PUBLIC SCHOOL FACILITIES AUTHORITY FINANCIAL & COMPLIANCE AUDIT SERVICES

Transcription

1 Form RFP-Audit Version F (SM) State of New Mexico Public School Facilities Authority PUBLIC SCHOOL FACILITIES AUTHORITY REQUEST FOR PROPOSALS (RFP) FINANCIAL & COMPLIANCE AUDIT SERVICES RFP# FCAS ISSUED DATE: April 3, 2018 Commodity Code Number(s): 94620, DEADLINE FOR RECEIPT OF PROPOSALS IS AS FOLLOWS: APRIL 18, Basehart Road SE Suite 200 Albuquerque, New Mexico Late Proposals will not be accepted. It is the responsibility of the Offeror to ensure that proposals are delivered on time to the correct address PRE-PROPOSAL CONFERENCE MAY/SHALL BE HELD AS FOLLOWS: DATE: Not Required Form RFP-Audit Version F (SM)

2 Form RFP-Audit Version F (SM) I. INTRODUCTION... 1 A. PURPOSE OF THIS REQUEST FOR PROPOSALS... 1 B. INFORMATION... 1 C. SCOPE OF PROCUREMENT/SERVICES... 1 C.1. STANDARD, QUALIFICATIONS & REQUIREMENTS... 2 D. DEFINITIONS OF TERMINOLOGY - COMMON AND TECHNICAL USAGE OF WORDS... 3 E. PROCUREMENT MANAGER & PROTEST MANAGER... 3 F. PROCUREMENT LIBRARY... 3 II. CONDITIONS GOVERNING THE PROCUREMENT... 4 A. SEQUENCE OF EVENTS... 4 B. EXPLANATION OF EVENTS Issuance of RFP Intent to Respond to RFP Deadline to Submit Written Questions Response to Written Questions/RFP Amendments Submission of Proposals Proposals Screened & Distributed to Committee Selection of Finalists Interviews with Finalists, If Applicable/Held Final Evaluation Review/Recommendation for Award Protest Deadline... 7 C. GENERAL REQUIREMENTS Acceptance of Conditions Governing the Procurement Incurring Cost Prime Contractor Responsibility Subcontractors/Consent Amended Proposals Offeror s Rights to Withdraw Proposal Proposal Offer Firm Disclosure of Proposal Contents No Obligation Termination Sufficient Appropriation Legal Review Governing Law Basis for Proposal Contract Terms and Conditions Offeror s Terms and Conditions Contract Deviations Offeror Qualifications Right to Waive Minor Irregularities Change in Contractor Representatives Notice of Penalties Agency Rights Cost Adjustments Right to Publish Ownership of Proposals Indemnification Confidentiality Internet Access & address required Use of Electronic Versions of this RFP ii

3 Form RFP-Audit Version F (SM) 30. New Mexico Employees Health Coverage Campaign Contribution Disclosure Form Pay Equity Reporting Requirements Disclosure Regarding Responsibility New Mexico Preferences III. RESPONSE FORMAT AND ORGANIZATION A. NUMBER OF RESPONSES B. NUMBER OF COPIES Hard Copy Responses C. PROPOSAL FORMAT Proposal Content and Organization b. Table of Contents c. d. Proposal Summary Introduction (optional) Corporate Information/Experience Organizational/Corporate Experience Organizational References (Minimum of 3 References) Key Personnel/Resumes Financial Stability (Financial information considered confidential may be placed in a Confidential Information binder) e. f. Technical Approach Management Approach g. Project Performance History IV. SPECIFICATIONS A. SCOPE OF WORK/ TECHNICAL SPECIFICATIONS Organizational Experience Organizational References Oral Presentation (Evaluation Optional Requirement) B. BUSINESS SPECIFICATIONS Financial Stability Performance/Payment Surety Bond Letter of Transmittal Form Campaign Contribution Disclosure Form Cost Resident Business or Resident Veterans Preference C. INSURANCE REQUIREMENTS V. EVALUATION A. EVALUATION POINT SUMMARY B. EVALUATION FACTORS Organizational Experience Organizational/ Project Performance References (See Table 1) Oral Presentation (If Applicable) (See Table 1) Mandatory Specifications Desirable Specifications Financial Stability Letter of Transmittal Campaign Contribution Disclosure Form Cost C. EVALUATION PROCESS ATTACHMENTS ATTACHMENT A INTENT TO RESPOND TO RFP FORM iii

4 Form RFP-Audit Version F (SM) ATTACHMENT B (MANDATORY) CAMPAIGN CONTRIBUTION DISCLOSURE FORM ATTACHMENT C ACKNOWLEDGEMENT OF RECEIPT OF AMENDMENTS EXHIBIT A FEE AND HOUR BREAKDOWN EXHIBIT B FINAL 2017 FINANCIAL STATEMENT iv

5 Form RFP-Audit Version F (SM) I. INTRODUCTION A. PURPOSE OF THIS REQUEST FOR PROPOSALS The purpose of the Request for Proposal (RFP) is to establish a contract through competitive sealed qualification-based proposals procurement for the New Mexico Public School Facilities Authority (hereinafter referred to as PSFA or Agency ). It is the intent of this RFP to obtain proposals from qualified and experienced Consultants to perform a financial and compliance audit of the Agency in accordance with the specific requirements described in the contents of this RFP. Any contract execution by virtue of this RFP shall be subject to all applicable New Mexico Statutory requirements. (The terms Consultant, Contractor, and Offeror are herein-after used interchangeably and shall be deemed synonymous). The Agency is required under the provisions of Title 2 Chapter 2 Part 2 a yearly financial and compliance audit. The successful Offeror(s) shall perform the work described in this RFP. The selected offerors shall be willing and capable of providing the requested and required service, both stated and reasonably inferable, that are necessary to fulfill the complete all work in accordance with the standards, specifications, and requirements contained in this RFP, any resulting contract/agreement, and all applicable laws and regulations. B. INFORMATION The Public School Facilities Authority (PSFA) is chartered to provide management and oversight of funds appropriated by the Public School Capital Outlay Council (PSCOC) for new construction, renovations, and deficiency correction projects identified throughout the state s 89 school Districts, charter schools within Districts, and the State of NM charter schools. The PSFA has entered into Joint Powers Agreements (JPA) with the school Districts for the purpose of overseeing this work as well as the expenditures for those projects. (Reference: Senate Bill 513 (Nava), Chapter 147, Laws of 2003, and Section NMSA 1978.) C. SCOPE OF PROCUREMENT/SERVICES The successful Offeror will be expected to, and required to enter into a Price Agreements for an initial term of one (1) year with options to enter a new contract each year, for a total of two (2) additional years, in one year increments for a maximum term of three (3) years. Agreements may be established by PFSA (based on PSFA s Fiscal Year [FY]) on a yearly basis. It is estimated and intended that an award of an Agreement under this RFP will occur in or about the month of July following the issuance of this RFP. PSFA is requesting a quote for audit work. Offeror is required to submit a 3 Year Financial and Compliance Audit Services Proposal, with associated pricing for each individual year, beginning with FY18 through FY20 financial statements. The stated work/services will be performed during FY19 FY21. (Note: PSFA s Fiscal Years (FY) commences on July 1 st of a preceding year and ends on June 30 th the following year e.g., July 1, 2018 to June 30, 2019 is FY19) Form RFP-Audit Version F (SM) Page 1 of 38

6 Form RFP-Audit Version F (SM) Based upon the New Mexico Office of the State Auditor s (OSA) audit contract components PSFA is requesting the Offerors to perform/provide the following: (1) Financial audit shall cover the entire financial reporting entity including the primary government and the component units, if any. (2) Scope of the audit includes the following statements and disclosures which the auditor shall audit and give an opinion on. a) basic financial statements, fund financial statements, budgetary comparison statements for the general fund and major special revenue funds (GASB 34, footnote 53), b) the related notes to the financial statements; (3) Budgetary comparison statements for the general fund and major special revenue funds presented on a fund, organization, or program structure basis because the budgetary information is not available on the GAAP fund structure basis for those funds shall be presented as RSI pursuant to GASBS 41. (4) The auditor shall apply certain procedures and report in the auditor s report on the following RSI (if applicable) pursuant to AU-C 730: (a) Management discussion and analysis (MD&A) (GASBS ); (b) RSI data required by GASBS 67 and 68 for defined benefit pension plans (c) RSI schedules required by GASBS 43 and 74 for postemployment benefit plans other than pension plans (d) Infrastructure modified approach schedules derived from asset management systems (GASBS ) (e) The audit engagement and audit contract compensation include an AU-C 725 opinion on the SI schedules presented in the audit report. (f) The agency shall prepare a schedule of vendors report. (5) The audit shall be conducted in accordance with auditing standards generally accepted in the United States of America, the most recent version of GAGAS, U.S. auditing standards AICPA (clarified), uniform administrative requirements, cost principles, and audit requirements for federal awards (uniform guidance), AICPA audit and accounting guide, government auditing standards and single audits (AAGGAS) latest edition, AICPA audit and accounting guide, state and local governments (AAG SLV) latest edition; and NMAC requirements for contracting and conducting audits of agencies, latest edition. Financial Statements ending FY17 are attached as Exhibit B, and are incorporated herein by way of this reference. C.1. STANDARD, QUALIFICATIONS & REQUIREMENTS The minimum qualifications of the Offeror(s) as applicable for the services to be provided from this RFP process are generally described as follows: Contractor shall have an established and proven ability to provide and ensure: a. Offeror shall be on OSA s List of Approved Firms/Independent Public Accountants (IPA) b. Offeror shall inform PSFA if OSA have their Firm on Restricted Status and how that may impact PSFA s financial audit process. c. All work shall be performed by qualified personnel (qualified by applicable education and skills) that have current and valid professional certifications/licenses. Form RFP-Audit Version F (SM) Page 2 of 38

7 Form RFP-Audit Version F (SM) d. All personnel maintain the necessary and required certifications/licenses and Standard specific to the services provided, in accordance with all applicable Industry requirements, Federal, NM State, and local rules, regulations and laws, e. All reports bear technical certifications when appropriate. D. DEFINITIONS OF TERMINOLOGY - COMMON AND TECHNICAL USAGE OF WORDS The definition of terminology, common and technical words used in this document is governed by and defined in PSFA Form# Con (Version 2.0) DEFINITION OF TERMINOLOGY located at: E. PROCUREMENT MANAGER & PROTEST MANAGER 1. PSFA has assigned a Procurement Manager who is responsible for the conduct of this procurement whose name, address, telephone number, address, and address are listed below: Name: Address: Shatona Martin, Procurement Manager Public School Facilities Authority 1312 Basehart Road, Suite 200 Albuquerque, New Mexico Telephone: (505) smartin@nmpsfa.org 2. Any inquiries or requests regarding this procurement shall be submitted, in writing, to the Procurement Manager. Offerors may contact ONLY the Procurement Manager regarding this procurement. 3. The Protest Manager for this procurement shall be Mr. Shatona Martin the Certified Chief Procurement Officer (CPO) of PSFA whose contact information is located on the State of New Mexico General Services/Procurement Department website at: 4. Protests of the solicitation or award must be delivered by certified/tracked mail via a common carrier such as UPS or FedEx, or the USPS to the Protest Manager. Faxed or ed protests will not be accepted. 5. As a Protest Manager has been named in this Request for Proposals, pursuant to NMSA 1978, , ONLY protests delivered directly to the Protest Manager in writing and in a timely fashion will be considered to have been submitted properly and in accordance with statute, rule and this Request for Proposals. ed protests will not be considered as properly submitted. F. PROCUREMENT LIBRARY A procurement library has been established. Offerors are encouraged to review the material contained in the Procurement Library by selecting the link provided in the electronic version of this document through your own internet connection or by contacting the Procurement Manager and scheduling an appointment. As a service to the potential Offerors, the Procurement Manager will make copies of those documents that are not available on-line. The library contains information listed below: Form RFP-Audit Version F (SM) Page 3 of 38

8 Form RFP-Audit Version F (SM) The library contains the information listed below: Procurement Regulations, NMAC A copy may be obtained from the following website: deregulationsexecutiveorders Guidelines to the New Mexico Public School Adequacy Standards, etc. - NMAC Statewide Adequacy Standards - NMAC Rules Public School Capital Outlay Council - Master Facility Plan - Public School Capital Outlay Council Awards Copies may be obtained from the following website: II. CONDITIONS GOVERNING THE PROCUREMENT This section of the RFP contains the schedule, description and conditions governing the procurement. A. SEQUENCE OF EVENTS The Procurement Manager will make every effort to adhere to the following schedule: Action Responsibility Date 1. Issue RFP PSFA 04/3/ Intent to Respond to RFP Potential Offerors 04/6/ Deadline to Submit Written Questions Potential Offerors 04/10/ Response to Written Questions/RFP Amendments PSFA 04/13/ Submission of Proposal Potential Offerors 04/18/ Proposal Screened & Distribution to Committee PSFA 04/20/ Selection of Finalists PSFA 04/23/ Interviews with Finalists, if held N/A N/A 10. Final Evaluation Review/Recommendation of Award PSFA 04/27/ Contract Negotiations TBA TBD 12. Protest of Award Deadline RFP Participants 05/12/2018 B. EXPLANATION OF EVENTS The following paragraphs describe the activities listed in the sequence of events shown in Section II. A., above. 1. Issuance of RFP This RFP is being issued on behalf of the Public School Facilities Authority on 04/03/2018>. 2. Intent to Respond to RFP Potential Offerors must provide written notice on Attachment A Intent to Respond to RFP in order to have their organization placed on the procurement distribution list. The notice shall be signed by an authorized representative of the organization, dated, and returned by close of business by the date shown on the table above to the Procurement Manager. Form RFP-Audit Version F (SM) Page 4 of 38

9 Form RFP-Audit Version F (SM) The Procurement Distribution List will be used for the distribution of written responses to questions and any RFP amendments. Failure to provide notice your organization s Intent to Respond to RFP shall constitute a presumption of receipt and rejection of the RFP, and the potential Offeror s organization name shall not appear on the Distribution List. 3. Deadline to Submit Written Questions Potential Offerors may submit additional written questions as to the intent or clarity of this RFP until close of business on the date shown on the table above. All written questions must be addressed to the Procurement Manager. 4. Response to Written Questions/RFP Amendments Written responses to written questions and any RFP amendments will be distributed on the date and time shown on the table above to all potential Offerors whose organization name appears on the procurement Distribution List. Additional written requests for clarification of distributed answers and/or amendments must be received by the Procurement Manager no later than three (3) days after the answers and/or amendments were issued. Any modifications to this Request for Proposals shall be made by the Procurement Manager via written addendum with copies sent to all firms on the procurement Distribution List. Only written communications shall be binding. 5. Submission of Proposals Proposal shall be delivered at the date and time stated in the RFP Schedule, to the location stated herein. Your proposal may be hand-delivered, delivered by a common carrier such as UPS or FedEx, or the USPS. Faxed or ed proposals will not be accepted. Regardless of the method you choose to deliver your proposal, late proposals will not be accepted under any circumstances. It is the Offeror s responsibility to ensure that the proposal is delivered to the correct location at the appointed time. Your Proposal shall be sealed in an envelope or box and shall be clearly identifiable on the outside of the envelope or box as to its contents. Mark the outside of the envelope or box as follows: RFP # _FCAS _ DUE ON _April18, 2018_ AT 2:00 PM MDT Deliver Proposal to: ATTN: Public School Facilities Authority c/o _Mr. Shatona Martin_ Address: _1312 Basehart Road, SE Suite 200_ City/State/Zip: _Albuquerque, New Mexico _ Phone: _ _ 6. Proposals Screened & Distributed to Committee The evaluation of proposals will be performed by an Evaluation Committee, whose members are selected/appointed by the Procurement Manager. The Committee will be comprised of a minimum of three (3) but not more than five (5) members. Form RFP-Audit Version F (SM) Page 5 of 38

10 Form RFP-Audit Version F (SM) The Procurement Manager will review each proposal package to determine that all Mandatory requirements for submittal have been met. The unopened Cost Proposal packages shall be separated from the Technical Proposals and locked away for evaluation after the Technical Proposals have been scored and ranked. The evaluation process will commence on the date and time shown in the table above. During the process, the Procurement Manager may, at her/his option, may initiate discussions with Offeror(s) who submit responsive or potentially responsive proposals for the purpose of clarifying aspects of the proposals. Proposals may be accepted and evaluated without such discussion. Discussions SHALL NOT be initiated by the Offerors. Each Evaluation Committee Member, prior to any discussion or meeting as a group regarding the submitted proposals, will individually/independently evaluate the Technical Proposals, and submit their individual completed Initial Proposals Evaluation Sheets to the Procurement Manager for an initial ranking/scoring of the Offerors. After the initial ranking is completed, the Procurement Manager will convene the Committee as a group to collaboratively evaluate the Offerors Technical Proposals and submit their individual Final Proposals Evaluation Sheets to the Procurement Manager. After the Final Technical Scoring/Ranking is completed by the Procurement Manager, the Cost Proposals will then be opened and evaluated, scored, and ranked. The rank of the Technical Proposal will be added to the rank of the Cost Proposal to determine the short list of Offerors (Finalist) to be interviewed. The Agency reserves the right to hold interviews, or not, depending on the outcome of the Technical and Cost Proposal evaluations. 7. Selection of Finalists Offerors will be notified of the status of the Selection of Finalists unofficially by with a return receipt, or by certified mail. If you are not selected as a finalist, you will also be notified unofficially by with a return receipt or by certified mail. The notification or letter shall serve as notice to stand down from the procurement process. 8. Interviews with Finalists, If Applicable/Held Interviews may be conducted if the Evaluation Committee determines it is in the best interests of the Agency to do so. Finalists will be notified by with return receipt and/or in writing, if a pre-interview meeting will be held for the purpose of distributing questions, rules and schedules for interviews. The Procurement Manager will schedule the time for each Offeror s presentation. The place and time of interviews will be determined by the number of Offerors on the short list. Presentations shall be held at the location specified in the Finalist Notification Letter. The Agency reserves the right to award a single contract or multiple contracts based on an Offeror s qualifications and overall proposal. Agency may conduct interviews with Offerors where more than one proposal has been submitted in a region if deemed necessary by the evaluation committee. 9. Final Evaluation Review/Recommendation for Award The recommendation for award(s) will be finalized with the most advantageous Offeror(s) by the date and time shown on the table above. This date is tentative. In the event that mutually agreeable terms cannot be reached within the time specified, the Agency reserves the right to finalize an Form RFP-Audit Version F (SM) Page 6 of 38

