Prepared by: Business Office

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2 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT Harlingen, Texas COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED AUGUST 31, 2014 Prepared by: Business Office

3 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED AUGUST 31, 2014 TABLE OF CONTENTS EXHIBIT PAGE INTRODUCTORY SECTION Table of Contents - 2 Letter of Transmittal - 7 GFOA Certificate of Achievement - 11 List of Principal Officials - 13 Administrative Organization Chart - 14 Certificate of Board - 15 FINANCIAL SECTION Independent Auditors Report - 19 Management s Discussion and Analysis - 25 Basic Financial Statements Government-wide Statements: Statement of Net Position A-1 34 Statement of Activities B-1 35 Government Fund Financial Statements: Balance Sheet C-1 36 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position C-2 37 Statement of Revenues, Expenditures, and Changes in Fund Balance C-3 38 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities C-4 39 Proprietary Fund Financial Statements: Statement of Net Position D-1 40 Statement of Revenues, Expenses, and Changes in Net Position D-2 41 Statement of Cash Flows D-3 42 Fiduciary Fund Financial Statements: Statement of Fiduciary Net Position E-1 43 Statement of Changes in Fiduciary Fund Net Position E-2 44 Notes to the Financial Statements 47 Required Supplementary Information Budgetary Comparison Schedule General Fund G-1 72 Notes to Required Supplementary Information 73 Other Supplementary Information Combining Fund Statements Nonmajor Governmental Funds: Combining Balance Sheet H-1 76 Combining Statement of Revenues, Expenditures and Changes in Fund Balances H-2 80 Internal Service Funds: Combining Statement of Net position, Internal Service Funds H-3 84 Combining Statement of Revenues, Expenses and Changes in Fund Net Position H-4 85 Combining Statement of Cash Flows, Internal Service Funds H

4 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED AUGUST 31, 2014 TABLE OF CONTENTS - CONTINUED FINANCIAL SECTION (Continued) EXHIBIT PAGE Private Purpose Trust Funds: Combining Statement of Net Position, Private Purpose Trust Funds H-6 88 Combining Statement of Revenues, Expenses and Changes in Fund Net Position H-7 90 Agency Fund: Statement of Changes in Assets and Liabilities H-8 92 Texas Education Agency Required Schedules: Schedule of Delinquent Taxes Receivable J-1 94 Budgetary Comparison Schedule Child Nutrition Program J-2 96 Budgetary Comparison Schedule Debt Service Fund J-3 97 Schedule of Required Responses to Selected School First Indicators K Capital Assets Used in the Operation of Governmental Funds: Comparative Schedules by Source 100 Schedule by Function and Activity 101 Schedule of Changes by Function 102 STATISTICAL SECTION SCHEDULE Statistical Section Overview 104 Government-wide Information Net Position by Component Last Ten Years Governmental Activities Expenses and Program Revenues Last Ten Years General Revenues and Changes in Net Position Last Ten Years Fund Information Fund Balances Governmental Funds Last Ten Years Governmental Fund Revenues by Source Last Ten Years Governmental Fund Expenditures by Function Last Ten Years Governmental Funds Other Sources, Uses and Changes in Fund Balances Last Ten Years Governmental Fund Expenditures by Function Per Average Daily Attendance Last Ten Years Revenue Capacity Information Assessed and Estimated Actual Value of Property Last Ten Years Property Tax Levies and Collections Last Ten Years Allocation of Property Tax Rates and Levies Last Ten Years Property Tax Rates Direct and Overlapping Governments (Per $100 Assessed Valuation) Last Ten Years Principal Property Taxpayers Current Year and Nine Years Prior

5 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED AUGUST 31, 2014 TABLE OF CONTENTS - CONTINUED SCHEDULE PAGE STATISTICAL SECTION CONTINUED Debt Capacity Information Outstanding Debt by Type Last Ten Years Direct and Overlapping Debt General Obligation Bonds Computation of Legal Debt Margin Last Ten Years Ratio of Net General Obligation Bonded Debt to Estimated Actual Value and Per Average Daily Membership Last Ten Years Ratio of Annual Debt Service for General Bonded Debt to Total General Fund Expenditures Last Ten Years Demographic and Economic Information Principal Employers Current Year and Ten Years Ago Construction and Property Values Last Ten Years Economic and Demographic Statistics Last Ten Years Operating Information Work Force Composition by Employee Classification Last Ten Years Schedule of Teacher Information Last Ten Years Schedule of Attendance and Membership Last Ten Years Operating Statistics Last Ten Years Schedule of Student Information Last Ten Years Schedule of School Buildings SINGLE AUDIT SECTION Independent Auditors 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 149 Independent Auditors Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by OMB Circular A Schedule of Findings and Questioned Costs Schedule of Status of Prior Findings Corrective Action Plan Schedule of Expenditures of Federal Awards K Notes on Accounting Policies for Federal Awards K

6 INTRODUCTORY SECTION 5

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9 The independent audit of the financial statements of the District was part of a broader, federally mandated Single Audit designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. Information related to this single audit, including a schedule of federal financial assistance, the independent auditors report on the internal controls and compliance with applicable laws and regulations, and a schedule of findings and questioned costs are included in the Single Audit Section of this report. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The District s MD&A can be found immediately following the report of the independent auditors. Profile of the Government The District is a political subdivision of the State of Texas governed and operating as an independent school district under the laws thereof. The District, originally organized in September 1909, now encompasses eightytwo square miles in Cameron County, Texas. The District is governed by a seven-member Board of Trustees (the Board ) composed of District residents, who are elected by voters of the District. The Board is responsible for managing and governing the schools of the District, including the adoption of goals and objectives for the District, reviewing and acting on policies, adopting an annual budget, levying and collection District taxes, hiring school personnel as recommended by the superintendent, approving salary schedules, adopting District policies and setting directions for curriculum, and reporting to the public on the District s progress. The District s Superintendent of Schools and staff assist the Board with financial and administrative matters and oversee the day-to-day operations of the District. The District provides a full range of educational services appropriate to grade levels pre-kindergarten through twelve for its approximate 18,700 students. These include regular and enriched academic education, special education for students with disabilities, occupational education, bilingual instruction for those with limited English proficiency and specialized instruction for disadvantaged students. These basic programs are supplemented by additional offerings in the fine arts and athletics. In addition, the District provides for community and adult education by offering a wide variety of academic and occupational courses. The annual budget serves as the foundation for the District s financial planning and control. The District s fiscal year begins September 1 st and ends August 31 st. The budget is initially prepared under the direction of the Superintendent. The Board reviews the budget during workshops conducted from May through July. The final budget is required by State law to be adopted by August 31, The District maintains budgetary controls to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the Board. Activities of the general fund, the debt service fund, and the food service fund are included in the annual appropriated budget. The level of budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated amount) is established by major functional category. 8

10 Budget-to-actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted. For the general fund, this comparison is presented on Exhibit G-1, as required supplementary information. The TEA required budget versus actual comparison for the child nutrition program can be found on Exhibit J-2 and the debt service fund comparison is presented on Exhibit J- 3. Factors Affecting Financial Conditions The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the District operates. Local Economy The District serves the City of Harlingen, City of Primera and the Township of Combes and several unincorporated areas in Cameron County. For the past several years, the Harlingen economy has grown at a steady rate. The opening of numerous new businesses in the past several years has had a ripple effect on the housing industry. Housing subdivisions have flourished throughout the city, creating a need for more schools in these new developments. The non-reliance on the manufacturing industry has minimized the problems affecting other parts of the country. Many of the new businesses have been in the service industry, i.e. restaurants, hospitals, retail stores, etc., thus the employment rate has remained at a steady level. District s Long-term Financial Planning The District has maintained the fund balance to ensure the needed resources are available when required to meet unexpected revenue shortfalls. Careful budgeting and monitoring of expenditures has allowed the District to make several major acquisitions without resorting to borrowing money. The District has experienced a modest increase in enrollment every year for the past 10 years. Projected membership for school year is expected to reach 18,700. Local funding is expected to increase slightly over the next few years due to an increase in new construction and appraisal values. The District s maintenance and operations tax rate for tax year 2014 is $1.04 per $100 valuation. State funding for the general fund is about 72% of the total general fund revenue. The State cut its education budget by $5.4 billion in the biennium. During the past legislative session, the State was able to replace some of the cuts made in Our District is has made necessary adjustments in funding. This funding is driven mainly by student attendance. Federal funding is expected to decrease due to the sequestration of federal funds at the National level. Grant funding plays an important role as a resource to supplement regular funding and to expand programs needed for greater academic achievement. The District is focusing on greater efficiency through the use of technology to help reduce labor and timeconsuming paperwork. 9

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14 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT HARLINGEN, TEXAS YEAR ENDED AUGUST 31, 2014 TRUSTEES Greg Powers - President Dr. Nolan Perez - Vice-President Verna Young - Secretary Dr. Bobby Muniz Gerry Fleuriet George McShan Javier De Leon SUPERINTENDENT Dr. Arturo J. Cavazos Chief Financial Officer Julio Cavazos 13

15 ASST. SUPERINTENDENT FOR HUMAN SERVICES ROSALINDA R. VARGAS 1 Harlingen CISD organizational chart updated July 24, 2014 COMMUNITY BOARD OF TRUSTEES INTERNAL AUDITOR ENEDELIA LEDESMA DIRECTOR OF ACCOUNTABILITY/ ASSESSMENT HARLAN HOWELL SUPERINTENDENT DR. ARTURO J. CAVAZOS DIRECTOR OF PUBLIC RELATIONS/ COMMUNITY ENGAGEMENT SHANE STRUBHART ASST. SUPERINTENDENT FOR DISTRICT OPERATIONS/ SCHOOL SAFETY OSCAR TAPIA CHIEF ACADEMIC OFFICER DR. ALICIA NOYOLA CHIEF FINANCIAL OFFICER JULIO CAVAZOS ADMINISTRATOR FOR SECONDARY EDUCATION DR. JOE RODRIGUEZ ADMINISTRATOR FOR ELEMENTARY LORANDA ROMERO ADMINISTRATION FOR ORGANIZATIONAL DEVELOPMENT VERONICA KORTAN SECONDARY PRINCIPALS ELEMENTARY PRINCIPALS

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22 Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Harlingen Consolidated Independent School District, as of August 31, 2014, and the respective changes in financial position, and, where applicable, cash flows thereof 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 and budgetary comparison information on pages and 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 financial statements that collectively comprise the Harlingen Consolidated Independent School District s basic financial statements. The introductory section, combining fund statements, other supplementary information, and the statistical section as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the basic financial statements. The combining fund statements, other supplementary information, and the schedule of expenditures of federal awards, are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining fund statements, other supplementary information and the schedule of expenditures of federal awards are fairly stated in all material respects in relation to the basic financial statements as a whole. The introductory and statistical sections 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 it. 21

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26 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS As management of the Harlingen Consolidated Independent School District, we offer this narrative overview of the District s financial performance during the fiscal year ended August 31, We encourage readers to consider the information presented here in conjunction with the information that we have furnished in our transmittal letter located in the front of this report, the independent auditor s report, and the District s Basic Financial Statements which follow this section. FINANCIAL HIGHLIGHTS The District s total combined net position was $121,059,055 at August 31, This is a decrease of $34,319 from the prior year. During the year, the District s expenses were $34,319 more than the $185,779,816 generated in taxes and other revenues for governmental activities. The general fund reported a fund balance this year of $29,782,434. A decrease of $220,055. The District received a superior rating for the Financial Integrity Reporting System of Texas (FIRST) for This rating evaluates quality of performance in the management of school district s financial resources. This is the twelfth year in a row the District receives a superior rating. The District was also awarded the Certificate of Excellence in Financial Reporting from the Government Finance Officers Association (GFOA). This is the fifth year in a row for this award. The District s current and delinquent property tax collections were 99.6% percent of its levy. The District has completed most of the 2010 School Bond Projects, with the exception of the Aquatic Center. In July 2012, the District authorized the issuance of Qualified School Construction Bonds to finance the construction of a new school for health professions. The Qualified School Construction Bonds is a federal program with zero to low interest rates. The bonds were sold in September The new school for health professions was completed in December OVERVIEW OF THE FINANCIAL STATEMENTS The Comprehensive Annual Financial Report is composed of three main sections (A) Introductory Section, (B) Financial Section and (C) the Statistical Section. The Financial Section of this Comprehensive Annual Financial Report consists of four parts: (1) management s discussion and analysis (this section), (2) the basic financial statements, (3) required supplemental information, and (4) other supplementary information, which is an optional section that presents additional information such as combining and individual fund statements and schedules for non-major and major governmental funds, internal service funds, fiduciary funds, capital assets and required compliance information. The Management s Discussion and Analysis section is intended to serve as an introduction to the District s Basic Financial Statements. The District s Basic Financial Statements comprise three components: (1) Government-Wide Financial Statements (2) Fund Financial Statements, and (3) Notes to the Basic Financial Statements. The basic financial statements include two kinds of statements that present different views of the District: The first two statements are government-wide financial statements that provide both long-term and short-term information about the District s overall financial status. The remaining statements are fund financial statements that focus on individual parts of the government, reporting the District s operations in more detail than the government-wide statements. The governmental funds statements tell how general government services were financed in the short term as well as what remains for future spending. Proprietary fund statements offer short- and long-term financial information about the activities the government operates like businesses. Fiduciary fund statements provide information about the financial relationships in which the District acts solely as a trustee or agent for the benefit of others, to whom the resources in question belong. The financial statements also include notes that explain some of the information in the financial statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the information in the financial statements. The remainder of this overview section of management s discussion and analysis explains the structure and contents of each of the statements. 25

27 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS (continued) Basic Financial Statements Government-wide Statements The government-wide statements report information about the District as a whole using accounting methods similar to those used by private-sector companies. All of the District s services are reported in the government-wide financial statements, including instructional, instructional leadership, student support services, general administration, support services, and debt services. Property taxes, state foundation funds and grants finance most of these activities. The Statement of Net Position includes all of the government s assets and deferred outflows and liabilities and deferred inflows, with the difference between the two reported as net position. Net position, is one way to measure the District s financial health or position. Over time, increases or decreases in the District s net position are an indicator of whether its financial health is improving or deteriorating, respectively. To fully assess the overall health of the District; however, non-financial factors need to be considered as well, such as changes in the District s average daily attendance, its property tax base and the condition of the District s facilities. The Statement of Activities presents information for all of the current year s revenues and expenses regardless of when cash is received or paid. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods. Fund Financial Statements A fund is a group of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance related requirements. The fund financial statements provide more detailed information about the District s most significant funds not the District as a whole. Funds are accounting devices that the District uses to keep track of specific sources of funding and spending for particular purposes. Some funds are required by State law and by bond covenants. The Board of Trustees establishes other funds to control and manage money for particular purposes to show that it is properly using taxes and grants. The District has the following kinds of funds: Governmental funds: Government 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 spendable resources, as well as on balances of spendable resources available at the end of the year. Most of the District s basic services are included in governmental funds, which focus on (1) how cash and other financial assets that can readily be converted to cash flow in and out and (2) the balances left at year-end that are available for spending. Consequently, the governmental fund statements provide a detailed short-term view that helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the District s programs. Because this information does not encompass the additional long-term focus of the government-wide statements, we provide additional information at the bottom of the governmental funds statement, or on the subsequent page, that explain the relationship (or differences) between them. The District maintains 20 governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances for the general fund and capital projects fund, which are considered to be major funds. Data from the other governmental funds are combined in a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in the financial statements. The District adopts an annual appropriated budget for its General Fund, National School Breakfast and Lunch Program Fund, and Debt Service Fund. A budgetary comparison schedule has been provided to demonstrate compliance with these budgets. Proprietary funds: Services for which the District charges customers a fee are generally reported in proprietary funds. Proprietary funds, like the government-wide statements, provide both long-term and short-term financial information. The District uses internal service funds to report activities for its worker s compensation and employee benefits program. 26

28 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS (continued) Fiduciary funds: The District is the trustee, or fiduciary, for certain funds. It is also responsible for other assets that because of a trust arrangement can be used only for the trust beneficiaries. The District is responsible for ensuring that the assets reported in these funds are used for their intended purposes. All of the District s fiduciary activities are reported in a separate statement of fiduciary net position and a statement of changes in fiduciary net position. We exclude these activities from the District s government-wide financial statements because the District cannot use these assets to finance its operations. Notes to Financial Statements The notes provide additional information that is essential to a complete understanding of the data provided in the governmentwide and fund financial statements. Required Supplementary Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information that further explains and supports the information in the financial statements. The Required Supplementary Information relates to comparison of the original adopted budget, the final amended budget, and the actual results for the fiscal year ended. This is required supplementary information for the general fund and any major special revenue funds. The District did not have any major special revenue funds, therefore, only the general fund is presented as Required Supplementary Information. Combining Fund Statements This section contains information for the purpose for additional analysis and is not a required part of the basic financial statements. It includes combining statements for non-major governmental funds, internal service funds and fiduciary fund. Other Supplementary Information The Other Supplementary Information includes budgetary comparisons and certain compliance schedules required by state regulatory agencies. Government-Wide Financial Analysis Presented in Tables I and II below are summarized Statement of Net Position and Statement of Changes in Net Position for both current and prior-year data. Our analysis focuses on the current year and the comparison of prior-year amounts on the net position (Table I) and changes in net position (Table II) of the District s governmental activities. Table I - Net Position Summary (In thousands dollars) Governmental Activities ASSETS: Current and other assets $ 62,572 $ 70,104 Capital assets 241, ,917 Total assets 303, ,021 LIABILITIES Current liabilities 18,024 21,895 Long-term liabilities 164, ,024 Total liabilities 182, ,919 DEFERRED INFLOWS OF RESOURCES Deferred gain on refunding 9 9 NET POSITION Net investment in capital assets 85,075 84,686 Restricted 11,606 2,447 Unrestricted 24,378 33,960 Total net position $ 121,059 $ 121,093 27

29 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS (continued) Table II - Change in Net Position (In Thousands) Governmental Activities Revenues Program Revenues: Charges for Services $ 2,888 $ 2,798 Operating grants and contributions 34,692 35,548 General Revenues: Property taxes 39,311 39,599 State and other grants 108,777 98,920 Investment earnings Other Total Revenues 185, ,904 Expenses Instruction 98,670 96,199 Instruction resources and media services 3,173 3,196 Curriculum and staff development 2,630 2,516 Instructional leadership 4,323 4,123 School leadership 10,794 9,835 Guidance, counseling and evaluation services 6,291 6,142 Social work services Health services 1,956 1,811 Student (pupil) transportation 3,886 3,421 Food services 11,151 10,479 Extracurricular activities 5,688 5,607 General administration 4,079 4,075 Facilities maintenance and operations 18,791 17,561 Security and monitoring services 1,286 1,002 Data processing services 2,545 2,617 Community services 1,914 1,757 Debt service - interest on long-term debt 6,862 6,064 Debt service - bond issuance cost and fees Capital outlay Payments to juvenile justice alternative ed. Prg Other intergovernmental charges , ,471 Change in net position (34) 433 Beginning net position 121, ,660 Ending net position $ 121,059 $ 121,093 Net Position As noted earlier, net position may serve over time as a useful indicator of a government s financial position. For the year ended August 31, 2014, assets exceeded liabilities and deferred outflows by $121.1 million. Investment in capital assets used for governmental activities (i.e. land, buildings and improvements, furniture and equipment, and construction in progress), less any related debt used to acquire those assets, that is still outstanding amounted to $85.1 million as of August 31, The District uses these capital assets to provide services to students; consequently, these assets are not available for future spending. Although the District s investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources since the capital assets themselves cannot be used to liquidate these liabilities. Unrestricted net position for governmental activities, the part of net position that can be used to finance day-to-day operations without constraints established by debt covenants, enabling legislation, or other legal requirements, amounted to $24 million at August 31,

