Zapata County ISD. Comprehensive Annual Financial Report. Norma G. Garcia, Ph.D. Superintendent of Schools

Transcription

1 Zapata County ISD Norma G. Garcia, Ph.D. Superintendent of Schools 17th & Carla St. Zapata, Texas (956) Comprehensive Annual Financial Report For the Year Ended August 31, 2012

2 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED AUGUST 31, 2012 Issued by: Business & Finance Office

3 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED AUGUST 31, 2012 TABLE OF CONTENTS Exhibit Page INTRODUCTORY SECTION Letter of Transmittal 1 Certificate of Board 8 GFOA Certificate of Achievement for Excellence in Financial Reporting 9 Principal District Officials 10 Organizational Chart 11 FINANCIAL SECTION Independent Auditors Report 13 Management's Discussion and Analysis 15 Basic Financial Statements Government Wide Statements: A1 Statement of Net Assets 23 B1 Statement of Activities 24 Governmental Fund Financial Statements: C1 Balance Sheet 25 C2 Reconciliation for C1 26 C3 Statement of Revenues, Expenditures, and Changes in Fund Balance 27 C4 Reconciliation for C3 28 Fiduciary Fund Financial Statements: E1 Statement of Fiduciary Net Assets 29 Notes to the Financial Statements 30 Required Supplementary Information G1 Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual General Fund 54 Notes to Required Supplementary Information 55 Combining Fund Statements and Other Statements Non Major Governmental Funds: H1 Combining Statement Balance Sheet 60 H2 Combining Statement of Revenues, Expenditures, and Changes in Net Assets 64 H3 Combining Statement of Changes in Assets and Liabilities Agency Fund 68 Other Schedules J1 Schedule of Delinquent Taxes Receivable 70 J2 Schedule of Expenditures for Computations of Indirect Cost 72 J3 Fund Balance and Cash Flow Calculation Worksheet 73 J4 Budgetary Comparison Schedule Child Nutrition Fund 74 J5 Budgetary Comparison Schedule Debt Service Fund 75 i

4 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED AUGUST 31, 2012 TABLE OF CONTENTS (Continued) Exhibit Page STATISTICAL SECTION Financial Trends Information: L1 Net Assets by Component 79 L2 Expenses, Program Revenues, and Net (Expense)/Revenue 80 L3 General Revenues and Total Change in Net Assets 81 L4 Fund Balances of Governmental Funds 82 L5 Changes in Fund Balances of Governmental Funds 83 L6 Governmental Funds Other Sources, Uses and Changes in Fund Balances 84 L7 Governmental Fund Revenue by Source 85 Revenue Capacity Information: L8 Assessed Value and Estimated Actual Value of Taxable Property 87 L9 Property Tax Rates Direct and Overlapping Governments 88 L10 Principal Property Taxpayers 89 L11 Property Tax Levies and Collections 90 Debt Capacity Information: L12 Legal Debt Margin Information 92 L13 Ratios of Outstanding Debt by Type 93 L14 Direct and Overlapping Governmental Activities Debt 94 L15 Ratios and General Bonded Debt Outstanding 95 Demographic and Economic Information: L16 Demographic and Economic Statistics 97 L17 Principal Employers 98 Operating Information: L18 Fulltime Equivalent District Employees by Type 100 L19 Pupil to Teacher Ratio and Expenses per Pupil Amounts 101 L20 Teacher Base Salaries 102 L21 Schedule of Capital Assets by Function 103 L22 Miscellaneous Statistics 105 ii

5 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED AUGUST 31, 2012 TABLE OF CONTENTS (Continued) Exhibit Page Federal Awards Section Report 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 107 Independent Auditor s Report on Compliance with Requirements That Could Have A Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A Schedule of Findings and Questioned Cost 111 Corrective Action Plan 113 Summary of Prior Year Audit Findings 114 K1 Schedule of Expenditures of Federal Awards 115 Notes on Accounting Policies for Federal Awards 117 Schools First Questionnaire 118 iii

6 INTRODUCTORY SECTION

7 Zapata County Independent School District Business Office 17 th and Carla, Zapata, Texas (956) , Fax (956) January 25, 2013 Board of Trustees Zapata County Independent School District 17 th and Carla Zapata, Texas Dear Board Members: We are pleased to present the Zapata County Independent School District (the District) Comprehensive Annual Financial Report (CAFR) for the year ended August 31, The report was prepared by the Business Office. Responsibility for the accuracy and fairness of the financial information and disclosures contained in the report rests solely with this office. The District s annual audited financial statements of the governmental activities, each major fund, and the aggregate remaining fund information are presented in conformity with requirements established by the Texas Education Agency in their Financial Accountability Systems Resource Guide. The District s independent auditors were Patillo, Brown and Hill, LLP and their opinion letter is hereby made a part of this report. The report, as submitted to the Texas Education Agency, has been modified to conform to the reporting format required by the Government Finance Officers Association. In addition, the Management s Discussion and Analysis section is an integral part of the CAFR and can be found on page 15. Texas law requires that each public school district in the state undergo an annual audit conducted by an independent audit firm. This audit must be done in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. The audit must also comply with the requirements of the U.S. Office of Management and Budget Circular A133, Audits of States, Local Governments, and NonProfit Organizations, and other grantors regulations. The goal of the independent audit was to provide reasonable assurance that the financial statements of Zapata County Independent School District for fiscal year ended August 31, 2012 were free of material misstatement and was presented in conformity with generally accepted accounting principles (GAAP). The independent auditor s report can be found on page 13. 1

8 Profile of the Government Zapata County Independent School District is located in south Texas in Zapata County, Texas. The District is a countywide school district that encompasses the unincorporated county seat of Zapata located 40 miles southeast of Laredo on U.S. Highway 83. The District s economy is based on mineral production and ranching. The principal source of agricultural income is cattle. The Zapata County Independent School District was incorporated in Today it is the only school district in Zapata County. Zapata County ISD encompasses 1,058 square miles. Zapata County ISD is steadily growing, averaging an increase of approximately 80 students per year. Zapata County is a county located in the U.S. state of Texas. In 2010, its population was 14,018 and increase of 15.1% since Its county seat is Zapata. Zapata is named for Colonel Jose Antonio de Zapata, a rancher in the area and rebel against Mexico. As an unincorporated community, Zapata, Texas has no municipal government but like all 254 Texas counties has four elected county commissioners chosen by singlemember districts and a countywide elected administrative judge. Zapata County was created and organized in 1858 from Starr and Webb Counties. The economy is based on mineral production and ranching. The Texas Almanac designates beef cattle, onions, cantaloupes, and goats as principal sources of agricultural income. The District is made up of 4 Elementary Schools, 1 Middle School, and 1 High School. In , Zapata County ISD educated over 3,460 students. The racial makeup of the county in 2011 was 2.6% White, 0.0% Black or African American, 0.0% Native American, 0.0% Asian Pacific Islander, 2.2% Multi Racial, 95.2% of the population was Hispanic or Latino of any race. The policymaking functions of the District lie with a sevenmember Board of Trustees (the Board), each of which is elected from a singlemember district for fouryear staggered terms. The Board receives funding from local, state, and federal source entities. However, the Board is not included in any other reporting entity as defined by GASB 14. This report contains all funds pertaining to the District. Serving without compensation, Board members establish the policies by which schools operate. In carrying out the task of setting policy, the board identifies needs and establishes priorities for the school system, allocated financial and human resources among the priority areas and evaluates school performance. On an annual basis, the District presents the Board of Trustees with the proposed budgets for the General Operating Fund, the Debt Service Fund, and the Food Service Fund for approval as required by the Texas Education Code and as described in the Texas Education Agency s Financial Accountability Systems Resource Guide. The proposed budget is presented to the Board summarized at the function level for each of the funds above. The Board is required to hold a public hearing on the proposed budget and to adopt a final budget no later than August 31, the close of the District s fiscal year. After 2

9 adoption of the budget, the appropriation amounts are entered into the District s accounting and encumbrance system and monitoring of the expenditures and encumbrances in relation to the approved budget begins. Budget managers have the authority to approve budget transfers anytime during the year. A budget transfer is the movement of appropriations between budget line items within the same function. Any request to move appropriations between budget line items to different functions is considered a budget amendment. Any budget amendment requested by budget managers requires Board approval. Expenditure requests will not be processed unless appropriations are available in the line item. The District feels that the budgetary controls currently in place are adequate to ensure that expenditures remain within the approved budget and that the District complies with regulations established by the Texas Education Code and the Financial Accountability Systems Resource Guide. The District evaluates the existing system of internal controls annually through selfevaluation, internal auditing, and the annual independent financial and compliance audit. Internal controls are designed to provide reasonable, but not absolute, assurance regarding: 1) the safeguarding of assets against loss from authorized use or disposition; and 2) the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognized that: 1) the cost of controls should not exceed benefits expected to be derived; and 2) the evaluation of costs and benefits requires estimates and judgments by management. Academics play a significant role in the lives of our students. Our campuses offer a wide variety of courses in all academic areas, including gifted and talented, careers and technology, and advanced placement courses at our secondary schools. Community and Parental Involvement is a high priority for our District and its schools. For the school year, ZCISD manages its own website, hosted by Edline Inc., to help facilitate communication between home and school via the Internet Furthermore, ZCISD manages a District Informational Facebook account. This communication enables parents/guardians, students, staff and teachers to share upcoming events, important announcements and crucial updates in their respective schools. In addition, has an online directory that list all addresses for teachers, administrators and staff members. Microsoft's Edu also allows users to utilize shared calendars, offering great advantages in collaboration effort between employees with invite attendees and scheduling assistant features. The district service enables teachers, administrators and staff members to have a professional platform to communicate with parents, students and community members about school related issues. For Fiscal Year , the Texas Education Agency implemented a new assessment tool for the Texas school districts. STAAR, State of Texas Assessments of Academics Readiness, will encompass endofcourse exams at the high school level that will replace TAKS. 3

10 To prepare for the new assessment program the district hired additional high school teachers starting in and a majority was first year teachers. Because of these factors, the number of teachers with less than five years teaching experience makes up 22.9% of the total teachers in the District. Factors Affecting the Financial Condition On Feb. 13, 2009 Congress passed the American Recovery and Reinvestment Act (ARRA) of 2009 which was signed into law four days later. A direct response to the economic crisis, the Recovery Act has three immediate goals, (1) Create new jobs as well as save existing ones, (2) Spur economic activity and invest in longterm economic growth, and (3) Foster unprecedented levels of accountability and transparency in government spending. These funds totaled over $ 3,086,000 for Zapata County ISD. To date, Zapata ISD has spent 100% of the ARRA funds. The 82th Legislative Session introduced Senate Bill 1, which reduced the amount of state funding revenue for the fiscal year. At the end of June 2011, lawmakers passed a bill to slash $4 billion in basic school funding throughout Texas during the next two years. The cuts came as part of an effort to balance the state budget without raising taxes. The losses for Zapata CISD for were $1,120,487 and it is projected that losses for the school year will be $1,340,208. In August 10, 2010, President Obama signed into Public Law No (Act) the Edu Jobs program. The Edu Jobs program is a federal program that provided $10 billion in assistance to states to save or create educations jobs for school year and allowed to use those remaining funds through September 30, The District was awarded $604,482. The District expended $583,794 during the fiscal year. Local Economy Employment and the Labor Force Zapata County Independent School District is located in South Texas in Zapata County, Texas. The District is a countywide school district that encompasses the unincorporated county seat of Zapata located 40 miles southeast of Laredo on U.S. Highway 83. The median income for a household in 2012 for the county was $26,009 and the median income for a family was $32,122. Males had a median income of $41,501 versus $29,770 for females. The per capita income for the county was $14,282. About 36.7 % of families and 14.3% of the population were below the poverty line, including 20.7% of those under age 18 and 8.9% of those ages 65 or over. 4

11 Oil and Gas Industry Minerals produced in Zapata County include gas, oil and caliche. There were billion cubic feet of natural gas recovered in 2012, ranking it the 8 th largest gas producer in the state. However, Zapata County was the number one gas producer in the Nation before Retail Industry Retail sales for 2011 as reported by the Texas Municipal Report on March 5, 2012 totaled $69.5 million. The total 2011 Effective Buying Income reflects $162.0 million with a median of $25,252 per household compared to the state median of $47,705. Banking Industry The banking industry in Zapata County area is strong with two local banks ranking in the top ten employers. Zapata National Bank and International Bank of Commerce of Zapata employed 60 citizens which comprise 1% of the total workforce. Recreation Industry Fishing, Hunting and Bird Watching are among the greatest recreational attractions in Zapata County. Falcon Creel Reservoir and the Falcon State Park attracted 102,712 visitors during the 2011 season. LongTerm Facilities Planning By 2013, the District will finish the construction of a replacement campus for Zapata North Elementary School which will be paid out of committed fund balance. The Board of Trustees along with the community will determine when it is most appropriate to call for a new bond election in the future. Debt Service Debt service is an area of cost due to the District s building program which is primarily financed by the sale of general obligation bonds. The Texas Education Code (TEC) authorized the District to issue negotiable coupon bonds to construct, acquire, or equip school buildings, to purchase necessary sites, or to acquire or refinance property financed under a contract entered into under the Public Property Finance Act. The District is further authorized to levy and assess annual ad valorem taxes sufficient to pay the principal and interest on the bonds as they become due. The District s primary objective in debt management is to keep the level of indebtedness within available resources and within legal debt limitations. 5

