Agenda Item
c. Georgia Department of Audits High Risk Designation Implications Presentation
Summary: Presented by: Mr. Byron Schueneman, Chief Financial Officer, Division of Finance and
Ms. Sara McLeod, Deputy Director, Georgia, Department of Audits & Accounts
HB 1164 & SB 472
What the New School-System Oversight Law Means for DeKalb County
Required Board Training • Statutory Overview • DeKalb County Board of Education
Presented by the Georgia Department of Audits and Accounts
AGENDA
What We'll Cover Today
The Legislative Landscape
01
HB 1164 & SB 472 at a glance, and the new fiscal monitoring framework
DeKalb's Designation
02
How risk designations work now, and what the FY2025 audit found
Requirements & Next Steps
03
What a high-risk designation requires, and the timeline ahead
Looking Forward
04
Board accountability, corrective action, and what to expect from DOAA
DeKalb County Board of Education | HB 1164 & SB 472 Briefing 2
PURPOSE
Why We're Here Today
This session serves two purposes:
⚖ ℹ
Required Board Training Legislative Overview
State law requires DOAA to provide training to board members At the District's request, we're also providing a broader
and appropriate personnel addressing the deficiencies briefing on HB 1164 and SB 472 — the new laws reshaping
underlying a high-risk designation. This meets that DOAA's oversight role for every local school system in Georgia,
requirement for DeKalb County BOE. effective July 1, 2026.
DeKalb County Board of Education | HB 1164 & SB 472 Briefing 3
LEGISLATIVE OVERVIEW
HB 1164 & SB 472 at a Glance
Effective July 1, 2026, these companion bills replace Senate Bill 68 (2019–2020) and significantly expand DOAA's oversight role.
HB 1164 SB 472
• Progressive Fiscal Monitoring Program — a new four-tier • Board member suspension provisions tied to the highest-risk tier
framework for monitoring fiscal health or a finding of financial mismanagement
• New annual certification requirements (audit readiness & • New contract default/termination provisions for financial
financial obligations) mismanagement (contracts entered/renewed on or after July 1,
2026)
• Auditor independence rule: the same CPA firm cannot both
prepare financial statements and conduct the audit • QBE advance distribution cap & state auditor override opinion
process
• State Board of Education audit committee — meets at least
6x/year; reviews fiscal conditions and risk designations • Independent school system petition threshold change
• Superintendent contract limitations for high-risk systems (12-
month extension cap)
• New investigation authority for the State Auditor over local school
systems and state charter schools
DeKalb County Board of Education | HB 1164 & SB 472 Briefing 4
THE NEW FRAMEWORK
The Progressive Fiscal Monitoring Program
O.C.G.A. § 50-6-6.1 — DOAA to monitor every local school system and state charter school on a four-tier scale.
1 2 3 4
TIER 1 TIER 2 TIER 3 TIER 4
Critical Fiscal
Fiscally Sound Fiscal Watch Fiscal Distress
Emergency
No signs of fiscal stress. Routine Signs of fiscal stress. Corrective Comprehensive fiscal plan with a Strict compliance with a state
monitoring only. action & recovery plan required. return-to-stability timeframe. intervention plan.
= MODERATE-RISK = HIGH-RISK = HIGH-RISK
Note: Detailed tier criteria and indicators are still being finalized through DOAA's rulemaking process with the State Board, GOEWS, and the State Charter Schools Commission.
DeKalb County Board of Education | HB 1164 & SB 472 Briefing 5
LEGAL BASIS
How Risk Designations Work Now
O.C.G.A. § 20-2-67(a.3)
Local school systems with reported irregularities or budget deficits for three or more consecutive years require Tier 3 or Tier 4 monitoring —
and are designated high-risk.
The practical standard is familiar:
• The same “three consecutive years” threshold that applied under the old law (SB 68) carries forward — it's simply now expressed through the
four-tier framework.
• One or two consecutive years of a reported irregularity or budget deficit → Tier 2 → moderate-risk.
• Three or more consecutive years → Tier 3 or 4 → high-risk, and DOAA is required to conduct the system's audit going forward.
DeKalb County Board of Education | HB 1164 & SB 472 Briefing 6
DEKALB'S STATUS
DeKalb County's Current Designation
HIGH-RISK Basis: three consecutive years of a
reported federal award finding
Effective July 1, 2026 (FY2023–FY2025)
What this designation is — and isn't — based on:
• DeKalb's high-risk status reflects the same federal award finding — concerning internal controls over employee compensation in the Child Nutrition
Cluster — reported for three straight fiscal years (FY2023, FY2024, FY2025), meeting the “three consecutive years” standard under § 20-2-67(a.3).
• This is not a designation tied to the District's overall financial condition. DeKalb's FY2025 financial statements received an unmodified (clean) opinion,
with no material weakness or significant deficiency identified in internal control over financial reporting.
DeKalb County Board of Education | HB 1164 & SB 472 Briefing 7
STATUTORY TRAINING
What a High-Risk Designation Requires
1 Mandatory DOAA Audit 2 Monthly Board Reporting
DOAA conducts the District's annual financial audit going forward, regardless A monthly anticipated-expenditures report, signed and acknowledged by every
of prior rotation. board member, by the 10th business day of each month.