30 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS (continued) Change in Net Position The Net Position of the District decreased by $34,319 for the year ended August 31, The total revenues from taxpayers, user services, grants and other sources for the District was $185.8 million, an increase of $7.9 million over fiscal year 2013 which is a result of the additional monies owed to us from the state available and foundation school funds from the prior year. Total expenses for the 2014 fiscal year were $185.7 million or $8.0 million more than expenses for fiscal year The increase in expenditures was the result of our cost of living adjustment for all staff in 2014, the completion of our 2010 Bond projects, the start of construction on our new school of health professions campus and the continuation on various remodeling at some of our cafeterias and other facilities. The District s total revenues were $185,779,816. A significant portion, 20.30%, of the District s revenue comes from taxes % comes from state aid formula grants and operating grants, while only 1.575% relates to charges for services. Investment Earnings decreased by $93,958 due to investment rates decrease. State revenues increased by $5,429,141 due to additional state foundation fund allocations. Governmental Activities Property tax rate remained at $1.218 per $100 of taxable property value. Our overall property tax revenues decreased by $286,484 due to adjustments in property values. Average daily attendance increased by 142 students. The total cost of all programs and services was $185,814,135; 80.26% of these costs are for instructional and student services. Table III presents the cost of each of the District s largest functions as well as each function s net cost (total cost less fees generated by the activities and intergovernmental aid). The net cost reflects what was funded by state revenues as well as local tax dollars. The cost of all governmental activities this year was $185,814,135. However, the amount that our taxpayers paid for these activities through property taxes was $39,311,455. Some of the cost was paid by those who directly benefited from the programs $2,887,695 or by grants and contributions $34,691,

31 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS (continued) Revenues in the general fund totaled $146,914,370 and $38,968,164 in other funds, an increase of $7,811,800 over the preceding year. State revenue increased by $7,495,710 due largely to an increase in per capita apportionment and foundation revenue and increase in average daily attendance. Federal revenues under the General fund increased by $522,881 primarily due to the increase in SHARS Medicaid billings. FINANCIAL ANALYSIS OF THE DISTRICT S FUNDS Table III Net Cost of Selected District Functions (in thousands of dollars) Total Cost of Services % Change Net Cost of Services As noted earlier, the District uses fund accounting to ensure and demonstrate compliance with finance related legal requirements, bond covenants, and segregation for particular purposes. The focus of the District s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the District s financing requirements. In particular, unassigned fund balance may serve as a useful measure of the District s net resources available for spending at the end of a fiscal year. As of August 31, 2014, the District s governmental funds reported a combined ending fund balance of $41.7 million, a decrease of $9.5 million from last year. The reduction is due to the 2010 bond election construction expenditures under the Capital Projects Fund. Of the total fund balance, $28.2 million, or approximately 67 percent, constitutes unassigned General Fund balance. The remainder of the combined fund balance is nonspendable, restricted, committed or assigned for particular purposes as follows: Table IV Governmental Funds - Fund Balances Nonspendable: Inventories $ 534,471 $1,065,442 Prepaid items 1,023,294 1,026,128 Restricted: Grant funds 610, ,145 Capital acquisitions and contractual programs 9,468,587 18,336,901 Debt service 2,153,932 1,432,996 Committed: Campus activity funds 398, ,091 Unassigned: Unassigned 27,529,669 28,307,983 Total fund balances $ 41,718,819 $ 51,236,686 % Change Instruction $98,670 $96, % $82,393 $84,387 (2.6)% School administration 10,794 9, % 9,952 9, % Food Services 11,150 10, % % Plant Maintenance & Operations 18,790 17, % 17,740 17, % Debt Service Interest & Fiscal 7,178 6, % (7,178) (6,068) (15.4)% 30

32 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS (continued) General Fund Budgetary Highlights Over the course of the year, the District revised its budget numerous times. Even with these adjustments, actual expenditures were $2,672,713 below final budget amounts. The most significant positive variance resulted from staffing. Staffing is budgeted for full employment throughout the full year. Budget amounts for vacant positions throughout the year are not eligible for budget revisions. Below are additional items of importance: General Fund Balance decreased by $220,055. This was due to the transfer of $3,586,714 to our capital projects fund for the new school of health professions. Without this transfer the district had revenues over expenditures of $3,366,659. Property tax collections rate was 99.6%. Average Daily Attendance was 17,238, up 142 from the prior year. There was a positive $2,672,713 variance with final budget and a $401,183 difference in the instruction area due to various vacancies being maintained throughout the year. Superior rating for the Financial Integrity Reporting System of Texas (FIRST). Awarded Certificate of Excellence in Financial Reporting from the GFOA. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets At the end of 2014, the District had invested $378,849,575 in a broad range of capital assets, including land, equipment, buildings, vehicles, and construction in progress. (See Table V) This amount represents a net increase (including additions and deductions) of 8.7% over last year. Major capital asset events during the current fiscal year included the following: The District had several construction projects in progress as of August 31, Additional information is disclosed in Note G of the footnotes to the financial statements. Table V Capital Asset Summary Governmental Activities Land $ 6,232 $ 6,232 Buildings and improvements 312, ,950 Vehicles and Equipment 24,918 23,682 Construction in Progress 34,872 55,002 Totals at historical cost 378, ,866 Total accumulated depreciation 139, ,743 Net capital assets $ 239,204 $ 221,123 31

33 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS (continued) Long Term Debt At year-end, the District had $164.8 million in bonds, loans and an accrual for compensated absences outstanding as shown in Table VI. More detailed information about the District s debt is presented in Note J of the footnotes to the financial statements. Table VI District s Long Term Debt (In thousands of dollars) Governmental Activities Compensated absences payable $1,221 $1,321 Premium on issuance of bonds 1,146 1,182 Discount on issuance of bonds (97) - Bonds payable 162, ,583 Total bonds & notes payable $ 164,818 $ 156,086 Bond Ratings The District s bonds presently carry AAA ratings with underlying ratings as follows: Moody s Investor Services Aaa and Standard & Poors AAA. ECONOMIC FACTORS AND NEXT YEAR S BUDGETS AND RATES Appraised value used for the budget preparation is up $ million, or 3.52% from $3.328 billion in property values. Total new construction for was $44.5 million. Our tax rate remained the same as in the previous year. Maintenance and operations is at $1.04 and interest and sinking was at $.178 for a total rate of $1.218 General operating fund spending per student increased in the budget from $8,263 to $8,574. The District s refined average daily attendance is expected to remain the same. These indicators were taken into account when adopting the general fund budget for Amounts available for appropriation in the general fund budget are $147.9 million, an increase of 4.5 percent over the budget of $141.3 million. Property taxes revenue will increase due to an increase in property valuation. State revenue will increase due to a change in state funding. The District held several meetings with staff and board to finalize the budget. Expenditures are budgeted to increase by 4.5 percent to $ million. The largest increase was in staffing. The District provided a 2.5% increase to teachers, a 2% increase for professional staff and a 3.0% increase to hourly staff. The District has a very competitive salary schedule which allows for recruitment of future staff. If these estimates are realized, the District s budgetary general fund fund balance is not expected to change appreciably by the close of The District has several construction projects underway. The voters of the District approved a $98.6 million school building and renovation bond on May 8, With the proceeds, the District was able to construct a Ninth Grade Academy, Fine Arts auditorium, Aquatic Center, Agricultural Farm and renovations to most campuses, district operations and Boggus Stadium. These projects were completed last year with the exception of the Aquatic Center which is expected to be completed by Spring The District also started construction on a new school for students interested in the health professions. This school was completed in December CONTACTING THE DISTRICT S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the District s finances and to demonstrate the District s accountability for the money it receives. If you have questions about this report or need additional financial information, contact the District s Business Services Department. 32

34 BASIC FINANCIAL STATEMENTS 33

35 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT STATEMENT OF NET POSITION AUGUST 31, 2014 EXHIBIT A-1 Data Control Codes Primary Government Governmental Activities ASSETS 1110 Cash and Cash Equivalents $ 1220 Property Taxes Receivable (Delinquent) 1230 Allowance for Uncollectible Taxes 1240 Due from Other Governments 1290 Other Receivables, net 1300 Inventories 1410 Prepayments 1490 Other Current Assets Capital Assets: 1510 Land 1520 Buildings, Net 1530 Furniture and Equipment, Net 1580 Construction in Progress 1800 Restricted Assets 49,544,288 4,428,864 (1,013,023) 7,259, , ,448 1,023,294 93,133 6,231, ,038,132 8,061,424 34,872,849 2,134, Total Assets 303,911,195 LIABILITIES 2110 Accounts Payable 2150 Payroll Deductions & Withholdings 2160 Accrued Wages Payable 2180 Due to Other Governments 2200 Accrued Expenses 2300 Unearned Revenue Noncurrent Liabilities 2501 Due Within One Year 2502 Due in More Than One Year 7,699,560 1,908,335 3,613,975 3,554,417 1,039, ,396 5,952, ,866, Total Liabilities 182,843,409 DEFERRED INFLOWS OF RESOURCES 2602 Deferred Gain on Refunding 8, Total Deferred Inflows of Resources 8,731 NET POSITION 3200 Net Investment in Capital Assets 3820 Restricted for Federal and State Programs 3850 Restricted for Debt Service 3860 Restricted for Capital Projects 3900 Unrestricted 85,075, ,808 1,526,809 9,468,587 24,377, Total Net Position $ 121,059,055 The notes to the financial statements are an integral part of this statement. 34

36 Data Control Codes Primary Government: HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT STATEMENT OF ACTIVITIES FOR THE YEAR ENDED AUGUST 31, 2014 Program Revenues EXHIBIT B-1 Net (Expense) Revenue and Changes in Net Position Expenses Charges for Services Operating Grants and Contributions Primary Gov. Governmental Activities GOVERNMENTAL ACTIVITIES: 11 Instruction $ 98,670,181 $ 1,119,855 $ 15,156,843 $ (82,393,483) 12 Instructional Resources and Media Services 3,173, ,018 (3,048,695) 13 Curriculum and Staff Development 2,630,282-1,358,861 (1,271,421) 21 Instructional Leadership 4,323,544-1,379,103 (2,944,441) 23 School Leadership 10,794, ,751 (9,952,495) 31 Guidance, Counseling and Evaluation Services 6,290,948-1,625,981 (4,664,967) 32 Social Work Services 584, ,383 (225,380) 33 Health Services 1,956, ,949 (1,795,306) 34 Student (Pupil) Transportation 3,886, ,189 (3,527,936) 35 Food Services 11,150,774 1,404,009 10,363, , Extracurricular Activities 5,687, , ,430 (5,132,919) 41 General Administration 4,079, ,245 (3,912,193) 51 Facilities Maintenance and Operations 18,790,629 26,200 1,023,980 (17,740,449) 52 Security and Monitoring Services 1,285, ,231 (1,123,476) 53 Data Processing Services 2,545, ,977 (1,814,124) 61 Community Services 1,913, ,691 (1,253,307) 72 Debt Service - Interest on Long Term Debt 6,861, (6,861,600) 73 Debt Service - Bond Issuance Cost and Fees 316, (316,737) 81 Capital Outlay 425, (425,609) 95 Payments to Juvenile Justice Alternative Ed. Prg. 111, (111,250) 99 Other Intergovernmental Charges 335, (335,255) [TP] TOTAL PRIMARY GOVERNMENT: $ 185,814,135 $ 2,887,695 $ 34,691,964 (148,234,476) Data Control Codes MT DT SF GC IE MI TR General Revenues: Taxes: Property Taxes, Levied for General Purposes Property Taxes, Levied for Debt Service State Aid - Formula Grants Grants and Contributions not Restricted Investment Earnings Miscellaneous Local and Intermediate Revenue Total General Revenues 33,558,889 5,752, ,349,444 4,427,529 57,283 54, ,200,157 CN Change in Net Position (34,319) NB Net Position - Beginning 121,093,374 NE Net Position--Ending $ 121,059,055 The notes to the financial statements are an integral part of this statement. 35

37 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT BALANCE SHEET GOVERNMENTAL FUNDS AUGUST 31, 2014 EXHIBIT C-1 Data Control Codes 10 General Fund 60 Capital Projects Other Funds Total Governmental Funds ASSETS 1110 Cash and Cash Equivalents $ 30,403,855 $ 13,016,932 $ 3,384,704 $ 46,805, Property Taxes - Delinquent 3,927, ,005 4,428, Allowance for Uncollectible Taxes (Credit) (925,400) - (87,623) (1,013,023) 1240 Receivables from Other Governments 5,582,702-1,676,812 7,259, Due from Other Funds 1,830, ,830, Other Receivables 186, ,273 1, , Inventories 534, , , Prepayments 1,023, ,023, Restricted Assets 695,000 1,439,853-2,134, Total Assets $ 43,258,942 $ 14,584,058 $ 5,862,821 $ 63,705,821 LIABILITIES 2110 Accounts Payable $ 1,978,033 $ 5,115,471 $ 569,048 $ 7,662, Payroll Deductions and Withholdings Payable 1,908, ,908, Accrued Wages Payable 3,613, ,613, Due to Other Funds 188,001-1,742,275 1,930, Due to Other Governments 2,946, ,748 3,554, Unearned Revenues 102, , , Total Liabilities 10,737,808 5,115,471 3,024,672 18,877,951 DEFERRED INFLOWS OF RESOURCES 2601 Unavailable Revenue - Property Taxes 2,738, ,351 3,109, Total Deferred Inflows of Resources 2,738, ,351 3,109,051 FUND BALANCES Nonspendable Fund Balance: 3410 Inventories 3430 Prepaid Items Restricted Fund Balance: 3450 Federal or State Funds Grant Restriction 3470 Capital Acquisition and Contractural Obligation 3480 Retirement of Long-Term Debt Committed Fund Balance: 3545 Other Committed Fund Balance 3600 Unassigned Fund Balance 534, ,471 1,023, ,023, , ,808-9,468,587-9,468, ,000-1,458,932 2,153, , ,058 27,529, ,529, Total Fund Balances 29,782,434 9,468,587 2,467,798 41,718, Total Liabilities, Deferred Inflows & Fund Balances $ 43,258,942 $ 14,584,058 $ 5,862,821 $ 63,705,821 The notes to the financial statements are an integral part of this statement. 36

38 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION AUGUST 31, 2014 EXHIBIT C-2 Total Fund Balances - Governmental Funds 1 The District uses internal service funds to charge the costs of certain activities, such as self-insurance and printing, to appropriate functions in other funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net position. The net effect of this consolidation is to increase(decrease) net position. 2 Capital assets used in governmental activities are not financial resources and therefore are not reported in governmental funds. The cost of these assets was $378,849,575 and the accumulated depreciation was $139,645,279. The net effect of including the beginning balances for capital assets (net of depreciation) in the governmental activities is to increase (decrease) net position. 3 Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds. 4 Long-term liabilities for compensated absences are not due and payable in the current period and therefore are not reported in the funds. 5 Property taxes receivable will be collected this year, but are not available soon enough to pay for the current period's expenditures and, therefore, are unavailable in the funds. 6 Gains/losses on defeasance of debt refundings is recognized as deferred outflows or inflows and amortized over the remaining life of the old debt or the life of the new debt, whichever is shorter, as an increase or (decrease) in net position. Deferred inflows/outflows due to debt refundings are not reported in the funds. $ 41,718,819 1,855, ,204,297 (162,548,000) (1,221,904) 3,109,051 (8,731) 7 Premiums totalling ($1,146,881) and discounts in the amount of $97,347 resulting from the issuance of bonds are capitalized, net of amortization, on the government-wide statements. (1,049,534) 19 Net Position of Governmental Activities $ 121,059,055 The notes to the financial statements are an integral part of this statement. 37

39 Data Control Codes HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS FOR THE YEAR ENDED AUGUST 31, General Fund 60 Capital Projects Other Funds EXHIBIT C-3 Total Governmental Funds REVENUES: Total Local and Intermediate Sources $ 36,388,386 $ 16,117 $ 7,472,247 $ 43,876,750 State Program Revenues 107,066,724-5,919, ,985,857 Federal Program Revenues 3,459,260-25,576,784 29,036, Total Revenues EXPENDITURES: Current: 0011 Instruction 0012 Instructional Resources and Media Services 0013 Curriculum and Instructional Staff Development 0021 Instructional Leadership 0023 School Leadership 0031 Guidance, Counseling and Evaluation Services 0032 Social Work Services 0033 Health Services 0034 Student (Pupil) Transportation 0035 Food Services 0036 Extracurricular Activities 0041 General Administration 0051 Facilities Maintenance and Operations 0052 Security and Monitoring Services 0053 Data Processing Services 0061 Community Services Debt Service: 0071 Principal on Long Term Debt 0072 Interest on Long Term Debt 0073 Bond Issuance Cost and Fees Capital Outlay: 0081 Facilities Acquisition and Construction Intergovernmental: 0095 Payments to Juvenile Justice Alternative Ed. Prg Other Intergovernmental Charges 6030 Total Expenditures 1100 Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES): 7911 Capital Related Debt Issued (Regular Bonds) 7912 Sale of Real and Personal Property 7915 Transfers In 7916 Premium or Discount on Issuance of Bonds 8911 Transfers Out (Use) 7080 Total Other Financing Sources (Uses) 146,914,370 16,117 38,968, ,898,651 83,191,142-10,678,787 93,869,929 3,007,330-5,408 3,012,738 1,147,736-1,348,940 2,496,676 2,833,254-1,275,590 4,108,844 9,725, ,381 10,278,767 4,621,114-1,350,837 5,971, , , ,083 1,792,740-64,343 1,857,083 3,696, ,656 3,896,201 10,766,734 10,766,734 5,172, ,702 5,413,101 4,208, ,543 4,260,729 17,168, , ,528 17,883,915 1,161, ,629 1,298,191 1,761, ,560 2,453,195 1,178, ,723 1,830, ,000-4,690,000 4,935,000 1,094,488-5,797,164 6,891, ,937 7, , ,296 25,783,849-26,741, , , , , ,618,818 26,268,674 39,397, ,285,156 3,295,552 (26,252,557) (429,500) (23,386,505) - 13,900,000-13,900,000 71, ,107-3,625,974-3,625,974 - (102,471) - (102,471) (3,586,714) (39,260) - (3,625,974) (3,515,607) 17,384,243-13,868, Net Change in Fund Balances (220,055) (8,868,314) (429,500) (9,517,869) 0100 Fund Balance - September 1 (Beginning) 30,002,489 18,336,901 2,897,298 51,236, Fund Balance - August 31 (Ending) $ 29,782,434 $ 9,468,587 $ 2,467,798 $ 41,718,819 The notes to the financial statements are an integral part of this statement. 38

40 EXHIBIT C-4 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED AUGUST 31, 2014 Total Net Change in Fund Balances - Governmental Funds The District uses internal service funds to charge the costs of certain activities, such as self-insurance and printing, to appropriate functions in other funds. The net income (loss) of internal service funds are reported with governmental activities. The net effect of this consolidation is to increase (decrease) net position. $ (9,517,869) 317,616 Capital outlays are reported in governmental funds as expenditures. However, in the statement of activities, the cost of those assets, $27,251,443, net of disposals totaling ($7,300), is allocated over their useful lives as depreciaiton expense which totaled ($9,162,981) at year end. This is the amount of capital assets in excess of depreciation expense in the current period. Property tax revenues in the statement of activities do not provide current financial resources and are not reported as revenues in the funds. Repayment of bond principal is an expenditure in the funds but is not an expense in the statement of activities The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. 18,081,162 (182,642) 4,935,000 (13,900,000) Governmental funds report the effect of premiums $34,630, discounts $102,471 issued in the current year and ($5,124) amortized, gains/losses aamortized totaling $546 and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This is the net effect of these differences. 132,523 Some expenses such as the effect of changes in compensated absences reported in the statement of activities do not require the use of current financial resoureces and, therefore, are not reported as expenditures in the governmental funds. 99,891 Change in Net Position of Governmental Activities $ (34,319) The notes to the financial statements are an integral part of this statement. 39

