies. Fixed income return projections reflect current yields across the U.S. Treasury yield curve and market expectations of forward yields projected and interpolated for multiple tenors and over multiple year horizons. Global public equity return projections are established through analysis of the equity risk premium and the fixed income return projections. Other asset categories and strategies’ return projections reflect the foregoing and historical data analysis. These projections are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class as of June 30, 2014 are summarized in the following table:

Asset Class

Target

Allocation

Long-Term Expected Real Rate of Return

Fixed Income 36.0% 2.5% Global Equity 40.5% 6.1% Real Estate 8.0% 5.7% Alternatives 6.5% 10.5% Credit 4.5% 6.8% Inflation Protection 4.5% 3.7% Total 100%

The information above is based on 30 year expectations developed with the consulting actuary for the 2013 asset liability and investment policy study for the North Carolina Retirement Systems, including TSERS. The long-term nominal rates of return underlying the real rates of return are arithmetic annualized figures. The real rates of return are calculated from nominal rates by multiplicatively subtracting a long-term inflation assumption of 3.19%. All rates of return and inflation are annualized. The new asset allocation policy was finalized during the fiscal year ended June 30, 2014 to be effective July 1, 2014. The new asset allocation policy utilizes different asset classes, changes in the structure of certain asset classes, and adopts new benchmarks. Using the asset class categories in the preceding table, the new long-term expected arithmetic real rates of return are: Fixed Income 2.2%, Global Equity 5.8%, Real Estate 5.2%, Alternatives 9.8%, Credit 6.8% and Inflation Protection 3.4%.

Page 42

RUTHERFORD COUNTY BOARD OF EDUCATION NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2015 Discount rate. The discount rate used to measure the total pension liability was 7.25%. the projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current contribution rate that contributions from employers will be made at statutorily required rates, actuarially determined. Based on these assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of the current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the County’s proportionate share of the net pension asset to changes in the discount rate. The following presents the Board’s proportionate share of the net pension liability calculated using the discount rate of 7.25 percent, as well as what the Board’s proportionate share of the net pension asset or net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.25 percent) or 1-percentage-point higher (8.25 percent) than the current rate:

1%

Decrease (6.25%)

Discount Rate

(7.25%)

1% Increase (8.25%)

Board’s proportionate share of net pension liability (asset) $ 28,174,065 $ 3,924,675 $ (16,550,395)

Pension plan fiduciary net position. Detailed information about the pension plan’s fiduciary net position is available in the separately issued Comprehensive Annual Financial Report (CAFR) for the State of North Carolina. b. Other Post-employment Benefits Post-employment Healthcare Benefits

Plan Description. The post-employment healthcare benefits are provided through a cost-sharing multiple-employer defined benefit plan administered by the Executive Administrator and the Board of Trustees of the Comprehensive Major Medical Plan (the Plan). The Executive Administrator and the Board of Trustees of the Plan establishes premium rates except as may be established by the General Assembly in an appropriation act. The Plan’s benefit and contribution provisions are established by Chapter 135-7, Article 1, and Chapter 135, Article 3 of the General Statutes and may be amended only by the North Carolina General Assembly. By General Statute, the Plan accumulates contributions from employers and any earnings on those contributions in the Retiree Health Benefit Fund. These assets shall be used to provide health benefits to retired and disabled employees and their applicable beneficiaries. These contributions are irrevocable. Also, by law, these assets are not subject to the claims of creditors of the employers making contributions to the Plan. The State of North Carolina issues a publicly available financial report that includes financial statements and required supplementary information for the State’s Comprehensive Major Medical Plan (also referred to as the State Health Plan). An electronic version of this report is available by assessing the North Carolina Office of the State Controller’s Internet home page http://www.ncosc.net/ and clicking on “Financial Reports”, or by calling the State Controller’s Financial Reporting Section at (919) 981-5454.

http://www.ncosc.net/

Page 43

RUTHERFORD COUNTY BOARD OF EDUCATION NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2015 Funding Policy. The Comprehensive Major Medical Plan is administered by the Executive Administrator and Board of Trustees of the Plan, which establish premium rates except as may be established by the General Assembly in an appropriation act. The healthcare benefits for retired and disabled employees are the same as for active employees, except that the coverage becomes secondary when former employees become eligible for Medicare. For employees first hired on and after October 1, 2006, future coverage as retired employees is subject to the requirement that the future retiree have 20 or more years of retirement service credit in order to receive coverage on a noncontributory basis. Employees first hired on and after October 1, 2006 with 10 but less than 20 years of retirement service credit are eligible for coverage on a partially contributory basis. For such future retirees, the State will pay 50% of the State Health Plan’s total noncontributory premium. For employees hired before October 1, 2006, healthcare benefits are provided to retirees (at no charge to the retirees) who have at least five years of contributing retirement membership prior to disability or retirement. In addition, persons who became surviving spouses of retirees prior to October 1, 1986, receive the same coverage as retirees at the State’s expense. Contributions are determined as a percentage of coverage monthly payroll. Annually, the monthly contribution rates to the Plan, which are intended to finance benefits and administrative expenses on a pay-as-you-go basis, are determined by the General Assembly in the Appropriations Bill. For the fiscal years ended June 30, 2015, 2014, and 2013, the Board paid all annual required contributions to the Plan for postemployment healthcare benefits of $2,512,885, $2,355,548, and $2,441,637, respectively. These contributions represented 5.49%, 5.40%, and 5.30%, of covered payroll, respectively. Long-term Disability Benefits Plan Description. Short-term and long-term disability benefits are provided through the Disability Income Plan of North Carolina (DIPNC), a cost-sharing, multiple-employer defined benefit plan. The DIPNC is administered by the Board of Trustees of the Teachers’ and State Employees’ Retirement System. Long-term disability benefits are payable as an other postemployment benefit from DIPNC after the conclusion of the short-term disability period or after salary continuation payments cease, whichever is later, for as long as an employee is disabled. Benefit and contribution provisions are established by Chapter 135, Article 6, of the General Statutes and may be amended only by the North Carolina General Assembly. The Plan accumulates contributions from employers and any earnings on those contributions in the Disability Income Plan Trust Fund. The plan does not provide for automatic post-retirement benefit increases. The State of North Carolina issues a publicly available financial report that includes financial statements and required supplementary information for the DIPNC. An electronic version of this report is available by accessing the North Carolina Office of the State Controller’s Internet home page http://www.ncosc.net/ and clicking on “Financial Reports”, or by calling the State Controller’s Financial Reporting Section at (919) 981-5454.

http://www.ncosc.net/

Page 44

RUTHERFORD COUNTY BOARD OF EDUCATION NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2015 Long-term Disability Benefits (continued) Funding Policy. An employee is eligible to receive long-term disability benefits provided the following requirements are met: (1) the employee has five or more years of contributing membership service in the Teachers’ and State Employees’ Retirement System of North Carolina, earned within 96 months prior to the end of the short-term disability period or cessation of salary continuation payments, whichever is later, (2) the employee must make application to receive long-term benefits within 180 days after the conclusion of the short-term disability period or after salary continuation payments cease or after monthly payments for Workers’ Compensation cease (excluding monthly payments for permanent partial benefits), whichever is later; (3) the employee must be certified by the Medical Board to be mentally or physically disabled for the further performance of his/her usual occupation; (4) the disability must have been continuous, likely to be permanent, and incurred at the time of active employment; (5) the employee must not be eligible to receive an unreduced retirement benefit from the Retirement System; and (6) the employee must terminate employment as a permanent, full-time employee. An employee is eligible to receive an unreduced retirement benefit from the Retirement System after (1) reaching the age of 65 and completing five years of creditable service, or (2) reaching the age of 60 and completing 25 years of creditable service, or (3) completing 30 years of creditable service, at any age. For members with five or more years of membership service as of July 31, 2007, the monthly long-term disability benefit is equal to 65% of one-twelfth of an employees’ annual base rate of compensation last payable to the participant of beneficiary prior to the beginning of the short-term disability period, plus the like percentage of one-twelfth of the annual longevity payment to which the participant or beneficiary would be eligible. The monthly benefits are subject to a maximum of $3,900 per month reduced by any primary Social Security disability benefits and by monthly payments for Workers’ Compensation to which the participant or beneficiary may be entitled. The monthly benefit shall be further reduced by the amount of any monthly payments from the Department of Veterans Affairs, any other federal agency or any payments made under the provisions of G.S.127A-108, to which the participant or beneficiary may be entitled on account of the same disability. Provided in any event, the benefits payable shall be no less than $10 a month. When an employee qualifies for an unreduced service retirement allowance from the Retirement System, the benefits payable from DIPNC will cease, and the employee will commence retirement under the TSERS. For members who obtain five years of membership service on or after August 1, 2007, the monthly long-term disability benefit is reduced by the primary Social Security retirement benefit to which you might be entitled should you become age 62 during the first 36 months. After 36 months of long-term disability, there will be no further payments from the DIPNC unless the member is approved for and are in receipts of primary Social Security disability benefits. It is payable as long as the member remains disabled and is in receipt of a primary Social Security disability benefit until eligible for an unreduced service retirement benefit. When an employee qualifies for an unreduced service retirement allowance from the Retirement System, the benefits payable from DIPNC will cease, and the employee will commence retirement under the TSERS.

