Year 1 SPLOST III Audit and Review for the 2007-08 … 1 SPLOST III Audit and Review for the 2007-08...

January 30, 2009

Submitted by:

Year 1 SPLOST III

Audit and Review for the

2007-08 School Year

Submitted to:

Gwinnett County Public Schools

FINAL REPORT

YYEEAARR 11 SSPPLLOOSSTT IIIIII

AAUUDDIITT AANNDD RREEVVIIEEWW

Final Report

Submitted to:

Mr. Rick Cost Chief Financial Officer

Gwinnett County Public Schools 437 Old Peachtree Road NW

Suwanee, GA 30024-2978

Submitted by:

2123 Centre Pointe Boulevard Tallahassee, Florida 32308-4930

January 30, 2009

TABLE OF CONTENTS

PAGE EXECUTIVE SUMMARY .................................................................................................. i 1.0 INTRODUCTION ..............................................................................................1-1 1.1 Methodology ..........................................................................................1-1 1.2 Overview of Final Report .......................................................................1-4 2.0 SPLOST III PROJECT OVERVIEW IN GWINNETT COUNTY PUBLIC SCHOOLS ..........................................................................................2-1 3.0 FACILITIES-RELATED SPLOST III FINDINGS, COMMENDATIONS, AND RECOMMENDATIONS ............................................................................3-1 3.1 Project Planning, Design, and Construction ...........................................3-1 3.2 Procurement Process ............................................................................3-6 3.3 Project Oversight and Budgetary Controls .............................................3-6 4.0 NON-FACILITIES–RELATED SPLOST III FINDINGS, COMMENDATIONS, AND RECOMMENDATIONS ............................................................................4-1 4.1 Financial Overview of SPLOST III .........................................................4-1 4.2 Budget Materials ...................................................................................4-3 4.3 Financial Management ..........................................................................4-8 4.4 Transportation ..................................................................................... 4-13 4.5 Technology .......................................................................................... 4-14 5.0 COMPLIANCE STATEMENT ............................................................................5-1

EXECUTIVE SUMMARY

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EXECUTIVE SUMMARY

In August 2008, MGT of America, Inc., was awarded a contract extension to conduct an Annual Special Purpose Local Option Sales Tax III (SPLOST III) Audit and Review for the 2007-08 school year for Gwinnett County Public Schools. As stated in the Request for Proposals (RFP), the purpose of the study is to conduct an external audit and review of SPLOST III fund expenditures by GCPS to ensure compliance with the requirements of Georgia law and prepare a final report of the findings, commendations, recommendations, and projected costs and/or cost savings for recommendations.

The RFP stated that the scope of work should include:

To become familiar with the District’s planned scope of the capital building program including, but not limited to, knowledge of the type of work planned for new construction, renovation, major/minor addition, upgrade, etc., furniture and supply purchases, and technology services and equipment including networking, installation, and procurement.

Reviewing and evaluating schedules for projects.

Reviewing accounting records/reports for projects in progress and/or completed and compare work completed to date with funds expended to date.

Reviewing contracting process for all work, labor and materials contracts as required by HB-1079 conformance and best practices in accordance with industry standards.

Presenting or assisting in the public presentation of the annual performance audit and review.

Commendations

Detailed commendations for exemplary practices are found in the full report in Chapters 3.0 and 4.0. The commendations regarding SPLOST III funds for which Gwinnett County Public Schools is recognized are:

Gwinnett County Public Schools is commended for its effective management of a facilities development and construction program that meets SPLOST III objectives (Commendation 3-A).

Gwinnett County Public Schools is commended for successfully identifying additional funding sources (Commendation 3-B).

Gwinnett County Public Schools continues to use an effective set of methods and controls in the processing of change orders (Commendation 3-C).

Gwinnett County Public Schools has followed a consistent process of project cost control related to SPLOST III projects during the 2007-08 school year

Executive Summary

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that resulted in lower construction costs than those found in neighboring school systems (Commendation 3-D).

Gwinnett County Public Schools is commended for continuing to use effective procedures that keep bid amounts within construction budgets (Commendation 3-E).

Gwinnett County Public Schools is commended for maintaining project schedules (Commendation 3-F).

Gwinnett County Public Schools is commended for using short-term general obligation bonds to provide the necessary cash flow to accelerate the SPLOST III construction program (Commendation 4-A).

Gwinnett County Public Schools is commended for continuing to provide monthly status reports to key central office staff and school principals for SPLOST III as they did for SPLOST II information (Commendation 4-B).

Gwinnett County Public Schools is commended for establishing a well documented process to track program changes to the SPLOST III program (Commendation 4-C).

Gwinnett County Public Schools continues to use an effective process to track retainage associated with each vendor report pertaining to SPLOST II funds (Commendation 4-D).

Gwinnett County Public Schools is commended for implementing the innovative refurbishment program as one way to upgrade and sustain an older bus fleet (Commendation 4-E).

Gwinnett County Public Schools is commended for properly affixing identification tags to assets purchased with SPLOST III funds during the 2007-08 school year (Commendation 4-F).

Findings and Recommendations

Although this Executive Summary briefly highlights areas of recommended improvement in Gwinnett County Public Schools regarding SPLOST III funds, detailed recommendations for improving operations are found throughout the main body of the full report. These recommendations are not meant to state that GCPS is not in compliance with Georgia laws governing SPLOST III funding. Findings and recommendations for improvement regarding SPLOST III revenue include the following:

Restructure the format for the SPLOST Funds in the FY2010 Public Budget Document to identify the beginning fund balance, anticipated revenues, ending fund balance and the expenditures that identify the current year activity as well as the estimated total project costs (Recommendation 4-1).

Provide the Board of Education a quarterly report that includes quarterly and year-to-date information for all SPLOST II and SPLOST III revenues, a

Executive Summary

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budget and actual expenditure report for the various SPLOST II and SPLOST III projects and other expenditures along with financial projections for the remainder of the fiscal year (Recommendation 4-2).

Establish a program to track the operating costs for the refurbished school buses in comparison with both new buses and older buses to determine the viability of continuing the refurbishment program (Recommendation 4-3).

Continue implementation of the fixed asset system using the PeopleSoft asset management module per the existing schedule (Recommendation 4-4).

Develop guidelines to assure that the asset identification tags are placed on different kinds of assets in a consistent manner that will allow them to be easily located (Recommendation 4-5).

Compliance Statement

Based on MGT’s findings during the Annual Special Purpose Local Option Sales Tax III Audit and Review, MGT has found Gwinnett County Public Schools to be in full compliance using SPLOST III funds in all areas audited and reviewed during the 2007-08 school year. Sections audited and reviewed include:

SPLOST III referendum process and documentation;

SPLOST III planning, design, and construction of school-related facilities;

SPLOST III procurement process related to the construction or renovation of school-related facilities;

SPLOST III project budgets, revenue and expenditure projections, and project completion status;

SPLOST III cash, investments, and General Ledger reconciliation documentation and procedures; and

SPLOST III receivables, payables, accruals, and General Ledger reconciliation documentation and procedures.

Gwinnett County Public Schools is therefore, in compliance with the related sections of Georgia’s Constitution and Official Code of Georgia (O.C.G.A.) 48-8-141, 48-8-121, and 21-2-491. Recommendations provide for additional efficiencies and are not meant to state that GCPS is not in compliance with Georgia laws governing SPLOST III funding.

1.0 INTRODUCTION

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1.0 INTRODUCTION

In August 2008, the Gwinnett County Board of Education extended a contract with MGT of America, Inc. to conduct an Annual Special Purpose Local Option Sales Tax III (SPLOST III) Audit and Review for the 2007-08 school year. This report represents the audit and review of the 2007-08 use of SPLOST III funds.

The purpose of this annual audit and review is to analyze how the school system is spending funds provided by SPLOST III and to verify compliance with the three related sections of Georgia’s Constitution and Official Code of Georgia (O.C.G.A.) which state:

O.C.G.A. 48-8-141 – authorizes sales taxes for educational purposes in the same manner as county sales and use taxes.

O.C.G.A. 48-8-121 – authorizes the use of tax proceeds and requires that a record be maintained of each project for which the proceeds of the tax are used.

O.C.G.A. 20-2-491 – specifically provides that such tax proceeds shall be subject to a performance audit or performance review through a public request for proposals process with respect to any sales tax for educational purposes which is in effect in July 1, 2003.

To fulfill the requirements of the contract with the Gwinnett County Board of Education, MGT developed an Annual SPLOST III Audit and Review designed to:

Develop a summary set of information about the status of funds collected.

Use findings to recommend strategies for improvements in the use of these funds in Gwinnett County Public Schools.