41 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT STATEMENT OF NET POSITION PROPRIETARY FUNDS AUGUST 31, 2014 EXHIBIT D-1 ASSETS Current Assets: Cash and Cash Equivalents $ Due from Other Funds Other Current Assets Governmental Activities - Total Internal Service Funds 2,738,797 99,423 93,133 Total Assets 2,931,353 LIABILITIES Current Liabilities: Accounts Payable Accrued Expenses 37,008 1,039,288 Total Liabilities 1,076,296 NET POSITION Unrestricted Net Position 1,855,057 Total Net Position $ 1,855,057 The notes to the financial statements are an integral part of this statement. 40

42 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED AUGUST 31, 2014 EXHIBIT D-2 OPERATING REVENUES: Local and Intermediate Sources $ Governmental Activities - Total Internal Service Funds 602,830 Total Operating Revenues 602,830 OPERATING EXPENSES: Payroll Costs Other Operating Costs 42, ,294 Total Operating Expenses 285,214 Operating Income Total Net Position - September 1 (Beginning) 317,616 1,537,441 Total Net Position - August 31 (Ending) $ 1,855,057 The notes to the financial statements are an integral part of this statement. 41

43 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED AUGUST 31, 2014 EXHIBIT D-3 Governmental Activities - Total Internal Service Funds Cash Flows from Operating Activities: Cash Received from User Charges $ Cash Payments for Insurance Premiums Net Cash Provided by Operating Activities Cash Flows from Non-Capital Financing Activities: Advances(Payments) interfunds 602,830 (490,107) 112,723 37,780 Net Increase in Cash and Cash Equivalents 150,503 Cash and Cash Equivalents at Beginning of Year 2,588,294 Cash and Cash Equivalents at End of Year $ 2,738,797 Reconciliation of Operating Income to Net Cash Provided by Operating Activities: Operating Income: $ 317,616 Effect of Increases and Decreases in Current Assets and Liabilities: Decrease (increase) in Prepaid Expenses (57) Increase (decrease) in Accounts Payable 14,384 Increase (decrease) in Payroll Deductions (219,220) Net Cash Provided by Operating Activities $ 112,723 The notes to the financial statements are an integral part of this statement. 42

44 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS AUGUST 31, 2014 EXHIBIT E-1 ASSETS Private Purpose Trust Funds Cash and Cash Equivalents $ 140,233 $ Agency Fund 774,178 Total Assets 140,233 $ 774,178 LIABILITIES Due to Student Groups - $ 774,178 Total Liabilities NET POSITION Restricted for Other Purposes 140,233 - $ 774,178 Total Net Position $ 140,233 The notes to the financial statements are an integral part of this statement. 43

45 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT STATEMENT OF CHANGES IN FIDUCIARY FUND NET POSITION FIDUCIARY FUNDS FOR THE YEAR ENDED AUGUST 31, 2014 EXHIBIT E-2 Private Purpose Trust Funds ADDITIONS: Local and Intermediate Sources $ 1,521 Total Additions 1,521 DEDUCTIONS: Other Operating Costs 3,500 Total Deductions 3,500 Change in Net Position (1,979) Total Net Position - September 1 (Beginning) 142,212 Total Net Position - August 31 (Ending) $ 140,233 The notes to the financial statements are an integral part of this statement. 44

46 NOTES TO FINANCIAL STATEMENTS 45

47

48 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED AUGUST 31, 2014 NOTE A - REPORTING ENTITY The Harlingen Consolidated Independent School District (the District ) is an independent public education agency operating under applicable laws and regulations of the State of Texas. This report includes the financial statements of the funds required to account for those activities, organizations and functions, which are related to the District and which are controlled by or dependent upon the District s governing body, the Board of Trustees. The Board of Trustees (the Board), includes seven eligible members elected at large by the qualified voters of the Harlingen Consolidated Independent School District. The Board has the exclusive power and duty to govern and oversee the management of the public schools of the District. All powers and duties not specifically delegated by statute to the Texas Education Agency (TEA) or to the State Board of Education are reserved for the Board, and TEA may not substitute its judgment for the lawful exercise of those powers and duties by the Board. The District is considered an independent entity for financial reporting purposes and is considered a primary government. As required by generally accepted accounting principles, these basic financial statements have been prepared, based on considerations regarding the potential for inclusion of other entities, organizations, or functions, as part of the District s financial reporting entity. Based on these considerations, no other entities have been included in the District s financial reporting entity. The District receives funding from local, state and federal government sources and must comply with the requirements of these funding source entities. Additionally, as the District is considered a primary government for financial reporting purposes, its activities are not considered a part of any other government or other type of reporting entity. The criteria used to determine whether an organization is a component unit of the District includes: financial accountability of the District for the component unit, appointment of a voting majority, fiscal dependency, ability to impose the District s will on the component unit, and whether there is a financial benefit or burden to the District. For financial reporting purposes, the Harlingen Consolidated Independent School District Public Facility Corporation ( PFC ) is included in the operations and activities of the District because of the fiscal dependency criteria whereby the PFC serves the District exclusively. The Harlingen Consolidated Independent School District Public Facility Corporation ( PFC ), a blended component unit, was organized to finance the construction of a new elementary campus for the District. HCISD PFC is governed by a Board of Directors composed of the Harlingen Consolidated Independent School District Board of Trustees. The HCISD PFC is blended as part of the governmental activities. NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Harlingen Consolidated Independent School District's (the "District") basic financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America as applied to governmental units in conjunction with the Texas Education Agency's Financial Accountability System Resource Guide (the "Resource Guide"). The Governmental Accounting Standards Board (GASB) is the accepted standards setting body for establishing governmental accounting and financial reporting principles. 47

49 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED AUGUST 31, 2014 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued 1. Government-Wide Statements and Fund Financial Statements The government-wide financial statements consist of the statement of net position and the statement of activities. These statements report information on all of the non-fiduciary activities of the District. The effect of the interfund activity has been removed from these statements. The statement of activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Program revenues include charges to customers and grants used for operational requirements. Governmental activities are supported by tax revenues, state aid, charges for services, investment earnings and intergovernmental revenues such as grants. The statement of activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. Program revenues include 1) charges to customers or applicants who purchase, use or directly benefit from goods, services or privileges provided by a given function and 2) grants and contributions that are restricted to meeting operational or capital requirements of a particular function. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and fiduciary funds even though the latter are excluded from the government-wide financial statements. Major individual governmental funds are reported as separate columns in the fund financial statements. The accounts of the District are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that compromise its assets, liabilities, fund equity, revenues and expenditures, or expenses, as appropriate. Government resources are allocated to, and accounted for the purpose of, carrying on specific activities in accordance with laws, regulations, or other appropriate requirements. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. All remaining governmental funds are aggregated and reported as non-major funds. 2. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Non-exchange transactions, in which the District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, grants, entitlements, and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. The District reports the following major governmental funds: General Fund. This is the District s primary operating fund. It accounts for all financial resources of the District except those required to be accounted for in another fund. 48

50 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED AUGUST 31, 2014 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued Capital Projects Fund. The District uses this fund to account for bond proceeds used for construction. In addition, the District reports the following fund types: Governmental Funds: Special Revenue Funds: The District accounts for resources restricted to, or designated for, a specific purpose by the District or a grantor in a special revenue fund. Most federal and some state financial award programs are accounted for in these funds and sometimes unused balances must be returned to the grantor at the close of specified project periods. Fiduciary Funds: Fiduciary funds are reported in the fiduciary fund financial statements. However, because their assets are held in a trustee or agency capacity and are not available to support District programs, these funds are not included in the government-wide statements. They are as follows: Private Purpose Trust Funds: The District accounts for donations for which the donor stipulated that both the principal and the income may be used for purposes that benefit parties outside the District. The District s Private Purpose Trust Funds include the Monasmith Scholarship Fund, Dan McCary UIL Scholarship Fund, Bob Irby Music Scholarship Fund, Susan Diaz Scholarship Fund, HHS Scholarship Fund, Norma Schultz Scholarship Fund and the Bergendahl Estate Scholarship Fund. Agency Funds: the District accounts for resources held for others in a custodial capacity in agency funds. The District s Agency Fund is the Student Activity Fund. In addition, the District reports the following proprietary fund: Internal Service Fund: These funds are used to account for revenues and expenses related to services provided to parties inside the District. These funds facilitate distribution of support costs to the uses of support services on a cost reimbursement basis. The District uses this fund to account for claim payments and administrative costs paid for the modified self-funded workers compensation plan provided for the employees. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund s principal ongoing operations. 49

51 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS CONTINUED YEAR ENDED AUGUST 31, 2014 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued The Proprietary Fund Types and the Fiduciary Fund Types are accounted for on a flow of economic resources measurement focus and utilize the accrual basis of accounting. This basis of accounting recognizes revenues in the accounting period in which they are earned and become measurable and expenses in the accounting period in which they are incurred and become measurable. With this measurement focus, all assets and all liabilities associated with the operation of these funds are included on the fund Statement of Net Position. The fund equity is segregated into restricted net position (held in trust) and unrestricted net position. The agency funds record only assets and liabilities and use the accrual basis of accounting to recognize receivables and payables. When both restricted and unrestricted resources are available for use, it is the District s policy to use restricted resources first, then unrestricted resources as they are needed. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. This basis of accounting recognizes revenues in the accounting period in which they become available and measurable. The District considers revenues as available if they are collected within the 60 days after year end. Revenues susceptible to accrual are property taxes, fiscal year state funding, and interest revenues. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources. When the District incurs an expenditure or expense for which both restricted and unrestricted resources may be used, it is the District s policy to use restricted resources first, then unrestricted resources. Unearned revenue is reported in the governmental funds when a potential revenue does not meet both the measurable and available criteria for recognition in the current period. Unearned revenues also arise when resources are received by the government before it has a legal claim to them, as when grant monies are received prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the government has a legal claim to the resources, the liability for unearned revenue is removed and revenue is recognized. 3. Budgets The official school budget was prepared for adoption for required Governmental Fund types by August 31, The budget was formally adopted by the board of school trustees at a duly advertised public meeting prior to the expenditure of funds. The budget was amended by the board of school trustees throughout the year. Expenditures may not legally exceed budgeted appropriations at the function level. 4. Cash and Cash Equivalents For the purposes of the statement of cash flows, investments are considered to be cash equivalents if they are highly liquid with maturity within three months or less. 5. Investments Money market investments which are short-term, highly liquid debt instruments including commercial paper, bankers acceptances and U.S. Treasury and agency obligations are reported at fair value. 50

52 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED AUGUST 31, 2014 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued 6. Inventory Inventory is valued at cost (average). The District accounts for school supply and food inventories by using the consumption method whereby expenditures are recognized only when inventory items are used. Maintenance supplies inventory is accounted for by using the purchase method whereby purchases of inventories are recognized as expenditures when the goods are received and the transaction is vouchered. Reported inventories are equally offset by nonspendable fund balance which indicates that they do not constitute "available spendable resources" even though they are a component of net current assets. Commodity inventory is offset by unearned revenue. 7. Other Current Assets Other current assets are prepaid expenses that will benefit periods beyond August 31, The only prepaid expenses included are for unexpired insurance policy premiums paid by August 31, 2014, and which extend beyond that date. The reported prepaid insurance is equally offset by nonspendable fund balance, which indicates that they do not constitute "available expendable resources" even though they are a component of net current assets. 8. Capital Assets Purchased or constructed capital assets are reported at cost or estimated historical cost. Donated capital assets are recorded at their estimated fair value at the date of the donation. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. A capitalization threshold of $5,000 is used. Capital assets are being depreciated using the straight-line method over the following estimated useful lives: 9. Interfund Activity Estimated Assets Class Useful Lives Buildings and improvements 50 Vehicles 7-10 Furniture and equipment 5-10 Interfund activity results from loans, services provided, reimbursements or transfers between funds. Loans are reported as interfund receivables and payables as appropriate and are subject to elimination upon consolidation. Services provided are treated as revenues and expenditures or expenses. Reimbursements occur when one fund incurs a cost, charges the appropriate benefiting fund, and reduces its related cost as a reimbursement. All other interfund transactions are treated as transfers. Transfers In and Transfers Out are netted and presented as a single Transfers line on the government-wide statement of activities. Similarly, interfund receivables and payables are netted and presented as a single Internal Balances line of the government-wide statement of net position. 51

53 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED AUGUST 31, 2014 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued 10. Long-term Obligations In government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities. Bond premiums and discounts are deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. Premiums received and discounts incurred on debt issuances are reported as other financing sources and uses. Issuance costs, whether or not withheld from debt proceeds, are reported as debt service expenditures. 11. Use of Estimates The preparation of financial statements in conformity with GAAP requires the use of management s estimates. Actual results could differ from those estimates. 12. Compensated Absences The District s policy allows employees with at least ten years of employment with the District to accumulate unused sick leave up to 30 days. Sick leave in excess of the 30 day maximum is not paid at termination, but will be paid only upon illness while in the employ of the District. 13. Accounting System In accordance with the Resource Guide, the District has adopted and installed an accounting system which meets at least the minimum requirements prescribed by the State Board of Education and approved by the State Auditor. Specifically, the District s accounting system uses codes and the code structure prescribed by TEA in the Resource Guide. Mandatory codes are recorded in the order provided in that section. 14. Data Control Codes Data Control Codes appear in the rows and above the columns of certain financial statements. The TEA requires the display of these codes in the financial statements filed with TEA in order to insure accuracy in building a State-wide database for policy development and funding plans. 15. Fund Balance Reporting The District s policy provides for two major types of fund balances, which are nonspendable and spendable. Nonspendable fund balances are balances that cannot be spent because they are not expected to be converted to cash or they are legally or contractually required to remain intact. Examples of this classification are prepaid items and inventories. The District has prepaid items and inventories that are considered nonspendable. In addition to the nonspendable fund balance, the policy has provided a hierarchy of spendable fund balances, based on a hierarchy of spending constraints. 52

54 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED AUGUST 31, 2014 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued Restricted: fund balances that are constrained by external parties, constitutional provisions, or enabling legislation. Committed: fund balances that contain self-imposed constraints of the government from its highest level of decision making authority. The responsibility to commit funds rests with the Board of Trustees. Committed amounts cannot be used for any other purpose unless the governing board changes or lifts the constraint taking the same formal action that imposed the constraint originally. The District establishes (and modifies or rescinds) fund balance commitments by passage of a resolution. Assigned: fund balances that contain self-imposed constraints of the government to be used for a particular purpose. The responsibility to assign funds rests with the Superintendent or the Assistant Superintendent for Business Services. Unassigned: fund balance of the general fund that is not constrained for any particular purpose. When an expenditure is incurred for a purpose for which both restricted and unrestricted fund balance is available, The District considers restricted funds to have been spent first. When an expenditure is incurred for which committed, assigned, or unassigned fund balances are available, the District considers amounts to have been spent first out of committed funds, then assigned funds, and finally unassigned funds. Minimum fund balance policy. The Board of Trustees adopted a financial policy to maintain a minimum level of unrestricted fund balance (the total of the committed, assigned, and unassigned components of fund balance) in the general fund. The target level is set at two months of total operating expenditures of fund balance in the general fund. This amount is intended to provide fiscal stability when economic downturns and other unexpected events occur. If fund balance falls below the minimum target level because it has been used, essentially as a revenue source, as dictated by current circumstances, the policy provides for actions to replenish the amount to the minimum target level. Generally, replenishment is to occur within a three-year period. 16. Encumbrance Accounting The District employs encumbrance accounting, whereby encumbrances for goods or purchased services are documented by purchase orders and contracts. An encumbrance represents a commitment of Board appropriation related to unperformed contracts for goods and services. The issuance of a purchase order or the signing of a contract creates an encumbrance but does not represent an expenditure for the period, only a commitment to expend resources. Appropriations lapse at August 31 st and encumbrances outstanding at that time are either cancelled or appropriately provided for in the subsequent year s budget. Outstanding encumbrances that were provided for in the subsequent year s budget are presented below: General Fund $ 1,383,072 Special Revenue Funds 624,569 Capital Projects Funds 8,790,453 $10,798,094 53

55 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED AUGUST 31, 2014 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued 17. Deferred Outflows and Inflows 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, deferred outflow of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The government only has one item that qualifies for reporting in this category. It is the deferred charge on refunding reported in the government-wide statement of net position. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunding debt. 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, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The government has only one type of item, which arises only under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from property taxes. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. NOTE C DEPOSITS AND INVESTMENTS Investment Accounting Policy The District is required by Government Code Chapter 2256, The Public Funds Investment Act (the Act ), to adopt, implement, and publicize an investment policy. That policy must address the following areas: (1) safety of principal and liquidity, (2) portfolio diversification, (3) allowable investments, (4) acceptable risk levels, (5) expected rates of return, (6) maximum allowable stated maturity of portfolio investments, (7) maximum average dollar-weighted maturity allowed based on the stated maturity date for the portfolio, (8) investment staff quality and capabilities, and (9) bid solicitation preferences for certificates of deposit. The Act requires an annual audit of investment practices. Audit procedures in this area conducted as a part of the audit of the basic financial statements disclosed that in the areas of investment practices, management reports, and establishment of appropriate policies; the District adhered to the requirements of the Act. Additionally, investment practices of the District were in accordance with local policies. The District s general policy is to report money market investments and short-term participating interest-earning investment contracts at amortized cost and to report nonparticipating interest-earning investment contracts using a cost-based measure. However, if the fair value of an investment is significantly affected by the impairment of the credit standing of the issuer or by other factors, it is reported at fair value. All other investments are reported at fair value unless a legal contract exists which guarantees a higher value. 54

56 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED AUGUST 31, 2014 NOTE C DEPOSITS AND INVESTMENTS - Continued The term short-term refers to investments which have a remaining term of one year or less at time of purchase. The term nonparticipating means the investment s value does not vary with market interest rate changes. Nonnegotiable certificates of deposit are examples of nonparticipating interest-earning investment contracts. The Act determines the types of investments, which are allowable for the District. These include, with certain restrictions, (1) obligations of the U.S. Treasury, certain U.S. agencies, the state of Texas, (2) certificates of deposit, (3) certain municipal securities, (4) money market savings accounts, (5) repurchase agreements, (6) bankers acceptances, (7) mutual funds, (8) investment pools, (9) guaranteed investment contracts, and (10) common trust funds. The District s policy authorizes all the State allowable investments. The District s management believes that it has complied in all material respects with the requirements of the Act and the District s investment policies. Custodial Credit Risk Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The Public Funds Investment Act, the District s investment policy, and Government Code Chapter 2257 Collateral For Public Funds contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments. To be eligible to receive funds from and invest funds on behalf of an entity under this chapter, a public fund investment pool created to function as a money market mutual fund must mark its portfolio to market daily, and to the extent reasonable possible, stabilize at a $1 net asset value. If the ratio of the market value of the portfolio divided by the book value of the portfolio is less than.995 or greater than 1.005, portfolio holdings shall be sold as necessary to maintain the ratio between and The District's funds are required to be deposited and invested under the terms of a depository contract. The depository bank deposits for safekeeping and trust with the District's agent bank approved pledged securities in an amount sufficient to protect District funds on a day-to-day basis during the period of the contract. The pledge of approved securities is waived only to the extent of the depository bank's dollar amount of Federal Deposit Insurance Corporation ( FDIC ) insurance. Cash Deposits At August 31, 2014, the carrying amount of the District's deposits (cash, certificates of deposit, and interest-bearing savings accounts included in temporary investments) was $51,153,699 and the bank balance was $53,849,547. The District's cash deposits at August 31, 2014 and during the year ended August 31, 2014 were entirely covered by FDIC insurance or by pledged collateral held by the District's agent bank in the District s name. The District s cash deposits at August 31, 2014 are maintained primarily at Frost National Bank, Harlingen, Texas. These deposits were entirely covered by FDIC insurance or by pledged collateral held by the District s agent bank. The deposits were collateralized in accordance with Texas Law, and the Texas Education Agency maintains copies of all safekeeping receipts in the name of the District. Deposits were properly secured at all times. 55