Page 45

RUTHERFORD COUNTY BOARD OF EDUCATION NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2015 The Board’s contributions are established in the Appropriations Bill by the General Assembly. Benefit and contribution provisions are established by Chapter 135, Article 6, of the General Statues any may be amended only by the North Carolina General Assembly. The contributions cannot be separated between the amounts that relate to other postemployment benefits and employment benefits for active employees. Those individuals who are receiving extended short-term disability benefit payments cannot be separated from the number of members currently eligible to receive disability benefits as another postemployment benefit. For the fiscal year ended June 30, 2015, 2014, and 2013, the Board paid all annual required contributions to the DIPNC for disability benefits of $187,665, $191,934, and $202,702, respectively. These contributions represented 0.41%, 0.44%, and 0.44% of covered payroll, respectively. Accounts Payable Accounts payable as of June 30, 2015, are as follows:

Due to Other Funds

(Internal Balances)

Vendors

Salaries

and Benefits

Total Governmental activities: Current Expense Fund $ (60,000) $ 423,323 $ -- $ 363,323 Other governmental 60,000 21,656 -- 81,656 Total governmental Activities $ -- $ 444,979 $ -- $ 444,979 Business-type activities: School Food Service Fund $ -- $ -- $ -- $ -- Deferred Inflows of Resources The balance in deferred inflows of resources at year-end is composed of the following:

Deferred

Outflows of Resources

Deferred Inflows of Resources

Change in proportion and difference between employer contributions and proportionate share of contributions $ - $ 807,298 Difference between projected and actual earnings on plan investments - 13,260,057 Difference between expected and actual experience - 914,822 Totals $ -- 14,982,177

Page 46

RUTHERFORD COUNTY BOARD OF EDUCATION NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2015 Risk Management (continued) Unearned Revenue The balance in unearned revenues at year-end is composed of the following elements:

Unearned Revenues

Prepaid lunch sales (School Food Service Fund) $ 12,323 Activity bus replacement and other (Capital Outlay Fund) 61,359 Local Special Expense Fund 9,000 Risk Management The Board is exposed to various risks of losses related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. Statutory worker’s compensation coverage is purchased through private insurers. Coverage is provided to the extent employees are paid from Federal and local funds. Worker’s Compensation coverage is provided by the State of North Carolina through a self-insured fund, to the extent employees are paid from State funds. The Board carries commercial coverage for all other risks of loss. There have been no significant reductions in insurance coverage in the prior year, and claims settled have not exceeded coverage in any of the past three fiscal years. The general liability coverage provides limits of $1 million per occurrence subject to a $2 million aggregate. Third party medical payments are $15,000. Third party fire damage is $300,000. Employee benefits are covered at $1 million per occurrence and $3 million aggregate. Health Occupational Education coverage is at $1 million per occurrence and $1 million aggregate. Abuse or Molestation coverage provides a $1 million per occurrence subject to a $3 million aggregate. The automobile policy has a $1 million combined single limit for bodily injury and property damage for all owned vehicles. There is not an aggregate limit for automobile liability. Coverage for under insured and uninsured motorist is at $1 million. School Leaders Errors and Omissions liability coverage carries a $1 million per occurrence subject to a $2 million aggregate, which carries a $2,500 deductible. Umbrella coverage in the amount of $2 million per occurrence subject to a $2 million aggregate applies as excess over general liability, automobile liability and employer’s liability, employee benefit liability, school leaders errors and omissions, abuse and molestation, and health occupational education liability; subject to a self-insured retention of $10,000. The property policy provides a blanket real and personal property coverage with a total limit of $302,341,200, which carries a $5,000 deductible per incident. Flood coverage is provided at a limit of $5 million, with a $25,000 deductible in all zones except for zones A, V, and D. There are no schools in zones A, V and D. Earthquake coverage is provided at a limit of $5 million, with a $50,000 deductible. Boiler and machine coverage is provided with a total blanket coverage limit of $50 million subject to a $5,000 deductible. Crime coverage is also provided with a $50,000 limit for public employee’s dishonesty, $50,000 for forgery or altercation and $50,000 inside and outside premises for theft subject to a $1,000 deductible. There is a performance bond provided for the Finance Officer with $100,000 coverage.

Page 47

RUTHERFORD COUNTY BOARD OF EDUCATION NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2015 The Board also participates in the Teacher’s and State Employees Comprehensive Major Medical Plan, a self-funded risk pool of the State administered by Blue Cross Blue Shield of North Carolina. Through the Plan, permanent full-time employees of the Board receive health care benefits up to a $5 million lifetime limit. The Board pays the full cost of coverage for employees enrolled in the Comprehensive Major Medical Plan. Long-term Obligations Installment Purchase The Board is authorized to finance the purchase of school buses under G.S. 115C-528(a). Session law 2003-284, section 7.25 authorized the State Board of Education to allot monies for the payments on financing contracts entered into pursuant to G.S. 115C-528. In 2012-2014, the Board entered into an installment purchase contract to finance the purchase of two buses for $161,508. The net principal payments for all installment purchases are $1,795,554 for the year ending June 30, 2016. Long-Term Obligation Activity The following is a summary of changes in the Board’s long-term obligations for the fiscal year ended June 30, 2015:

Beginning Balance

Increases

Decreases

Ending Balance

Current Portion

Governmental activities: Installment purchases $ 3,549,981 $ -- $ 1,754,427 $ 1,795,554 $ 1,795,554 Net pension liability 20,523,687 -- 16,730,733 3,792,954 -- Compensated absences 5,212,752 2,258,867 2,379,865 5,091,754 2,380,000 $ 29,286,420 $ 2,258,867 $ 20,865,025 $ 10,680,262 $ 4,175,554 . Business-type activities: Compensated absences $ 82,611 $ 92,972 $ 104,980 $ 70,603 $ 70,603 Net pension liability 712,737 -- 581,016 131,721 -- $ 795,348 $ 92,972 $ 685,996 $ 202,324 $ 70,603 Compensated absences are paid by the General Fund and the School Food Service Fund when leave is taken Interfund Balances and Activity The State Public School Fund transferred $45,000 to the School Food Service Fund for certain administrative costs during the year ended June 30, 2015.

Page 48

RUTHERFORD COUNTY BOARD OF EDUCATION NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2015 Fund Balance The Board of Education has a revenue spending policy that provides policy for programs with multiple revenue sources. The Finance Officer will use resources in the following hierarchy: federal funds, State funds, local non-Board of Education funds, Board of Education funds. For purposes of fund balance classification expenditures are to be spent form restricted fund balance first, followed in-order by committed fund balance, assigned fund balance and lastly unassigned fund balance. The Finance Officer has the authority to deviate from this policy if it is in the best interest of the Board of Education. The following schedule provides management and citizens with information on the portion of the General Fund balance that is available for appropriation, as of June 30, 2015.

Current Expense

Total fund balance $ 463,518 Less: Stabilization by State Statute 112,250 Subsequent year’s expenditures 300,000 Remaining unassigned fund balance $ 51,268 Encumbrances are amounts needed to pay any commitments related to purchase orders and contracts that remain unperformed at year-end. The Board had $14,029 in encumbrances as of June 30, 2015. NOTE 3 – SUMMARY DISCLOSURE OF SIGNIFICANT CONTINGENCIES Federal and State Assisted Programs The Board has received proceeds from several federal and State grants. Periodic audits of these grants are required and certain costs may be questioned as not being appropriate expenditures under the grant agreements. Such audits could result in the refund of grant monies to the grantor agencies. Management believes that any required refunds will be immaterial. No provision has been made in the accompanying financial statements for the refund of grant monies. Other Contingencies Subsequent events evaluated through October 15, 2015, which is the date the financial statements were available to be issued. There were no recognized subsequent events meriting disclosure.

Page 49

RUTHERFORD COUNTY BOARD OF EDUCATION NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2015 NOTE 4 – SIGNIFICANT EFFECTS OF SUBSEQUENT EVENTS Charter School Funding In the case of Francine Delaney New School for Children, Inc. v. Asheville Board of Education, the State Supreme Court ruled that the trial court had not erred in its summary judgment for the plaintiff (Delaney) which, as a charter school, sought additional funding from the school board in the form of an equal per pupil share from the board’s supplemental school tax and penal fines and forfeitures revenues. Subsequently, the General Assembly, in the 2002 Technical Corrections Bill (SB1217), Section 91.1, determined that payments would not begin until July 2, 2003, and that no retroactive payments would be made prior to that date. Therefore, beginning with the fiscal year 2003-2004, the Rutherford County must distribute any supplemental school tax revenue and fines and forfeitures revenue on an equal per-pupil basis to any charter school that has a student or students registered that are residents of that county. Based on the following data, the Board has estimated its additional liability for next year to be $1,428 per student enrolled in a charter school. For the fiscal year ended June 30, 2015, there were 990 residents of Rutherford County enrolled in various charter schools in the State. Total projected supplemental school tax revenue and Fines and forfeitures revenue 2015-2016 $ 13,305,375 Total projected average daily membership for 2015-2016 9,316 Total estimated per-pupil revenue $ 1,428 NOTE 5 – CHANGE IN ACCOUNTING PRINCIPLES/RESTATEMENT The Board implemented Governmental Accounting Standards Board (GASB) statement 68, Accounting and Financial Reporting for Pensions (an amendment of GASB Statement No. 27), in the fiscal year ending June 30, 2015. The implementation of the statement required the City to record beginning net pension liability and the effects on net position of contributions made by the City during the measurement period (fiscal year 2014). As a result, net position for the governmental and business-type activities decreased by $16,854,578 and $585,318, respectively.

RUTHERFORD COUNTY BOARD OF EDUCATIONSCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITYTEACHERS' AND STATE EMPLOYEES' RETIREMENT SYSTEMLAST TWO FISCAL YEARS*

2015 2014

Board's proportion of the net pension liability (asset) 0.335% 0.350%

Board's proportionate share of the net pension liability (asset) $3,924,679 $21,236,424

Board's covered-employee payroll $43,621,273 $46,068,644

Board's proportionate share of the net pension liability (asset) as a percentage of its covered-employee payroll 9.00% 46.10%

Plan fiduciary net position as a percentageof the total pension liability 98.24% 90.60%

* The amounts presented for each fiscal year were determined as of the prior fiscal year ending June 30.

Page 50

RUTHERFORD COUNTY BOARD OF EDUCATIONSCHEDULE OF BOARD CONTRIBUTIONSTEACHERS' AND STATE EMPLOYEES' RETIREMENT SYSTEMLAST TWO FISCAL YEARS*

2015 2014

Contractually required contribution $4,188,142 $3,790,689

Contributions in relation to the contractually required contribution 4,188,142 3,790,689

Contribution deficiency (excess) $ - $ -

Board's covered-employee payroll $45,772,045 $43,621,273

Contributions as a percentage of covered-employee payroll 9.15% 8.69%

* The amounts presented for each fiscal year were determined as of the prior fiscal year ending June 30.