12 All bond elections are held in accordance with statutory requirements and bonds are issued and taxes are levied in compliance with Sections , (b)(1), and (c) of the Texas Education Code. As of August 31, 2012, the District had $2,411,007 of School Building Unlimited Tax Bonds with a maturity in The District s Debt Service fund balance is $843,205 as of August 31, In the prior year, the District refinanced the bonds that were due in varying installments with a final payment of $2,315,000 in August The net proceeds were deposited in an irrevocable trust with an escrow agent to provide for all debt service payments on the refunded bonds Series Maintenance Tax Qualified School Construction Note During the year, the District received Qualified School Construction Maintenance Tax Note Series 2012 in amount of $6,680,000 payable in annual installments of $445,000 for 15 years. Fiduciary Operations The District maintains the fiduciary responsibility of monitoring the individual campus student activity funds. The District ensures that proper control over cash is maintained and that all procedures are in accordance with TEA s Financial Accountability Systems Resource Guide. As of August 31, 2012, total assets for student activity funds were $69,743 Awards School FIRST Senate Bill 218 of the 77 th Legislature (2001) authorized the implementation of a financial accountability rating system for Texas school districts. The primary goal of the School FIRST is to improve the management of school s district financial resources. The Zapata Independent School District achieved a Superior Achievement for The FIRST program was created by TEA in response to the Texas Legislature s request to address several public school system accountability issues. The program ensures that school districts be held accountable for the quality of their financial management practices through various given ratings. The system is designed to encourage Texas public schools to manage their financial resources in a more fiscally appropriate manner and to allow the maximum allocation possible for direct instructional purposes. The system also discloses the quality of local management and decision making process that impacts the allocation of financial resources in Texas public schools. Comprehensive Annual Financial Report The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to Zapata ISD for its comprehensive annual financial report for the fiscal year ended August 31, This was the third year that the government has achieved this prestigious award. In order to be awarded a 6

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16 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT Administration Building 17th and Carla St. Zapata, Texas Principal District Officials BOARD OF TRUSTEES Jose M. Ramirez III, President Veronica P. Gonzalez, Vice President Dora O. S. Martinez, Secretary Diego Gonzalez, Jr., Member Norberto Lopez, Member Ricardo X. Ramirez, Member Anselmo Trevino, Jr., Jr., Member ADMINISTRATIVE OFFICIALS Norma G. Garcia, Ph.D., Superintendent Suzette M. Barrera, Chief Financial Officer Jose L. Morales, Chief Personnel Officer PREPARED BY: Finance Department 10

17 ~(Chief Instructional Officer) I I I CHIEF INSTRUCTIONAL OFFICER CHIEF PERSONNEL OFFICER CHIEF FINANCIAL OFFICER (Compensatory Education Director) ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT ZAPATA, TEXAS ORGANIZATIONAL CHART PROVISIONAL I ATIORNEY I ;1!j I PUBLIC ~ ""o"nru~ I I Assessment ex ;:special College & Career Compensatory Instructional Instructional Readiness Director Education Director Support Director Services Director 11 Bilingual Educationl ESL Director Campus Principals I I AtKISK "ooralnator, ::;'Clence lsi Instructional Tech. Coordinator UIL I Extra Curricular Technology Coordinator Coordinator I I I Related Services Diagnosticians Nurses Migrant Counselor Senior Accountant Staff Accountant I I I I I I I Transportation Custodial Maintenancel Child Nutrition Human Resources PEIMS Specialist Supervisor Supervisor Security Supervisor Specialist Specialist energy Management Supervisor Attendance Officers

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21 MANAGEMENT S DISCUSSION AND ANALYSIS This section of the Zapata County Independent School District s annual financial report presents our discussion and analysis of the District s financial performance during the fiscal year ended August 31, Please read it in conjunction with the District s financial statements, which follow this section. FINANCIAL HIGHLIGHTS The District s total combined net assets were $68,176,747 at August 31, This amounted to an increase of $6,118,500 from prior year s total of $62,058,247 During the year, the District s expenses were $40,962,911. Revenues generated in taxes and other revenues for governmental activities were $47,154,687. This amounted to a decrease in revenue of $6,435,619 or 13% from prior year s total revenue for governmental activities. The total cost of the District s programs decreased $6,701,679 from last year. This decrease from Weighted Average Daily Attendance (WADA) Credits and reduction on staff. The general fund reported a fund balance this year of $30,767,586. OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists of three parts management s discussion and analysis (this section), the basic financial statements, and required supplementary information. The basic financial statements include two kinds of statements that present the different views of the District: Figure A1F, Required Components of the District s Annual Financial Report The first two statements are governmentwide financial statements that provide both longterm and shortterm 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 governmentwide 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 longterm financial information about the activities the government operates like businesses, such as food service. The District did not have any proprietary funds as of August 31, 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. Figure A1 shows how the required parts of this annual report are arranged and related to one another. 15

22 Figure A2 summarizes the major features of the District s financial statements, including the portion of the District government they cover and the types of information they contain. The remainder of this overview section of management s discussion and analysis explains the structure and contents of each of the statements. Governmentwide Statements The governmentwide statements report information about the District as a whole using accounting methods similar to those used by privatesector companies. The statement of net assets includes all of the government s assets and liabilities. All of the current year s revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid. The two governmentwide statements report the District s net assets and how Scope Figure A2. Major Features of the District's Governmentwide and Fund Financial Statements Fund Statements Type of Statements Governmentwide Governmental Funds Proprietary Funds Fiduciary Funds Entire Agency s government The activities of the district Activities the district that are not proprietary or operates similar to private fiduciary businesses: self insurance Required financial statements Accounting basis and measurement focus Type of asset/liability information Type of inflow/outflow information (except fiduciary funds) and the Agency's component units Instances in which the district is the trustee or agent for someone else's resources Statement of net assets Balance sheet Statement of net assets Statement of fiduciary net assets Statement of activities Statement of revenues, expenditures & changes Statement of revenues, expenses and changes in Statement of changes in fiduciary net assets in fund balances fund net assets Statement of cash flows Accrual accounting and economic resources focus All assets and liabilities, both financial and capital, shortterm and longterm All revenues and expenses during year, regardless of when cash is received or paid Modified accrual accounting and current financial resources focus Only assets expected to be used up and liabilities that come due during the year or soon thereafter; no capital assets included Revenues for which cash is received during or soon after the end of the year; expenditures when goods or services have been received and payment is due during the year or soon thereafter Accrual accounting and economic resources focus All assets and liabilities, both financial and capital, and shortterm and longterm All revenues and expenses during year, regardless of when cash is received or paid Accrual accounting and economic resources focus they have changed. Net assets the difference between the District s assets and liabilities is one way to measure the District s financial health or position. All assets and liabilities, both shortterm and longterm; the Agency's funds do not currently contain capital assets, although they can All revenues and expenses during year, regardless of when cash is received or paid Over time, increases or decreases in the District s net assets are an indicator of whether its financial health is improving or deteriorating, respectively. To assess the overall health of the District, one needs to consider additional nonfinancial factors such as changes in the District s tax base. The governmentwide financial statements of the District include the Governmental activities. Most of the District s basic services are included here, such as instruction, extracurricular activities, curriculum and staff development, health services and general administration. Property taxes and grants finance most of these activities. Fund Financial Statements 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 or to show that it is properly using certain taxes and grants. The District has the following kinds of funds: Governmental funds 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 yearend that are available for spending. Consequently, the governmental fund statements provide a detailed shortterm 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 longterm focus of the governmentwide 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. 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 assets and a statement of changes in fiduciary net assets. We exclude these activities from the District s governmentwide financial statements because the District cannot use these assets to finance its operations. The Governmental Accounting Standard Board (GASB) released Statement 54 Fund Balance Reporting and Governmental Fund Type Definitions on March 11, 2009, which is effective for fiscal year ending August 31, This new statement is intended to improve the usefulness of the amount reported in fund balance by providing more structured classification. 16

23 Previously, fund balance was classified as reserved or unreserved. GASB 54 will change fund balance is reported. The hierarchy of the five possible classifications is as follows: Nonspendable Fund Balance Restricted Fund Balance Committed Fund Balance Unassigned Fund Balance The five classifications of fund balance of the governmental types are defined as follows: 1. Nonspendable fund balance shall mean the portion of the gross fund balance that is not expendable (such as inventories) or is legally earmarked for a specific use (such as the selffunded reserves program). Examples of nonspendable fund balance reserves for which fund balance shall not be available for financial general operating expenditures include: Inventories Prepaid items Deferred Expenditures Long term receivables Outstanding encumbrances 2. Restricted fund balances shall include amounts constrained to a specific purpose by the provider, such as a grantor. Examples of restricted fund balances include: Child nutrition programs Technology programs Constructions programs Resources from other granting agencies 3. Committed fund balances shall mean that portion of the fund balance that is constrained to a specific purpose by Board. Examples include: Potential litigation, claims and judgments Campus activity funds 4. Assigned fund balances shall mean that portion of the fund balance that is spendable or available for appropriation but has been tentatively earmarked for some specific purpose. In current practice such plans or intent may change and may never be budgeted, or may result in expenditures in future periods of time. Examples include: Insurance deductible Program start up costs Other legal uses 5. Unassigned fund balance shall include amounts available for any legal purpose. This portion of the total fund balance in general fund is available to finance operating expenditures. The unassigned fund balance shall be the difference between the total fund balance and the total of the nonspendable fund balance, restricted fund balance, committed fund balance and assigned fund balance. The introduction of the GASB 54 has created changes in the districts Fund Balances Classification fiscal year. beginning with the 17

24 FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE Net assets. The District s combined net assets were $68,176,747 at August 31, (See Table A1). Table A1 Zapata County Independent School District Combined Net Assets Current assets: Cash and cash equivalents $805,594 $1,385,377 Current investments 26,609,678 8,402,348 Due from Other Governments 6,404,390 12,743,009 Taxes Receivable, Net 1,946,425 1,548,600 Other Receivables Inventories 23,023 26,212 11,061 68,523 Total current assets: $35,815,322 $24,158,918 Noncurrent assets: Capitalized bond & other debt issuance costs 26,456 52,909 Land 1,044,825 1,044,825 Buildings 41,478,252 43,575,172 Furniture and equipment 411, ,710 Construction in progress 720,029 Total Assets 79,496,335 69,617,534 Current liabilities: Accounts payable 639,352 1,049,066 Due to other governments 347, ,056 Unearned Revenue 26,212 68,523 Interest Payable 6,087 6,087 Accrued Liabilities ,473,341 Total Current Liabilities 2,228,481 2,802,073 Bonds payable 9,091,107 4,757,215 Total Liabilities 11,319,588 7,559,288 Net assets Invested in Capital Assets 34,616,118 40,913,658 Restricted for Federal and State Programs 674, ,365 Restricted for Debt Service 843, ,083 Restricted for Campus Activities 60,947 54,499 Unrestricted 31,982,326 19,808,642 Total Net Assets $68,176,747 $62,058,247 18

25 The $31,982,326 of unrestricted net asset represents resources available to fund the programs of the District for the upcoming year. Changes in net assets. The District s total general revenues were $47,154,687. Fiftyfive percent (50%) of revenues were from property taxes. Grants and contributions not restricted represented 32% of revenues and operating grants represented 15%. The remaining 2% of revenues were from investment earnings, miscellaneous local intermediate sources and charges for services. Investment Earnings, Charges for Services & Misc. 2% Figure 8 3 Sources of Revenue for Year 2012 Operating Grants 15% State Revenue 32% The total cost of all programs and services, net of program revenues was $33,222,563 and 44% of these costs were for instructional services. Governmental Activities Property Taxes 50% Grants Unrestricted 1% Property tax rate is $ per $100 valuation. Table A2 Changes in Zapata Independent School District's Net Assets Program revenues: Charges for services $660,906 $595,679 Operating grants and contributions 7,079,442 7,932,964 General revenues: Property Taxes 23,594,324 29,618,029 Grants/contributions not restricted 15,675,893 15,270,198 Investment earnings 131,763 98,122 Miscellaneous local intermediate 12,359 75,314 Total Revenues 47,154,687 53,590,306 Instruction 18,751,409 20,744,520 Instructional resources and media services 603, ,433 Curriculum and staff development 226, ,730 Instructional leadership 864, ,952 School leadership 1,885,876 2,058,842 Guidance, counseling and evaluation services 1,011,705 1,060,997 Social services 109, ,945 Health services 288, ,097 Student (pupil) transportation 1,251,417 1,287,032 Food services 2,089,333 2,358,656 Co curricular/extracurricular activities 1,742,962 1,810,050 General administration 1,371,466 1,362,046 Plant maintenance & operations 3,807,064 3,778,402 Security and monitoring services 442, ,924 Data processing services 560, ,184 Community services 125, ,571 Debt service 266, ,336 Contracted Instructional Services between Schools Other intergovernmental Charges 5,096, ,418 8,263, ,726 Total Expenses 40,962,911 47,664,590 Change in Net Assets Prior Period Adjustment Beginning Net Assets Ending Net Assets 6,191,776 (73,276) 62,058,247 68,176,747 5,925,717 56,132,530 $62,058,247 19

26 Table A3 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 $40,962,911 However, the amount that our taxpayers paid for these activities through property taxes was $23,594,324. The cost that was paid by those who directly benefited from the programs was $660,906. The amount by grants and contributions was $7,079,442. Table A3 Cost of District's Largest Functions Total Cost of Services Net Cost of Services Instruction $18,751,409 $20,744,520 $14,621,291 15,948,868 School Leadership Student (Pupil) Transportation 1,885,876 1,251,417 2,058,842 1,287, ,632 1,211,219 1,884,269 1,243,019 Food Services 2,089,333 2,358,656 (110,544) 225,628 Cocurricular/Extracurricular Activities 1,742,962 1,810,030 1,681,136 1,360,296 Plant Maintenance & Operations 3,807,064 3,778,402 3,735,386 3,702,264 Businesstype Activities The District did not have any business type activities. FINANCIAL ANALYSIS OF THE DISTRICT S FUNDS Revenues are governmental fund types totaled $46,747,102 decrease of 12% over the preceding year. The decrease in local revenues was $6,394,570 due to a reduction in minerals & property values as a result of the declining oil & gas industry; state revenues increased by $747,617 due to the state aide formulas that currently tries to offset the District s maintenance & operations revenue and federal revenues decreased by $1,200,424 due to an attempt by the federal government to balance the budget. The following individual major funds for the school year and their final fund balance was follows: General Fund increased by $5,069,564 which increased that fund balance to $30,767,586. Debt Service Fund decreased by $ 11,567 for a total fund balance of $854,772. Child Nutrition Fund increased by $348,703 for a total fund balance of $582,735. General Fund Budgetary Highlights Over the course of the year, the District revised its budget several times. Even with these adjustments, actual expenditures were $12,365,801 below final budget amounts. Facility acquisition and construction is budgeted throughout the year when projects are approved. Resources available were $(96,237) below the final budget amount. Property taxes revenue increase from original estimates. Investments earnings were decreased. State revenues were decreased for the reduced number of instructional days in the month of August in the year end required salary accrual adjustment. Following is a summary of amendments made to appropriations: These budget amendments fall into three categories: The first category includes amendments appropriations that were approved shortly after beginning of the year and reflects the actual beginning balances (versus the amounts we estimated in August 2011). These amendments are not a part of the original budget adopted by the Board of Trustees before the beginning of the 1112 Fiscal Year. The second category includes changes that the Board made during the fiscal year, one of which addressed the need to amend the District s budget by $6.6 million for QSCB. The Board also amended the budget for $11 million from Committed Fund Balance to construct Zapata North Elementary The Third category involved amendments moving funds from programs that did not need all the resources originally appropriated to them to programs with resources need The following are variances noted in the financial statements: Chapter 41 payments in the amount of $200,384 due to a difference between estimated and final TEA Summary of Finances. CAPITAL ASSETS AND DEBT ADMINISTRATION 20