3 September 30 Publication 4 Corrective Action Plan
Two consecutive weeks of published financial operations statements, signed by A board-approved CAP addressing the underlying finding, submitted to GaDOE,
the board and superintendent. DOAA, and GOEWS.
5 Superintendent Contract Cap 6 Board & Staff Training
Contract extensions for the superintendent are limited to 12 months while the Board members and appropriate personnel must participate in training
designation is in effect. addressing the deficiencies — what this session fulfills.
DeKalb County Board of Education | HB 1164 & SB 472 Briefing 8
FINDINGS REVIEW
FY2025 Audit Results — Financial Statements
UNMODIFIED OPINION Key Financial Highlights
Governmental activities and each major fund
$1.85B General fund expenditures, FY2025
✓ No material weakness identified in internal control over
financial reporting
✓ No significant deficiency reported in internal control over
$1.07B Total governmental fund balance, June 30, 2025
financial reporting
✓ No noncompliance material to the financial statements $435.85M Unassigned general fund balance — 23.5% of
FY2025 expenditures
The District's fund balance and overall financial position are not the basis for its
high-risk designation.
DeKalb County Board of Education | HB 1164 & SB 472 Briefing 9
FINDINGS REVIEW
FY2025 Audit Results — Federal Award Finding
FA 2025-001 Improve Controls over Employee Compensation — Child Nutrition Cluster
Child Nutrition Cluster (School Breakfast & National School Lunch)
Program
Significant deficiency in internal control over compliance; nonmaterial noncompliance
Nature
Of 60 employees tested: pay-scale and documentation errors on a small number of payroll transactions
Condition
$7,474 identified; ~$93,759 projected across the full personnel population
Questioned Costs
Third consecutive year — FA 2023-004, FA 2024-001, FA 2025-001
Repeat History
District context: the identified error represents roughly 0.036% of the $20.6M in tested personnel expenditures — a 99.64% accuracy rate. The threshold is a fixed statutory amount and doesn't scale with district
size.
DeKalb County Board of Education | HB 1164 & SB 472 Briefing 10
HOW WE GOT HERE
A Three-Year Pattern — and Why It Matters
The same underlying control gap has now been reported for three consecutive fiscal years — which is precisely the threshold that triggers a high-risk
designation under § 20-2-67(a.3).
FY2023 FY2024 FY2025
FA 2023-004 FA 2024-001 FA 2025-001
Allowable Costs → Improve Controls over
Employee Compensation → Improve Controls over
Employee Compensation
Reported Unresolved 3rd consecutive year
DeKalb County Board of Education | HB 1164 & SB 472 Briefing 11
PATH FORWARD
Corrective Action Already Underway
Per the District's own corrective action plan submitted with the FY2025 audit:
✓ Corrected pay-scale deficiencies to ensure employees receive proper compensation
Estimated Completion
✓ Implemented additional review controls to prevent future errors
✓ Strengthened account coding procedures so compensation charges post to the correct
March 31, 2026
funding source
Responsible Contact
✓ Updated the digital time-tracking approval workflow to require contemporaneous
authorization Byron Schueneman
Chief Financial Officer
(678) 676-0133
DOAA will follow up on this finding during the FY2026 audit to confirm it has been resolved.
DeKalb County Board of Education | HB 1164 & SB 472 Briefing 12
LOOKING AHEAD
What's Required Next
Ongoing Monthly anticipated-expenditures report presented to and signed by every board member (by the 10th business day)
Sept 30, 2026 Two consecutive weeks of published financial operations statement in the official county organ
Within statutory Corrective action plan approved by the Board and submitted to GaDOE, DOAA, and GOEWS
window
Dec 31, 2026 First Audit Readiness & Financial Obligations Certifications due to DOAA
DeKalb County Board of Education | HB 1164 & SB 472 Briefing 13
CONTEXT & CONTINUITY
Board Accountability — and What to Expect from DOAA
SB 472 Board Suspension Provision What to Expect from DOAA
Applies only to a Tier 4 (Critical Fiscal Emergency) designation, or an DOAA already conducts DeKalb's annual financial audit — this
independent State Auditor finding of financial mismanagement or relationship continues without disruption.
misconduct.
Same audit standards, professionalism, and judgment your team
DeKalb is currently designated high-risk but would most closely align already knows.
to Tier 3 — this provision does not apply to the District today.
A named point of contact for questions throughout the year — not
The Board should understand the escalation path even though it isn't just at audit time.
a present concern.
DeKalb County Board of Education | HB 1164 & SB 472 Briefing 14
Questions?
We're here as a partner throughout this process — not just at audit time.
Sara McLeod, CPA
Deputy Director, Financial Audits Division
mcleods@audits.ga.gov
Kristina A. Turner, CPA, CISA, MMIS
Deputy State Auditor
turnerka@audits.ga.gov
270 Washington Street, SW, Suite 4-101 | Atlanta, Georgia 30334 | (404) 656-2180