Page 51

COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES


RUTHERFORD COUNTY BOARD OF EDUCATIONSTATEMENT OF REVENUES AND EXPENDITURES - INDIVIDUAL SCHOOLS FUNDFor the Year Ended June 30, 2015

Schedule 1

Fund Balance Fund BalanceJune 30, 2014 Revenues Expenditures June 30, 2015

Elementary schools:

Carver Center 5,651$ 6,086$ 6,385$ 5,352$ Cliffside Elementary 24,812 32,763 45,835 11,740 Ellenboro Elementary 43,838 112,303 108,920 47,221 Forest City-Dunbar Elementary 7,627 44,192 36,782 15,037 Forrest W. Hunt Elementary 12,723 39,147 37,925 13,945 Harris Elementary 7,270 4,141 8,481 2,930 Mt. Vernon-Ruth Elementary 15,751 27,585 28,380 14,956 Pinnacle Elementary 12,114 78,386 75,575 14,925 Rutherford Opportunity Center 9,002 7,445 10,297 6,150 Rutherfordton Elementary 14,383 26,989 25,629 15,743 Spindale Elementary 10,074 27,906 30,074 7,906 Sunshine Elementary 23,383 40,867 48,202 16,048

Total elementary schools 186,628 447,810 462,485 171,953

Middle schools:

Chase Middle 41,373 148,594 161,146 28,821 East Rutherford Middle 35,403 182,863 184,088 34,178 R-S Middle 48,008 152,554 150,004 50,558

Total middle schools 124,784 484,011 495,238 113,557

High schools:

Chase High 92,735 496,606 462,699 126,642 East Rutherford High 142,534 455,864 487,500 110,898 REaCH 20,361 44,916 39,790 25,487 R-S Central High 187,443 611,437 612,019 186,861

Total high schools 443,073 1,608,823 1,602,008 449,888

Total all schools 754,485$ 2,540,644$ 2,559,731$ 735,398$

Page 52

For the Year Ended June 30, 2015Schedule 2

VariancePositive

Budget Actual (Negative)Revenues:

State of North Carolina:State appropriations - buses 281,787$ 40,380$ (241,407)$ Sales tax refund - - -

281,787 40,380 (241,407)

Rutherford County:Appropriations from county 629,388 626,709 (2,679)

629,388 626,709 (2,679)

Other:ABC revenue 23,908 21,322 (2,586) Insurance proceeds - - - Other - 12,896 12,896

23,908 34,218 10,310

Total revenues 935,083 701,307 (233,776)

Expenditures:Furniture and equipment 90,133 474,965 (384,832) Buses and motor vehicles 325,182 83,772 241,410 Site Improvements 479,388 33,475 445,913

Debt serviceInterest expense - - - Principal payments 40,380 40,380 -

Total expenditures 935,083 632,592 302,491

Revenues over (under) expenditures - 68,715 68,715

Other financing sources:Installment purchase obligations issued - - - Transfer to:Child Nutrition - - - General Fund - - -

Total other financing sources (uses) - - -

- 68,715 68,715

Appropriated fund balance - - -

-$ 68,715 68,715$

Fund balances:Beginning of year, July 1 459,575

End of year, June 30 528,290$

Page 53

Revenues and appropriated fund balance over (under) expenditures

RUTHERFORD COUNTY BOARD OF EDUCATIONSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - CAPITAL OUTLAY FUND

Revenues and other sources over (under) expenditures


VariancePositive

Budget Actual (Negative)Operating revenues:

Food sales 591,200$ 584,217$ (6,983)$ Total operating revenues 591,200 584,217 (6,983)

Operating expenditures:Food costs 1,826,004 Salaries and benefits 2,583,211 Pension expense - Indirect costs - Travel 15,883 Contracted services 1,078 Materials and supplies 136,593 Repairs and maintenance 15,708 Other 8,915 Capital Outlay -

Total operating expenditures 4,698,500 4,587,392 111,108

Operating loss (4,107,300) (4,003,175) 104,125

Nonoperating revenues:Federal reimbursements 3,787,300 3,622,588 (164,712) Federal commodities 275,000 269,627 (5,373) Miscellaneous - - -

Total nonoperating revenues 4,062,300 3,892,215 (170,085)

(45,000) (110,960) (65,960)

Other financing sources: Transfers from other funds 45,000 45,000 - Capital contributions - 63,042 63,042

Total other financing sources 45,000 108,042 63,042

- (2,918) (2,918)

Appropriated fund balance - - -

-$ (2,918)$ (2,918)$

Page 54


Revenues over (under) expenditures before other financing sources

Revenues and other sources over (under) expenditures

Revenues, appropratied fund balance, and other sources, over (under) expenditures

SCHEDULE OF REVENUES AND EXPENDITURES - BUDGET AND ACTUAL (NON-GAAP) - SCHOOL FOOD SERVICE FUND



(Continued)

ActualReconciliation of modified accrual to full accrual basis:

Revenues, appropriated fund balance, and other sourcesover (under) expenditures (2,918)$ Reconciling items:

Capital contributions 0Contributions to the pension plan in the current year 140,563Depreciation (45,456) Pension expense (49,235) Indirect costs (365,949) Indirect costs not paid 365,949 Equipment purchases - Increase in inventory 6,984 Decrease in compensated abscences 12,008

Change in net position (full accrual) 61,946$

Page 55

SCHEDULE OF REVENUES AND EXPENDITURES - BUDGET AND ACTUAL (NON-GAAP) - SCHOOL FOOD SERVICE FUND

RUTHERFORD COUNTY BOARD OF EDUCATIONCOMBINING STATEMENT OF FIDUCIARY NET POSITION - FIDUCIARY FUNDSPRIVATE PURPOSE TRUST FUNDSJune 30, 2015

Schedule 4

Assets Net Position

Cash and Cash Held in Trust forEquivalents Private Purpose

Alexander School Scholarship 36,081$ 36,081$ Clothing Fund 50 50 Daniel Scholoarship 68 68 Don Walters Scholarship 17 17 Free Enterprise Fund 443 443 G.A. Wilson Scholarship - - Hargreen Scholarship 303 303 Johnnie Glover Scholarship - - Mark Perry Memorial 1,661 1,661 Project Graduation 131 131 Rebecca Smith Scholarship 2,881 2,881 T.W. Smart Scholarship 459 459 Tanner Foundation 4,000 4,000 Teacher of the Year 70,218 70,218

116,312$ 116,312$

Page 56

RUTHERFORD COUNTY BOARD OF EDUCATIONCOMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION - FIDUCIARY FUNDSPRIVATE PURPOSE TRUST FUNDSFor the Year Ended June 30, 2015

Schedule 5

Contributions/ Net Position,Investment Change in Beginning of Net Position,

Earnings Awards Net Assets Year End of Year

Alexander School Scholarship 73$ -$ 73$ 36,008$ 36,081$ Clothing Fund - - - 50 50 Daniel Scholoarship 1 - 1 67 68 Don Walters Scholarship 16 (6,600) (6,584) 6,601 17 Free Enterprise Fund - - - 443 443 G.A. Wilson Scholarship (3) - (3) 3 - Hargreen Scholarship - - - 303 303 Johnnie Glover Scholarship - - - - - Mark Perry Memorial - - - 1,661 1,661 Project Graduation - - - 131 131 Rebecca Smith Scholarship 17 (1,000) (983) 3,864 2,881 T.W. Smart Scholarship 3 - 3 456 459 Tanner Foundation - - - 4,000 4,000 Teacher of the Year 341 (1,000) (659) 70,877 70,218

448$ (8,600)$ (8,152)$ 124,464$ 116,312$

Page 57

RUTHERFORD COUNTY BOARD OF EDUCATIONSTATEMENT OF CHANGES IN ASSETS AND LIABILITIES - FIDUCIARY FUNDSAGENCY FUNDFor the Year Ended June 30, 2015

Schedule 6

Balance Funds Funds BalanceJuly 1, 2014 Collected Disbursed June 30, 2015

Flexible Spending Fund

Assets:Cash 59,641$ 405,005$ 407,556$ 57,090$

Liabilities:Due to other sources 59,641$ 405,005$ 407,556$ 57,090$

Page 58

RUTHERFORD COUNTY HEADSTART(A COMPONENT UNIT OF RUTHERFORD COUNTY BOARD OF EDUCATION)STATEMENT OF ACTIVITIESFor the Year Ended June 30, 2015

Schedule 7

Program Revenues

Functions/Programs Expenses

Operating Grants and

Contributions

Net (Expense) Revenue and

Changes in Net Position

Governmental Activities:Instructional services:

Special populations -$ -$ -$ Alternative programs 1,721,044 1,721,044 - School-based support 117,008 117,008 -

System-wide support services: - Special population support and development 29,714 29,714 -

Alternative programs and services support and development 182,064 182,064 - Technology support 3,592 3,592 - Operational support 220,258 220,258 -

Ancillary services 42,386 42,386 - Total governmental activities 2,316,066$ 2,316,066$ -

General revenues:Unrestricted State appropriations - Investment earnings, unrestricted - Miscellaneous, unrestricted -

Total general revenues - Change in net position -

Net position-beginning - Net position-ending -$

Page 59

RUTHERFORD COUNTY HEADSTART(A COMPONENT UNIT OF RUTHERFORD COUNTY BOARD OF EDUCATION)


VariancePositive

Budget Actual (Negative)Revenues:

U. S. Government 2,548,984$ 2,316,066$ (232,918)$ Other - - -

2,548,984 2,316,066 (232,918)

Expenditures:Instructional services 1,968,309 1,838,052 130,257 System-wide supporting services 527,763 435,628 92,135 Ancillary services 52,912 42,386 10,526 Total expenditures 2,548,984 2,316,066 232,918

-$ - -$ Fund balances:

Beginning of year, July 1 -

End of year, June 30 -$

Page 60

Revenues over (under) expenditures

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL


STATISTICAL SECTION

Page 61

STATISTICAL SECTION (Unaudited)

The Statistical Section of the District’s Comprehensive Annual Financial Report (CAFR)

presents detailed information as a context for understanding what the information in the financial

statements, note disclosures, and required supplementary information say about the District’s

overall financial outlook.

Sections

Financial Trends

These schedules contain trend information to help the reader understand how the

District’s financial performance and operations have changed over time.