57 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED AUGUST 31, 2014 NOTE C DEPOSITS AND INVESTMENTS Continued In addition, the following is disclosed regarding coverage of combined balances on the date of highest deposit: a. Depository: Frost National Bank b. The market value of securities pledged as of the date of the highest combined balance on deposit was $31,053,323. c. The highest combined balances of cash, savings and time deposit accounts amounted to $23,868,956 and occurred during the month of December d. Total amount of FDIC coverage at the time of largest combined balance was $500,000. Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. In accordance to the District s local policy, the District uses final and weighted-average maturity limits and diversification. It manages its exposure to interest rate risk by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations. The District s policy in using final and weighted-average-maturity limits helps reduce exposure to changes in interest rates that could adversely affect the value of investments. Information about the sensitivity of the fair values of the District s investments to market interest rate fluctuations is provided by the following table that shows the specific investments and their maturity: Description CUSIP Amount Maturity Days Texas Class N/A $22,311,649 N/A Daily Tex Star N/A 1,163,881 N/A Daily TexPool N/A 1,576,825 N/A Daily Lone Star N/A 14,050,346 N/A Daily QSCB-US Bank N/A 4,529,658 N/A Daily $43,632,359 Credit Risk Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by the District s investment policy and the Texas Public Fund Investment Act and the actual rating as of year end for each investment. Minimum Description Legal Rating Amount Rating Percentage Texas Class AAA $22,311,649 AAA 51% Tex Star AAA 1,163,881 AAA 3 TexPool AAA 1,576,825 AAA 4 Lone Star AAA 14,050,346 AAA 32 QSCB-US Bank AAA 4,529,658 AAA 10 $43,632,359 56

58 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED AUGUST 31, 2014 NOTE C DEPOSITS AND INVESTMENTS Continued Concentration of Credit Risk The Investment policy of the District contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the Public Funds Investment Act ( PFIA ). There were no investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) that represent 5% or more of total District investments. Public Funds Investment Pools TexPool is a public funds investment pool created by the Texas Treasury Safekeeping Trust Company (Trust Company) to provide a safe environment for the placement of local government funds in authorized short-term, fully-collateralized investments, including direct obligations of, or obligations guaranteed by, the United States or State of Texas or their agencies, federally insured certificates of deposit issued by Texas banks or savings and loans, and fully collateralized direct repurchase agreements secured by United States Government agency securities and placed through a primary government securities dealer. The Trust Company was incorporated by the State Treasurer by authority of the Texas Legislature as a special purpose trust company with direct access to the services of the Federal Reserve Bank to manage, disburse, transfer, safekeep, and invest public funds and securities more efficiently and economically. The State Comptroller of Public Accounts exercises oversight responsibility over TexPool. Oversight includes the ability to significantly influence operations, designation of management, and accountability for fiscal matters. TexPool operates in a manner consistent with the Security and Exchange Commission s Rule 2a7 of the Investment Company Act of TexPool uses amortized cost rather than market value to report net assets to compute share prices. The fair value of the position in TexPool is the same as the value of TexPool shares. Accordingly, the District s investments in TexPool are stated at cost, which approximates fair value. TexPool is currently rated AAA by Standard and Poor s. This rating indicates excellent safety and a superior capacity to maintain principal value and limit exposure to loss. TexSTAR is a local government investment pool created under the Interlocal Cooperation Act specifically tailored to meet Texas state and local government investment objectives of preservation of principal, daily liquidity and competitive yield. The fund is rated AAAm by Standard and Poor s and maintains a maturity of 60 days or less, with a maximum maturity of 13 months for any individual security. The fund seeks to maintain a constant dollar objective and fulfills all requirements of the Texas PFIA for local government investment pools. MBIA, Inc. s Texas CLASS pool is a 2a7-like investment pool. Texas CLASS pool is rated AAA by Fitch. Texas CLASS participants investments in the pool are evidenced by shares of the pool. The public entity s investment is with the pool, not the securities that make up the pool. The District's investment in Pools are reported at an amount determined by the fair value per share of the pool's underlying portfolio, unless the pool is 2a7-like, in which case they are reported at share value. A 2a7-like pool is one which is not registered with the Securities and Exchange Commission ("SEC") as an investment company, but nevertheless has a policy that it will, and does, operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of

59 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED AUGUST 31, 2014 NOTE D - PROPERTY TAX Property taxes are levied by October 1 in conformity with Subtitle E, Texas Property Tax Code. Taxes are due on receipt of the tax bill and are delinquent if not paid before February 1 of the year following the year in which imposed. On January 1 of each year, a tax lien attaches to property to secure the payment of all taxes, penalties, and interest ultimately imposed. Property tax revenues are considered available when they become due or past due and receivable within the current period and those expected to be collected during a 60 day period after the close of the school fiscal year. Delinquent taxes are prorated between maintenance and debt service based on rates adopted for the year of the levy. The District s 2013 tax rate was $1.04 for maintenance and $.0850 for debt service per $100 assessed valuation. The 2012 assessed valuation was $3,034,734,662. Allowances for uncollectibles within the General and Debt Service Funds are based upon historical experience in collecting property taxes. Uncollectible personal property taxes are periodically reviewed and written off, but the District is prohibited from writing off real property taxes without specific statutory authority from the Texas Legislature. At August 31, 2014 outstanding taxes in the general fund and debt service fund was $3,927,859 and $501,005 with a corresponding allowance for doubtful accounts of $925,400 and $87,623. NOTE E DUE FROM AND TO OTHER GOVERNMENTS AND AGENCIES Due From Due To Governmental Funds: General Fund: Texas Education Agency: Foundation revenues $5,555,960 $2,946,669 Other government agencies 26, ,748 5,582,702 3,554,417 Other Governmental Funds: Texas Education Agency: ESEA, Title I, Part A Improving Basic Programs 821,357 - ESEA, Title I, Part C Migratory Children 188,374 - ESEA, Title I, Part D Prevention and Intervention Programs 3,902 - Title I, School Improvement: Priority and Focus 2,037 - IDEA B Formula 285,908 - IDEA B Preschool 5,070 - National School Breakfast and Lunch Program 3,241 - Career and Technical Basic Grant 29,530 - ESEA, Title II, Part A, TPTR 107,619 - ESEA, Title III, Part A, - English Language Acquisition 12,139 - Title IV Part B 21 st Century Community Learning Centers 213,167 - Other government agencies 4,468 - Total Governmental Funds 1,676,812 - Total $7,259,514 $3,554,417 58

60 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED AUGUST 31, 2014 NOTE F DISAGGREGATION OF RECEIVABLES AND PAYABLES Receivables at August 31, 2014, were as follows: Due from Property Other Other Other Total Taxes, Net Governments Funds Receivables Receivables Governmental Activities: General Fund $3,002,459 $5,582,702 $1,830,227 $186,934 $10,602,322 Capital Projects Fund - 127, ,273 Nonmajor Governmental Funds 413,382 1,676, ,320 2,092,140 Total Governmental Activities $3,415,841 $7,259,514 $1,830,853 $315,527 $12,821,735 Payables at August 31, 2014, were as follows: Accounts Salaries and Due to Due to Other Total Payable Benefits Other Funds Governments Payables Governmental Activities: General Fund $1,978,034 $5,522,310 $ 188,001 $2,946,669 $ 10,635,014 Capital Projects Funds 5,115,471-5,115,471 Nonmajor Governmental Funds 569,047-1,742, ,748 2,919,070 Total Governmental Activities $7,662,552 $5,522,310 $1,930,276 $3,554,417 $18,669,555 NOTE G CAPITAL ASSETS Capital asset activity for the year ended August 31, 2014, was as follows: Governmental activities General General Capital Assets Capital Assets Sept.1, 2013 Additions Deletions Transfers Aug. 31, 2014 Capital assets not being depreciated Land $ 6,231,892 $ - $ - $ - $ 6,231,892 Construction in progress 55,002,435 25,747,695 - (45,877,281) 34,872,849 Total capital assets not being depreciated 61,234,327 25,747,695 - (45,877,281) 41,104,741 Capital assets being depreciated Building and improvements 266,949,607 45,877, ,826,888 Furniture and equipment 23,682,478 1,503, ,279-24,917,946 Total capital assets being depreciated 290,632,085 1,503, ,279 45,877, ,744,834 Less accumulated depreciation: Building and improvements 115,518,297 7,270, ,788,756 Furniture and equipment 15,224,980 1,892, ,979-16,856,523 Total accumulated depreciation 130,743,277 9,162, , ,645,279 Total capital assets being depreciated, net 159,888,809 (7,659,233) 7, ,236,876 Governmental activities capital assets, net $221,123,136 $18,088,462 $ 7,300 $ - $239,204,297 59

61 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED AUGUST 31, 2014 NOTE G CAPITAL ASSETS - Continued Depreciation was charged to the following functions: Government Activities: 11 Instruction $5,068, Instructional Resources and Media Services 162, Curriculum and Staff Development 135, Instructional Leadership 222, School Leadership 555, Guidance, Counseling and Evaluation Services 322, Social Work Services 30, Health Services 100, Student Transportation 210, Food Services 582, Cocurricular/Extracurricular Activities 292, General Administration 230, Plant Maintenance and Operations 947, Security and Monitoring Services 70, Data Processing Services 132, Community Services 99,098 $9,162,981 NOTE H CONSTRUCTION COMMITMENTS Construction in progress at August 31, 2014 is comprised of the following: Expended Estimated Through Amount Project Costs August 31, 2014 Committed Cano Academy $ 3,319,166 $ 3,319,166 $ - Performing Arts Center 655, ,481 - School of Health Professions 16,190,867 11,599,253 4,591,614 Aquatic Center 8,010,556 8,010,556 - Agriculture Farm 117, ,161 - Other Renovations 11,171,232 11,171,232 - $39,464,463 $34,872,849 $4,591,614 NOTE I RESTRICTED ASSETS Restricted assets of $2,134,853 at August 31, 2014, consisted of restricted cash balances relating to retainage agreements totaling $1,439,853 and $695,000 in a sinking fund balance related to the Unlimited 2013 Tax Qualified School Construction Bonds (Tax Credit) on the District s construction projects. 60

62 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED AUGUST 31, 2014 NOTE J - LONG-TERM OBLIGATIONS Long term obligations include bonds payable, loans payable, and compensated absences. Changes in long-term obligations for the year ended August 31, 2014 are as follows: Beginning Balance Balance Due Within Governmental Activities Sept. 1, 2013 Increase Decrease Aug. 31, 2014 One Year Unlimited Tax School Building Bonds Series 2003 $ 355,000 $ - $ 355,000 $ - $ - Unlimited Tax Refunding Bonds Series ,740,000-2,020,000 45,720,000 2,120,000 Unlimited Tax School Building Bonds Series 2010A 67,380,000-1,765,000 65,615,000 1,785,000 Unlimited Tax School Building Bonds Series 2010B 24,220, ,000 23,670, ,000 Unlimited Tax Refunding Bonds Series ,270,000 9,270, ,000 Lease Revenue Bonds ,618, ,000 4,373, ,000 Total general obligation bonds 153,583,000-4,935, ,648,000 5,130,000 Unlimited 2013 Tax Qualified School Construction Bonds (Tax Credit) - 13,900,000-13,900, ,000 Premium on issuance of bonds 1,181,511-34,630 1,146,881 - Discount on issuance of bonds - (102,471) 5,124 (97,347) - Compensated absences 1,321,795 25, ,500 1,221, ,500 Total governmental activities $156,086,306 $13,823,138 $5,100,254 $164,819,438 $5,952,500 The District s other non-current liabilities including compensated absences are liquidated in the fund where the liability was incurred. Thus, the general fund satisfies most liabilities for governmental activities. General Obligation Bonds: Bonds payable at August 31, 2014 are comprised of the following individual issues: The District issued $41,730,000 in current interest serial bonds with interest rates ranging from 3.0% to 5.0% and $13,450,000 in current interest term bonds to advance refund $55,189,991 of outstanding 1999 series bonds ( refunded bonds ) with an interest rate of 5.5% to 7.5%. The current interest serial bonds mature in the years 2005 through 2027 in installments ranging from $135,000 to $3,810,000. The current interest term bonds of $5,280,000 and $8,170,000 mature on August 15, 2020 and August 15, 2020, respectively. At August 31, 2014, the amount of defeased debt outstanding was $51,935,000. $45,720,000 The Harlingen Consolidated Independent School District Public Facilities Corporation ( PFC ) issued $6,000,000 in non-callable lease revenue bonds the ( bonds ) with interest rates ranging from 3.99% to 4.53%. The bonds mature annually on August 15 th through the years 2008 through 2027 in installments ranging from $185,000 to $440,000. Interest payments are due semi-annually on August 15 th and February 15 th. The proceeds of the bonds were used for construction of a new elementary campus. 4,373,000 61

63 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED AUGUST 31, 2014 NOTE J - LONG-TERM OBLIGATIONS - Continued The District issued $72,745,000 in Unlimited Tax School Building Bonds, Taxable Series 2010A (Directly Subsidy Build America Bonds) with interest rates ranging from.4% to 5.470%. The bonds mature annually on August 12 th through the y ears 2011 through 2030 and term bonds maturing on August 12, 2035 and August 15, Proceeds will be used for construction of a new ninth grade campus, new middle school, agricultural farm and various other projects. $ 65,615,000 The District issued $25,280,000 Unlimited Tax Building Bonds, Series 2010B as serial Bonds maturing on August 15, 2011 through August 15, Proceeds will be used for construction of a fine arts auditorium, aquatic center, District operations facility and other renovations. Interest rates range from 2.0% to 4.10%. These are tax exempt bond issues. 23,670,000 On July 14, 2011, the District advance refunded $9,270,000, Unlimited Tax Refunding Bonds, Series Principal plus interest payments are due annually on August 31, for each year until maturity on August 31, Principal and interest payments range from $466,726 to $846,000 and interest rates range from 2.5% to 4.0%. 9,270,000 $148,648,000 Tax Qualified School Construction Bonds On September 5, 2013, the District issued $13,900,000, 2013 School Facility Lease Revenue Qualified School Construction Bonds (Direct pay subsidy tax credit). Qualified school construction bonds (QSCB) are a debt instrument created by Section 1521 of the American Recovery and Reinvestment Act of The District has elected to receive a direct interest payment from the federal government. Payments will be set aside to a sinking fund until maturity. $ 13,900,000 Advance Refunding in Prior Years In prior years, the District defeased certain outstanding bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the respective trust account assets and related liabilities for the defeased bonds are not included in the District s financial statements. At August 31, 2014, the following outstanding bonds are considered defeased: Series Ending Balance 1999 $20,105, $ 9,525,000 Debt service requirements on long-term debt at August 31, 2014 are as follows: Year Ending General Obligation Bonds Lease Revenue Bonds Total Requirements August 31, Principal Interest Principal Interest Principal Interest 2015 $ 4,875,000 $ 5,570,495 $ 255,000 $ 197,658 $ 5,130,000 $ 5,768, ,030,000 5,419, , ,387 5,294,000 5,605, ,195,000 5,252, , ,586 5,474,000 5,427, ,380,000 5,073, ,948 5,380,000 5,234, ,580,000 4,878, ,948 5,580,000 5,040, ,300,000 20,972, ,842 31,300,000 21,488, ,280,000 13,973,143 3,575, ,789 41,855,000 14,650, ,590,000 7,393,248 20,590,000 7,393, ,935,000 3,550,130 22,935,000 3,550, ,110, ,152 5,110, ,152 General Fund Restricted Asset Total $144,275,000 $72,272,851 $4,373,000 $ 2,076,157 $148,648,000 $74,349,007 There are a number of limitations and restrictions contained in the general obligation bond indentures. Management has indicated that the District is in compliance with all significant limitations and restrictions at August 31,

64 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED AUGUST 31, 2014 NOTE J - LONG-TERM OBLIGATIONS - Continued 2013 School Facility Lease Revenue Qualified School Construction Bonds Direct-Pay Subsidy Bonds Available Subsidy Year Ending August 31, Principal Interest Interest 2015 $ 695,000 $ 938,250 $ (740,870) , ,250 (740,870) , ,250 (740,870) , ,250 (740,870) , ,250 (740,870) ,475,000 4,691,250 (3,704,350) ,475,000 4,691,250 (3,704,350) ,780,000 3,753,000 (2,963,480) General Fund Restricted Asset 695,000 Total Requirements $13,900,000 $17,826,750 $(14,076,530) This debt will be paid by the General Fund. At the time of issuance of these notes, a 79% federal subsidy was available to the District under Code Section 6431 (f), for the fiscal year , sequestration reductions under the Budget Control Act of 2011 limited the interest assistance to the District to 92.8% of the interest requirements on these bonds. At August 31, 2014, $695,000 was recorded as a restricted asset in the general funds. These funds are required to be set aside to pay the Tax Qualified School Construction Bonds (direct pay subsidy tax credit). These funds are managed by a Trustee and are currently invested in certificates of deposit. Other restrictions of fund balances on the balance sheet include this amount. NOTE K - HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT PUBLIC FACILITY CORPORATION The Public Facility Corporation is a public non-profit corporation, the creation of which was sponsored by the District pursuant to the Public Facility Corporation Act, Article 717s, Vernon s Texas Civil Statutes, as amended (the Public Facility Corporation Act ). The Public Facility Corporation Act authorizes the creation and utilization by school districts of public facility corporations to issue bonds to provide for the acquisition, construction, rehabilitation, renovation, repair, equipping, furnishing and placing in service of public facilities of its governmental sponsor and further authorizes the governmental sponsor to incur lease purchase obligations in favor of the corporation to serve as security for the bonds issued by the Public Facility Corporation. Lease revenue bonds in the principal amount of $6,000,000 were issued on July 25, 2007, pursuant to a resolution by the Board of Directors of the Public Facility Corporation and a Master Trust Indenture dated as of June 1, 2007, (the Trust Indenture ) between the Public Facility Corporation and Amegy Bank National Association, as trustee to finance, for the benefit of the District, the construction of a new elementary campus. The balance at August 31, 2014 totaled $4,373,000. To accomplish the financing, the Public Facility Corporation and the District entered into a Lease With An Option to Purchase Relating to the Harlingen Consolidated Independent School District New Elementary Campus, pursuant to the terms of which the District will pay to the Public Facility Corporation such lease payments at such times and in such amounts as will be required to pay the principal of premium, if any, and interest on the lease revenue bonds as they become due. 63

