Franklin Financial Management by aft19038

VIEWS: 78 PAGES: 67

More Info
									Franklin County
School District


    Basic Financial Statements,
 Supplementary Information, and
  Independent Auditor’s Reports



    Year Ended June 30, 2009




    Critchfield & Critchfield
     Certified Public Accountants, LLC
            336 West Broadway
        Danville, Kentucky 40422
                                                            FRANKLIN COUNTY SCHOOL DISTRICT
                                                                     Table of Contents
                                                                 Year Ended June 30, 2009




                                                                                                                                                       Page

Independent Auditor’s Report ....................................................................................................................... 1

Management’s Discussion and Analysis ..................................................................................................... 3

Basic Financial Statements:

  District-wide Financial Statements:

     Statement of Net Assets ............................................................................................................................ 8

     Statement of Activities ................................................................................................................................ 9

  Fund Financial Statements:

     Balance Sheet – Governmental Funds .................................................................................................... 10

     Reconciliation of the Balance Sheet - Governmental
      Funds to the Statement of Net Assets.................................................................................................. 11

     Statement of Revenues, Expenditures and Changes in
       Fund Balances – Governmental Funds................................................................................................ 12

     Reconciliation of the Statement of Revenues, Expenditures, and
      Changes in Fund Balances of Governmental Funds to the
      Statement of Activities .......................................................................................................................... 13

     Statement of Revenues, Expenditures and Changes in
       Fund Balance – Budget and Actual - General Fund ............................................................................ 14

     Statement of Revenues, Expenditures and Changes in
       Fund Balance – Budget and Actual - Special Revenue Fund.............................................................. 15

     Statement of Net Assets – Proprietary Funds ......................................................................................... 16

     Statement of Revenues, Expenses and Changes in Net Assets –
       Proprietary Funds.................................................................................................................................. 17

     Statement of Cash Flows – Proprietary Funds ........................................................................................ 18

     Statement of Fiduciary Net Assets – Fiduciary Funds ............................................................................ 19
                                                       FRANKLIN COUNTY SCHOOL DISTRICT
                                                           Table of Contents - Continued
                                                            Year Ended June 30, 2009




Notes to the Basic Financial Statements ................................................................................................... 20

Supplementary Information:

  Combining Statements – Non-major Funds:

     Combining Balance Sheet – Non-major Governmental Funds ............................................................... 33

     Combining Statement of Revenues, Expenditures and Changes
      in Fund Balances – Non-major Governmental Funds ......................................................................... 34

     Combining Statement of Fiduciary Net Assets.........................................................................................35

     Combining Statement of Changes in Assets and Liabilities – Agency Funds..........................................37

      High School Activity Funds - Statement of Cash Receipts & Disbursements.........................................38

Schedule of Expenditures of Federal Awards ........................................................................................... 43

Notes to the Schedule of Expenditures of Federal Awards .................................................................... 44


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 .................................. 45

Report on Compliance with Requirements
 Applicable to Each Major Program and Internal Control over
 Compliance in Accordance with OMB Circular A-133 .......................................................................... 46

Schedule of Findings, Questioned Costs & Corrective Action Plan ...................................................... 48

Management Letter Comments ................................................................................................................... 49
                                              Critchfield and Critchfield
                                               Certified Public Accountants, LLC
                                                       336 West Broadway
                                                   Danville, Kentucky 40422




                                             INDEPENDENT AUDITOR'S REPORT




State Committee for School District Audits
Members of the Board of Education
Franklin County School District
Frankfort, Kentucky


We have audited the accompanying financial statements of the governmental activities, the business-type activities, each
major fund, and aggregate remaining fund information of the Franklin County School District as of and for the year ended
June 30, 2009, which collectively comprise the District's basic financial statements as listed in the table of contents. These
financial statements are the responsibility of the District's management. Our responsibility is to express opinions on these
financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America, the
standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of
the United States and the Audit requirements prescribed by the Kentucky State Committee for School District Audits in the
Independent Auditor’s Contract Appendix I, II, and III. 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 includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial
position of the governmental activities, the business type activities, each major fund, and the aggregate remaining fund
information of the Franklin County School District as of June 30, 2009, and the respective changes in financial position and
cash flows where applicable and the respective budgetary comparison for the General Fund and the major Special
Revenue Fund for the year then ended, in conformity with accounting principles generally accepted in the United States of
America.

In accordance with Government Auditing Standards, we have also issued a report dated November 13, 2009, on our
consideration of the Franklin County School District’s internal control over financial reporting and our tests of its
compliance with certain provisions of 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 an opinion on the internal control over financial reporting or compliance. That report is an
integral part of an audit performed in accordance with Government Auditing Standards and should be considered in
assessing the results of our audit.
Management's discussion and analysis on pages 3 through 7 is not a required part of the basic financial statements but is
supplementary information required by accounting principles generally accepted in the United States of America. We have
applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of
measurement and presentation of the supplementary information. However, we did not audit the information and express
no opinion on it.

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the
Franklin County School District's basic financial statements. The combining and individual non-major fund financial
statements are presented for the purpose of additional analysis and are not a required part of the basic financial
statements. The accompanying schedule of expenditures of federal awards is presented for the purposes of additional
analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and
Non-Profit Organizations, and is also not a required part of the basic financial statements of the Franklin County School
District. The combining and individual non-major fund financial statements and the schedule of expenditures of federal
awards have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our
opinion, are fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.




Critchfield & Critchfield, CPAs LLC


November 13, 2009




                                                           -2-
Management's Discussion and Analysis (MD&A)
                               FRANKLIN COUNTY SCHOOL DISTRICT
                             Management’s Discussion and Analysis (MD&A)
                                     Year Ended June 30, 2009




As management of the Franklin County School District (District), we offer readers of the District’s
financial statements this narrative overview and analysis of the financial activities of the District for
the fiscal year ended June 30, 2009. We encourage readers to consider the information
presented here in conjunction with additional information found within the body of the financial
statements.



FINANCIAL HIGHLIGHTS

   The District continues to take advantage of bond refinancing when net present value saving can
    occur. During 2009 $1,810,000 in refunding bonds were issued for which a net present value savings
    of $85,614 was achieved.

   Interest income for the District has declined due to falling interest rates. Interest earned and credited
    to the District’s General Fund in 2008-2009 was $241,460.

   The General Fund had $42,386,886 in revenue, which consisted primarily of State Program revenues
    (SEEK and on-behalf payments), property taxes, utility taxes, and motor vehicle taxes. Excluding
    interfund transfers, there was $41,012,906 in general fund expenditures.

   The District continues to participate in the Kentucky Inter-Local School Transportation Association
    (KISTA) equipment lease revenue bonds program for the purpose of acquiring replacement buses.
    The District acquired one bus under this program during the 2008-2009 fiscal year.




                                                    -3-
OVERVIEW OF FINANCIAL STATEMENTS

This discussion and analysis is intended to serve as an introduction to the District’s basic financial
statements. The District’s basic financial statements comprise three components: 1) district-wide financial
statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains
other supplementary information in addition to the basic financial statements themselves.


District-wide financial statements. The district-wide financial statements are designed to provide
readers with a broad overview of the District’s finances, in a manner similar to a private-sector business.

The statement of net assets presents information on all of the District’s assets and liabilities, with the
difference between the two reported as net assets. Over time, increases or decreases in net assets may
serve as a useful indicator of whether the financial position of the district is improving or deteriorating.

The statement of activities presents information showing how the District’s net assets changed during the
most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise
to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are
reported in this statement for some items that will only result in cash flows in future fiscal periods.

The district-wide financial statements outline functions of the District that are principally supported by
property taxes and intergovernmental revenues (governmental activities). The governmental activities of
the District include instruction, support services, operation and maintenance of plant, student
transportation and operation of non-instructional services. Fixed assets and related debt are also
supported by taxes and intergovernmental revenues.

The district-wide financial statements can be found on pages 8 - 9 of this report.


Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over
resources that have been segregated for specific activities or objectives. This is a state mandated uniform
system and chart of accounts for all Kentucky public school districts utilizing the MUNIS administrative
software. The District uses fund accounting to ensure and demonstrate compliance with finance-related legal
requirements. All of the funds of the District can be divided into three categories: governmental, proprietary
funds and fiduciary funds. Fiduciary funds are trust funds established by benefactors to aid in student
education, welfare and teacher support. The only proprietary funds are our vending and food service
operations. All other activities of the district are included in the governmental funds.

The basic governmental fund financial statements can be found on pages 10 - 19 of this report.


Notes to the financial statements. The notes provide additional information that is essential to a full
understanding of the data provided in the district-wide and fund financial statements. The notes to the
financial statements can be found on pages 20 - 32 of this report.


DISTRICT-WIDE FINANCIAL ANALYSIS

Net assets may serve over time as a useful indicator of a government’s financial position. In the case of the
District, assets exceeded liabilities by $25.1 million as of June 30, 2009.




                                                      -4-
The largest portion of the District’s net assets reflects its investment in capital assets (e.g., land and
improvements, buildings and improvements, vehicles, furniture and equipment); less any related debt used to
acquire those assets that is still outstanding. The District uses these capital assets to provide services to its
students; consequently, these assets are not available for future spending. Although the District’s investment
in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this
debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate
these liabilities.

The District’s financial position is the product of several financial transactions including the net results of
activities, the acquisition and payment of debt, the acquisition and disposal of capital assets, and the
depreciation of capital assets.



                    Net Assets for the period ending June 30, 2009 and June 30, 2008

A comparison of June 30, 2009 and June 30, 2008 government wide net assets is as follows:


                                                             2009                   2008

Current Assets                                        $    7,316,198          $    9,456,703
Non-current Assets                                        79,747,285              80,880,116

Total Assets                                          $ 87,063,483            $ 90,336,819

Current Liabilities                                   $    5,227,561          $    7,310,449
Non-current Liabilities                                   56,734,391              59,503,842

Total Liabilities                                     $ 61,961,952            $ 66,814,291

Net Assets
Investment in capital assets (net of debt)            $ 20,854,189            $ 20,749,679
Restricted                                                   -0-                     -0-
Unrestricted                                             4,247,342               2,772,849

Total Net Assets                                      $ 25,101,531            $ 23,522,528



Current assets and non-current liabilities decreased because of the decrease in construction fund cash.




                                                       -5-
The following table presents a District wide comparison of changes in net assets and summary of revenues
and expenses for the fiscal years ended June 30, 2009 and June 30, 2008.


                                                              2009               2008
               Revenues:
               Program Revenues
                  Fees for services                       $    2,186,802    $     1,893,524
                  Federal/state grants                         6,609,306          7,333,757
               General Revenues
                  Property taxes                              16,405,887         15,762,192
                  Utility taxes                                2,857,275          2,766,999
                  Interest earnings                              241,460            625,790
                  State grants                                28,949,091         28,009,224
                  Other                                          171,691            299,497
               Total revenues                                 57,421,512         56,690,983

               Expenses:
                 Instruction                                  30,124,756         30,707,483
                 Student support services                      2,594,810          2,360,365
                 Instructional support                         2,653,504          2,747,726
                 District administration                       1,172,950          1,288,864
                 School administration                         3,579,728          3,437,982
                 Business support                                669,572            671,076
                 Plant operation                               4,555,730          4,331,459
                 Student transportation                        3,427,141          3,489,760
                 Community service                               438,391            375,575
                 Debt service - interest                       2,618,294          2,969,864
                 Food service                                  2,908,091          2,755,469
                 Daycare                                         636,231            455,156
                 Community education                             461,137            529,663
               Total expenditures                             55,840,335         56,120,442

               Change in Net Assets                       $    1,581,177    $       570,541


The principal reasons for the changes in net assets were increased property tax revenues, and federal/state
grant program revenues.

On-behalf payment amounts are included in the above figures. On-behalf payments, as defined by KDE, are
payments the state makes on behalf of employees to the various agencies for health and life insurance,
retirement benefits, debt service, and administration fees.

General Fund Budgetary Highlights

       The District’s total general fund revenues for the fiscal year ended June 30, 2009, net of interfund
        transfers, were $42.4 million.
       General fund budget compared to actual revenue shows favorable variances for all revenue sources,
        except property tax, vehicle tax, tuition, interest earned, and federal revenues.
       The total cost of all general fund programs and services was $41.7 million.




                                                    -6-
Future Budgetary Implications

In Kentucky, the public schools fiscal year is July 1 – June 30; other programs, i.e. some federal programs
operate on a different fiscal calendar, but are reflected in the District overall budget. By law, the budget must
have a minimum 2% contingency. The District adopted a budget for 2008-2009 with an approximate 3.4%
contingency. The District has adopted a budget for 2009-2010 with an approximate 5.2% contingency.



CAPITAL ASSET AND DEBT ADMINISTRATION


Capital Assets

At the end of the 2009 fiscal year, the District had invested 79,747,285 in a broad range of capital assets,
including equipment, buses, buildings, and land. This amount represents a net decrease of $1,132,831.
Depreciation expense for the year was $3,025,245.

                                                    District Capital Assets
                                                    (net of Depreciation)

                                   Governmental                  Business-Type
                                     Activities                    Activities                   Total

Land                          $         1,208,980            $             -0-         $       1,208,980
Land Improvements                       1,719,643                          -0-                 1,719,643
Buildings & Improvements               72,720,081                          -0-                72,720,081
Equipment                               1,318,079                     515,015                  1,833,094
Vehicles                                2,251,076                          -0-                 2,251,076
Construction in Progress                   14,411                                                 14,411
                              $        79,232,270            $        515,015          $      79,747,285


Long-Term Debt

The District had $56,799,000 in bonds outstanding at year-end. The District issued School Building
Refunding Bonds (series 2009) for $1,810,000 to refund series 1999 bond. The District retired $4,467,000 in
bonded debt during fiscal year 2009.


Contacting the District's Financial Management

This financial report is designed to provide our citizens, taxpayers and other interested readers with a general
overview of the District's finances and to demonstrate the District's accountability for the money it receives. If
you have questions about this report or need additional financial information contact the District's
Superintendent or Finance Director.