Revenue Capacity

Since the District’s local revenues are primarily provided by Rutherford County, these

schedules on the county’s revenue sources are relevant to an understanding of Rutherford

County’s most significant local revenue source, the property tax.

Debt Capacity

Since the District has no tax-levying or debt-issuing authority, the County of Rutherford

provides significant funding to the school system. Selected fiscal data from the County

of Rutherford has been included to help the reader better understand the school system

and its financial operations.

Demographic and Economic Information

These schedules offer demographic and economic indicators to help the reader

understand the environment within which the District’s financial activities take place.

County information is included.

Operating Information

These schedules contain service data to help the reader understand how the information

in the District’s financial report relates to the services the District provides and the

activities it performs.

Tab

le 1

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20

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20

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Net

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4,8

51

,58

0

5,3

51

,15

0

4,9

68

,73

9

4,9

12

,45

4

4,8

98

,03

9

4,7

93

,25

5

5,1

57

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0

5,4

39

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5

5,0

28

,93

1

Tota

l d

istr

ict-

wid

e ex

pen

ses

81

,89

3,4

10

$

82

,16

2,0

31

$

86

,60

8,7

30

$

84

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1,0

53

$

92

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4,5

37

$

88

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0,7

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$

90

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3,0

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$

92

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8,9

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Pro

gra

m R

even

ues

Gover

nm

enta

l ac

tivit

ies:

C

har

ges

for

serv

ices

:

R

egu

lar

inst

ruct

ion

al s

ervic

es5

31

,98

8$

19

1,1

71

$

56

3,8

50

$

14

0,1

51

$

13

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6$

34

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8$

33

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1$

28

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4$

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-$

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ther

-

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-

2,8

29

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8

2,4

05

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6

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84

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per

atin

g g

ran

ts a

nd

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trib

uti

on

s5

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55

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5

56

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1,4

09

61

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7,2

09

61

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8,0

52

67

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7,0

60

60

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2,5

32

62

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3,6

32

62

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61

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89

59

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apit

al g

ran

ts a

nd

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uti

on

s-

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-

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52

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4

61

8,9

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90

5,6

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45

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73

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27

26

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8

Tota

l gover

nm

enta

l ac

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ies

pro

gra

m r

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ues

56

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7,5

33

56

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61

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1,0

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61

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70

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3,1

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63

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65

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Bu

sin

ess-

typ

e ac

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ies:

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ges

for

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:

S

tud

ent

mea

l se

rvic

es5

84

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g g

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nd

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on

s4

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64

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l b

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s-ty

pe

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ies

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gra

m r

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4,9

05

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5

5,2

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Tota

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61

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66

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l ac

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Bu

sin

ess-

typ

e ac

tivit

ies

16

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6

79

,12

5

(14

1,4

27

)

(11

8,0

23

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(23

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27

9,0

23

(14

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)

(35

1,1

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9,4

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(73

7,8

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l d

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ict-

wid

e n

et e

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ense

(20

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0,3

68

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6)

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7,6

82

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4)

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8,4

71

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(2

0,1

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$

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(2

2,2

63

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5)

$

(16

,34

9,3

96

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(1

6,4

60

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3)

$

RU

TH

ER

FO

RD

CO

UN

TY

BO

AR

D O

F E

DU

CA

TIO

N

Ch

an

ges

in

Net

Posi

tion

La

st T

en F

isca

l Y

ears

(Acc

rua

l b

asi

s of

acc

ou

nti

ng

)

For

the

yea

r en

ded

Ju

ne

30

, 2

01

5

63

Ta

ble

2 (

con

tin

ued

)

20

15

2014

2013

2012

2011

2010

20

09

20

08

20

07

20

06

Gen

eral

Rev

enu

es a

nd

Oth

er C

ha

ng

es i

n N

et P

osi

tio

n

Gover

nm

enta

l ac

tivit

ies:

Sta

te o

f N

ort

h C

aroli

na

-$

-$

-

$

-

$

576,8

98

$

1,9

21

,58

1$

2,4

14

,86

5$

1

,58

6,0

53

$

2,4

98

,65

4$

2

,04

6,2

70

$

Ruth

erfo

rd C

ounty

12

,66

9,7

13

12,4

99,7

13

12,4

90,1

05

12,4

96,0

39

12,1

26,2

10

14,3

21

,22

2

23

,07

8,0

82

1

7,8

35

,36

5

15

,22

5,7

18

1

4,6

51

,17

1

U.

S.

Gover

nm

ent

-

-

-

-

-

2,6

05

,42

5

8

80

,34

9

2,4

20

,52

5

-

-

Inves

tmen

t ea

rnin

gs,

unre

stri

cted

-

-

-

-

7,3

17

12,0

47

13

,56

5

1

18

,33

6

14

5,4

66

9

5,9

33

Mis

cell

aneo

us,

unre

stri

cted

8,2

17

,15

9

5,9

13,4

45

4,6

58,2

98

4,0

02,6

93

424,9

76

674,3

09

7

10

,27

6

71

7,8

37

8

82

,00

6

1,2

46

,27

4

Tra

nsf

ers

(45

,00

0)

(5

7,3

43)

(5

4,1

94)

(5

3,0

31)

(6

6,2

44)

(1

10

,98

3)

(64

,74

7)

(7

1,5

82

)

(57

,56

1)

(5

5,6

11

)

Tota

l gover

nm

enta

l ac

tivit

ies

20

,84

1,8

72

18,3

55,8

15

17,0

94,2

09

16,4

45,7

01

13,0

69,1

57

19,4

23

,60

1

27

,03

2,3

90

2

2,6

06

,53

4

18

,69

4,2

83

1

7,9

84

,03

7

Busi

nes

s-ty

pe

acti

vit

ies:

Inves

tmen

t ea

rnin

gs,

unre

stri

cted

-

-

-

-

1

1

0

3,6

08

2

,97

8

12

,53

0

2

0,4

49

Loss

on d

isposa

l of

capit

al a

sset

s-

-

-

-

-

-

-

-

-

(3

,06

1)

Tra

nsf

ers

45

,00

0

57,3

43

54,1

94

53,0

31

66,2

44

110,9

83

6

4,7

47

71

,58

2

5

7,5

61

55

,61

1

Tota

l bu

sin

ess-

typ

e ac

tivit

ies

45

,00

0

57,3

43

54,1

94

53,0

31

66,2

45

110,9

93

6

8,3

55

74

,56

0

7

0,0

91

72

,99

9

Tota

l d

istr

ict-

wid

e2

0,8

86

,87

2$

18,4

13,1

58

$

17,1

48,4

03

$

16,4

98,7

32

$

13,1

35,4

02

$

19,5

34

,59

4$

2

7,1

00

,74

5$

22

,68

1,0

94

$

1

8,7

64

,37

4$

18

,05

7,0

36

$

Ch

an

ge

in N

et P

osi

tion

Gover

nm

enta

l ac

tivit

ies

52

4,4

72

$

(2

,092,0

56)

$

(2

,432,3

12)

$

(1

,118,4

10)

$

(4

,449,7

98)

$

(1

,007,5

57

)$

7

,29

0,2

43

$

69

3,8

73

$

2

,87

4,3

45

$

2,2

61

,16

5$

Busi

nes

s-ty

pe

acti

vit

ies

61

,94

6

136,4

68

(8

7,2

33)

(6

4,9

92)

(1

73,2

71)

390,0

16

(7

9,3

79

)

(27

6,6

14

)

(4

59

,36

7)

(66

4,8

72

)

Tota

l dis

tric

t-w

ide

chan

ge

in n

et p

osi

tion

58

6,4

18

$

(1

,955,5

88)

$

(2

,519,5

45)

$

(1

,183,4

02)

$

(4

,623,0

69)

$

(6

17

,54

1)

$

7,2

10

,86

4$

4

17

,25

9$

2,4

14

,97

8$

1

,59

6,2

93

$

RU

TH

ER

FO

RD

CO

UN

TY

BO

AR

D O

F E

DU

CA

TIO

N

Ch

an

ges

in

Net

Po

siti

on

(co

nti

nu

ed)

La

st T

en F

isca

l Y

ears

(Acc

rua

l b

asi

s of

acc

ou

nti

ng)

Fo

r th

e y

ear

end

ed J

un

e 30,

2015

Sourc

e:

Ruth

erfo

rd C

ounty

Boar

d o

f E

du

cati

on

, A

nn

ual

Fin

anci

al R

eport

for

the

yea

r en

ded

June

30,

2015

64

Table 3

2015 2014 2013 2012 2011 2010 2009 2008 2007 2006

General fund:

Reserved 405,351$ 300,000$ 300,000$ 96,303$ 187,939$

Unreserved 2,373,133 2,590,377 2,543,507 3,011,398 1,918,418

Total general fund 2,778,484$ 2,890,377$ 2,843,507$ 3,107,701$ 2,106,357$

All other governmental funds:

Reserved -$ -$ -$ -$ -$

Unreserved, reported in:

Special revenue funds 651,998 608,833 593,627 593,625 626,614

Capital outlay fund 227,913 209,218 222,241 505,244 647,850

Activity bus replacement reserve 196,879 196,879 - - -

Total all other governmental funds 1,076,790$ 1,014,930$ 815,868$ 1,098,869$ 1,274,464$

General Fund

Nonspendable -$ -$ -$ 73,127$ -$

Restricted 112,250 139,007 282,318 - 710,542

Assigned 300,000 750,000 564,734 239,787 -

Unassigned 51,268 38,816 (42,705) (65,442) 2,084,175

Total General Fund 463,518$ 927,823$ 804,347$ 247,472$ 2,794,717$

All other governmental funds

Restricted 6,867,908$ 5,720,672$ 5,375,844$ 5,125,444$ 1,147,052$

Total all other governmental funds 6,867,908$ 5,720,672$ 5,375,844$ 5,125,444$ 1,147,052$

NOTE: GASB Statement 54 established new fund balance classification effective beginning 2011.

Previous to FY2011, general and local special expense funds (both part of general fund totals),

were combined in audit schedules. They are now presented separately. The activity bus reserve

is presented as part of the capital outlay fund effective FY 2011.