11 Form RFP-Audit Version F (SM) agreement with the next most advantageous Offeror without undertaking a new procurement process. The most advantageous proposal may or may not have received the most points. The Procurement Manager reserves the right to accept or reject any or all proposals or part of a proposal; to waive any informalities or technicalities; clarify any ambiguities in proposals; modify any criteria in this Request for Proposals; and unless otherwise specified, to accept any item in a proposal. 10. Contract Negotiations Upon approval of award, the Procurement Manager and Evaluation Committee may negotiate the final contract(s). If the Agency and the Offeror cannot reach an agreement on the contract terms and conditions, the Agency may terminate negotiations with the first ranked Offeror and then go to the second ranked Offeror and negotiate a contract. If the second ranked Offeror cannot reach an agreement, the Agency reserves the right to cancel the procurement and re-advertise the solicitation. 11. Protest Deadline Any protest by an Offeror must be timely and in conformance with NMSA 1978, and applicable procurement regulations. As a Protest Manager has been named in this Request for Proposals, pursuant to NMSA 1978, , ONLY protests delivered directly to the Protest Manager in writing and in a timely fashion will be considered to have been submitted properly and in accordance with statute, rule and this Request for Proposals. The 15 calendar day protest period shall begin on the day following the award of contracts and will end at 5:00 pm Mountain Standard Time/Daylight Time on the 15 th day. Protests must be written and must include the name and address of the protestor and the request for proposal number. It must also contain a statement of the grounds for protest including appropriate supporting exhibits and it must specify the ruling requested from the Protest Manager. Protests received after the deadline will not be accepted. C. GENERAL REQUIREMENTS This procurement will be conducted in accordance with the applicable provisions of the State of New Mexico Procurement Code Sections through This General Requirements section contains specific information about the process and conditions under which this RFP is issued and conditions concerning how the projects will be completed. 1. Acceptance of Conditions Governing the Procurement Offerors shall indicate their acceptance of the Terms, Conditions, and Specifications Governing the Procurement in its letter of transmittal. Submission of a proposal constitutes acceptance of the Proposal Evaluation Factors contained in this RFP. 2. Incurring Cost Any cost incurred by Offeror(s) in preparation, transmittal, and/or presentation of any proposal or material submitted in response to this RFP shall be borne solely by the Offeror. Any cost incurred by the Offeror for set up and demonstration of the proposed equipment and/or system shall be borne solely by the Offeror. 3. Prime Contractor Responsibility Any contractual agreement that may result from this RFP shall specify that the prime contractor is solely responsible for fulfillment of all requirements of the contractual agreement with the Agency Form RFP-Audit Version F (SM) Page 7 of 38

12 Form RFP-Audit Version F (SM) which may derive from this RFP. The Agency entering into a contractual agreement with a vendor will make payments to only the prime contractor. 4. Subcontractors/Consent Use of subcontractors shall be clearly explained in the proposal, and major subcontractors must be identified by name. The prime contractor shall be wholly responsible for the entire performance of the contractual agreement whether or not subcontractors are used. Additionally, the prime contractor must receive approval, in writing, from the Agency awarding any resultant contract, before any subcontractor is used during the term of this agreement. 5. Amended Proposals An Offeror may submit an amended proposal before the deadline for receipt of proposals. Such amended proposals must be complete replacements for a previously submitted proposal and must be clearly identified as such in the transmittal letter. The Agency personnel will not merge, collate, or assemble proposal materials. 6. Offeror s Rights to Withdraw Proposal Offerors will be allowed to withdraw their proposals at any time prior to the deadline for receipt of proposals. The Offeror must submit a written withdrawal request addressed to the Procurement Manager and signed by the Offeror s duly authorized representative. The approval or denial of withdrawal requests received after the deadline for receipt of the proposals is governed by the applicable procurement regulations. 7. Proposal Offer Firm Responses to this RFP, including proposal prices for services, will be considered firm for one hundred twenty (120) days after the due date for receipt of proposals or ninety (90) days after the due date for the receipt of a best and final offer, if the Offeror is invited or required to submit one. 8. Disclosure of Proposal Contents A. Proposals will be kept confidential until negotiations and the award are completed by the Agency. At that time, all proposals and documents pertaining to the proposals will be open to the public, except for material that is clearly marked proprietary or confidential. The Procurement Manager will not disclose or make public any pages of a proposal on which the potential Offeror has stamped or imprinted "proprietary" or "confidential" subject to the following requirements: B. Proprietary or confidential data shall be readily separable from the proposal in order to facilitate eventual public inspection of the non-confidential portion of the proposal. C. Confidential data is restricted to: 1. Confidential financial information concerning the Offeror s organization; 2. Data that qualifies as a trade secret in accordance with the Uniform Trade Secrets Act, NMSA A-1 to 57-3A PLEASE NOTE: The price of products offered or the cost of services proposed shall not be designated as proprietary or confidential information. If a request is received for disclosure of data for which an Offeror has made a written request for confidentiality, the State Purchasing Division or the Agency shall examine the Offeror s request and make a written determination that specifies which portions of the proposal should be disclosed. Unless the Offeror takes legal action to prevent the disclosure, the proposal will be so disclosed. Form RFP-Audit Version F (SM) Page 8 of 38

13 Form RFP-Audit Version F (SM) The proposal shall be open to public inspection subject to any continuing prohibition on the disclosure of confidential data. 9. No Obligation This RFP in no manner obligates the Agency, the State of New Mexico or any of its Agencies to the eventual rental, lease, purchase, etc. of any equipment, software, or services offered until a valid written contract is awarded and approved by appropriate authorities. 10. Termination This RFP may be canceled at any time and any and all proposals may be rejected in whole or in part when the Agency determines such action to be in the best interest of the Agency, and the State of New Mexico. 11. Sufficient Appropriation Any contract awarded as a result of this RFP process may be terminated if sufficient appropriations or authorizations do not exist. Such terminations will be effected by sending written notice to the contractor. The Agency s decision as to whether sufficient appropriations and authorizations are available will be accepted by the contractor as final. 12. Legal Review The Agency requires that all Offerors agree to be bound by the Specific and General Requirements contained in this RFP. Any Offeror s concerns must be promptly submitted in writing to the attention of the Procurement Manager. In the event Offeror s forms or parts of forms are included as an attachment, Offeror agrees that, in the event of inconsistencies or contradictions, the terms and conditions of this solicitation document shall supersede and control over those contained in the Offeror s forms regardless of any statement to the contrary in an Offeror s form(s) or proposal. Notwithstanding the preceding sentence, the Agency reserves the right to consider the Offeror s additional terms and conditions and negotiate as necessary and applicable to the category of goods, services, or combination of goods and services offered by the Offeror in response to this RFP. Unless the Agency specifically agrees in an express written amendment of this solicitation, terms and conditions on Offeror s forms shall be of no effect. 13. Governing Law This RFP and any agreement with an Offeror which may result from this procurement shall be governed by the laws of the State of New Mexico. 14. Basis for Proposal Only information supplied, in writing, by the Agency through the Procurement Manager or in this RFP shall be used as the basis for the preparation of Offeror proposals. 15. Contract Terms and Conditions In additions to the Terms and Conditions listed verbatim in this RFP, the Terms and Conditions contained in the Services Contract/Agreement (herein after referred to as Sample Agreement) are equally applicable to this solicitation/procurement process, and are incorporated herein and made a part of this RFP to the same extent as if they have been set out verbatim. A PDF Version of the Sample Agreement [(Sample) 2018 Audit Contract for SA (DFA Req)] is located at, and Form RFP-Audit Version F (SM) Page 9 of 38

14 Form RFP-Audit Version F (SM) Contractors participating in this RFP process, shall obtain a copy from: The contract between a Agency and a contractor will follow the format specified by the Agency and contain the terms and conditions set forth in the Sample Agreement. However, the contracting Agency reserves the right to negotiate provisions in addition to those contained in this RFP Sample Agreement with any Offeror. The contents of this RFP, as revised and/or supplemented, and the successful Offeror s proposal will be incorporated into and become part of any resultant contract. The Agency discourages exceptions from the contract terms and conditions as set forth in this RFP and Sample Agreement. Such exceptions may cause a proposal to be rejected as nonresponsive when, in the sole judgment of the Evaluation Committee or the Procurement Manager, the proposal appears to be conditioned on the exception, or correction of what is deemed to be a deficiency, or an unacceptable exception is proposed which would require a substantial proposal/contract rewrite to correct. Should an Offeror object to any of the terms and conditions as set forth in the RFP Sample Agreement strongly enough to propose alternate terms and conditions in spite of the above, the Offeror must propose specific alternative language. The Evaluation Committee or Procurement Manager may or may not accept the alternative language. General references to the Offeror s terms and conditions or attempts at complete substitutions of the Sample Agreement are not acceptable to and will result in disqualification of the Offeror s proposal. Offerors must provide a brief discussion of the purpose and impact, if any, of each proposed change followed by the specific proposed alternate wording. If an Offeror fails to propose any alternate terms and conditions during the procurement process (the RFP process prior to selection as successful Offeror), no proposed alternate terms and conditions will be considered later during the negotiation process. Failure to propose alternate terms and conditions during the procurement process (the RFP process prior to selection as successful Offeror) is an explicit agreement by the Offeror that the contractual terms and conditions contained herein are accepted by the Offeror. The Agency may accept any item or group of items of an offer, unless the Offeror qualifies the offer by specific limitations. Unless otherwise provided in the RFP, offers may not be submitted for quantities less than those specified. The Agency reserves the right to make awards to multiple contractors on any item for a quantity less than the quantity offered, at the unit prices offered, unless the Offeror specifies otherwise in the offer. 16. Offeror s Terms and Conditions Offerors must submit with the proposal a complete set of any additional terms and conditions they expect to have included in a contract negotiated with the Agency. Please see Section II.C.15 for requirements. The Evaluation Committee or Procurement Manager may, in its sole discretion, evaluate or consider any additional terms and conditions submitted with an Offeror s response. This applies to any language appearing in or attached to the document as part of the Bidder s response. By execution and delivery of this Request for Proposal and response(s), the Bidder agrees that any additional terms and conditions, whether submitted purposely or inadvertently, shall have no force or effect unless expressly accepted by the Agency. Form RFP-Audit Version F (SM) Page 10 of 38

15 Form RFP-Audit Version F (SM) 17. Contract Deviations Any additional terms and conditions, which may be the subject of negotiation (such terms and conditions having been proposed during the procurement process, that is, the RFP process prior to selection as successful Offeror), will be discussed only between the Agency and the Offeror selected and shall not be deemed an opportunity to amend the Offeror s proposal. 18. Offeror Qualifications The Evaluation Committee may, via the Procurement Manager, make such investigations as necessary to determine the ability of the potential Offeror to adhere to the requirements specified within this RFP. The Evaluation Committee will reject the proposal of any potential Offeror who is not a Responsible Offeror or fails to submit a responsive offer as defined in NMSA 1978, and Right to Waive Minor Irregularities The Evaluation Committee/Procurement Manager reserves the right to waive minor irregularities. The Evaluation Committee also reserves the right to waive mandatory requirements provided that all of the otherwise responsive proposals failed to meet the same mandatory requirements and the failure to do so does not otherwise materially affect the procurement. 20. Change in Contractor Representatives The Agency reserves the right to require a change in contractor representatives if the assigned representative(s) is (are) not, in the opinion of the Agency, adequately meeting the needs of the Agency. 21. Notice of Penalties The Procurement Code, NMSA 1978, through , imposes civil, misdemeanor and felony criminal penalties for its violation. In addition, the New Mexico criminal statutes impose felony penalties for bribes, gratuities and kickbacks. 22. Agency Rights The Agency reserves the right to accept all or a portion of a potential Offeror s proposal. 23. Cost Adjustments Pursuant to , NMSA 1978, Price Adjustments, the Agency hereby agrees to review a request by an Offeror awarded a contract to an adjustment in rates at the end of a contract period, prior to the extension of the contract awarded for a consecutive year. Contractor(s) must provide detailed documentation and assessment as to the reasons for the request for an increase in price. The Agency will evaluate the request and write a determination to allow negotiations, or deny an adjustment to costs pertaining to the services proposed and agreed upon in the agreement. 24. Right to Publish Throughout the duration of this procurement process and contract term, Offerors and contractors must secure from the Agency written approval prior to the release of any information that pertains to the potential work or activities covered by this procurement and/or Agency contracts deriving from this procurement. Failure to adhere to this requirement may result in disqualification of the Offeror s proposal or removal from the contract. Form RFP-Audit Version F (SM) Page 11 of 38

16 Form RFP-Audit Version F (SM) 25. Ownership of Proposals All documents submitted in response to the RFP shall become property of the Agency/State of New Mexico. 26. Indemnification The Contractor shall defend, indemnify and hold harmless the Agency and the State of New Mexico from all actions, proceeding, claims, demands, costs, damages, attorneys fees and all other liabilities and expenses of any kind from any source which may arise out of the performance of this Agreement, caused by the negligent act or failure to act of the Contractor, its officers, employees, servants, subcontractors or agents, or if caused by the actions of any client of the Contractor resulting in injury or damage to persons or property during the time when the Contractor or any officer, agent, employee, servant or subcontractor thereof has or is performing services pursuant to this Agreement. In the event that any action, suit or proceeding related to the services performed by the Contractor or any officer, agent, employee, servant or subcontractor under this Agreement is brought against the Contractor, the Contractor shall, as soon as practicable but no later than two (2) days after it receives notice thereof, notify the legal counsel of the Agency and the Risk Management Division of the New Mexico General Services Department by certified mail. 27. Confidentiality Any confidential information provided to, or developed by, the contractor in the performance of the contract resulting from this RFP shall be kept confidential and shall not be made available to any individual or organization by the contractor without the prior written approval of the Agency. The Contractor(s) agrees to protect the confidentiality of all confidential information and not to publish or disclose such information to any third party without the procuring Agency's written permission. 28. Internet Access & address required A large part of the communication regarding this procurement will be conducted via the School/Agency/PSFA website and by electronic mail ( ). Offeror must have Internet Access and a valid address to receive correspondence. 29. Use of Electronic Versions of this RFP This RFP is being made available by electronic means. In the event of conflict between a version of the RFP in the Offeror s possession and the version maintained by the Agency, the Offeror acknowledges that the version maintained by the Agency shall govern. Please refer to: under the Request for Proposal section._ 30. New Mexico Employees Health Coverage A. If the Offeror has, or grows to, six (6) or more employees who work, or who are expected to work, an average of at least 20 hours per week over a six (6) month period during the term of the contract, Offeror must agree to have in place, and agree to maintain for the term of the contract, health insurance for those employees if the expected annual value in the aggregate of any and all contracts between Contractor and the State exceed $250,000 dollars. B. Offeror must agree to maintain a record of the number of employees who have (a) accepted health insurance; (b) decline health insurance due to other health insurance coverage already in place; or (c) decline health insurance for other reasons. These records are subject to review and audit by a representative of the state. Form RFP-Audit Version F (SM) Page 12 of 38

17 Form RFP-Audit Version F (SM) C. Offeror must agree to advise all employees of the availability of State publicly financed health care coverage programs by providing each employee with, as a minimum, the following web site link to additional information D. For Indefinite Quantity, Indefinite Delivery contracts (price agreements without specific limitations on quantity and providing for an indeterminate number of orders to be placed against it); these requirements shall apply the first day of the second month after the Offeror reports combined sales (from state and, if applicable, from local public bodies if from a state price agreement) of $250, Campaign Contribution Disclosure Form Offeror must complete, sign, and return the Campaign Contribution Disclosure Form, Attachment B, as a part of their proposal. This requirement applies regardless whether a covered contribution was made or not made for the positions of Governor and Lieutenant Governor or other identified official. Failure to complete and return the signed unaltered form will result in disqualification. 32. Pay Equity Reporting Requirements A. If the Offeror has ten (10) or more employees OR eight (8) or more employees in the same job classification, Offeror must complete and submit the required reporting form (PE10-249) if they are awarded a contract. Out-of-state Contractors that have no facilities and no employees working in New Mexico are exempt if the contract is directly with the out-of-state contractor and fulfilled directly by the out-of-state contractor, and not passed through a local vendor. B. For contracts that extend beyond one (1) calendar year, or are extended beyond one (1) calendar year, Offeror must also agree to complete and submit the required form annually within thirty (30) calendar days of the annual bid or proposal submittal anniversary date and, if more than 180 days has elapsed since submittal of the last report, at the completion of the contract. C. Should Offeror not meet the size requirement for reporting at contract award but subsequently grows such that they meet or exceed the size requirement for reporting, Offeror must agree to provide the required report within ninety (90) calendar days of meeting or exceeding the size requirement. D. Offeror must also agree to levy these reporting requirements on any subcontractor(s) performing more than 10% of the dollar value of this contract if said subcontractor(s) meets, or grows to meet, the stated employee size thresholds during the term of the contract. Offeror must further agree that, should one or more subcontractor not meet the size requirement for reporting at contract award but subsequently grows such that they meet or exceed the size requirement for reporting, offer will submit the required report, for each such subcontractor, within ninety (90) calendar days of that subcontractor meeting or exceeding the size requirement. 33. Disclosure Regarding Responsibility A. Any prospective Contractor and any of its Principals who enter into a contract greater than sixty thousand dollars ($60,000.00) with any State Agency, Agency or local public body for professional services, tangible personal property, services or construction agrees to disclose whether the Contractor, or any principal of the Contractor s company: 1. is presently debarred, suspended, proposed for debarment, or declared ineligible for award of contract by any federal entity, State Agency, Agency or local public body; Form RFP-Audit Version F (SM) Page 13 of 38