                                                       -7-
District-Wide Financial Statements
                                                  FRANKLIN COUNTY SCHOOL DISTRICT
                                                        Statement of Net Assets
                                                             June 30, 2009




                                                                                         Business-
                                                                Governmental               Type
Assets                                                            Activities             Activities              Total

Current Assets
  Cash and cash equivalents                                 $        5,222,179       $        444,587       $    5,666,766
  Inventory                                                                 -0-                64,355               64,355
  Receivable                                                           617,351                     -0-             617,351
  Due from federal/state governments                                   838,110                131,791              969,901

         Total current assets                                        6,677,640                640,733            7,318,373

Non-current Assets
  Land                                                              1,208,980                      -0-            1,208,980
  Capital assets                                                  108,323,278               1,503,371           109,826,649
    Less: accumulated depreciation                                (30,299,988)               (988,356)          (31,288,344)

         Total non-current assets                                  79,232,270                 515,015            79,747,285

         Total assets                                       $      85,909,910        $      1,155,748       $    87,065,658


Liabilities

Current Liabilities
  Accounts payable                                          $          321,244       $         39,298       $       360,542
  Deferred revenue – federal/state grants                              633,885                     -0-              633,885
  Current portion of bond obligations                                2,785,000                     -0-            2,785,000
  Current portion of capital lease obligations                         477,778                     -0-              477,778
  Current portion of accrued sick leave                                279,122                     -0-              279,122
  Accrued wages & benefits                                              19,049                  3,987                23,036
  Interest payable                                                     668,198                     -0-              668,198

         Total current liabilities                                   5,184,276                 43,285             5,227,561

Non-current Liabilities
  Non-current portion of bond obligations                          53,682,501                         -0-        53,682,501
  Non-current portion of capital lease obligations                  1,947,817                         -0-         1,947,817
  Non-current portion of accrued sick leave                         1,104,073                         -0-         1,104,073

         Total non-current liabilities                             56,734,391                         -0-        56,734,391

         Total liabilities                                  $      61,918,667        $         43,285       $    61,961,952


Net Assets
Invested in capital assets, net of related debt                    20,339,174                 515,015            20,854,189
Unrestricted                                                        3,652,069                 597,448             4,249,517

         Total net assets                                   $      23,991,243        $      1,112,463       $    25,103,706




                                           See accompanying notes to financial statements
                                                               -8-
                                                              FRANKLIN COUNTY SCHOOL DISTRICT
                                                                     Statement of Activities
                                                                   Year ended June 30, 2009

                                                                                                                                    Net (Expense) Revenue and
                                                                             Program Revenues                                         Changes in Net Assets

                                                            Charges            Operating               Capital                               Business-
                                                              For              Grants &               Grants &           Governmental          Type
                                           Expenses         Services          Contributions          Contributions         Activities        Activities            Total
FUNCTIONS/PROGRAMS
 Governmental Activities:
   Instruction                         $   30,124,756   $      40,945    $       3,375,589    $                -0-   $    (26,708,222)   $           -0-   $    (26,708,222)
   Support services:
     Student                                2,594,810              -0-             502,559                     -0-         (2,092,251)               -0-         (2,092,251)
     Instruction staff                      2,653,504              -0-             748,918                     -0-         (1,904,586)               -0-         (1,904,586)
     District administrative                1,172,950              -0-                  -0-                    -0-         (1,172,950)               -0-         (1,172,950)
     School administrative                  3,579,728              -0-              35,917                     -0-         (3,543,811)               -0-         (3,543,811)
     Business                                 669,572              -0-              31,307                     -0-           (638,265)               -0-           (638,265)
     Plant operation                        4,555,730              -0-                  -0-                    -0-         (4,555,730)               -0-         (4,555,730)
     Student transportation                 3,427,141              -0-              10,370                     -0-         (3,416,771)               -0-         (3,416,771)
   Community service activities               438,391              -0-             425,608                     -0-            (12,783)               -0-            (12,783)
   Interest on long-term debt               2,618,294              -0-                  -0-                    -0-         (2,618,294)               -0-         (2,618,294)

      Total governmental activities        51,834,876          40,945            5,130,268                     -0-        (46,663,663)               -0-        (46,663,663)


Business-Type Activities:
   Food service                             2,908,091       1,183,814            1,479,038                     -0-                 -0-        (245,239)           (245,239)
   Daycare fund                               636,230         702,323                   -0-                    -0-                 -0-           66,093              66,093
   Community education                        461,137         259,720                   -0-                    -0-                 -0-        (201,417)           (201,417)

      Total business-type activities        4,005,458       2,145,857            1,479,038                     -0-                 -0-        (380,563)           (380,563)

      Total primary government         $   55,840,334   $   2,186,802    $       6,609,306    $                -0-   $    (46,663,663)   $    (380,563)    $    (47,044,226)


                                                                              General Revenues:
                                                                               Taxes:
                                                                                 Property taxes                      $     14,888,327               -0-          14,888,327
                                                                                 Motor vehicle taxes                        1,517,560               -0-           1,517,560
                                                                                 Utility taxes                              2,857,275               -0-           2,857,275
                                                                               Interest earnings                              237,365            4,095              241,460
                                                                               State grants                                28,648,253          300,838           28,949,091
                                                                               Miscellaneous                                   96,687           75,004              171,691
                                                                               Transfers                                    (221,902)          221,902                   -0-
                                                                              Total General Revenues                       48,023,565          601,839           48,625,404

                                                                              Change in net assets                          1,359,902          221,276            1,581,178

                                                                              Net assets – beginning                       22,631,341          891,187           23,522,528

                                                                              Net assets – ending                    $     23,991,243    $   1,112,463     $     25,103,706


                                                            See accompanying notes to financial statements
                                                                                -9-
Fund Financial Statements
                                                     FRANKLIN COUNTY SCHOOL DISTRICT
                                                       Balance Sheet - Governmental Funds
                                                                 June 30, 2009




                                                                                                                     Other               Total
                                                      General             Special              Construction       Governmental        Governmental
                                                       Fund               Revenue                 Fund               Funds               Funds
Assets and Resources:

  Cash and cash equivalents                      $      2,772,326 $                 -0-    $      1,005,172 $        1,444,681 $         5,222,179
  Receivable                                              617,351                   -0-                   -0-                -0-           617,351
  Due from federal/state government                            -0-             838,110                    -0-                -0-           838,110
  Due from other funds                                    136,034                  -0-                   -0-                 -0-           136,034


         Total assets and resources              $      3,525,711   $          838,110     $      1,005,172   $      1,444,681    $      6,813,674



Liabilities and Fund Balances:

Liabilities
     Accounts payable                            $       152,849 $              68,191 $            100,204 $               -0- $          321,244
     Current portion of accumulated sick leave           279,122                     -0-                 -0-                -0-            279,122
     Accrued wages & benefits                             19,049                     -0-                 -0-                -0-             19,049
     Deferred revenue – federal/state grants                  -0-              633,885                   -0-                 -0-           633,885
     Due to other funds                                       -0-              136,034                    -0-                -0-           136,034

         Total liabilities                               451,020               838,110              100,204                 -0-          1,389,334


Fund Balances

    Unreserved                                          3,074,691                    -0-            904,968          1,444,681           5,424,340

Total fund balances                                     3,074,691                    -0-            904,968          1,444,681           5,424,340

Total liabilities and fund balances              $      3,525,711   $          838,110     $      1,005,172   $      1,444,681    $      6,813,674




                                                 See accompanying notes to financial statements

                                                                        -10-
                                              FRANKLIN COUNTY SCHOOL DISTRICT
                                     Reconciliation of the Balance Sheet - Governmental Funds to
                                                     The Statement of Net Assets
                                                             June 30, 2009




Total fund balance per fund financial statements                                               $    5,424,340

Amounts reported for governmental activities in the statement of net
 assets are different because:

Capital assets are not reported in this fund financial statement because
  they are not current financial resources, but they are reported in the
  statement of net assets.                                                                         79,232,270
Certain liabilities (such as bonds payable, the long-term portion of accrued
  sick leave, and accrued interest) are not reported in this fund financial
  statement because they are not due and payable, but they are presented
  in the statement of net assets.                                                                  (60,665,367)


Net assets for governmental activities                                                         $   23,991,243




                                              See accompanying notes to financial statements

                                                                   -11-
                                                 FRANKLIN COUNTY SCHOOL DISTRICT
                                    Statement of Revenues, Expenditures, and Changes in Fund Balances
                                                           Governmental Funds
                                                           Year ended June 30, 2009




                                                                                                                        Other               Total
                                                       General              Special              Construction        Governmental        Governmental
                                                        Fund                Revenue                 Fund                Funds               Funds
Revenues:
  From local sources
     Taxes
       Property                                  $     11,717,476    $                -      $            -      $     3,170,851     $     14,888,327
       Motor vehicle                                    1,517,560                     -                   -                  -              1,517,560
       Utilities                                        2,857,275                     -                   -                  -              2,857,275
     Tuition and fees                                      40,945                  21,693                 -                  -                 62,638
     Earnings on investments                              192,067                   3,433              41,865                -                237,365
     Other local revenues                                  97,998                  35,253                 -                  -                133,251
  Intergovernmental – state                            25,935,631               2,379,494                 -            2,684,688           30,999,813
  Intergovernmental – federal                              27,934               2,693,828                 -                  -              2,721,762

             Total revenues                            42,386,886               5,133,701              41,865          5,855,539           53,417,991


Expenditures:
  Instruction                                          24,625,959               3,436,381                 -                  -             28,062,340
  Support services:
     Student                                            2,079,683                502,559                  -                  -              2,582,242
     Instruction staff                                  1,698,497                748,918                  -                  -              2,447,415
     District administrative                            1,166,894                    -                    -                  -              1,166,894
     School administrative                              3,540,324                 35,917                  -                  -              3,576,241
     Business                                             566,430                 31,307                  -                  -                597,737
     Plant operation                                    4,395,369                    -                    -              104,222            4,499,591
     Student transportation                             2,932,160                 10,370                  -                  -              2,942,530
  Facilities acquisition and construction                      -                     -              1,482,687                -              1,482,687
  Community service activities                              7,590                425,608                  -                  -                433,198
  Debt service                                                 -                     -                    -            5,765,073            5,765,073

             Total expenditures                        41,012,906               5,191,060           1,482,687          5,869,295           53,555,948


Excess (deficit) of revenues over expenditures          1,373,980                 (57,359)         (1,440,822)            (13,756)           (137,957)


Other Financing Sources (Uses)
  Sale of assets                                              574                    -                   -                   -                     574
  Operating transfers in                                  391,079                114,580              518,400           4,261,715            5,285,774
  Operating transfers out                                (725,317)               (57,221)            (300,000)         (4,199,378)          (5,281,916)

             Total other financing sources (uses)        (333,664)                57,359              218,400             62,337                4,432


Net Change in Fund Balance                              1,040,316                      -0-         (1,222,422)            48,581             (133,525)

Fund balance, July 1, 2008                              2,034,375                      -0-          2,127,390          1,396,100            5,557,865

Fund balance, June 30, 2009                      $      3,074,691    $                 -0- $          904,968    $     1,444,681     $      5,424,340




                                                 See accompanying notes to financial statements

                                                                         -12-
                                           FRANKLIN COUNTY SCHOOL DISTRICT
                            Reconciliation of the Statement of Revenues, Expenditures, and Changes in
                               Fund Balances of Governmental Funds to the Statement of Activities
                                                  For the year ended June 30, 2009




Net change in total fund balances per fund financial statements                                $        (133,525)

Amounts reported for governmental activities in the statement of activities
 are different because:

Capital outlays are reported as expenditures in this fund financial statement
  because they use current financial resources, but they are presented as
  assets in the statement of activities and depreciated over their
  estimated economic lives. The difference is the amount by which
  capital outlays exceed depreciation expense for the year.                                        (1,367,239)

Bond and capital lease payments are recognized as expenditures of current
  financial resources in the fund financial statement but are reductions of
  liabilities in the statement of net assets.                                                       3,234,167

Generally, expenditures recognized in this fund financial statement are limited
 to only those that use current financial resources, but expenses are
 recognized in the statement of activities when they are incurred.                                      (373,501)


Change in net assets of governmental activities                                                $    1,359,902




                                             See accompanying notes to financial statements

                                                                  -13-
                                                     FRANKLIN COUNTY SCHOOL DISTRICT
                                        Statement of Revenues, Expenditures, and Changes in Fund Balance
                                                        Budget and Actual - General Fund
                                                           Year ended June 30, 2009




                                                                                                                                Variance
                                                                                                                                with Final
                                                                      Budgeted Amounts                                           Budget
                                                                                                                                Favorable
                                                           Original                  Final                 Actual             (Unfavorable)
Revenues:
  From local sources
     Taxes
        Property                                     $     12,662,739          $    11,919,906       $     11,717,476     $        (202,430)
        Motor vehicle                                       1,642,244                1,561,727              1,517,560               (44,167)
        Utilities                                           2,842,000                2,800,000              2,857,275                57,275
  Tuition and fees                                            116,200                  116,200                 40,945               (75,255)
  Interest earned                                             120,000                  220,000                192,067               (27,933)
  Other local revenues                                         58,600                   58,600                 97,998                39,398
  Intergovernmental - state                                17,504,622               18,130,933             25,935,631             7,804,698
  Intergovernmental - federal                                 110,000                  110,000                 27,934               (82,066)

          Total revenues                                   35,056,405               34,917,366             42,386,886             7,469,520


Expenditures:
  Instruction                                              19,808,229               19,526,332             24,625,959            (5,099,627)
  Support services:
     Student                                                1,766,801                1,743,594              2,079,683              (336,089)
     Instruction staff                                      1,466,496                1,439,885              1,698,497              (258,612)
     District administrative                                1,243,696                1,233,110              1,166,894                66,216
     School administrative                                  3,118,826                3,063,273              3,540,324              (477,051)
     Business                                                 554,890                  547,111                566,430               (19,319)
     Plant operation                                        4,545,440                4,532,014              4,395,369               136,645
     Student transportation                                 2,920,003                2,878,004              2,932,160               (54,156)
     Community services                                            -0-                      -0-                 7,590                (7,590)
  Facility acquisition & construction                              -0-                      -0-                     -0-                  -0-
  Debt Service                                                538,140                  538,140                     -0-              538,140
  Contingency                                                 744,241                1,700,636                     -0-            1,700,636

          Total expenditures                               36,706,762               37,202,099             41,012,906            (3,810,807)


Excess (deficit) of revenues over
  expenditures                                             (1,784,999)              (2,284,733)             1,373,980             3,658,713

Other Financing Sources (Uses)
  Sales of assets                                               5,000                       5,000                 574                (4,426)
  Operating transfers in                                       80,000                     380,000             391,079                11,079
  Operating transfers out                                    (134,642)                   (134,642)           (725,317)             (590,675)

          Total other financing sources (uses)                (49,642)                   250,358             (333,664)             (584,022)


Net change on Fund Balance                                 (1,834,641)              (2,034,375)             1,040,316             3,074,691

Fund balance, July 1, 2008                                  2,034,375                2,034,375              2,034,375                    -0-


Fund balance, June 30, 2009                          $        199,734-         $               -0-   $      3,074,691     $       3,074,691