Fund Balance

Last Ten Fiscal Years ended June 30, 2015

Governmental Funds

Source: Rutherford County Board of Education, Annual Financial Report for the year ended June 30, 2015

65

Ta

ble

4

2015

2014

2013

2012

2011

2010

20

09

20

08

20

07

20

06

Rev

enu

es

Sta

te o

f N

ort

h C

aroli

na

52,5

91,1

38

$

50,3

77,0

59

$

51,7

24,8

84

$

52,5

33,9

14

$

52,3

25,7

04

$

52,6

66,8

34

$

59

,54

6,6

32

$

58

,77

3,2

11

$

56

,92

3,2

55

$

52

,85

1,2

40

$

Ruth

erfo

rd C

ounty

13,2

96,4

22

13,5

00,7

28

12,7

01,3

18

12,6

06,2

89

11,9

95,0

14

14,3

21,2

22

23

,07

8,0

82

17

,83

5,3

65

15

,22

5,7

18

14

,65

1,1

71

U.S

. G

over

nm

ent

6,5

73,8

36

7,7

09,5

89

8,1

32,1

97

9,3

12,3

89

14,9

18,2

55

12,4

33,1

84

6,8

81

,15

9

8

,03

0,3

90

7

,64

1,6

44

8

,44

5,9

98

Oth

er5,1

58,4

42

3,6

96,1

20

6,3

46,3

53

4,1

55,0

29

3,9

69,5

56

3,2

00,2

16

3,3

48

,89

4

3

,40

6,3

45

3

,54

8,9

12

4

,09

8,9

76

T

ota

l re

ven

ues

77,6

19,8

38

75,2

83,4

96

78,9

04,7

52

78,6

07,6

21

83,2

08,5

29

82,6

21,4

56

92

,85

4,7

67

88

,04

5,3

11

83

,33

9,5

29

80

,04

7,3

85

Exp

end

itu

res

Inst

ruct

ional

ser

vic

es58,4

03,0

15

55,7

79,0

68

59,2

30,4

90

60,2

71,4

21

65,1

63,5

75

63,2

45,9

73

65

,07

2,3

98

65

,63

2,5

42

58

,83

9,3

48

56

,45

9,6

40

Support

ser

vic

es14,4

46,1

82

14,4

23,5

95

14,6

38,8

64

14,6

08,7

51

15,5

39,2

18

14,4

44,3

73

14

,73

6,2

63

15

,16

1,5

04

17

,94

6,9

97

17

,30

7,6

53

Anci

llar

y s

ervic

es41,2

96

30,4

25

57,6

45

91,9

19

174,4

35

117,8

90

58

,33

3

17

5,4

24

32

1,2

02

41

4,5

94

Non-p

rogra

mm

ed c

har

ges

1,5

54,2

55

1,4

57,8

42

1,4

72,7

88

1,3

74,5

94

1,3

80,8

91

1,2

46,7

42

82

7,2

18

76

6,8

32

45

3,5

55

36

0,7

65

Oth

er

-

-

-

-

-

730,8

89

-

-

-

-

Cap

ital

outl

ay592,2

12

1,2

12,1

15

909,8

26

577,9

99

192,7

91

3,0

55,5

64

12

,19

8,8

95

6,3

33

,86

3

5

,39

6,5

54

3

,98

2,3

26

Deb

t se

rvic

e -

pri

nci

pal

1,7

54,4

27

1,7

95,1

86

1,8

05,7

42

197,8

51

603,0

95

510,4

79

58

8,8

64

45

0,7

59

71

5,1

74

30

3,0

60

Deb

t se

rvic

e -

inte

rest

100,5

20

59,6

18

89,4

36

908

1,7

85

-

-

-

-

-

T

ota

l ex

pen

dit

ure

s76,8

91,9

07

74,7

57,8

49

78,2

04,7

91

77,1

23,4

43

83,0

55,7

90

83,3

51,9

10

93

,48

1,9

71

88

,52

0,9

24

83

,67

2,8

30

78

,82

8,0

38

Rev

enues

over

(und

er)

expen

dit

ure

s727,9

31

525,6

47

699,9

61

1,4

84,1

78

152,7

39

(730,4

54

)

(62

7,2

04

)

(4

75

,61

3)

(3

33

,30

1)

1

,21

9,3

47

Oth

er f

inan

cin

g s

ou

rces

(u

ses)

Inst

allm

ent

purc

has

e obli

gat

ions

issu

ed-

-

161,5

08

-

-

791,4

04

93

7,8

83

-

1,2

16

,61

1

1

20

,69

3

Tra

nsf

ers

in (

ou

t)(4

5,0

00)

(5

7,3

43)

(54,1

94)

(53,0

31)

(66,2

44)

(110,9

83

)

(64

,74

7)

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1,5

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)

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)

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)

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et c

han

ge

in f

und b

alan

ce682,9

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468,3

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1,4

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47

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86,4

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(5

0,0

33

)$

24

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(54

7,1

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)$

82

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1,2

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9$

Rat

io o

f deb

t se

rvic

e to

non-c

apit

al e

xpen

dit

ure

s2.4

9%

2.5

9%

2.5

1%

0.2

6%

0.7

4%

0.6

5%

0.7

3%

0.5

5%

0.9

2%

0.4

1%

RU

TH

ER

FO

RD

CO

UN

TY

BO

AR

D O

F E

DU

CA

TIO

N

Gov

ern

men

tal

Fu

nd

s

Ch

an

ges

In

Fu

nd

Ba

lan

ces

Last

Ten

Fis

cal

Yea

rs

For

the

yea

r en

ded

Ju

ne

30

, 2

01

5

Sourc

e: R

uth

erfo

rd C

ounty

Boar

d o

f E

duca

tion, A

nnual

Fin

anci

al R

eport

for

the

yea

r en

ded

June

30,

2015

66

Tab

le 5

Ass

ess

ed

Va

lue i

n T

ho

usa

nd

sA

ssess

ed

Rea

l P

rop

erty

Per

son

al

Pro

perty

To

tal

Ta

xa

ble

To

tal

Dir

ect

Est

ima

ted

Va

lue a

s a

Fis

ca

lR

esi

den

tia

lC

om

mercia

lM

oto

rP

ub

lic S

erv

ice

Ass

ess

ed

Ta

x R

ate

Actu

al

Per

cen

tag

e o

f

Yea

rP

rop

erty

Pro

perty

Veh

icle

sO

ther

Co

mp

an

ies

Va

lue

per $

10

0T

ax

ab

le V

alu

eA

ctu

al

Va

lue

20

15

3,9

60

,31

2$

4

13

,65

3$

44

9,0

50

$

8

51

,29

4$

5

20

,30

6$

6,1

94

,61

5$

0

.60

7$

6,1

94

,61

5$

1

00

.00

20

14

3,9

36

,92

8$

4

42

,98

3$

36

1,4

28

$

7

04

,26

0$

5

11

,38

0$

5,9

56

,97

9$

0

.60

7$

5,9

56

,97

9$

1

00

.00

20

13

3,8

87

,47

5$

4

35

,67

7$

37

2,3

35

$

3

43

,04

8$

4

81

,55

3$

5,5

20

,08

8$

0

.60

7$

5,4

96

,45

3$

1

00

.43

20

12

4,4

12

,40

8$

4

95

,78

8$

35

8,5

11

$

2

98

,86

7$

4

17

,79

6$

5,9

83

,37

0$

0

.53

0$

5,9

54

,78

7$

1

00

.48

20

11

4,3

89

,35

0$

5

32

,07

0$

34

5,2

80

$

3

35

,88

9$

3

16

,64

4$

5,9

19

,23

3$

0

.53

0$

6,3

44

,98

1$

9

3.2

9

20

10

3,9

89

,45

8$

8

77

,69

9$

37

3,0

25

$

3

59

,31

6$

2

99

,42

2$

5,8

98

,92

0$

0

.53

0$

6,4

63

,15

3$

9

1.2

7

20

09

3,9

36

,14

5$

8

65

,28

2$

42

9,4

56

$

3

71

,89

4$

2

92

,28

6$

5,8

95

,06

3$

0

.53

0$

6,3

22

,46

1$

9

3.2

4

20

08

3,8

66

,90

1$

8

19

,35

7$

42

9,8

70

$

3

71

,20

5$

2

76

,12

0$

5,7

63

,45

3$

0

.53

0$

6,1

54

,90

5$

9

3.6

4

20

07

2,8

45

,47

7$

4

40

,18

9$

40

9,5

69

$

3

44

,29

4$

2

28

,69

4$

4,2

68

,22

3$

0

.61

0$

5,1

76

,74

1$

8

2.4

5

20

06

2,6

45

,50

2$

4

24

,19

9$

42

2,3

95

$

3

53

,88

8$

2

55

,55

3$

4,1

01

,53

7$

0

.62

0$

4,6

28

,75

2$

8

8.6

1

So

urc

e: R

uth

erfo

rd C

ou

nty

Tax

Dep

artm

ent

No

te -

Pro

per

ty w

as r

eval

ued

in

fis

cal

yea

r 2

00

8 a

nd

20

12

.