18 Form RFP-Audit Version F (SM) 2. has within a three-year period preceding this offer, been convicted in a criminal matter or had a civil judgment rendered against them for: a. the commission of fraud or a criminal offense in connection with obtaining, attempting to obtain, or performing a public (federal, state or local) contract or subcontract; b. violation of Federal or state antitrust statutes related to the submission of offers; or c. the commission in any federal or state jurisdiction of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, tax evasion, violation of Federal criminal tax law, or receiving stolen property; 3. is presently indicted for, or otherwise criminally or civilly charged by any (federal state or local) government entity with the commission of any of the offenses enumerated in paragraph A of this disclosure; 4. has, preceding this offer, been notified of any delinquent Federal or state taxes in an amount that exceeds $3, of which the liability remains unsatisfied. Taxes are considered delinquent if the following criteria apply. a. The tax liability is finally determined. The liability is finally determined if it has been assessed. A liability is not finally determined if there is a pending administrative or judicial challenge. In the case of a judicial challenge of the liability, the liability is not finally determined until all judicial appeal rights have been exhausted. b. The taxpayer is delinquent in making payment. A taxpayer is delinquent if the taxpayer has failed to pay the tax liability when full payment was due and required. A taxpayer is not delinquent in cases where enforced collection action is precluded. c. Have within a three year period preceding this offer, had one or more contracts terminated for default by any Federal Agency, State Agency, Agency or local public body. B. Principal, for the purpose of this disclosure, means an officer, director, owner, partner, or a person having primary management or supervisory responsibilities within a business entity or related entities. C. The Contractor shall provide immediate written notice to the Purchasing Agent or the Agency s Chief Procurement Officer if, at any time during the term of this Agreement, the Contractor learns that the Contractor s disclosure was at any time erroneous or became erroneous by reason of changed circumstances. D. A disclosure that any of the items in this requirement exist will not necessarily result in termination of this Agreement. However, the disclosure will be considered in the determination of the Contractor s responsibility and ability to perform under this Agreement. Failure of the Contractor to furnish a disclosure or provide additional information as requested will render the Offeror nonresponsive. E. Nothing contained in the foregoing shall be construed to require establishment of a system of records in order to render, in good faith, the disclosure required by this document. The knowledge and information of a Contractor is not required to exceed that which is the normally possessed by a prudent person in the ordinary course of business dealings. F. The disclosure requirement provided is a material representation of fact upon which reliance was placed when making an award and is a continuing material representation of the facts during the term of this Agreement. If during the performance of the contract, the Contractor is indicted for or otherwise criminally or civilly charged by any government entity (federal, state Form RFP-Audit Version F (SM) Page 14 of 38

19 Form RFP-Audit Version F (SM) or local) with commission of any offenses named in this document the Contractor must provide immediate written notice to the State Purchasing Agent or other party to this Agreement. If it is later determined that the Contractor knowingly rendered an erroneous disclosure, in addition to other remedies available to the Government, the State Purchasing Agent or Central Purchasing Officer may terminate the involved contract for cause. Still further the State Purchasing Agent or Central Purchasing Officer may suspend or debar the Contractor from eligibility for future solicitations until such time as the matter is resolved to the satisfaction of the State Purchasing Agent or Central Purchasing Officer. 34. New Mexico Preferences For the Bid Processes: Resident business, resident veteran business, resident contractor and resident veteran contractor shall, if they meet the requirements set forth in New Mexico Procurement Code Sections , NMSA 1987, and if the bid was submitted under a formal bid process, be afforded preference in the form of lowering the amount of the actual bid submitted by a value up to five percent (5%) for resident business/contractors, and by a value up to 10 percent (10%) for resident veteran business/contractors. In no event will a business be awarded both a resident business preference and a resident veteran business preference in any single procurement/contractual action. For the RFP Processes: Resident business, resident veteran business, resident contractor and resident veteran contractor shall, if they meet the requirements set forth in New Mexico Procurement Code Sections , NMSA 1987, if their proposal was submitted under a formal request for proposal process, and the contract is to be awarded based on a point-based system, be afforded preference in the form of additional points equivalent to five percent (5%) of the total possible points for resident business/contractors, and additional points equivalent to ten percent (10%) of the total possible points for resident veteran business/contractors. In no event will a business be awarded both a resident business preference and a resident veteran business preference in any single procurement/contractual action. 35. Requirement for Bid Security RESERVED 36. Bonding of subcontractors RESERVED 37. Public Works Act RESERVED Form RFP-Audit Version F (SM) Page 15 of 38

20 Form RFP-Audit Version F (SM) III. RESPONSE FORMAT AND ORGANIZATION A. NUMBER OF RESPONSES Offerors shall submit only one proposal in response to this RFP. B. NUMBER OF COPIES 1. Hard Copy Responses Offeror s proposal must be clearly labeled, numbered and indexed as outlined in Section III.C. Proposal Format. Proposals must be submitted as outlined below. The original copy shall be clearly marked as such on the front of the binder. Each portion of the proposal (technical/cost) must be submitted in separate binders and must be prominently displayed on the front cover. Envelopes, packages or boxes containing the original and the copies must be clearly labeled and submitted in a sealed envelope, package, or box bearing the following information: Offerors shall deliver: 1. Technical Proposals One (1) ORIGINAL HARD COPY and one (1) Electronic Copy (USB Jump Drive) containing ONLY the Technical Proposal. The electronic version/copy CANNOT be ed. 2. Cost Proposals One (1) ORIGINAL HARD COPY and one (1) Electronic Copy (USB Jump Drive) containing ONLY the Cost Proposal. The electronic copy CANNOT be ed. 3. The Cost and Technical Proposals shall be individually placed in separate labeled binders and separate sealed envelopes. The electronic version/copy of the proposals must mirror the physical binders submitted. The electronic version can NOT be ed. 4. The original, hard copy and electronic copy information must be identical. In the event of a conflict between versions of the submitted proposal, the Original hard copy shall govern. Any proposal that does not adhere to the requirements of this RFP may be deemed non-responsive and rejected on that basis. C. PROPOSAL FORMAT All proposals must be typewritten or printed sheet faces of text and/or graphic material on standard 81/2 x 11 paper (larger paper, 11 x 17, is permissible for charts, spreadsheets, etc.) and placed in a three ring (3) binder with labels/tabs identifying each section. If there is any question regarding format requirements they shall be directed to the Procurement Manager s office for clarification, prior to submittal of documents. Submit one (1) each printed, signed, and dated original Technical Proposal (Volume 1) and Cost Proposal (Volume 2), clearly marked Original and two (2) separate USB Jump Drives (one (1) Jump Drive each for Volume I and Volume II) in PDF format. The required quantity of copies must be submitted to Procurement Manager at the location specified herein on or before the closing date and time for receipt for proposals for a proposal to be considered responsive to this RFP. The Cost Proposal (Volume 2) inclusive of the Jump Drive, shall be submitted in a sealed envelope and clearly identified on the outside of the envelope as the Cost Proposal. Form RFP-Audit Version F (SM) Page 16 of 38

21 Form RFP-Audit Version F (SM) 1. Proposal Content and Organization Proposals shall contain concise responses to satisfy the requirements of this Request for Proposals with an emphasis on completeness and clarity. Proposals shall follow the same sequence and outline as the Request for Proposals. Each paragraph or question including associated number shall be restated followed by the Offeror s response to that item. General RFP Submittal Guidelines a. Non-conforming RFP submittals may be rejected. Please read all instructions carefully. b. Comply with all RFP requirements. c. Evidence of insurance shall be included in the proposal in the form of a current Certificate of Insurance. Non-Conforming Proposal Any proposal deemed non-conforming by the Procurement Manager in regard to format will be considered non-responsive. Offerors shall contact the Procurement Manager to clarify any questions concerning format prior to submission. Proposal Signature: Proposal shall include the complete mailing address of the Offeror and shall be signed by an authorized representative of the Offeror by original signature with the signer s full name and legal title typed below the signature line. Each proposal shall include the Offeror s Federal Employer's Identification Number or Social Security Number as applicable. Amendments: Offeror shall acknowledge receipt of any amendments to this Request for Proposals on Attachment C Failure to acknowledge receipt of any amendments may render the proposal to be non-responsive. Changes to this Request for Proposals shall be issued only by the Procurement Manager in writing. The number of pages for Proposal materials excluding mandatory pages such as the Letter of Transmittal, Table of Contents, and Attachments, shall not exceed forty-five (45) (pages shall be sequentially numbered) excluding Attachments A through _C_, and Exhibits A through B_. Direct reference to pre-prepared or promotional material may be used if referenced and clearly marked. Promotional material should be minimal. The proposal must be organized and indexed in the following format and must contain, at a minimum, all listed items in the sequence indicated. The proposal must be organized and indexed in the following format and must contain, at a minimum, all listed items in the sequence indicated. Within each section of the proposal, Offerors shall address the items in the order indicated below. Any and all forms provided in this RFP, and required to be submitted, shall be thoroughly completed and included in the appropriate section of the proposal. All discussion of proposed costs, rates or expenses shall occur only in Binder #2. The proposal summary is optional and may be included by potential Offerors to provide the Evaluation Committee with an overview of the proposal; however, this material will not be used in the evaluation process unless specifically referenced from other portions of the Offeror s proposal. Technical Proposal (Binder/Volume 1): a. Letter of Transmittal b. Table of Contents Form RFP-Audit Version F (SM) Page 17 of 38

22 Form RFP-Audit Version F (SM) c. Proposal Summary Introduction (optional) d. Corporate Information/Experience Organizational/Corporate Experience Organizational References (Minimum of 3 References) Key Personnel/Resumes Financial Stability (Financial information considered confidential may be placed in a Confidential Information binder) e. Technical Approach f. Management Approach g. Project Performance History h. Other Value Added Services i. Attachments: Certificate of Insurance - Mandatory Attach State of NM W-9 - Mandatory Completed Attachment B, Campaign Disclosure Form Mandatory Mandatory Attachment C, Acknowledge of Receipt of Amendments - Mandatory Letter of Transmittal, supra, must include the following information: a. Identify the submitting organization and NM CRS number b. Identify name and title, telephone and fax numbers, and address of the person(s) authorized by the Offeror to contractually obligate the organization for the purpose of this proposal c. Identify the name, title(s), telephone and fax number(s) and address of the person authorized to negotiate the contract on behalf of the organization d. Identify the names, titles, telephone and fax numbers, and addresses of persons to be contacted for clarification questions regarding this RFP e. Explicitly indicate acceptance of the Conditions Governing the Procurement stated in Section 2.8 of this Request for Proposals. f. Be signed by a person authorized to contractually obligate the organization g. Acknowledge receipt of any and all amendments/addenda to this RFP Cost Proposal (Binder/Volume 2): 1. Completed Cost Response Cost Proposal shall be submitted in a SEALED ENVELOPE clearly marked on the outside of the envelope as follows: Cost Proposal RFP #FCAS Name of Firm NOTE: The Cost Proposal Sealed Envelope may be inserted inside Volume 1 to insure that it is not misplaced. Provide a breakdown of costs to perform the work. Costs proposed should be in direct relationship to the services offered in relation to the Technical Approach and Other Value Added Services. Pricing and cost data shall be provided as described below. By submitting a proposal, the Offeror certifies that its pricing was developed independently and without collusion, communication, consultation, or agreement related to pricing in any manner with other Offerors, competitors or public employees. Form RFP-Audit Version F (SM) Page 18 of 38

23 Form RFP-Audit Version F (SM) The Cost Proposal shall be sealed in an envelope that is identified with the Offeror s name marked COST PROPOSAL and must be submitted with the Offeror s proposal. Offerors shall use the Audit Cost Proposal Form included in this RFP as Exhibit A. The Cost Proposal shall include required disciplines, overtime, travel, per diem, and reimbursable expenses, for all services requested. Profit and overhead shall be incorporated into the rates. Fill-in version of Form Exhibit A is located at: - under the Request For Proposal Section. Offerors are expected and shall provide/submit cost/pricing information for all staffing/labor, services, equipment, administration (overhead), and management costs that are directly or indirectly associated with providing the applicable and specific Services and Products. Said associated cost/pricing shall be included in/with the product or service to which it specifically applies. Cost/pricing for services, staffing, equipment/hardware/software not enumerated in the submitted cost/pricing proposal, which is, or reasonably directly or indirectly associated with, necessary, or required in providing an applicable Services or Products, shall be assumed to be included in the proposals cost/pricing for the services or products to be provided and no additional cost, not specifically associated with the services or product, shall be applicable or allowed. Each Offeror shall clearly indicate (mark by page, etc.) if elements of this section are requested to be treated as proprietary. The responsible Agency official will make the final decision if this is to be treated as proprietary. Per Diem RESERVED Mileage Rate RESERVED Transportation - Air Fare and Vehicle Rental RESERVED Reimbursable Expenses RESERVED Travel, Per Diem, Transportation, Mileage, Reimbursable Items, Overtime RESERVED Limitation for Mileage, Overtime RESERVED Separate Line Items to be shown RESERVED Form RFP-Audit Version F (SM) Page 19 of 38

24 Form RFP-Audit Version F (SM) IV. SPECIFICATIONS Offerors should respond in the form of a thorough narrative to each specification, unless otherwise instructed. The narratives, including required supporting materials will be evaluated and awarded points accordingly. A. SCOPE OF WORK/ TECHNICAL SPECIFICATIONS The Statement of Work and Specification contained in Article I, Section C inclusive, of this RFP, and in Article 1.0 of the Sample Agreement is hereby incorporated and made a part of this Article IV, Sections A to the same extent as if it has been set out verbatim in this Article and Section. 1. Organizational Experience Offerors must: a) Provide a description of relevant corporate experience with state government and private sector. The experience of all proposed subcontractors must be described. The narrative must thoroughly describe how the Offeror has supplied expertise for similar contracts and must include the extent of their experience, expertise and knowledge. All related private sector work will also be considered; b) Indicate how many related and associated services have been provided in the last two years and what percentage of business revenue is derived from related and associated services engagements; c) Describe at least two project successes and failures of a related and associated services engagement. Include how each experience improved the Offeror s services. 2. Organizational References Offerors should provide a minimum of three (3) references from similar projects performed for private, state or large local government clients within the last three years. The Evaluation Committee may contact any or all business references for validation of information submitted. If this step is taken, the Procurement Manager and the Evaluation Committee must all be together on a conference call with the submitted reference so that the Procurement Manager and all members of the Evaluation Committee receive the same information. Additionally, the Agency reserves the right to consider any and all information available to it (outside of the Business Reference information required herein), in its evaluation of Offeror responsibility. Offerors shall submit the following Business Reference information as part of Offer: a) Client name; b) Project description; c) Project dates (starting and ending); d) Technical environment (i.e., Software applications, Internet capabilities, Data communications, Network, Hardware); e) Staff assigned to reference engagement that will be designated for work per this RFP; and f) Client project manager name, telephone number, fax number and address. Form RFP-Audit Version F (SM) Page 20 of 38

25 Form RFP-Audit Version F (SM) 3. Oral Presentation (Evaluation Optional Requirement) If selected as a finalist, Offerors agree to provide the Evaluation Committee the opportunity to interview proposed staff members identified by the Evaluation Committee, at the option of the Agency. The Evaluation Committee may request a finalist to provide an oral presentation of the proposal as an opportunity for the Evaluation Committee to ask questions and seek clarifications. B. BUSINESS SPECIFICATIONS 1. Financial Stability Offerors Financial Stability shall be assessed as prescribed under the applicable standards contained in Determination of Responsibility of Contractors Financial Viability Guidance and Matrix documents located at: and by utilizing the DECLARATION & CONFIRMATION OF FISCAL VIABILITY Form COFV-Ver (sm) located at: CONFIRMATION_OF_FISCAL_VIA BILITY_Form.pdf 2. Performance/Payment Surety Bond RESERVED 3. Letter of Transmittal Form The Offeror s proposal must be accompanied by the Letter of Transmittal. The letter must be completed and must be signed by the person authorized to obligate the company. 4. Campaign Contribution Disclosure Form The Offeror must complete an unaltered Campaign Contribution Disclosure Form and submit a signed copy with the Offeror s proposal. This must be accomplished whether or not an applicable contribution has been made. (See Attachment B) 5. Cost Provide a breakdown of costs to perform the work. Costs proposed should be in direct relationship to the services offered in relation to the Technical Approach and Other Value Added Services. Pricing and cost data shall be provided as described below. By submitting a proposal, the Offeror certifies that its pricing was developed independently and without collusion, communication, consultation, or agreement related to pricing in any manner with other vendors, competitors or public employees. The Cost Proposal shall be sealed in an envelope that is identified with the Offeror s name marked COST PROPOSAL and must be submitted with the Offeror s proposal. Offerors shall use the Cost Proposal Form included in this document in Exhibit B. The Cost Proposal shall include required disciplines, hourly rates to be entered by region proposing, overtime, travel, per diem, and reimbursable expenses, for all disciplines that correlate with services requested. Profit and overhead shall be incorporated into the rates. Contractor shall indicate whether its company/organization reports its receipts, for Gross Receipts and/or Compensating Taxes purposes, as a cash-basis taxpayer or an accrual basis taxpayer. Each Offeror shall clearly indicate (mark by page, etc.) if elements of this section are requested to be treated as proprietary. The responsible PSFA official will make the final decision if this is to be treated as proprietary. Form RFP-Audit Version F (SM) Page 21 of 38