65 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED AUGUST 31, 2014 NOTE L - REVENUES FROM LOCAL AND INTERMEDIATE SOURCES During the current year, revenues from local and intermediate sources consisted of the following: Capital Other Total Internal General Projects Governmental Governmental Service Fund Fund Funds Funds Funds Total Property taxes $33,800,116 $ - $5,814,661 $39,614,777 $ - $39,614,777 Food sales 1,447,036 1,447,036-1,447,036 Investment income 35,112 16,117-51,229 1,521 52,750 Penalties and interest 745, , ,791 Co-curricular student activities 337, , ,631 Other 1,469, ,550 1,680, ,309 2,281,595 $36,388,386 $ 16,117 $7,472,247 $43,876,750 $602,830 $44,479,580 NOTE M DEFERRED OUTFLOWS AND INFLOWS OF RESOURCES Governmental funds report deferred inflows in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. On the government-wide financial statements, deferred outflows include deferred charges on refunding of the bonds. Unavailable revenues in the general fund and the debt service fund at August 31, 2014 were $2,738,700 and $370,351 respectively. On the government-wide financial statements, the District reports cumulative deferred charges on refundings as a Deferred Outflows of Resources in the amount of $9,278 which is net of cumulative amortization of $1,637. NOTE N - UNEARNED REVENUE Governmental funds report unearned revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. As of August 31, 2014, the various components of unearned revenue reported in the governmental funds were as follows: Amount Advance athletic receipts $102,795 Commodity inventory 6,891 State and private grants 98,710 $208,396 Unearned revenues for property taxes represent property taxes levied but not collected as of August 31, 2014 (less allowance for uncollectible taxes). Deferred property taxes will be recognized as revenue in the fiscal year that they become available. Unearned revenues for state and private grants represent revenues received in excess of expenditures incurred for those programs for which the project period has not yet ended. 64

66 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED AUGUST 31, 2014 NOTE O INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS Interfund receivable and payable balances at August 31, 2014 were: Due to Due From General Fund Non-Major Fund $ 88,269 General Fund Funds within the general fund 309 Non-Major Funds General Fund 1,841,698 Due to other fund 1,930,276 Internal Service Fund General Fund (99,423) Due from other funds $1,830,853 The remaining balances resulted from a routine lag between the dates that transactions such as year-end payroll accruals and worker s compensation adjustment payments are made between the funds. All amounts are scheduled to be repaid within one year. NOTE P - GENERAL FUND FEDERAL SOURCE REVENUES Federally financed programs are generally accounted for in the Other Governmental Funds of the District, except for indirect costs charged to federal programs which are accounted for in the General Fund as prescribed by the TEA and certain direct revenues. The District recognized in the General fund such revenues for the year ended August 31, 2014, from various federal sources as follows: CFDA Programs or Source Number Amount ROTC Salary and Travel $ 103,885 SHARS/Medicaid N/A 2,275,895 Medicaid Administrative Claim N/A 76,324 Payment in lieu of taxes N/A 46,233 Government subsidy N/A 650,065 Summer school - LEP N/A 15,583 Indirect Costs Fiscal Year Programs Title I, Part A Improving Basic Programs ,522 Title I, Part C Migratory Children ,559 Title I, Part D ,059 Title I, (003A) Priority and Focus A 37 IDEA-B Formula ,756 IDEA-B Preschool ,039 Career and Technical Basic Grant ,004 Title II, Part A- Teacher/Principal Training ,089 Title III, Part A English Language Acquisition ,822 Title IV, Part B 21st Century Community Learning Centers ,388 Total general fund federal revenue $3,459,260 65

67 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED AUGUST 31, 2014 NOTE Q COMPLIANCE AND ACCOUNTABILITY a. Finance-Related Legal and Contractual Provision In accordance with GASB Statement No. 38, Certain Financial Statement Note Disclosures, violations of finance related legal and contractual provisions, if any, are reported below, along with actions taken to address such violations: Violations None noted Action Taken None necessary b. Deficit Fund Balance or Fund Net Position of Individual Funds No deficit fund balances were reported in the current year. NOTE R - CONTINGENT LIABILITIES The District is a party to various legal actions, none of which is believed by administration to have a material effect on the financial condition of the District. Accordingly, no provision for losses has been recorded in the accompanying combined financial statements for such contingencies. The District participates in numerous state and federal grant programs which are governed by various rules and regulations of the grantor agencies. Costs charged to the respective grant programs are subject to audit and adjustment by the grantor agencies; therefore, to the extent that the District has not complied with the rules and regulations governing the grants, if any, refunds of any money received may be required and the collectibility of any related receivable at August 31, 2014 may be impaired. In the opinion of the District, there are no significant contingent liabilities relating to compliance with the rules and regulations governing the respective grants; therefore, no provision has been recorded in the accompanying combined financial statements for such contingencies. Obligations under the construction contracts in existence at August 31, 2014 are expected to be liquidated within the following reporting period. NOTE S PENSION PLAN Plan Description. The District contributes to the Teacher Retirement System of Texas (TRS), a cost sharing multiple employer defined benefit pension plan. TRS administers retirement and disability annuities, and death and survivor benefits to employees and beneficiaries of employees of the public school systems of Texas. It operates primarily under the provisions of the Texas Constitution, Article XVI, Sec. 67, and Texas Government Code, Title 8, Subtitle C. TRS also administers proportional retirement benefits and service credit transfer under Texas Government Code, Title 8, Chapters 803 and 805, respectively. The Texas state legislature has the authority to establish and amend benefit provisions of the pension plan and may, under certain circumstances, grant special authority to the TRS Board of Trustees. TRS issues a publicly available financial report that includes financial statements and required supplementary information for the defined benefit pension plan. That report may be obtained by downloading the report from the TRS Internet website, under the TRS Publications heading, by calling the TRS Communications Department at , or by writing to the TRS Communications Department, 1000 Red River Street, Austin, Texas

68 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED AUGUST 31, 2014 NOTE S PENSION PLAN - Continued Funding Policy. Contribution requirements are not actuarially determined but are established and amended pursuant to the following state funding policy: (1) The state constitution requires the legislature to establish a member contribution rate of not less than 6.0% of the member s annual compensation and a state contribution rate of not less than 6.0% and not more than 10% of the aggregate annual compensation of all members of the system during the fiscal year; (2) state statute prohibits benefit improvements, if as a result of the particular action, the time required to amortize TRS unfunded actuarial liabilities would be increased to a period that exceeds 31 years, or, if the amortization period already exceeds 31 years, the period would be increased by such action. Contribution rates and contributions for fiscal years are shown in the table below. These rates are set by the General Appropriations Act. In certain instances, the reporting district is required to make all or a portion of the state s and/or member s contribution including federally funded personnel, new hires and amounts above statutory minimum. Contribution Rates and Contribution Amounts Member State on-behalf District Covered Fiscal Year Rate Amount Rate Amount Amount Payroll % $7,120, % $6,455,469 $1,046,605 $111,256, % 6,835, % 5,463, , ,080, % 6,605, % 5,352, , ,204,680 Contributions made by the State on behalf of the District have been recorded in the government-wide financial statements and in the fund financial statements of the General Fund as both state revenues and payroll expenditures. NOTE T RETIREE HEALTH CARE PLAN Plan Description. The District contributes to the Texas Public School Retired Employees Group Insurance Program (TRS Care), a cost sharing multiple employer defined benefit postemployment health care plan administered by the Teacher Retirement System of Texas. TRS Care provides health care coverage for certain persons (and their dependents) who retired under the Teacher Retirement System of Texas. The statutory authority for the program is Texas Insurance Code, Chapter Section grants the TRS Board of Trustees the authority to establish and amend basic and option group insurance coverage for participants. The TRS issues a publicly available financial report that includes financial statements and required supplementary information for TRS-Care. That report may be obtained by visiting the TRS website at under the TRS Publications heading, by calling the TRS Communications Department at , or by writing to the Communications Department of the Teacher Retirement System of Texas at 1000 Red River Street, Austin, Texas Funding Policy. Contribution requirements are not actuarially determined but are legally established each biennium by the Texas Legislature. Texas Insurance Code, Sections , 203 and 204 establish state, active employee and public school contributions, respectively. Funding for free basic coverage is provided by the program based upon public school district payroll. Per Texas Insurance Code, Chapter 1575, the public school contribution may not be less than 0.25% or greater than 0.75% of the salary of each active employee of the public school. Funding for optional coverage is provided by those participants selecting the optional coverage. Contribution rates and amounts are shown in the table below for fiscal years

69 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED AUGUST 31, 2014 NOTE T RETIREE HEALTH CARE PLAN - Continued Contribution Rates and Contribution Amounts Member State on-behalf District Covered Fiscal Year Rate Amount Rate Amount Rate Amount Payroll % $ 723, % $ 556, % $ 611,909 $111,256, % 696, % 535, % 588, ,080, % 670, % 1,032, $ 567, ,204,680 The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 established prescription drug coverage for Medicare beneficiaries known as Medicare Part D. Under Medicare Part D, TRS-Care receives retiree drug subsidy payments from the federal government to offset certain prescription drug expenditures for eligible TRS-Care participants. Subsidy payments received by TRS-Care on behalf of the District are shown in the table below for fiscal years Fiscal Medicare Year Part D 2014 $304, , ,024 Contributions made by the State on behalf of the District have been recorded in the government-wide financial statements and in the fund financial statements of the General Fund as both state revenues and payroll expenditures. NOTE U - RISK MANAGEMENT The District is exposed to various risks of loss related to torts, theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters. During fiscal 2012, the District purchased commercial insurance to cover general liabilities. There were no significant reductions in coverage in the past fiscal year and there were no settlements exceeding insurance for each of the past three fiscal years. Effective November 1, 2011, the District entered into a health insurance contract with Valley Baptist Health Plans (VBHP) and Valley Baptist Insurance Company. These plans are fully-funded, pure premium plans, which the District pays premiums of $332.51, respectively per month per employee to the plan and the employees, at their option, may authorize payroll withholdings to pay premiums for dependents. Terms of coverage and premium costs are included in the contractual provisions. Beginning November 1, 2014, the District will begin health insurance coverage under Blue Cross Blue Shield. Workers Compensation Aggregate Deductible During the year ended August 31, 2014, the District met its statutory workers compensation obligations through participation in the TASB Risk Management Fund (the Fund). The Fund was created and is operated under the provisions of the Interlocal Cooperation Act, Chapter 791 of the Texas Government Code. The Fund s Workers Compensation Program is authorized by Chapter 504, Texas Labor Code. All members participating in the Fund execute Interlocal Agreements that define the responsibilities of the parties. The Fund provides statutory workers compensation benefits to its members and their injured employees. 68

70 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED AUGUST 31, 2014 NOTE U - RISK MANAGEMENT - Continued The District participates in the Fund s reimbursable aggregate deductible program. As such, the District is responsible for a certain amount of claims liability as outlined on the District s Contribution and Coverage Summary document. After the District s deductible has been met, the Fund is responsible for additional claims. The Fund and its members are protected against higher than expected claims costs through the purchase of stop loss coverage for any claim in excess of the Fund s self-insured retention of $1.5 million. The Fund uses the services of an independent actuary to determine reserve adequacy and fully funds those reserves. As of August 31, 2014, the Fund carries a discounted reserve of $68,883,628 for future development on reported claims and claims that have been incurred but not yet reported. For the year ended August 31, 2014, the fund anticipates no additional liability to members beyond their contractual obligations for payment of contributions and reimbursable aggregate deductibles. The Fund engages the services of independent auditors to conduct a financial audit after the close of each plan year on August 31. The audit is accepted by the Fund s Board of Trustees in February of the following year. The Fund s audited financial statements as of August 31, 2013, are available at the TASB offices and have been filed with the Texas State Board of Insurance in Austin. Self-funded During the year ended August 31, 2014, Harlingen CISD met its statutory unemployment compensation obligations by participating as a self-funded member of the TASB Risk Management Fund (the Fund). The Fund was created and is operated under the provisions of the Interlocal Cooperation Act, Chapter 791 of the Texas Government Code and Chapter 504, Texas Labor Code. All members participating in the Fund execute Interlocal Agreements that define the responsibilities of the parties. As a self-funded member of the TASB Risk Management Fund, Harlingen CISD is solely responsible for all claim costs, both reported and unreported. The Fund provides administrative services to its self-funded members including claims administration and customer service. The Fund engages the services of an independent auditor to conduct a financial audit after the close of each plan year on August 31. The audit is accepted by the Fund s Board of Trustees in February the following year. The Fund s audited financial statements as of August 31, 2013, are available at the TASB offices and have been filed with the Texas Department of Insurance in Austin. NOTE V COMMITMENTS AND CONTINGENCIES Early College High School Program On October 15, 2006, the District and Texas State Technical College Harlingen ( TSTC-H ) entered into a Memorandum of Understanding agreement, which provided for the joint operation of an Early College High School Program to be located at the TSTC-H campus. On August 27, 2008, the District entered into a twenty-five year lease agreement with TSTC-H to lease premises at the Harlingen, Texas campus for the purpose of construction of new science laboratories for use by the Early College High School Program. 69

71 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED AUGUST 31, 2014 NOTE V COMMITMENTS AND CONTINGENCIES - Continued Early College High School Program The initial term of this lease is twenty-five years, beginning on August 27, 2008 and ending on August 27, The District may extend this lease an additional two-year term on the same terms and conditions as the initial term by giving TSTC-H written notice of the District s intention to extend the term. The District will pay TSTC-H minimum yearly rent totaling $10 as rent for using and occupying the leased premises. During fiscal year ending August 31, 2014, the District has invested $1,504,854 in leasehold improvements to this site. NOTE W FUND BALANCES Committed for Campus Activity Funds the School Board has taken action to commit the fund balance in the campus activity fund to the respective campus. The purpose for this committed fund balance is to ensure the availability of these funds for each campus. Assigned the School Board has authorized the superintendent by board resolution to assign funds for specifically identified purposes. Unassigned the unassigned fund balance has no constraints. FUND BALANCES Other Governmental Funds Total General Capital Other Governmental Funds Projects Funds Funds Nonspendable fund balance: Inventories $ 534,471 $ - $ - $ 534,471 Prepaid items 1,023,294 1,023,294 Restricted fund balance: Federal or State funds grant restriction 610, ,808 Capital acquisition and contractual obligation - 9,468,587-9,468,587 Retirement of long-term debt 695,000-1,458,932 2,153,932 Committed fund balance: Other committed fund balance 398, ,058 Unassigned fund balance 27,529,669 27,529,669 Total fund balances $29,782,434 $9,468,587 $2,467,798 $41,718,

72 REQUIRED SUPPLEMENTARY INFORMATION 71

73 Data Control Codes HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - GENERAL FUND FOR THE YEAR ENDED AUGUST 31, 2014 Original Budgeted Amounts Final Actual Amounts (GAAP BASIS) EXHIBIT G-1 Variance With Final Budget Positive or (Negative) REVENUES: 5700 Total Local and Intermediate Sources $ 35,375,922 $ 36,333,662 $ 36,388,386 $ 54, State Program Revenues 104,127, ,142, ,066,724 1,924, Federal Program Revenues 1,745,377 2,421,380 3,459,260 1,037, Total Revenues 141,248, ,897, ,914,370 3,017,278 EXPENDITURES: Current: 0011 Instruction 0012 Instructional Resources and Media Services 0013 Curriculum and Instructional Staff Development 0021 Instructional Leadership 0023 School Leadership 0031 Guidance, Counseling and Evaluation Services 0032 Social Work Services 0033 Health Services 0034 Student (Pupil) Transportation 0035 Food Services 0036 Extracurricular Activities 0041 General Administration 0051 Facilities Maintenance and Operations 0052 Security and Monitoring Services 0053 Data Processing Services 0061 Community Services Debt Service: 0071 Principal on Long Term Debt 0072 Interest on Long Term Debt Capital Outlay: 0081 Facilities Acquisition and Construction Intergovernmental: 0095 Payments to Juvenile Justice Alternative Ed Other Intergovernmental Charges 82,710,180 83,592,325 83,191, ,183 3,158,171 3,061,720 3,007,330 54,390 1,307,672 1,191,680 1,147,736 43,944 2,904,086 2,843,482 2,833,254 10,228 9,577,654 9,801,368 9,725,386 75,982 4,595,726 4,633,730 4,621,114 12, , , ,744 4,675 1,702,425 1,805,537 1,792,740 12,797 3,794,046 3,736,569 3,696,545 40,024 2,303,113-5,034,461 5,199,723 5,172,399 27,324 16,962,470 4,228,925 4,208,031 20,894 16,983,370 17,420,839 17,168, ,185 1,130,103 1,268,241 1,161, ,679 1,963,290 2,022,440 1,761, ,805 1,067,527 1,178,378 1,178, ,000 1,145, , ,000 1,110, ,503 1,094,488 (204,985) 131,484 1,460, , , , , ,250 38, , , , , Total Expenditures 157,445, ,291, ,618,818 2,672, Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES): 7912 Sale of Real and Personal Property 8911 Transfers Out (Use) (16,196,433) (2,394,439) 3,295,552 5,689,991 50,000 50,000 71,107 21,107 (3,586,714) (3,586,714) 7080 Total Other Financing Sources (Uses) 50,000 50,000 (3,515,607) (3,565,607) 1200 Net Change in Fund Balances (16,146,433) (2,344,439) (220,055) 2,124, Fund Balance - September 1 (Beginning) - 30,002,489 30,002, Fund Balance - August 31 (Ending) $ (16,146,433) $ 27,658,050 $ 29,782,434 $ 2,124,384 72

74 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT NOTES TO REQUIRED SUPPLEMENTARY INFORMATION YEAR ENDED AUGUST 31, 2014 Stewardship, compliance, and accountability Budgetary information The Board adopts an appropriated budget on a basis consistent with GAAP for the general fund, debt service fund and National Breakfast and Lunch Program (which is included in special revenue funds). At a minimum, the District is required to present the original and the final amended budgets for revenues and expenditures compared to actual revenues and expenditures for these three funds. The following procedures are followed in establishing the budgetary data reflected in the general purpose financial statements: Prior to August 20 for a fiscal year start date of September 1, the District prepares a budget based on the modified zero-based budgeting concept for the next succeeding fiscal year. The operating budget includes proposed expenditures and the means of financing them. After one or more budget workshops with the Board, a meeting is called for the purpose of adopting the proposed budget. At least ten days but not more than 30 days public notice of the meeting is required. Prior to August 31 st for a fiscal year start date of September 1, the Board legally adopts the budget for the general fund, debt service fund and food service fund. After the budget for the above listed funds is approved, any amendment that causes an increase or decrease in a fund or functional spending category or total revenue or other resources object category requires Board approval prior to the fact. These amendments are presented to the Board at its regular monthly meeting and are reflected in the official minutes. Because the District has a policy of careful budgetary control, several budgetary amendments were necessary throughout the year. Expenditure budgets are controlled at the expenditure functional and object level by the appropriate budget manager (principal, department director or divisional administrator). Budget managers may authorize transfers within functional and organizational categories that do not affect the total functional and organizational appropriation. All budget appropriations lapse at year-end. Encumbrance accounting, under which purchase orders, contracts and other commitments are recorded in order to reserve that portion of the applicable appropriation, is used in all governmental funds. Encumbrances outstanding at year-end are commitments that do not constitute expenditures or liabilities. Since appropriations lapse at the end of each year, outstanding encumbrances are appropriately provided for in the subsequent fiscal year s budget to provide for the liquidation of the prior commitments. 73

75 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT NOTES TO REQUIRED SUPPLEMENTARY INFORMATION - CONTINUED YEAR ENDED AUGUST 31, 2014 Over the course of the year, the District revised the budget numerous times. Even with these adjustments, actual expenditures were $2,672,713 below final budget amounts. The most significant positive variances resulted from staffing. Staffing is budgeted for full employment throughout the full year. Budget amounts for vacant positions are not eligible for budget revisions. The final budget also includes amendments for capital outlay that were not expended during the year. End-of-year outstanding encumbrances that were provided for in the subsequent year s budget for the general fund total $1,383,072. Differences between the original budget and the final amended budget were not significant and were funded from revised revenue appropriations. Significant budgetary variances were as follows: General fund balance decreased by $220,055 which is largely attributed to a $3,586,714 transfer to the capital projects fund to cover ongoing construction costs. The District received less state revenue during the current year. Overall property tax revenues increased by $3,018,087 due to increase property values. 74