                                                 See accompanying notes to financial statements
                                                                    -14-
                                                  FRANKLIN COUNTY SCHOOL DISTRICT
                                     Statement of Revenues, Expenditures, and Changes in Fund Balance
                                                  Budget and Actual - Special Revenue Fund
                                                         Year ended June 30, 2009




                                                                                                                              Variance
                                                                                                                              with Final
                                                                      Budgeted Amounts                                         Budget
                                                                                                                              Favorable
                                                           Original                    Final             Actual             (Unfavorable)
Revenues:
  Other local revenues                                 $       34,950              $      18,500     $      60,379          $      41,879
  Intergovernmental – state                                 2,929,322                  2,929,322         2,379,494               (549,828)
  Intergovernmental – federal                               4,199,818                  2,826,588         2,693,828               (132,760)

         Total revenues                                     7,164,090                  5,774,410         5,133,701               (640,709)

Expenditures:
  Instruction                                               5,830,755                  4,663,381         3,436,381              1,227,000
  Support services:
     Student                                                   40,788                     40,788           502,559               (461,771)
     Instruction staff                                        609,419                    607,851           748,918               (141,067)
     School administrative                                     39,791                     39,791            35,917                   3,874
     Business                                                      -0-                        -0-           31,307                (31,307)
     Plant operation                                               -0-                        -0-               -0-                     -0-
     Student transportation                                       659                        659            10,370                  (9,711)
  Community service activities                                438,249                    438,249           425,608                 12,641

         Total expenditures                                 6,959,661                  5,790,719         5,191,060               599,659


Excess (deficit) of revenues over
  expenditures                                                204,429                    (16,309)          (57,359)               (41,050)

Other Financing Sources (Uses)
  Operating transfers in                                      104,642                    104,642           114,580                  9,938
  Operating transfers out                                     (80,818)                   (80,818)          (57,221)                23,597

         Total other financing sources (uses)                  23,824                     23,824            57,359                 33,535



Net change in Fund Balance                                    228,253                      7,515                  -0-              (7,515)

Fund balance, July 1, 2008                                             -0-                     -0-                -0-                   -0-

Fund balance, June 30, 2009                        $          228,253          $           7,515                  -0-   $          (7,515)




                                                See accompanying notes to financial statements
                                                                   -15-
                                                 FRANKLIN COUNTY SCHOOL DISTRICT
                                                       Statement of Net Assets
                                                          Proprietary Funds
                                                            June 30, 2009




                                     Food                                          Community
                                    Service                Daycare                 Education
                                     Fund                   Fund                     Fund             Total
Assets

Current Assets
 Cash and cash equivalents $           66,683       $          174,872         $       203,032    $     444,587
 Inventory                             64,355                       -0-                     -0-          64,355
 Accounts receivable                   72,839                   13,588                  45,364          131,791

Total current assets                  203,877                  188,460                 248,396          640,733


Non-current Assets
 Capital assets                     1,269,115                        -0-               234,256        1,503,371
 Less:
   accumulated depreciation          (766,603)                       -0-              (221,753)        (988,356)

Total non-current assets              502,512                        -0-                12,503          515,015

Total assets                    $     706,389       $          188,460         $       260,899    $   1,155,748


Liabilities

Current Liabilities
 Accounts payable               $      6,912        $           20,225         $        12,161    $      39,298
  Accrued wages                        1,983                         -0-                 2,004            3,987

Total current liabilities               8,895                   20,225                  14,165           43,285


Net Assets
  Invested in capital assets,
    net of related debt              502,512                        -0-                 12,503          515,015
  Unrestricted                       194,982                   168,235                 234,231          597,448

Total net assets                $    697,494        $          168,235         $       246,734    $   1,112,463




                                                 See accompanying notes to financial statements

                                                                     -16-
                                              FRANKLIN COUNTY SCHOOL DISTRICT
                                     Statement of Revenues, Expenses, and Changes in Net Assets
                                                         Proprietary Funds
                                                      Year ended June 30, 2009




                                      Food                                        Community
                                      Service                Daycare              Education
                                      Fund                    Fund                  Fund             Total


Operating Revenues:

  Lunchroom sales                  $ 1,183,814           $           -0-      $            -0-   $   1,183,814
  Fees for services                         -0-                 693,981               256,547          950,528
  Other operating revenues                  -0-                   8,342                 3,173           11,515

Total operating revenues              1,183,814                 702,323               259,720        2,145,857


Operating Expenses:

  Salaries and wages                     931,296                402,083               299,043        1,632,422
  Materials and supplies               1,475,859                 57,397                38,195        1,571,451
  Depreciation                            85,678                     -0-                4,299           89,977
  Other operating expenses               415,258                176,750               119,600          711,608

Total operating expenses               2,908,091                636,230               461,137        4,005,458


Operating gain (loss)                (1,724,277)                 66,093              (201,417)       (1,859,601)


Non-Operating Revenues (Expenses):

  Loss on disposition of equipment         (1,104)                   -0-                   -0-           (1,104)
  Federal grants                       1,318,084                     -0-                   -0-       1,318,084
  Other local                                  -0-                    -0-              76,108           76,108
  Donated commodities                    160,954                     -0-                   -0-         160,954
  State grants                           189,804                 50,228                60,806          300,838
  Interest income                             609                    -0-                3,486             4,095

Total non-operating revenues           1,668,347                 50,228               140,400        1,858,975

Income before transfers                  (55,930)               116,321               (61,017)               (626)

Transfers in (out)                      225,759                 (33,857)               30,000          221,902

Net income (loss)                        169,829                 82,464               (31,017)         221,276


Net Assets, July 1, 2008                527,665                  85,771               277,751          891,187


Net Assets, June 30, 2009      $       697,494       $          168,235       $       246,734    $   1,112,463




                                                See accompanying notes to financial statements

                                                                       -17-
                                                    FRANKLIN COUNTY SCHOOL DISTRICT
                                                          Statement of Cash Flows
                                                             Proprietary Funds
                                                         Year ended June 30, 2009



                                                                                 Food                               Community
                                                                                Service              Daycare        Education
                                                                                 Fund                 Fund            Fund             Total
Cash Flows from Operating Activities
 Cash received from:
   Lunchroom sales                                                        $     1,183,814    $            -0-   $          -0-   $    1,183,814
   Other activities                                                                    -0-           693,713          258,396           952,109
 Cash paid to/for:
   Employees                                                                     (934,093)       (416,197)           (315,981)       (1,666,271)
   Supplies                                                                    (1,289,798)        (49,410)            (40,469)       (1,379,677)
   Other activities                                                              (415,258)       (176,751)           (119,600)         (711,609)
   Net cash provided (used) by operating activities                            (1,455,335)          51,355           (217,654)       (1,621,634)

Cash Flows from Non-capital Financing Activities
 Operating grants received                                                      1,455,789              50,229         136,914         1,642,932
 Transfers                                                                             -0-           (33,857)          30,000            (3,857)
   Net cash provided (used) by non-capital financing activities                 1,455,789              16,372         166,914         1,639,075

Cash Flows from Capital Financing Activities
 Purchases capital assets                                                       (225,759)                 -0-          (4,271)        (230,030)
 Loss on disposition of equipment                                                  (1,104)                -0-              -0-           (1,104)
 Transfer from other funds                                                        225,759                 -0-              -0-          225,759
   Net cash provided (used) by capital financing activities                        (1,104)                -0-          (4,271)           (5,375)

Cash Flows from Investing Activities
 Receipt of interest income                                                            609                -0-           3,486             4,095

Net increase (decrease) in cash and cash equivalents                                  (41)             67,727         (51,525)           16,161

Cash and Cash Equivalents, beginning of year                                       66,724            107,145          254,557           428,426

Cash and Cash Equivalents, end of year                                    $        66,683    $       174,872    $     203,032    $      444,587


Reconciliation of operating income (loss) to net cash
 provided (used) by operating activities
Operating income (loss)                                                   $    (1,724,277)   $         66,093   $    (201,417)   $   (1,859,601)

Adjustments to reconcile operating income to net cash
 provided (used) by operating activities
Depreciation                                                                       85,678                 -0-           4,299            89,977
Commodities used                                                                  160,954                 -0-              -0-          160,954
Change in assets and liabilities:
 Accounts receivable                                                                   -0-            (8,611)          (1,324)          (9,935)
 Inventory                                                                         26,816                 -0-              -0-           26,816
 Accounts payable                                                                  (4,506)            (6,127)         (19,212)         (29,845)

Net cash provided (uses) by operating activities                          $    (1,455,335)   $         51,355   $    (217,654)   $   (1,621,634)


Schedule of non-cash transactions;
  Donated commodities received from federal
    Government                                                            $       160,954

Total non-cash transactions                                               $       160,954




                                                    See accompanying notes to financial statements

                                                                        -18-
                                  FRANKLIN COUNTY SCHOOL DISTRICT
                                     Statement of Fiduciary Net Assets
                                             Fiduciary Funds
                                              June 30, 2009




                                                                    Agency Fund

Assets

Cash and cash equivalents                                       $       559,550

Accounts receivable                                                       3,943

       Total assets                                             $       563,493


Liabilities

Accounts payable                                                $        17,460

Deferred for student activities                                         546,033

       Total liabilities                                        $       563,493




                                  See accompanying notes to financial statements

                                                      -19-
                                        FRANKLIN COUNTY SCHOOL DISTRICT
                                          Notes to Basic Financial Statements
                                              Year ended June 30, 2009




NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reporting Entity

The Franklin County Board of Education (“Board”), a five-member group, is the level of government which has oversight
responsibility over all activities related to public elementary and secondary school education within the jurisdiction of the
Franklin County School District (“District”). The District receives funding from Local, State and Federal government
sources and must comply with the commitment requirements of these funding source entities. However, the District is not
included in any other governmental “reporting entity” as defined in Section 2100, Codification of Governmental Accounting
and Financial Reporting Standards. Board members are elected by the public and have decision making authority, the
power to designate management, the responsibility to develop policies which may influence operations and primary
accountability for fiscal matters.

The District, for financial purposes, includes all of the funds and account groups relevant to the operation of the Franklin
County School District. The financial statements presented herein do not include funds of groups and organizations, which
although associated with the school system, have not originated within the Board itself such as Band Boosters, Parent-
Teacher Associations, etc.

The financial statements of the District include those of separately administered organizations that are controlled by or
dependent on the Board. Control or dependence is determined on the basis of budget adoption, funding and appointment
of the respective governing board.

Based on the foregoing criteria, the financial statements of the following organization are included in the accompanying
financial statements:

Franklin County School District Finance Corporation – In a prior year the Board resolved to authorize the establishment of
the Franklin County School District Finance Corporation (a non-profit, non-stock, public and charitable corporation
organized under the School Bond Act, KRS 273 and KRS Section 58.180) (the "Corporation") as an agency for the District
for financing the costs of school building facilities. The members of the Board also comprise the Corporation’s Board of
Directors.

Basis of Presentation

District-wide Financial Statements – The statement of net assets and the statement of activities display information about
the District as a whole. These statements include the financial activities of the primary government, except for fiduciary
funds. The statements distinguish between those activities of the District that are governmental and those that are
considered business-type activities.

The district-wide statements are prepared using the economic resources measurement focus. This is the same approach
used in the preparation of the proprietary fund financial statements but differs from the manner in which governmental fund
financial statements are prepared. Governmental fund financial statements therefore include reconciliation with brief
explanations to better identify the relationship between the district-wide statements and the statements for governmental
funds.




                                                            -20-
                                        FRANKLIN COUNTY SCHOOL DISTRICT
                                          Notes to Basic Financial Statements
                                              Year ended June 30, 2009



The district-wide statement of activities presents a comparison between direct expenses and program revenues for each
segment of the business-type activities of the District and for each function or program of the District’s governmental
activities. Direct expenses are those that are specifically associated with a service, program or department and are
therefore clearly identifiable to a particular function. Program revenues include charges paid by the recipient of the goods
or services offered by the program and 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 of the District, with certain limited exceptions. The comparison of direct expenses with program revenues
identifies the extent to which each business segment or governmental function is self-financing or draws from the general
revenues of the District.

Fund Financial Statements – Fund financial statements report detailed information about the District. The focus of
governmental and enterprise fund financial statements is on major funds rather than reporting funds by type. Each major
fund is presented in a separate column. Non-major funds are aggregated and presented in a single column. Fiduciary
funds are reported by fund type.

The accounting and reporting treatment applied to a fund is determined by its measurement focus. All governmental fund
types are accounted for using a flow of current financial resources measurement focus. The financial statements for
governmental funds are a balance sheet, which generally includes only current assets and current liabilities, and a
statement of revenues, expenditures and changes in fund balances, which reports on the changes in net total assets.
Proprietary funds and fiduciary funds are reported using the economic resources measurement focus. The statement of
cash flows provides information about how the District finances and meets the cash flow needs of its proprietary activities.

The District has the following funds:

I.      Governmental Fund Types

        (A)     The General Fund is the main operating fund of the District. It accounts for financial resources used for
                general types of operations. This is a budgeted fund, and any fund balances are considered as resources
                available for use. The principal revenues of this fund are property taxes, utility taxes, and state
                entitlements. This is a major fund of the District.

        (B)     The Special Revenue (Grant) Funds account for proceeds of specific revenue sources (other than
                expendable trusts or major capital projects) that are legally restricted to disbursements for specified
                purposes. It includes federal financial programs where unused balances are returned to the grantor at the
                close of the specified project periods as well as the state grant programs. Project accounting is employed
                to maintain integrity for the various sources of funds. The separate projects of federally funded grant
                programs are identified in the Schedule of Expenditures of Federal Awards included in this report on
                pages 43 through 44. This is a major fund of the District.

        (C)     Capital Project Funds are used to account for financial resources to be used for the acquisition or
                construction of major capital facilities and equipment (other than those financed by Proprietary Fund).

                1. The Support Education Excellence in Kentucky (SEEK) Capital Outlay Fund receives those funds
                   designated by the state as Capital Outlay Funds and is restricted for use in financing projects
                   identified in the district’s facility plan. This is a non-major fund of the District.

                2. The Facility Support Program of Kentucky (FSPK) accounts for funds generated by the building tax
                   levy required to participate in the School Facilities Construction Commission’s construction funding
                   and state matching funds, where applicable. Funds may be used for projects identified in the district’s
                   facility plan. This is a non-major fund of the District.

                3. The Construction Fund accounts for proceeds from sales of bonds and other revenues to be used for
                   authorized construction. This is a major fund of the District.