Prepare recommendations for improvement.

Develop implementation strategies and a timeline for implementing each recommendation.

1.1 Methodology

The methodology MGT used to prepare for and conduct the Annual SPLOST III Audit and Review of Gwinnett County Public Schools is described in this section.

Introduction


MGT’s audit methodology:

Identifies compliance or noncompliance with Georgia Statutes regulating SPLOST funds.

Specifically takes into account the unique student body and environment within which the school district operates.

Obtains input from school district administrators and staff.

Follows a common set of guidelines tailored specifically to the district being reviewed.

Includes analyses of the efficiency of work practices.

Identifies the level and effectiveness of externally imposed work tasks and procedures.

Identifies both exemplary programs and practices as well as needed improvements.

Documents all findings.

Presents straightforward and practical recommendations for improvement.

Each of the strategies we used is described below and followed by the timeline presented in Exhibit 1-1.

To provide a foundation for data analyses and recommendations, we simultaneously conducted many activities. Among these activities were the identification and collection of existing reports and data sources that provided us with available recent information related to the various administrative functions and financial operations associated with SPLOST III funds we would review in Gwinnett County Public Schools.

Examples of materials MGT requested include, but are not limited, to the following:

Independent financial audits Annual budget and expenditure reports Budget guidelines and procedures Organizational charts School board policies and administrative procedures Program and compliance reports Technology plan Annual performance reports Job descriptions

Introduction


EXHIBIT 1-1 TIMELINE FOR THE ANNUAL SPLOST III AUDIT AND REVIEW OF

GWINNETT COUNTY PUBLIC SCHOOLS

TIME FRAME ACTIVITY

August 2008 Contract amendment finalized.

September 2008 Tailored data request list based on Gwinnett County Public School data availability.

Week of October 13, 2008

Conducted onsite audit and review of Gwinnett County Public Schools use of SPLOST III funds during the 2007-08 school year, along with the final year of SPLOST II.

Collected data.

Interviewed central office administrators and staff.

October – November 2008

Conducted site visits to various schools and facilities.

Analyzed data and information previously collected.

Requested additional data and/or clarification with Gwinnett County Public Schools administrators and staff.

October – December 2008

Prepared Draft Final Year One Report.

December 19, 2008 Submitted Draft Final Year One Report.

January 16 – 29, 2009

Reviewed Draft Year One Report and made changes to the Draft Year One Report.

January 30, 2009 Submitted Final Year One Report.

Introduction


1.2 Overview of Final Report

MGT’s final report is organized into five chapters and an appendix, including:

Introduction SPLOST III Project Overview in Gwinnett County Public Schools Facilities Related SPLOST III Findings and Recommendations Non-Facilities Related SPLOST III Findings and Recommendations Compliance Statement

Chapter 2.0 contains an overview of projects funded with SPLOST III during the 2007-08 school year in Gwinnett County Public Schools.

In Chapters 3.0 and 4.0, we analyze relevant facilities-related and non-facilities projects for Gwinnett County Public Schools using SPLOST III funds during the 2007-08 school year. Findings, commendations, and recommendations are presented and the following data are included:

A description of the current status of each project in Gwinnett County Public Schools.

A summary of our study findings:

Findings from report and data sources which were compiled prior to our onsite review.

A summary of our onsite observational and interview findings.

A commendation or recommendation for each finding.

Implementation strategies and timelines for each recommendation.

We conclude this report with a compliance statement in Chapter 5.0.

MGT consultants conducted the formal onsite audit and review of Gwinnett County Public Schools in October 2008. Prior to the onsite review, each consultant was provided with information about the school system’s SPLOST projects. During the onsite work, consultants conducted detailed reviews of the operations of Gwinnett County Public Schools in their assigned functional areas as they pertained to SPLOST III funding during the 2007-08 school year.

2.0 SPLOST III PROJECT OVERVIEW IN GWINNETT

COUNTY PUBLIC SCHOOLS


2.0 SPLOST III PROJECT OVERVIEW IN GWINNETT COUNTY PUBLIC SCHOOLS

This chapter provides an overview of projects related to the Special Local Option Sales Tax III (SPLOST III) funding for the 2007-08 school year in Gwinnett County Public Schools (GCPS).

Gwinnett County has experienced significant growth in the past decade and as the area has grown, so has the school system. According to the Gwinnett County Public Schools, Gwinnett is expecting a continued student enrollment growth to over 175,000 students in 2010-11. In September 2004, school enrollment set a record at 135,730 students and, according to Gwinnett County Public Schools, existing classrooms are overcrowded due to continued growth in enrollment. Construction plans have been developed using current and projected enrollment growth to relieve overcrowding by the year 2012, and to reduce or eliminate temporary structures such as portables and trailers. GCPS is currently within a five-year, $1.1 billion capital construction program that will result in approximately 1,800 classrooms in 27 schools, nine school additions, technology improvements, transportation assets, and new sites for future schools. Of this $1.1 billion, Bufford City schools is expected to receive 1.7 percent or $18,700,000.

Based on the fast growth in the county and the demands of increasing student enrollments, GCPS approached the Gwinnett County Board of Education to request SPLOST III funding for the district. The Board of Education agreed to move forward with asking the voters for this new option. The district completed and submitted the appropriate documentation to the local election board for approval.

In November 2006, Gwinnett County voters subsequently passed, by a 66 percent favorable response, an additional SPLOST for another five years. SPLOST III runs from July 1, 2007 though June 30, 2012. This special local option sales tax can be used to construct or modify school facilities, purchase transportation vehicles or technology-related equipment for the school district. The Gwinnett County Board of Education approves all projects considered as part of this funding program and GCPS is responsible for overseeing each aspect of every project.

GCPS integrated SPLOST III project planning with the continual district vision, mission and strategic goals. Projects have been planned to provide the district with world-class schools where students acquire knowledge and skills to be successful as they continue their education which is evident in the aggressiveness of building new and improving existing schools throughout the district.

Gwinnett County Public Schools adopted strategic goals in 2002. These goals, as well as the mission statement, are shown in Exhibit 2-1. As shown, the district goals are to provide world-class, safe, and secure schools to retain a workforce for optimizing student achievement.

SPLOST III Project Overview


EXHIBIT 2-1 GWINNETT COUNTY PUBLIC SCHOOLS

VISIONS, MISSION AND GOALS

Vision Statement

Gwinnett County Public Schools will be a system of world-class schools where students acquire the knowledge and skills to be successful as they continue their education at the postsecondary level and/or enter the workforce.

Mission Statement

The mission of the Gwinnett County Public Schools is to pursue excellence in academic knowledge, skills, and behavior for each student, resulting in measured improvement against local, national, and world-class standards.

Strategic Goals to Support the Mission

Adopted April 11, 2002

1. Gwinnett County Public Schools will ensure a world-class education for all students by focusing on teaching and learning the Academic Knowledge and Skills (AKS) curriculum.

2. Gwinnett County Public Schools will engine a safe, secure, and orderly environment for all.

3. Gwinnett County Public Schools will optimize student achievement through responsible stewardship of its financial resources and the proactive pursuit of all resources necessary to meet current and future demands.

4. Gwinnett County Public Schools will recruit, employ, develop, and retain a workforce that achieves the mission and goals of the organization.

5. Gwinnett County Public Schools will meet the continuing and changing demand for essential information through technological systems and processes that support effective performance and desired results.

6. Gwinnett County Public Schools will provide and manage the system's facilities and operations in an exemplary manner as determined by programmatic needs and best management practices.

7. Gwinnett County Public Schools will apply continuous quality improvement strategies and principles as the way the organization does business.

Source: Gwinnett County Public Schools, 2005.

SPLOST III Project Overview


Projects reported on the district’s plan for SPLOST III funds are shown in Exhibit 2-2.