76 OTHER SUPPLEMENTARY INFORMATION 75

77 Data Control Codes HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS AUGUST 31, ESEA I, A Improving Basic Program ESEA Title I Part C Migrant ESEA Title I Part D Title I Priority and Focus 2015 ASSETS 1110 Cash and Cash Equivalents 1220 Property Taxes - Delinquent 1230 Allowance for Uncollectible Taxes (Credit) 1240 Receivables from Other Governments 1260 Due from Other Funds 1290 Other Receivables 1300 Inventories $ - $ - $ - $ - 821, ,374 3,902 2, Total Assets $ 821,358 $ 188,374 $ 3,902 $ 2,037 LIABILITIES 2110 Accounts Payable 2170 Due to Other Funds 2180 Due to Other Governments 2300 Unearned Revenues $ 224,978 $ 605 $ - $ 2, , ,769 3, Total Liabilities 821, ,374 3,902 2,037 DEFERRED INFLOWS OF RESOURCES 2601 Unavailable Revenue - Property Taxes 2600 Total Deferred Inflows of Resources FUND BALANCES Restricted Fund Balance: 3450 Federal or State Funds Grant Restriction 3480 Retirement of Long-Term Debt Committed Fund Balance: 3545 Other Committed Fund Balance 3000 Total Fund Balances 4000 Total Liabilities, Deferred Inflows & Fund Balances $ 821,358 $ 188,374 $ 3,902 $ 2,037 76

78 EXHIBIT H-1 (Cont'd) Title I Priority and Focus 2014 IDEA - Part B Formula IDEA - Part B Preschool National Breakfast and Lunch Program Career and Technical - Basic Grant ESEA II,A Training and Recruiting Title III, A English Lang. Acquisition Title IV, B Community Learning $ - $ - $ - $ 868,755 $ - $ - $ - $ ,908 5,070 3,241 29, ,618 12, , , , $ - $ 285,908 $ 5,070 $ 1,259,919 $ 29,530 $ 107,618 $ 12,139 $ 213,167 $ - $ 1,079 $ - $ 321,641 $ 9,420 $ 9,200 $ 125 $ ,829 5, ,579 20,110 98,418 12, , , ,908 5, ,111 29, ,618 12, , , ,808 $ - $ 285,908 $ 5,070 $ 1,259,919 $ 29,530 $ 107,618 $ 12,139 $ 213,167 77

79 Data Control Codes HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS AUGUST 31, Advanced Placement Incentives State Textbook Fund Read to Succeed IMA Technology Lending Prgm ASSETS Cash and Cash Equivalents $ 1,350 $ 97,304 $ 56 $ - Property Taxes - Delinquent Allowance for Uncollectible Taxes (Credit) Receivables from Other Governments Due from Other Funds Other Receivables Inventories 1000 Total Assets $ 1,350 $ 97,304 $ 56 $ LIABILITIES Accounts Payable $ - $ - $ - $ - Due to Other Funds Due to Other Governments Unearned Revenues 1,350 97, Total Liabilities 1,350 97, DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Property Taxes Total Deferred Inflows of Resources FUND BALANCES Restricted Fund Balance: Federal or State Funds Grant Restriction Retirement of Long-Term Debt Committed Fund Balance: Other Committed Fund Balance Total Fund Balances 4000 Total Liabilities, Deferred Inflows & Fund Balances $ 1,350 $ 97,304 $ 56 $ - 78

80 EXHIBIT H Total 511 Total Campus Activity Funds Nonmajor Special Revenue Funds Debt Service Fund Nonmajor Governmental Funds $ 398,058 $ 1,365,523 $ 2,019,181 $ 501,005 (87,623) - 1,672,344 4, , ,977-3,384, ,005 (87,623) 1,676, , ,977 $ 398,058 $ 3,425,790 $ 2,437,031 $ 5,862,821 $ - $ 569,048 $ - $ 569,048-1,742,275-1,742, , , , ,601-2,416, ,748 3,024, , , , , ,808-1,458, ,808 1,458, , , , ,058 1,008,866 1,458,932 2,467,798 $ 398,058 $ 3,425,790 $ 2,437,031 $ 5,862,821 79

81 Data Control Codes HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED AUGUST 31, ESEA I, A Improving Basic Program ESEA Title I Part C Migrant ESEA Title I Part D Title I Priority and Focus 2015 REVENUES: 5700 Total Local and Intermediate Sources $ - $ - $ - $ State Program Revenues 5900 Federal Program Revenues 8,253,074 1,375,792 58,773 2, Total Revenues 8,253,074 1,375,792 58,773 2,000 EXPENDITURES: Current: 0011 Instruction 0012 Instructional Resources and Media Services 0013 Curriculum and Instructional Staff Development 0021 Instructional Leadership 0023 School Leadership 0031 Guidance, Counseling and Evaluation Services 0032 Social Work Services 0033 Health Services 0034 Student (Pupil) Transportation 0035 Food Services 0036 Extracurricular Activities 0041 General Administration 0051 Facilities Maintenance and Operations 0052 Security and Monitoring Services 0053 Data Processing Services 0061 Community Services Debt Service: 0071 Principal on Long Term Debt 0072 Interest on Long Term Debt 0073 Bond Issuance Cost and Fees 5,562, ,283 55,395 2,000 3, ,969 1,158 1, ,263 17,897 55,282 14,947 2, , , ,339 5,843 3, ,269 50, , , , ,159 84, Total Expenditures 8,253,074 1,375,792 58,773 2, Net Change in Fund Balance 0100 Fund Balance - September 1 (Beginning) 3000 Fund Balance - August 31 (Ending) $ - $ - $ - $ - 80

82 EXHIBIT H-2 (Cont'd) IDEA - Part B IDEA - Part B National Career and ESEA II,A Title III, A Formula Preschool Breakfast and Technical - Training and English Lang. Lunch Program Basic Grant Recruiting Acquisition Title I Priority and Focus 2014 Title IV, B Community Learning $ - $ - $ - $ 1,447,036 $ - $ - $ - $ , ,544,607 57,746 9,375, ,650 1,116, ,630 1,244, ,544,607 57,746 10,887, ,650 1,116, ,630 1,244, ,414,126 57,746-61, , , , ,703 62, , ,352 15,197 97, , , , , , ,766, , , , ,093 3, , ,159-2, ,544,607 57,746 11,290, ,650 1,116, ,630 1,244,649 - (403,402) - 1,014,210 $ - $ - $ - $ 610,808 $ - $ - $ - $ - 81

83 Data Control Codes HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED AUGUST 31, Advanced Placement Incentives State Textbook Fund Read to Succeed IMA Technology Lending Prgm REVENUES: 5700 Total Local and Intermediate Sources $ - $ - $ - $ State Program Revenues - 1,148, Federal Program Revenues 5020 Total Revenues - 1,148,196 EXPENDITURES: Current: 0011 Instruction 0012 Instructional Resources and Media Services 0013 Curriculum and Instructional Staff Development 0021 Instructional Leadership 0023 School Leadership 0031 Guidance, Counseling and Evaluation Services 0032 Social Work Services 0033 Health Services 0034 Student (Pupil) Transportation 0035 Food Services 0036 Extracurricular Activities 0041 General Administration 0051 Facilities Maintenance and Operations 0052 Security and Monitoring Services 0053 Data Processing Services 0061 Community Services Debt Service: 0071 Principal on Long Term Debt 0072 Interest on Long Term Debt 0073 Bond Issuance Cost and Fees 6030 Total Expenditures - 1,148,196-1,148, Net Change in Fund Balance 0100 Fund Balance - September 1 (Beginning) 3000 Fund Balance - August 31 (Ending) $ - $ - $ - $ - 82

84 EXHIBIT H Total 511 Total Campus Activity Funds Nonmajor Special Revenue Funds Debt Service Fund Nonmajor Governmental Funds $ 210,550 $ 1,657,586 $ 5,814,661 $ 7,472,247-1,212,895 4,706,238 5,919,133-25,576,784-25,576, ,550 28,447,265 10,520,899 38,968,164 61,644 10,678,787-10,678,787 1,811 5,408-5,408 9,413 1,348,940-1,348,940-1,275,590-1,275,590 95, , ,381 2,481 1,350,837-1,350, , ,339-64,343-64, , ,656-10,766,734-10,766,734 81, , , ,543-52,543 8, , , , , , , , ,723 4,690,000 4,690,000 5,797,164 5,797,164 7,800 7, ,583 28,902,700 10,494,964 39,397,664 (52,033) (455,435) 25,935 (429,500) 450,091 1,464,301 1,432,997 2,897,298 $ 398,058 $ 1,008,866 $ 1,458,932 $ 2,467,798 83

85 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS AUGUST 31, 2014 EXHIBIT H Employee Benefits Workers' Compensation Total Internal Service Funds ASSETS Current Assets: Cash and Cash Equivalents $ 116,995 $ 2,621,802 $ 2,738,797 Due from Other Funds - 99,423 99,423 Other Current Assets 20,722 72,411 93,133 Total Assets 137,717 2,793,636 2,931,353 LIABILITIES Current Liabilities: Accounts Payable Accrued Expenses 22,623 14,385 37,008-1,039,288 1,039,288 Total Liabilities 22,623 1,053,673 1,076,296 NET POSITION Unrestricted Net Position 115,094 1,739,963 1,855,057 Total Net Position $ 115,094 $ 1,739,963 $ 1,855,057 84

86 EXHIBIT H-4 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION INTERNAL SERVICE FUNDS FOR THE YEAR ENDED AUGUST 31, 2014 OPERATING REVENUES: Employee Benefits Workers' Compensation Total Internal Service Funds Local and Intermediate Sources $ 10 $ 602,820 $ 602,830 Total Operating Revenues , ,830 OPERATING EXPENSES: Payroll Costs Other Operating Costs 42,920-42, , ,294 Total Operating Expenses 42, , ,214 Operating Income (Loss) (42,910) 360, ,616 Total Net Position - September 1 (Beginning) 158,004 1,379,437 1,537,441 Total Net Position August 31 (Ending) $ 115,094 $ 1,739,963 $ 1,855,057 85

87

88 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED AUGUST 31, 2014 EXHIBIT H Total Employee Workers' Internal Benefits Compensation Service Funds Cash Flows from Operating Activities: Cash Received from User Charges $ 10 $ 602,820 $ 602,830 Cash Payments for Insurance Premiums (42,920) (447,187) (490,107) Net Cash Provided by (Used for) Operating Activities (42,910) 155, ,723 Cash Flows from Non-Capital Financing Activities: Advances(Payments) interfunds 137,203 (99,423) 37,780 Net Increase in Cash and Cash Equivalents 94,293 56, ,503 Cash and Cash Equivalents at Beginning of Year 22,702 2,565,592 2,588,294 Cash and Cash Equivalents at End of Year $ 116,995 $ 2,621,802 $ 2,738,797 Reconciliation of Operating Income (Loss) to Net Cash Provided by (Used for) Operating Activities: Operating Income (Loss): $ (42,910) $ 360,526 $ 317,616 Effect of Increases and Decreases in Current Assets and Liabilities: Decrease (increase) in Prepaid Expenses - (57) (57) Increase (decrease) in Accounts Payable - 14,384 14,384 Increase (decrease) in Payroll Deductions Net Cash Provided by (Used for) - (219,220) (219,220) Operating Activities $ (42,910) $ 155,633 $ 112,723 87

89 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT COMBINING STATEMENT OF NET POSITION PRIVATE PURPOSE TRUST FUNDS AUGUST 31, Monasmith Scholarship Dan McCary UIL Scholarship Bob Irby Susan Music Diaz Scholarship Scholarship ASSETS Cash and Cash Equivalents $ 3,466 $ 2,597 $ 2,505 $ 1,466 Total Assets 3,466 2,597 2,505 1,466 NET POSITION Restricted for Other Purposes 3,466 2,597 2,505 1,466 Total Net Position $ 3,466 $ 2,597 $ 2,505 $ 1,466 88

90 EXHIBIT H Total HHS Scholarship Norma Schultz Scholarship Bergendahl Estate Scholarship Private Purpose Trust Funds $ 56,417 $ 7,910 $ 65,872 $ 140,233 56,417 7,910 65, ,233 56,417 7,910 65, ,233 $ 56,417 $ 7,910 $ 65,872 $ 140,233 89

91 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION PRIVATE PURPOSE TRUST FUNDS FOR THE YEAR ENDED AUGUST 31, 2014 ADDITIONS: Dan McCary Bob Irby Susan Monasmith Scholarship UIL Scholarship Music Scholarship Diaz Scholarship Local and Intermediate Sources $ 1,437 $ 1 $ 1 $ - DEDUCTIONS: Total Additions 1, Other Operating Costs 500-2,500 - Total Deductions 500-2,500 - Change in Net Position (2,499) - Total Net Position - September 1 (Beginning) 2,529 2,597 5,003 1,466 Total Net Position - August 31 (Ending) $ 3,466 $ 2,598 $ 2,504 $ 1,466 90

92 EXHIBIT H Total Norma Bergendahl Private HHS Scholarship Schultz Scholarship Estate Scholarship Purpose Trust Funds $ 56 $ 3 $ 23 $ 1, , , ,500 (244) (197) 23 (1,979) 56,661 8,106 65, ,212 $ 56,417 $ 7,909 $ 65,873 $ 140,233 91

93 EXHIBIT H-8 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUND FOR THE YEAR ENDED AUGUST 31, 2014 BALANCE BALANCE SEPTEMBER 1 AUGUST ADDITIONS DEDUCTIONS 2014 STUDENT ACTIVITY ACCOUNT Assets: Cash and Temporary Investments $ 741,281 $ 2,928,049 $ 2,895,152 $ 774,178 Liabilities: Due to Student Groups $ 741,281 $ 2,928,049 $ 2,895,152 $ 774,178 TOTAL AGENCY FUNDS Assets: Cash and Temporary Investments $ 741,281 $ 2,928,049 $ 2,895,152 $ 774,178 Liabilities: Due to Student Groups $ 741,281 $ 2,928,049 $ 2,895,152 $ 774,178 92

94 TEXAS EDUCATION AGENCY REQUIRED SCHEDULES 93

95 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT SCHEDULE OF DELINQUENT TAXES RECEIVABLE FISCAL YEAR ENDED AUGUST 31, 2014 Last 10 Years Ended August 31 (1) (2) (3) Assessed/Appraised Tax Rates Value for School Maintenance Debt Service Tax Purposes 2005 and prior years Various Various $ Various ,498,194, ,750,157, ,920,308, ,034,734, ,085,528, ,096,818, ,114,333, ,268,505, (School year under audit) ,034,734, TOTALS 94

96 EXHIBIT J-1 (10) (20) (31) (32) (40) (50) Current Entire Year's Maintenance Debt Service Year's Total Levy Collections Collections Adjustments Beginning Balance 9/1/2013 Ending Balance 8/31/2014 $ - $ - $ 38,517 $ 3,639 $ (21,359) $ (63,515) 1,115,555-11, (2,347) 1,100, ,609-17,827 1,132 (2,289) 147, ,226-20,381 1,666 (2,331) 169, ,289-30,853 2,522 (2,185) 139, ,531-62,726 5, , , ,384 19,687 1, , , ,312 32,059 (2,138) 182, , ,418 96,602 (39,933) (115,795) 1,284,528 39,532,268 32,594,841 5,578,732 (83,666) 2,559,557 $ 4,435,944 $ 39,532,268 $ 33,643,212 $ 5,741,860 $ (154,276) $ 4,428,864 95

97 Data Control Codes HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - CHILD NUTRITION PROGRAM FOR THE YEAR ENDED AUGUST 31, 2014 Original Budgeted Amounts Final Actual Amounts (GAAP BASIS) EXHIBIT J-2 Variance With Final Budget Positive or (Negative) REVENUES: 5700 Total Local and Intermediate Sources $ 1,775,142 $ 1,775,142 $ 1,447,036 $ (328,106) 5800 State Program Revenues 65,000 65,000 64,699 (301) 5900 Federal Program Revenues 9,166,541 9,875,541 9,375,351 (500,190) 5020 Total Revenues 11,006,683 11,715,683 10,887,086 (828,597) EXPENDITURES: 0035 Food Services 0051 Facilities Maintenance and Operations 10,912,407 11,508,407 10,766, , , , ,754 1, Total Expenditures 11,393,348 12,033,348 11,290, , Net Change in Fund Balances (386,665) (317,665) (403,402) (85,737) 0100 Fund Balance - September 1 (Beginning) 1,014,210 1,014,210 1,014, Fund Balance - August 31 (Ending) $ 627,545 $ 696,545 $ 610,808 $ (85,737) 96

98 Data Control Codes HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - DEBT SERVICE FUND FOR THE YEAR ENDED AUGUST 31, 2014 Original Budgeted Amounts Final Actual Amounts (GAAP BASIS) EXHIBIT J-3 Variance With Final Budget Positive or (Negative) REVENUES: 5700 Total Local and Intermediate Sources $ 5,314,343 $ 5,394,343 $ 5,814,661 $ 420, State Program Revenues 5,121,000 5,121,000 4,706,238 (414,762) 5020 Total Revenues 10,435,343 10,515,343 10,520,899 5,556 EXPENDITURES: Debt Service: 0071 Principal on Long Term Debt 0072 Interest on Long Term Debt 0073 Bond Issuance Cost and Fees 4,690,000 4,690,000 4,690,000-5,737,543 5,800,343 5,797,164 3,179 7,800 25,000 7,800 17, Total Expenditures 10,435,343 10,515,343 10,494,964 20, Net Change in Fund Balances 25,935 25, Fund Balance - September 1 (Beginning) 1,432,996 1,432,997 1,432, Fund Balance - August 31 (Ending) $ 1,432,996 $ 1,432,997 $ 1,458,932 $ 25,935 97

99

100 CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS 99

101 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS COMPARATIVE SCHEDULES BY SOURCE August 31, 2014 ASSETS August 31, Land $ 6,231,892 $ 6,231,892 Building and Improvements 312,826, ,949,607 Furniture, Equipment and Vehicles 24,917,946 23,682,478 Construction In Progress 34,872,849 55,002,435 Total $ 378,849,575 $ 351,866,412 INVESTMENTS IN CAPITAL ASSETS Investments in Capital Assets Acquired from General Fund $ 199,490,633 $ 186,192,788 Special Revenue Fund 6,563,467 6,343,207 Capital Projects Fund 172,795, ,330,417 Total $ 378,849,575 $ 351,866,

102 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE BY FUNCTION AND ACTIVITY August 31, 2014 Building Furniture, Construction and Equipment in Function Land Improvements and Vehicles Progress Total Instructional and Instructional 25,000 1,158,891 4,121,340 - $ 5,305,231 Related Services Instructional and School Leadership - 307, ,255 $ 740,354 Support Services - Student (Pupil) 150,000 4,562,376 13,638,872 18,351,248 Administration Services 125,000 3,233, ,778 3,650,956 Support Services - Nonstudent Based 35,000 3,708,204 4,261,100 8,004,304 Ancillary Services - 9,463 41,098 50,561 Facilities 5,896, ,847,677 2,129,503 34,872, ,746,921 Total $ 6,231,892 $ 312,826,888 $ 24,917,946 $ 34,872,849 $ 378,849,