27 Capital Assets At the end of 2012, the District had invested $43,759,280 in a broad range of capital assets, including land, equipment, buildings, and vehicles. (See Table A4.) This amount represents a net decrease (including additions and deductions) of $1,646,428 or 4 % over last year. Table A4 District's Capital Assets Land $1,044,825 $1,044,825 Buildings and improvements 62,517,308 62,517,308 Furniture and Equipment 7,520,898 7,799,298 Construction in Progress 720, ,391,858 71,361,431 Accumulated depreciation (28,148,503) (25,955,723) $43,654,557 $45,405,708 This year the major additions and deletions included: The construction of a new replacement for North Elementary School. At year end, the Board of Trustees committed $11,000,000 of fund balance for the construction of North Elementary School. More detail information about District s capital assets is presented in the notes to the financial statements as Note 6 Capital Assets Activity on page 28. Long Term Debt Bond Ratings At yearend the District had $9,091,107 in bonds and related interest as shown in Table A5. More detailed information about the District s debt is presented in the notes to the financial statements. Table A5 District's LongTerm Debt Bonds payable $2,315,000 $4,565,000 Issuance premium 77, ,172 Deferred amount on refunding Qualified School Construction Bond 19,021 6,680,000 38,043 $9,091,107 $4,757,215 The refunded bonds were due in installment of $2,250,000 with a final payment in At August 31, 2012 the amount of defeased debt outstanding was $2,250,000. During the year the District received Qualified School Construction Maintenance Tax Note Series 2012 for the amount of $6,680,000 payable in installments of $445,000 for 15 years. ECONOMIC FACTORS AND NEXT YEAR S BUDGETS AND RATES Appraised value used for the 2012 budget preparation was $1,698,922,920 for an 18% decrease from the previous year. General operating fund expenditures per student in the 2013 budget is $6,213. These indicators were taken into account when adopting the general fund budget for The District adopted a balanced budget and anticipates several budget amendments throughout the fiscal year to account for increases in the student population and our taxable values. The District will use these increases in revenues to finance programs we currently offer. Expenditures are expected to decrease to $4,798,301. The most significant factors in the overall decrease are decreased WADA. The District has added a major initiative which is called isucceed that will impact the 2013 budget and beyond. This new initiative will impact instructional budget because students will be given the opportunity to use an ipad for instructional purposes. If these estimates are realized, the District s budgetary general fund, fund balance is not expected to change appreciably by the close of CONTACTING THE DISTRICT S FINANCIAL MANAGEMENT The District s bonds presently carry Aaa ratings assigned by Moody s Investor Services. This financial report is designed to provide our citizens, taxpayers, customers, 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 Office of the Chief Financial Officer, Zapata County I.S.D., 17 th and Carla St. Zapata Texas,

28 BASIC FINANCIAL STATEMENTS 22

29 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT STATEMENT OF NET ASSETS AUGUST 31, 2012 EXHIBIT A1 Data Control Codes Primary Government Governmental Activities ASSETS 1110 Cash and Cash Equivalents $ 1120 Current Investments 1225 Property Taxes Receivable, net 1240 Due from Other Governments 1250 Accrued Interest 1290 Other Receivables, net 1300 Inventories 1420 Capitalized Bond and Other Debt Issuance Costs Capital Assets: 1510 Land 1520 Buildings, Net 1530 Furniture and Equipment, Net 1580 Construction in Progress 805,594 26,609,678 1,946,425 6,404,390 21,831 1,192 26,212 26,456 1,044,825 41,478, , , Total Assets 79,496,335 LIABILITIES 2110 Accounts Payable 2140 Interest Payable 2150 Payroll Deductions & Withholdings 2160 Accrued Wages Payable 2180 Due to Other Governments 2200 Accrued Expenses 2300 Deferred Revenues Noncurrent Liabilities 2501 Due Within One Year 2502 Due in More Than One Year 639,352 6,087 12,525 1,186, ,128 11,175 26,212 2,760,000 6,331, Total Liabilities 11,319,588 NET ASSETS 3200 Invested in Capital Assets, Net of Related Debt 3820 Restricted for Federal and State Programs 3850 Restricted for Debt Service 3870 Restricted for Campus Activities 3900 Unrestricted Net Assets 34,616, , ,205 60,947 31,982, Total Net Assets $ 68,176,747 The notes to the financial statements are an integral part of this statement. 23

30 Data Control Codes Primary Government: ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT STATEMENT OF ACTIVITIES FOR THE YEAR ENDED AUGUST 31, 2012 Program Revenues EXHIBIT B1 Net (Expense) Revenue and Changes in Net Assets Expenses Charges for Services Operating Grants and Contributions Primary Gov. Governmental Activities GOVERNMENTAL ACTIVITIES: 11 Instruction $ 18,751,409 $ 98,779 $ 4,031,339 $ (14,621,291) 12 Instructional Resources and Media Services 603,289 84,088 (519,201) 13 Curriculum and Staff Development 226,044 8, ,542 (53,912) 21 Instructional Leadership 864, ,325 (725,632) 23 School Leadership 1,885, ,137 98,441 (1,654,298) 31 Guidance, Counseling and Evaluation Services 1,011, ,489 (790,216) 32 Social Work Services 109,528 31,253 (78,275) 33 Health Services 288,768 16,371 (272,397) 34 Student (Pupil) Transportation 1,251,417 40,198 (1,211,219) 35 Food Services 2,089, ,541 1,996, , Extracurricular Activities 1,742,962 26,140 35,686 (1,681,136) 41 General Administration 1,371,466 1,750 45,664 (1,324,052) 51 Facilities Maintenance and Operations 3,807,064 71,678 (3,735,386) 52 Security and Monitoring Services 442,275 20,887 (421,388) 53 Data Processing Services 560, ,674 24,981 (351,205) 61 Community Services 125,843 4,295 58,164 (63,384) 72 Debt Service Interest on Long Term Debt 67,295 (67,295) 73 Debt Service Bond Issuance Cost and Fees 199,068 (199,068) 91 Contracted Instructional Services Between Schools 5,096,334 (5,096,334) 99 Other Intergovernmental Charges 467,418 (467,418) [TP] TOTAL PRIMARY GOVERNMENT: $ 40,962,911 $ 660,906 $ 7,079,442 (33,222,563) 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 21,200,641 2,393,683 15,150, , ,763 12,359 39,414,339 CN NB PA NE Change in Net Assets Net AssetsBeginning Prior Period Adjustment Net AssetsEnding $ 6,191,776 62,058,247 (73,276) 68,176,747 The notes to the financial statements are an integral part of this statement. 24

31 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT BALANCE SHEET GOVERNMENTAL FUNDS AUGUST 31, 2012 EXHIBIT C1 Data Control Codes 10 General Fund Other Funds Total Governmental Funds ASSETS Cash and Cash Equivalents $ 927,481 $ (121,887) $ 805,594 Investments Current 25,758, ,008 26,609,678 Taxes Receivable, net 1,817, ,248 1,946,425 Receivables from Other Governments 5,952, ,288 6,404,390 Accrued Interest 18,056 3,775 21,831 Due from Other Funds 1,026, ,167 1,199,493 Other Receivables 1,192 1,192 Inventories 26,212 26, Total Assets $ 35,527,216 $ 1,487,599 $ 37,014, LIABILITIES AND FUND BALANCES Liabilities: Accounts Payable $ 632,501 $ 6,851 $ 639,352 Payroll Deductions and Withholdings Payable 12,525 12,525 Accrued Wages Payable 1,062, ,563 1,186,002 Due to Other Funds 989, ,846 1,199,493 Due to Other Governments 338,291 8, ,128 Accrued Expenditures 11,175 11,175 Deferred Revenues 1,713, ,722 1,829, Total Liabilities 4,759, ,819 5,225, Fund Balances: Nonspendable Fund Balance: Inventories Restricted Fund Balance: Federal or State Funds Grant Restriction Retirement of LongTerm Debt Committed Fund Balance: Construction Other Committed Fund Balance Unassigned Fund Balance 26,212 26, , , , , ,205 11,000,000 11,000,000 60,947 60,947 19,184,851 19,184, Total Fund Balances 30,767,586 1,021,780 31,789, Total Liabilities and Fund Balances $ 35,527,216 $ 1,487,599 $ 37,014,815 The notes to the financial statements are an integral part of this statement. 25

32 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS AUGUST 31, 2012 EXHIBIT C2 Total Fund Balances Governmental Funds 1 Capital assets used in governmental activities are not financial resources and therefore are not reported in governmental funds. At the beginning of the year, the cost of these assets was $70,316,606 and the accumulated depreciation was $25,955,723. In addition, longterm liabilities, including bonds payable, are not due and payable in the current period, and, therefore are not reported as liabilities in the funds. The net effect of including the beginning balances for capital assets (net of depreciation) and longterm debt in the governmental activities is to increase net assets. 2 Current year capital outlays and longterm debt principal payments are expenditures in the fund financial statements,but they should be shown as increases in capital assets and reductions in longterm debt in the governmentwide financial statements. The net effect of including the 2012 capital outlays and debt principal payments is to (decrease) net assets. 3 The 2012 depreciation expense increases accumulated depreciation. The net effect of the current year's depreciation is to (decrease) net assets. $ 31,789,366 40,695,315 (3,624,317) (2,487,179) 4 Various other reclassifications and eliminations are necessary to convert from the modified accrual basis of accounting to accrual basis of accounting. These include recognizing deferred revenue as revenue, eliminating interfund transactions, reclassifying the proceeds of bond sales as an increase in bonds payable, and recognizing the liabilities associated with maturing longterm debt and interest. The net effect of these reclassifications and recognitions is to increase net assets. 19 Net Assets of Governmental Activities $ 1,803,562 68,176,747 The notes to the financial statements are an integral part of this statement. 26

33 Data Control Codes ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS FOR THE YEAR ENDED AUGUST 31, General Fund Other Funds Total Governmental Funds EXHIBIT C REVENUES: Total Local and Intermediate Sources $ 21,219,481 $ 2,777,266 $ 23,996,747 State Program Revenues 16,221, ,700 16,571,949 Federal Program Revenues 2,387,364 3,791,042 6,178, Total Revenues 39,828,094 6,919,008 46,747,102 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: 0091 Contracted Instructional Services Between Schools 0099 Other Intergovernmental Charges 13,737,753 3,519,001 17,256, ,044 65, ,326 55, , , ,892 99, ,957 1,765, ,780 1,885, , ,970 1,011,705 82,348 27, , ,560 1, ,768 1,020,904 1,020,904 1,910,162 56,442 1,966,604 1,206, ,487 1,370,575 1,338,169 1,338,169 3,619,217 3,619, , , , ,287 37,172 58,699 95,871 2,250,000 2,250, , , ,647 1, , , ,061 5,096,334 5,096, , , Total Expenditures 34,758,530 6,846,161 41,604, Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES): 7914 NonCurrent Loans 7915 Transfers In 8911 Transfers Out (Use) 5,069,564 72,847 5,142,411 6,680,000 6,680,000 64,047 64,047 (64,047) (64,047) 7080 Total Other Financing Sources (Uses) 6,680,000 6,680, Net Change in Fund Balances 11,749,564 72,847 11,822, Fund Balance September 1 (Beginning) 18,805,766 1,161,189 19,966, Increase (Decrease) in Fund Balance 212,256 (212,256) 3000 Fund Balance August 31 (Ending) $ 30,767,586 $ 1,021,780 $ 31,789,366 The notes to the financial statements are an integral part of this statement. 27

34 EXHIBIT C4 ZAPATA COUNTY 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, 2012 Total Net Change in Fund Balances Governmental Funds Current year capital outlays and longterm debt principal payments are expenditures in the fund financial statements, but they should be shown as increases in capital assets and reductions in longterm debt in the governmentwide financial statements. The net effect of removing the 2012 capital outlays and debt principal payments is to (decrease) net assets. Depreciation is not recognized as an expense in governmental funds since it does not require the use of current financial resources. The net effect of the current year's depreciation is to (decrease) net assets. $ 11,822,411 (3,624,317) (2,413,903) Various other reclassifications and eliminations are necessary to convert from the modified accrual basis of accounting to accrual basis of accounting. These include recognizing deferred revenue as revenue, adjusting current year revenue to show the revenue earned from the current year's tax levy, eliminating interfund transactions, reclassifying the proceeds of bond sales, and recognizing the liabilities associated with maturing longterm debt and interest. The net effect of these reclassifications and recognitions is to increase net assets. Change in Net Assets of Governmental Activities $ 407,585 6,191,776 The notes to the financial statements are an integral part of this statement. 28

35 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS AUGUST 31,2012 EXHIBIT E1 Agency Fund ASSETS Cash and Cash Equivalents $ 69,743 Total Assets $ 69,743 LIABILITIES Due to Student Groups $ 69,743 Total Liabilities $ 69,743 The notes to the financial statements are an integral part of this statement. 29