26 Form RFP-Audit Version F (SM) 6. Resident Business or Resident Veterans Preference For the Bid Processes: Resident business, resident veteran business, resident contractor and resident veteran contractor shall, if they meet the requirements set forth in New Mexico Procurement Code Sections , NMSA 1987, and if the bid was submitted under a formal bid process, be afforded preference in the form of lowering the amount of the actual bid submitted by a value up to five percent (5%) for resident business/contractors, and by a value up to 10 percent (10%) for resident veteran business/contractors. In no event will a business be awarded both a resident business preference and a resident veteran business preference in any single procurement/contractual action. For the RFP Processes: Resident business, resident veteran business, resident contractor and resident veteran contractor shall, if they meet the requirements set forth in New Mexico Procurement Code Sections , NMSA 1987, if their proposal was submitted under a formal request for proposal process, and the contract is to be awarded based on a point-based system, be afforded preference in the form of additional points equivalent to five percent (5%) of the total possible points for resident business/contractors, and additional points equivalent to ten percent (10%) of the total possible points for resident veteran business/contractors. In no event will a business be awarded both a resident business preference and a resident veteran business preference in any single procurement/contractual action. C. Insurance Requirements Contractors shall submit with their Proposal and prior to any work/services to be performed for any project under any Agreement issued, proof of insurance via Certificate of Insurance for all applicable coverages. Form RFP-Audit Version F (SM) Page 22 of 38

27 Form RFP-Audit Version F (SM) V. EVALUATION A. EVALUATION POINT SUMMARY The following is a summary of evaluation factors with point values assigned to each. These weighted factors will be used in the evaluation of individual potential Offeror proposals by sub-category. The award of an Agreements to an Offeror shall be based on the Best Value Procurement method, in which in addition to an evaluation of cost/price and requirements established under this RFP the Agency will consider documented and quantifiable factors such as quality, expertise, past performance, reliability, and the ability to meet a required schedule particular to the specific project. Factors Technical Specifications Organizational Experience (Combined a thru d Total) a. Corporate Information/Experience b. Key Personnel c. Technical Approach d. Management Approach Organizational/Project Performance References Oral Presentations (If Applicable) Mandatory Specification Desirable Specification Business Specifications Financial Stability Letter Of Transmittal Signed Campaign Contribution Disclosure Form Applicable Insurance Certificates Cost TOTAL Table 1: Evaluation Point Summary Points Available Points must be assigned and defined for all factors (must total 100% of available points) 5 Points 7 Points 7 Points 3 Points 2 Points RESERVED 10 Points 2 Points 4 Points Pass/Fail Pass/Fail Pass/Fail Pass/Fail 60 Points 100 points B. EVALUATION FACTORS 1. Organizational Experience Points will be awarded based on the thoroughness and clarity of the response of the engagements cited and the perceived validity of the response. a. Corporate Information/Experience The Evaluation Committee will evaluate the information provided by each Offeror that documents overall qualifications, experience, background, capacity, and number of years of experience regarding the type of services required for the Offeror, team, and/or joint venture. Form RFP-Audit Version F (SM) Page 23 of 38

28 Form RFP-Audit Version F (SM) b. Key Personnel The Evaluation Committee will evaluate the information provided by each Offeror that documents qualifications, background, experience, and availability to perform all aspects of the work for key personnel proposed for the type of services required. c. Technical Approach The Evaluation Committee will assess each Offeror s detailed description of the services to be provided and how they will be provided, including major tasks and subtasks, description of any proposed team(s), roles of each member of the team, and how the team is organized and managed including any proposed subcontractor(s) to perform the work. d. Management Approach The Evaluation Committee will consider each Offeror s approach to managing multiple projects and/or geographical area(s) including proximity to and familiarity with defined geographical area(s) in which projects may be located; staff levels, qualifications, and location and percentage of time available for projects. 2. Organizational/ Project Performance References (See Table 1) The Evaluation Committee will review details submitted by each Offeror on projects performed within the past five (5) years as well as any current projects or contracts with government agencies and private industry with respect to such factors as relevance to the type of services required by this Request for Proposals, control of costs, quality of work, and ability to meet schedules. Provide the name of the firm/agency, address, telephone number and a contact person for the three (3) top projects listed. 3. Oral Presentation (If Applicable) (See Table 1) Points will be awarded based on the quality, organization and effectiveness of communication of the information presented, as well as the professionalism of the presenters and technical knowledge of the proposed staff. Prior to Oral Presentation, the Agency will provide the Offeror a presentation agenda. (If no Oral Presentations are required all Offerors will receive the same amount of total points for this evaluation factor). 4. Mandatory Specifications Points will be awarded based on the Offeror meeting all of the mandatory RFP Terms, Conditions, Requirements and the Statement/Scope of Work contained in this RFP, inclusive of Exhibit A. 5. Desirable Specifications Points will be awarded based on the Offeror matching desirable RFP Terms, Conditions, Requirements and the Statement/Scope of Work contained in this RFP, inclusive of Exhibit A. 6. Financial Stability Pass/Fail only. No points assigned. 7. Letter of Transmittal Pass/Fail only. No points assigned. Form RFP-Audit Version F (SM) Page 24 of 38

29 Form RFP-Audit Version F (SM) 8. Campaign Contribution Disclosure Form Pass/Fail only. No points assigned. 9. Certificate of Insurance (Pass/Fail only. No points assigned.) 10. Cost The evaluation of each Offeror s cost proposal will be conducted using the following formula: Lowest Responsive Offer Bid X Available Award Points This Offeror s Bid C. EVALUATION PROCESS 1. All Offeror proposals will be reviewed for compliance with the requirements and specifications stated within the RFP. Proposals deemed non-responsive will be eliminated from further consideration. 2. The Procurement Manager may contact the Offeror for clarification of the response. 3. The Evaluation Committee may use other verifiable sources to perform the evaluation. 4. Responsive proposals will be evaluated on the factors in Section IV, which have been assigned a point value. The responsible Offerors with the highest scores will be selected as finalist Offerors, based upon the proposals submitted. The responsible Offerors whose proposals are most advantageous to the Agency taking into consideration the evaluation factors in Section IV will be recommended for award. Please note, however, that a serious deficiency in the response to any one factor may be grounds for rejection regardless of overall score. 5. All final calculations of point standings, including any addition or deduction of points to Offeror submittals shall occur at a meeting of the Evaluation Committee, with all members in attendance. 6. A maximum total of 100 points are possible in scoring each proposal for determining the shortlist of firms for further evaluation. The Evaluation Committee will evaluate the proposals and if it is determined that Offerors will be interviewed, the Procurement Manager will notify the Shortlist Finalists. Offerors that do not make the Shortlist will also be notified. 7. All committee rankings are public record and will be available for public inspection at the Agency offices after final award of contracts. Individual scores and rankings by each committee member shall be confidential. Ties in ranking by individual committee members and by collective committee rankings shall be scored using the sum of the ranking places, divided by the number of firms in a tie. The following is an example of scoring for a tie at first: Scoring Numerical Ranking Firm A Tie (1st + 2nd) /2 = 1.5 Firm B Tie (1st + 2nd)/ 2 = 1.5 Firm C 3rd = 3 A tie for first, at the end of the final rankings after the completion of evaluation of proposals shall be broken by a separate ranking by the committee members, only ranking the firms involved in the tie. If a tie still exists after ranking only the tied firms, the tie shall be broken by the chairman of the Evaluation Committee Form RFP-Audit Version F (SM) Page 25 of 38

30 Form RFP-Audit Version F (SM) 8. The Procurement Manager shall notify all finalists in writing of the final results of the interviews, if held, and the overall selection process. Form RFP-Audit Version F (SM) Page 26 of 38

31 Form RFP-Audit Version F (SM) ATTACHMENTS Form RFP-Audit Version F (SM) Page 27 of 38

32 Form RFP-Audit Version F (SM) ATTACHMENT A INTENT TO RESPOND TO RFP FORM REQUEST FOR PROPOSALS TITLE: Financial and Compliance Audit Services - RFP #FCAS _ In acknowledgement of receipt of this Request for Proposal the undersigned agrees that he/she has received a complete copy, beginning with the title page and table of contents, and ending with Attachment _C and Exhibits A & B_ This acknowledgement of receipt shall be signed and returned to the Procurement Manager no later than close of business on April 6 th, 2018, the close of business is 5:00 PM MST. Failure to return this form with the intention of submitting a proposal will jeopardize the receipt Offeror written questions and the Agency s written responses to those questions as well as RFP amendments if any are issued. FIRM: REPRESENTED BY: TITLE: PHONE No. :( ) FAX NO.: ADDRESS: CITY: STATE: ZIP CODE: SIGNATURE: DATE: ALTERNATE CONTACT INFO NAME: PHONE No. :_( ) This name and address will be used for all correspondence related to the Request for Proposal. Place an X on the appropriate statement below: Firm DOES INTEND to respond to this Request for Proposals. Firm DOES NOT INTEND to respond to this Request for Proposals. Procurement Manager: Name: Mr. Shatona Martin Title: Procurement Manager Agency Name: New Mexico Public School Facilities Authority Address: 1312 Basehart Road SE, Suite 200 Albuquerque, New Mexico TELEPHONE: smartin@nmpsfa.org Form RFP-Audit Version F (SM) Page 28 of 38

33 Form RFP-Audit Version F (SM) ATTACHMENT B (Mandatory) CAMPAIGN CONTRIBUTION DISCLOSURE FORM Pursuant to the Procurement Code, Sections , et seq., NMSA 1978 and NMSA 1978, (2006), as amended by Laws of 2007, Chapter 234, any prospective contractor seeking to enter into a contract with any state agency or local public body for professional services, a design and build project delivery system, or the design and installation of measures the primary purpose of which is to conserve natural resources must file this form with that state agency or local public body. This form must be filed even if the contract qualifies as a small purchase or a sole source contract. The prospective contractor must disclose whether they, a family member or a representative of the prospective contractor has made a campaign contribution to an applicable public official of the state or a local public body during the two years prior to the date on which the contractor submits a proposal or, in the case of a sole source or small purchase contract, the two years prior to the date the contractor signs the contract, if the aggregate total of contributions given by the prospective contractor, a family member or a representative of the prospective contractor to the public official exceeds two hundred and fifty dollars ($250) over the two year period. Furthermore, the state agency or local public body may cancel a solicitation or proposed award for a proposed contract pursuant to Section NMSA 1978 or a contract that is executed may be ratified or terminated pursuant to Section NMSA 1978 of the Procurement Code if: 1) a prospective contractor, a family member of the prospective contractor, or a representative of the prospective contractor gives a campaign contribution or other thing of value to an applicable public official or the applicable public official s employees during the pendency of the procurement process or 2) a prospective contractor fails to submit a fully completed disclosure statement pursuant to the law. The state agency or local public body that procures the services or items of tangible personal property shall indicate on the form the name or names of every applicable public official, if any, for which disclosure is required by a prospective contractor. THIS FORM MUST BE INCLUDED IN THE REQUEST FOR PROPOSALS AND MUST BE FILED BY ANY PROSPECTIVE CONTRACTOR WHETHER OR NOT THEY, THEIR FAMILY MEMBER, OR THEIR REPRESENTATIVE HAS MADE ANY CONTRIBUTIONS SUBJECT TO DISCLOSURE. The following definitions apply: Applicable public official means a person elected to an office or a person appointed to complete a term of an elected office, who has the authority to award or influence the award of the contract for which the prospective contractor is submitting a competitive sealed proposal or who has the authority to negotiate a sole source or small purchase contract that may be awarded without submission of a sealed competitive proposal. Form RFP-Audit Version F (SM) Page 29 of 38

34 Form RFP-Audit Version F (SM) Campaign Contribution means a gift, subscription, loan, advance or deposit of money or other thing of value, including the estimated value of an in-kind contribution, that is made to or received by an applicable public official or any person authorized to raise, collect or expend contributions on that official s behalf for the purpose of electing the official to statewide or local office. Campaign Contribution includes the payment of a debt incurred in an election campaign, but does not include the value of services provided without compensation or unreimbursed travel or other personal expenses of individuals who volunteer a portion or all of their time on behalf of a candidate or political committee, nor does it include the administrative or solicitation expenses of a political committee that are paid by an organization that sponsors the committee. Family member means spouse, father, mother, child, father-in-law, mother-in-law, daughter-in-law or son-in-law of (a) a prospective contractor, if the prospective contractor is a natural person; or (b) an owner of a prospective contractor. Pendency of the procurement process means the time period commencing with the Public notice of the request for proposals and ending with the award of the contract or the cancellation of the request for proposals. Prospective contractor means a person or business that is subject to the competitive sealed proposal process set forth in the Procurement Code or is not required to submit a competitive sealed proposal because that person or business qualifies for a sole source or a small purchase contract. Representative of a prospective contractor means an officer or director of a corporation, a member or manager of a limited liability corporation, a partner of a partnership or a trustee of a trust of the prospective contractor. Name(s) of Applicable Public Official(s) if any: (Completed by State Agency or Local Public Body) DISCLOSURE OF CONTRIBUTIONS BY PROSPECTIVE CONTRACTOR: Contribution Made By: Relation to Prospective Contractor: Date Contribution(s) Made: Amount(s) of Contribution(s) Nature of Contribution(s) Form RFP-Audit Version F (SM) Page 30 of 38

35 Form RFP-Audit Version F (SM) Purpose of Contribution(s) (Attach extra pages if necessary) Signature Title/Position Date --OR NO CONTRIBUTIONS IN THE AGGREGATE TOTAL OVER TWO HUNDRED FIFTY DOLLARS ($250) WERE MADE to an applicable public official by me, a family member or representative. Signature Title (Position) Date Form RFP-Audit Version F (SM) Page 31 of 38

36 Form RFP-Audit Version F (SM) ATTACHMENT C ACKNOWLEDGEMENT OF RECEIPT OF AMENDMENTS TO RFP # FCAS I hereby attest that I have received the following amendment(s) to the RFP _FCAS _ as follows: AMENDMENT # AMENDMENT # AMENDMENT # AMENDMENT # AMENDMENT # DATE: DATE: DATE: DATE: DATE: Signed by: TITLE: Form RFP-Audit Version F (SM) Page 32 of 38

37 Form RFP-Audit Version F (SM) Exhibit A Fee and Hour Breakdown Category Financial Statement Audit Financial Statement Preparation Federal Single Audit Other allowed non-audit services Component Units Other Gross Receipts Tax [Year 1] Hours [Year 1] Cost [Year 2] Hours [Year 2] Cost [Year 3] Hours [Year 3] Cost TOTAL For the current fiscal year, total amount payable Including Applicable Gross Receipts Tax, Shall Not Exceed: Form RFP-Audit Version F (SM) Page 33 of 38

38 Form RFP-Audit Version F (SM) Exhibit B Final 2017 Financial Statement COVER SHEET Form RFP-Audit Version F (SM) Page 34 of 38

39 State of New Mexico New Mexico Public School Facilities Authority Financial Statements For the Year Ended June 30, 2017 RFP # FCAS EXHIBIT B

40 (This page intentionally left blank.) 2

41 INTRODUCTORY SECTION 3

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43 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Table of Contents June 30, 2017 INTRODUCTORY SECTION Exhibit Page Table of Contents 5 Official Roster 6 FINANCIAL SECTION Independent Auditors' Report 8-9 Management's Discussion and Analysis BASIC FINANCIAL STATEMENTS Government Wide Statement of Net Position A-1 18 Government Wide Statement of Activities A-2 19 Balance Sheet - Governmental Funds B-1 20 Reconciliation of the Balance Sheet to the Statement of Net Position - Governmental Funds 21 Statement of Revenues, Expenditures, and Changes in Fund Balance - Governmental Funds B-2 22 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance of Governmental Funds to the Statement of Activities 23 Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund (94300) C-1 24 Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - Special Revenue Fund - Bond Proceeds Capital Projects (94700) C-2 25 Notes to Financial Statements SUPPORTING SCHEDULES Schedule Schedule of Joint Powers Agreements I COMPLIANCE SECTION Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Schedule of Findings and Responses II 58 OTHER DISCLOSURES 59 5

44 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Official Roster June 30, 2017 Name Public School Capital Outlay Council Title Duffy Rodriguez Paul Aguilar Jessica Kelly Gilbert Peralta Joe Guillen David Abbey Rachel Gudgel Pat McMurray Raul Burciaga Department of Finance & Administration Public Education Department Office of the Governor Public Education Commission NM School Board Association Legislative Finance Committee Legislative Education Study Committee Construction Industries Division Manufactured Housing Division Regulation and Licensing Department Legislative Council Service Name Rocky Kearney Casandra Cano Denise Irion Lacey Burton Bryan King Marticia Casias Edward Avila Larry Tillotson Administration Position Interim Director Program Support Manager Chief Financial Officer Human Resources & Training Manger Chief Information Officer Planning & Design Manager Interim Senior Facilities Manager Facilities Maintenance & Operating Support Manager 6

45 FINANCIAL SECTION 7

46 Alamogordo Albuquerque Carlsbad Clovis El Paso Hobbs Lubbock Roswell Santa Fe INDEPENDENT AUDITORS REPORT Tim Keller New Mexico State Auditor Members of the Public School Capital Outlay Council State of New Mexico Public School Facilities Authority Albuquerque, New Mexico Report on Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the budgetary comparisons for the general fund and major special revenue fund of the New Mexico Public School Facilities Authority (the Authority ), as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the Authority s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error. Auditors Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Authority s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Authority s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall financial statement presentation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 8

47 Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the Authority as of June 30, 2017, and the respective changes in financial position thereof, and the respective budgetary comparison of the general fund and the major special revenue fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 1, the financial statements of the Authority are intended to present the financial position, and the changes in financial position of only that portion of the governmental activities that are attributable to the transactions of the Authority. They do not purport to and do not present fairly the financial position of the State of New Mexico as of June 30, 2017, and the changes in its financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management s Discussion and Analysis on pages 10 through 15 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the Authority s financial statements and the budgetary comparisons. The Supporting Schedule I and II required by NMAC are presented for the purpose of additional analysis and are not a required part of the basic financial statements. The introductory section and Schedule I have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 12, 2017 on our consideration of the Authority s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Authority s internal control over financial reporting and compliance. RPC CPAs + Consultants, LLP Albuquerque, New Mexico October 12,