                                                           -21-
                                            FRANKLIN COUNTY SCHOOL DISTRICT
                                              Notes to Basic Financial Statements
                                                  Year ended June 30, 2009

           (D)       Debt Service Fund
                     4. The Debt Service Fund is used to account for the accumulation of resources for, and the payment of,
                        general long-term debt principal and interest and related costs; and for the payment of interest on
                        general obligation notes payable, as required by Kentucky Law. This is a non-major fund of the
                        District.

    II.          Proprietary Fund Types (Enterprise Fund)

                 A. The Food Service Fund is used to account for school food service activities, including the National School
                    Lunch Program, which is conducted in cooperation with the U.S. Department of Agriculture (USDA).
                    Amounts have been recorded for in-kind contribution of commodities from the USDA. Federal grants,
                    donated commodities, state grants, and interest income are non-operating revenues. Lunchroom meal
                    sales are the principal operating revenue of this fund. The Food Service Fund is a major fund of the
                    District.

                 B. The Day Care Fund is used to account for daycare activities. Daycare service fees are the funds principal
                    operating revenue. This fund is treated as a major fund of the District.

                 C. The Community Education Fund is used to account for adult education activities. Community education
                    service fees are the funds principal operating revenue. This fund is treated as a major fund of the District.

                 The District applies all Governmental Accounting Standards Board (GASB) pronouncements to proprietary
                 funds as well as the Financial Accounting Standards Board (FASB) pronouncements issued on or before
                 November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements.

    III.         Fiduciary Fund Type (Agency and Private Purpose Trust Funds)

                 A. The Agency fund accounts for activities of student groups and other types of activities requiring clearing
                    accounts. The Student Activity Funds are accounted for in accordance with the Accounting Procedures for
                    Kentucky School Activity Funds (Redbook).

                 B. The Private Purpose Trust funds are used to report trust arrangements under which principal and income
                    benefit individuals, private organizations or other governments.

Basis of Accounting

Basis of accounting determines when transactions are recorded in the financial records and reported on the financial
statements. District-wide financial statements are prepared using the accrual basis of accounting. Governmental funds use
the modified accrual basis of accounting. Proprietary and fiduciary funds also use the accrual basis of accounting.

Revenues – Exchange and Non-exchange Transactions – Revenues resulting from exchange transactions, in which each
party receives essentially equal value, are recorded on the accrual basis when the exchanges take place. On a modified
accrual basis, revenues are recorded in the fiscal year in which the resources are measurable and available. Available
means that the resources will be collected within the current fiscal year or are expected to be collected soon enough
thereafter to be used to pay liabilities of the current fiscal year. For the District, available means expected to be received
within sixty days of the fiscal year-end.

Non-exchange transactions, in which the District receives value without directly giving equal value in return, include
property taxes, grants, entitlements and donations. On an accrual basis, revenue from property taxes is recognized in the
fiscal year for which the taxes are levied. Revenue from grants, entitlements and donations is recognized in the fiscal year
in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify
the year when the resource are required to be used or the fiscal year when use is first permitted, matching requirements,
in which the District must provide local resources to be used for a specified purpose, and expenditure requirements, in
which the resources are provided to the District on a reimbursement basis. On a modified accrual basis, revenues from
non exchange transactions must also be available before it can be recognized.



                                                                -22-
                                         FRANKLIN COUNTY SCHOOL DISTRICT
                                           Notes to Basic Financial Statements
                                               Year ended June 30, 2009



Basis of Accounting - continued

Deferred Revenue – Deferred revenue arises when assets are recognized before revenue recognition criteria have been
satisfied. Grants and entitlements received before the eligibility requirements are met are recorded as deferred revenue.

The fair value of donated commodities used during the year is reported in the statement of revenues, expenses, and
changes in net assets as an expense with a like amount reported as donated commodities revenue.

Expenses/Expenditures – On the accrual basis of accounting, expenses are recognized at the time they are incurred. The
measurement focus of governmental fund accounting is on decreases in net financial resources (expenditures) rather than
expenses. Expenditures are generally recognized in the accounting period in which the related fund liability is incurred, if
measurable. Allocations of cost, such as depreciation, are not recognized in governmental funds.

When both restricted and unrestricted resources are available, it is the District’s policy to use restricted resources first,
then unrestricted resources as they are needed.

Property and Other Taxes

Property Tax Revenues - Property taxes are levied each September on the assessed value listed as of the prior January 1,
for all real and personal property in the county. The billings are considered due upon receipt by the taxpayer; however, the
actual date is based on a period ending 30 days after the tax bill mailing. Property taxes collected are recorded as
revenues in the fiscal year for which they were levied. All taxes collected are initially deposited into the General Fund and
then transferred to the appropriate fund.

The property tax rates assessed for the year ended June 30, 2009, to finance the General Fund operations were $.521 per
$100 valuation for real property, $.521 per $100 valuation for business personal property and $.510 per $100 valuation for
motor vehicles.

Utility Tax - The District levies a utility gross receipts license tax in the amount of 3% of the gross receipts derived from the
furnishings, within the county, of telephonic and telegraphic communications services, cablevision services, electric power,
water, and natural, artificial and mixed gas.


Capital Assets

General capital assets are those assets not specifically related to activities reported in the proprietary funds. These assets
generally result from expenditures in the governmental funds. These assets are reported in the governmental activities’
column of the district-wide statement of net assets but are not reported in the fund financial statements. Capital assets
utilized by the proprietary funds are reported both in the business-type activities column of the district-wide statement of
net assets and in the respective funds.

All capital assets are capitalized at cost (or estimated historical cost) and updated for additions and retirements during the
year. Donated fixed assets are recorded at their fair market values as of the date received. The District maintains a
capitalization threshold of one thousand dollars with the exception of computers, digital cameras and real property for
which there is no threshold. The District does not possess any infrastructure. Improvements are capitalized, while the cost
of normal maintenance and repairs that do not add to the value of the asset or materially extend an assets life are not.




                                                              -23-
                                        FRANKLIN COUNTY SCHOOL DISTRICT
                                          Notes to Basic Financial Statements
                                              Year ended June 30, 2009


All reported capital assets are depreciated. Improvements are depreciated over the remaining useful lives of the related
capital assets. Depreciation is computed using the straight-line method over the following useful lives for both general
capital assets and proprietary fund assets:

                               Description                                  Estimated Lives

                      Buildings and improvements                             25-50 years
                      Land improvements                                        20 years
                      Technology equipment                                      5 years
                      Vehicles                                                5-10 years
                      Audio-visual equipment                                   15 years
                      Food service equipment                                 10-12 years
                      Furniture and fixtures                                    7 years
                      Rolling stock                                            15 years
                      Other                                                    10 years

Interfund Balances

On fund financial statements, receivables and payables resulting from short-term interfund loans are classified as
“interfund receivables/payables”. These amounts are eliminated in the governmental and business-type activities columns
of the statements of net assets, except for the net residual amounts due between governmental and business-type
activities, which are presented as internal balances.

Accumulated Unpaid Sick Leave Benefits

Upon retirement from the school system, an employee will receive from the District an amount equal to 30% of the value of
accumulated sick leave.

Sick leave benefits are accrued as a liability using the termination payment method. An accrual for earned sick leave is
made to the extent that it is probable that the benefits will result in termination payments. The liability is based on the
District’s past experience of making termination payments.

The entire compensated absence liability is reported on the district-wide financial statements.

For governmental fund financial statements the current portion of unpaid accrued sick leave is the amount expected to be
paid using expendable available resources. These amounts are recorded in the account “accumulated sick leave payable”
in the general fund. The non-current portion of the liability is not reported.

Budgetary Process

Budgetary Basis of Accounting: The District’s budget is prepared on a basis of Generally Accepted Accounting Principles
(GAAP) - modified accrual.

The budget is enacted by Board of Education approval.

Once the budget is approved, it can be amended. Amendments are presented to the Board at their regular meetings. Such
amendments are reflected in the official minutes of the Board, and are not made after fiscal year-end as dictated by law.

Each budget is prepared and controlled by the budget coordinator at the revenue and expenditure function/object level. All
budget appropriations lapse at year-end.

The approved budget does not include $7,992,529 on–behalf payments made by the Kentucky Department of Education.
The General Fund and the Special Revenue Fund budget to actual variances on the Statement of Revenues,
Expenditures, and Change in Fund Balance Budget and Actual are primarily due to the above on-behalf payments.



                                                            -24-
                                             FRANKLIN COUNTY SCHOOL DISTRICT
                                               Notes to Basic Financial Statements
                                                   Year ended June 30, 2009




Cash and Cash Equivalents

The District considers demand deposits, money market funds, and other investments with an original maturity of 90 days or less, to be
cash equivalents.

Inventories

On district-wide financial statements inventories are stated at cost and are expensed when used. The cost of inventory items are
recorded as expenditures in the governmental fund types when purchased. The food service fund and the general fund use the first-in,
first-out method for valuing inventory items.

Prepaid Assets

Payments made that will benefit periods beyond June 30, 2009, are recorded as prepaid items using the consumption method. A
current asset for the prepaid amount is recorded at the time of the purchase and an expenditure/expense is reported in the ye ar in
which services are consumed.

Accrued Liabilities and Long-Term Obligations

All payables, accrued liabilities and long-term obligations are reported in the district-wide financial statements, and all payables,
accrued liabilities and long-term obligations payable from proprietary funds are reported on the proprietary fund financial statements.

In general, payables and accrued liabilities that will be paid from governmental funds are reported on the governmental fund financial
statements regardless of whether they will be liquidated with current resources. However, claims and judgments, the non-current
portion of capital leases, accumulated sick leave, contractually required pension contributions and special termination benef its that will
be paid from governmental funds are reported as a liability in the fund financial statements only to the extent that they will be paid with
current, expendable, available financial resources. In general, payments made within sixty days after year-end are considered to have
been made with current available financial resources. Bonds and other long-term obligations that will be paid from governmental funds
are not recognized as a liability in the fund financial statements until due.

In the district wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term
obligations are reported as liabilities in the applicable governmental activities, business type activities, or proprietary f und type
statement of net assets. Bond premiums and discounts are deferred and amortized over the life of the bonds using the e ffective
interest method. Bonds payable are reported net of the applicable bond premium or discount.

In the fund financial statements governmental fund types recognized bond premiums and discounts, as well as bond issuance cos ts,
during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt
issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Iss uance
costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

Fund Balance Reserves

The District reserves those portions of fund equity which are legally segregated for a specific future use or which do not re present
available expendable resources and therefore are not available for appropriation or expenditure. Unreserved fund balance indicates
that portion of fund equity which is available for appropriation in future periods. Fund equity reserves have been establishe d for
inventories and fixed assets.

Net Assets

Net assets represent the difference between assets and liabilities. Net assets invested in capital assets, net of related deb t consists of
capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the acquisition,
construction or improvement of those assets. Net assets are reported as restricted when there are limitations imposed on thei r use
either through the enabling legislation adopted by the District or through external restrictions imposed by creditors, grantors or laws or
regulations of other governments.




                                                                   -25-
                                           FRANKLIN COUNTY SCHOOL DISTRICT
                                             Notes to Basic Financial Statements
                                                 Year ended June 30, 2009


Operating Revenues and Expenses

Operating revenues are those revenues that are generated directly from the primary activity of the proprietary funds. For
the District, those revenues are primarily charges for meals provided by the various schools.

Contributions of Capital

Contributions of capital in fund financial statements arise from outside contributions of fixed assets, or from grants or
outside contributions of resources restricted to capital acquisition and construction.

Interfund Activity

Flows of cash or goods from one fund to another without a requirement for repayment are reported as interfund transfers.
Interfund transfers are reported as other financing sources/uses in governmental funds and after non-operating
revenues/expenses in proprietary funds. Repayments from funds responsible for particular expenditures/expenses to the
funds that initially paid for them are not presented on the financial statements.

Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of
America requires the District's management to make estimates and assumptions that affect reported amounts of assets,
liabilities, fund balances, and disclosure of contingent assets and liabilities at the date of the general purpose financial
statements, and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ
from those estimates.

NOTE B – CASH AND CASH EQUIVALENTS

Cash and cash equivalents at June 30, 2009 consisted of the following:

                Bank Balance                Book Balance

            $        8,866,295        $         6,226,316

Breakdown per financial statements:
                                            Book Balance

       Governmental funds             $         5,222,179
       Proprietary funds                          444,587
       Fiduciary funds                            559,550
                                      $         6,226,316

Custodial Credit Risk - Custodial credit risk for deposits is the risk that, in the event of failure by a financial institution, the
District may not be able to recover the value of its deposits that are in the possession of the financial institution. The
District’s policy dictates that all cash maintained in any financial institution named as a depository be insured or
collateralized, with the collateral held in the name of the District. Collateral must be held by an independent third-party
custodian. As stated above, the District is fully insured or collateralized as of June 30, 2009.