PLANNED PROJECTS FOR SPLOST III FUNDS

PROJECT

2007 Dacula Area ES

Mill Creek Cluster ES #2 (Patrick-Proj. 504)

Grayson/Dacula Cluster ES #2 (Lovin-Proj. 501)

Systemwide Maintenance

Ed. Spec. Upgrades

Land Purchases

2008 Knight ES

Grayson Cluster ES #1 (Trip ES)

Mill Creek Cluster ES #1 (Puckett’s Mill ES)

Lanier ES (White Oak ES)

Lanier Cluster MS (Lanier MS Replacement)

South Cluster ES #1 (Rosebud ES)

Crews MS

IMD Infrastructure

IMD System Development

Systemwide Maintenance

Ed. Spec. Upgrades

Fine Arts BEL Update

Land Purchases

2009 North Cluster MS (North Gwinnett MS)

Grayson/Dacula Cluster HS (Archer HS)

Mill Creek/Collins Hill/Dacula HS (Mt. View HS)

Mill Creek/Collins Hill/Dacula MS #1 (Twin Rivers)

Grayson Cluster MS #1 (Bay Creek MS)

Grayson Cluster MS #2 (Couch MS)

Mill Creek/Collins Hill/Dacula ES #2 (Woodward)

Mill Creek/Collins Hill/Dacula ES #1 (Dyer)

Grayson Cluster ES #2 (Starling ES)

Benefield ES (Repl)

2010 Lanier Cluster HS (Lanier HS) Source: GCPS Business and Finance Report, 2008.

The following two chapters of this report provide findings, commendations, and recommendations for Gwinnett County Public Schools regarding facilities-related (Chapter 3.0) and non-facilities projects (Chapter 4.0) using SPLOST III funds in the 2007-08 school year.

3.0 FACILITIES-RELATED SPLOST III FINDINGS,

COMMENDATIONS, AND RECOMMENDATIONS


3.0 FACILITIES-RELATED SPLOST III FINDINGS, COMMENDATIONS, AND RECOMMENDATIONS

This chapter provides a summary of facilities-related SPLOST III findings for the 2007-08 school year in Gwinnett County Public Schools (GCPS). The three major sections of this chapter are:

3.1 Project Planning, Design, and Construction 3.2 Procurement Process 3.3 Project Oversight and Budgetary Controls

Well-planned educational facilities should be designed to support and enhance the educational experience of the students. The design process should be driven by the requirements of the educational program, the needs of the students, and the goal of supporting a multitude of learning and teaching styles. The design process requires input from all stakeholders, including administrators, teachers, security specialists, parents, students, and the maintenance and operations staff. The facility design should ensure efficient and effective maintenance and operation of the facility. The planning, design and construction process must result in safe and secure environments that support the educational program and efficiently use the school system’s resources. A well implemented facility construction program should have the following goals:

On-time facility delivery.

Facility delivery within budget.

Facility delivery at specified levels of quality and quantity.

Lowest possible total cost for construction, operations, and maintenance due to active life-cycle cost analysis.

In this first year of the SPLOST III audit conducted by MGT, many SPLOST III activities of the GCPS Division of Facilities and Operations exemplify best practices, and are thus captured in the form of commendations.

3.1 Project Planning, Design, and Construction

The purpose of educational facilities planning, design, and construction is to provide well designed schools that meet the needs of the educational programs and provide sufficient capacity for the district’s enrollment. To meet these goals, accurate enrollment projections are required and must be frequently updated. In addition, planners must be very knowledgeable about the educational programs and teaching/learning styles.

FINDING

GCPS continues an aggressive and effective building program in SPLOST III, Phase I of a three phase program called “The Plan”. Phase II will fund projects utilizing General

SPLOST II Project Overview in Gwinnett County Public Schools


Obligation Bonds which were approved on February 5, 2008 and Phase III expects to utilize funds from SPLOST IV which will go to voters in November 2011. SPLOST III calls for the construction of seven new elementary schools, one replacement elementary school, an addition to an existing elementary school, five new middle schools, an addition to one existing middle school, and three new high schools. SPLOST III projects will total 1,141 new classrooms for Gwinnett students.

Exhibit 3-1 summarizes these projects, while Exhibits 3-2 and 3-3 provide detailed information. As shown:

Capacity was added for 8,600 students in FY08. 397 new classrooms were added.

EXHIBIT 3-1 SUMMARY OF EDUCATIONAL FACILITIES COMPLETED, UNDER CONSTRUCTION, IN DESIGN, OR IN PLANNING,

2007-08 SCHOOL YEAR

STATUS

ADDED STUDENT CAPACITY

CLASSROOMS ADDED

TOTAL CONSTRUCTION COST ($MILLION) NOTES

Completed 8,600 397 $100.68

Under Construction 17,793 744 $300,00

In Design or Planning

14,627 649 Approx. $318.50 Projection

2007-08 TOTALS 41,020 1,790 Approx. $719.18 Projection

Source: Gwinnett County Public Schools 2007-12 Building Program, and June 2008-September 2008 Monthly Reports to Board of Education.



EXHIBIT 3-2 EDUCATIONAL FACILITIES COMPLETED OR IN CONSTRUCTION WITH SPLOST III FUNDS

2007-08 SCHOOL YEAR

SCHOOL NAME TYPE

NEW CLASS-ROOMS

OLD CAPACITY

NEW CAPACITY

CONTRACT AMOUNT

($MILLIONS) STATUS

SCHOOL YEAR OPEN

Knight Elementary School

Addn. 17 520 873 $7.50 Occupied 2007-08

Trip Elementary School

New 64 0 1,331 $16.27 Occupied 2007-08

Puckett's Mill Elementary

New 64 0 1,331 $15.41 Occupied 2007-08

Lanier Elementary School

New 53 0 1,102 $11.01 Occupied 2007-08

Lanier Middle School

New 72 0 1,800 $21.34 Occupied 2007-08

Rosebud Elementary School

New 64 0 1,331 $14.38 Occupied 2007-08

Crews Middle School

Addn. 10 1,150 1,400 $1.40 Occupied 2007-08

North Gwinnett Middle School

New 80 0 2,000 $24.19 Construction 2008-09

Archer High School


Mountain View High School


Twin Rivers Middle School


Bay Creek Middle School


Couch Middle School


Woodward Mill Elementary School


Dyer Elementary School


Starling Elementary School


Benefield Elementary School

New 53 0 1,102 $13.38 Occupied 2007-08

Lanier High School New 80 0 2,000 $50.77 Construction 2008-09

Total 1,141 1,670 28,063 $376.18 Source: Gwinnett County Public Schools 2007-127 Building Program, and July 2008-September 2008 Monthly Reports to Board of Education.



EXHIBIT 3-3 EDUCATIONAL FACILITIES IN PLANNING OR DESIGN

2007-08 SCHOOL YEAR

SCHOOL NAME TYPE

NEW CLASS-ROOMS

OLD CAPACITY

NEW CAPACITY STATUS

SCHOOL YEAR OPEN

Central Cluster Elementary School New 53 0 1,102 Design 2010-11

Peachtree Ridge Cluster ES #1 New 37 0 770 Design 2010-11

Berkmar/Meadowcreek Area ES New 53 0 1,102 Design 2010-11

North Cluster Elementary School New 53 0 1,102 Design 2010-11

South Cluster Middle School New 45 0 1,125 Design 2010-11

Radloff Middle School Addn. 27 1,125 1,800 Design 2010-11

Shiloh High School Addn. 24 1,900 2,500 Design 2010-11

Shiloh Middle School Addn. 9 1,775 2,000 Design 2010-11

Shiloh Cluster Elementary School New 53 0 1,102 Design 2010-11

Meadowcreek High School - 3rd Floor Buildout Renov. 16 3,000 3,400 Planning 2010-11

Central Cluster Middle School New 60 0 1,500 Design 2011-12

Sugar Hill Elementary School Addn. 10 1,019 1,227 Planning 2011-12

Alcova Elementary School Addn. 20 770 1,186 Planning 2011-12

Central Gwinnett High School - 4th Floor Buildout Renov. 17 2,650 3,075 Planning 2011-12

Parsons Elementary School Addn. 16 770 1,102 Planning 2011-12

Chesney Elementary School Addn. 20 770 1,186 Design 2011-12

South Gwinnett High School Addn. 24 2,400 3,000 Planning 2011-12

Grayson High School Addn. 20 2,500 3,000 Planning 2012-13

Jones Middle School Addn. 15 1,125 1,500 Planning 2012-13

Gwinnet School of Mathematics, Science and Technology New 107 0 1200 Const. 2010-11

Jones Middle School Addn. 15 1,125 1,500 Planning 2012-13

Ft. Daniel Elementary School Addn. 18 1,019 1,393 Planning 2012-13

Camp Creek Elementary School Addn. 10 977 1,185 Planning 2012-13

Parkview High School Addn. 12 2,700 3,000 Planning 2012-13

South Cluster ES #2 New 37 0 770 Planning 2012-13

Total 771 25,625 41,827 Source: Gwinnett County Public Schools 2007-2012 Building Program, and July 2008-September 2008 Monthly Reports to Board of Education.

COMMENDATION 3-A:

Gwinnett County Public Schools is commended for its effective management of a facilities development and construction program that meets SPLOST III objectives.



FINDING

GCPS continues to identify and utilizes funding sources in addition to SPLOST. GCPS identified the need for additional funding early in 2003-04 based on projected facility needs and projected SPLOST funding. The projected need continues to exceed projected SPLOST funding.