36 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2012 A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NOTE 1 REPORTING ENTITY Membership of Board The Board of Trustees includes seven eligible members elected at large by the qualified voters of the Zapata County Independent School District. The governing Board derives its powers from the statutes of the State of Texas and the rules and regulations of the Texas State Department of Education. The District receives funding from local, state and federal government sources and must comply with the requirements of these funding source entities. However, the District is not included in any other governmental "reporting entity" as defined by GASB statement No.14 The Financial Reporting Entity. The District has no component units. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Zapata County Independent School District's (the "District") basic financial statements have been prepared in conformity with generally accepted accounting principles (GAAP) 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. A. Basis of Presentation GovernmentWide Statements: The statement of net assets and the statement of activities include the financial activities of the overall government, except for fiduciary activities. Eliminations have been made to minimize the doublecounting of internal activities. All interfund transactions between governmental funds and between governmental funds and internal service funds are eliminated on the governmentwide statements. Governmental activities are generally financed through taxes, intergovernmental revenues, and other nonexchange transactions. They are reported separately from business type activities, which rely to a significant extent on fees and charges for support. The statement of activities presents a comparison between direct expenses and program revenues for each function of the District s governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. The District does not allocate indirect expenses in the statement of activities. Program revenues include: (a) fees, fines, and charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. 30

37 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2012 A. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (Continued) NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. Privatesector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in the governmentwide financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent privatesector guidance for their businesstype activities and enterprise funds, subject to this same limitation. The government has elected not to follow subsequent privatesector guidance. Fund Financial Statements: The fund financial statements provide information about the District s funds, with separate statements presented for each fund category. 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 nonmajor funds. The District reports the following major governmental fund: General Fund The general fund is the District's primary operating fund. It accounts for all financial resources except those required to be accounted for in another fund. Other Governmental Funds: Additionally, the District reports the following fund type(s): Special Revenue Funds The District accounts for resources restricted to, or designated for, specific purposes by the District or a grantor in a special revenue fund. Most Federal and some State financial assistance is accounted for in a Special Revenue Fund. Debt Service Fund The District accounts for resources accumulated and payments made for principal and interest on longterm general obligation debt of governmental funds in a debt service fund. Capital Projects Fund The capital projects fund of the District accounts for proceeds from long term debt financing and revenues and expenditures related to authorized construction and related capital asset acquisitions. Agency Funds These funds are used to report student activity funds and other resources held in a purely custodial capacity (assets equal liabilities). The Agency funds typically involve only the receipt, temporary investment, and remittance of fiduciary resources to individuals, private organization, or other governments. 31

38 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2012 A. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (Continued) NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Basis of Accounting/Measurement Focus Governmentwide and Fiduciary Fund Financial Statements: These financial statements are reported using the economic resources measurement focus. The governmentwide, proprietary fund and fiduciary fund financial statements are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange 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. Governmental Fund Financial Statements: Governmental funds 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. All other revenue items are considered to be measurable and available only when cash is received by the government. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general longterm 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 longterm 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. Deferred revenue is reported in the governmental funds when potential revenue does not meet both the measurable and available criteria for recognition in the current period. Deferred 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 deferred revenue is removed and revenue is recognized. 32

39 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2012 A. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (Continued) NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Revenues Substantially, all governmental fund revenues are accrued. Property taxes are billed and collected within the same period in which the taxes are levied. Subsidies and grants to proprietary funds, which finance either capital or current operations, are reported as non operating revenue based on GASBS No. 33. In applying GASBS No. 33 to grant revenues, the provider recognizes liabilities and expenses and the recipient recognizes receivables and revenue when the applicable eligibility requirements, including time requirements, are met. Resources transmitted before the eligibility requirements are met are reported as advances by the provider and deferred revenue by the recipient. D. Expenditures Expenditures are recognized when the related fund liability is incurred. Inventory costs are reported in the period when inventory items are used, rather than in the period purchased. E. Cash and Cash Equivalents The District s cash and cash equivalents are considered to be cash on hand, demand deposits, and short term investments with original maturities of three months or less. F. Investments Money market investments which are shortterm, highly liquid debt instruments including commercial paper, banker s acceptances and U.S. Treasury and agency obligations are reported at amortized cost. All other investments are reported at fair value. G. Receivables and Payables 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 governmentwide statement of activities. Similarly, interfund receivables and payables are netted and presented as a single Internal Balances line of the governmentwide statement of net assets. All trade and property tax receivables are shown net of an allowance for uncollectible. Property taxes are levied by October 1 on the assessed value listed as of the prior January 1 for all real and business personal property in the District in conformity with Subtitle E, Texas Property Code. Taxes are due upon 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 31 of each year, a tax lien attaches to property to secure the payment of all taxes, penalties, and interest ultimately imposed. 33

40 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2012 A. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (Continued) NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Delinquent taxes are prorated between the general and debt service funds based on rates adopted for the year of the levy. Allowance for uncollectible tax receivables are based on historical experience in collecting property taxes. Accrued liabilities include amounts accrued for salaries. H. 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. Reported inventories are equally offset by a fund balance reserve in the fund level statements which indicates that they do not constitute "available spendable resources" even though they are a component of net current assets. I. Capital Assets Capital assets, which include property, buildings, furniture and equipment are reported in the applicable governmental or businesstype activities columns in the governmentwide financial statements. 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 the assets life is not capitalized. A capitalization threshold of $5,000 is used. Capital assets are being depreciated using the straightline method over the following estimated useful lives: Depreciable Lives of Assets Years Buildings 30 Building improvements 15 Vehicles 5 Office Equipment 7 Computer Equipment 5 J. Use of Estimates The preparation of financial statements in conformity with GAAP requires the use of management s estimates. K. Compensated Absences It is the District s policy that vacations are to be taken in the same year they are earned, and any unused days at the end of the year are forfeited. Some employees of the District are entitled to sick leave that may be accumulated if not used. There is no liability for unpaid accumulated leave since the District does not have a policy to pay amounts when employees separate from service with the District. 34

41 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2012 A. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (Continued) NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) L. Longterm obligations In the governmentwide financial statements, longterm debt and other longterm obligations are reported as liabilities in the applicable governmental activities. Bond premiums and discounts, as well as issuance cost, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as 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. The face amount of debt issued is reported as other financing sources. Premium received on debt issuance are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Refunding gain or loss is amortized over the lesser of the refunded bonds. M. Fund Balance Reporting The District has adopted GASB 54 as part of its fiscal year reporting. Implementation of GASB 54 is required for all districts for their fiscal year ending in The intention of the GASB is to provide a more structured classification of fund balance and to improve the usefulness of fund balance reporting to the users of the District s financial statements. The reporting standard establishes a hierarchy for fund balance classifications and the constraints imposed on the uses of those resources. GASB 54 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 item, inventories, and principal of endowment fund. The District has inventories that are considered nonspendable. The District does not have any prepaid items or nonspendable funds related to endowments. In addition to the nonspendable fund balance, GASB 54 has provided a hierarchy of spendable fund balances, based on hierarchy of spending constrains. Restricted: fund balance shall include amounts constrained to a specific purpose by the provider, such as a grantor. Committed: fund balances that contain selfimposed constraints of the government from its highest level of decision making authority. The responsibility to commit funds rests with the Board of Trustees. In implementing GASB 54, the District Designates Committed fund balance through a formal resolution by the Board of Trustees. Committed Funds that are to be specified for a particular purpose can only be established, modified, or rescinded through Board action. Thus, committed amounts cannot be used for any other purpose unless the governing board removes those constraints by taking the same type of formal action. 35

42 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2012 A. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (Continued) NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assigned: fund balance shall mean that portion of the fund balance that is spendable or available for appropriation but has been tentatively earmarked for some specific purpose by the Board, the Superintendent. The Board delegates by formal action in a scheduled meeting specific persons or groups to assign certain fund balances. The Board may modify or rescind its delegation of authority by the same action. The authority to make assignments shall be in effect until modified or rescinded by the Board by majority vote in a scheduled meeting. Unassigned: fund balance shall include amounts available for any legal purpose. This portion of the total fund balance in the general fund is available to finance operating expenditures. The order of spending and availability shall be to reduce funds from the listed areas in the following order: restricted, committed, assigned and unassigned. The District has Committed $11,000,000 of its Fund Balance for the construction of Zapata North Elementary. The District manages several Special Revenues Funds of which the following have a fund balance at August 31, 2012: Campus Activity Fund to account on project basis for transactions related to a principal s activity fund and the monies generated are not subject to recall by the school district s board of trustees into the General Fund. The fund balance of $60,947 is fully controlled by the various campuses. The District s other Special Revenue Funds can be located on page 60. N. 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 Texas Education Agency (TEA) in the Resource Guide. Mandatory codes are recorded in the order provided in that section. O. Data Control Codes Data Control Codes appear in the rows and above the columns of certain financial statements. TEA requires the display of these codes in the financial statements filed with TEA in order to insure accuracy in building a statewide database for policy development and funding plans. B. COMPLIANCE AND ACCOUNTABILITY NOTE 3 FINANCERELATED 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: Expenditures Exceeding Appropriations During the year ended August 31, 2012 the District had expenditures exceeding budgets in the General Fund in Function 73 and 91 in the amounts of $42,926 and $138,033, respectively. 36

43 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2012 B. COMPLIANCE AND ACCOUNTABILITY (Continued) NOTE 3 FINANCERELATED LEGAL AND CONTRACTUAL PROVISION (Continued) To the extent that these amounts were not noncash amounts, these expenditures were funded by greater than anticipated local revenues in the General Fund. Deficit Fund Balance or Fund Net Assets of Individual Funds During the year ended August 31, 2012 the District did not have any deficit fund balance or fund net assets in individual funds. Deficit Fund Name Amount Remarks None reported Not applicable Not applicable NOTE 4 PROPERTY TAXES Property taxes are levied by October 1 on the assessed value listed as of the prior January 1 for all real and business personal property located in the District 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 31 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 (1) when they become due or past due and receivable within the current period and (2) when they are expected to be collected during a 60day period after the close of the school fiscal year. The District s 2011 tax rate was $1.04 for maintenance and $ for debt service per $100 assessed valuation. Allowances for uncollectible within the General and Debt Service Funds are based upon historical experience in collecting property taxes. The assessed valuation of $2,065,498,655 used to determine the tax rates represents 100% of the fair market value of the property. Education Code section limits a school district s M&O rate for any year. The rate may not exceed the rate equal to the sum of $0.17 and the product of the state compression percentage as determined by Section multiplied by $1.50. A school district that adopted a 2005 M&O rate above $1.50, as permitted by special law, may not exceed the rate equal to the sum of $0.17 and the product of the state compression percentage multiplied by the district s M&O tax rate for A school district also may adopt a rate up to $0.50 for new debt plus a rate for old debt. New debt is debt authorized after April 1, 1991 and issued after September 1, 1992; old debt is debt authorized prior to those dates. The Education Code requires school districts to demonstrate to the Texas Attorney General the projected ability to pay all debt issued after September 1, 1992, with a rate not to exceed $0.50. Taxes receivable at August 31, 2012 are as follows: Less: Total Allowance for Net Receivable Uncollectible Receivable General Fund $ 4,021,805 $ 2,204,628 $ 1,817,177 Debt Service Fund 320, , ,248 $ 4,342,249 $ 2,395,824 $ 1,946,425 37

44 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2012 B. COMPLIANCE AND ACCOUNTABILITY (Continued) NOTE 5 DEPOSITS, SECURITIES AND INVESTMENTS (Continued) The District s funds are required to be deposited and invested under the terms of a depository contract pursuant to the School Depository Act. 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 daytoday 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. At yearend, the carrying amount of the District s deposits (cash, certificates of deposit, and interestbearing savings accounts) was $23,410,132 and the bank balance was $23,786,831. Custodial Credit Risk Deposits Custodial credit risk is the risk that in the event of a bank failure, the District s deposits may not be covered by depository insurance and the deposits are uncollateralized, collateralized with securities held by the pledging financial institution, or collateralized with securities held by the pledging financial institution s trust department or agent but not in the District s name. The District's cash deposits at August 31, 2012 were entirely covered by FDIC insurance or by pledged collateral held in the District's name by a bank other than the pledging bank. In addition, the following is disclosed regarding coverage of combined balances on the date of highest deposit: (a) Depository: International Bank of Commerce (b) The fair value of securities pledged as of the date of the highest combined balance on deposit was $71,344,607. (c) The highest combined balances of cash, savings, and time deposit accounts amounted to $38,081,711 and occurred during the month of November. (d) Total amount of FDIC coverage at the time of the highest combined balance was $250,000. Temporary Investments Statutes authorize the District to invest in obligations of the U.S. Treasury or the State of Texas, certain U.S. agencies, certificates of deposit, money market savings accounts, certain municipal securities, repurchase agreements, common trust funds and other investments specifically allowed by the Public Funds Investment Act of 1995 (Chapter 2256, Texas Government Code). The District s investment policies and types of investments are governed by the Public Funds Investments Act (PFIA). The District s management believes that it complied with the requirements of the PFIA and the District Investment policies. 38

45 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2012 B. COMPLIANCE AND ACCOUNTABILITY (Continued) NOTE 5 DEPOSITS, SECURITIES AND INVESTMENTS (Continued) Policies and Strategies Governing Deposits and Investments In accordance with the Public Funds Investment Act, District Investment Strategies shall address the following priorities (in order of importance): Understanding the suitability of the investment to the financial requirements of the District; Preservation and safety of principal; Liquidity; Marketability of the investment if the need arises to liquidate the investment prior to maturity; Diversification of the investment portfolio; and Yield. Effective investment strategy development coordinates the primary objectives of the District s Investment Policy and cash management procedures. Aggressive cash management to increase the available investment period will enhance the ability of the District to earn interest income. Maturity selections shall be based on cash flow and market conditions to take advantage of interest rate cycles as viable and material revenue to all District funds. The District s portfolio shall be designed and managed in a manner responsive to the public trust and consistent with the Investment Policy. Each major Fund type has varying cash flow requirements and liquidity needs. Therefore, specific strategies shall be implemented considering the Fund s unique requirements. District funds shall be analyzed and invested according to the following major Fund types: A. General Funds B. Agency Funds C. Debt Service Funds D. Capital Project Funds In order to minimize risk of loss due to interest rate fluctuations, investment maturities will not exceed the anticipated cash flow requirements of the Funds. The District shall take all prudent measures that are consistent with its investment policy to liquidate an investment that does not have the minimum rating required by law. Investment guidelines by Fund type are as follows: A. General Funds Suitability Any investment eligible in the Investment Policy is suitable for General Funds. Safety of Principal All investments shall be of high quality securities with no perceived default risk. Market price fluctuations will occur. However, managing the weighted average days to maturity for the Operating Fund s portfolio to less than 180 days and restricting the maximum allowable maturity to one year will minimize the price volatility of the overall portfolio. Marketability Securities with active and efficient secondary markets are necessary in the event of an unanticipated cash flow requirement. Historical market spreads between the bid and offer prices of a particular securitytype of less than a tenth of a percentage point will define an efficient secondary market. 39