NOTE C – RECEIVABLES

Receivables as of June 30, 2009 are as follows:

     Property taxes            $          155,823
     Utility taxes                        414,852
     Other                                 46,676
                               $          617,351

                                                               -26-
                                          FRANKLIN COUNTY SCHOOL DISTRICT
                                            Notes to Basic Financial Statements
                                                Year ended June 30, 2009




NOTE D – CAPITAL ASSETS

Capital asset activity for the fiscal year ended June 30, 2009, was as follows:

                                                           Balance                                                Balance
          Governmental Activities                        July 1, 2008       Additions           Deductions     June 30, 2009
Land                                                   $    1,208,980 $             -0- $                -0- $     1,208,980
Land improvements                                           3,469,577                -0-                 -0-       3,469,577
Buildings and improvements                                 81,380,599       12,762,785                    -0-     94,143,384
Technology equipment                                        3,563,292          234,045             249,957         3,547,380
General equipment                                           1,353,760           77,903               12,068        1,419,595
Construction in process                                    11,521,115           14,411           11,521,115           14,411
Vehicles                                                    5,631,587           97,344                   -0-       5,728,931
  Totals at historical cost                               108,128,910       13,186,488           11,783,140      109,532,258

Less: accumulated depreciation
  Land improvements                                         1,624,304          125,630                    -0-        1,749,934
 Buildings and improvements                                19,530,631        1,892,672                   -0-        21,423,303
  Technology equipment                                      2,671,861          340,702              248,072          2,764,491
  General equipment                                           814,028           82,445               12,068            884,405
  Vehicles                                                  2,984,036          493,819                   -0-         3,477,855
  Total accumulated depreciation                           27,624,860        2,935,268              260,140         30,299,988

Governmental Activities Capital Assets – Net           $   80,504,050 $     10,251,220 $         11,523,000 $       79,232,270

      Business-Type Activities
Food service assets                                    $    1,050,982   $      225,759      $         7,626     $   1,269,115
Community education assets                                    240,984            4,271               10,999           234,256
  Totals at historical cost                                 1,291,966          230,030               18,625         1,503,371

Less: accumulated depreciation
  Food service assets                                        687,447              85,678              6,522           766,603
  Community education assets                                 228,453               4,299             10,999           221,753
    Total accumulated depreciation                           915,900              89,977             17,521           988,356

Business-Type Activities Capital Assets – Net          $     376,066 $         140,053 $              1,104     $     515,015


Depreciation expense was charged to governmental functions as follows:
  Governmental Function                 Depreciation
  Instruction                       $      2,089,290
  Student support                             12,568
  Instructional staff support                206,089
  District administration support              6,056
  School administration support                3,487
  Business support                            71,835
  Plant operation                             56,139
  Student transportation                     484,611
  Community services                           5,193

  Total                             $      2,935,268




                                                               -27-
                                FRANKLIN COUNTY SCHOOL DISTRICT
                                  Notes to Basic Financial Statements
                                      Year ended June 30, 2009




NOTE E – BONDED DEBT AND LEASE OBLIGATIONS

The outstanding bond issues, interest rates, and summary of bond activity are as follows:


                                        Amount                                                    Amount
                                      Outstanding                                               Outstanding
   Series           Rates             July 1, 2008           Issued           Retired          June 30, 2009

    1996           4.69%         $         930,000      $           -0-   $     465,000    $         465,000
    1999           4.45%                 1,845,000                  -0-       1,845,000                   -0-
    2000           5.32%                   315,000                  -0-         100,000              215,000
    2002           4.66%                 7,366,000                  -0-          97,000            7,269,000
    2003           3.50%                 7,095,000                  -0-         310,000            6,785,000
   2004 A         4.045%                 7,200,000                  -0-         345,000            6,855,000
   2004 B         4.5846%               14,375,000                  -0-         665,000           13,710,000
    2004           2.92%                   825,000                  -0-         345,000              480,000
    2005           4.37%                 3,835,000                  -0-          10,000            3,825,000
    2005          3.6006%                2,895,000                  -0-         120,000            2,775,000
    2007           4.52%                11,085,000                  -0-         140,000           10,945,000
    2009          3.1564%                1,690,000                  -0-          25,000            1,665,000
    2009          2.9841%                       -0-          1,810,000               -0-           1,810,000
                                 $      59,456,000      $    1,810,000    $   4,467,000    $      56,799,000



The District, through the General Fund (including utility taxes and the Support Education Excellence in
Kentucky (SEEK) Capital Outlay Fund) is obligated to make payments in amounts sufficient to satisfy debt
service requirements on bonds issued by the Franklin County Fiscal Court and Franklin County School
District Finance Corporation to construct school facilities. The District has an option to purchase the
property under lease at any time by retiring the bonds outstanding.

In connection with the school revenue bonds issued, the District entered into “participation agreements”
with the School Facility Construction Commission (SFCC). The Commission was created by the Kentucky
General Assembly for the purpose of assisting local school districts in meeting school construction needs.
The table below sets forth the amount to be paid by the District and the Commission for each year until
maturity of all bond issues. The liability for the total bond amount remains with the District and, as such,
the total principal outstanding has been recorded in the financial statements.

In 2009, the District issued $1,810,000 in School Building Refunding Revenue Bonds (Series 2009) with
an average interest rate of 2.9841% to refund the series 1999 revenue bonds. The District reduced future
interest cost by $96,415 and created a net economic gain of $85,614 as a result of the refunding.




                                                      -28-
                                   FRANKLIN COUNTY SCHOOL DISTRICT
                                     Notes to Basic Financial Statements
                                         Year ended June 30, 2009

The bonds may be called prior to maturity and redemption premiums are specified in each issue.
Assuming no bonds are called prior to scheduled maturity, the minimum obligations of the District,
including amounts to be paid by the Commission, at June 30, 2009, for debt service (principal and
interest) are as follows:
                             Franklin County                           Kentucky School
                             School District                       Construction Commission
   Year               Principal             Interest               Principal           Interest         Total
 2009-10       $      1,763,685       $    1,921,786        $       809,539       $     467,253    $   4,962,263
 2010-11              1,824,751            1,858,528                828,814             438,107        4,950,200
 2011-12              1,894,047            1,792,132                740,375             411,186        4,837,740
 2012-13              1,961,670            1,722,957                762,759             384,048        4,831,434
 2013-14              2,039,721            1,648,159                790,723             354,715        4,833,318
 2014-15              2,118,013            1,569,659                823,430             321,263        4,832,365
 2015-16              2,200,221            1,486,115                787,431             285,975        4,759,742
 2016-17              2,291,557            1,396,938                822,264             252,657        4,763,416
 2017-18              2,390,515            1,292,559                779,485             217,589        4,680,148
 2018-19              2,496,733            1,187,246                808,267             185,135        4,677,381
 2019-20              2,607,811            1,075,401                627,189             150,992        4,461,393
 2020-21              2,724,914              958,435                650,086             125,068        4,458,503
 2021-22              2,863,469              832,386                676,531              96,318        4,468,704
 2022-23              2,968,894              726,186                706,106              66,140        4,467,326
 2023-24              3,104,778              592,467                655,222              34,596        4,387,063
 2024-25              3,247,241              450,944                 37,759               5,068        3,741,012
 2025-26              3,387,361              311,674                 37,639               3,464        3,740,138
 2026-27              3,530,760              167,711                 39,240               1,864        3,739,575
               $     45,416,141       $   20,991,283         $    11,382,859      $    3,801,438   $   81,591,721


The District wide statement of net assets presents bonds payable of $56,799,000 net of bond
discount/issue costs of $331,499. The total bonds payable on the statement of net assets is a net
$56,467,501.

There are a number of limitations and restrictions contained in the various bond indentures. Management
has indicated that the District is in compliance with all significant limitations and restrictions at June 30,
2009.

NOTE F – CAPITAL LEASE PAYABLE

The following is an analysis of the leased property under capital lease by class:

                       Classes of Property                        Book value as of June 30, 2009
                             Buses                                        $     2,036,869

The following is a schedule by years of the future lease principal payments under capital lease as of June
30, 2009:
                      Year ending June 30,                                 Capital Lease Payable
                               2010                                         $       477,778
                               2011                                                  477,628
                               2012                                                  375,475
                               2013                                                  316,123
                               2014                                                  268,463
                              2015-19                                                510,128
                   Total payable                                                   2,425,595
                   Capital lease obligations-current                                 477,778
                   Capital lease obligations-non current                   $       1,947,817




                                                           -29-
                                   FRANKLIN COUNTY SCHOOL DISTRICT
                                     Notes to Basic Financial Statements
                                         Year ended June 30, 2009


NOTE G – RETIREMENT PLANS

Pension Plan

Certified employees are covered under the Kentucky Teachers Retirement System (“KTRS”). Funding for the Plan is
provided through payroll withholdings of 9.855% and state contributions of 13.105% of salaries for all employees
hired before July 1, 2008. New members hired after June 30, 2008 contribute 10.855%. The 13.105% or 14.105%
matching contributions are paid by the Federal programs for any salaries paid by that program. The KTRS Plan is a
cost-sharing, multiple employer defined benefit pension plan. KTRS administers retirement and disability annuities,
and death and survivor benefits to employees and beneficiaries of employees of the public school systems and other
educational agencies in Kentucky.

Substantially all other employees (classified personnel) are covered under the County Employee’s Retirement
System (“CERS”), a cost sharing, multiple-employer, public employers retirement system. Funding for the Plan is
provided through payroll withholdings of 5% and a Board contribution of 13.50% of the employee’s total
compensation subject to contribution. The CERS Plan is a cost-sharing, multiple-employer defined benefit pension
plan. CERS administers retirement and disability annuities, and death and survivor benefits to employees and
beneficiaries of classified employees of the public school systems and other public agencies in Kentucky.

KTRS was created by the General Assembly and is governed by Chapter 161 Section 220 through Chapter 161
Section 990 of the Kentucky Revised Statutes (KRS). The CERS was created by the Kentucky General Assembly by
provisions of KRS 78.520. KTRS and CERS issues a publicly available financial report that includes financial
statements and required supplementary information for the defined benefit pension plan. These reports can be
obtained by writing to Kentucky Teachers' Retirement System, 479 Versailles Road, Frankfort, KY 40601 or County
Employee's Retirement System, Frankfort, KY 40601.

The Board’s total payroll for the year was $32,542,424. The payroll for employees covered under KTRS was
$22,313,521 and for CERS was $8,173,840. The Commonwealth of Kentucky contributed $2,931,998 to KTRS for
benefit of participating employees during the fiscal year ended June 30, 2009. The contribution requirement for
CERS for the year ended June 30, 2009 was $1,513,625 which consisted of $1,103,467 from the Board and
$410,158 from the employees. The Board paid $158,874 from federal grant monies to KTRS in matching
contributions for federally funded employees.

Benefits under both plans will vary based on final compensation, years of service and other factors as fully described
in the Plan documents.

The District also offers employees the option to participate in a defined contribution plan under Section 403(B), 401(K)
and 457 of the Internal Revenue Code. All regular full-time and part-time employees are eligible to participate and may
contribute up to the maximum amount allowable by law. The District does not contribute to these plans.

Medical Insurance Plan

Plan description – In addition to the pension benefits described above, Kentucky Revised Statues require KTRS and
CERS to provide post-retirement healthcare benefits to eligible members and dependents. The KTRS and CERS
Medical Insurance benefit are cost-sharing multiple employer defined benefit plans. Changes made to the medical plan
may be made by the KTRS and CERS Board of Trustees, the Kentucky Department of Employee Insurance and the
General Assembly.

To be eligible for medical benefits, the member must have retired either for service or disability. The KTRS and CERS
Medical Insurance Funds offer coverage to members under the age of 65 through the Kentucky Employees Health Plan
administered by the Kentucky Department of Employee Insurance. Once retired members and eligible spouses attain
age 65 and are Medicare eligible, coverage is obtained through the Medicare Eligible Health Plan.

Funding policy – The post-retirement healthcare provided by KTRS is financed on a pay-as-you-go basis. In order to
fund the post-retirement healthcare benefit, one and five tenths percent (1.5%) of the gross annual payroll of all active
members is contributed. One-half (1/2) of this amount is derived from member contributions and one-half (1/2) from
state appropriation. Members hired on or after July 1, 2008 pay an additional 1% of there salary to the medical
insurance fund. Also, the premiums collected from retirees as described in the plan description and investment interest
help with the medical expenses of the plan.




                                                          -30-
                                 FRANKLIN COUNTY SCHOOL DISTRICT
                                   Notes to Basic Financial Statements
                                       Year ended June 30, 2009




NOTE H - CONTINGENCIES

The District receives funding from Federal, State and Local government agencies and private contributions.
These funds are to be used for designated purposes only. For government agency grants, if based upon the
grantor's review, the funds are considered not to have been used for the intended purpose, the grantors may
request a refund of monies advanced, or refuse to reimburse the District for its disbursements. The amount
of such future refunds and unreimbursed disbursements, if any, is not expected to be significant.
Continuation of the District's grant programs is predicated upon the grantors' satisfaction that the funds
provided are being spent as intended and the grantors' intent to continue their programs.

In addition, the District operates in a heavily regulated environment. The operations of the District are
subject to the administrative directives, rules and regulations of federal and state regulatory agencies,
including, but not limited to, the U.S. Department of Education and the Kentucky Department of Education.
Such administrative directives, rules and regulations are subject to change by an act of Congress or the
Kentucky Legislature or an administrative change mandated by the Kentucky Department of Education.
Such changes may occur with little or inadequate funding to pay for the related cost, including the
additional administrative burden to comply with a change.


NOTE I - LITIGATION

The District is not involved in civil litigation at June 30, 2009 that would materially impact the District’s
financial statements.


NOTE J - RISK MANAGEMENT

The District is exposed to various forms of loss of assets associated with the risks of fire, personal liability,
theft, vehicular accidents, errors and omissions, fiduciary responsibility, etc. Each of these risk areas is
covered through the purchase of commercial insurance. The District has purchased certain policies which
are retrospectively rated, including Workers' Compensation insurance.

The District is exposed to various risks of loss related to injuries to employees. To obtain insurance of
workers’ compensation, errors and omissions, and general liability coverage, the District participates in the
Kentucky School Boards Insurance Trust Liability Insurance Fund. The public entity risk pools operate as
common risk management and insurance programs for all school districts and other tax supported
educational agencies of Kentucky who are members of the Kentucky School Boards Association. The District
pays an annual premium to each fund for coverage. Contributions to the Workers’ Compensation fund are
based on premium rates established by such fund in conjunction with the excess insurance carrier, subject to
claims experience modifications and a group discount amount. Dividends may be declared, but are not
payable until twenty-four (24) months after the expiration of the self-insurance term. The Liability Insurance
fund pays insurance premiums of the participating members established by the insurance carrier. The Trust
can terminate coverage if it is unable to obtain acceptable excess general liability coverage and for any
reason by giving a ninety (90) day notice. In the event the Trust terminates coverage, any amount remaining
in the Fund (after payment of operational and administrative costs and claims for which coverage was
provided) would be returned to the members on a pro rata basis.




                                                      -31-
                                 FRANKLIN COUNTY SCHOOL DISTRICT
                                   Notes to Basic Financial Statements
                                       Year ended June 30, 2009




The District purchases unemployment insurance through the Kentucky School Boards Insurance Trust
Unemployment Compensation Fund; however, risk has not been transferred to such fund. In addition, the
District continues to carry commercial insurance for all other risks of loss. Settled claims resulting from these
risks have not exceeded commercial insurance coverage in any of the past three fiscal years.


NOTE K - DEFICIT OPERATING BALANCES

There are no funds of the District that currently have a deficit fund balance. However, the following funds
have operations that resulted in a current year deficit of revenues over expenditures resulting in a
corresponding reduction of fund balance:

                    Food Service Fund                    $          55,930    deficit
                    Community Education Fund                        61,017    deficit


NOTE L - TRANSFER OF FUNDS

The following transfers were made during the year:

     Type            From Fund              To Fund                Purpose                  Amount
Matching           General             Special Revenue        Technology Match          $     114,580
Operations         General             Community Ed           Operations                       30,000
Debt Service       General             Debt Service           Debt Service                    580,737
Debt Service       FSPK Fund           Debt Service           Debt Service                  3,680,978
Operations         Special             General                Operations                       57,221
Capital Assets     Construction        General                Operations                      300,000
Operations         Daycare             General                Operations                       33,858
Capital Assets     Capital Outlay      Construction           Capital Assets                  518,400

                   Total                                                                $   5,315,774

NOTE M - ON BEHALF PAYMENTS

For the year ended June 30, 2009, $7,992,529 in on behalf payments were made for life insurance, health
insurance, debt service, teacher retirement matching and administrative fees by the Commonwealth of
Kentucky for the benefit of the District. These payments were recognized as on behalf payments and
recorded in the appropriate revenue and expense accounts.