The current five-year enrollment projections show that enrollments will continue to grow through school year 2012-13. Exhibit 3-4 presents the GCPS enrollment projections.

EXHIBIT 3-4 GCPS 5-YEAR ENROLLMENT PROJECTIONS

2008-09 THROUGH 2012-13

SCHOOL YEAR CAPACITY ENROLLMENT PROJECTION

2008-09 140,007 154,464

2009-10 154,484 163,043

2010-11 164,171 166,685

2011-12 164,171 169,422

2012-13 164,171 171,374 Source: 2008- MGT summary prepared from data furnished by Gwinnett County Public Schools, Division of Facilities and Operations, 2008.

Based on these enrollment projections, GCPS has developed a three phase plan to meet the facility needs of the district. Exhibit 3-5 outlines the plan phases and funding sources for the 2007-2012 Building Program, or “The Plan”.

EXHIBIT 3-5 2007-12 BUILDING PROGRAM

PLAN PHASE FUNDING SOURCE SCHEDULE

Phase I SPLOST III Approved November 7, 2006

Phase II General Obligation Bonds Approved February 5, 2008

Phase III SPLOST IV To Voters in November, 2011

Source: 2008- MGT summary prepared from data furnished by Gwinnett County Public Schools, Division of Facilities and Operations, 2008.

COMMENDATION 3-B:

Gwinnett County Public Schools is commended for successfully identifying additional funding sources.



3.2 Procurement Process

An effective construction program requires the procurement of professional architectural, engineering, and contraction services. In addition, the procurement of the construction material must be done with an awareness of the current markets and innovations in products to capitalize on the best opportunities. GCPS continues to use procedures for acquiring services that ensure a high level of performance for the professionals involved in its construction program. GCPS continues to look at innovative construction materials and processes to maximize the performance of it’s finished facilities.

GCPS has continued to improve the quality materials used in the construction of schools, and to explore new methodologies that can save resources and maintain quality. See the audit report for the fifth year of SPLOST II for FY 2008 details.

3.3 Project Oversight and Budgetary Controls

The effectiveness of project oversight and budgetary control mechanisms can be measured readily by the following outcomes:

Projects are delivered on time.

Projects are delivered within the budget.

Projects conform to the standards set forth in the construction documents.

Life-cycle costing is used to obtain the lowest possible initial costs, combined with the lowest possible operating and maintenance costs.

Change order rates are kept within best practice standards.

When unforeseeable situations do occur they are handled dauntlessly, with confidence and trust, in the established procedures and processes.

FINDING

The GCPS Division of Facilities and Operations exhibits all of the above characteristics during the 2007-08 Annual SPLOST III Audit and Review.

Exhibit 3-6 summarizes the record of change orders during the 2007-08 school year with SPLOST III funds. During this period, 126 change orders were initiated, for a net cost to GCPS of over $328,778. The majority of the change orders were due to unforeseen conditions on one project. For FY 2007-08, the total dollar amount of change orders represented approximately 3.3 percent of the $100.690 million dollars of new and renovation/addition construction completed that year. This is within the industry standard of three to four percent for new construction and six to nine percent for renovation work.



EXHIBIT 3-6 SUMMARY OF SPLOST III CHANGE ORDERS

2007-08 SCHOOL YEAR

CATEGORY 2007-08

Total Number of Change Orders 126

Number of Change Orders per Project

15.75

Net Total $328,778

Average $/Change Order $2,609

Owner-Only Initiated 2

Architect/Engineer-Only Initiated 20

Contractor-Only Initiated 0

Owner-, Architect/Engineer-Initiated

19

Owner-, Architect/Engineer-, Contractor-Initiated

3

Unforeseen 86

Source: MGT summary prepared from data furnished by Gwinnett County Public Schools, Division of Facilities and Operations, 2008.

COMMENDATION 3-C:

Gwinnett County Public Schools continues to use an effective set of methods and controls in the processing of change orders.

FINDING

For the first year of SPLOST III, GCPS has continued a consistent process of project cost control. This process has resulted in lower construction costs than found in neighboring school systems.

Exhibit 3-7 compares the construction costs per square foot for the Atlanta Metro Area, and GCPS for the SPLOST III projects in the 2007-08 school year. (Note, no schools were bid in FY 2007-08 in Cobb County, the district determined to be GCPS’s best competitor.) As the exhibit indicates, GCPS is continuing to build schools at a significant lower cost per square foot than other districts in the region. Construction costs for GCPS, on average, are 30 percent less than the comparison districts/areas.



EXHIBIT 3-7 PER SQUARE FOOT CONSTRUCTION COST AVERAGES FOR NEW

CONSTRUCTION IN THE ATLANTA METRO AREA AND IN GWINNETT COUNTY FOR SPLOST II

2006-07 SCHOOL YEAR

SCHOOL TYPE

PER SQUARE FOOT

AVERAGE IN ATLANTA

METRO AREA

PER SQUARE FOOT

AVERAGE IN GWINNETT

COUNTY

DIFFERENCE BETWEEN ATLANTA

METRO AND GWINNETT

Elementary Schools $137 $95 $42

Middle Schools $129 $89 $40

High Schools $144 N/A1 NA

Source: Prepared by MGT from data supplied by the Gwinnett County Public Schools, 2008. 1No high schools bid in 2007-08

COMMENDATION 3-D:

Gwinnett County Public Schools has followed a consistent process of project cost control related to SPLOST III projects during the 2007-08 school year that resulted in lower construction costs than those found in neighboring school systems.

FINDING

GCPS continues to use processes that keep bid amounts within the architectural construction budgets. As noted during SPLOST II, these processes include:

Prototype designs.

Standard materials, finishes, and construction methods.

Architects with significant prior GCPS experience who can produce clear and easy-to-understand construction documents.

Contractors with significant prior GCPS experience who do not add large contingencies to their bids.

A cadre of experience subcontractors with equally considerable GCPS experience.

Exhibit 3-8 compares the bid amounts versus the actual architectural construction budgets for the projects placed under contract in the 2007-08 school year using SPLOST III funds. All projects were under the A/E (architect/engineer) Budget amounts with the exception of one middle school and it was within the district’s budget amount.



EXHIBIT 3-8 SPLOST III BID AMOUNTS VERSUS

ACHITECT/ENGINEER CONSTRUCTION BUDGETS 2006-07 SCHOOL YEAR

PROJECT NAME BID AMOUNT A/E CONSTRUCTION

BUDGET

DIFFERENCE BETWEEN BUDGET AND BID AMOUNT

Knight ES Additions and Renovations

$7,455,968 $7,500,000 $44,032

Trip ES $16,265,300 $17,500,000 $1,234,700

Puckett’s Mill ES $15,289,150 $16,500,000 $1,210,850

White Oak ES $11,005,000 $11,500,000 $495,000

Rosebud ES $14,850,000 $16,000,000 $1,150,000

Benefield ES $13,389,600 $14,500,000 $1,110,400

Lanier MS $21,300,000 $19,000,000 -$2,300,000

Crews MS $1,399,000 $2,500,000 $1,101,000

Source: Gwinnett County Public Schools documents, 2008.

COMMENDATION 3-E:

Gwinnett County Public Schools is commended for continuing to use effective procedures that keep bid amounts within construction budgets.

FINDING

For the FY 2007-08, GCPS has had a good record of completing projects on schedule and before the school opening date. Completing projects on schedule is another indicator of a well-managed building program.

Exhibit 3-9 compares the actual FY 2007-08 project completion dates (as determined by the date of the Fire Marshall Certificate of Occupancy) with the scheduled completion dates and the school opening dates. As the exhibit shows, all schools were ready for occupancy on the school opening date.



EXHIBIT 3-9 PROJECT COMPLETION DATES VERSUS SCHOOL OPENING DATES

FY 2007-08

PROJECT

SCHEDULED COMPLETION

DATE

ACTUAL COMPLETION

DATE SCHOOL

OPENING DATE:

Knight ES July 15, 2008 July 31,2008 8/11/2008

Trip ES June 1, 2008 May 22, 2008 8/11/2008

Puckett’s Hill ES March 3, 2008 June 10, 2008 8/11/2008

White Oak ES May 31, 2008 June 20, 2008 8/11/2008

Lanier MS May 1, 2008 June 20, 2008 8/11/2008

Rosebud ES June 1, 2008 May 6, 2008 8/11/2008

Crews MS March 31, 2008 November 20,

2007 8/11/2008

Benefield ES June 2, 2008 June 18, 2008 8/11/2008

Source: Gwinnett County Public Schools document, 2008.