46 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2012 B. COMPLIANCE AND ACCOUNTABILITY (Continued) NOTE 5 DEPOSITS, SECURITIES AND INVESTMENTS (Continued) Liquidity The Operating Fund requires the greatest shortterm liquidity of any of the Fund types. Shortterm investment pools and money market mutual funds will provide daily liquidity and may be utilized as a competitive yield alternative to fixed maturity investments. Diversification Investment maturities should be staggered throughout the budget cycle to provide cash flow based on the anticipated operating needs of the District. Diversifying the appropriate maturity structure out through one year will reduce market cycle risk. Yield Attaining a competitive market yield for comparable securitytypes and portfolio restrictions is the desired objective. The yield of an equally weighted, rolling sixmonth Treasure bill portfolio will be the minimum yield objective. B. Agency Funds Suitability Any investment eligible in the Investment Policy is suitable for Agency Funds. Safety of Principal All investments shall be of high quality securities with no perceived default risk. Market price fluctuations will occur. However, managing the weighted average days to maturity for the Investment Pool to less than 180 days and restricting the maximum allowable maturity to one year, the price volatility of the overall portfolio will be minimized. Marketability Securities with active and efficient secondary markets are necessary in the event of an unanticipated cash flow requirement. Historical market spreads between the bid and offer prices of a particular securitytype of less than a tenth of a percentage point will define an efficient secondary market. Liquidity Agency Funds require reasonable shortterm liquidity. Shortterm investment pools and money market mutual funds will provide daily liquidity and may be utilized as a competitive yield alternative to fixed maturity investments. Diversification Investment maturities should be staggered throughout the budget cycle to provide cash flow based on the anticipated operating needs of the District. Diversifying the appropriate maturity structure out through one year will reduce market cycle risk. Yield Attaining a competitive market yield for comparable securitytypes and portfolio restrictions is the desired objective. The yield of an equally weighted, rolling sixmonth Treasure bill portfolio will be the minimum yield objective. C. Debt Service Funds Suitability Any investment eligible in the Investment Policy is suitable for the Debt Service Fund. Safety of Principal All investments shall be of high quality securities with no perceived default risk. Market price fluctuations will occur. However, by managing Debt Service Funds to not exceed the debt service payment schedule the market risk of the overall portfolio will be minimized. Marketability Securities with active and efficient secondary markets are not necessary as the event of an unanticipated cash flow requirement is not probable. Liquidity Debt Service Funds have predictable payment schedules. Therefore, investment maturities should not exceed the anticipated cash flow requirements. Investment pools and money market mutual funds may provide a competitive yield alternative for short term fixed maturity investments. A singular repurchase agreement may be utilized if disbursements are allowed in the amount necessary to satisfy any debt service payment. This investment structure is commonly referred to as a flexible repurchase agreement. 40

47 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2012 B. COMPLIANCE AND ACCOUNTABILITY (Continued) NOTE 5 DEPOSITS, SECURITIES AND INVESTMENTS (Continued) Diversification Market conditions influence the attractiveness of fully extending maturity to the next unfunded payment date. Generally, if investment rates are anticipated to decrease over time, the District is best served by locking in most investments. If the interest rates are potentially rising, then investing in shorter and larger amounts may provide advantage. At no time shall the debt service schedule be exceeded in an attempt to bolster yield. Yield Attaining a competitive market yield for comparable securitytypes and portfolio restrictions is the desired objective. The yield of an equally weighted, rolling threemonth Treasure bill portfolio will be the minimum yield objective. D. Capital Project Funds Suitability Any investment eligible in the Investment Policy is suitable for Capital Project Funds. Safety of Principal All investments shall be of high quality securities with no perceived default risk. Market price fluctuations will occur. However, by managing Capital Project Funds to not exceed the anticipated expenditure schedule the market risk of the overall portfolio will be minimized. Marketability Securities with active and efficient secondary markets are necessary in the event of an unanticipated cash flow requirement. Historical market spreads between the bid and offer prices of a particular securitytype of less than a tenth of a percentage point will define an efficient secondary market. Liquidity Capital Project Fund programs have reasonably draw down schedules. Therefore, investment maturities should generally follow the anticipated cash flow requirements. Investment pools and money market mutual funds will provide readily available funds generally equal to one month s anticipated cash flow needs, or a competitive yield alternative for short term fixed maturity investments. A singular repurchase agreement may be utilized if disbursements are allowed in the amount necessary to satisfy any expenditure request. This investment structure is commonly referred to as a flexible repurchase agreement. Diversification Market conditions and arbitrage regulations influence the attractiveness of staggering the maturity of fixed rate investments for construction, loan and bond proceeds. Generally, when investment rates exceed the applicable cost of borrowing, the District is best served by locking in most investments. If the cost of borrowing cannot be exceeded, then concurrent market conditions will determine the attractiveness of diversifying maturities or investing in shorter and larger amounts. At no time shall the anticipated expenditure schedule be exceeded in an attempt to bolster yield. Yield Achieving a positive spread to the cost of borrowing is the desired objective, within the limits of the Investment Policy s risk constraints. The yield of an equally weighted, rolling sixmonth Treasury bill portfolio will be the minimum yield objective for nonborrowed funds. 41

48 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2012 B. COMPLIANCE AND ACCOUNTABILITY (Continued) NOTE 5 DEPOSITS, SECURITIES AND INVESTMENTS (Continued) All investments are reported at fair value. Public Funds Investment Pools Public funds investment pools in Texas ("Pools") are established under the authority of the interlocal Cooperation Act, Chapter 79 of the Texas Government Code, and are subject to the provisions of the Public Funds Investment Act (the "Act"). Chapter 2258 of the Texas Government Code, in addition to other provisions of the Act designed to promote liquidity and safety of principal, the Act requires Pools to: 1) have an advisory board composed of participants in the pool and other persons who do not have a business relationship with the pool and are qualified to advise the pool; 2) maintain a continuous rating of no lower than AAA or AAAm or an equivalent rating by at least one nationally recognized rating service; and 3) maintain the fair value of its underlying investment portfolio within one half of one percent of the value of its shares. 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 2a7like, in which case they are reported at share value. A 2a7like 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 The District s investments at August 31, 2012 are shown below: Reported Fair Amount Value Category MBIA Assets Management $ 4,074,883 $ 4,074,883 Pooled Investments At August 31, 2012, the District s investments, other than those which are obligations of or guaranteed by the U.S. Government, are rated as to credit quality as follows: Credit Quality Distribution of Securities With Credit Exposure as a Percentage of Total Investments Investment or Investment Type Rating Exposure MBIA Asset Management AAA/V1+ 100% The following is a reconcilement of the District s total Cash and Investments: Deposits $ 875,337 Deposits Certificates of Deposit 22,534,795 Investments MBIA 4,074,883 Total $ 27,485,015 Exhibit A1 Cash and Cash Equivalents $ 805,594 Current Investments 26,609,678 Total Exhibit A1 27,415,272 Exhibit E1 Fiduciary Cash and Cash Equivalents 69,743 $ 27,485,015 42

49 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2012 B. COMPLIANCE AND ACCOUNTABILITY (Continued) NOTE 6 CAPITAL ASSET ACTIVITY Capital asset activity for the District for the year ended August 31, 2012, was as follows: Beginning Ending Balance Retirements/ Balance 9/1/2011 Additions Adjustments 8/31/2012 Governmental Activities: Capital Assets, not being depreciated: Land $ 1,044,825 $ $ $ 1,044,825 Construction in progress 720, ,029 1,044, ,029 1,764,854 Capital Assets, being depreciated: Buildings and improvements 62,517,308 62,517,308 Furniture and equipment 7,799,298 15, ,399 7,520,898 70,316,606 15, ,399 70,038,206 Less accumulated depreciation for: Buildings and improvements 18,942,135 2,023,645 (73,276) 21,039,056 Furniture and equipment 7,013, , ,399 7,109,447 Total Accumulated Depreciation 25,955,723 2,413, ,123 28,148,503 Total Capital Assets being Depreciated 44,360,883 (2,397,904) 73,276 41,889,703 Governmental Capital Assets (Net) $ 45,405,708 $ (1,677,875) $ 73,276 $ 43,654,557 Depreciation expense was charged to governmental functions as follows: Instruction $ 1,494,655 Instructional resources and media services 39,963 Student (pupil) transportation 230,513 Food service 122,729 Cocurricular/Extracurricular activities 372,387 Administration 33,297 Plan maintenance and operations 67,815 Data Processing Services 22,572 Community service 29,972 Total depreciation expense $ 2,413,903 NOTE 7 INTERFUND RECEIVABLES/PAYABLES Interfund receivable and payable balances at August 31, 2012 were: Due from Other Funds Due to Other Funds General Fund $ 1,026,326 $ 989,647 Special Revenue Fund ,059 Debt Service Fund 172, ,787 TOTAL $ 1,199,493 $ 1,199,493 The balances result from a routine lag between the dates that transactions such as yearend payroll accruals, worker s compensation adjustments and other yearend accruals are recorded in the accounting system and payments between the funds are made. All amounts are scheduled to be repaid within one year. 43

50 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2012 B. COMPLIANCE AND ACCOUNTABILITY (Continued) NOTE 8 DISAGGREAGATION OF RECEIVABLES AND PAYABLES Receivables at August 31, 2012 were as follows: Due from Property Other Other Total Taxes Governments Receivables Receivables Governmental Activities: General Fund $ 4,021,805 $ 5,952,102 $ 1,192 $ 9,975,099 Nonmajor Governmental Funds 320, , ,732 Less: Allowance for uncollectible (2,395,824) (2,395,824) Total Governmental Activities $ 1,946,425 $ 6,404,390 $ 1,192 $ 8,352,007 Payables at August 31, 2012 were as follows: Payroll Due to Accounts Payable Deductions & Accrued Other Total and Retainage Withholding Wages Governments Payables Governmental Activities: General Fund $ 632,501 $ 12,525 $ 1,062,439 $ 338,291 $ 2,045,756 Nonmajor Governmental Funds 6, ,563 8, ,251 Total Governmental Activities $ 639,352 $ 12,525 $ 1,186,002 $ 347,128 $ 2,185,007 NOTE 9 DUE TO AND FROM OTHER GOVERNMENTS The District participates in a variety of federal and state programs from which it receives grants to partially or fully finance certain activities. In addition, the District receives entitlements from the State through the School Foundation and Per Capita Programs. Amounts due from federal and state governments as of August 31, 2012, are summarized below. General Other Fund Funds Total Due From Other Governments: Federal grants: Grants passed through Texas Education Agency $ 5,830,365 $ 452,288 $ 6,282,653 Zapata County Tax Collections 121, ,737 $ 5,952,102 $ 452,288 $ 6,404,390 44

51 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2012 B. COMPLIANCE AND ACCOUNTABILITY (Continued) NOTE 10 DEFERRED REVENUE Deferred revenue at August 31, 2012 consisted of the following: Nonmajor General Governmental Fund Funds Total Tax Revenue $ 1,686,840 $ 116,722 $ 1,803,562 Food Service Commodities 26,212 26,212 $ 1,713,052 $ 116,722 $ 1,829,774 Less: Tax Revenue (1,803,562) Unearned Revenue Exhibit A1 $ 26,212 NOTE 11 GENERAL FUND FEDERAL SOURCE REVENUES The following summarizes general fund federal program revenues: CFDA Program or Source Number Amount National School Lunch/Breakfast / $ 1,806,769 Commodity Supplemental Food Program ,488 R.O.T.C. Program ,850 SHARS 327,749 Indirect Costs: ESEA Title I, Part A A 34,916 ESEA Title I, Part C ,275 IDEAB Formula ,683 IDEAB Preschool Carl Perkins Basic Grant ESEA Tilte II Part A A 3,653 Title III Part A A 618 ESEA, Title VI, Part B B 948 ARRA Education Jobs Fund A 10,672 Total for General Fund $ 2,387,364 45

52 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2012 B. COMPLIANCE AND ACCOUNTABILITY (Continued) NOTE 12 LONGTERM OBLIGATIONS Long Term Obligations Long term obligations include bonds payable and capital leases payable. Changes in longterm activity for the year ended August 31, 2012, was as follows: Beginning Ending Governmental Balance Balance Due Within Activities 9/1/11 Increase Decrease 8/31/12 One Year Bonds Payable $ 4,565,000 $ $ 2,250,000 $ 2,315,000 $ 2,315,000 Less Deferred: On Refunding 38,043 19,022 19,021 Premium on Bonds 154,172 77,086 77,086 Qualified School Construction Maintenance Tax Note 6,680,000 6,680, ,000 Total Governmental Activities $ 4,757,215 $ 6,680,000 $ 2,346,108 $ 9,091,107 $ 2,760,000 Due in More Than One Year $ 6,331,107 Bonds Payable Bonds payable at August 31, 2012 are comprised of the following individual issues: Unlimited Tax Refunding Bonds, Series 2010: $ 2,315, Qualified School Construction Maintenance Tax Note 6,680,000 $ 8,995,000 Current requirements for principal and interest expenditures are accounted for in the Debt Service Fund. Debt service requirements at August 31, 2012 are as follows: Year Ended August 31 Principal Interest Total 2013 $ 2,760,000 $ 498,724 $ 3,258, , , , , , , , , , , , , ,225,000 1,619,900 3,844, ,230,000 1,619,900 3,849,900 $ 8,995,000 $ 5,034,444 $ 14,029,444 There are a number of limitations and restrictions contained in the general obligation bond indenture. Management has indicated that the District is in compliance with all significant limitations and restrictions at August 31,