                                                      -32-
Supplementary Information
Combining Statements - Nonmajor Fund Statements
                                                 FRANKLIN COUNTY SCHOOL DISTRICT
                                          Combining Balance Sheet – Nonmajor Governmental Funds
                                                              June 30, 2009




                                                                                                            Total
                                             SEEK                                                         Non-major
                                          Capital Outlay          FSPK              Debt Service         Governmental
                                              Fund                Fund                 Fund                 Funds

Assets and Resources:

 Cash and cash equivalents            $         517,263    $        927,418    $               -0-   $       1,444,681

 Prepaid expenses                                    -0-                 -0-                   -0-                 -0-

   Total Assets and Resources         $         517,263    $        927,418    $               -0-   $       1,444,681


Liabilities and Fund Balances:

 Liabilities

   Accounts payable                   $              -0-   $             -0-   $               -0-   $             -0-

   Deferred revenue                                  -0-                 -0-                   -0-                 -0-

     Total Liabilities                               -0-                 -0-                   -0-                 -0-


Fund Balances

 Reserved                                       517,263             927,418                    -0-           1,444,681

 Unreserved:                                         -0-                 -0-                   -0-                 -0-

       Total Fund Balances                      517,263             927,418                    -0-           1,444,681

Total Liabilities and Fund Balances   $         517,263    $        927,418    $               -0-   $       1,444,681




                                                                  -33-
                                                FRANKLIN COUNTY SCHOOL DISTRICT
                               Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
                                                      Non-major Governmental Funds
                                                        Year ended June 30, 2009




                                             SEEK                                                         Total
                                             Capital                                Debt                Non-major
                                             Outlay            FSPK                Service             Governmental
Revenues                                      Fund             Fund                 Fund                  Fund
   From local sources
    Taxes – Property                     $          -0-   $     3,170,851      $          -0-      $     3,170,851
   Intergovernmental – State                   535,324            646,006          1,503,358             2,684,688

Total Revenues                                 535,324          3,816,857          1,503,358             5,855,539

Expenditures
   Instruction                                      -0-                  -0-              -0-                   -0-
   Support services                                 -0-                  -0-              -0-                   -0-
   Plant operation & management                104,222                   -0-              -0-              104,222
   Debt service                                     -0-                  -0-       5,765,073             5,765,073

Total Expenditures                             104,222                   -0-       5,765,073             5,869,295

Excess (deficit) of revenues
   over expenditures                           431,102          3,816,857          (4,261,715)             (13,756)

Other Financing Sources (Uses)
   Operating transfers in                          -0-                 -0-          4,261,715            4,261,715
  Operating transfers out                    (518,400)         (3,680,978)                 -0-          (4,199,378)

Total Other Financing Sources(Uses)          (518,400)         (3,680,978)          4,261,715              62,337

Net change in Fund Balance                    (87,298)           135,879                     -0-           48,581

Fund balance, July 1, 2008                     604,561           791,539                     -0-         1,396,100


Fund balance, June 30, 2009          $         517,263    $      927,418       $             -0-   $     1,444,681




                                                                  -34-
                                       FRANKLIN COUNTY SCHOOL DISTRICT
                                     Combining Statement of Fiduciary Net Assets
                                                    June 30, 2009




                                                       SCHOOL ACTIVITY FUNDS
                                                                                                      EARLY
                       FRANKLIN CO. WESTERN HILLS BONDURANT     ELKHORN       BRIDGEPORT COLLINS LANE LEARNING
                       HIGH SCHOOL HIGH SCHOOL    MIDDLE SCHOOL MIDDLE SCHOOL ELEMENTARY ELEMENTARY   VILLAGE

Assets

Cash & Cash Equivalents   $136,351        $125,220      $85,705           $39,805   $20,742   $28,141   $19,681

Accounts Receivable          3,079             864            -0-            -0-        -0-       -0-       -0-


Total assets              $139,430        $126,084      $85,705           $39,805   $20,742   $28,141   $19,681




Liabilities

Account Payable           $ 10,833        $   3,191     $     -0-         $ 2,438   $   998   $   -0-   $   -0-

Deferred for Student
   Activities              128,597         122,893       85,705            37,367    19,744    28,141   19,681

Total liabilities         $139,430        $126,084      $85,705           $39,805   $20,742   $28,141   $19,681
                          ========        ========      =======           =======   =======   =======   =======




                                                 Continued on Next Page


                                                            -35-
                                    FRANKLIN COUNTY SCHOOL DISTRICT
                                  Combining Statement of Fiduciary Net Assets
                                                 June 30, 2009




                                              SCHOOL ACTIVITY FUNDS
                                                                                          FFA
                          ELKHORN      HEARN      PEAKS MILL   WESTRIDGE FRANKLIN CO.     ESCROW
                          ELEMENTARY   ELEMENTARY ELEMENTARY   ELEMENTARY CAREER & TECH   FUNDS      TOTALS

Assets

Cash & Cash Equivalents   $ 10,772      $10,362    $11,412      $17,980     $13,083   $40,296      $559,550

Accounts Receivable             -0-         -0-        -0-            -0-       -0-          -0-      3,943


Total assets              $ 10,772      $10,362    $11,412      $17,980     $13,083   $40,296      $563,493




Liabilities

Accounts Payable          $     -0-     $   -0-    $   -0-      $     -0-   $   -0-   $      -0-   $ 17,460

Deferred for Student
   Activities                 10,772     10,362     11,412       17,980      13,083       40,296    546,033

Total liabilities         $ 10,772     $10,362     $11,412      $17,980     $13,083   $40,296      $563,493
                          ========     =======     =======      =======     =======   =======      ========




                                                       -36-
                                               Franklin County School District
                                     Combining Statement of Changes in Assets and Liabilities
                                                         All Agency Funds
                                             For the fiscal year ended June 30, 2009



                                                Balance                                                    Balance
Student Activity Fund                         July 1, 2008         Additions          Deductions        June 30, 2009

Assets:
  Cash                                    $       513,249    $     1,489,651      $    1,483,646    $         519,254
  Accounts Receivable                                  -0-             3,943                  -0-               3,943

      Total Assets                        $       513,249    $     1,493,594      $    1,483,646    $         523,197

Liabilities:
   Accounts Payable                       $        35,136    $           17,460   $      35,136     $          17,460
   Deferred for Student activities                478,113               505,737         478,113               505,737

     Total Liabilities                    $       513,249    $          523,197   $     513,249     $         523,197


                                                Balance                                                    Balance
FFA Escrow Fund                               July 1, 2008         Additions          Deductions        June 30, 2009

Assets:
  Cash                                    $        39,440    $             856    $           -0-   $          40,296
  Accounts Receivable                                  -0-                  -0-               -0-                  -0-

      Total Assets                        $        39,440    $             856    $           -0-   $          40,296

Liabilities:
   Due to FFA Groups                      $        39,440    $             856    $           -0-   $          40,296

      Total Liabilities                   $        39,440    $             856    $           -0-   $          40,296


                                                Balance                                                    Balance
Total All Agency Funds                        July 1, 2008         Additions          Deductions        June 30, 2009

Assets:
  Cash                                    $       552,689    $     1,490,507      $    1,483,646    $         559,550
  Accounts Receivable                                  -0-             3,943                  -0-               3,943

      Total Assets                        $       552,689    $     1,494,450      $    1,483,646    $         563,493

Liabilities:
   Accounts Payable                       $        35,136    $           17,460   $      35,136     $          17,460
   Due to FFA Groups                               39,440                   856              -0-               40,296
   Deferred for Student Activities                478,113               505,737         478,113               505,737

      Total Liabilities                   $       552,689    $          524,053   $     513,249     $         563,493




                                                                 -37-
                       FRANKLIN COUNTY SCHOOL DISTRICT
                       Franklin County High School - Activity Fund
                     Statement of Cash Receipts and Disbursements
                           For the Year Ended June 30, 2009



 Individual   Cash balance          Cash       Cash      Inter-fund Cash balance
Activity fund July 1, 2008         Receipts Disbursements Transfers June 30, 2009
------------- ------------         -------- ------------- --------- -------------

General fund     $    386.96   $   457.00        $   950.14   $      168.64    $       62.46
Family resources       22.78         0.00              0.00            0.00            22.78
Field trips           657.50       560.00            642.52         (500.00)           74.98
Interest            4,203.58     3,600.24          7,186.86         (162.50)          454.46
Postage               145.99        32.34             76.23            0.00           102.10
Parking             1,667.40     2,495.00            620.50       (1,884.13)        1,657.77
Mann account        2,580.97         0.00              0.00            0.00         2,580.97
State textbooks     4,451.50    37,180.00         35,687.02       (2,853.00)        3,091.48
Agenda books            0.00        25.00          5,204.13        5,179.13             0.00
Rewards picnic      2,068.26         0.00            263.00          500.00         2,305.26
FEA                 1,402.76         0.00              0.00            0.00         1,402.76
Lost & stolen       3,370.18       388.94            702.70          (17.00)        3,039.42
Textbook rentals      873.91       334.50              0.00            0.00         1,208.41
Social committee      104.93       659.00            522.31            0.00           241.62
Coke sales            701.12     3,653.16          3,529.19         (668.64)          156.45
Snack machines        221.17         0.00            211.03            0.00            10.14
Teachers lounge       811.46       506.21          1,198.94          (70.00)           48.73
Recyclables           468.06       105.05            334.95            0.00           238.16
Athletic           16,533.80   118,583.21        116,254.89          284.40        19,146.52
Toyota Classic          0.00    12,066.00         12,066.00            0.00             0.00
FB playoffs             0.00     2,857.00          1,016.10         (816.10)        1,024.80
B-basketball camp 5,180.88       4,395.00          6,384.35         (569.87)        2,621.66
G-basketball camp 1,336.54       2,397.50          4,046.85          825.00           512.19
Boys tennis           777.62       495.52            908.93          (50.00)          314.21
Cheerleading camp     336.85         0.00              0.00         (336.85)            0.00
Cheerleaders        2,600.38    10,790.00          9,279.59          286.85         4,397.64
Swimming team          64.00     2,438.00          2,478.38            0.00            23.62
Flyerette tennis      178.00       203.68            203.68            0.00           178.00
Athletic complex       96.43       116.42              0.00          (93.43)          119.42
Softball showcase     230.00     1,425.00          1,755.00          100.00             0.00
Step team             192.85         0.00             63.79          (60.00)           69.06
Art club              856.75       513.33          1,029.76          (55.00)          285.32
Art fund              147.95         0.00            132.00            0.00            15.95
Donnelly               25.83         0.00              0.00            0.00            25.83
Beta club             281.77    15,722.38         17,063.39        3,696.54         2,637.30
DECA                  386.16    13,931.19         12,698.11          190.00         1,809.24
FBLA                  321.59         0.00            177.00            0.00           144.59
FCA                    22.08         0.00              0.00            0.00            22.08
FFA                 1,385.94     9,264.50          9,141.19           63.00         1,572.25




                                Continued on next page



                                          -38-
                      FRANKLIN COUNTY SCHOOL DISTRICT
                      Franklin County High School - Activity Fund
                    Statement of Cash Receipts and Disbursements
                          For the Year Ended June 30, 2009




 Individual   Cash balance      Cash       Cash      Inter-fund Cash balance
Activity fund July 1, 2008     Receipts Disbursements Transfers June 30, 2009
------------- ------------     -------- ------------- --------- -------------

Home Scholars    $   498.50   $ 1,755.00       $ 2,176.00   $        0.00    $      77.50
French honor          49.00         0.00             0.00            0.00           49.00
Film club            174.44         0.00             0.00            0.00          174.44
Academic club         12.00       562.00           571.00            0.00            3.00
Key club           6,118.75     2,187.88         7,177.00            0.00        1,129.63
Math dept.         2,714.88       100.00             0.00            0.00        2,814.88
Multi-cultural club 438.48          0.00             0.00            0.00          438.48
Nat honor society    477.53       650.00           583.18            0.00          544.35
Pep club             197.00        25.00             0.00          (50.00)         172.00
SADD                  67.66         0.00             0.00            0.00           67.66
Spanish club         509.39         0.00           178.52         (100.00)         230.87
S.T.A.N.D.            97.95       835.58           907.76            0.00           25.77
Spanish honor        731.44       280.00           578.25          (50.00)         383.19
Student council    1,918.63       698.00         1,065.79          (65.00)       1,485.84
Tri-M honor soc       11.88         0.00             0.00            0.00           11.88
Vernissage         2,630.43     2,103.68           846.42           50.00        3,937.69
Y club               664.52    13,236.53        13,280.87          335.73          955.91
Young Republicans     28.50         0.00             0.00            0.00           28.50
FCCLA                471.85     1,422.90           839.88          (88.00)         966.87
Floral design        134.50         0.00            94.09            0.00           40.41
Trainer              530.11         0.00             0.00            0.00          530.11
AP BIO               384.95         0.00            81.00            0.00          303.95
Broadcast journal.    79.20         0.00             0.00            0.00           79.20
Drama              5,843.33    14,142.50        12,890.49         (398.50)       6,696.84
English Dept.      2,474.64       322.00            15.75            0.00        2,780.89
Hat day              360.73         0.00             0.00         (360.73)           0.00
Journalism           361.01         0.00             0.00            0.00          361.01
Spanish Dept.        457.64         0.00             0.00            0.00          457.64
Spanish sales        321.21         0.00             0.00           75.00          396.21
FB quarterback         0.00     1,500.00             0.00            0.00        1,500.00
Workbooks bus.       187.96         0.00             0.00            0.00          187.96
ROTC O&M             555.31         0.00             0.00            0.00          555.31
ROTC cadet meals     954.00         0.00             0.00          (15.56)         938.44
ROTC RPA           5,938.14     2,484.23             0.00       (2,220.83)       6,201.54
ROTC cadet TL        517.84         0.00             0.00         (480.00)          37.84
ROTC fundraiser      480.64     6,636.34         9,587.05        2,866.39          396.32




                               Continued on next page



                                        -39-
                      FRANKLIN COUNTY SCHOOL DISTRICT
                      Franklin County High School - Activity Fund
                    Statement of Cash Receipts and Disbursements
                          For The Year Ended June 30, 2009