COMMENDATION 3-F:

Gwinnett County Public Schools is commended for maintaining project schedules.

4.0 NON-FACILITIES–RELATED SPLOST III FINDINGS,

COMMENDATIONS, AND RECOMMENDATIONS


4.0 NON-FACILITIES–RELATED SPLOST III FINDINGS, COMMENDATIONS, AND RECOMMENDATIONS

This chapter describes the findings related to non-facilities projects using SPLOST III funds during the 2007-08 school year in Gwinnett County Public Schools (GCPS). The five major sections of this chapter are as follows:

4.1 Financial Overview of SPLOST III 4.2 Budget Materials 4.3 Financial Management 4.4 Transportation 4.5 Technology

SPLOST III funds were authorized in a November 2006 referendum approved by the voters of Gwinnett County. The referendum approved a maximum collection of $1.1 billion in sales tax revenues from July 1, 2007 through June 30, 2012 for SPLOST III. In addition to approving the sales tax, the voters also authorized the Board of Education to sell short-term bonds in the amount of $425 million to be repaid with sales tax revenue. The sale of the bonds was designed to provide cash flow to address the immediate classroom needs of GCPS.

SPLOST III funds for non-facilities projects became available to GCPS beginning in March 2007 with the sale of $425,000,000 in short term general obligation bonds. The first sales tax revenues were collected in July 2007. These resources can be used to purchase furniture and equipment for the newly constructed and remodeled buildings, acquire technology-related equipment, and purchase new vehicles for school district use.

4.1 Financial Overview of SPLOST III

Financial information for SPLOST III includes transactions that occurred during a four month period in FY2007 after the sale of the bonds with the majority of the activity taking place in FY2008. Exhibit 4-1 provides a summary of the overall financial activities since the beginning of the SPLOST III program. As noted, the budget amount represents the anticipated activity for the five-year SPLOST III program. The fiscal year 2008 activity represents the transactions that occurred during fiscal 2008. The beginning fund balance reflects the net result of SPLOST III activities that occurred between March and June of 2007, mainly as a result of the issuance of $425 million in short-term general obligation bonds.

NON-FACILITIES-RELATED SPLOST III


SPLOST III ACTIVITY

BUDGET (1) 3/29/2007 - 6/30/2008

Beginning Fund Balance 7/1/2008 -$ -$

Revenues 1,484,249,860 692,295,289

Expenditures and Encumbrances 1,484,249,860 579,045,269

Ending Fund Balance -$ 113,250,020$

(1) Total budget for SPLOST III program , including $425 million in short-term general obligation bonds issued to

advance fund the program.

Source: Gwinnett Public Schools Account Group Budget Report, Capital Projects Multi Year Expenditures,

SPLOST III Program, and SPLOST III Summary as of June 30, 2008.

EXHIBIT 4-1


SUMMARY OF FINANCIAL ACTIVITY

SPLOST III PROGRAM

MARCH 29, 2007 THROUGH JUNE 30, 2008

Exhibit 4-2 presents the current budget and actual data for SPLOST III revenues. As noted, the budget amount identifies the budget estimate for the five year program while the revenues reflect the revenues collected during the first 16 months of the program ending June 30, 2008. The sales tax, interest earnings, and the State capital revenue reflect revenues received during fiscal year 2008 while the bond revenues were received in March 2007, four months prior to the beginning of the 2008 fiscal year.

REVENUES

REVENUE CURRENT ACTUAL REVENUES TO BE COLLECTED

SOURCE BUDGET (1) COLLECTED (2) IN FUTURE YEARS

Sales Tax 844,382,866$ 145,247,393$ (699,135,473)$

Interest Earnings 33,807,717 18,302,065 (15,505,652)

State Capital Revenue 158,582,588 105,436,121 (53,146,467)

Bond Revenue 447,476,689 447,476,689 -

Total Revenue 1,484,249,860$ 716,462,268$ (767,787,592)$

Source: Gwinnett County Public Schools SPLOST III Summary as of June 30, 2008.

(1) Total budget for SPLOST III program.

EXHIBIT 4-2


SUMMARY OF SPLOST III REVENUES


(2) Includes accrual of $24,166,980 for May and June 2008 sales tax receipts received in July and

August 2008. Exhibit 4-3 provides a summary of the expenditures associated with the SPLOST III program from March 29, 2007 through June 30, 2008. As shown:

$579,045,268 of the $1,484,249,860 budget or 39 percent of the expenditures/encumbrances have occurred during the first year of the program. This percentage is higher than what would be anticipated because of the positive



cash flow generated by the issuance of the $425 million in short-term general obligation bonds.

Over 77 percent of the expenditures/encumbrances during this initial period have been for capital improvement-related activities, The amount of $30,544,319 identified as Transfers to Other Funds involves the transfer of resources to the Debt Service Fund to pay the principal and interest for certificates of participation originally issued in 2004 which were partially refinanced in 2006 and the short-term general obligation bonds issued in March 2007.

GCPS has also established a project reserve of $56,362,856 to serve as a contingency for any shortfall in revenues or unanticipated expenditure requirements.

CURRENT TOTAL OVER (UNDER)

BUDGET (1) EXPENDITURES ENCUMBRANCES COMMITMENTS BUDGET

Capital Improvements

Construction 460,239,974 258,860,788 137,859,766 396,720,554 (63,519,420)

Site Work 10,983,000 650,524 - 650,524 (10,332,476)

Land Purchases 51,524,083$ 51,524,483$ -$ 51,524,483$ 400$

Total Capital Improvements 522,747,057 311,035,795 137,859,766 448,895,561 (73,851,496)

Technology 140,868,422 60,350,513 9,146,687 69,497,200 (71,371,222)

Bus Replacement 14,191,945 9,389,329 3,217,069 12,606,398 (1,585,547)

Equipment - Facilities 36,254,254 9,845,354 1,002,432 10,847,786 (25,406,468)

Buy Back of ISC Facility 50,500,000 3,644,500 - 3,644,500 (46,855,500)

Supply Services - Property 1,200,000 560,811 - 560,811 (639,189)

Finance & Accounting 952,250 943 - 943 (951,307)

Transfers to Other Funds 658,725,326 30,544,319 - 30,544,319 (628,181,007)

Debt Service 2,447,750 2,447,750 - 2,447,750 -

Project Reserve 56,362,856 - - - (56,362,856)

TOTAL 1,484,249,860$ 427,819,314$ 151,225,954$ 579,045,268$ (905,204,592)$

(1) Total budget for SPLOST III program.

EXHIBIT 4-3


SUMMARY OF SPLOST III EXPENDITURES


Source: Gwinnett County Public Schools Capital Projects Multi Year Expenditures, 2007 SPLOST Program, 6/30/2008 and SPLOST III

Summary As of June 30, 2008.

4.2 Budget Materials

Accurate budgeting and financial reporting is an important component for the management of public resources. It is especially important to provide effective financial management for resources identified for specific purposes such as the SPLOST III program managed by GCPS.

The SPLOST III budget is prepared by GCPS primarily for the Georgia Department of Education; Gwinnett County Board of Education; Superintendent; Chief Financial Officer;



Executive Director of Facility Planning and Construction; Director of Budgets, Finance, and Accounting; and applicable project directors of each department and division.

FINDING

As mentioned in the SPLOST II report for fiscal year 2008, the GCPS FY2008 Public Budget Document does not provide enough information regarding the overall activities associated with SPLOST III and is not consistent with the manner in which all other funds for GCPS are presented in the FY2008 Public Budget Document. The SPLOST III budget provides total project (multi-year) expenditure information and excludes the identification of the available resources and the resources expected to be expended in the current year.

The financial information in the 2007-08 fiscal year budget document for the entire Capital Projects Fund is replicated in Exhibit 4-4.

Below is a list of projects to be completed in FY2008 along with the budgeted expenditures

Type Name BudgetAddition Knight ES $12,252,578

New Grayson Cluster ES $21,663,932

New Mill Creek Cluster ES $21,592,568

New Lanier Cluster ES $12,936,328 Also funded from SPLOST II

New Lanier Cluster MS $14,273,569 Also funded from SPLOST II

New South Gw innett Cluster ES $21,626,491

Addition Crew s MS $7,670,549

Land Purchases for future school sites $60,000,000

System-w ide Maintenance $5,500,000

Furniture & Equipment Replacement $3,400,000

Fine Arts $4,200,000

Ed Spec Upgrades $3,520,000

Technology $89,156,519

TOTAL $277,792,534

Note: The budget for the new schools and school additions includes funds for construction, computer equipment and furniture.

Source: Gwinnett County Board of Education Adopted Budget, FY2008 Public Budget Document.

