Comprehensive Annual Financial Report Ending June 2011

Fayette County Board of Education
Management's Discussion and Analysis
June 30, 2011
Major capital asset related events during the year included the following:
• The School System purchased 24 buses totaling approximately $2.0 million, funded with
State issued bond proceeds and SPLOST receipts.
• During the year, the School System completed wiring upgrades for schools to accommodate
its 21st century classroom initiative.
• The School System completed renovation projects on tracks at four of its five high schools.
Additional information on the School System's capital assets can be found in Note G on page 58 and
59 of this report.
Long-term debt- As of June 30, 2011, the School System had total bonded debt of $79,728,368 from
three separate bond issuances. This bonded debt is payable from an ad valorem tax on all taxable
property within the School District, without limit as to rate or amount. Additionally, the School
System had debt of $6,210,785 under two capital leases for buses, four capital leases for computer
equipment and one certificate of participation (similar to a capital lease) related to construction of
facilities.
The School System maintains a "AA-" rating from Standard & Poor's and a "Aa3" rating from
Moody's Investor Services for general obligation debt, without credit enhancements as a result of the
Georgia Intercept Program or bond insurance.
State statues limit the amount of general obligation debt a governmental entity may issue to ten
percent of its total assessed valuation. The current debt limitation for the School System is
$462,186,375 which is significantly in excess of the School System's outstanding general obligation
debt.
Additional information on the School System's long-term debt can be found in Note I on pages 60
and 61 of tl1is report.
Economic Factors and Next Year's Budgets and Rates
Going into fiscal year 2012, the economic position of the School System appeared to be extremely
strong. Beginning in 2009, the System underwent significant budget reductions tl1at allowed it to
grow its fund balance from a 2008 fund balance of $1.7 million to an estimated $25 million at the end
of 2011. Due to the strong financial position, in late fiscal year 2011, the Board voted to restore
paycuts made in 2010. The pay restorations would continue into the 2012 budget.
In preparing the fiscal year 2012 budget, School System administration had to consider several
factors that would impact the 2012 revenues as compared to the previous year:
• School System enrollment has continued to decline which would negatively impact earnings
of State funding.
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