53 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2012 B. COMPLIANCE AND ACCOUNTABILITY (Continued) NOTE 13 LONG TERM DEBT REFUNDING In year 2010, the District refunded bonds that were due in varying installments with a final payment of $2,315,000 in The net proceeds were deposited in an irrevocable trust with an escrow agent to provide for all debt service payments on the refunded bond series Maintenance Tax Qualified School Construction Note During the year, the District received Qualified School Construction Maintenance Tax Note Series 2012 in the amount of $6,680,000, payable in annual installments of $445,000 for 15 years. NOTE 14 PENSION PLAN OBLIGATIONS Plan description Zapata County Independent School District contributes to the Teacher Retirement System of Texas (TRS), a costsharing 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. TRS issues a publicly available financial report that includes financial statements and required supplementary information for the defined benefit pension plan. The report may be obtained by writing to the TRS Communications Department, 1000 Red River Street, Austin, Texas 78701, by calling the TRS Communications Department at , or by downloading the report from the TRS Internet website, under the TRS Publications heading. Funding Policy State law provides a state contribution rate of % for fiscal years 2012 and 2011, and 6.58% for fiscal year State law further provides a member contribution rate of 6.4% for fiscal years 2012, 2011, and Effective January 1, 2010 the state contribution rate increased to 6.644% and decreased to 6.00% effective September 1, In certain instances, the reporting district is required to make all or a portion of the state's 6.58% or 6.00% contribution. Contribution requirements are not actuarially determined but are legally established each biennium 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 10.0% of the aggregate annual compensation of all members of the system during that fiscal year, (2) A state statute prohibits benefit improvements or contribution reductions if, as a result of a the particular action, the time required to amortize TRS s 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. 47

54 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2012 B. COMPLIANCE AND ACCOUNTABILITY (Continued) NOTE 14 PENSION PLAN OBLIGATIONS (Continued) State contributions to TRS made on behalf of Zapata County Independent School District's employees for the years ended August 31, 2010, 2011, and 2012 were $1,096,350, $1,104,960, and $1,058,384 respectively, and were recognized by the District. The District paid additional state contributions for the year ended August 31, 2010, 2011 and 2012 in the amount of $124,797, $131,377, and $129,974 respectively, on the portion of the employees' salaries that exceeded the statutory minimum. NOTE 15 RISK MANAGEMENT A. General During the period September 1, 2011 through August 31, 2012, the District participated in the Texas Association of School Boards Risk Management Fund for all significant governmental functions claims. The more significant of these includes $1,000,000 of general liability insurance and property insurance covering District buildings and properties in an aggregate amount of approximately $85,630,380 and $1,000,000 in school leader s errors and omissions. Provisions of the Program require annual contributions based on a riskfunding plan developed by the Program. In addition, the terms of the Program allow the Program to collect an adjusted contribution if the Program s operations for any given fund year are inadequate to pay the ultimate cost of claims incurred in that fund year. This adjusted contribution may be collected from a member who no longer participates in the Program if the year was attributable to a member s participation year. The Program shall provide excess coverage to ensure the Program s financial integrity. There were no reductions in coverage in the past fiscal year. B. Health Care Coverage The District provides the employees with a health insurance plan. The District paid premiums of $396 per month per employee; and employees, at their option, authorized payroll withholdings to pay premiums for dependents. All premiums were paid to a licensed insurer. The plan was authorized by Article 3.512, Texas Insurance Code, and was documented by contractual agreement. Latest financial statements for the company are available and have been filed with the Texas State Board of Insurance, Austin, Texas and are public records. The coverage for remains with the same provider. C. Worker s Compensation Coverage The District met its statutory workers compensation obligation through participation in the Texas Association of School Boards Risk Management Fund. The District contributed $241,887 in premiums to 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. 48

55 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2012 B. COMPLIANCE AND ACCOUNTABILITY (Continued) NOTE 15 RISK MANAGEMENT (Continued) D. Unemployment Coverage The District met its obligation for unemployment insurance through participation in the Texas Association of School Boards Risk Management Fund. The District contributed $50,987 in premiums to the fund. NOTE 16 REVENUES Revenues of the District consist of the following: Local, intermediate, and outofstate revenues are comprised of property taxes received, food sales, cocurricular activity receipts, investment income and the other miscellaneous receipts. State program revenues are primarily comprised of foundation monies received from the Texas Education Agency and other miscellaneous state program reimbursements. Federal program revenues include all federal grants direct from federal agencies or passed through from the Texas Education Agency or other state and local entities. NOTE 17 OPERATING LEASE COMMITMENTS The District had operating leases expenditures of $174,859 for office equipment and rental expenditures of $84,336 during Year Ended August 31 Amount Offices 2012 $ 174, ,371 $ 228,230 NOTE 18 REVENUE FROM LOCAL AND INTERMEDIATE SOURCES During the current year, revenues from local and intermediate sources consisted of the following: Non major General Governmental Fund Funds Total Property taxes $ 20,498,079 $ 2,345,154 $ 22,843,233 Penalties, interest and other 317,454 26, ,506 Investment income 126,166 5, ,763 Food sales 203, ,541 Athletic revenues 26,140 26,140 Other 48, , ,564 $ 21,219,481 $ 2,777,266 $ 23,996,747 49

56 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2012 B. COMPLIANCE AND ACCOUNTABILITY (Continued) NOTE 19 CONTINGENT LIABILITIES A. The District participates in a number of state and federally assisted programs. These programs are subject to program compliance audits by the grantors or their representatives. Accordingly, the District s compliance with applicable grant requirements will be finally determined at some future date. The amount, if any, of expenditures, which may be disallowed by the granting agencies, cannot be determined at this time although the District expects such amounts, if any, to be immaterial. B. The District participated in a public entity risk pool for all significant governmental functions. The District believes any adjustments to premiums for claims would be immaterial. C. ZCISD underwent an audit of the Erate Program in July As a result of this audit, Demand Payment Letters were issued to ZCISD on October 2010 totaling approximately $1.4 million. The District submitted an appeal to the FCC. On February 2012, the District received a letter from FCC stating that there was no evidence of waste, fraud and abuse in the record. USACC issued a Revised Funding Commitment Decision Letter in July 2012 with the adjusted amounts totaling $2, The District paid the adjusted amount on July NOTE 20 RELATED PARTIES A member of the Board of Trustees is president at the District s depository bank. NOTE 21 RETIREE HEALTH CARE PLAN Plan Description. The District contributes to the Texas Public School Retired Employees Group Insurance Program (TRSCare), a cost sharing multipleemployer defined benefit post employment health care plan administered by the Teacher Retirement System of Texas (TRS), TRSCare Retired Plan 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 optional group insurance coverage for participants. The TRS issues a publicly available financial report that includes financial statements and required supplementary information for TRSCare. That report may be obtain by visiting the TRS web site at by writing to the Communications Department if the Teacher Retirement System of Texas at 1000 Red River Street, Austin, Texas 78071, or calling

57 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2012 B. COMPLIANCE AND ACCOUNTABILITY (Continued) NOTE 21 RETIREE HEALTH CARE PLAN (continued) Funding Policy Contribution requirements are not actuarially determined but are legally established each biennium by the Texas Legislature. The Texas Insurance Code, Sections , 203, and 204 establish state, active employee, and public school contributions, respectively. The State of Texas and active public school employee contribution rates were 1.0% and 0.65% of public school payroll, respectively, with school districts contributing a percentage of payrolls set at 0.55% for fiscal years ended August 31, 2010, 2011 and Per Texas Insurance Code, Chapter 1575, the public school contribution may not be less than 1.25% or greater than 0.75% of the salary of each active employee of the public school. For the years ended August 31, 2012, 2011 and 2010, the State s contribution to TRSCare were $28,934, $28,670, and $34,105, respectively. The active member contributions were $1,328,233, $1,431,006, and $1,452,215, respectively. The District s contributions were $114,144, $122,977, and $124,796, respectively, which equaled to the required contributions each year. Medicare Part D On Behalf Payments for Reporting Entities Funding Policy the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, which was effective January 1, 2006, established prescription drug coverage for Medicare beneficiaries, also known as Medicare Part D. One of the provisions of Medicare Part D allows for the Texas Public School Retired Employee Group Insurance Program (TRSCare) to receive drug subsidy payments from the federal government to offset certain prescription drug expenditures for eligible TRSCare participants. The amount of subsidy reimbursements received by TRS on behalf of the District for the period ending August 31, 2012, 2011, and 2010, were estimated at $58,053, $53,886, and $53,390, respectively, and were recognized by the District. NOTE 22 FUND BALANCE The District has classified its fund balances with the following hierarchy: Nonspendable: The District has inventories totaling $26,212 that are classified as nonspendable. Spendable: The District has classified the spendable fund balances as Restricted, Committed and Unassigned and considered each to have been spent when expenditures are incurred. The District currently has no funds classified as Assigned. Restricted for Food Service, Federal and State Programs, Debt Service and Capital Projects: Federal Laws, Texas Statutes and local ordinances require that certain revenues be specifically designed for the purposes of food service, federal and state programs, debt service, and capital Projects. The funds have been included in restricted category of fund balance. The restricted fund balances totaled $1,517,356 and represents $556,523 in food service, $117,628 in state programs, and $843,205 in debt service. 51

58 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2012 B. COMPLIANCE AND ACCOUNTABILITY (Continued) NOTE 22 FUND BALANCE (continued) Committed for School Operations: The School Board has set aside certain spendable fund balance for school operations. At year end, the committed fund balance was $11,000,000. This amount was committed to the construction of Zapata North Elementary School. The District also committed $60,947 for the Campus Activity Fund. Unassigned: The unassigned fund balance for the General Fund is $19,184,851. Other Governmental Funds Total General Special Debt Governmental Description Fund Revenue Fund Service Funds Fund Balances: Nonspendable: Inventories: Food Service $ 26,212 $ $ $ 26,212 Restricted: Food Service 556, ,523 State Programs 117, ,628 Debt Service 843, ,205 Committed: Construction 11,000,000 11,000,000 Campus Activity Fund 60,947 60,947 Assigned: Unassigned: 19,184,851 19,184,851 Total Fund Balance $ 30,767,586 $ 178,575 $ 843,205 $ 31,789,366 NOTE 23 PRIOR PERIOD ADJUSTMENT For the year ended August 31, 2012, the District recognized a prior period adjustment for related depreciation expenditures in previous years, totaling $73,

59 REQUIRED SUPPLEMENTARY INFORMATION 53

60 Data Control Codes ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL GENERAL FUND FOR THE YEAR ENDED AUGUST 31, 2012 Original Budgeted Amounts Final Actual Amounts (GAAP BASIS See Note) EXHIBIT G1 Variance With Final Budget Positive or (Negative) REVENUES: 5700 Total Local and Intermediate Sources $ 20,461,758 $ 20,584,258 $ 21,219,481 $ 635, State Program Revenues 16,962,712 16,973,512 16,221,249 (752,263) 5900 Federal Program Revenues 74,567 2,366,561 2,387,364 20, Total Revenues 37,499,037 39,924,331 39,828,094 (96,237) 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: 0073 Bond Issuance Cost and Fees Capital Outlay: 0081 Facilities Acquisition and Construction Intergovernmental: 0091 Contracted Instructional Services Between Schools 0099 Other Intergovernmental Charges 15,376,162 15,814,039 13,737,753 2,076, , , ,044 77, , ,293 55, , , , , ,229 1,824,140 1,832,612 1,765,096 67,516 1,011,938 1,011, , ,203 93,642 93,642 82,348 11, , , , ,811 2,000,959 2,000,959 1,020, ,055 2,155,294 1,910, ,132 1,175,621 1,269,221 1,206,088 63,133 1,439,074 1,439,074 1,338, ,905 4,241,396 4,241,396 3,619, , , , ,275 87,889 1,075,613 1,075, , , , ,336 37,172 68, , ,647 (42,926) 1,030,000 7,974, ,061 7,134,439 4,638,301 4,958,301 5,096,334 (138,033) 525, , ,418 57, Total Expenditures 37,499,037 47,279,052 34,758,530 12,520, Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES): 7914 NonCurrent Loans 7915 Transfers In 8911 Transfers Out (Use) 7080 Total Other Financing Sources (Uses) 1200 Net Change in Fund Balances (7,354,721) 5,069,564 12,424,285 6,701,120 6,680,000 (21,120) 64,047 64,047 (6,701,120) (64,047) 6,637,073 6,680,000 6,680,000 (7,354,721) 11,749,564 19,104, Fund Balance September 1 (Beginning) 18,805,766 18,805,766 18,805, Increase (Decrease) in Fund Balance 212, , Fund Balance August 31 (Ending) $ 18,805,766 $ 11,663,301 $ 30,767,586 $ 19,104,285 54

61 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT NOTES TO REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED AUGUST 31, 2012 A. Budgets The official school budget was prepared for adoption for required Governmental Fund Types by August 25, 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 trustees throughout the year. Expenditures may not legally exceed budgeted appropriations at the function level. Annual budgets were adopted for the General Fund, the Debt Service Fund, and the Child Nutrition Fund on a basis consistent with generally accepted accounting principles. The Debt Service Fund and the Child Nutrition Program budget comparison schedules are presented at other schedules schedule section of the financial statements. B. Encumbrances Encumbrances for goods or purchased services are documented by purchase orders or contracts. Under Texas law, appropriations lapse at August 31, and encumbrances outstanding at the time are to be either cancelled or appropriately provided for in the subsequent year s budget. No encumbrances were provided for in the subsequent year s budget for the General Fund. 55