103 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE OF CHANGES BY FUNCTION August 31, 2014 Balance Balance August 31, August 31, Function 2013 Additions Deletions 2014 Instructional and Instructional Related Services $ 5,121,207 $ 212,062 $ 28,038 $ 5,305,231 Instructional and School Leadership 717,172 33,806 10,624 $ 740,354 Support Services - Student (Pupil) 18,048, , ,373 $ 18,351,248 Administration Services 3,559,482 91,474 $ 3,650,956 Support Services - Nonstudent Based 7,958, ,580 85,245 $ 8,004,304 Ancillary Services 35,561 15,000 $ 50,561 Facilities 316,425,272 26,321,649 $ 342,746,921 Total $ 351,866,412 $ 27,251,443 $ 268,280 $ 378,849,

104 STATISTICAL SECTION 103

105 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT STATISTICAL SECTION OVERVIEW This part of the District s comprehensive annual financial report presents detailed information to provide the readers of the District s financial information with a background for a better understanding of the information in the financial statements, note disclosures, and required supplementary information. The statistical section is organized in the following sections: Government-wide information This section contains schedules that reflect current year and past years amounts on the District s government-wide financial statements. Fund Information This section contains schedules that reflect current year and past years amounts on the District s fund financial statements. Revenue Capacity Information This section contains schedules that provide information about the District s most significant major own-source revenue, which is property taxes, and the factors that impact the District s ability to generate such revenue. Debt Capacity Information This section contains schedules that provide information on the District s current levels of outstanding debt, the District s ability to repay the debt, and to issue additional debt in the future. Demographic and Economic Information This section contains schedules that provide an understanding of the environment within which the District s financial activities take place. Operating Information This section contains schedules that provide information about the services the District provides and the activities it performs, such as, employees and facilities of the District. 104

106 SCHEDULE 1 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT NET ASSETS BY COMPONENT LAST TEN YEARS Governmental Activities Net investment in capital assets $ 68,857,359 $ 68,732,020 $ 78,162,812 $ 74,129,496 $ 78,729,287 $ 77,103,902 $ 77,628,683 $ 78,332,976 $ 84,686,249 $ 85,075,349 Restricted 675,775 1,034,558 2,778,046 7,197,195 5,562,172 2,691,250 2,452,756 2,919,901 21,169,603 11,606,204 Unrestricted 41,056,358 42,551,443 35,999,837 39,167,332 34,899,616 35,793,338 36,282,418 39,965,307 15,237,521 24,377,502 Total net position $ 110,589,492 $ 112,318,021 $ 116,940,695 $ 120,494,023 $ 119,191,075 $ 115,588,490 $ 116,363,857 $ 121,218,184 $ 121,093,373 $ 121,059,055 Source: The District's Statement of Net Position (Exhibit A-1) 105

107 SCHEDULE 2 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT GOVERNMENTAL ACTIVITIES EXPENSES AND PROGRAM REVENUES LAST TEN YEARS Expenses Governmental Activities: Instruction $ 72,990,866 $ 75,129,869 $ 78,919,515 $ 84,673,839 Instructional Resources & Media Services 2,499,055 2,509,568 2,562,534 2,959,450 Curriculum & Staff Development 1,245,942 1,286,252 1,450,127 1,445,780 Instructional Leadership 2,350,827 2,394,093 2,588,674 3,077,493 School Leadership 6,961,027 7,368,508 7,772,897 8,173,334 Guidance, Counseling & Evaluation Services 5,070,228 5,062,627 5,334,071 5,413,274 Social Work Services 393, , , ,646 Health Services 1,230,137 1,284,573 1,400,911 1,444,434 Student (Pupil) Transportation 2,397,279 2,605,655 2,933,043 3,365,585 Food Services 6,674,547 7,737,943 7,812,211 8,210,139 Cocurricular/Extracurricular Activities 4,200,222 4,340,411 4,709,795 4,689,091 General Administration 3,222,777 3,436,108 3,620,295 3,820,781 Plant Maintenance & Operations 12,007,515 14,300,882 16,128,054 15,976,551 Security & Monitoring Services 462, , , ,973 Data Processing Services 1,403,726 1,789,471 1,990,127 1,827,186 Community Services 1,209,936 1,244,802 1,250,638 1,335,855 Debt Service - Interest on Long Term Debt 3,290,514 3,563,275 3,592,066 3,938,101 Debt Service - Bond Issuance Cost & Fees 2,000 3,000 2,000 1,000 Facilities Acquisition & Construction 1,048, , ,949 13,262 Payments to Juvenile Justice Alternative Ed. Prg. 35,840 86,848 44,544 30,826 Other Intergovernmental Charges Total Governmental Activities 128,696, ,607, ,415, ,685,600 Program Revenues Charges for Services Instruction 111, , , ,119 Instructional Resources & Media Services 2,033 19,685 17,459 4,654 Curriculum & Staff Development 2,227 6,646 15,034 9,771 Instructional Leadership School Leadership 35, ,963 91, ,135 Guidance, Counseling & Evaluation Services 151 1, Social Work Services Health Services Student (Pupil) Transportation Food Services Cocurricular/Extracurricular Activities General Administration Plant Maintenance & Operations 67,793 96,620 31,583 34,119 Security & Monitoring Services 3,126 4,316 3,153 7,143 Data Processing Services Community Services , Debt Service - Interest on Long Term Debt Operating Grants and Contributions 26,755,007 27,238,222 28,831,972 29,807,607 Total governmental Activities Program Revenues 26,977,486 27,719,506 29,153,134 30,132,152 - Net Governmental Activities Revenue/(Expense) $ (101,718,823) $ (107,887,990) $ (114,262,074) $ (121,553,448) Source: The District's Statement of Activities (Exhibit B-1) 106

108 $ 89,847,152 $ 96,785,436 $ 97,348,512 $ 92,246,550 $ 96,198,655 $ 98,670,181 2,989,335 2,871,154 2,875,212 2,827,866 3,195,513 3,173,713 1,303,374 1,460,572 1,228,827 2,171,061 2,516,389 2,630,282 3,341,630 5,104,516 5,140,780 3,944,400 4,123,018 4,323,544 8,702,106 9,153,929 9,399,297 9,195,731 9,835,294 10,794,246 6,176,793 6,132,575 6,416,988 5,944,557 6,141,842 6,290, , , , , , ,763 1,659,176 1,676,279 1,736,667 1,718,759 1,810,878 1,956,255 3,183,686 3,138,212 3,423,523 3,188,815 3,420,614 3,886,125 9,055,446 9,829,579 10,411,742 10,116,604 10,479,164 11,150,774 5,095,854 5,244,460 5,198,400 5,121,138 5,606,866 5,687,980 3,990,738 3,511,369 3,996,817 3,880,677 4,074,939 4,079,438 16,833,181 17,320,910 16,938,681 16,671,243 17,561,172 18,790, , , , ,573 1,001,999 1,285,707 2,238,787 2,656,528 2,297,790 2,166,508 2,617,364 2,545,101 1,512,161 1,713,604 1,868,811 1,782,137 1,756,948 1,913,998 3,903,600 4,208,101 7,125,837 6,000,063 6,063,588 6,861,600 2,000 3,661 18,900 7,320 4, , ,814 80, , , ,609 68,789 94, , , , , , , , , , ,603, ,692, ,657, ,181, ,470, ,814,135 1,011,459 1,224,750 1,294,280 1,898, ,839 1,119,855 1,497,906 1,456,061 1,467,280 1,424,380 1,417,612 1,404, , , , , , ,631 13,093 16,865 36,654 31,675 33,231 26,200 33,338,216 40,372,265 41,202,887 35,964,313 26,857,487 34,691,964 36,140,042 43,379,365 44,355,809 39,742,587 29,655,102 37,579,659 $ (125,463,827) $ (129,312,858) $ (133,301,535) $ (129,439,191) $ (147,815,647) $ (148,234,476) 107

109 SCHEDULE 3 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT GENERAL REVENUES AND CHANGES IN NET POSITION LAST TEN YEARS Net Governmental Activities Revenue /(Expense) $ (101,718,823) $ (107,887,990) $ (114,262,074) General Revenues and Changes in Net Position: Property Taxes -General 34,216,988 35,548,163 35,992,979 Property Taxes - Debt Service 2,235,602 2,067,512 2,295,660 Investment Earnings 2,042,612 2,695,709 2,772,134 State Aid-Formula and Unrestricted Grants 66,905,094 66,729,246 75,276,104 Miscellaneous 606, , ,537 Total General Revenues 106,006, ,736, ,985,414 Change in Net Position $ 4,287,892 $ (151,957) $ 2,723,340 Source: The District's Statement of Activities (Exhibit B-1) 108

110 $ (121,553,448) $ (125,463,827) $ (129,312,858) $ (133,301,535) $ (129,439,191) $ (147,815,647) $ (148,234,476) 31,773,948 31,987,361 31,636,772 30,990,035 31,223,483 33,718,411 33,558,889 2,549,135 2,594,037 2,588,085 5,340,727 5,356,369 5,879,528 5,752,566 2,033, , , , , ,241 57,283 85,961,759 89,023,342 89,358,503 96,313,853 96,322, ,611, ,776, ,833 43,339 1,972,808 1,095,883 1,079, ,161 54, ,156, ,384, ,710, ,076, ,293, ,248, ,200,157 $ 1,603,472 $ (1,079,384) $ (3,602,585) $ 775,367 $ 4,854,325 $ 432,913 $ (34,319) 109

111 SCHEDULE 4 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT FUND BALANCES GOVERNMENTAL FUNDS LAST TEN YEARS General Fund Nonspendable Fund Balances: Inventories $ 475,719 $ 509,323 $ 592,584 Prepaid Items 395,074 1,695,834 1,148,531 Restricted Fund Balances: Retirement of Long Term Debt - Committed Fund Balances: Construction - Unassigned: Reported in the General Fund 33,868,301 34,824,852 30,144,178 Total General Fund Balance 34,739,094 37,030,009 31,885,293 All Other Governmental Funds Nonspendable Fund Balances: Investments in Inventory 387, , ,190 Prepaid Items Restricted Fund Balances: Food Service 730,641 1,158,145 1,043,977 Other Restricted Funds 93, ,298 75,187 Retirement of Long Term Debt 189, , ,277 Capital Acquisition & Contractual Obligations 17,873,007 5,475,004 12,708,014 Committed Fund Balance: Reported in Special Revenue funds 815,415 Total All Other Governmental Fund Balances 19,274,135 7,627,842 15,486,060 Total Governmental funds -- Fund Balance $ 54,013,229 $ 44,657,851 $ 47,371,353 Governmental Funds Beginning fund Balance $ 86,877,178 $ 54,013,229 $ 44,657,851 Net Change in Fund Balance (32,863,949) (9,355,378) 2,713,502 Ending Balance $ 54,013,229 $ 44,657,851 $ 47,371,353 Source: The District's Governmental Funds Balance Sheets and Combined Statements of Revenues, Expenditures and Changes in Fund Balances. Fund balance classifications for fiscal years prior to 2011 have been recast to reflect GASB Statement No. 54 classifications for comparative purposes. 110

112 $ 599,735 $ 702,148 $ 717,391 $ 655,728 $ 601,526 $ 701,191 $ 534, , , ,265 1,173,925 1,305,195 1,022,431 1,023, ,000 10,000,000 5,000,000 5,000,000 33,030,092 28,836,150 19,540,475 26,680,697 30,298,035 28,278,866 27,529,669 34,511,446 30,481,587 30,971,131 33,510,350 37,204,756 30,002,488 29,782, , , , , , , ,547,001 1,260,212 1,109,542 1,306,049 1,242, , , , , , , ,712 1,432,996 1,458,932 3,924,741 2,934, ,827 91,892,109 53,995,214 18,336,901 9,468, , , , , , , ,058 7,060,078 5,562,172 2,700,109 94,308,317 56,904,491 21,234,198 11,936,385 $ 41,571,524 $ 36,043,759 $ 33,671,240 $ 127,818,667 $ 94,109,247 $ 51,236,686 $ 41,718,819 $ 47,371,353 $ 41,571,524 $ 36,043,759 $ 33,671,240 $ 127,818,667 $ 94,109,244 $ 51,236,688 (5,799,829) (5,527,765) (2,372,519) 94,147,427 (33,709,423) (42,872,556) (9,517,869) $ 41,571,524 $ 36,043,759 $ 33,671,240 $ 127,818,667 $ 94,109,244 $ 51,236,688 $ 41,718,

113

114 SCHEDULE 5 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT GOVERNMENTAL FUND REVENUES BY SOURCE LAST TEN YEARS Local and Intermediate Sources State Programs Fiscal Property Per Capita On-behalf Federal Year Tax Tuition Other and Foundation TRS Payments Other Programs Total ,126,086 63,797 5,431,972 63,329,117 3,783,268 5,793,649 20,578, ,106, ,563,539 89,913 6,615,252 63,392,024 4,055,609 5,621,338 20,883, ,220, ,742,386 91,397 6,538,249 72,023,914 4,469,197 6,289,570 21,264, ,418, ,103,997 89,590 6,064,516 82,750,056 4,520,385 6,412,626 22,076, ,017, ,400,069 72,882 4,433,133 85,746,014 4,654,739 6,382,462 25,533, ,223, ,519,339 76,807 4,072,009 86,716,789 4,662,951 4,997,849 35,220, ,266, ,001,023 64,677 4,450,362 89,086,429 4,704,301 6,849,645 36,868, ,025, ,772,155 66,430 4,088,700 92,994,806 4,964,525 3,036,502 31,288, ,211, ,689,618 43,350 3,870,655 98,920,303 5,463,839 1,106,005 28,976, ,070, ,614,777 39,248 4,222, ,349,444 6,455,469 2,180,944 29,036, ,898,

115 SCHEDULE 6 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT GOVERNMENTAL FUND EXPENDITURES BY FUNCTION LAST TEN YEARS Instruction and Instructional Support Support Instructional and Services Administrative Services Debt Fiscal Related School Student Support Nonstudent Ancillary Service Year Services Leadership (Pupil) Services Based Services Principal ,986,608 9,134,881 20,565,426 3,154,525 13,603,675 1,179,384 2,355, ,012,406 9,542,456 20,918,902 3,346,958 16,626,378 1,212,292 1,697, ,067,573 10,102,436 23,250,647 3,525,393 18,648,381 1,217,854 1,774, ,174,417 10,855,453 23,365,119 3,727,713 18,067,257 1,288,109 2,005, ,367,869 11,557,415 25,737,823 3,815,543 19,252,138 1,456,480 2,120, ,530,145 13,712,422 25,678,513 3,777,066 20,293,046 1,666,411 1,120, ,267,622 13,927,711 27,240,452 3,833,540 19,444,394 1,785,069 4,155, ,457,624 12,627,595 26,346,479 3,807,462 18,995,564 1,701,441 4,645, ,133,387 13,332,350 28,101,026 4,109,969 20,302,436 1,677,833 4,785, ,379,343 14,387,611 28,460,153 4,260,729 21,635,301 1,830,980 4,935,000 Source: The District's Annual Financial Report - Governmental Funds Statements of Revenues, Fund Expenditures, and Changes in Balances. Note: Operating expenditures excludes capital outlay (Function 81) 114

116 Debt Debt Service Service Inter- Total as a Percentage Interest Capital Governmental Governmental Fund of Noncapital and Other Outlay Charges Expenditures Expenditures 3,292,514 39,204,996 35, ,512, % 3,566,275 14,057,196 86, ,066, % 3,757,774 10,224,740 44, ,614, % 3,743,414 12,019,129 30, ,276, % 3,600,750 9,086,229 68, ,063, % 4,686,577 4,464, , ,402, % 7,469,655 9,864, , ,581, % 6,215,196 41,305, , ,695, % 6,120,376 45,873, , ,993, % 7,208,389 26,741, , ,285, % 115

117 SCHEDULE 7 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT GOVERNMENTAL FUNDS OTHER SOURCES, USES AND CHANGES IN FUND BALANCES LAST TEN YEARS Excess of Revenues Over (Under) Expenditures $ (32,748,133) $ (9,784,477) $ (3,729,790) Other Financing Sources (Uses) Issuance of Bonds - Capital-Related Debt Issued 59,499,551-6,000,000 Sale of Real and Personal Property 19,957 79,100 93,295 Transfers In 17,432, ,344 9,953,313 Premium or Discount on Issuance of Bonds - Other Resources - (66,344) - Transfers Out (17,432,737) - (9,603,313) Other Uses (59,635,324) Total Other Financing Sources (Uses) (115,816) 429,100 6,443,295 Net Change in Fund Balances $ (32,863,949) $ (9,355,377) $ 2,713,505 Source: The District's Governmental Funds Balance Sheets and Combined Statements of Revenues, Expenditures and Changes in Fund Balances. 116

118 $ (6,297,358) $ (5,708,698) $ (2,774,340) $ (5,311,183) $ (33,762,086) $ (42,922,471) $ (23,386,505) - 107,295,000 13,900,000-1,359, ,527 54,497 51,818 78,993 52,663 49,913 71, ,000 5,850, , ,000-10,000,000 3,625,974 (102,471) - - (5,500,000) - (10,000,000) (3,625,974) - (9,525,000) - 497, , ,818 99,458,610 52,663 49,913 13,868,636 $ (5,799,831) $ (5,304,201) $ (2,372,522) $ 94,147,427 $ (33,709,423) $ (42,872,558) $ (9,517,869) 117

119 SCHEDULE 8 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT GOVERNMENTAL FUND EXPENDITURES BY FUNCTION PER AVERAGE DAILY ATTENDANCE LAST TEN YEARS Instruction and Instructional Support Support Average Instructional and Services Administrative Services Fiscal Daily Related School Student Support Nonstudent Year Attendance Services Leadership (Pupil) Services Based ,447 $ 4,855 $ 591 $ 1,331 $ 204 $ ,603 4, , , ,674 5, , , ,843 5, , , ,093 5, , , ,832 5, , , ,076 5, , , ,210 5, , , ,096 5, , , ,238 5, , ,254 Source: Average Daily Attendance provided by the District's PEIMS and A.E.I.S. reports Note: Average Daily Attendance - the average daily attendance of eligible enrollees, district-wide, over the official number of instructional days. 118

120 Debt Debt Service Inter- Ancillary Service Interest Capital Governmental Services Principal and Other Outlay Charges Total $ 76 $ 152 $ 213 $ 2,495 $ 2 $ 10, , , , , , , , , , , , ,

121 SCHEDULE 9 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT ASSESSED AND ESTIMATED ACTUAL VALUE OF PROPERTY LAST TEN YEARS Fiscal Assessed Value Year Real Property Personal Property Total 2005 $ 2,423,544,606 $ 497,805,264 $ 2,921,349, ,624,739, ,566,991 3,152,306, ,812,289, ,152,900 3,373,442, ,926,773, ,884,706 3,500,658, ,976,702, ,749,243 3,550,451, ,056,341, ,973,177 3,619,314, ,106,013, ,882,755 3,658,896, ,242,215, ,860,281 3,767,075, ,270,365, ,667,904 3,853,033, ,346,448, ,370,293 3,892,818,661 Source: Cameron Appraisal District *per $100 of assessed value 120

122 Ratio of Total Assessed Estimated To Total Estimated *Total Direct Actual Value Actual Value Tax Rate $ 3,088,332, % ,371,769, % ,587,951, % ,692,372, % ,727,717, % ,787,019, % ,828,474, % ,924,741, % ,007,446, % ,050,831, %

123 SCHEDULE 10 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN YEARS Percent of Delinquent Fiscal Total Tax Current Tax Current Taxes Tax Year Levy Collections Collected Collections 2005 $ 35,875,732 $ 33,600, % $ 1,525, ,739,109 35,615, % 1,947, ,152,889 35,883, % 1,859, ,887,005 30,173, % 1,930, ,135,679 31,622, % 1,683, ,714,729 31,905, % 1,667, ,618,546 34,376, % 1,954, ,855,317 35,362, % 1,577, ,804,954 37,726, % 1,997, ,532,268 38,173, % 1,210,269 Source: Harlingen Consolidated Independent School District Annual Financial and and Compliance Reports 122