FY2008 PUBLIC BUDGET DOCUMENT

REPLICA BUDGET PAGE 75CAPITAL PROJECT FUND

EXHIBIT 4-4GWINNETT COUNTY PUBLIC SCHOOLS

Although not formally noted, this budget page implies that all of the resources in the Capital Fund reflect the use of SPLOST III resources with the exception of the Lanier Cluster projects which note SPLOST II resources will be used for the Lanier Cluster Elementary and Middle School projects.



All of the budget amounts, with the exception of the Lanier Cluster projects reflect the total project costs which are anticipated to occur in fiscal 2008 and in one or more future fiscal years. The two Lanier Cluster projects were initiated in the 2006-07 fiscal year and these budget amounts represent only the remainder of the required resources for these projects. Thus, there is an inconsistency in the manner in which the project budgets are presented as the majority of the projects are reported on a total project basis, but the SPLOST II projects reflect the remaining portion of the Lanier Cluster schools projects.

Although the use of SPLOST II resources are identified for the Lanier Cluster schools, the SPLOST II amounts are not identified. Other factors include the lack of information regarding the beginning fund balance or revenue information pertaining to SPLOST II or III and the only reference to SPLOST II in the Capital Fund section of the budget document is the following:

SPLOST II (July 1,2002 – June 30, 2007)

The 2002 education SPLOST building program is coming to a conclusion. The sales tax collections run through June 30, 2007. Some projects will not be completed at this time, and remaining balances for the ongoing projects will be carried forward to FY2008 until the completion of the project. In all, the SPLOST II building program is projected to provide over 2,200 new classrooms, located in 24 schools with additions to 40 existing schools.

Prior to the 2007-08 fiscal year budget, the annual budget documents provided information for two capital projects funds (SPLOST II and Certificates of Participation) that included the beginning fund balance, revenues by source, and the expenditures. The financial summary information for the two capital funds for FY2007 is replicated in Exhibit 4-5.




REPLICA CAPITAL FUND BUDGET PAGE 86 FY2007 PUBIC BUDGET DOCUMENT

2002 SPLOST FUND

CERTIFICATES OF PARTICIPATION

FUND

FY2007 FY2007 FY2007

Consolidated

Sources of Funds

Beginning Year Balance ($103,300,574) $106,523,978 $3,223,404

State Capital Outlay Revenue $17,952,034 - $17,952,034

Sales Tax Receipts $162,857,886 - $162,857,886

Interest Earnings $646,905 $5,360,633 $6,007,538

Total Source of Funds $78,156,251 $111,884,611 $190,040,862

Expenditures $59,723,493 $61,273,684 $120,997,177

Transfers $14,392,641 - $14,392,641

End of Year Balance $4,040,117 $50,610,927 $54,651,044

Total Expenditures and End of Year Balance $78,156,251 $111,884,611 $190,040,862

Source: Gwinnett Public Schools FY2007 Public Budget Document.

A format similar to that included in the FY2007 budget depicted in Exhibit 4-5 identifying the resources for SPLOST II and SPLOST III would clearly identify the resources for each program.

The prior budget documents also provided expanded information for all expenditures anticipated to occur during the fiscal year. This was the source for information included in prior reports prepared by MGT. Exhibit 4-6 is the schedule that was included in the Year 4 SPLOST Audit and Review provided by the data in the FY2007 budget document.




SPLOST II PROJECT BUDGETS APPROVED FOR THE 2006-07 SCHOOL YEAR INCLUDED IN THE YEAR 4 SPLOST II REVIEW

SCHEDULED COMPLETION

YEAR PROJECT PROJECT DESCRIPTION ORIGINAL BUDGET

2007-08 Oakland Meadow School Replacement Facility for Oakland School $8,101,606

2007-08 Grayson/Dacula Area Relief Elementary School

New 53-classroom facility $5,853,939

2007-08 Dacula Area Relief Elementary School


2007-08 Mill Creek Cluster Relief Elementary School


2008-09 Lanier Cluster Middle School New 72-classroom facility $15,000,000

2008-09 Lanier Cluster Elementary School


Systemwide Renovations Educational Specialist and Americans with Disabilities Act renovations to facilities systemwide

$2,990,182

HVAC Modifications Climate system renovations and upgrades at Peachtree Elementary and Lilburn middle schools

$198,440

Roof Modifications Roof modifications at Head Elementary School; Dacula, Shiloh, and Lilburn Middle Schools; and Berkmar High School

$785,813

Site Work and Land Purchases $876,761

Construction Management $2,019,317

Interest and Issuance Expenses on Short-Term Construction Notes and Lease Payments

$4,795,274

Transfer to Debt Service Fund (Interest Payment of Certificate of Participation)

$14,392,641

Source: Year 4 SPLOST II Audit and Review for the 2006-07 School Year and the Gwinnett County Public Schools, FY2007 Public Budget Document.

Identifying the total project costs is a sound method of providing information for capital projects as expenditures for capital projects normally require more than a single fiscal year, however, this circumstance should be communicated and the estimated amount to be expended in the current year should also be identified. Page 34 of the FY2008 budget document identifies the aggregate expenditures for FY2008 for all GCPS funds for FY2008; however, the Capital Projects Fund is overstated by the amount of resources for these projects that will be expended in future years. To effectively reflect the budgetary activities for the SPLOST programs, additional information is required.

For the SPLOST resources and expenditures to be effectively communicated, the Capital Fund materials in the formal budget document should be prepared consistent with the other funds which include the beginning fund balance, estimated revenues,



current year expenditures and the ending fund balance. This information was reported during the SPLOST II review.

RECOMMENDATION 4-1:

Restructure the format for the SPLOST Funds in the FY2010 Public Budget Document to identify the beginning fund balance, anticipated revenues, ending fund balance and the expenditures that identify the current year activity as well as the estimated total project costs.

In addition, if SPLOST II resources are still available, provide separate information for SPLOST II and SPLOST III activities.

To fully understand the current year financial activities of the SPLOST Funds, it is important to identify the beginning fund balances, the additional resources that will be available and the estimated current year expenditures along with the total project cost information.

IMPLEMENTATION STRATEGIES AND TIME LINE

1. The Chief Financial Officer should direct staff to develop a budget format for the SPLOST projects that will include current and total program activities.

Winter 2008 – Spring 2009

2. The Chief Financial Officer should provide the new format for the FY2010 GCPS Public Budget Document.

Spring 2009

FISCAL IMPACT

This recommendation can be implemented with existing staff.

4.3 Financial Management

The major revenue source for the SPLOST program is sales tax receipts which are collected by the State of Georgia and remitted to GCPS two months in arrears. At year end, two months of sales tax revenues (those for May and June) are recorded as taxes receivable and identified as current revenues in the Comprehensive Annual Financial Report prepared by GCPS.

GCPS established eight bank accounts for SPLOST III funds during the 2007-08 school year. These accounts are comprised of SPLOST III revenue and SPLOST III–funded investments trustee accounts.

Trustee accounts have been established to account for the debt service obligations associated with the $425 million general obligation bond issue in March 2007. The SPLOST III funds are sent by the Georgia Department of Revenue directly to the accounts at US Bank (one for GCPS and the other to account for the “up front” funds provided to Buford Schools at the beginning of the SPLOST III program) and if the resources are not required to fund debt service obligations and other liabilities, the funds are transferred to a Wachovia bank account.



Exhibit 4-7 identifies the eight accounts, the beginning cash balances as of July 1, 2007, and the ending balances as of June 30, 2008.


SPLOST III CASH BALANCES 2007-08 SCHOOL YEAR

CASH BALANCE

ACCOUNTS JULY 1, 2007 JUNE 30, 2008

Local Government Investment Pool

Sales Tax Account $ 397,133,075 $ 76,239,560

Local Government Investment Pool

Notes Account - 160,229,294

Sales Tax - Wachovia Bank Account 4,636 1,089,820

Sales Tax - Wachovia Bank Account - 13,802,556

US Bank - GO Bond 73,486 21,111,992

GO Bond - US Bank - Trustee Account - -

GO Bond - US Bank - Trustee Account - -

Buford Schools - -

TOTAL $ 397,211,197 $ 272,473,222 Sources: Gwinnett County Public Schools, budget, Finance, and Accounting Department and specific bank statements from July 2007 through June 2008.

In reviewing documentation for each of these accounts, MGT found that confirmation notices from the state for SPLOST III revenue were recorded correctly in the bank accounts and on the general ledger. By reviewing monthly bank reconciliations, MGT verified that bank statements balanced against the general ledger.