 Individual   Cash balance      Cash       Cash      Inter-fund Cash balance
Activity fund July 1, 2008     Receipts Disbursements Transfers June 30, 2009
------------- ------------     -------- ------------- --------- -------------

Class of 2008    $ 1,961.33 $      0.00 $     89.00         $(1,872.33) $      0.00
Class of 2009      1,190.46   24,441.17   30,067.42           4,959.79       524.00
Class of 2010        509.60      149.00      274.00             (58.61)      325.99
Class of 2011          0.00        0.00        0.00             551.52       551.52
Class of 1012          0.00      500.05      312.00             (25.00)      163.05
Former classes     4,661.03        0.00    2,494.81               0.00     2,166.22
Counselor fund     3,709.33        0.00      296.36               0.00     3,412.97
Guidance office       83.00       10.00        0.00               0.00        93.00
AP exams           6,834.85   17,537.00   18,335.15            (227.00)    5,809.70
Library fund          92.28       68.36        0.00              17.00       177.64
PSAT                 977.50      925.00      871.00               0.00     1,031.50
Yearbook ads      13,320.08   12,938.75    7,923.46           3,543.50    21,878.87
Yearbook sales     3,563.50        0.00        0.00          (3,563.50)        0.00
Miss FCHS Pageant 5,619.81     6,616.00    5,510.62          (6,514.41)      210.78
Franktown s/d      1,419.50    1,085.00      149.31               0.00     2,355.19
Richards memorial     20.00      500.00      250.00               0.00       270.00
Pearce scholarship 700.00          0.00        0.00               0.00       700.00
Tennis court       2,407.50        0.00        0.00               0.00     2,407.50
Track                830.47        0.00      667.43               0.00       163.04
Project Grad.      2,171.66        0.00        0.00               0.00     2,171.66
Young Democrats        0.00      270.00      160.00             (25.00)       85.00
Angel fund             0.00      277.00      275.00               0.00         2.00
Shining star fund      0.00    4,138.77        0.00             558.50     4,697.27
Science dept.          0.00       75.00        0.00               0.00        75.00
Jenn Penn memorial     0.00      500.00        0.00               0.00       500.00
                ----------- ----------- -----------         ---------- -----------

Totals         $142,559.89 $364,167.91 $370,377.14          $     0.00   $136,350.66
               =========== =========== ===========          ==========   ===========




                                        -40-
                    FRANKLIN COUNTY SCHOOL DISTRICT
                     Western Hills High School - Activity Fund
                  Statement of Cash Receipts and Disbursements
                        For the Year Ended June 30, 2009



  Individual  Cash balance       Cash       Cash      Inter-fund Cash balance
Activity fund July 1, 2008     Receipts Disbursements Transfers June 30, 2009
------------- ------------     -------- ------------- --------- -------------

Operating fund $ 2,069.60     $ 2,672.93      $ 3,328.03   $     0.00    $ 1,414.50
Agendas              330.75         8.00        4,689.71     4,600.00        249.04
Building             222.53         0.00          218.68         0.00          3.85
Coke students      1,602.55     5,633.86        5,230.77       (20.00)     1,985.64
Coke teachers      1,156.63     1,749.97        2,314.37       (70.00)       522.23
Interest          14,990.61     2,748.80        3,069.62    (9,433.95)     5,235.84
Lost textbooks       704.69       651.12          250.95         0.00      1,104.86
Parking fees       1,103.14     1,095.00        2,713.54     1,800.00      1,284.60
Principal special 4,250.71         49.00        3,128.99        (9.60)     1,161.12
Textbook rental    1,531.14    29,415.22       19,677.18    (6,428.00)     4,841.18
Contingency        5,169.09         0.00        1,912.50         0.00      3,256.59
Copiers                4.29         0.00            0.00        (4.29)         0.00
Student needs        108.00         0.00           93.70         0.00         14.30
SR. Legacy         1,707.49         0.00            0.00       486.62      2,194.11
Class of 2005        485.66         0.00            0.00      (485.66)         0.00
Class of 2007        100.00         0.00            0.00         0.00        100.00
Class of 2008        596.77         0.00          610.70        13.93          0.00
Class of 2009      4,221.40     4,918.15        9,969.12     1,810.51        980.94
Class of 2010      1,023.74     2,357.75        1,321.67       (30.00)     2,029.82
Class of 2011        457.00       733.00          562.50       (30.00)       597.50
Athletic budget 17,260.68      49,910.02       63,180.85     4,769.07      8,758.92
Athletic admin     2,014.92         0.00          169.08         0.00      1,845.84
Boys golf            500.65         0.00            0.00         0.00        500.65
Boys soccer            0.46         0.00            0.00         0.00          0.46
Baseball             174.87    38,093.94       32,023.69         0.00      6,245.12
BBK special        2,726.71         0.00        2,632.40         0.00         94.31
Cheerleaders       1,015.12     8,240.87        3,718.97        96.00      5,633.02
Dance team           110.76       126.48          126.48       (30.00)        80.76
Football           4,108.49    51,436.80       43,288.61    (4,114.59)     8,142.09
Girls golf           191.45         0.00            0.00         0.00        191.45
B & G soccer         398.04    18,297.14       13,689.27         0.00      5,005.91
GBK special        2,797.02    24,013.93       23,766.55      (350.48)     2,693.92
Swim special          11.46     1,448.42        1,459.88         0.00          0.00
Track events           0.00     1,608.70          798.60         0.00        810.10
Track special      4,537.34    17,133.31       11,054.37         0.00     10,616.28
Volleyball           272.64         0.00           30.00       (30.00)       212.64
Cross country        238.40     2,455.03        2,287.81         0.00        405.62
Tournaments        1,052.12         0.00            0.00         0.00      1,052.12
Tennis special     1,737.80     4,222.75        3,248.36         0.00      2,712.19
Wrestling special     50.00     1,793.98        1,442.72         0.00        401.26
Athletic scholar 1,626.82         201.00            0.00         0.00      1,827.82
Archery                0.00       500.00            0.00         0.00        500.00
Academic team        284.62        53.75           38.62         0.00        299.75
Art club              36.69       201.50          243.75        34.35         28.79
Art projects           4.35         0.00            0.00        (4.35)         0.00
Beta club            758.98    10,157.89       10,675.95       (40.00)       200.92
Y-club               734.38     4,985.00        5,160.64       (30.00)       528.74
Cultural diversity 312.65          48.00            0.00       (60.00)       300.65
Drama club         1,373.84     2,532.22        2,507.25     1,797.51      3,196.32




                              Continued on next page

                                       -41-
                    FRANKLIN COUNTY SCHOOL DISTRICT
                     Western Hills High School - Activity Fund
                  Statement of Cash Receipts and Disbursements
                        For the Year Ended June 30, 2009


 Individual     Cash balance     Cash       Cash      Inter-fund Cash balance
Activity fund   July 1, 2008   Receipts Disbursements Transfers June 30, 2009
-------------   ------------   -------- ------------- --------- -------------

Ecology club     $   386.44 $     83.00 $    335.96 $      0.00 $   133.48
FBLA                 499.02        0.00       77.00      (30.00)    392.02
FCA                    1.24        0.00        0.00        0.00       1.24
FFA                1,205.92   17,096.65   13,540.24   (2,539.00)  2,223.33
FCCLA                285.40    4,785.51    4,431.93      (88.00)    550.98
French Honor SOC.     48.72      292.99      213.64      (30.00)     98.07
JR Civitan             1.92        0.00        0.00        0.00       1.92
G.E.M.S.               0.00       42.00        0.00        0.00      42.00
Nat Honor Society    238.57      440.00      477.01      (30.00)    171.56
Pep club             259.84    1,090.00    1,054.30      (30.00)    265.54
SADD                 111.90        0.00        0.00        0.00     111.90
STLP                 390.40       78.55      116.02      (30.00)    322.93
Spanish Honor        443.58      445.00      372.00        0.00     516.58
Student Council    1,768.18      450.00      655.51      (10.00)  1,552.67
Help desk              0.04        0.00        0.00       (0.04)      0.00
JR historians        185.72       30.00       33.00        0.00     182.72
Book club            133.53      173.64      216.14       60.90     151.93
HOSA                 400.98        0.00      400.98        0.00       0.00
Future educators     159.37      315.00      322.29        0.00     152.08
Film club             23.60        0.00        0.00        0.00      23.60
DECA                  30.50      134.00       64.00        0.00     100.50
Young Republicans      0.00        0.00        0.00      (30.00)    (30.00)
Band                   1.54      765.50      765.00        0.00       2.04
Business dept          7.25        0.00        0.00        0.85       8.10
Business workbooks     0.85        0.00        0.00       (0.85)      0.00
Chorus                 0.00       58.00        0.00       28.00      86.00
English dept         368.65    2,407.30    1,109.74        0.00   1,666.21
FAMCO fees            20.39       88.00      155.45    1,000.00     952.94
Foreign language       1.00        4.95        0.00        0.00       5.95
Humanities            53.94        0.00        0.00      (30.00)     23.94
Journalism-print     822.96    2,070.00    2,225.76      (30.00)    637.20
Library              231.77      298.44      300.02     (101.86)    128.33
Math dept             83.85      100.00        0.00        0.00     183.85
PE dept               82.14        0.00        0.00        0.00      82.14
Resource spec ED       6.00        0.00        0.00        0.00       6.00
Science dept         246.93        0.00    2,303.64    2,851.91     795.20
Social studies        15.76       30.00        0.00        0.00      45.76
VO-AG                352.47       64.50      377.02        0.00      39.95
Freshman academy       0.96        0.00        0.00       (0.96)      0.00
Health sciences        4.03        0.00        0.00        0.00       4.03
Horticulture       6,818.12   12,929.05   13,405.75    2,564.00   8,905.42
JROTC              1,894.37    1,916.00    3,425.43     (360.00)     24.94
Counselors         1,264.32   10,645.00   11,129.95        0.00     779.37
Counselor special     35.09        0.00        0.00        0.00      35.09
Learning center      761.74   18,087.93    7,738.35   (1,500.00)  9,611.32
Learning ctr pay 3,824.89          0.00    5,310.43    1,500.00      14.46
Pageant                0.00    4,153.83    1,158.81   (2,995.02)      0.00
Yearbook           7,765.57      750.00   13,842.61    5,582.04     255.00
Landscape grant       58.84        0.00        0.00        0.00      58.84
Courtyard project 1,238.64         0.00        0.00        0.00   1,238.64
08-09 yearbook         0.00    7,305.50    3,913.64       10.96   3,402.82
               ----------- ----------- ----------- ---------- -----------

Totals          $118,703.99 $376,623.87 $370,107.50     $     0.00   $125,220.36
                =========== =========== ===========     ==========   ===========




                                      -42-
Schedule of Expenditures of Federal Awards
                                                  FRANKLIN COUNTY SCHOOL DISTRICT
                                                 Schedule of Expenditures of Federal Awards
                                                         Year ended June 30, 2009



                                                                                               Pass
                                                                            CFDA              Through
                                                                           Number             Number        Disbursements
U.S. DEPARTMENT OF EDUCATION

Passed through the Kentucky Department of Education
 Adult Education State Grant Program                                        84.002             0535     $          142,101
 Title I, Grants to Local Education Agencies                                84.010             0351              1,134,266
 Vocational Education Basic Grants to State                                 84.048             5462                 57,187
 Special Education Cluster:
    Special Education Grants to State                                       84.027             0581                958,797
    Special Education Preschool Grants                                      84.173             0587                 83,481
       Special Education Cluster Total                                                                           1,042,278

 Safe & Drug Free Schools & Communities State Grants                        84.186             0590                19,956
 State Grants for Innovative Programs                                       84.298             0533                 5,398
 Improving Teacher Quality State Grants                                     84.367             0710               188,321
 Hurricane Education Recovery                                               84.938             0400                17,063

    Total U.S. Department of Education                                                                           2,606,570


U.S. DEPARTMENT OF DEFENSE

National Guard Military Operation & Maintenance Projects-
 Air Force Junior ROTC                                                      12.401             5048                89,841

    Total U.S. Department of Defense                                                                               89,841


U.S. DEPARTMENT OF AGRICULTURE

Passed through the Kentucky Department of Education
 School Breakfast Program (Child Nutrition Cluster)                         10.553             0576               270,228
 National School Lunch Program (Child Nutrition Cluster)                    10.555             0575               956,134
 Summer Food Service Program for Children                                   10.559             0574                39,207

      Total passed through the Kentucky Department of Education                                                  1,265,569

Passed through the Kentucky Department of Agriculture
 Food Donation                                                              10.550             0575               160,954

    Total U.S. Department of Agriculture                                                                         1,426,523


U.S. DEPARTMENT OF LABOR

Workforce Investment Act Youth Activities                                   17.259             3826                89,188

    Total U.S. Department of Labor                                                                                 89,188


CORPORATION FOR NATIONAL & COMMUNITY SERVICE

Learn & Service America-School & Community Based Programs                   94.004             0736                  1,852

    Total Corporation for National & Community Service                                                               1,852


Total Federal Financial Awards Expenditures                                                             $        4,213,974




                                                                   -43-
                                      FRANKLIN COUNTY SCHOOL DISTRICT
                                  Notes to Schedule of Expenditures of Federal Awards
                                            For the year ended June 30, 2009




NOTE A – BASIS OF PRESENTATION

The accompanying schedule of expenditures of federal awards includes the federal grant activity of the Franklin County
School District 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 States, Local Governments, and Non-Profit
Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the
preparation of, the basic financial statements.



NOTE B – FOOD DISTRIBUTION

Non-monetary assistance is reported in the schedule at the fair value of the commodities disbursed. At June 30, 2009, the
District had food commodities in inventory. The food inventory totaled $91,171 at June 30, 2009. The District does not
separate commodities and purchased inventory totals.




                                                           -44-
 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
                                           Critchfield and Critchfield
                                          Certified Public Accountants, LLC
                                                  336 West Broadway
                                              Danville, Kentucky 40422

       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

State Committee for School District Audits
Members of the Board of Education
Franklin County School District
Frankfort, Kentucky

We have audited the financial statements of the governmental activities, the business-type activities, each major
fund, and the aggregate remaining fund information of the Franklin County School District as of and for the year
ended June 30, 2009 which collectively comprise the Franklin County School District basic financial statements and
have issued our report thereon dated November 13, 2009. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America, the standards applicable to financial audits contained
in Government Auditing Standards issued by the Comptroller General of the United States and audit requirements
prescribed by the Kentucky State Committee for School District Audits in the Independent Auditor’s Contract
Appendix I, II, and III.

Internal Control Over Financial Reporting
In planning and performing our audit, we considered the Franklin County School District’s internal control over
financial reporting as a basis for designing our auditing procedures 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 entity’s internal
control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the entity’s internal
control over financial reporting.