RU

TH

ER

FO

RD

CO

UN

TY

, N

OR

TH

CA

RO

LIN

A

Ass

ess

ed

Va

lue A

nd

Actu

al

Va

lue O

f T

ax

ab

le P

rop

erty

La

st T

en

Fis

ca

l Y

ea

rs

67

Table 6

2015 2014 2013 2012 2011 2010 2009 2008 2007 2006

County Direct Rate 0.607$ 0.607$ 0.607$ 0.530$ 0.530$ 0.530$ 0.530$ 0.530$ 0.610$ 0.620$

Town Rates

Bostic 0.260 0.260 0.260 0.250 0.250 0.250 0.250 0.250 0.250 0.250

Chimney Rock 0.075 0.075 0.075 0.075 0.075 0.075 0.075 0.075 0.115 0.115

Ellenboro 0.220 0.220 0.220 0.220 0.220 0.220 0.220 0.220 0.250 0.250

Forest City 0.290 0.290 0.290 0.290 0.290 0.290 0.300 0.290 0.300 0.300

Lake Lure 0.191 0.191 0.194 0.210 0.210 0.210 0.210 0.210 0.280 0.280

Ruth 0.280 0.280 0.280 0.260 0.260 0.260 0.260 0.260 0.260 0.260

Rutherfordton 0.567 0.567 0.537 0.520 0.520 0.520 0.520 0.520 0.540 0.540

Spindale 0.633 0.633 0.633 0.600 0.600 0.560 0.560 0.510 0.510 0.510

Special Districts

Bill's Creek Fire 0.060 0.060 0.080 0.080 0.080 0.080 0.080 0.080 0.080 0.080

Bostic Fire 0.060 0.050 0.050 0.050 0.060 0.060 0.060 0.050 0.050 0.050

Broad River Fire 0.100 0.100

Cherry Mountain Fire 0.090 0.090 0.090 0.090 0.090 0.090 0.090 0.090 0.090 0.090

Chimney Rock Fire 0.050 0.050 0.050 0.050 0.050 0.050 0.050 0.040 0.060 0.060

Cliffside Fire 0.080 0.080 0.080 0.070 0.070 0.080 0.080 0.070 0.055 0.055

Cliffside Sanitary 0.080 0.080 0.080 0.080 0.080 0.070 0.070 0.080 0.080 0.080

Contracted Fire 0.060 0.040 0.030 0.020 0.020 0.020 0.020 0.020 0.030 0.030

Edneyville Fire 0.090 0.090

Ellenboro Fire 0.070 0.070 0.070 0.060 0.060 0.060 0.060 0.060 0.060 0.060

Fairfield Fire 0.100 0.080

Forest City Rural Fire 0.080 0.080

Green Hill Fire 0.070 0.070 0.070 0.070 0.070 0.070 0.070 0.070 0.070 0.070

Hollis/Polkville Fire 0.050 0.030 0.030 0.030 0.030 0.030 0.030 0.030 0.030 0.030

Hudlow Fire 0.080 0.080 0.080 0.080 0.080 0.080 0.080 0.080 0.080 0.080

Lake Lure Rural Fire 0.090 0.080

Rutherfordton Fire 0.090 0.080 0.080 0.080 0.080 0.080 0.080 0.080 0.080 0.080

Sandy Mush Fire 0.050 0.050 0.050 0.050 0.050 0.050 0.050 0.040 0.040 0.040

Shiloh Danieltown Oakland Fire 0.050 0.050 0.050 0.050 0.050 0.050 0.050 0.050 0.050 0.050

Shingle Hollow Fire 0.100 0.100 0.100 0.100 0.100 0.100 0.100 0.100 0.100 0.100

Spindale Rural Fire 0.080 0.080

Union Mills Fire 0.050 0.050 0.050 0.050 0.050 0.050 0.050 0.050 0.050 0.050

Source: Rutherford County Tax Department

Year Taxes Are Payable

Note: Property was revalued as of January 1, 2012 which affected the 2013 tax levy, and as of January 1, 2007 which affected the 2008 tax levy.

Rutherford County, North Carolina

Direct and Overlapping Property Tax Rates

Last Ten Years

(rate per $100 af assessed value)

68

Ta

ble

7

Fis

cal

Yea

r 2015

Fis

cal

Yea

r 2

00

6

Per

centa

ge

of

Per

cen

tag

e o

f

Ass

esse

dT

ota

l C

ounty

Ass

esse

dT

ota

l C

ou

nty

Type

Of

Val

ue

Tax

able

Ass

esse

dV

alu

eT

axab

le A

sses

sed

Tax

pay

erB

usi

nes

s(T

housa

nds)

Ran

kV

alue

(Th

ou

san

ds)

Ran

kV

alu

e

An

dal

e In

c. F

KA

Soft

war

e5

59

,15

7$

19

.03

%

Du

ke

En

ergy

Publi

c U

tili

ty4

46

,03

5

27

.20

%1

56

,81

8$

13

.82

%

Ho

rseh

ead

Met

al P

roduct

sM

anu

fact

uri

ng

13

5,8

89

32

.19

%

Del

l E

qu

ipm

ent

Fundin

g L

PL

easi

ng C

om

pan

y8

2,7

05

41

.34

%

DL

P R

uth

erfo

rd R

egio

nal

Hea

lth S

yst

em L

LC

Hosp

ital

23

,35

2

50

.38

%

CS

X T

ran

spo

rtat

ion

Publi

c U

tili

ty3

0,5

40

60

.49

%

Bel

lso

uth

Publi

c U

tili

ty2

0,6

41

70

.33

%2

5,9

04

30

.63

%

Tre

lleb

org

Man

ufa

ctu

rin

g2

0,4

39

80

.33

%

Pub

lic

Ser

vic

e C

o o

f N

C I

nc

Publi

c U

tili

ty1

2,2

78

90

.20

%

Fo

xru

n T

ow

nh

ou

ses

PO

AR

esort

Pro

per

ty1

1,9

49

10

0.1

9%

RC

M M

anag

emen

t S

ervic

es,

LL

PA

via

tio

n1

8,0

00

80

.44

%

Tim

ken

US

Co

rp (

Torr

ingto

n)

Man

ufa

ctu

rin

g1

8,1

99

70

.44

%

Co

ne

Mil

ls C

orp

ora

tion

Tex

tile

s1

8,5

55

60

.45

%

Ru

ther

ford

Ele

ctri

c M

ember

ship

Corp

Publi

c U

tili

ty1

8,9

20

50

.46

%

Ree

ves

Bro

ther

sM

anu

fact

uri

ng

15

,94

6

90

.39

%

Fai

rfie

ld C

om

munit

ies

Res

ort

Pro

per

ty3

1,8

71

20

.78

%

Bro

yh

ill

Fu

rnit

ure

Man

ufa

ctu

rin

g1

9,4

61

40

.47

%

Nat

ion

al T

exti

les

Inc

Tex

tile

s1

5,8

43

10

0.3

9%

Oth

er4

,85

1,6

30

78

.32

%3

,76

2,0

20

91

.73

%

Tota

l6

,19

4,6

15

$

10

0.0

0%

4,1

01

,53

7$

1

00

.00

%

Sourc

e: R

uth

erfo

rd C

ounty

Rev

enue

Dep

artm

ent

Ru

ther

ford

Cou

nty

, N

ort

h C

aro

lin

a

Pri

nci

pal

Pro

per

ty T

ax P

ayer

s

Cu

rren

t Y

ear

an

d N

ine

Yea

rs A

go

69

Table 8

Taxes Levied

Fiscal Year for the Prior Years'

Ended Fiscal Year Percentage of Levy Percentage of

June 30, (Original Levy) Amount Original Levy Collections Amount Original Levy

2015 40,380,840$ 38,820,937$ 96.1% -$ 38,820,937$ 96.1%

2014 39,404,494$ 37,988,441$ 96.4% 608,991$ 38,597,332$ 98.0%

2013 35,511,830$ 33,844,505$ 95.3% 1,049,678$ 34,894,183$ 98.3%

2012 33,887,224$ 31,598,979$ 93.2% 1,357,080$ 32,956,059$ 97.3%

2011 33,478,863$ 31,210,949$ 93.2% 1,459,951$ 32,670,900$ 97.6%

2010 33,253,013$ 31,195,062$ 93.8% 1,400,249$ 32,595,311$ 98.0%

2009 33,213,924$ 31,362,647$ 94.4% 1,295,006$ 32,657,653$ 98.3%

2008 32,461,482$ 31,280,218$ 96.4% 999,002$ 32,279,220$ 99.4%

2007 27,557,905$ 26,491,335$ 96.1% 964,663$ 27,455,998$ 99.6%

2006 26,864,829$ 25,786,091$ 96.0% 993,078$ 26,779,169$ 99.7%

(1) Includes general fund and special districts.

Source: Rutherford County Tax Department

Collected within the

Fiscal Year of the Levy

Total Collections to Date

RUTHERFORD COUNTY, NORTH CAROLINA

Property Tax Levies And Collections For Rutherford County (1)

Last Ten Fiscal Years

70

Table 9

Per

Capita

Fiscal Personal Median School Unemployment

Year Population (1) Income (2) Age (3) Enrollment (4) Rate (5)

2015 67,656 28,379$ 43.31 8,301 8.4

2014 66,956 28,283$ 43.18 8,474 8.7

2013 67,303 28,295$ 42.99 8,554 13.7

2012 68,392 27,059$ 42.89 8,672 14.5

2011 67,412 25,986$ 42.50 8,765 14.6

2010 67,784 25,650$ 40.08 9,016 14.8

2009 67,561 26,020$ 39.69 9,298 15.3

2008 67,145 25,775$ 40.56 9,533 7.7

2007 66,305 24,914$ 36.60 9,915 7.9

2006 65,855 23,847$ 38.30 9,898 8.1

(1) Bureau of Economic Analysis, US Department of Commerce.

(2) Bureau of Economic Analysis, US Department of Commerce.

(3) NC Office of State Budget and Management.

(4) North Carolina Department of Public Instruction (Final ADM). Does not include county charter school students.

(5) NC Department of Commerce, Labor and Economic Analysis Division.