FINDING

GCPS issued $425,000,000 in short-term general obligation bonds on March 29, 2007. Exhibit 4-8 identifies the debt service schedule for these bonds. As shown, the total debt service for these obligations will be paid with SPLOST III funds and be fully retired in February 2013.



EXHIBIT 4-8 GWINNETTE COUNTY PUBLIC SCHOOLS

GENERAL OBLIGATION BONDS, SERIES 2007 DEBT SERVICE PAYMENT SCHEDULE

PERIOD ENDING PRINCIPAL INTEREST

TOTAL DEBT SERVICE

ANNUAL DEBT SERVICE

8/1/2007 - $8,744,302.08 $8,744,302.08 -

2/1/2008 - $10,493,162.50 $10,493,162.50 $19,237,464.58

8/1/2008 - $10,493,162.50 $10,493,162.50 -

2/1/2009 - $10,493,162.50 $10,493,162.50 $20,986,325.00

8/1/2009 - $10,493,162.50 $10,493,162.50 -

2/1/2010 $100,000,000.00 $10,493,162.50 $110,493,162.50 $120,986,325.00

8/1/2010 - $8,022,100.00 $8,022,100.00 -

2/1/2011 $110,000,000.00 $8,022,100.00 $118,022,100.00 $126,044,200.00

8/1/2011 - $5,304,725.00 $5,304,725.00 -

2/1/2012 $125,000,000.00 $5,304,725.00 $130,304,725.00 $135,609,450.00

8/1/2012 - $2,219,425.00 $2,219,425.00 -

2/1/2013 $90,000,000.00 $2,219,425.00 $92,219,425.00 $94,438,850.00

Total $425,000,000.00 $92,302,614.58 $517,302,614.58 $517,302,614.58 Source: Closing Transcript, Gwinnett County Public Schools, General Obligation Bonds, Series 2007.

The purpose of this bond issue was to improve the short-term cash flow to allow GCPS to more quickly meet the immediate demand for classroom space.

COMMENDATION 4-A:

Gwinnett County Public Schools is commended for using short-term general obligation bonds to provide the necessary cash flow to accelerate the SPLOST III construction program.

FINDING

As reported in the SPLOST II report, the monthly financial reports involving SPLOST activities provided to the GCPS Board of Education do not provide the total financial picture for the SPLOST program. The Board receives two reports:

Monthly Schedule of Sales Tax Receipts - This is a good report that compares the projected sales tax receipts with the actual receipts for each month. This report, however, does not reflect any of the other revenue sources for the SPLOST program such as the state revenue, investment earnings, and any other miscellaneous revenue items.

Building Program Report – This report identifies the status of the various projects. This is an excellent report that keeps the Board abreast of the overall construction program. Missing from this report is any financial information



relating to the budget and actual expenditures and information relating to non-facilities activities.

Although these are both excellent and useful tools to keep the Board of Education informed of the major activities associated with the SPLOST II program, they do not provide complete financial information.

RECOMMENDATION 4-2:

Provide the Board of Education a quarterly report that includes quarterly and year-to-date information for all SPLOST II and SPLOST III revenues, a budget and actual expenditure report for the various SPLOST II and SPLOST III projects and other expenditures along with financial projections for the remainder of the fiscal year.

Along with the current reporting, the Board should be provided a more complete picture of the overall financial position of the SPLOST programs on a periodic basis.


1. The Chief Financial Officer should direct the Director of Budgets and Financial Reporting to develop a process and format for quarterly reporting of the SPLOST program to the Board of Education. program activities.

December 2008 –September 2009

2. The Chief Financial Officer should present the reports to the Board of Education on a quarterly basis.

October 2009

FISCAL IMPACT


FINDING

As previously reported, GCPS continues to present construction status reports to every school principal and key central office staff members on a monthly basis. By providing information in a deliberative, open manner, areas of concern or relevance can be discussed with the goal of efficient and effective implementation of the use of SPLOST revenues.

By providing these reports to all school principals, GCPS is ensuring that district staff are clearly informed, which fosters a positive environment. This continued reporting structure is considered a best practice.

Furthermore, GCPS has implemented a safeguard in the PeopleSoft software that requires any budgetary or expense entry to be associated with a specific SPLOST project. This requirement ensures that SPLOST III funds are attributed to specific board-approved projects.



COMMENDATION 4-B:

Gwinnett County Public Schools is commended for continuing to provide monthly status reports to key central office staff and school principals for SPLOST III as they did for SPLOST II information.

FINDING

A process has been established whereby the Superintendent, Chief Operating Officer, Chief Financial Officer, Chief Information Officer and the Director of Budgets and Financial Reporting meet quarterly to review the status of the SPLOST III program. Part of the reporting associated with this review is a financial summary that includes a listing of the budget adjustments made by this group which is maintained on a life-to-date basis. The process used is to transfer budget reductions/increases to the Project Reserve Account. This is an effective way to keep abreast of the activities taking place in the program as well as providing documentation of the actions taken by the group.

COMMENDATION 4-C:

Gwinnett County Public Schools is commended for establishing a well documented process to track program changes to the SPLOST III program.

FINDING

MGT analyzed the retainage payment schedules for contractors associated with several projects using SPLOST III funds during the 2007-08 school year. The district continues to track retainage with the following information:

Project name. Contractor name and contract amount. Architect name and contract amount. Amounts paid to date for both the contractor and the architect. Total retainage to date. Previous retainage. Current retainage.

Documentation reviewed for the aforementioned projects included copies of the application and certificate for payment complete with notarization, detailed deliverables provided, summary of deliverables provided, and the approval from the internal construction manager.

COMMENDATION 4-D:

Gwinnett County Public Schools continues to use an effective process to track retainage associated with each vendor report pertaining to SPLOST II funds.



4.4 Transportation

During the 16 months of the SPLOST III program, 145 new buses were purchased at a cost of $9,389,329. Exhibit 4-9 identifies the GCPS vehicle inventory at June 30, 2008.

EXHIBIT 4-9 GWINNET COUNTY PUBLIC SCHOOLS

VEHICLE INVENTORY BY AGE AS OF JUNE 20, 2008

VEHICLE TYPE 1 - 5

YEARS 6 - 10

YEARS 11 - 15 YEARS

16 YEARS

17 YEARS

18 YEARS

19 YEARS

20 YEARS

OVER 20

YEARS TOTAL

School Buses 563 497 216 58 2 141 76 33 106 1692

Support Vehicles 82 112 99 6 23 22 28 15 55 442

Totals 645 609 315 64 25 163 104 48 161 2134

Buses

Over 15 Years - - - 64 25 163 104 48 131 535

% of Total Fleet 33.27% 29.37% 12.77% 3.43% 0.12% 8.33% 4.49% 1.95% 6.26% 100%

Percent over 15 Years - - - 3.43% 0.12% 8.30% 4.49% 1.95% 6.26% 24.55%

Support Vehicles

Over 15 Years - - - 6 23 22 28 15 55 149

% of Total Fleet 18.55% 25.34% 22.40% 1.36% 5.20% 4.98% 6.33% 3.39% 12.44% 100%

Percent over 15 Years - - 1.36% 5.20% 4.98% 6.33% 3.39% 12.44% 33.70%

Source: Gwinnett Public Schools Fleet Maintenance Department, 2008.

FINDING

Beginning with the 2003-04 SPLOST II Audit and Review, MGT has recommended that a school bus replacement strategy be established based on the guidelines published by the National Association of State Directors of Pupil Transportation; however, documentation has not been provided to indicate that this recommendation has been implemented. As referenced in past reports, the district uses a 15 year estimated life for school buses and most other vehicles. Exhibit 4-9 indicates the district has 131 buses and 149 support vehicles aged 15 years or older.

An amount of $5,000,000 is currently budgeted in SPLOST II, for expenditure in FY2009 to refurbish 288 buses ranging from 21 to 15 years of age. This represents an upgrade of 54 percent of the buses 15 years of age or older. This refurbishment includes total renovation of the interior and exterior of the buses and upgrading to meet current technical specifications for school buses. This is an innovative approach to sustaining an older bus fleet when resources are required to expand the fleet to provide transportation for a growing student population.

COMMENDATION 4-E:

Gwinnett County Public Schools is commended for implementing the innovative

refurbishment program as one way to upgrade and sustain an older bus fleet.



FINDING

As reported in the SPLOST II FY2008 report, the bus refurbishment program appears to be an effective way to reduce the overall capital costs associated with the replacement of buses, it will be important to carefully track the operating costs associated with these buses and compare these costs with similar costs associated with other buses in the fleet.

RECOMMENDATION 4-3:

Establish a program to track the operating costs for the refurbished school buses in comparison with both new buses and older buses to determine the viability of continuing the refurbishment program.