A control deficiency 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 misstatements on a timely basis. A
significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity's
ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted
accounting principles such that there is more than a remote likelihood that a misstatement of the Franklin County
School District’s financial statements that is more than inconsequential will not be prevented or detected by the
entity’s internal control.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a
remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the
Franklin County School District’s internal control.

Our consideration of internal control over financial reporting was for the limited purpose described in the first
paragraph of this section and would not necessarily identify all deficiencies in internal control that might be
significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial
reporting that we consider to be material weaknesses, as defined above.

Compliance and other matters
As part of obtaining reasonable assurance about whether the Franklin County School District’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. In addition, the results of our tests disclosed no instances of non compliance of specific state
statutes or regulations identified in Appendix II of the Independent Auditor’s Contract – State Audit Requirements.

In addition, we noted other matters involving internal control and its operation, which we reported to management of
the Franklin County School District in a separate letter dated November 13, 2009.

This report is intended solely for the information and use of management, school board, others within the district, the
Kentucky Department of Education, Kentucky State Committee for School District Audits, and federal awarding
agencies and pass-through entities, and is not intended to be and should not be used by anyone other than these
specified parties.

Critchfield & Critchfield, CPAs LLC

November 13, 2009
                                                           -45-
Report on Compliance with Requirements Applicable To Each Major
         Program and Internal Control over Compliance in
              Accordance with OMB Circular A-133
                                    Critchfield and Critchfield
                                     Certified Public Accountants, LLC
                                             336 West Broadway
                                         Danville, Kentucky 40422


         Report on Compliance with Requirements Applicable to Each Major Program and
            Internal Control over Compliance in Accordance With OMB Circular A-133


State Committee for School District Audits
Members of the Board of Education
Franklin County School District
Frankfort, Kentucky

Compliance
We have audited the compliance of the Franklin County School District with the types of compliance
requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance
Supplement that are applicable to each of its major federal programs for the year ended June 30, 2009.
The Franklin County School District’s major federal programs are identified in the summary of auditor's
results section of the accompanying schedule of findings and questioned costs. Compliance with the
requirements of laws, regulations, contracts and grants applicable to each of its major federal programs is
the responsibility of the Franklin County School District’s management. Our responsibility is to express an
opinion on the Franklin County School District’s compliance based on our audit.

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 Government 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 audit requirements prescribed by the Kentucky
State Committee for School District Audits in the Independent Auditor’s Contract Appendix I, II, and III.
Those standards and OMB Circular A-133 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 Franklin County School District’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. Our audit does not provide a legal
determination on the Franklin County School District’s compliance with those requirements.

In our opinion, the Franklin County School District complied, in all material respects, with the requirements
referred to above that are applicable to each of its major federal programs for the year ended June 30,
2009.

Internal Control Over Compliance
The management of the Franklin County School District is responsible for establishing and maintaining
effective internal control over compliance with requirements of laws, regulations, contracts and grants
applicable to federal programs. In planning and performing our audit, we considered the Franklin County
School District’s internal control over compliance with the requirements that could have a direct and
material effect on a major federal program in order to determine our auditing procedures for the purpose
of expressing our opinion on compliance, 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 Franklin County School District’s internal control over compliance.




                                                    -46-
A control deficiency in an entity’s internal control over compliance 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 noncompliance with a type of compliance requirement of a federal program
on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies,
that adversely affects the entity’s ability to administer a federal program such that there is more than a
remote likelihood that noncompliance with a type of compliance requirement of a federal program that is
more than inconsequential will not be prevented or detected by the entity’s internal control.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in
more than a remote likelihood that material noncompliance with a type of compliance requirement of a
federal program will not be prevented or detected by the entity’s internal control.

Our consideration of internal control over compliance was for the limited purpose described in the first
paragraph of this section and would not necessarily identify all deficiencies in internal control 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, as defined above.

This report is intended solely for the information and use of management, the school board, others within
the entity, the Kentucky Department of Education, Kentucky State Committee for School District Audits,
and federal awarding agencies and pass-through entities and is not intended to be and should not be used
by anyone other than these specified parties.




Critchfield & Critchfield, CPAs LLC




November 13, 2009




                                                     -47-
Schedule of Findings, Questioned Costs
       & Corrective Action Plan
                                FRANKLIN COUNTY SCHOOL DISTRICT
                      Schedule of Findings, Questioned Costs & Corrective Action Plan
                                     For the Year Ended June 30, 2009

                                   Section I-Summary of Auditor’s Results




Financial Statements

Type of auditor’s report issued:                                     Unqualified

Internal control over financial reporting:

   Material weakness(es) identified?                          ______yes           __X_ no

   Significant deficiencies 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 programs:

   Material weakness(es) identified?                          ______yes           __X_ no

   Significant deficiencies identified
    that are not considered to be material
    weakness(es)?                                              ______yes           __X_ none reported

Type of auditor’s report issued on compliance for major programs:                  Unqualified

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 programs:

        CFDA Number(s)                            Name of Federal Program or Cluster

            84.010                                                   Title I



Dollar threshold used to distinguish
Between type A and type B programs:                        $     300,000


Auditee qualified as low-risk auditee?                           X     yes               no




                                                    -48-
                               FRANKLIN COUNTY SCHOOL DISTRICT
               Schedule of Findings, Questioned Costs & Corrective Action Plan-continued
                                   For the Year Ended June 30, 2009




                                 Section II – Financial Statement Findings




No matters were reported.




           Section III – Federal Award Findings, Questioned Costs & Corrective Action Plan




No findings or questioned costs.




                          Section IV – Schedule of Prior Year Audit Findings


U.S. Department of Agriculture

2008-1 Child Nutrition Cluster (CFDA #’s 10.533, 10.555, & 10.559)

Our review of the food service verification of student’s eligibility for free or reduced meals revealed two
differences.

(a) One family file did not obtain sufficient documentation of income to adequately determine eligibility.
The food service used a net check amount per a bank deposit transmittal memo as proof of the amount of
family income. Gross wages from a paycheck stub (or other original source document) should be used.
The information used did not provide the required documentation to verify eligibility. We recommend the
family be verified again.

(b) The second file in question had sufficient documentation but was not correctly evaluated. The
documentation indicated the student’s status should be free meals. However, the food service changed
the status to reduced price meals. We recommend the status be changed to free meals.

Corrective Action: (a) The Food Service Director re-verified the family income to resolve this finding. (b)
The Food Service Director changed the student’s status to free meals to correct this finding.




                                                   -49-
Management Letter Comments
                                        Critchfield and Critchfield
                                         Certified Public Accountants, LLC
                                                 336 West Broadway
                                             Danville, Kentucky 40422




State Committee for School District Audits
Members of the Board of Education
Franklin County School District
Frankfort, Kentucky


In planning and performing our audit of the financial statements of the Franklin County School District as of
and for the year ended June 30, 2009, in accordance with auditing standards generally accepted in the
United States of America, we considered the District’s internal control over financial reporting as a basis for
designing our auditing procedures 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 Franklin County School District’s
internal control.

However, during our audit we became aware of matters that are opportunities for strengthening internal
controls and operating efficiency. The memorandum that accompanies this letter summarizes our comments
and suggestions regarding those matters. A separate report dated November 13, 2009 contains our report on
the District’s internal controls. This letter does not affect our report dated November 13, 2009, on the financial
statements of the Franklin County School District.

We will review the status of these comments during our next audit engagement. We have already discussed
many of these comments and suggestions with various District personnel, and their implementation is
currently being reviewed. We will be pleased to discuss them in further detail at your convenience, to perform
any additional study of these matters, or to assist you in implementing the recommendations.

This communication is intended solely for the information and use of management, the school board, others
within the organization, the Kentucky Department of Education, Kentucky State Committee for School District
Audits, federal awarding agencies and pass-through entities and is not intended to be and should not be
used by anyone other than these specified parties.




Critchfield & Critchfield, CPAs LLC




November 13, 2009




                                                      -50-
                                FRANKLIN COUNTY SCHOOL DISTRICT
                                    Management Letter Comments
                                   For the Year Ended June 30, 2009


Central Accounting Comments

1) The District does not properly cancel paid vendor invoices. To cancel a paid invoice the District should
stamp paid, record date paid and check number issued on the invoice. Properly cancelled invoices help
prevent duplication of payment. We recommend the district cancel all paid invoices.

2) We observed instances where incorrect account classification codes were utilized to record
transactions for goods and/or services. Noted were: payments for annual subscription renewal of online
curriculum classified to a property code; three projectors and digital system classified to miscellaneous
expense rather than a property code; and a TV and mounting equipment was classified as purchased
services. We recommend correct classification codes be utilized to accurately reflect the actual reason for
the expenditure on the financial statements. Amounts should not be coded based on remaining budgeted
funds in certain account classification codes.

Management’s Response

In response to management comments the following procedures will be implemented. A stamp will be
acquired to stamp all paid invoices to properly cancel them. Additionally, greater care will be taken to
ensure that appropriate object codes are used. Purchase Orders will be reviewed for this and corrected.


Individual School Activity Funds

Western Hills High School

1) The “Redbook” states that all checks written on the internal account should have the signature of the
principal or his designee and the school treasurer. We noted six checks that cleared the bank with only
one authorized signature. Two signatures are required on all checks. We recommend compliance with the
two signature requirement.

2) Procedures outlined in the “Redbook” for handling cash states “Teachers/sponsors/students shall use
the multiple receipt form or pre-numbered receipts when collecting money. A copy of the Multiple Receipt
Form or a copy of the pre-numbered receipt shall be retained by the teacher/sponsor and the original shall
be given to the school treasurer.” We noted several of the receipts tested had no supporting
documentation attached. Also when issuing receipts they should be issued to the person rendering the
money not to the person receiving the money. We noted several receipts issued to the school treasurer
rather than the person who paid the money. We recommend the school use multiple receipt forms with all
supporting documentation attached and proper procedures be used in issuing the receipt to the person
rendering the money. In the case of a teacher turning in a multiple receipt form listing students paying then
the receipt is issued to the teacher rendering the money.

3) The “Redbook” states the school treasurer shall file all documents (check stub, purchase order,
standard invoice, and detail purchase receipts) for a disbursement together by month, in an organized
manner. We found it difficult to locate paid invoices because they were not in check sequence order or by
paid date order. (Examples: we found an invoice paid in November in the March folder, an invoice paid in
December in the March folder and an invoice paid in March in the May folder) We recommend all
documentation be filed by check number, by month paid, which will provide a better trail for management
and auditors.

 4) The Young Republicans activity fund ended the fiscal year June 30, 2009 with a negative or deficit
balance. Activity funds should not incur obligations when they do not have funds to cover the expense. We
recommend more care be taken in order to not have a deficit balance in any activity fund.


                                                    -51-
                                FRANKLIN COUNTY SCHOOL DISTRICT
                                    Management Letter Comments
                                   For the Year Ended June 30, 2009



Bondurant Middle School

1) When testing the receipts, we noted 30% of the receipts tested did not have complete support
documentation. We noted receipts that should have been supported with a multiple receipt form.
Procedures outlined in the “Redbook” for handling cash state “Teachers/sponsors/students shall use the
multiple receipt form when collecting money. A copy of the Multiple Receipt Form shall be retained by the
teacher/sponsor and the original shall be given to the school treasurer.” We recommend a multiple receipt
form be used and retained in the records every time there is more than one person giving money.

2) We noted many fund raising activities in the school records but we found no fund raising approvals or
worksheets. The “Redbook” has certain policies for monitoring fund-raising activities which require prior
approval be obtained from the School Board. Monitoring fund raising activities is necessary to determine
reasonable profits and maintain adequate internal controls. We recommend all policies and procedures
outlined in the “Redbook” for fund raising activities should be followed.

Elkhorn Middle School

1) The “Redbook” states that all checks written on the internal account should have the signature of the
principal or his designee and the school treasurer. We noted four checks that cleared the bank with only
one authorized signature. Two signatures are required on all checks. We recommend compliance with the
two signature requirement.

Collins Lane Elementary School

1) The “Redbook” states “Prior year balances shall be entered at the beginning of each fiscal year”. We
noted nine activity funds that had a different current fiscal year beginning balance (July 1, 2008) than their
prior fiscal year ending balance (June 30, 2008). These activity funds were; General fund, Interest,
Academic team, Chorus t-shirts, Music, Fifth grade fundraiser, Fifth grade overnight, Field trip-fifth grade,
and Fitness. Any transfer of funds between activity funds must be made only with the proper completion of
a transfer form. We recommend the polices and procedures of the “Redbook” be followed in bringing
forward prior year balances and making inter fund transfers.

Hearn Elementary School

1) We noted two instances where a check was recorded in the central ledger multiple times and then
voided out. (Check # 3806 & 3807 listed four times, reversed three times) (Check # 3886 listed four times,
reversed once, recorded as a receipt twice). Check # 3886 was actually for $2,493.01 but to correct the
over stated check amount in the records a voiding entry was recorded as a receipt of $4986.02. This over
stated the receipts and disbursements for the year. The “Redbook” states void checks should be recorded
as negative expenses and not as receipts. We recommend more care be taken when posting to the
central ledger and proper procedures be followed in correcting errors.

2) When testing the receipts, we noted 38% of the receipts tested did not have complete support
documentation. We noted multiple receipt forms that did not have complete information. A listing of who
rendered the money should be on the form. Stating, for example, yearbook sales and not listing who paid
the money is not proper completion of the form. Procedures outlined in the “Redbook” for handling cash
state “Teachers/sponsors/students shall use the multiple receipt form when collecting money. A copy of
the Multiple Receipt Form shall be retained by the teacher/sponsor and the original shall be given to the
school treasurer. We recommend multiple receipt forms be used, completed properly, and retained in the
records.


                                                    -52-
                                FRANKLIN COUNTY SCHOOL DISTRICT
                                    Management Letter Comments
                                   For the Year Ended June 30, 2009




Peaks Mill Elementary School

1) We noted transfers between the activity funds. We did not locate completed transfer forms supporting
the transfers. The “Redbook” states, “amounts may be transferred between activity funds only by proper
completion of a transfer form”. We recommend the policies in the “Redbook” be followed when making
transfers between activity funds.



Management’s Response

The Individual Schools' management reviewed the above comments and they will make the procedural
changes necessary to correct the problems.




Prior Year Comments

All prior year comments for the District Central Accounting were resolved.

All prior year comments for the individual Schools were resolved except for the following:

Western Hills High School did not correct the prior year comments 1 and 3 above.

Elkhorn Middle School did not correct the prior year comment which is repeated above.




                                                   -53-

								
To top