48 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Management s Discussion & Analysis June 30, 2017 Public School Facilities Authority s discussion and analysis is designed to (a) provide an overview of the Agency's financial activities, its mission and function, (b) provide a description of significant capital assets, (c) provide a brief discussion of the basic financial statements, including the relationships of the statements to each other, and the significant differences in the information they provide, and (d) provide an analysis of the agency's financial position. Public School Facilities Authority Mission Statement Partnering with New Mexico s communities to provide quality, sustainable school facilities for our students and educators. The Public School Facilities Authority is an adjunct agency of the State of New Mexico, created in 2004 under Section NMSA Financial Highlights The Public School Facilities Authority s net position at June 30, 2017 was $12,650,614, which is a decrease of $6,869,227 from the fiscal year ended June 30, The decrease is a result from a prior year restatement for advances receivable in the amount of $1,808,402 plus $5,060,825 related to total decrease in expenditures for the fiscal year. As of the close of the fiscal year 2017, the agency's government wide financial statements showed current assets of $16,991,705 and net capital assets of $3,302,214. Overview of Financial Statements This discussion and analysis is intended to serve as an introduction to The Public School Facilities Authority s basic financial statements. The Public School Facilities Authority s basic financial statements consist of three components: government wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government wide Financial Statements. The government wide financial statements are designed to provide readers with a broad overview of The Public School Facilities Authority s finances, in a manner similar to the private sector business. These statements consist of the statement of net position and the statement of activities. The statement of net position presents information on all of the agency's assets and liabilities, with the difference between the two reported as net position. Over time, the increases or decreases in net position may serve as a useful indicator of whether the financial position of the Public School Facilities Authority is improving or deteriorating. The statement of activities presents information showing how the agency's net positions changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., earned but unused vacation leave). The government wide Statement of Activities of the agency reflects the activities of the agency by its governmental functions. The Statement of Activities identifies financial resources that are directly related to the governmental function. Financial resources that are not specifically related to the governmental functions are shown as general resources in the bottom portion of this statement. The Statement of Activities also shows the change in net position for the fiscal year. 10

49 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Management s Discussion & Analysis June 30, 2017 The government wide financial statements can be found on pages of this report. Fund Financial Statements Governmental Funds. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The agency, like other agencies, uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. All of the funds of the agency are considered Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government wide financial statements. However, unlike the government wide financial statements, governmental fund financial statements focus on near term inflows and outflows of expendable resources, as well as on balances of expendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near term financing requirements and resources. The governmental funds use the modified accrual basis of accounting whereby revenues are recognized when they become available and measurable as net current assets. "Available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred. Because the focus of governmental funds is narrower than that of the government wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government wide financial statements. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between the governmental fund financial statements and the government wide financial statements. In addition to the General Fund, the agency maintains the Public School Capital Outlay Fund, considered a major fund. (A fund is considered to be a major fund depending on the amount of its assets, liabilities, revenues, or expenditures.) The Public School Facilities Authority adopts an annual appropriated budget for all of its funds. Budgetary comparison statements have been provided for the governmental funds to demonstrate budget compliance. The basic governmental fund financial statements can be found on pages of this report. Notes to the Financial Statements. The notes provide additional information that is essential to a full understanding of the data provided in the government wide and the fund financial statements. The notes to the financial statements can be found on pages of this report. Budgetary Comparisons. GASB 34 requires budgetary comparison schedules for the general fund and for each major special revenue fund that has a legally adopted annual budget. The budgetary comparison schedules present both the original and the final approved budgets for the reporting period as well as the actual inflows, outflows and balances, stated on the agency's budgetary basis (modified accrual). Budgetary information is provided at the approved budget level to demonstrate compliance with legal requirements. 11

50 GOVERNMENT WIDE FINANCIAL ANALYSIS STATE OF NEW MEXICO New Mexico Public School Facilities Authority Management s Discussion & Analysis June 30, 2017 As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the case of the agency, assets exceeded liabilities by $12,475,825 as of June 30, Comparative net position is shown below: Governmental Governmental Activities Activities June 30, 2017 June 30, 2016 Assets: Current assets: Investment in State General Fund Investment Pool $ $ Other current assets 16,991,705 54,578,692 Total current assets 16,991,705 54,578,692 Capital assets, net 3,302,214 3,739,428 Other noncurrent assets 5,949,297 7,868,677 Total noncurrent assets 9,251,511 11,608,105 Total assets 26,243,216 66,186,797 Liabilities: Current liabilities 13,592,602 46,666,956 Non current liabilities Total liabilities 13,590,254 46,666,956 Net position: Net investment in capital assets 3,302,214 3,739,428 Restricted for special appropriations 7,156,146 Unrestricted 2,192,254 15,780,413 Total net position $ 12,650,614 $ 19,519,841 The decrease of $6,869,227 from the previous year is primarily due to the recognition of current assets and liabilities for receivables and payables related to bond expenditures for capital projects. The Authority processed all goods and services received by June 30, 2017 within the fiscal year thus, resulting in a reduction of the due to/from other state agencies. Also the advance receivable was adjusted for unearned revenue that was booked in the prior year as the district paid PSFA s portion during FY17. 12

51 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Management s Discussion & Analysis June 30, 2017 Changes in Net Position: The overall decrease/increase in the agency s net position is shown in the following schedule: Governmental Governmental Activities Activities June 30, 2017 June 30, 2016 Expenses Education $ 183,581,661 $ 183,582,945 General Government 6,033,417 6,346,046 Total expenses 189,615, ,928,991 General revenues and transfers Inter agency transfers 174,001, ,582,945 Other miscellaneous revenues 10,552, ,770 Total general revenues and transfers 184,554, ,153,393 Change in net position (5,060,825) 224,402 Beginning net position, July 1 19,519,841 5,354,266 Beginning net position, July 1 (restated) 17,711,439 19,295,439 Ending net position, June 30 $ 12,650,614 19,519,841 FINANCIAL ANALYSIS OF THE AGENCY S FUNDS Governmental Funds The focus of the agency s governmental funds is to provide information on near term inflows, and balances of expendable resources. Such information is more useful in assessing the agency s financial position than the government wide statements, because the fund financial statements better reflect the reality that certain revenues are legally restricted for specific purposes and cannot be used to cover the costs of other operations. Budgetary Highlights The agency s General Fund budget for fiscal year 2017 was $6,039,700 ($4,689,100 Personnel Services and Employee Benefits; $161,200 Contractual Services; $1,189,400 Other). Budget Adjustment Request (BAR) was not executed in FY17. At fiscal year end, the agency expended $5,606,465 reverting back the balance of the fiscal year approved budget to the PSCOC fund $433,235 which will be recorded in the FY18 fiscal year audit. In FY17, the agency s major fund, the Bond Proceeds Capital Projects Special Revenue Fund saw a decrease in budgeted inflows of $9,771,318 from reduced intra agency transfers of Supplemental Severance Tax Bonds. Throughout the course of FY17, the Bond Proceeds Capital Projects Fund saw outflows totaling $183,581,661 for project expenditures. 13

52 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Management s Discussion & Analysis June 30, 2017 Changes in Assets and Long Term Liabilities of the Agency The PSCOC Capital Asset value of $3,302,214 is the depreciated value of portable classrooms purchased in Financial Assets are Intra agency transfers from the sale of Supplemental Severance Tax Bonds (SSTBs). Although the Authority oversees and funds various construction projects, the Authority does not maintain ownership; ownership is turned over to the respective school district upon completion of the project. The Authority also does not carry any of the debt obtained to fund the construction project; the debt resides with the New Mexico Board of Finance. Long term commitments of the agency are future construction (phase 2) awards as identified in the Public School Capital Outlay Council Financial Plan Project Awards Schedule. At June 30, 2017, unexpended balances in the fund were $216,016,823. It is the policy goal of the PSCOC to reduce balances. The unexpended balance represents a substantial decrease in unexpended balances that once exceeded $600 million. In FY17, awards totaled approximately $64.7 million for 10 school construction projects and 21 facility planning needs in 24 school districts, a decrease of 43.1 percent over FY16. Current long term commitments for awards not yet certified are to 18 projects totaling approximately $98.1 million (not inclusive of or other out year award cycles.) The Public School Capital Outlay Council awarded 103 charter schools in 22 districts $15.7 million in lease assistance awards. Economic Factors and Budget Outlook Background of Program Funding In 1998, the Zuni school district brought a capital funding/facilities suit against the state, Zuni School District v. State, CV II (Dist. Ct., McKinley County Oct. 14, 1999), claiming that the funding system for capital items was unconstitutional. The trial court granted partial summary judgment in favor of plaintiffs and ordered the state to "establish and implement a uniform funding system for capital improvements". In response, the Legislature amended the Severance Tax Bonding Act to create a new category of bonds to be funded by severance taxes termed Supplemental Severance Tax Bonds (SSTB s). Proceeds of SSTB s are earmarked by the Public School Capital Outlay Act to be utilized for public school improvements. Currently 45% of prior fiscal year Bonding Fund revenue can be used for SSTB s. Since 1999, SSTBs have provided $2.56 billion for public school construction statewide. As a result of this significant investment, the New Mexico average Facilities Condition Index (FCI) for school buildings has decreased from 70.6% to 34.43% from FY03 to FY17. Substantial progress has been made in equalizing the condition of facilities across the state. Redirecting funds for legislative appropriations and the decline in revenue proceeds could have a negative impact on the Public School Capital Outlay Fund. Revenue Volatility Severance tax revenues are derived from the production of oil, natural gas, and other minerals. The value of these products is inherently volatile. Hurricanes, pipeline constraints, new extraction technologies and geopolitical events affect domestic and global supply and demand, causing commodity prices, and hence the valuation base of severance tax collections to fluctuate widely, causing revenue volatility in the public school capital outlay fund. Since 1999, the majority of the revenues generated for the public school capital outlay fund are from the issuance of supplemental severance tax notes short term notes (1 3 day maturity) sold to the State Treasury. The short term nature of these obligations reduces risk in the Severance Tax Bond program, but a side effect is a more volatile revenue stream to the public school capital outlay fund since long term issuances are not typically used to stabilize funding. The State of New Mexico experienced a budget deficit for FY17. During the Special Session that was held, Senate Bill 4 and Senate Bill 8 were passed. The fiscal impact to the Public School Capital Outlay Fund reduces the fund $25.0 million in FY18 FY22. Construction projects may continue to be at risk of delay. 14

53 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Management s Discussion & Analysis June 30, 2017 New Mexico Average Facilities Condition Index (FCI) for School Buildings A key performance measure for public school building condition is the average facilities condition index (FCI). FCI is a ratio of needed repairs, including life cycle renewal requirements divided by replacement value. For example, assume you own a $100,000 house that needs a new $15,000 roof. The FCI is reached by dividing the cost of repair by the cost of the house $15,000/$100,000 = 15% FCI. Request for Information This financial report is designed to provide a general overview of the agency s finances. Questions concerning any of the information provided in this report or any request for additional financial information should be addressed to Denise A. Irion, CFO, 1312 Basehart, Suite 200, Albuquerque, NM dirion@nmpsfa.org. Phone number: (505)

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55 BASIC FINANCIAL STATEMENTS 17

56 STATE OF NEW MEXICO Exhibit A-1 New Mexico Public School Facilities Authority Statement of Net Position June 30, 2017 Governmental Activities Assets Current assets: Investment in State Treasurer's General Fund Investment Pool $ 14,348,594 Advances receivable 2,169,269 Due from other state agencies 160,227 Due from local governments 313,615 Total current assets 16,991,705 Noncurrent assets: Advances receivable 5,949,297 Capital assets, net of accumulated depreciation 3,302,214 Total noncurrent assets 9,251,511 Total assets $ 26,243,216 Liabilities Current liabilities: Accounts payable $ 10,610,315 Unearned revenue 200,000 Accrued salaries payable 151,845 Due to local governments 2,453,984 Compensated absences payable 176,458 Total current liabilities 13,592,602 Total liabilities 13,592,602 Net position Net investment in capital assets 3,302,214 Restricted for special appropriations 7,156,146 Unrestricted 2,192,254 Total net position 12,650,614 Total liabilities and net position $ 26,243,216 The accompanying notes are an integral part of these financial statements. 18

57 STATE OF NEW MEXICO Exhibit A-2 New Mexico Public School Facilities Authority Statement of Activities For the Year Ended June 30, 2017 Governmental Activities Expenses Education $ 183,581,661 General government: Personnel services and employee benefits 4,289,067 Contractual services 97,716 Other costs 1,646,634 Total expenses 189,615,078 General revenues and transfers Inter-agency transfers 174,001,595 Miscellaneous 10,552,658 Total general revenues and transfers 184,554,253 Change in net position (5,060,825) Net position, beginning 19,519,841 Net position, restatement (Note 15) (1,808,402) Net position, beginning as restated 17,711,439 Net position, ending $ 12,650,614 The accompanying notes are an integral part of these financial statements. 19

58 STATE OF NEW MEXICO Exhibit B-1 New Mexico Public School Facilities Authority Page 1 of 2 Balance Sheet Governmental Funds June 30, 2017 General Fund Bond Proceeds Capital Projects Total Assets Investments in State General Fund Investment Pool $ 2,546,493 $ 11,802,101 $ 14,348,594 Advances receivable, current - 2,169,269 2,169,269 Advances receivable, long-term - 5,949,297 5,949,297 Due from other state agencies - 160, ,227 Due from local governments - 313, ,615 Total assets $ 2,546,493 $ 20,394,509 $ 22,941,002 Liabilities and fund balances Liabilities Accounts payable $ 25,936 $ 10,584,379 $ 10,610,315 Unearned revenues - 200, ,000 Accrued salaries payable 151, ,845 Due to local governments - 2,453,984 2,453,984 Total liabilities 177,781 13,238,363 13,416,144 Fund balances Restricted for special appropriations - 7,156,146 7,156,146 Unassigned 2,368,712-2,368,712 Total fund balances 2,368,712 7,156,146 9,524,858 Total liabilities and fund balances $ 2,546,493 $ 20,394,509 $ 22,941,002 The accompanying notes are an integral part of these financial statements. 20

59 STATE OF NEW MEXICO Exhibit B-1 New Mexico Public School Facilities Authority Page 2 of 2 Reconciliation of the Balance Sheet to the Statement of Net Position Governmental Funds June 30, 2017 Total fund balance for the governmental fund (Exhibit B-1) $ 9,524,858 Amounts reported for governmental activities in the Statement of Net Position is different because: Capital assets (net of accumulated depreciation) used in governmental activities are not financial resources, and therefore are not reported in the funds. 3,302,214 Long-term liabilities, including compensated absences payable, are not due and payable in the current period and, therefore, are not reported in the funds (176,458) Total net position (Exhibit A-1) $ 12,650,614 The accompanying notes are an integral part of these financial statements. 21

60 STATE OF NEW MEXICO Exhibit B-2 New Mexico Public School Facilities Authority Page 1 of 2 Statement of Revenues, Expenditures, and Changes in Fund Balance Governmental Funds For the Year Ended June 30, 2017 General Fund Bond Proceeds Capital Projects Total Revenues Miscellaneous income $ 70,753 $ 10,481,905 $ 10,552,658 Total revenues 70,753 10,481,905 10,552,658 Expenditures Current: Education - 183,581, ,581,661 General government: Personnel services and employee benefits 4,299,329-4,299,329 Contractual services 97,716-97,716 Other costs 1,209,420-1,209,420 Total expenditures 5,606, ,581, ,188,126 Excess (deficiency) of revenues over expenditures (5,535,712) (173,099,756) (178,635,468) Other financing sources (uses) Interfund transfers 6,039,700 (6,039,700) - Inter-agency transfers - 174,001, ,001,595 Total other financing sources 6,039, ,961, ,001,595 Net change in fund balance 503,988 (5,137,861) (4,633,873) Fund balance, beginning of year 1,864,724 14,102,409 15,967,133 Fund balance, restatement (Note 15) - (1,808,402) (1,808,402) Fund balance, beginning, as restated 1,864,724 12,294,007 14,158,731 Fund balance, end of year $ 2,368,712 $ 7,156,146 $ 9,524,858 The accompanying notes are an integral part of these financial statements. 22

61 STATE OF NEW MEXICO Exhibit B-2 New Mexico Public School Facilities Authority Page 2 of 2 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance of Governmental Funds to the Statement of Activities For the Year Ended June 30, 2017 Net change in fund balance - governmental funds $ (4,633,873) The change in net position reported for governmental activities in the statement of activities is different because: Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense: Depreciation expense (437,214) Expenses in the Statement of Activities that do not consume current financial resources are not reported as expenditures in the funds: Decrease in compensated absences 10,262 Change in net position (Exhibit A-2) $ (5,060,825) The accompanying notes are an integral part of these financial statements. 23

62 STATE OF NEW MEXICO Exhibit C-1 New Mexico Public School Facilities Authority Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual General Fund (94300) For the Year Ended June 30, 2017 Variances Favorable Budgeted Amounts (Unfavorable) Original Final Actual Final to Actual Revenues Miscellaneous revenue $ - $ - $ 70,753 $ 70,753 Total revenues ,753 70,753 Expenditures Current: Personnel services and employee benefits 4,689,100 4,689,100 4,299, ,771 Contractual services 161, ,200 97,716 63,484 Other costs 1,189,400 1,189,400 1,209,420 (20,020) Total expenditures 6,039,700 6,039,700 5,606, ,235 Other financing sources Transfers in: Interfund transfers 6,039,700 6,039,700 6,039,700 - Total other financing sources 6,039,700 6,039,700 6,039,700 - Excess (deficiency) of revenues over expenditures and other financing resources $ - $ - $ 503,988 $ 503,988 The accompanying notes are an integral part of these financial statements. 24