62 COMBINING FUND STATEMENTS AND OTHER STATEMENTS 56

63 SPECIAL REVENUE FUNDS Special Revenue Funds are used to account for resources restricted to, or designated for, specific purposes by a grantor. Federal financial assistance often is accounted for in a Special Revenue Fund. In most Special Revenue funds, unused balances are recorded as deferred revenue and carried forward to the succeeding fiscal year, provided the amount carried forward is within the limits established by the grantor. In some cases, the unused balances are returned to the grantor at the close of specified project periods. The District budgets for Special Revenue Funds as grants are awarded by the various grantees. The District uses project accounting for them in order to maintain integrity for the various sources of funds. These funds utilize the modified accrual basis of accounting and budgeting. Included in the District s Special Revenue Funds are: 211 ESEA, Title I, Part A, Improving Basic Programs This fund classification is to be used to account, on a project basis, for funds allocated to local educational agencies to enable schools to provide opportunities for children served to acquire the knowledge and skills contained in the challenging State content standards and to meet the challenging State performance standards developed for all children. 212 ESEA, Title I, Part C, Education of Migratory Children This fund classification is to be used to account, on a project basis, for funds granted for programs benefiting children of migrant agriculture or agriculturerelated workers and children of migrant fishermen. 224 IDEA Part B, Formula This fund classification is to be used to account, on a project basis, for funds granted to operate educational programs for children with disabilities. This fund classification includes capacity building and improvement (sliver) sub grants. 225 IDEA Part B, Preschool This fund classification is to be used to account, on a project basis, for funds granted for preschool children with disabilities. 226 IDEA Part B, Discretionary This fund classification is to be used to account, on a project basis, for funds used to support an Education Service Center (ESC) special education component and also: Targeted support to LEAs Regional Day School Programs for the Deaf Private residential placements Priority projects Other emerging needs 242 Summer Feeding Program This fund classification is to be used to account, on a project basis, for funds received from the Department of Human Services that are awarded for meals provided to the community based on the average number of daily participants. 57

64 244 Career and Technical and Recruiting Basic Grant This fund classification is to be used to account, on a project basis, for funds granted to provide career and technology education to develop new and/or improve career and technology education programs for paid and unpaid employment. Full participation in the basic grant is from individuals who are members of special populations, at 1) a limited number of campuses (sites) or 2) a limited number of program areas. 255 ESEA, Title II, Part A, Teacher and Principal Training and Recruiting This fund classification is to be used to provide financial assistance to LEAs to (1) increase student academic achievement through improving teacher and principal quality and increasing the number of highly qualified teachers in classrooms and highly qualified principals and assistant principals in schools, and (2) hold local education agencies and schools accountable for improving student academic achievement. 263 Title III, Part A, English Language Acquisition and Enhancement This fund classification is to be used to account, on a project basis, for funds granted to improve the education of limited English proficient children, by assisting the children to learn English and meet challenging State academic content and student academic achievement standards. 270 ESEA, Title VI, Part B Rural and LowIncome School Program This fund classification is to be used to account, on a project basis, for funds allocated to local educational agencies to enable them to address the unique needs of rural school districts. This program is authorized under P.L (84.358B) (U.S. Department of Education). 272 Medicaid Administrative Claiming Program Medicaid Administrative Claiming is also a Medicaid financing program that allows local school districts/ cooperatives to be partially reimbursed for the administrative time that staff spend performing health outreach and referral activities. The Texas Department of Human Services is the lead agency responsible for the administration of this program. Under MAC, a district can be reimbursed with Medicaid funds for certain referral and outreach services delivered to all students within the district, regardless of whether the student is Medicaideligible or not. MAC will reimburse the district for: providing information and other indirect health/mentalrelated services to the student; assisting the student/family in accessing needed health (including mental health) services; coordination of healthrelated services. 274 GEAR UP This fund classification is to be used to account, on a project basis, for funds granted to school districts received through the ESC. They provide services and support to lowincome minority school districts to ensure that students are academically prepared for higher education, graduate from high school, and have access to higher education opportunities. 281 GEAR UP (Middle School) This fund classification is to be used to account, on a project basis, for funds granted to school districts received through the ESC. They provide services and support to lowincome minority school districts to ensure that students are academically prepared for higher education, graduate from high school, and have access to higher education opportunities. 58

65 282 High School Redesign This fund classification is used to account, on a project basis, for funds granted to school districts received through education service center. These funds enable students to take advantage of the state s new scholarship program for economically disadvantaged students. 287 Education Jobs Fund This fund classification is to be used to account, on a project basis, for funds granted to be used for school level personnelrelated activities. SFSF provisions and assurances incorporated by reference as indicated in ARRA Sec Funds will only be available to LEA s for the and fiscal year. Retain existing schoollevel employees Recall or rehire former schoollevel employees Hire new schoollevel employees (early childhood, elementary, secondary) 410 State Textbook Fund (Instructional Allotment) This fund classification is to be used to account, on a project basis, for funds awarded to school districts to purchase instructional materials, technological equipment, and technology related services. 411 Technology AllotmentThis fund classification is to be used to account, on a project basis, for funds awarded to school districts to purchase technological software or equipment that contributes to student learning, or to pay for training for educational personnel involved in the use of these materials. 429 Texas Fitness Grant ED. PROGRD42 State funded special revenue funds not listed above are to be accounted for in this fund. Coded to this fund for PEIMS reporting purposes. 461 Campus Activity Funds contain funds raised at a particular campus which are managed by the principal or other campus administrators. These funds are accounted for as Campus Funds as stipulated by the Financial Accountability Resource Guide. Campus accounts must be spent to promote the general welfare of the school and the educational development of students. Principals may use these funds to supplement their budgeted district funds. Campus funds should not be spent to benefit any individual or nonstudent group. 480 CONOCO Phillips Grant These fund classifications are used, at the option of the school district to classify locally funded special revenue funds such as grants by corporations to specific campuses not defined elsewhere. 59

66 Data Control Codes ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS AUGUST 31, ESEA I, A Improving Basic Program ESEA Title I Part C Migrant IDEA Part B Formula IDEA Part B Preschool ASSETS 1110 Cash and Cash Equivalents 1120 Investments Current 1225 Taxes Receivable, net 1240 Receivables from Other Governments 1250 Accrued Interest 1260 Due from Other Funds $ (172,440) $ (13,718) $ (42,030) $ (347) 261,093 13,611 68, Total Assets $ 88,653 $ 276 $ 26,293 $ LIABILITIES AND FUND BALANCES Liabilities: 2110 Accounts Payable 2160 Accrued Wages Payable 2170 Due to Other Funds 2180 Due to Other Governments 2300 Deferred Revenues $ 5,366 $ 276 $ 659 $ 83,287 25, Total Liabilities 88, ,293 Fund Balances: Restricted Fund Balance: 3450 Federal or State Funds Grant Restriction 3480 Retirement of LongTerm Debt Committed Fund Balance: 3545 Other Committed Fund Balance 3000 Total Fund Balances 4000 Total Liabilities and Fund Balances $ 88,653 $ 276 $ 26,293 $ 60

67 EXHIBIT H1 (Cont'd) IDEA Part B Summer Career and ESEA II,A Title III, A ESEA VI, Pt B Medicaid GEAR UP Discretionary Feeding Technical Training and English Lang. Rural & Low Admin. Claim Program Basic Grant Recruiting Acquisition Income MAC $ $ 50,655 $ $ (3,483) $ (3,258) $ $ 27,756 $ (31,689) 12,799 3,258 45,852 $ $ 50,655 $ $ 9,316 $ $ $ 27,756 $ 14,163 $ $ $ $ $ $ $ $ 9,316 5,326 13,059 8,837 13,059 9,316 14,163 37,596 27,756 37,596 27,756 $ $ 50,655 $ $ 9,316 $ $ $ 27,756 $ 14,163 61

68 Data Control Codes ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS AUGUST 31, GEAR UP Middle School High School Redesign Education Jobs Fund State Textbook Fund ASSETS Cash and Cash Equivalents $ 2,374 $ 18,370 $ (47,249) $ Investments Current Taxes Receivable, net Receivables from Other Governments 47,249 Accrued Interest Due from Other Funds 1000 Total Assets $ 2,374 $ 18,370 $ $ LIABILITIES AND FUND BALANCES Liabilities: Accounts Payable $ $ $ $ Accrued Wages Payable Due to Other Funds Due to Other Governments Deferred Revenues Total Liabilities Fund Balances: Restricted Fund Balance: Federal or State Funds Grant Restriction Retirement of LongTerm Debt Committed Fund Balance: Other Committed Fund Balance 2,374 18, Total Fund Balances 2,374 18, Total Liabilities and Fund Balances $ 2,374 $ 18,370 $ $ 62

69 EXHIBIT H Total Total Technology Allotment Other State Special Revenue Funds Campus Activity Funds Conoco Phillips Grant Nonmajor Special Revenue Funds Debt Service Fund Capital Project Fund Nonmajor Governmental Funds $ 8,937 $ 779 $ 60,947 $ 22,311 $ (122,085) $ 198 $ $ (121,887) 851, , , , , ,288 3,775 3, , ,167 $ 8,937 $ 779 $ 60,947 $ 22,366 $ 330,885 $ 1,156,714 $ $ 1,487,599 $ $ $ $ 550 $ 6,851 $ $ $ 6, , ,563 13, , ,846 8,837 8, , , , , ,819 8, , , , , ,205 60,947 60,947 60,947 8, ,947 21, , ,205 1,021,780 $ 8,937 $ 779 $ 60,947 $ 22,366 $ 330,885 $ 1,156,714 $ $ 1,487,599 63

70 Data Control Codes ZAPATA COUNTY 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 IDEA Part B Formula IDEA Part B Preschool REVENUES: 5700 Total Local and Intermediate Sources $ $ $ $ 5800 State Program Revenues 5900 Federal Program Revenues 1,919, , ,385 2, Total Revenues 1,919, , ,385 2,802 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 0035 Food Services 0036 Extracurricular Activities 0061 Community Services Debt Service: 0071 Principal on Long Term Debt 0072 Interest on Long Term Debt 0073 Bond Issuance Cost and Fees 1,593,375 15, ,805 2,802 65, ,401 2,612 61,536 33,415 4,114 57,067 63,036 10,936 11, ,718 54,218 1,446 2, Total Expenditures 1,919, , ,385 2, Net Change in Fund Balance 0100 Fund Balance September 1 (Beginning) 1300 Increase (Decrease) in Fund Balance 3000 Fund Balance August 31 (Ending) $ $ $ $ 64

71 EXHIBIT H2 (Cont'd) IDEA Part B Summer Career and ESEA II,A Title III, A ESEA VI, Pt B Medicaid GEAR UP Discretionary Feeding Technical Training and English Lang. Rural & Low Admin. Claim Program Basic Grant Recruiting Acquisition Income MAC $ $ 52 $ $ $ $ $ $ 6,000 82,688 37, ,802 33,802 51,903 20,598 71,916 6,000 82,740 37, ,802 33,802 51,903 20,598 71,916 6,000 35, ,853 20,809 51,903 16,611 1,834 11,285 12,993 2, ,867 56, ,000 56,442 37, ,802 33,802 51,903 71,916 26,298 20,598 $ 11,298 7,158 $ 37,596 $ $ $ $ $ 27,756 $ 65

72 Data Control Codes ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED AUGUST 31, GEAR UP Middle School High School Redesign Education Jobs Fund State Textbook Fund REVENUES: 5700 Total Local and Intermediate Sources $ $ $ $ 5800 State Program Revenues 350, Federal Program Revenues 23, , Total Revenues 23, , ,412 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 0035 Food Services 0036 Extracurricular Activities 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 4, , ,412 4, , , Net Change in Fund Balance 18, Fund Balance September 1 (Beginning) 2, Increase (Decrease) in Fund Balance 3000 Fund Balance August 31 (Ending) $ 2,374 $ 18,370 $ $ 66

73 EXHIBIT H Total Capital Technology Allotment Other State Special Revenue Funds Campus Activity Funds Conoco Phillips Grant Total Nonmajor Special Revenue Funds 599 Debt Service Fund Project Fund Nonmajor Governmental Funds $ $ $ 383,070 $ 17,340 $ 400,462 $ 2,376,804 $ $ 2,777, , ,700 3,791,042 3,791, ,070 17,340 4,542,204 2,376,804 6,919,008 88,029 3,519,001 3,519,001 (601) 65,282 65,282 8, , ,676 99,065 99, , , , , ,970 4,689 27,180 27, ,208 1,208 56,442 56, , , , ,699 58,699 2,250,000 2,250, , ,950 1,421 1, ,622 4,928 4,457,790 2,388,371 6,846,161 $ 288 6,448 12,412 84,414 (11,567) 72,847 8, ,499 9,404 94, , ,256 1,161,189 (212,256) (212,256) 8,937 $ 779 $ 60,947 $ 21,816 $ 178,575 $ 843,205 $ $ 1,021,780 67

74 EXHIBIT H3 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUND FOR THE YEAR ENDED AUGUST 31, 2012 BALANCE BALANCE SEPTEMBER 1 AUGUST ADDITIONS DEDUCTIONS 2012 STUDENT ACTIVITY ACCOUNT Assets: Zapata High School $ 86,396 $ 219,174 $ 235,827 $ 69,743 Liabilities: Due to Student Groups $ 86,396 $ 219,174 $ 235,827 $ 69,743 TOTAL AGENCY FUNDS Assets: Cash and Temporary Investments $ 86,396 $ 219,174 $ 235,827 $ 69,743 Liabilities: Due to Student Groups $ 86,396 $ 219,174 $ 235,827 $ 69,743 68

75 OTHER SUPPLEMENTARY INFORMATION 69

76 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT SCHEDULE OF DELINQUENT TAXES RECEIVABLE FISCAL YEAR ENDED AUGUST 31, 2012 Last 10 Years Ended August 31 (1) (2) (3) Assessed/Appraised Tax Rates Value for School Maintenance Debt Service Tax Purposes 2003 and prior years Various Various $ 1,604,979, ,605,250, ,906,857, ,348,594, ,379,096, ,136,823, ,416,623, ,061,558, ,683,026, (School year under audit) ,065,498, TOTALS 70