124 Ratio of Total Tax Collections Ratio of Total to Total Tax Levy Outstanding Delinquent Taxes Tax Plus Outstanding Delinquent to Total Collections Delinquent Taxes Taxes Tax Levy $ 35,126, % $ 5,232, % 37,563, % 4,228, % 37,742, % 3,522, % 32,103, % 4,621, % 33,305, % 4,950, % 33,572, % 5,611, % 36,330, % 5,167, % 36,940, % 4,743, % 39,724, % 4,435, % 39,385, % 4,428, % 123

125 SCHEDULE 11 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT ALLOCATION OF PROPERTY TAX RATES AND LEVIES LAST TEN YEARS Tax Rates (Per $100 of Assessed Value) Tax Levies Debt Debt Original Fiscal General Service General Service Levy Year Fund Fund Total Fund Fund Total $ 33,676,897 $ 2,198,835 $ 35,875, ,426,067 2,313,042 37,739, ,875,504 2,277,385 38,152, ,477,765 2,409,240 31,887, ,632,094 2,503,585 33,135, ,167,394 2,547,335 33,714, ,241,417 5,377,129 36,618, ,469,236 5,386,081 36,855, ,133,951 5,671,003 38,804, ,754,974 5,777,294 39,532,268 Source: Harlingen Consolidated Independent School District Annual Financial and Compliance Reports Note: The basis for the property tax rate is $100 assessed valuation. 124

126 SCHEDULE 12 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS (PER $100 ASSESSED VALUATION) LAST TEN YEARS Direct Tax Rate Harlingen Consolidated Independent School District South Overlapping Tax Rates Total Direct Fiscal Tax Debt Total Texas City of Cameron Overlapping Year Year Maintenance Service Direct ISD Harlingen County Tax Rate and Source: Tony Yzaguirre, Jr., Tax Assessor-Collector and City of Harlingen, Texas and Cameron Appraisal District 125

127 SCHEDULE 13 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND TEN YEARS PRIOR Fiscal Year 2014 Tax Year 2013 Percentage of Assessed Total Assessed Taxpayer Type of Business Valuation Valuation VHS Harlingen Hospital Co. LLC Medical $ 76,296, % AEP Texas Central Co Electric utility 32,207, % Boyer Harlingen LC Govt. real estate investments 27,955, % HMC Realty LLC Real estate investments 23,297, % VHS Harlingen Hospital Co. LLC Medical 22,140, % Mall at Valle Vista LLC Shopping center 20,843, % United Launch Alliance LLC Aerospace supplier 19,688, % AMS Harlingen I LP Real estate investments 17,660, % VHS Valley Real Estate Company LLCReal estate investments 13,975, % Union Pacific RR Co Railroad 12,617, % Totals $ 266,681, % Source: Cameron Appraisal District 126

128 Fiscal Year 2005 Tax Year 2004 Percentage of Assessed Total Assessed Taxpayer Type of Business Valuation Valuation Harlingen Medical Center Ltd. Medical $ 30,297, % AEP Texas Central Electric utility 29,135, % Southwestern Bell Telephone Co. Telephone utility 25,965, % Lockheed Martin Aerospace supplier 21,968, % Simon Property Group Shopping center 19,775, % Valley Baptist Med Dev Corp Real estate investments 18,964, % H. E. Butt Grocery Co. Grocery stores 16,053, % Harlingen Medical Center Limited Real estate investments 15,577, % Fruit of the Loom Texas Inc Clothing supplier 10,945, % US INS II LLC Real estate investments 10,386, % Totals $ 199,070, % 127

129 SCHEDULE 14 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT OUTSTANDING DEBT BY TYPE LAST TEN YEARS General Lease Fiscal Obligation Revenue Refunding Notes Year Bonds Bonds Bonds Payable 2005 $ 17,705,000 $ - $ 54,314,991 $ 92, ,195,000-54,179,991 40, ,600,000 6,000,000 54,039, ,920,000 5,815,000 53,899, ,145,000 5,615,000 53,754, ,855,000 5,294,000 53,245, ,170,000 5,074,000 60,765, ,580,000 4,853,000 58,935, ,955,000 4,618,000 57,010, ,185,000 4,373,000 54,990,000 - Source: Harlingen Consolidated Independent School District Annual Financial and Compliance Reports (1) See schedule 17 for adjusted assessed values (2) See schedule 21 for personal income (3) See schedule 21 for average daily attendance 128

130 Ratio of Toal Total Debt Ratio of Net Capital Debt to Estimated PerAverage Debt to Bonded Appreciation Total Actual Daily Personal Debt per Bonds Debt Property Value (1) Membership Income (2) Capita (3) $ - $ 72,112, % $ 4, % $ 1,137-70,415, % 4, % 1,060-74,639, % 4, % 1, ,113 72,822, % 4, % 1, ,389 70,998, % 4, % ,394, % 3, % 1, ,009,000 4% 9, % 2, ,368,000 4% 8, % 2, ,583,000 4% 8, % 2, ,548,000 4% 8, % 2,

131

132 SCHEDULE 15 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT DIRECT AND OVERLAPPING DEBT GENERAL OBLIGATION BONDS Political Subdivision Net Debt Amounts As of Percentage Applicable to HCISD (1) HCISD's Share of Debt DIRECT DEBT Harlingen Consolidated ISD $ 163,597,534 8/31/ % $ 163,597,534 Total direct debt 163,597, ,597,534 OVERLAPPING DEBT City of Harlingen $ 44,450,000 09/30/ % 44,450,000 Cameron County 86,805,000 09/30/ % 17,673,498 Total overlapping debt 131,255,000 62,123,498 Total Direct and Overlapping Debt $ 294,852,534 $ 225,721,032 Source: City of Harlingen and Cameron County Financial Data Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the District. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and business of the District. This process recognizes that, when considering the district's ability to issue and repay long term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. (1) The percentage of overlapping debt is estimated using taxable property values. Percentages were estimated by determining portion of the overlapping taxing authority's taxable assessed value that is within the District's boundaries and dividing it be the overlapping taxing authority's total taxable assessed value. 131

133 SCHEDULE 16 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT COMPUTATION OF LEGAL DEBT MARGIN LAST TEN YEARS Assessed Valuation $ 2,921,349,870 $ 3,152,306,775 $ 3,373,442,534 $ 3,500,658,364 Debt Limit - 10% of Assessed Valuation $ 292,134,987 $ 315,230,678 $ 337,344,253 $ 350,065,836 General Obligation Bonds 17,705,000 16,195,000 14,600,000 12,920,000 Deduct Amount Available in Debt Service Fund 189, , , ,856 Applicable Debt Margin 17,515,614 15,776,194 14,026,723 12,255,144 Legal Debt Margin $ 274,619,373 $ 299,454,484 $ 323,317,530 $ 337,810,692 Debt Margin as a Percentage of the Debt Limit 94.00% 95.00% 95.84% 96.50% Source: Harlingen Consolidated Independent School District Annual Financial and Compliance Reports 132

134 $ 3,550,451,472 $ 3,619,314,495 $ 3,658,896,463 $ 3,767,075,657 $ 3,853,033,183 $ 3,892,818,661 $ 355,045,147 $ 361,931,450 $ 365,889,646 $ 376,707,566 $ 385,303,318 $ 389,281,866 11,145,000 10,855, ,009, ,515, ,965, ,175, , , , ,711 1,432,996 1,458,932 10,486,890 10,407, ,684, ,586, ,532, ,716,068 $ 344,558,257 $ 351,523,679 $ 203,205,410 $ 224,121,277 $ 237,771,314 $ 232,565, % 97.12% 55.54% 59.49% 61.71% 59.74% 133

135 SCHEDULE 17 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT RATIO OF NET GENERAL OBLIGATION BONDED DEBT TO ESTIMATED ACTUAL VALUE AND PER AVERAGE DAILY MEMBERSHIP LAST TEN YEARS Average Estimated General Less Reserve General Bonded Debt Debt Per Fiscal Daily Actual Bonded for Retirement Bonded to Estimated Average Daily Year Membership Value Debt of Bonded Debt Debt Actual Value Membership 2005 $ 16,229 $ 3,088,332,918 $ 72,019,991 $ 189,386 $ 71,830, % $ 4, ,424 3,371,769,309 70,374, ,806 69,956, % 4, ,459 3,587,951,420 74,639, ,277 74,066, % 4, ,666 3,692,372,670 72,822, ,856 72,157, % 4, ,806 3,727,717,970 70,998, ,110 70,340, % 4, ,832 3,787,019,889 69,394, ,229 68,946, % 4, ,076 3,828,474, ,009, , ,684, % 9, ,210 3,924,741, ,368, , ,439, % 9, ,096 4,007,446, ,583,000 1,432, ,150, % 8, ,238 3,899,084, ,548,000 1,458, ,364, % 9,361 Note: Average Daily Membership represents the average daily enrollment of students. Note: Estimated actual property value and average daily membership are used because they are more relevant to the school district than personal income and population. 134

136 SCHEDULE 18 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT RATIO OF ANNUAL DEBT SERVICE FOR GENERAL BONDED DEBT TO TOTAL GENERAL FUND EXPENDITURES LAST TEN YEARS Total Ratio of Total General Debt Service Fiscal Debt Fund To General Fund Year Principal Interest* Service Expenditures Expenditures 2005 $ 2,305,000 $ 3,285,501 $ 5,590,501 $ 99,664, % ,645,000 3,560,314 5,205, ,480, % ,735,000 3,583,486 5,318, ,217, % ,820,000 3,464,561 5,284, ,723, % ,920,000 3,339,561 5,259, ,206, % ,991 4,432,450 5,232, ,655, % ,935,000 6,014,757 9,949, ,437, % ,420,000 5,979,686 10,399, ,945, % ,550,000 5,897,685 10,447, ,728, % ,690,000 5,797,164 10,487, ,009, % Note: * Excludes other fees. 135

137 SCHEDULE 19 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT PRINCIPAL EMPLOYERS CURRENT YEAR AND TEN YEARS AGO 2014 * 2005 Percentage of Percentage of Total City Total City Employer Employees Rank Employment Employer Employees Rank Employment Valley Baptist Medical Center 3, % Harlingen CISD 2, % Harlingen CISD 1, % Valley Baptist Medical Center 1, % Vicky Roy Home Health % Vicky Roy Home Health % Dish Network % Advanced Call Center % Advanced Call Center % Dish Network % City of Harlingen % City of Harlingen % HEB (3 locations) % Texas State Technical College % Bee First Primary Home Care % Harlingen Medical Center % Cardone Industries % Time Warner Cable % Texas State Technical College % West Corporation % Total Principal Employers 10, % Total Principal Employers 9, % Other Employers 6, % Other Employers 3, % Total Employers 16, % Total Employers 13, % Source: * 2014 Harlingen Economic Development Council website and Markets Report for Brownsville and Harlingen

138 SCHEDULE 20 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT CONSTRUCTION AND PROPERTY VALUES LAST TEN YEARS Fiscal Year Number of Permits New Value Total Property Value $ 52,997,296 $ 3,121,106, ,190,648 3,403,873, ,204,761 3,620,007, ,924,857 3,751,851, ,296,947 3,774,161, ,071,401 3,792,640, ,433,988 3,834,130, ,954,809 3,924,741, ,955,866 4,007,446, ,984,370 4,050,831,528 Source: Cameron Appraisal District New Values Report 137

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140 SCHEDULE 21 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT ECONOMIC AND DEMOGRAPHIC STATISTICS LAST TEN YEARS Per Capita Personal Average Fiscal Personal Income Median Daily Unemployment Year * Population Income (PCPI) Age Attendance Rate 2005 $ 63,404 $ 1,131,697,996 $ 17, , % ,459 1,237,732,416 18, , % ,300 1,323,589,100 19, , % ,043 1,391,074,641 21, , % ,950 1,677,980,600 22, , % 2010 ** 64,849 1,489,840,926 22, , % 2011 ** 65,466 1,504,015,884 22, , % ,430 1,549,136,361 22, , % ,791 1,111,110,166 15, , % ,665 1,569,984,485 23, , % Sources: Harlingen Economic Development Corporation City of Harlingen, Texas Bureau of Economic Analysis - US Department of Commerce-Brownsville-Harlingen MPA (PCPI) * Estimate ** 2010 Census 139

141 SCHEDULE 22 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT WORK FORCE COMPOSITION BY EMPLOYEE CLASSIFICATION LAST TEN YEARS Classification Number of Employees Teachers 1,039 1,103 1,118 1,162 Professional Support Campus Administration Central Administration Educational Aides Auxillary Staff Total Employees 2,352 2,423 2,465 2,532 Percent of Total Teachers 44.18% 45.52% 45.35% 45.89% Professional Support 8.76% 8.01% 8.24% 7.90% Campus Administration 2.55% 2.52% 2.56% 2.33% Central Administration 0.26% 0.25% 0.24% 0.28% Educational Aides 11.61% 12.55% 12.01% 11.97% Auxillary Staff 32.65% 31.16% 31.60% 31.64% Source: The District's Human Resources Department and the Academic Excellence Indicator System (AEIS) Data taken from P.E.I.M.S. report(s) % % % % 140

142 ,175 1, ,560 2,608 2,623 2,562 2,642 2, % 47.16% 46.51% 45.90% 45.50% 44.20% 8.32% 8.67% 8.50% 9.13% 9.20% 9.10% 2.58% 2.19% 2.21% 2.26% 2.20% 2.30% 0.27% 0.27% 0.50% 0.51% 0.60% 0.61% 12.58% 12.62% 12.70% 12.72% 12.60% 11.84% 30.35% 29.10% 29.58% 29.48% 29.90% 32.09% % % % % % % 141

143 SCHEDULE 23 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT SCHEDULE OF TEACHER INFORMATION LAST TEN YEARS Average Average Fiscal Bachelor's Degree Master's Degree Doctorate Teacher Years of Bachelor's Master's Year Min. Max. Min. Max. Min. Max. Salary Experience Education Education 2005 $ 32,500 $ 46,472 $ 33,500 $ 47,472 $ 33,500 $ 47,472 $ 41, % 14.4% ,000 47,851 35,000 48,851 35,000 48,851 42, % 13.8% ,000 51,231 38,000 52,231 38,000 52,231 44, % 13.9% ,000 53,100 39,000 54,100 39,000 54,100 44, % 13.9% ,500 55,500 40,500 56,500 42,500 58,500 44, % 13.9% ,500 56,100 41,500 57,500 42,500 58,500 47, % 12.8% ,000 56,890 42,000 57,890 43,000 58,890 48, % 13.8% ,200 56,890 42,200 57,890 43,200 58,890 48, % 13.2% ,500 57,300 43,500 58,300 44,500 59,300 49, % 14.3% ,000 57,500 44,000 58,500 45,000 59,500 49, % 13.5% Source: Academic Excellence Indicator System (AEIS) Note: Min & Max salaries are based on the HCISD Hiring Schedule from each applicable year. They are based on zero years of experience to 27 + years. 142

144 SCHEDULE 24 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT SCHEDULE OF ATTENDANCE AND MEMBERSHIP LAST TEN YEARS Average Average Fiscal Daily Daily Percent of Year Attendance Membership Attendance ,446 16, % ,606 16, % ,674 16, % ,843 16, % ,069 16, % ,832 17, % ,076 17, % ,210 17, % ,096 17, % ,238 17, % Source: The District's PEIMS & Student Accounting Office * Average Daily Membership represents the average daily attendance of eligible enrollees, district-wide over the official number of instructional days. 143

145 SCHEDULE 25 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT OPERATING STATISTICS LAST TEN YEARS Average Cost Cost Fiscal Daily Operating per Percent Operating per Percent Year Attendance Expenditures Pupil Change Expenses Pupil Change ,447 $ 99,186,807 $ 6, % $ 130,900,743 $ 8, % , ,296,240 6, % 131,420,090 8, % , ,779,173 7, % 139,478,649 8, % , ,267,515 7, % 147,702,411 9, % , ,200,859 7, % 157,207,666 9, % , ,046,253 7, % 167,927,757 9, % , ,320,546 7, % 169,624,164 9, % , ,158,623 7, % 162,431,460 9, % , ,405,419 7, % 168,921,949 9, % , ,571,273 8, % 177,763,684 10, % Source: Average Daily Attendance provided by the District's PEIMS and A.E.I.S. reports. 144

146 SCHEDULE 26 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT SCHEDULE OF STUDENT INFORMATION LAST TEN YEARS No. of %age of Teacher / %age of Economically Economically Fiscal Student Free and Disadvantaged Disadvantaged Year Ratio Reduced Lunch Students Students % 12, % % 13, % % 13, % % 13, % % 13, % % 13, % % 14, % % 14, % % 14, % , % Source: Academic Excellence Indicator System (AEIS) 145

147 SCHEDULE 27 HARLINGEN CONSOLIDATED INDEPENDENT SCHOOL DISTRICT SCHEDULE OF SCHOOL BUILDINGS LAST TEN YEARS Estimated Estimated Square Recommended Square Recommended Footage Capacity Footage Capacity HIGH SCHOOLS ELEMENTARY SCHOOLS Harlingen High School 330,706 2,400 Austin 55, Harlingen South High School 301,660 2,400 Bonham 65, Early College High School 22, Bowie 53, Dr. Cano Ninth Grade Academy 170,954 1,250 Crockett 57, Dishman 62, TOTAL 825,556 6,450 Houston 69, Jefferson 55, Lamar 69, MIDDLE SCHOOLS Milam 64, Coakley 122,156 1,000 Stuart 76, Memorial 133,968 1,000 Travis 58, Vernon 131,894 1,000 Zavala 54, Gutierrez 126,104 1,000 Wilson 81, Vela 130,994 1,000 Treasure Hills 85, TOTAL 645,116 5,000 Long 74, Rodriguez 92, Means 84, TOTAL 1,161,960 11,500 SPECIAL CAMPUSES Keys Academy 33, La Esperanza Home 1, New Pathways Center 4, Secondary Alternative Center 11, TOTAL 51, Source: Facility Area information provided by District Operations 146

148 SINGLE AUDIT SECTION 147

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150 INDEPENDENT AUDITORS 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 To the Board of Trustees Harlingen Consolidated Independent School District We have audited, in accordance with the 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 aggregate remaining fund information of the Harlingen Consolidated Independent School District, as of and for the year ended August 31, 2014, and the related notes to the financial statements, which collectively comprise Harlingen Consolidated Independent School District s basic financial statements, and have issued our report thereon dated December 30, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Harlingen Consolidated Independent School District 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 Harlingen Consolidated Independent School District s internal control. Accordingly, we do not express an opinion on the effectiveness of Harlingen Consolidated Independent School District 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 entity 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 governance. 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 and therefore, material weaknesses or significant deficiencies may exist that were not identified. 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 have not been identified. 149

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154 INDEPENDENT AUDITORS REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133 To the Board of Trustees Harlingen Consolidated Independent School District Report on Compliance for Each Major Federal Program We have audited Harlingen Consolidated Independent School District s compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of Harlingen Consolidated Independent School District s major federal programs for the year ended August 31, Harlingen Consolidated Independent School District s major federal programs are identified in the summary of auditor s results section of the accompanying schedule of findings and questioned costs. Management s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs. Auditors Responsibility Our responsibility is to express an opinion on compliance for each of Harlingen Consolidated Independent School District s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non- Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Harlingen Consolidated Independent School District s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of Harlingen Consolidated Independent School District s compliance. Opinion on Each Major Federal Program In our opinion, Harlingen Consolidated Independent School District, complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended August 31,

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