63 STATE OF NEW MEXICO Exhibit C-2 New Mexico Public School Facilities Authority Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Bond Proceeds Capital Projects Special Revenue Fund (94700) For the Year Ended June 30, 2017 Variances Favorable Budgeted Amounts (Unfavorable) Original Final Actual Final to Actual Revenues Miscellaneous revenue $ - $ - $ 10,481,905 $ 10,481,905 Total revenues ,481,905 10,481,905 Expenditures Current: Education 699,190, ,190, ,581, ,609,292 Other costs Total expenditures 699,190, ,190, ,581, ,609,292 Other financing sources (uses) Transfers in: Inter-agency transfers 170,946, ,946, ,826,805 2,880,041 Transfers out: Interfund transfers (6,039,700) (6,039,700) (6,039,700) - Total other financing sources (uses) 164,907, ,907, ,787,105 2,880,041 Excess (deficiency) of revenues over expenditures and other financing resources $ (534,283,889) $ (534,283,889) $ (5,312,651) $ 528,971,238 The accompanying notes are an integral part of these financial statements. 25

64 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Notes to Financial Statements June 30, 2017 NOTE 1. Definition of Reporting Entity The Deficiencies Correction Unit (DCU) of the Public Schools Capital Outlay Council was created under Senate Bill 167 of the 2001 laws and was budgeted for the first time for the year ended June 30, Under Senate Bill 513 of the 2003 laws, the DCU became the State of New Mexico Public School Facilities Authority (the Authority ). The new Authority consists of the staff, contracts, and equipment of the DCU and various staff, contracts, and equipment of the State Department of Education Capital Outlay Unit. Currently, the authority is a fully independent agency vouchering through the State of New Mexico Department of Finance and Administration (DFA). The State of New Mexico Legislature created the Authority to administer a state-wide program in which the deficiencies in the facilities of each public school district in the State of New Mexico were corrected on a school by school basis. NOTE 2. Summary of Significant Accounting Policies This summary of significant accounting policies of the Authority is presented to assist in the understanding of the Authority s financial statements. The financial statements and notes are the representation of the Authority s management who is responsible for their integrity and objectivity. The financial statements of the Authority have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental agencies. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the Authority's accounting policies are described below: Financial Reporting Entity In evaluating how to define the Authority for financial reporting purposes, management has considered all potential programs and operations of the Authority. The decision to include a potential component unit in the reporting entity was made by applying the criteria set forth in GASB Statement No. 14, as amended by GASB Statement No. 39, GASB Statement No. 61, and GASB Statement No. 80. The basic, but not the only, criterion for including a potential component unit within the reporting entity is the governing body s ability to exercise oversight responsibility. The most significant manifestation of this ability is financial interdependency. GASB 80 defines the financial reporting entity as consisting of the primary government, organizations for which the primary government is financially accountable and other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. This definition of the reporting entity is based primarily on the notion of financial accountability as the "cornerstone of all financial reporting in government." The Authority is not included in any other governmental "reporting entity" as defined in Section 2100, Codification of Governmental Accounting and Financial Reporting Standards, but would be included in a state-wide Comprehensive Annual Financial Report (CAFR). In evaluating how to define the Authority for financial reporting purposes, management has considered all potential component units. The decision to include a potential component unit in the reporting entity was made by applying the criteria set forth in GAAP. The basic - but not the only - criterion for including a potential component unit within the reporting entity is the governing body's ability to exercise oversight responsibility. The most significant manifestation of this ability is financial interdependency. 26

65 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Notes to Financial Statements June 30, 2017 NOTE 2. Summary of Significant Accounting Policies (continued) Other manifestations of the ability to exercise oversight responsibility include, but are not limited to, the selection of governing authority, the designation of management, the ability to significantly influence operations and accountability for fiscal matters. The other criterion used to evaluate potential component units for inclusion or exclusion from the reporting entity is the existence of special financing relationships, regardless of whether the Authority is able to exercise oversight responsibilities. Based upon the application of these criteria, the Authority does not have any component units. Use of Estimates in Preparing Financial Statements The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Authority s estimates include the useful lives of depreciable assets and the current portion of accrued compensated absences. Basic Financial Statements - Government-wide Statements The Authority's basic financial statements include both information on a government-wide basis and information presented on a fund basis. Government-wide financial statements include two basic financial statements: a statement of net position and a statement of activities. These statements do not include the fiduciary activities as they do not represent resources available to fund the Authority's programs. The Authority has no fiduciary fund activity. Both the government-wide and fund financial statements (within the basic financial statements) categorize primary activities as either governmental funds or business-type. In the government-wide statement of net position, both the governmental and business-type activities columns are presented on a consolidated basis by column, and are reflected on a full accrual, economic resources basis, which incorporates long-term assets and receivables as well as long-term debt and obligations. The Authority does not have any business-type activities at year end June 30, The Authority's net position is reported in three parts: invested in capital assets; restricted net position and unrestricted net position. When applicable, the effect of interfund activity is removed from the statement of net position in order to avoid a grossing-up effect on assets and liabilities within the statements. The objective of the statement of activities is to report the relative financial burden of each of the reporting government's functions on its taxpayers. The format identifies the extent to which each function of the government draws from the general revenues of the government or is self-financing through fees or intergovernmental aid. The government-wide Statement of Activities reflects both the gross and net cost per functional category which is otherwise being supported by general government revenues. The Statement of Activities reduces gross expenses (including depreciation) by related program revenues, operating and capital grants. The program revenues must be directly associated with the function or a business-type activity. The Authority had no program revenues during the year ended June 30, The Authority includes only one function (general government). 27

66 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Notes to Financial Statements June 30, 2017 NOTE 2. Summary of Significant Accounting Policies (continued) The net cost (by function or business-type activities) is normally covered by general revenues (intergovernmental revenues or other revenue, etc.). Historically, the previous model did not summarize or present net cost by function or activity. The Authority does not currently employ indirect cost allocation systems. The Authority's policy for when an expense is incurred for purposes for which both restricted and unrestricted assets are available is to utilize the restricted assets first. This government-wide focus is more on the sustainability of the Authority as an entity and the change in aggregate financial position resulting from the activities of the current fiscal period. Basic Financial Statements - Fund Financial Statements The governmental funds in the fund financial statements are presented on a current financial resource and modified accrual basis of accounting. This is the manner in which these funds are normally budgeted. The presentation is deemed more appropriate to demonstrate legal and covenant compliance, to demonstrate the source and use of liquid resources and to demonstrate how the Authority's actual experience conforms to the budget or fiscal plan. Since the governmental fund statements are presented on a different measurement focus and basis of accounting than the government-wide statements governmental column, a reconciliation is presented on the page following each statement, which briefly explains the adjustment necessary to transform the fund based financial statements into the governmental column of government-wide presentation. The fund financial statements are similar to the financial statements presented in the previous accounting model. Emphasis here is on the major funds in either the governmental or business-type categories. Non-major funds (by category) or fund type are summarized into a single column. The General Fund is required to be a major program, and the Special Revenue Fund also is required to be a major fund. Therefore, there are no non-major funds. The Authority has no fiduciary funds, but if the Authority did, they would not be included in the government-wide financial statements. The financial transactions of the Authority are recorded in individual funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of selfbalancing accounts that comprise its assets, liabilities, fund balance, revenues, expenditures or expenses and other financing sources or uses. Government resources are allocated to, and accounted for, in individual funds based upon the purpose for which they are to be spent and the means by which spending activities are controlled. The reporting model under GASB 34 sets forth the minimum criteria (percentage of the assets, liabilities, revenues or expenditures of either fund category or the governmental and enterprise combines) for the determination of major funds. Due to the fund structure of the Authority, all funds are considered major funds and are included under as governmental funds. The Authority classifies all of its funds as major funds. The following fund types are used by the Authority: Governmental Funds - All governmental fund types are accounted for on a spending or financial flow measurement focus. Only current assets and current liabilities are generally included on their balance sheets. Their reported fund balance (net current assets) is considered a measure of available spendable resources. Governmental fund operating statements present increases (revenues and, other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of available spendable resources during a period. 28

67 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Notes to Financial Statements June 30, 2017 NOTE 2. Summary of Significant Accounting Policies (continued) Due to their spending measurement focus, expenditure recognition for governmental fund types is limited to exclude amounts represented by noncurrent liabilities. Since they do not affect net current assets, such long-term amounts are not recognized as government fund type expenditures of fund liabilities. The General Fund is the general operating fund of the Authority and is used to account for all financial resources, except those required to be accounted for in another fund. The General Fund (SHARE FUND # ) is non-reverting in accordance with NMSA , The Bond Proceeds Capital Projects Special Revenue Fund (SHARE FUND # ) is the program fund of the Authority. It is used to account for all funding received and for all expenditures made for the operation of the deficiencies correction program. This fund is a nonreverting fund in accordance with NMSA , Measurement Focus, Basis of Accounting and Financial Reporting Presentation Basis of accounting refers to the point at which revenues or expenditures are recognized in the accounts and reported in the financial statements. It relates to the timing of the measurements made, regardless of the measurement focus applied. The government-wide financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. Revenues, expenses, gains, losses, assets, deferred outflows of resources, liabilities, and deferred inflows of resources resulting from exchange and exchange-like transactions should be recognized when the exchange takes place. All governmental fund statements are presented on a current financial resource and modified accrual basis of accounting. Under this method, revenues and other governmental fund financial resource increments are recognized in the accounting period in which they become susceptible to accrual - that is, when they become both measurable and available to finance expenditures of the fiscal period ("available" meaning collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period, typically 60 days). Expenditures are recorded as liabilities when incurred. An exception to this general rule is that accumulated unpaid annual, compensatory and certain sick leave are not accrued as current liabilities but as non-current liabilities. However, in the government-wide financial statements, both current and long-term are accrued. Expenditures charged to federal programs are recorded utilizing the cost principles described by the various funding sources. In applying the "susceptible to accrual" concept to intergovernmental revenues pursuant to GASB 33, the provider should recognize liabilities and expenses and the recipient should recognize receivables and revenues when the applicable eligibility requirements, including time requirements, are met. Resources transmitted before the eligibility requirement are met, under most circumstances, should be reported as advances by the provider and deferred inflow by the recipient. Budgets and Budgetary Accounting These procedures are followed in establishing the budgetary data reflected in the financial statements: 1. No later than September 1, the Authority prepares a budget appropriation request by category to be presented to the next Legislature. 2. The appropriation request is submitted to the New Mexico Department of Finance and Administration's Budget Division (DFA) and to the Legislative Finance Committee (LFC). 29

68 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Notes to Financial Statements June 30, 2017 NOTE 2. Summary of Significant Accounting Policies (continued) 3. DFA makes recommendations and adjustments to the appropriation request, which then becomes the Governor's proposal to the Legislature. 4. The LFC holds hearings on the appropriation request, also submitting recommendations and adjustments before presentation to the Legislature. 5. Both the DFA's and LFC's recommended appropriation proposals are presented to the Legislature for approval of the final budget plan. 6. Budget hearings are scheduled before the New Mexico House Appropriations and Senate Finance Committees. The final outcome of these hearings is incorporated into the General Appropriations Act. 7. The Act is signed into law by the Governor of the State of New Mexico within the legally prescribed time limit. 8. The Authority submits, no later than May 1, to DFA an annual operating budget by category and line item based upon the appropriations made by the Legislature. The DFA Budget Division reviews and approves the operating budget which becomes effective on July All subsequent budget adjustments must be approved by the Authority and the Director of the DFA Budget Division. The budget for the current year was properly amended. 10. Legal budget control for expenditures and encumbrances is at the appropriation unit level. 11. Formal budgetary integration is employed as a management control device during the fiscal year for the General Fund and the Special Revenue Fund. 12. The budget is adopted on a modified accrual basis of accounting that is consistent with accounting principle generally accepted in the United States of America. This change was implemented with the Laws of 2004, Chapter 114, Section 3 Paragraph N and Paragraph 0. It is effective for fiscal years beginning July 1, However, there is a statutory exception per General Appropriation Act, Laws of 2006, Chapter 109, Section 3, Subsections N and 0. The budget is adopted on the modified accrual basis of accounting except for accounts payable accrued at the end of the fiscal year that do not get paid by the statutory deadline per Section NMSA Those accounts payable must be paid out of the next year's budget. A reconciliation has been provided that reconciles differences between the budgetary basis and the modified accrual basis. 13. Each year the Legislature approves multiple appropriations, which the State considers as continuing appropriations. The Legislature authorizes these appropriations for two to five years; however, it does not identify the authorized amount by fiscal year. Consequently, the appropriation is budgeted in its entirety the first year the Legislature authorizes it. The unexpended portion of the budget is carried forward as the next year's beginning budget balance until either the project period has expired or the appropriation has been fully expended. The budget presentations in these financial statements are consistent with the budgeting methodology. The Authority's General Fund and Special Revenue Fund are not reverting funds. 30

69 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Notes to Financial Statements June 30, 2017 NOTE 2. Summary of Significant Accounting Policies (continued) Capital Assets Property, plant and equipment including software, purchased or acquired, are carried at historical cost or estimated historical cost. Contributed assets are recorded at the fair market values as of the date received. Additions, improvements and other capital outlays that significantly extend the useful life of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred. The State's capitalization policy, i.e., the dollar value above which asset acquisitions including software are added to the capital accounts, is $5,000 which is a change in policy effective July 1, However, all capital outlay purchases may not necessarily be capitalized. Old inventory items that do not meet the new capitalization threshold will remain on the inventory list and continue to be depreciated. The Authority does not capitalize any interest in regards to its capital assets. Depreciation on all assets is provided on the straight-line basis over the estimated useful lives with no salvage value. The Authority utilizes Internal Revenue Service guidelines to estimate the useful lives on fixed assets as follows: Equipment Computer Equipment Portable Classrooms Vehicles 8 years 4 to 8 years 20 years 5 years Encumbrance Accounting Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of funds are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary control in the General Fund and the Special Revenue Funds. Encumbrances not recorded as vouchers payable at year end lapse. Accrued Compensated Absences Vacation and sick leave earned and not taken is cumulative; however, upon termination of employment, sick pay for such leave hours accumulated up to 600 hours is forfeited and vacation pay is limited to payment for 240 hours. Vacation leave up to the maximum of 240 hours is payable upon separation from service at the employee's current hourly rate. Sick leave is payable semiannually to qualified employees for hours accumulated above 600 hours at a rate equal to 50 percent of their hourly rate, not to exceed 120 hours each semi-annual period. Upon retirement, payment for sick leave is limited to 400 hours accumulated in excess of 600 hours at the 50 percent hourly rate. The compensated absences payable is included in the government-wide financial statements. Authority general fund resources have been used to liquidate accrued compensated absences. Pensions The Authority, as part of the primary government of the State of New Mexico, is a contributing employer to a cost-sharing multiple employer defined benefit pension plan administered by the Public Employees Retirement Association (PERA). Disclosure requirements for governmental funds apply to the primary government as a whole, and as such this information will be presented in the Component Appropriation Funds Annual Financial Report General Fund and the Comprehensive Annual Financial Report (CAFR) of the State of New Mexico. 31

70 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Notes to Financial Statements June 30, 2017 NOTE 2. Summary of Significant Accounting Policies (continued) Information concerning the net pension liability, pension expense, and pension-related deferred inflow and outflow of resources of the primary government will be contained in the General Fund and the CAFR and will be available, when issued, from the Office of the State Controller, Room 166, Bataan Memorial Building 407 Galisteo Street, Santa Fe, New Mexico, For purposes of measuring the net pension liability, deferred outflow of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the New Mexico Public Employees Retirement Association (PERA) and additions to /deductions from PERA s fiduciary net positon, have been determined on the same basis as they are reported by PERA, on the economic resources measurement focus and accrual basis of accounting. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Net Position/Fund Equity In the government-wide financial statements, net position consists of three components: net investment in capital assets; restricted; and unrestricted. The Authority has no debt related to capital assets; therefore, net position invested in capital assets equal the capital assets, net of accumulated depreciation. Net position is reported as restricted when constraints placed on net position use are externally imposed by creditors such as through debt covenants, grantors, contributors, or laws or regulations of other governments or imposed by law through constitutional provisions or enabling legislation. Enabling legislation includes a legal enforceable requirement that resources be only for the specific purposes stipulated in the legislation. Legal enforceability means the government can be impelled by an external party - such as citizens, public interest groups or the judiciary - to use resources for the purposes specified by the legislation. These resources remaining in net position were received or earned with the explicit understanding between the Authority and the resource provider (grantor, contributor, other government or enabling legislation) that the funds would be used for a specific purpose. Unrestricted net position consists of net position that does not meet the definition of restricted or net investment in capital assets. In the governmental fund financial statements, fund balances are classified as non-spendable, restricted, committed, assigned or unassigned. Restricted represents those portions of fund balance where constraints placed on the resources are either externally imposed or imposed by law through constitutional provisions or enabling legislation. Committed fund balance represents amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the Legislative and Executive branches of the State. Assigned fund balance is constrained by the Legislature's and Executive Branch's intent to be used for specific purposes or, in some cases, by legislation. When an expenditure/expense is incurred for purposes for which both restricted and unrestricted resources are available, it is the State's policy to use restricted resources first. When expenditures/expenses are incurred for purposes for which unrestricted (committed, assigned and unassigned) resources are available, and amounts in any of these unrestricted classifications could be used, it is the State's policy to spend committed resources first. 32