Replacement decisions should be based on the operating cost rather than the age of the bus.


1. The Chief Operations Officer should direct the Director of Fleet and Grounds Maintenance to evaluate the operating cost impact of the bus refurbishment program in comparison to operating costs for other buses by varying age groups.

December 2009 – June 2010

2. The Director of Fleet and Grounds Maintenance should assure that the necessary procedures are in place to evaluate the bus operating costs for the various age groups of buses in comparison to the refurbished buses.

July 2010

FISCAL IMPACT


4.5 Technology

Technology-related purchases with SPLOST III funds are allowable under Georgia law. The GCPS Division of Information Management has expended $60,350,514 and encumbered $9,146,687 for a total commitment of $69,497,201 during the first 16 months of the SPLOST III program.

These technology expenditures for SPLOST III through June 30, 2008 are identified in Exhibit 4-10. As shown on Exhibit 4-10:

$69,297,201 of the SPLOST III budget for technology has been expended. This represents 49 percent of the amount budgeted for the five year program.

Of the total budget, 78 percent has been budgeted for instructional purposes.

The majority of the expenditures thus far (92 percent) have been to support instructional activities at the schools.



CURRENT TOTAL

BUDGET EXPENDITURES ENCUMBRANCES COMMITTED

Instructional Technology

Crews MS 103,899$ 103,899$ -$ 103,899$

Knight MS Addition 1,000,187 689,099 - 689,099

Lovin ES 1,238,142 1,238,142 - 1,238,142

Mulberry ES 1,006,179 1,006,179 - 1,006,179

Patrick ES 1,236,990 1,236,991 - 1,236,991

North Gwinnett MS 3,484,422 - - -

Trip ES 1,796,252 865,676 344,861 1,210,537

Bay Creek MS 3,324,374 99,861 - 99,861

Archer HS 5,254,835 3,087 37,528 40,615

White Oak ES 1,773,146 431,616 416,369 847,985

Mountain View HS 5,216,835 920,871 20,248 941,119

Twin Rivers MS 3,441,686 108,244 3,499 111,743

Lanier MS Replacement 3,371,474 1,746,501 440,700 2,187,200

Couch MS 3,324,374 105,862 4,661 110,523

Rosebud ES 1,794,493 208,436 180,572 389,008

Woodward Mill ES 1,739,669 22,645 - 22,645

Starling ES 1,792,709 20,431 9,747 30,178

Benefield ES Replacement 1,575,285 427,167 638,915 1,066,082

Dyer ES Replacement 1,792,709 100,816 17,932 118,748

Puckett's Mill ES 1,796,252 583,348 737,003 1,320,351

Lanier HS 5,211,399 28,561 326,549 355,110

Math / Science HS 411,068 411,068 - 411,068

Growth Computers 1,738,280 239,017 17,376 256,393

Replacement Computers 500,000 85,271 1,235 86,506

Mobile Classroom Infrastructure 2,288,943 781,422 - 781,422

ES Technology Refresh 12,611,584 6,649,766 5,150,390 11,800,156

MS Technology Refresh 41,556,498 37,068,108 384,885 37,452,993

Charter School Infrastructure 10,115 10,115 - 10,115

Total Instruction 110,391,799 55,192,198 8,732,469 63,924,668

Other Technology Activities

ISC Renovations 100,524 100,524 - 100,524

IMD System Development 17,664,766 1,891,349 409,251 2,300,600

Access Strategy 4,307,661 - - -

Network Mgt / Intrusion Detection 2,360,533 754,845 934 755,779

Infrastructure Testing/ Stds 2,796,781 2,401,631 4,033 2,405,664

Central Office Refresh 3,246,358 9,966 - 9,966

Total Other 30,476,623 5,158,315 414,218 5,572,533

TOTAL 140,868,422$ 60,350,514$ 9,146,687$ 69,497,201$

Source: Gwinnett County Public Schools Capital Projects Multi Year Expenditures report, 2007 SPLOST Program for

6/30/2008.

EXHIBIT 4-10GWINNETT COUNTY PUBLIC SCHOOLS

SPLOST III TECHNOLOGY EXPENDITURESFOR FISCAL YEAR ENDING JUNE 30, 2008

FINDING

As reported in earlier SPLOST reviews, GCPS continues to use a labor-intensive asset management system that is inefficient at tracking the district’s capitalized assets acquired with both SPLOST II and SPLOST III funds. As previously reported, the



information is entered manually into a spreadsheet based on data received by the individual accounting offices.

A task force has analyzed the asset management processes from procurement to disposal and made recommendations for improvement. The task force recommended the PeopleSoft module integration as the system to implement. The requirements definition phase of the process has been completed and is scheduled for finalization in July 2008. A plan has been developed that is anticipated to result in the implementation of the PeopleSoft asset management module in March 2009.

RECOMMENDATION 4-4:

Continue implementation of the fixed asset system using the PeopleSoft asset management module per the existing schedule.

GCPS has now reached a point where the implementation of a consistent process for managing the fixed assets of the district should be realized prior to the end of the FY09 fiscal year.


1. The Chief Financial Officer should continue to oversee the implementation plan of the PeopleSoft asset management module

Summer 2008 – Spring 2009

2. The Chief Financial Officer should assure that the PeopleSoft asset management module has been installed and is operational prior to the end of the 2009 fiscal year.

3. The Chief Financial Officer should assure that all of the fixed assets have inventory tags with bar codes.

Fall 2008 – Spring 2010

Spring 2010

FISCAL IMPACT

As previously reported, the cost of implementation will be $1,812,690. An additional $20,000 per year would be needed for maintenance costs.

Recommendation 2009-10 2010-11 2011-12 2012-13 2013-14 Purchase and Implement an Automated Fixed Asset System

($1,812,690) ($20,000) ($20,000) ($20,000) ($20,000)

FINDING

MGT visited the following schools and offices to review assets that were purchased and ensure that asset identification tags were affixed and that the items were actually used:

Chesney Elementary School Grayson Elementary School Give Center West at Buchanan High School of Technology Mill Creek High School



Osborn Middle School Math, Science and Technical School at Duluth High School Parkview High School Patrick Elementary School Information Management Department

All of the assets were located and contained an asset identification tag.

COMMENDATION 4-F:

Gwinnett County Public Schools is commended for properly affixing identification tags to assets purchased with SPLOST III funds during the 2007-08 school year.

FINDING

Although all of the assets identified by MGT during the review did contain asset tags, there is no consistency regarding the placement of asset identification tags on the assets. When locating copiers, it was found that in some cases the asset identification tags were located on the back of the unit that was against the wall and could not be accessed. These assets were verified by serial number. Asset identification tags for computers were consistently placed on the right hand side of the computer units.

The new fixed asset system will use bar coded identification tags and to efficiently complete the inventory process using bar code readers, all of the identification tags should be visible and easily located.

RECOMMENDATION 4-5:

Develop guidelines to assure that the asset identification tags are placed on different kinds of assets in a consistent manner that will allow them to be easily located.

The implementation of this recommendation should assist GCPS with a more efficient inventory process and lead to a commendable practice seen throughout the country.


1. The Chief Financial Officer should assign responsibility for developing guidelines for affixing the fixed asset tags to the Director of Purchasing.

Winter 2009

2. The Director of Purchasing, working with the Assistant Director of Purchasing/Property Management should establish formal guidelines for affixing the asset tags to the various types of assets maintained by GCPS.

Spring 2009

FISCAL IMPACT

This recommendation can be implemented with existing resources.

5.0 COMPLIANCE STATEMENT


5.0 COMPLIANCE STATEMENT

Based on MGT’s findings during the Special Purpose Local Option Sales Tax III Audit and Review for the 2007-08 school year, MGT has found Gwinnett County Public Schools to be in full compliance using SPLOST III funds in all areas reviewed and reviewed during the 2007-08 school year. Sections reviewed were:

SPLOST III referendum process and documentation.

SPLOST III planning, design, and construction of school-related facilities.

SPLOST III procurement process related to the construction or renovation of school-related facilities.

SPLOST III project budgets, revenue and expenditure projections, and project completion status.

SPLOST III cash, investments, and General Ledger reconciliation documentation and procedures.

SPLOST III receivables, payables, accruals, and General Ledger reconciliation documentation and procedures.

Gwinnett County Public Schools is therefore in compliance with the related sections of Georgia’s Constitution and Official Code of Georgia (O.C.G.A.) 48-8-141, 48-8-121, and 21-2-491. Recommendations detailed in the report provide for additional efficiencies and are not meant to state that GCPS is not in compliance with Georgia laws governing SPLOST III funding.

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