RUTHERFORD COUNTY, NORTH CAROLINA

Demographic and Economic Statistics


71

Ta

ble

10

Bu

sin

ess-

typ

e A

ctiv

itie

s

Po

pu

lati

on

Gen

era

lT

ota

lP

erce

nta

ge

Fis

cal

in t

ho

usa

nd

sO

bli

ga

tio

nIn

stall

men

t C

ap

ital

Rev

olv

ing

Ca

pit

al

Pri

ma

ryo

f P

erso

na

lP

er

Yea

r(E

stim

ate

d)

Bo

nd

s P

urc

hase

(1)

Lea

ses

Fu

nd

- D

EN

RL

ease

sG

ov

ern

men

tIn

com

e (2

) C

ap

ita

(2

)

20

15

67

3,5

82

,00

0$

37,9

06,8

77

$

1,3

43,8

65

$

198,8

40

$

1

88

,09

7$

43

,21

9,6

79

$

not

avai

lab

le6

45

.07

$

20

14

67

3,9

32

,00

0$

40,4

83,0

26

$

1,2

79,4

09

$

215,4

10

$

3

05

,43

8$

46

,21

5,2

83

$

2.4

5%

68

9.7

8$

20

13

68

4,1

60

,00

0$

43,7

29,8

78

$

1,4

94,9

93

$

231,9

80

$

-

$

49

,61

6,8

51

$

2.6

2%

72

9.6

6$

20

12

68

4,4

90

,00

0$

48,0

52,8

54

$

1,2

35,6

26

$

248,5

50

$

2

4,3

79

$

54

,05

1,4

09

$

2.8

5%

79

4.8

7$

20

11

67

4,8

20

,00

0$

50,6

01,7

31

$

2,3

85,1

02

$

265,1

20

$

1

74

,06

7$

58

,24

6,0

20

$

3.2

2%

86

9.3

4$

20

10

63

7,0

35

,00

0$

54,9

11,2

71

$

3,2

40,0

00

$

281,6

90

$

4

02

,33

0$

65

,87

0,2

91

$

3.7

6%

1,0

45

.56

$

20

09

63

7,7

20

,00

0$

58,0

74,8

56

$

4,7

58,5

37

$

298,2

60

$

6

21

,29

9$

71

,47

2,9

52

$

4.1

6%

1,1

34

.49

$

20

08

63

9,9

75

,00

0$

57,6

68,4

67

$

3,9

63,3

43

$

314,8

30

$

6

67

,63

2$

72

,58

9,2

72

$

4.1

8%

1,1

52

.21

$

20

07

64

10

,67

5,0

00

$

44,9

53,6

77

$

2,2

74,2

11

$

331,4

00

$

5

77

,39

7$

58

,81

1,6

85

$

3.4

6%

91

8.9

3$

20

06

64

13

,01

0,0

00

$

41,1

04,4

19

$

1,8

76,2

14

$

-$

6

88

,42

6$

56

,67

9,0

59

$

3.4

8%

88

5.6

1$

Sou

rce:

R

uth

erfo

rd C

ou

nty

Rev

enu

e D

epar

tmen

t

Note

: D

etai

ls r

egar

din

g t

he

Cou

nty

's o

uts

tan

din

g d

ebt

can

be

found i

n t

he

note

s to

the

finan

cial

sta

tem

ents

.

(1)

Incl

ud

es c

erti

fica

tes

of

par

tici

pat

ion

an

d p

rivat

e p

lace

men

t deb

t.

(2)

See

th

e D

emogra

ph

ic a

nd

Eco

nom

ic S

tati

stic

s p

age

for

per

sonal

inco

me

and p

opula

tion d

ata.

Go

ver

nm

enta

l A

ctiv

itie

s

RU

TH

ER

FO

RD

CO

UN

TY

, N

OR

TH

CA

RO

LIN

A

Ra

tio

of

Ou

tsta

nd

ing

Deb

t b

y T

yp

e

La

st T

en F

isca

l Y

ears

72

Table 11

Employer Employees Rank Employees Rank

Rutherford County Schools(1)

1000+ 1 1000+ 1

Wilson Medical Center Inc (Rutherford Hospital) 500-999 2 500-999 3

County Of Rutherford 500-999 3 250-499 7

American Greetings Corporation 250-499 4 250-499 6

Isothermal Community College 250-499 5 250-499 8

Wal-Mart Associates Inc 250-499 6 1000+ 2

Rock Tenn Services Inc 250-499 7 250-499

Ingles Markets Inc 250-499 8 100-249 18

The Timken Company 100-249 9 100-249

Watts Regulator Company (A Corp) 100-249 10 100-249 9

Rumbling Bald Resort 100-249 11 250-499 23

Ameridial Inc 100-249 12 100-249

Town Of Forest City 100-249 13 100-249 19

Rutherford Management Corp 100-249 14 100-249 20

Parker Hannifin Corporation 100-249 15 100-249 10

Trelleborg Coated Systems Us Inc (formerly Reeves) 100-249 16 100-249 16

Century Employer Organization Llc 100-249 17 100-249

Professional Transportation Inc 100-249 18 100-249

Duke Energy Carolinas Llc 100-249 19 100-249 24

Lowes Home Centers Inc 100-249 20 100-249

Aallied Die Casting Co Of Nc 100-249 21 100-249

Parton Lumber Co Inc 100-249 22 100-249

Heritage Healthcare Inc 100-249 23 100-249

Peoplease Corporation 100-249 24 100-249

White Oak Manor Inc 100-249 25 100-249

ACS Business Process Solutions Inc. 500-999 4

National Textiles 500-999 5

The Torrington Company 100-249 11

A G Industries Inc 100-249 12

All American Homes of NC LLC 100-249 13

United Southern Industries Inc. 100-249 14

Aeroequip Corp. 100-249 15

Tanner Companies LTD 100-249 17

Cone Jacquards LLC 100-249 21

AFA Acquisition Group 100-249 22

Willow Ridge of NC LLC 100-249 25

NC Department of Commerce, Labor and Economic Analysis Division.

(1) includes all permanent full and part-time positions

Rutherford County, North Carolina

Principal Employers

Current Year and Nine Years Ago

20062015

73

Table 12RUTHERFORD COUNTY BOARD OF EDUCATION

Full-Time Equivalent Employees by Function


Operations &Instructional Programs Support Services Food Services Total

2015 931 47 213 1,191

2014 934 45 207 1,186

2013 940 46 207 1,193

2012 985 46 218 1,249

2011 1,086 44 179 1,309

2010 1,106 52 182 1,340

2009 1,191 55 170 1,416

2008 1,195 54 173 1,422

2007 1,194 55 184 1,433

2006 1,192 56 187 1,435

Source: Rutherford County Board of Education Human Resources Department

74

Table 13

School 2015 2014 2013 2012 2011 2010

Elementary

Cliffside

Square feet 58,844 58,844 58,844 58,844 58,844 58,844

Ninth month membership 333 357 384 382 399 417

Forest City/Dunbar

Square feet 80,881 80,881 80,881 80,881 80,881 80,881


Ellenboro

Square feet 93,786 93,786 93,786 93,786 93,786 93,786


Forrest Hunt

Square feet 62,352 62,352 62,352 62,352 62,352 62,352


Harris

Square feet 76,568 76,568 76,568 76,568 76,568 76,568


Mt. Vernon/Ruth

Square feet 62,500 62,500 62,500 62,500 62,500 62,500


Pinnacle

Square feet 72,084 72,084 72,084 72,084 72,084 72,084


Rutherfordton

Square feet 83,923 83,923 83,923 83,923 83,923 51,034


Spindale

Square feet 61,785 61,785 61,785 61,785 61,785 61,785


Sunshine

Square feet 62,221 62,221 62,221 62,221 62,221 62,221



School Building Information

75

Table 13

School 2015 2014 2013 2012 2011 2010

Middle

Chase

Square feet 101,619 101,619 101,619 101,619 101,619 101,619


East

Square feet 105,574 105,574 105,574 105,574 105,574 105,574


RS

Square feet 149,946 149,946 149,946 149,946 149,946 149,946


High

Chase

Square feet 164,031 164,031 164,031 164,031 164,031 164,031


East

Square feet 165,345 165,345 165,345 165,345 165,345 165,345


RS Central

Square feet 244,741 244,741 244,741 244,741 244,741 244,741


Source: District records

Note: 265 additional students attended the alternative or early college schools.


School Building Information (Continued)

76

Table 14

Fiscal Year Student Percentage Pupil/

Ended Average Daily Cost Per Change In Teaching Teacher

June 30, Expenses Membership Pupil Per Pupil Cost Staff Ratio

2015 76,443,275$ 8,301 9,209$ 6.00% 546 15.2

2014 73,621,823$ 8,474 8,688$ -4.16% 547 15.5

2013 77,543,351$ 8,554 9,065$ 2.28% 549 15.6

2012 76,858,060$ 8,672 8,863$ -2.86% 579 15.0

2011 79,969,255$ 8,765 9,124$ 4.81% 605 14.5

2010 78,485,495$ 9,016 8,705$ -1.26% 634 14.2

2009 81,969,004$ 9,298 8,816$ 4.26% 656 14.2

2008 80,611,748$ 9,533 8,456$ 8.04% 635 15.0

2007 77,608,050$ 9,915 7,827$ 4.11% 565 17.5

2006 74,411,641$ 9,898 7,518$ 6.59% 558 17.7

Source: NC Department of Public Instruction, Statistical Profile, Current Expense Expenditures by Source of Funds


Operating Statistics


77

Table 15

Fiscal Year

Ended

June 30, Minimum Maximum Average

2015 34,100$ 64,380$ 41,840$

2014 31,900$ 61,668$ 41,727$

2013 31,900$ 62,410$ 41,755$

2012 31,530$ 64,580$ 42,873$

2011 31,530$ 65,850$ 43,469$

2010 31,530$ 65,850$ 44,555$

2009 31,430$ 65,750$ 45,115$

2008 30,650$ 65,060$ N/A

2007 26,610$ 55,600$ N/A

2006 26,210$ 57,230$ N/A

Instruction

Source: Rutherford County Board of Education Finance Department, NC Department of Public


Teacher Salaries


The above tabulation represents total salaries including both state base salary and local teacher

supplement. Longevitity payments (ranging from 1.5% to 4.5% of the annual salary for teachers with

10 or more years of service) were paid separately through the 2013-2014 school year. Beginning in

2014-2015, longevity became a part of the state teacher salary schedule, hence included in the totals.

Bonus payments or payments for performing extra duties are not included.