71 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Notes to Financial Statements June 30, 2017 NOTE 2. Summary of Significant Accounting Policies (continued) Deferred Outflows/lnflows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, represents a consumption of net position that applies to future periods and so will not be recognized as an outflow of resources (expense/expenditure) until then. The Authority did not have any items that qualified for reporting in this category as of June 30, In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, represents an acquisition of net position that applies to a future period and so will not be recognized as an inflow of resources (revenue) until that time. The Authority did not have any items that were required to be reported in this category as of June 30, Interfund Balances and Transactions Interfund transactions are reported as transfers. Nonrecurring or nonroutine permanent transfers of equity are reported as residual equity transfers. All other interfund transfers are reported as operating transfers. Revenues, Expenditures, and Expenses Substantially all governmental fund revenues are accrued. No allowance for doubtful accounts for the Due from Other State Agencies was necessary because this amount was due from bond proceeds held by another state agency and it is considered fully collectible by management. Expenditures are recognized when the related fund liability is incurred. NOTE 3. State General Fund Investment Pool The Authority does not have a separate bank account. For cash management and investment purposes, funds of various state agencies are deposited in the State General Fund Investment Pool (the Pool), which is managed by the Office of the New Mexico State Treasurer. Claims on the Pool are reported as assets by the various agencies investing in the Pool. In June 2012, an independent diagnostic report revealed that Pool balances had not been reconciled at a "business unit by fund" level since the inception of the Statewide Human Resources, Accounting, and Management Reporting System (SHARE) system in July This report, entitled "Current State Diagnostic of Cash Control," also described a difference between Pool bank balances and the corresponding general ledger balances and indicated that the effect of reconciling items were unknown. The report, dated June 20, 2012, is available on the website of the New Mexico Department of Finance & Administration at: Control. aspx. By state statute, the New Mexico Department of Finance and Administration (DFA) is responsible for the performance of monthly reconciliations with the balances and accounts kept by the State Treasurer. Therefore, under the direction of the State Controller / Financial Control Division Director, the Financial Control Division (FCD) of the New Mexico Department of Finance & Administration undertook action to address the situation. DFA/FCD initiated the Cash Management Remediation Project (Remediation Project) in partnership with the Office of the New Mexico State Treasurer, the New Mexico Public Schools Facilities Authority, and a contracted third party with expertise in the Enterprise System Software used by the State. 33

72 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Notes to Financial Statements June 30, 2017 NOTE 3. State General Fund Investment Pool (continued) The Remediation Project objective was to design and implement changes necessary to ensure ongoing completion of timely, accurate and comprehensive reconciliation of the Pool. DFA is in the process of implementing all the recommendations resulting for the Remediation Project and has made changes to the State's SHARE system configuration, cash accounting policies and procedures, business practices, and banking structure. This has enabled DFA to complete timely and accurate reconciliation of bank to book balances at the State and Business Unit level on a post-implementation basis, however it did not resolve historical reconciling items. Additional changes recommended by the Project continue to be cascaded through DFA and state agencies to support the Business Unit by Fund accounting requirements. A plan to address historical reconciling items is being assessed and a separate initiative will need to be undertaken to resolve the historical reconciling items. Management considers it unlikely that this separate initiative will be successful in allocating all historical reconciling items to the State entities invested in the Pool. As a result, any remaining differences post specific allocation to Pool participants will be reported in the State General Fund. In FY 2012, management of DFA recorded a loss contingency of $101.7 million in the State General Fund based on its estimate of the effect of issues related to the reconciliation of the Pool, that estimate is still current. Because no specific loss amount is determinable, consistent with generally accepted accounting principles, the amount accrued is the minimum amount that management considers to be probable. Ultimately, the loss could exceed the amount accrued, perhaps by a substantial amount. The Authority has established daily and monthly procedures that mitigate the risk of misstatement of the Authority s balances within the Pool. In addition, as required by Section (J) NMSA 1978, DFA/FCD is to complete, on a monthly basis, reconciliation with the balances and accounts kept by the state treasurer and adopt and promulgate rules regarding reconciliation for state agencies. State law (Section NMSA 1978) requires the Authority s cash be managed by the New Mexico State Treasurer's Office. Accordingly, the investments of the Authority s consist of an interest in the State General Fund Investment Pool managed by the New Mexico State Treasurer's Office. Detail of pledged collateral specific to this agency is unavailable because the bank comingles pledged collateral for all state funds it holds. However, the State Treasurer's Office Collateral Bureau monitors pledged collateral for all state funds held by state agencies in such authorized" bank accounts. The Authority does not have a separate bank account. The following is a summary of the Authority s investment account of the State General Fund Investment Pool held by the New Mexico State Treasurer as reported by the New Mexico Department of Finance and Administration (DFA): Fund Type of Account SHARE Fund No. Reconciled Balance General Fund Investment $ 2,546,493 Bond Proceeds Capital Projects Fund Investment ,802,101 Total share of State General Fund Investment Pool $ 14,348,594 34

73 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Notes to Financial Statements June 30, 2017 NOTE 4. Due from/due to Other State Agencies Authority's cash balances would be misstated due to the State General Fund Investment Pool not being reconciled as previously mentioned. Fund Proceeds Capital Projects Due From State of New Mexico 34100/10920 $ 160,227 The Special Revenue Fund was owed $160,227 by the State of New Mexico. $160,227 is due to the Authority for construction costs incurred in this fund not yet received by June 30, NOTE 5. Due from/due to Local Governments The Special Revenue Fund was owed $313,615 by and was liable for $2,453,984 to various School Districts within the State of New Mexico. $313,615 is due to the Authority for construction costs incurred in this fund not yet received by June 30, $2,453,984 is owed to the various school districts for construction cost incurred and not yet paid to the school districts. NOTE 6. Advances Receivable At June 30, 2017, the Authority had $8,118,566 in advances receivable. Advances receivable are approved by resolution through the Public School Capital Outlay Council to award districts a local match advance. Once the Authority awards an advance, the district has four years to repay the advance. NOTE 7. Capital Assets The capital assets activity for the year ended June 30, 2017 is as follows: June 30, 2016 Additions Deletions June 30, 2017 Capital assets being depreciated: Equipment $ 51,595 $ - $ - $ 51,595 Computer equipment 134, ,528 Portable Classrooms 8,481, ,481,100 Vehicles 247, ,065 Total capital assets being depreciated 8,914, ,914,288 Less accumulated depreciation: Equipment 31,544 12,188-43,732 Computer equipment 122, ,851 Portable Classrooms 4,773, ,055-5,197,426 Vehicles 247, ,065 Total accumulated depreciation 5,174, ,214-5,612,074 Capital assets, net of accumulated depreciation $ 3,739,428 $ (437,214) $ - $ 3,302,214 Depreciation expense for the year ended June 30, 2017 was $437,214. All depreciation expense was allocated to the Authority s general governmental function. 35

74 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Notes to Financial Statements June 30, 2017 NOTE 8. Laws 2014 HB55 Section 45 Special Appropriations Appropriations below are from the unexpended proceeds of inter-agency transfers of taxable supplemental severance tax bonds that are not needed for the projects for which the bonds were issued. Therefore, for the identified special appropriations there is not a budget to actual financial statement. These appropriations require an amended certification and resolution to start the project and create a budget. The following is a summary of special appropriations still outstanding at June 30, 2017: Applicable Fiscal Year Period Description New Mexico School for the Blind and Visually Impaired Projects - Appropriations from the Public School Capital Outlay Fund. Appropriations are from the unexpended proceeds of taxable supplemental severance tax bonds that are no longer needed for the projects for which the bonds were issued. Projects are: Original Balance Amount Spent Amount Returned to State of New Mexico General Fund Unexpended Balance at 6/30/17 P Ditzler Auditorium and recreation center and the library building, including demolition of the Bert Reeves Learning Center (plan, design, construct, renovate, equip and furnish). $ 4,116,993 $ 1,515,680 $ - $ 2,601,313 P Quimby gmnasium and natatorium ( plan, design, construct, renovate, equip and furnish). 1,844,015 33,432-1,810,583 P Sacramento Dormitory (plan, design, construct, renovate, equip and furnish residential cottages, including demolition) 2,294, ,294,411 Subtotal $ 8,255,419 $ 1,549,112 $ - $ 6,706,307 36

75 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Notes to Financial Statements June 30, 2017 NOTE 8. Laws 2014 HB55 Section HB55 Section 47 Special Appropriations (continued) Applicable Fiscal Year Period Description New Mexico School for the Deaf Project - Appropriations from the Public School Capital Outlay Fund. Appropriations are from the unexpended proceeds of taxable supplemental severance tax bonds that are no longer needed for the projects for which the bonds were issued. Projects are: Original Balance Amount Spent Amount Returned to State of New Mexico General Fund Unexpended Balance at 6/30/17 P Cartwright Hall (plan, design, construct, renovate, equip and furnish). $ 7,038,365 $ 304,296 $ - $ 6,734,069 Subtotal $ 7,038,365 $ 304,296 $ - $ 6,734, Public Education Department Projects - Appropriations from the Public School Capital Outlay Fund. Appropriations are from the unexpended proceeds of taxable supplemental severance tax bonds that are no longer needed for the projects for which the bonds were issued. Projects are: Pre-K (renovate and construct). $ 2,500,000 $ 2,500,000 $ - $ - School buses (purchase statewide). 7,395,000 7,395, Educational technology infrastructure at public schools (minimum network speed of less than five kilobytes per second per student to ensure these schools are able to administer computerbased assessments by the school year. 5,000,000 5,000, Subtotal $ 14,895,000 $ 14,895,000 $ - $ - 37

76 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Notes to Financial Statements June 30, 2017 NOTE 8. Laws 2013 SB60 Section SB60 Section SB60 Section 54 Special Appropriations (continued) Applicable Fiscal Year Period Description New Mexico School for the Deaf Project - Appropriations from the Public School Capital Outlay Fund, contingent upon approval of the public school capital outlay council Original Balance Amount Spent Amount Returned to State of New Mexico General Fund Unexpended Balance at 6/30/17 P NMSD - Site Improvements $ 7,000,000 $ 4,982,784 $ - $ 2,017,216 C NMSD - Dillion Hall 1,000,000 1,000, Subtotal $ 8,000,000 $ 5,982,784 $ - $ 2,017, Public Education Department - Appropriations from the Public School Capital Outlay Fund, contingent upon approval of the public school capital outlay council Pre-K (renovate and construct) $ 2,500,000 $ 1,507,102 $ 992,898 $ - School Busses (purchase statewide) 13,000,000 12,999, Subtotal $ 15,500,000 $ 14,506,454 $ 993,546 $ New Mexico School for the Blind and Visually Impaired - Appropriations from the Public School Capital Outlay Fund, contingent upon approval of the public school capital outlay council P NMSBVI - Jack Hall and the Health Services Buildings (relocate the library) $ 838,000 $ 569,259 $ - $ 268,741 P NMSBVI - Jack Hall and the Health Services Buildings (relocate the library) 335, , P NMSBVI - Site Improvements to the campus 1,486, , ,693 P NMSBVI - Site Improvements to the campus 1,486,180 1,486, P NMSBVI - Watkins Eduction Center (renovate and equip and to demolish San Andres Building) 5,500,000 4,254,672-1,245,328 Subtotal $ 9,645,368 $ 7,145,606 $ - $ 2,499,762 38

77 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Notes to Financial Statements June 30, 2017 NOTE 8. Laws 2015 SB1 Section HB219 Section 40 Special Appropriations (continued) Applicable Fiscal Year Period Description Public Education Department - Appropriations from the Public School Capital Outlay Fund, contingent upon approval of the public school capital outlay council Original Balance Amount Spent Amount Returned to State of New Mexico General Fund Unexpended Balance at 6/30/17 Pre-K (renovate and construct) $ 1,000,000 $ 1,000,000 $ - $ - School Busses (purchase statewide) 4,000,000 4,000, Subtotal $ 5,000,000 $ 5,000,000 $ - $ Public Education Department - Appropriations from the Public School Capital Outlay Fund, contingent upon approval of the public school capital outlay council Pre-K (renovate and construct) $ 5,000,000 $ - $ - $ 5,000,000 School Busses (purchase statewide) 7,000,000 7,000, Subtotal $ 12,000,000 $ 7,000,000 $ - $ 5,000,000 39

78 NOTE 8. Laws 2016 SB4 Section 2 Paragraph N Special Appropriations (continued) Applicable Fiscal Year Period STATE OF NEW MEXICO New Mexico Public School Facilities Authority Notes to Financial Statements June 30, 2017 Description Instructional Material or Transportation Distribution Fund - Appropriations from the Public School Capital Outlay Fund, declaring an emergency. Original Balance Amount Spent Amount Returned to State of New Mexico General Fund Unexpended Balance at 6/30/ Instructional Material Fund or Transportation Distribution Fund $ 25,000,000 $ - $ - $ 25,000, Instructional Material Fund or Transportation Distribution Fund 25,000, ,000, Instructional Material Fund or Transportation Distribution Fund 25,000, ,000, Instructional Material Fund or Transportation Distribution Fund 25,000, ,000, Instructional Material Fund or Transportation Distribution Fund 25,000, ,000, SB4 Section SB8 Section Instructional Material or Transportation Distribution Fund - Appropriations from the Public School Capital Outlay Fund, declaring an emergency Instructional Material Fund or Transportation Distribution Fund 12,500,000 12,500, Subtotal $ 137,500,000 $ 12,500,000 $ - $ 125,000, General Fund Restore Allotments- Appropriations from the Public School Capital Outlay Fund from the unexpended proceeds of supplemental severance tax bonds that are no longer needed for the projects for which bonds were issued General Fund Restore Allotments - Project Reversions $ 12,368,629 $ 12,368,629 $ - $ - Subtotal $ 12,368,629 $ 12,368,629 $ - $ - TOTALS $ 230,202,781 $ 81,251,881 $ 993,546 $ 147,957,354 40

79 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Notes to Financial Statements June 30, 2017 NOTE 9. Changes in Long-term Liabilities A summary of changes in long-term liabilities for the year ended June 30, 2017 is as follows: June 30, 2016 Additions Deletions June 30, 2017 Due within one Year Compensated absences $ 186,720 $ 227,665 $ 237,927 $ 176,458 $ 176,458 Compensated absences payable The liability at June 30, 2017 has been recorded in the basic financial statements and represents the Authority s commitment to fund accrued vacation, sick leave and personal time off costs from future operations. The compensated absence liability of the governmental fund is expected to be liquidated by the General Fund. NOTE 10. Pension Plan Public Employees Retirement Association General Information about the Pension Plan Compliant with the requirements of Government Accounting Standards Board Statement No. 68 Accounting and Financial Reporting for Pensions, the State of New Mexico has implemented the standard for fiscal year ending June 30, The Department, as part of the primary government of the State of New Mexico, is a contributing employer to a cost-sharing multiple employer defined benefit pension plan administered by the Public Employees Retirement Association (PERA). Disclosure requirements including schedules of required supplementary information and related notes for governmental funds apply to the primary government as a whole, and as such this information will be presented in the Component Appropriation Funds Annual Financial Report General Fund and the Comprehensive Annual Financial Report (CAFR) of the State of New Mexico. The net pension liability is a long-term liability that is not directly related to or expected to be paid from the Department s enterprise funds and therefore not reported in the Department s Statement of Net Position. Information concerning the net pension liability, pension expense, and pension-related deferred inflow and outflow of resources of the primary government will be contained in the General Fund and the CAFR and will be available, when issued, from the Office of the State Controller, Room 166, Bataan Memorial Building 407 Galisteo Street, Santa Fe, New Mexico, NOTE 11. Post-Employment Benefits State Retiree Health Care Plan Plan Description. The Authority contributes to the New Mexico Retiree Health Care Fund, a costsharing multiple-employer defined benefit postemployment healthcare plan administered by the New Mexico Retiree Health Care Authority (RHCA). The RHCA provides health care insurance and prescription drug benefits to retired employees of participating New Mexico government agencies, their spouses, dependents, and surviving spouses and dependents. The RHCA Board was established by the Retiree Health Care Act (Chapter 10, Article 7C, NMSA 1978). The Board is responsible for establishing and amending benefit provisions of the healthcare plan and is also authorized to designate optional and/or voluntary benefits like dental, vision, supplemental life insurance, and long-term care policies. Eligible retirees are: 1) retirees who make contributions to the fund for at least five years prior to retirement and whose eligible employer during that period of time made contributions as a participant in the RHCA plan on the person's behalf unless that person retires before the employer's RHCA effective date, in which event the time period required for employee and employer contributions shall become the period of time between the employer's effective date and the date of retirement; 2) retirees defined by the Act who retired prior to July 1, 1990; 3) former legislators who served at least two years; and 4) former governing authority members who served at least four years. 41

80 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Notes to Financial Statements June 30, 2017 NOTE 11. Post-Employment Benefits State Retiree Health Care Plan (continued) The RHCA issues a publicly available stand-alone financial report that includes financial statements and required supplementary information for the postemployment healthcare plan. That report and further information can be obtained by writing to the Retiree Health Care Authority at 4308 Carlisle NE, Suite 104, Albuquerque, NM Funding Policy. The Retiree Health Care Act (Section 10-7C-13 NMSA 1978) authorizes the RHCA Board to establish the monthly premium contributions that retirees are required to pay for healthcare benefits. Each participating retiree pays a monthly premium according to a service based subsidy rate schedule for the medical plus basic life plan plus an additional participation fee of five dollars if the eligible participant retired prior to the employer's RHCA effective date or is a former legislator or former governing authority member. Former legislators and governing authority members are required to pay 100% of the insurance premium to cover their claims and the administrative expenses of the plan. The monthly premium rate schedule can be obtained from the RHCA or viewed on their website at The employer, employee and retiree contributions are required to be remitted to the RHCA on a monthly basis. The statutory requirements for the employer and employee contributions can be changed by the New Mexico State Legislature. Employers that choose to become participating employers after January 1, 1998, are required to make contributions to the RHCA fund in the amount determined to be appropriate by the board. The Retiree Health Care Act (Section 10-7C-15 NMSA 1978) is the statutory authority that establishes the required contributions of participating employers and their employees. For employees that were members of an enhanced retirement plan (state police and adult correctional officer member coverage plan 1; municipal police member coverage plans 3, 4 or 5; municipal fire member coverage plan 3, 4 or 5; municipal detention officer member coverage plan 1; and members pursuant to the Judicial Retirement Act) during the fiscal year ended June 30, 2014, the statute required each participating employer to contribute 2.5% of each participating employee's annual salary; and each participating employee was required to contribute 1.25% of their salary. For employees that were not members of an enhanced retirement plan during the fiscal year ended June 30, 2014, the statute required each participating employer to contribute 2.0% of each participating employee's annual salary; each participating employee was required to contribute 1.0% of their salary. In addition, pursuant to Section 10-7C-15(G) NMSA 1978, at the first session of the Legislature following July 1, 2013, the legislature shall review and adjust the distributions pursuant to Section NMSA 1978 and the employer and employee contributions to the authority in order to ensure the actuarial soundness of the benefits provided under the Retiree Health Care Act. The Authority's contributions to the RHCA for the years ended June 30, 2017, 2016 and 2015 were $62,627, $60,735, and $57,391 respectively, which equal the required contributions for each year. NOTE 12. Commitments and Contingencies Operating Leases The Authority leased its office space in Santa Fe and in Albuquerque under operating leases. The Santa Fe lease was renewed in May 2011 for an indefinite amount of time and since it is in a State owned building, there are no lease payments. The Authority is responsible for the building s maintenance and utility costs. The Albuquerque lease was entered as of July 1, 2008 for an initial term of five years. In July 2013, the Authority renewed for a second five-year term. Total rental expenditures for the year ended June 30, 2017 for operating leases were $196,

