Comprehensive Annual Financial Report Ending June 2011

Fayette County Board of Education
Management's Discussion and Analysis
June 30, 2011
The Genera/ Fund is the chief operating fund of the School System. Its fund balance increased $9.0
million over the prior year. While management operates under a balanced budget, there are times
when revenues will exceed expenditures and, conversely, when revenues fall below expected levels.
Further discussion of budget to actual comparisons can be found under "General Fund Budgetary
Highlights." Overall, revenues for the General Fund decreased approximately $2.65 million
compared to the prior year. This was a net result of an increase in State funds of $8.54 million, $5.90
million decrease in federal funds, and a decrease of $5.29 million in local funds.
• All public school systems in Georgia receive state funding based on the Quality Basic
Education Act (QBE) earnings formula. The formula is based on a system's enrollment
multiplied by dollar values for different cost categories. As the economy worsened at the
end of fiscal 2008, the State began increasing the "amended formula adjustment" (a funding
reduction also known as austerity cuts). When the State began receiving ARRA funding in
fiscal year 2009, the Federal money was used to prop up the State budget. In doing so,
school districts received an allocation of ARRA money but their austerity cuts were
increased by the same amount, netting to zero additional funding. For fiscal year 2010, the
School System's austerity cut, net of ARRA funding, was $9.8 million, on a cash basis. For
fiscal year 2011, d1at cut increased by $3.1 million. While enrollment dropped by 461
students (FTE), gross QBE earnings slighdy increased by $0.34 million for an increase in the
training and experience factor within the earnings formula which gives credit to districts for
teachers' years of experience and degrees levels.
• Federal sources in the General Fund decreased $5.90 million. Funding under the American
Recovery and Reinvestment Act (ARRA) came to an end. In 2009 and 2010, the State had
used this money to offset increases to the QBE amended formula reductions. However,
unexpectedly, the Federal government passed d1e Jobs Bill in September 2010 that provided
the School System with $4.33 million. The State was not able to use this money towards its
budget and therefore it had no effect on the State QBE allotment funding as in the prior two
years.
• Property taxes decreased by $6.0 million. The decrease is reflective of the decrease in the
property tax digest as a result of d1e significant downturn in the housing market.
• Auto ad valorem taxes were up $0.18 million. Intangible and transfer taxes, both related to
real estate transactions, were up $0.12 million.
• The School System received net vendor reimbursements related to cRate of $0.46 million in
2011. In 2010, d1e School System did not receive any reimbursements.
24