78

Table 16

Fiscal Year Sites and Furniture Debt Service

Ended Building and Principal

June 30, Improvements Equipment Vehicles & Interest Total

2015 33,475$ 474,965$ 83,772$ 1,854,947$ 2,447,159$

2014 129,460$ 909,583$ 173,072$ 1,854,804$ 3,066,919$

2013 516,561$ 8,667$ 384,598$ 1,895,178$ 2,805,004$

2012 548,308$ 3,362$ 26,329$ 198,759$ 776,758$

2011 -$ 106,435$ 86,356$ 604,880$ 797,671$

2010 749,007$ 1,449,143$ 857,414$ 510,479$ 3,566,043$

2009 9,572,224$ 1,763,607$ 863,064$ 588,864$ 12,787,759$

2008 5,135,641$ 1,144,660$ 53,562$ 450,759$ 6,784,622$

2007 3,631,608$ 487,180$ 1,277,766$ 715,174$ 6,111,728$

2006 3,556,748$ 264,350$ 161,228$ 303,060$ 4,285,386$

Source: Rutherford County Board of Education Finance Department


Capital Projects And Expenditures


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81

COMPLIANCE SECTION




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 Auditors’ Report

To the Chairman and Members of the Rutherford County Board of Education Forest City, North Carolina We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to the 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, the aggregate discretely presented component unit, each major fund, and the aggregate remaining fund information of Rutherford County Board of Education, North Carolina, as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the basic financial statements, and have issued our report thereon dated October 15, 2015. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Rutherford County Board of Education’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 Rutherford County Board of Education’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Board’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 a 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 the 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 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.

Page 82

Compliance and Other Matters As a part of obtaining reasonable assurance about whether the Rutherford County Board of Education’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. Purpose of this 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.

Gastonia, North Carolina October 15, 2015

Page 83



Report on Compliance With Requirements Applicable to Each Major Federal Program and Internal Control over Compliance in Accordance with OMB

Circular A-133 and the State Single Audit Implementation Act

Independent Auditors’ Report To the Chairman and Members of the Rutherford County Board of Education Forest City, North Carolina Report on Compliance for Each Major Federal Program We have audited the Rutherford County Board of Education, North Carolina, compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement and the Audit Manual for Governmental Auditors in North Carolina, issued by the Local Government Commission, that could have a direct and material effect on each of Rutherford County Board of Education’s major federal programs for the year ended June 30, 2015. The Rutherford County Board of Education’s major federal programs are identified in the summary of auditors’ 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 its federal programs. Auditor’s Responsibility Our responsibility is to express an opinion on compliance for each of the Rutherford County Board of Education’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 Governmental Auditing Standards, issued by the Comptroller General of the United States; OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and the State Single Audit Implementation Act. Those standards, OMB Circular A-133, and the State Single Audit Implementation Act 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 Rutherford County Board of Education’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 on the Rutherford County Board of Education’s compliance. Page 84

Opinion on Each Major federal Program In our opinion, the Rutherford County Board of Education complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2015. Report on Internal Control Over Compliance Management of the Rutherford County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the Rutherford County Board of Education’s internal control over compliance with the types of requirements that could have a direct and material effect on a major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing our opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of the internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Rutherford County Board of Education’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance; such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.

Gastonia, North Carolina October 15, 2015 Page 85



Report on Compliance With Requirements Applicable To Each Major State Program and Internal Control over Compliance in Accordance with Applicable Sections of OMB

Circular A-133 and the State Single Audit Implementation Act

Independent Auditors’ Report To the Chairman and Members of the Rutherford County Board of Education Forest City, North Carolina Report on Compliance for Each Major State Program We have audited the Rutherford County Board of Education, North Carolina, compliance with the types of compliance requirements described in the Audit Manual for Governmental Auditors in North Carolina, issued by the Local Government Commission, that could have a direct and material effect on each of the Rutherford County Board of Education’s major State programs for the year ended June 30, 2015. The Rutherford County Board of Education’s major State programs are identified in the summary of auditors’ 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, contract, and grants applicable to its state programs. Auditor’s Responsibility Our responsibility is to express an opinion on compliance for each of the Rutherford County Board of education’s major state 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 Governmental Auditing Standards, issued by the Comptroller General of the United States; and applicable sections of OMB Circular A-133, Audits of States, Local Governments and Non-Profit Organizations, as described in the Audit Manual for Governmental Auditors in North Carolina and the State Single Audit Implementation Act. Those standards, OMB Circular A-133, Audits of States, Local Governments and Non-Profit Organizations and the State Single Audit Implementation Act 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 State program occurred. An audit includes examining, on a test basis, evidence about Rutherford County Board of Education’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 state program. However, our audit does not provide a legal determination on the Rutherford County Board of Education’s compliance. Page 86

Opinion on Each Major State Program In our opinion, the Rutherford County Board of Education complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major State programs for the year ended June 30, 2015. Report on Internal Control Over Compliance

Management of the Rutherford County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the Rutherford County Board of Education’s internal control over compliance with the types of requirements that could have a direct and material effect on a major State program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing our opinion on compliance for each major state program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Rutherford County Board of Education’s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a State program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a State program will not be prevented, detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance with a type of compliance requirement of a state program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of the internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.

Gastonia, North Carolina October 15, 2015 Page 87

Page 88

Rutherford County Board of Education, North Carolina Schedule of Findings and Questioned Costs


Section I. Summary of Auditors’ Results

Financial Statements Type of auditors’ report issued: Unmodified ` Internal control over financial reporting:

Material weakness(es) identified? yes X no

Significant Deficiency(s) identified that are not considered to be material weaknesses? yes X none reported Noncompliance material to financial statements noted? yes X no Federal Awards Internal control over major federal programs:


Significant Deficiency (s) identified that are not considered to be material weaknesses? yes X none reported

Type of auditor’s report issued on compliance for major federal programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with Section 510(a) of Circular A-133? yes X no Identification of major federal programs:

CFDA Numbers Names of Federal Program or Cluster

84.010 Title I 84.367 Improving Teacher Quality

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Dollar threshold used to distinguish between Type A and Type B Programs: $ 383,464 Auditee qualified as low-risk auditee? X yes no

State Awards Internal control over major State programs:


Significant Deficiency (s) identified that are not considered to be material weaknesses? yes X none reported Type of auditors’ report issued on compliance for major State programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with the State Single Audit Implementation Act? yes X no Identification of major State programs: Program Name State Public School Fund NC Pre-K Program

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Section II. Financial Statement Findings

None reported.

Section III. Federal Award Findings and Questioned Costs

None reported.

Section IV. State Award Findings and Questioned Costs

None reported.

Page 91

Rutherford County Board of Education, North Carolina Corrective Action Plan



None reported


None reported


None reported

Page 92

Rutherford County Board of Education, North Carolina Summary Schedule of Prior Audit Findings



None reported.


None reported.


None reported.

State/

Federal Pass-through

Grantor/Pass-through CFDA Grantor's

Grantor/Program Title Number Number Expenditures

Federal Grants:

Cash Programs:

U. S. Department of Agriculture

Food and Nutrition Service

Passed-through the N.C. Department of Public Instruction:

Child Nutrition Cluster:

School Breakfast Program 10.553 831,390$

National School Lunch Program - Cash Assistance 10.555 2,786,312

National School Lunch Program - Non-cash (Commodities) 10.555 269,627

Passed-through the N.C. Department of Heath and Human Services:

Division of Public Health:

Summer Food Service Program for Children 10.559 4,886

Total Child Nutrition Cluster: 3,892,215

Total U. S. Department of Agriculture 3,892,215

U.S. Department of Education

Office of Elementary and Secondary Education


Grants to Local Education - Basic and Concentration

Title I Cluster:

Educationally Deprived Children 84.010 PRC 050 2,974,834

School Improvement Cluster

School Improvement - Title I 84.010 PRC 105 197,118

Child Nutrition Equipment 10.579 PRC 053 13,778

Safe and Drug Free Schools and Communities 84.186 PRC 048 & 058 907

21st Century Community Learning Centers 84.287 PRC 110 551,330

Title III, Language Acquisition 84.365 PRC 104 24,006

Race to the Top - ARRA 84.395 PRC 154 36,856

Improving Teacher Quality Cluster

- Teacher Quality Enhancement 84.367 PRC 103 341,581

Office of Special Education and Rehabilitative Services


Special Education Cluster:

Individuals with Disabilities Education Act

Education of the Handicapped 84.027 PRC 060 1,834,392

Preschool Handicapped 84.173 PRC 049 62,197

Targeted Assistance 84.027 PRC 118 10,459

Targeted Assistance 84.027 PRC 119 652

Total Special Education Cluster: 1,907,700

State Personnel Development 84.323 PRC 082 38,469

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SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS

(Continued)

v

State/




Education for Homeless Children and Youth Cluster

Education of Homeless Children and Youth 84.196 PRC 026 33,400


Carl D. Perkins Vocational and Applied Technology

Education Act Amendments of 1990

Basic Grants to States

- Program Development 84.048 PRC 017 130,472

Total U. S. Department of Education 6,250,451

Office of the Assistant Secretary for Postsecondary Education


Gear-Up Program 84.344 90,687

Rural Education 84.358 PRC 109 171,693

U.S. Department of Health and Human Services

Direct Programs:

Head Start 93.600 2,316,066

U.S. Department of Defense

Direct Program:

ROTC 12.000 61,005

Total federal assistance 12,782,117

State Grants:

N.C. Department of Public Instruction:

State Public School Fund 47,858,481

Driver Training - SPSF PRC 012 179,069

School Technology Fund - SPSF PRC 015 155,762

Vocational Education

- State Months of Employment PRC 013 2,673,346

- Program Support Funds PRC 014 122,807

Textbooks - Noncash -

State Appropriations- School Buses - Noncash 40,380

Total N.C. Department of Public Instruction 51,029,845

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(Continued)

State/




N.C. Department of Health and Human Services:

Division of Child Development:

NC Pre-Kindergarten Program 1,334,390

Division of Public Health

School Nurse Funding Initiative 250,000

Smart Start 67,084

Total N.C. Department of Health and Human Services 1,651,474

Total State assistance 52,681,319

Total federal and State assistance 65,463,436$

Page 95

The accompanying schedule of expenditures of federal and State awards includes the federal and State grant activity of

Rutherford County Board of Education and is presented on the modified accrual basis of accounting. The information in this

schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of State, Local Governments, and

Non-Profit Organizations and State Single Audit Implementation Act. Therefore some amounts presented in this schedule may

differ from amounts presented in, or used in the preparation of the basic financial statements.




p1cdn4static.sharpschool.comp1cdn4static.sharpschool.com/UserFiles/Servers...BOARD OF EDUCATIONJanet H. Mason, Ed.D. Barry Gold, Chair Sherry Bright, Vice-Chair John Mark Bennett Jackie

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