81 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Notes to Financial Statements June 30, 2017 NOTE 12. Commitments and Contingencies (continued) The following is a schedule by years of future minimum lease rental payments required under operating leases that have initial or remaining non-cancellable lease terms in excess of one year as of June 30, Year Ending June 30, Amount Risk Management 2018 $ 196,350 The Authority obtains coverage through the Risk Management Division of the State of New Mexico General Services Department. This coverage includes liability and civil rights, property, vehicle, employer bond, workers' compensation, group insurance and state unemployment. The coverages are designed to satisfy the requirements of the State Tort Claims Act. All employees of the Authority are covered by blanket fidelity bond up to $5,000,000 with a $1,000 deductible per occurrence by the State of New Mexico for the period July 1, 2016 through June 30, There have been no settlements in excess of insurance coverage as of June 30, NOTE 13. Interfund Transfers Operating transfers are for the allocation of administrative and payroll costs and consist of the following: Tranfers In Transfers out Amount General Fund (94300) Bond Proceeds Capital Projects Fund (94700) $ 6,039,700 NOTE 14. Transfers from Other State of New Mexico Agencies Authority Fund Bond Proceeds Capital Projects Fund (94700) Agency Department of Finance & Administration Agency Number Fund Number Purpose Amount Severance Tax Bond $ 174,001,595 NOTE 15. Prior Period Restatement At June 30, 2017, a prior period restatement was recorded for the Bond Proceeds Capital Projects Special Revenue Fund related to advances made to school districts for construction projects not properly recorded by the Authority in the prior year. The Authority noted an error in a school district receivable in the amount of $1,507,272. In addition, a prior period restatement was recorded for the Bond Proceeds Capital Projects Special Revenue Fund related to the Authority s project closeout process. During the fiscal year, the Authority performed a detail audit over capital projects completed but not yet closed out in the Authority s project listing. As a result of this process, the Authority recorded a prior period restatement of $301,130 for expenses not recognized for two school districts in prior years. In total, beginning Bond Proceeds Capital Projects Special Revenue fund balance and Governmental Activities net position was restated by ($1,808,402). 43

82 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Notes to Financial Statements June 30, 2017 NOTE 16. Other Required Individual Fund Disclosures The Authority did not have deficit fund balance at year end June 30, The Authority had the following fund with function item expenditures in excess of the budgeted appropriations for the year ended June 30, Major Fund General Fund (94300) $ 20,020 The Authority did not have any funds in which designated cash appropriations were in excess of available budget. NOTE 17. Subsequent Pronouncements In June 2015, GASB Statement No. 75 Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, was issued. Effective Date: The provisions of this Statement are effective for fiscal years beginning after June 15, The standard will be implemented during the fiscal year ended June 30, The Housing Authority does not expect this pronouncement to have a material effect on the financial statements as they do not participate in such a plan. In March 2016, GASB Statement No. 81 Irrevocable Split-Interest Agreements was issued. Effective Date: The requirements of this Statement are effective for reporting periods beginning after December 15, Earlier application is encouraged. The Housing Authority is still evaluating how this pronouncement will affect the financial statements. In November 2016, GASB Statement No. 83, Certain Asset Retirement Obligations was issued. Effective Date: The requirements of this Statement are effective for reporting periods beginning after June 15, Earlier application is encouraged. The Authority is still evaluating how this pronouncement will affect the financial statements. In January 2017, GASB Statement No. 84 Fiduciary Activities was issued. Effective Date: The requirements of this Statement are effective for reporting periods beginning after December 15, Earlier application is encouraged. The Authority is still evaluating how this pronouncement will affect the financial statements. In March 2017, GASB Statement No. 85 Omnibus 2017 was issued. Effective Date: The requirements of this Statement are effective for reporting periods beginning after June 15, Earlier application is encouraged. This Statement addresses a variety of topics including issues related to blending component units, goodwill, fair value measurement and application, and postemployment benefits (pensions and other postemployment benefits [OPEB]). The Authority is still evaluating how this pronouncement will affect the financial statements. In May 2017, GASB Statement No. 86 Certain Debt Extinguishment Issues was issued. Effective Date: The requirements of this Statement are effective for reporting periods beginning after June 15, Earlier application is encouraged. The Authority is still evaluating how this pronouncement will affect the financial statements. In June 2017, GASB Statement No. 87 Leases was issued. Effective Date: The requirements of this Statement are effective for reporting periods beginning after December 15, Earlier application is encouraged. The Authority is still evaluating how this pronouncement will affect the financial statements. 44

83 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Notes to Financial Statements June 30, 2017 NOTE 18. Subsequent Events The date to which events occurring after June 30, 2017, the date of the most recent statement of net position, have been evaluated for possible adjustment to the financial statements or disclosures is October 12, 2017, which is the date on which the financial statements were available to be issued. No events were noted for disclosure. NOTE 19. Future Projects The PSCOC certifies to the Board of Finance the need to issue bonds for projects and other uses provided for under the Public School Capital Outlay Act. Bond proceeds therefore support funding needs of project commitments identified on a priority basis by the PSCOC and made on behalf of the State of New Mexico for public school capital improvements statewide. Reallocation of revenue in the fund by the Legislature that is not supplanted by other replacement sources within a short period of time will delay commencement or completion of public school facility improvements the State has committed to participate in. Engineering, architecture and construction contracts relating to construction or major repairs of educational facilities aggregated approximately $438,554,259 as of June 30, The remaining commitment on these contracts was approximately $83,449,877. These contracts will be paid in future periods as work is performed. Payment will be made with proceeds from inter-agency transfers of severance tax bonds and contributions from respective school districts. At June 30, 2017, the Authority had approximately $228,620,672 of certified and issued Severance Tax Bonds that remain unspent. 45

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85 SUPPORTING SCHEDULES 47

86 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Schedule of Joint Powers Agreements For the Year Ended June 30, 2017 Schedule I Page 1 of 7 District Responsibility Responsible Party Beginning (DFA Approval) Ending Amount Applicable Amount Contributed Audit Alamogordo PSFA Director 10/14/10 Indefinitely NA NA School District Albuquerque PSFA Director 11/08/10 Indefinitely NA NA School District Animas PSFA Director 10/04/10 Indefinitely NA NA School District Aztec PSFA Director 11/08/10 Indefinitely NA NA School District Belen PSFA Director 10/04/10 Indefinitely NA NA School District Bernalillo PSFA Director 10/04/10 Indefinitely NA NA School District Bloomfield PSFA Director 10/26/10 Indefinitely NA NA School District Capitan PSFA Director 10/14/10 Indefinitely NA NA School District Carlsbad PSFA Director 10/26/10 Indefinitely NA NA School District Carrizozo PSFA Director 09/14/10 Indefinitely NA NA School District Central PSFA Director 02/02/11 Indefinitely NA NA School District Chama PSFA Director 11/01/10 Indefinitely NA NA School District Cloudcroft PSFA Director 10/04/10 Indefinitely NA NA School District Clovis PSFA Director 11/08/10 Indefinitely NA NA School District Cobre PSFA Director 11/08/10 Indefinitely NA NA School District Corona PSFA Director 10/14/10 Indefinitely NA NA School District Cuba PSFA Director 09/14/10 Indefinitely NA NA School District See independent auditors' report. 48

87 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Schedule of Joint Powers Agreements For the Year Ended June 30, 2017 Schedule I Page 2 of 7 District Responsibility Responsible Party Beginning (DFA Approval) Ending Amount Applicable Amount Contributed Audit Deming PSFA Director 10/04/10 Indefinitely NA NA School District Des Moines PSFA Director 07/18/11 Indefinitely NA NA School District Dexter PSFA Director 10/04/10 Indefinitely NA NA School District Dora PSFA Director 02/02/11 Indefinitely NA NA School District Elida PSFA Director 10/01/10 Indefinitely NA NA School District Espanola PSFA Director 02/02/11 Indefinitely NA NA School District Estancia PSFA Director 10/14/10 Indefinitely NA NA School District Eunice PSFA Director 04/13/11 Indefinitely NA NA School District Farmington PSFA Director 09/14/10 Indefinitely NA NA School District Floyd PSFA Director 02/02/11 Indefinitely NA NA School District Fort Sumner PSFA Director 10/04/10 Indefinitely NA NA School District Gadsden PSFA Director 10/04/10 Indefinitely NA NA School District Gallup PSFA Director 10/04/10 Indefinitely NA NA School District Grady PSFA Director 11/08/10 Indefinitely NA NA School District Grants PSFA Director 09/29/10 Indefinitely NA NA School District Hagerman PSFA Director 10/01/10 Indefinitely NA NA School District Hatch PSFA Director 02/02/11 Indefinitely NA NA School District See independent auditors' report. 49

88 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Schedule of Joint Powers Agreements For the Year Ended June 30, 2017 Schedule I Page 3 of 7 District Responsibility Responsible Party Beginning (DFA Approval) Ending Amount Applicable Amount Contributed Audit Hobbs PSFA Director 02/15/11 Indefinitely NA NA School District Hondo PSFA Director 11/08/10 Indefinitely NA NA School District House PSFA Director 09/14/10 Indefinitely NA NA School District Jal PSFA Director 10/04/10 Indefinitely NA NA School District Jemez Mountain PSFA Director 11/08/10 Indefinitely NA NA School District Jemez Valley PSFA Director 10/14/10 Indefinitely NA NA School District Lake Arthur PSFA Director 02/02/11 Indefinitely NA NA School District Las Cruces PSFA Director 10/14/10 Indefinitely NA NA School District Las Vegas City PSFA Director 11/08/10 Indefinitely NA NA School District Logan PSFA Director 10/14/10 Indefinitely NA NA School District Lordsburg PSFA Director 10/14/10 Indefinitely NA NA School District Los Alamos PSFA Director 10/14/10 Indefinitely NA NA School District Los Lunas PSFA Director 11/08/10 Indefinitely NA NA School District Loving PSFA Director 10/14/10 Indefinitely NA NA School District Lovington PSFA Director 11/08/10 Indefinitely NA NA School District Magdalena PSFA Director 11/08/10 Indefinitely NA NA School District Maxwell PSFA Director 09/14/10 Indefinitely NA NA School District See independent auditors' report. 50

89 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Schedule of Joint Powers Agreements For the Year Ended June 30, 2017 Schedule I Page 4 of 7 District Responsibility Responsible Party Beginning (DFA Approval) Ending Amount Applicable Amount Contributed Audit Melrose PSFA Director 10/14/10 Indefinitely NA NA School District Mesa Vista PSFA Director 03/16/12 Indefinitely NA NA School District Mora PSFA Director 02/02/11 Indefinitely NA NA School District Moriarty PSFA Director 09/14/10 Indefinitely NA NA School District Mosquero PSFA Director 09/08/10 Indefinitely NA NA School District Mountainair PSFA Director 10/14/10 Indefinitely NA NA School District Pecos PSFA Director 10/14/10 Indefinitely NA NA School District Penasco PSFA Director 09/14/10 Indefinitely NA NA School District Pojoaque PSFA Director 03/12/13 Indefinitely NA NA School District Portales PSFA Director 10/04/10 Indefinitely NA NA School District Questa PSFA Director 03/12/13 Indefinitely NA NA School District Raton PSFA Director 10/26/10 Indefinitely NA NA School District Reserve PSFA Director 02/02/11 Indefinitely NA NA School District Rio Rancho PSFA Director 11/08/10 Indefinitely NA NA School District Roswell PSFA Director 10/04/10 Indefinitely NA NA School District Roy PSFA Director 03/07/11 Indefinitely NA NA School District Ruidoso PSFA Director 09/14/10 Indefinitely NA NA School District See independent auditors' report. 51

90 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Schedule of Joint Powers Agreements For the Year Ended June 30, 2017 Schedule I Page 5 of 7 District Responsibility Responsible Party Beginning (DFA Approval) Ending Amount Applicable Amount Contributed Audit San Jon PSFA Director 10/04/10 Indefinitely NA NA School District Santa Fe PSFA Director 11/08/10 Indefinitely NA NA School District Santa Rosa PSFA Director 02/02/11 Indefinitely NA NA School District Silver City PSFA Director 09/14/10 Indefinitely NA NA School District Socorro PSFA Director 09/14/10 Indefinitely NA NA School District Springer PSFA Director 10/04/10 Indefinitely NA NA School District Taos PSFA Director 09/14/10 Indefinitely NA NA School District Tatum PSFA Director 10/04/10 Indefinitely NA NA School District Texico PSFA Director 02/02/11 Indefinitely NA NA School District T or C PSFA Director 10/04/10 Indefinitely NA NA School District Tucumcari PSFA Director 10/14/10 Indefinitely NA NA School District Tularosa PSFA Director 10/04/10 Indefinitely NA NA School District Vaughn PSFA Director 10/04/10 Indefinitely NA NA School District Wagon Mound PSFA Director 09/14/10 Indefinitely NA NA School District West Las Vegas PSFA Director 10/14/10 Indefinitely NA NA School District Zuni PSFA Director 10/04/10 Indefinitely NA NA School District NM School for the Deaf PSFA Director 10/27/09 Indefinitely NA NA School District See independent auditors' report. 52

91 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Schedule of Joint Powers Agreements For the Year Ended June 30, 2017 Schedule I Page 6 of 7 District Responsibility Responsible Party Beginning (DFA Approval) Ending Amount Applicable Amount Contributed Audit NM School for the Blind PSFA Director 11/06/09 Indefinitely NA NA School District Academy of Trades & Technology PSFA Director 11/08/10 Indefinitely NA NA School District ACE Leadership HS PSFA Director 09/01/11 Indefinitely NA NA School District Albuquerque Sign Language Academy PSFA Director 09/14/10 Indefinitely NA NA School District Aldo Leopold HS PSFA Director 10/14/10 Indefinitely NA NA School District Alma d'arte PSFA Director 03/24/11 Indefinitely NA NA School District Amy Biehl HS PSFA Director 04/04/13 Indefinitely NA NA School District The ASK Academy PSFA Director 02/02/11 Indefinitely NA NA School District Cesar Chavez Community School Cien Aguas International School Cottonwood Classical Preparatory School PSFA Director 02/02/11 Indefinitely NA NA School District PSFA Director 10/14/10 Indefinitely NA NA School District PSFA Director 02/28/12 Indefinitely NA NA School District East Mountain HS PSFA Director 10/04/10 Indefinitely NA NA School District Gilbert Sena Charter HS PSFA Director 04/24/13 Indefinitely NA NA School District Horizon Academy West PSFA Director 02/02/11 Indefinitely NA NA School District International School of Mesa del Sol PSFA Director 04/26/13 Indefinitely NA NA School District J. Paul Taylor Academy PSFA Director 02/02/11 Indefinitely NA NA School District La Promesa Charter School PSFA Director 01/29/13 Indefinitely NA NA School District See independent auditors' report. 53

92 STATE OF NEW MEXICO New Mexico Public School Facilities Authority Schedule of Joint Powers Agreements For the Year Ended June 30, 2017 Schedule I Page 7 of 7 District Responsibility Responsible Party Beginning (DFA Approval) Ending Amount Applicable Amount Contributed Audit The Masters Program PSFA Director 08/08/11 Indefinitely NA NA School District Media Arts Collaborative CS PSFA Director 09/14/10 Indefinitely NA NA School District Montessori ES PSFA Director 04/10/13 Indefinitely NA NA School District New Mexico School for the Arts PSFA Director 10/04/10 Indefinitely NA NA School District North Valley Academy PSFA Director 09/14/10 Indefinitely NA NA School District School of Dreams PSFA Director 02/02/11 Indefinitely NA NA School District South Valley Preparatory School SW Intermediate Learning Center SW Primary Learning Center SW Secondary Learning Center Taos Academy Charter School Taos Integrated School for the Arts PSFA Director 02/02/11 Indefinitely NA NA School District PSFA Director 09/14/10 Indefinitely NA NA School District PSFA Director 09/14/10 Indefinitely NA NA School District PSFA Director 09/14/10 Indefinitely NA NA School District PSFA Director 11/14/10 Indefinitely NA NA School District PSFA Director 02/02/11 Indefinitely NA NA School District Tierra Adentro PSFA Director 10/04/10 Indefinitely NA NA School District Village Academy PSFA Director 09/14/10 Indefinitely NA NA School District See independent auditors' report. 54

93 COMPLIANCE SECTION 55

94 Alamogordo Albuquerque Carlsbad Clovis El Paso Hobbs Lubbock Roswell Santa Fe REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS INDEPENDENT AUDITORS REPORT Tim Keller New Mexico State Auditor Members of the Public School Capital Outlay Council State of New Mexico Public School Facilities Authority Albuquerque, New Mexico We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund and the budgetary comparisons of the general fund and major special revenue fund of the New Mexico Public School Facilities Authority (the Authority ) as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the Authority s basic financial statements, and have issued our report thereon dated October 12, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Authority s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Authority s internal control. Accordingly, we do not express an opinion on the effectiveness of the Authority s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the Authority s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governances. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However material weaknesses may exist that were not identified. 56