Financial Audit Presentation Year Ended June 30, 2015 Berkeley County School District Greene, Finney & Horton, CPAs

2015 FINANCIAL AUDIT BERKELEY COUNTY SCHOOL DISTRICT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ OPINION  The School District’s responsibility:  Effective internal controls  Financial statements  Prepare and manage the budget  GF&H responsibility:  Opinion-reasonable assurance that financial statements are materially correct  Opinion does not address the financial condition of the District  Issued unmodified opinion Greene, Finney & Horton, CPAs

2015 FINANCIAL AUDIT BERKELEY COUNTY SCHOOL DISTRICT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ General Fund  Total fund balance increased $4.1 million  Non-spendable fund balance of $1.3 million related to prepaid items and inventory Greene, Finney & Horton, CPAs

2015 FINANCIAL AUDIT BERKELEY COUNTY SCHOOL DISTRICT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ General Fund Unassigned fund balance is $46.4 million, which is 20.8% of 2015 actual expenditures and 19.5% of 2016 budgeted expenditures District policy is a minimum of 15% GFOA recommends a minimum of 16.7% (two months) Greene, Finney & Horton, CPAs

2015 FINANCIAL AUDIT BERKELEY COUNTY SCHOOL DISTRICT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Major Reasons To Maintain An Adequate Fund Balance: Cash flow through second half of calendar year; property taxes are cyclical Significant emergencies and unanticipated expenditures Flexibility for discretionary funding needs Potential for better interest rates on debt issues (can save the School District money). To cover potential shortfalls from the state Extremely important given the uncertain economic times Unique financing requirements of a coastal School District Greene, Finney & Horton, CPAs

2015 FINANCIAL AUDIT BERKELEY COUNTY SCHOOL DISTRICT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs General Fund Revenues: $219.5 million for 2015: $76.3M from property taxes $142.2M from the state gov’t $41K from the federal gov’t $1.0M for all other revenues $10.8M (5.2%) increase from 2014 $2.1M (2.8%) increase in local property taxes due to 5.9% increase in assessed values. $9.4M (7.1%) increase in state revenues due to an increase in base student cost and more programs being funded through EFA funds GENERAL FUND REVENUES

2015 FINANCIAL AUDIT BERKELEY COUNTY SCHOOL DISTRICT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs General Fund Revenues: $2.5M (1.1%) over budget $1.4M over budget in taxes due to FILOT’s coming in over budget by $908K and current taxes coming in over budget by $566K $984K over budget in state revenues due to EFA revenues coming in over budget by $901K GENERAL FUND REVENUES

2015 FINANCIAL AUDIT BERKELEY COUNTY SCHOOL DISTRICT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs $223.4 million for 2015: $130.5M in instruction $92.3M in support services $523K in other expenditures $11.1M (5.2%) increase from 2014 $5.8M increase in salaries and a $3.8M increase in fringe benefits due to a step increase provided to all employees and a slight increase in employees. Continued increases in required retirement contributions and health insurance benefit costs $228K (0.1%) under budget GENERAL FUND EXPENDITURES General Fund Expenditures:

2015 FINANCIAL AUDIT BERKELEY COUNTY SCHOOL DISTRICT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Totals for All Funds Includes General, Special Revenue, EIA, Food Service, Debt Service, Capital Projects and Enterprise funds Revenues-$344.4 million Expenditures-$402.3 million The higher expenditures are primarily due to receiving bond funds in prior years for capital projects and then spending those down in the current year as well as the use of debt service reserves in the refunding of SAFE bonds Greene, Finney & Horton, CPAs

2015 FINANCIAL AUDIT BERKELEY COUNTY SCHOOL DISTRICT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Change In Accounting: Implemented Statement No. 68 Accounting and Financial Reporting for Pensions – an amendment of GASB Statement No. 27 and GASB Statement No. 71 Pension Transition for Contributions Made Subsequent to the Measurement Date – an amendment of GASB Statement No. 68 in 2015: The School District participates in the State’s cost sharing multiple- employer plans – the South Carolina Retirement System (“SCRS”) and Police Officers Retirement System (“PORS”). The School District was required to record its pro-rata portion of the net pension liability and deferred outflows/inflows of resources associated with the SCRS and PORS in its Statement of Net Position which has significantly decreased its beginning net position by approximately $286.4M on the government wide statements and $1.6M on the enterprise fund statements. Net pension liability of $290.5M at June 30, Greene, Finney & Horton, CPAs

2015 FINANCIAL AUDIT BERKELEY COUNTY SCHOOL DISTRICT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Other Items of Note: Total capital assets were $502.9M at 6/30/15 – increase of $35.1M from 6/30/14: Various construction in progress additions related to the start of referendum projects and use of short-term debt proceeds Construction in progress is $61.4M at 6/30/15 related to construction projects including Philip Simmons High, Philip Simmons Middle, Nexton Elementary, Tanner Elementary, Foxback Elementary, Philip Simmons Elementary, and Cross High, Stratford High and Marrington Middle renovations Construction commitments total $108.1M at 6/30/15, Greene, Finney & Horton, CPAs

2015 FINANCIAL AUDIT BERKELEY COUNTY SCHOOL DISTRICT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Other Items of Note: Total long-term obligations outstanding at 6/30/15 were $572.7M – decrease of $19.8M from 6/30/14: $78.6M in 2015A and 2015B Series – SAFE Refunding Bonds used to refund the $89.6M balance of the Series 2006 SAFE Installment Purchase Revenue Bonds. Compensated Absences – $6.1M Total debt service payments for 2016 on outstanding debt is expected to be $41.2M Refunding of 2006 SAFE bonds reduced total debt service payments over the next 14 years by approximately $22.4M. Greene, Finney & Horton, CPAs

2015 FINANCIAL AUDIT BERKELEY COUNTY SCHOOL DISTRICT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs Auditing/Accounting Update: Future Significant Changes in Auditing Principles: None Future Significant Changes in Accounting Principles: GASB #74 and GASB #75 – Other Postemployment Benefits (retiree medical) – GASB issued new statements in June 2015 that will make OPEB accounting very similar to Pension accounting. OPEB plans will have to implement for FY 2017 and employers for FY GASB #72 – Fair Value Measurement and Application will require additional disclosure regarding investments. GASB #77 Tax Abatement Disclosures will require additional disclosure regarding any abated taxes.

2015 FINANCIAL AUDIT BERKELEY COUNTY SCHOOL DISTRICT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Compliance One financial statement finding: Recording of debt service payments on refunded debt Single Audit was required for 2015 National School Lunch and Breakfast Program – no findings noted. Management Letter Required communications to management and those charged with governance Preparation and utilization of long-term projections Greene, Finney & Horton, CPAs

2015 FINANCIAL AUDIT Berkeley County School District ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Consideration of future financial risks as the District works on long term projections Future continued increases in salaries and benefits Efficiency/effectiveness improvements Increased operating costs due to new facilities These should be addressed in long-term strategic and financial planning Greene, Finney & Horton, CPAs

2015 FINANCIAL AUDIT BERKELEY COUNTY SCHOOL DISTRICT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Summary Unmodified opinion on the Financial Statements from GF&H Healthy fund balance as of June 30, 2015 Greene, Finney & Horton, CPAs