77 EXHIBIT J1 (10) (20) (31) (32) (40) (50) Current Entire Year's Maintenance Debt Service Year's Total Levy Collections Collections Adjustments Beginning Balance 9/1/2011 Ending Balance 8/31/2012 $ 1,221,396 $ $ 36,598 $ 9,047 $ 2,123 $ 1,177, ,271 6, (1,540) 127, ,229 7,616 1,563 (2,297) 178, ,201 11,904 1,270 (1,700) 191, ,396 20,749 1,678 (1,135) 247, ,382 30,472 3,516 (1,662) 208, ,713 52,193 2,946 (4,491) 332, ,767 91,089 5,121 (13,908) 444, , ,503 13,296 (34,791) 566,017 23,968,777 20,021,761 2,304,428 (775,442) 867,146 $ 4,066,962 $ 23,968,777 $ 20,514,967 $ 2,343,680 $ (834,843) $ 4,342,249 71

78 EXHIBIT J2 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT SCHEDULE OF EXPENDITURES FOR COMPUTATIONS OF INDIRECT COST FOR GENERAL AND SPECIAL REVENUE FUNDS AUGUST 31, 2012 FUNCTION 41 AND RELATED FUNCTION 53 GENERAL ADMINISTRATION, 99 APPRAISAL DISTRICT COST Account Number Account Name (702) (703) (701) (750) School Board Tax Collections Supt's Office Indirect Cost 5 (720) Direct Cost 6 (other) Miscellaneous 7 Total 611X6146 PAYROLL COSTS 6149 Leave for Separating Employees in Fn 41 & Leave Separating Employees not in 41 & Legal Services 6212 Audit Services 6213 Tax Appraisal/Collection Appraisal in Fn Lobbying 621X Other Professional Services 6220 Tuition and Transfer Payments 6230 Education Service Centers 6240 Contr. Maint. and Repair 6250 Utilities 6260 Rentals 6290 Miscellaneous Contr Textbooks and Reading 6330 Testing Materials 63XX Other Supplies Materials 6410 Travel, Subsistence, Stipends 6420 Ins. and Bonding Costs 6430 Election Costs 6490 Miscellaneous Operating 6500 Debt Service 6600 Capital Outlay $ $ $ 185,821 $ 564,649 $ $ $ 750,470 90,770 76, ,611 49,120 49, , ,418 1,517 49,720 51,237 51,100 51, ,205 14,205 2,623 5,983 27,584 36,190 8,498 4,363 7,826 20,687 1,326 1,326 5,278 52,146 22,653 80,077 4,878 4, TOTAL $ 17,725 $ 467,418 $ 341,204 $ 863,698 $ $ 4,878 $ 1,694,923 (8) NOTE A: Total expenditures/expenses for General and Special Revenue Funds: (9) $ 39,216,320 LESS: Deductions of Unallowable Costs FISCAL YEAR Total Capital Outlay (6600) (10) $ 761,257 Total Debt & Lease(6500) Plant Maintenance (Function 51, ) Food (Function 35, 6341 and 6499) Stipends (6413) Column 4 (above) Total Indirect Cost (11) (12) (13) (14) 197,647 3,619, , ,698 Net Allowed Direct Cost SubTotal: 6,317,443 32,898,877 CUMULATIVE Total Cost of Buildings before Depreciation (1520) Historical Cost of Building over 50 years old Amount of Federal Money in Building Cost (Net of #16) Total Cost of Furniture & Equipment before Depreciation (1530 & 1540) (15) (16) (17) (18) $ $ $ $ 62,517,308 1,410,809 7,520,898 Historical Cost of Furniture & Equipment over 16 years old (19) $ 980,638 Amount of Federal Money in Furniture & Equipment (Net of #19) (20) $ No Function 53 expenditures are included in this report on administrative costs. $467,418 in Function 99 expenditures for appraisal district costs are included in this report on administrative costs. $ 72

79 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT FUND BALANCE AND CASH FLOW CALCULATION WORKSHEET GENERAL FUND AS OF AUGUST 31, 2012 UNAUDITED 1 Total General Fund Balance as of 8/31/12 (Exhibit C1 object 3000 for the $ General Fund Only) EXHIBIT J3 30,767,586 2 Total NonSpendable Fund Balance (from Exhibit C1 for the General $ 26,212 Fund Only) 3 Total Restricted Fund Balance (from Exhibit C1 for the General Fund 556,532 Only) 4 Total Committed Fund Balance (from Exhibit C1 for the General Fund 11,000,000 Only) 5 Total Assigned Fund Balance (from Exhibit C1 for the General Fund Only) 6 Estimated amount needed to cover fall cash flow deficits in the General Fund (Net of borrowed funds and funds representing deferred revenues.) 7 Estimate of two month's average cash disbursements during the fiscal year. 8,625,000 8 Estimate of delayed payments from state sources (58xx) Estimate of underpayment from state sources equal to variance between Legislative Payment Estimate (LPE) and District Planning Estimate (DPE) or District's calculated earned state aid amount. Estimate of delayed payments from federal sources (59xx) 11 Estimate of expenditures to be reimbursed to General Fund from Capital Projects Fund (uses of General Fund cash after bond referendum and prior to issuance of bonds) 12 Optimum Fund Balance and Cash Flow (Lines ) 20,207, Excess (Deficit) Unassigned Fund Balance (Line 1 minus Line 12) $ 10,559,842 Explanation of need for and/or projected use of net positive Unassigned General Fund Fund Balance: Demoliton / CTE Shop / A/C Chiller / Furniture / Stadium Fuse Boards and Electrical Replacments / Zapata North Elementary School (Existing Building) Improvements / Stadium Sound System / Zapata Middle School Bus Drop Off / Parking pavements / Stadium Artifical Turf / ALBES Surveillance System 73

80 Data Control Codes ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL CHILD NUTRITION PROGRAM FOR THE YEAR ENDED AUGUST 31, 2012 Original Budgeted Amounts Final Actual Amounts (GAAP BASIS See Note) EXHIBIT J4 Variance With Final Budget Positive or (Negative) REVENUES: 5700 Total Local and Intermediate Sources $ 122,500 $ 122,500 $ 204,300 $ 81, State Program Revenues 10,800 12,637 1, Federal Program Revenues 1,912,306 2,021,994 1,927,257 (94,737) 5020 Total Revenues 2,034,806 2,155,294 2,144,194 (11,100) EXPENDITURES: 0035 Food Services 2,034,806 2,155,294 1,910, , Total Expenditures 2,034,806 2,155,294 1,910, , Net Change in Fund Balances 234, , Fund Balance September 1 (Beginning) 348, , , Fund Balance August 31 (Ending) $ 348,703 $ 348,703 $ 582,735 $ 234,032 74

81 Data Control Codes ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL DEBT SERVICE FUND FOR THE YEAR ENDED AUGUST 31, 2012 Original Budgeted Amounts Final Actual Amounts (GAAP BASIS See Note) EXHIBIT J5 Variance With Final Budget Positive or (Negative) REVENUES: 5700 Total Local and Intermediate Sources $ 2,389,950 $ 2,389,950 $ 2,376,804 $ (13,146) 5020 Total Revenues 2,389,950 2,389,950 2,376,804 (13,146) EXPENDITURES: Debt Service: 0071 Principal on Long Term Debt 0072 Interest on Long Term Debt 0073 Bond Issuance Cost and Fees 2,250,000 2,250,000 2,250, , , ,950 3,000 3,000 1,421 1, Total Expenditures 2,389,950 2,389,950 2,388,371 1, Net Change in Fund Balances (11,567) (11,567) 0100 Fund Balance September 1 (Beginning) 854, , , Fund Balance August 31 (Ending) $ 854,772 $ 854,772 $ 843,205 $ (11,567) 75

82 STATISTICAL Section 76

83 STATISTICAL SECTION (Unaudited) This part of the Zapata County Independent School District s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, and note disclosures says about the District s overall financial health. Contents Financial Trends These schedules contain trend information to help the reader understand how the District s financial performance and wellbeing have changed over time. Revenue Capacity These schedules contain information to help the reader assess the District s most significant local revenue source, the property tax. Debt Capacity These schedules present information to help the reader assess the affordability of the District s current levels of outstanding debt and the District s ability to issue additional debt in the future. Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the District s financial activities take place. Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the District s financial report relates to the services the District provides and the activities it performs. Source: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 77

84 FINANCIAL TRENDS INFORMATION 78

85 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT NET ASSETS BY COMPONENT LAST SEVEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) TABLE L1 Fiscal Year Governmental Activities Invested in Capital Assets $ 17,302,164 $ 19,485,244 $ 24,949,495 $ 32,157,050 $ 37,246,471 $ 40,913,658 $ 34,616,118 Restricted Federal and State Programs 946,579 1,015, , , , ,151 Debt Service 875, , ,638 1,053, , , ,205 Campus Activities 59,421 80,349 94,315 71,247 92,947 54,499 60,947 Unrestricted 11,913,489 19,264,446 20,328,054 17,229,318 17,369,113 19,808,642 31,982,326 Total Governmental Activities Net Assets $ 30,150,466 $ 40,683,658 $ 47,319,750 $ 51,470,589 $ 56,132,528 $ 62,058,247 $ 68,176,747 Note: Statement of net assets information is available only from the year 2006 Source: Zapata County ISD Business Office 79

86 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT EXPENSES, PROGRAM REVENUES, AND NET (EXPENSE)/REVENUE LAST SEVEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) TABLE L2 Fiscal Year Expenses Governmental Activities: Instruction $ 16,718,162 $ 16,881,040 $ 19,531,964 $ 21,262,351 $ 21,486,794 $ 20,744,520 $ 18,751,409 Instructional Resources & Media Services 533, , , , , , ,289 Curriculum & Staff Development 634, , , , , , ,044 Instructional Leadership 909,601 1,154,977 1,100, , , , ,957 School Leadership 1,186,157 1,530,283 1,787,394 1,998,959 2,029,641 2,058,842 1,885,876 Guidance, Counseling & Evaluation Svcs 647, , ,347 1,017, ,515 1,060,997 1,011,705 Social Work Services 8,770 77,160 94,539 95, , , ,528 Health Services 259, , , , , , ,768 Student Transportation 1,136,064 1,161,294 1,394,733 1,684,965 1,725,286 1,287,032 1,251,417 Food Service 1,914,591 1,917,605 2,222,513 2,274,244 2,312,496 2,358,656 2,089,333 Cocurricular/Extracurricular Activities 1,276,260 1,455,744 2,024,582 1,512,694 1,687,875 1,810,030 1,742,962 General Administration 1,653,104 1,566,024 1,474,862 1,346,121 1,372,491 1,362,046 1,371,466 Plant Maintenance & Operations 3,040,319 3,597,836 3,770,735 3,455,894 3,640,975 3,778,402 3,807,064 Security & Monitoring Services 385, , , , , , ,275 Data Processing Services 476, , , , , , ,860 Community Services 88,285 87, , , , , ,843 Interest on LongTerm Debt 729, , , , , , ,363 Chapter 41 Payments 12,033,519 18,543,340 16,303,312 16,524,466 10,768,994 8,263,096 5,096,334 Appraisal of Property 342, , , , ,418 Total Governmental Activities Expenses 43,630,287 51,717,105 53,959,811 55,154,184 50,406,474 47,664,590 40,962,911 Program Revenues Governmental Activities: Charges for Services: Instruction 18, ,506 Food Services 122, , , , , , ,541 Cocurricular/Extracurricular Activities 29,830 44,752 25, , , ,707 27,890 Data Processing Services 188,969 Operating Grants and Contributions 7,440,628 7,612,437 7,733,181 7,749,320 8,166,800 7,932,964 7,079,442 Capital Grants and Contributions 100,000 Total Governmental Activities Program Rev. 7,593,296 7,883,443 7,921,425 8,297,257 8,747,635 8,528,643 7,740,348 Net (Expense)/Revenue Total Primary Government Net Expense $ 36,036,991 $ 43,833,662 $ 46,038,386 $ 46,856,927 $ 41,658,839 $ 39,135,947 $ 33,222,563 Note: Change in net assets information is available only from the year Source: Zapata County ISD Business Office 80

87 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT GENERAL REVENUES AND TOTAL CHANGE IN NET ASSETS LAST SEVEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) TABLE L3 Fiscal Year Net (Expense)/Revenue Total Primary Government Net Expense $ 36,036,991 $ 43,833,662 $ 46,038,386 $ 46,856,927 $ 41,658,839 $ 39,135,947 $ 33,222,563 General Revenues & Other Changes in Net Assets Governmental Activities: Property Taxes: Levied for General Purposes 33,753,610 44,610,565 31,797,925 35,750,197 31,082,368 27,203,221 21,200,641 Levied for Debt Service 3,847,601 3,608,073 3,697,948 2,040,896 1,742,508 2,414,808 2,393,683 Investment Earnings 623,358 1,500,526 1,421, , ,795 15,270,198 15,150,003 Grants and Contributions not Restricted 2,080,517 4,390,333 15,213,185 12,636,545 13,238,371 98, ,890 Miscellaneous 465, , , , ,737 75, ,763 Extraordinary Item Inflow 100,775 12,359 Total Governmental Activities 40,871,404 54,366,854 52,674,478 51,007,768 46,320,779 45,061,663 39,414,339 Change in Net Assets Total Primary Government $ 4,834,413 $ 10,533,192 $ 6,636,092 $ 4,150,841 $ 4,661,940 $ 5,925,716 $ 6,191,776 Note: General revenues and total change in net assets information is available only from year Source: Zapata County ISD Business Office 81

88 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT FUND BALANCES OF GOVERNMENTAL FUNDS LAST SEVEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) TABLE L4 Fiscal Year General Fund PRE GASB 54 Reserved $ 792,866 $ 819,013 $ 918,042 $ 854,861 $ 519,410 $ $ Designated 3,300,000 13,540,000 10,900,000 11,000,000 Unreserved 10,146,323 15,128,455 6,276,764 5,047,438 5,077,612 POST GASB 54 Non spendable 68,523 26,212 Restricted 280, ,523 Committed 7,200,000 11,000,000 Unassigned 11,257,063 19,184,851 Total General Fund Balance $ 10,939,189 $ 19,247,468 $ 20,734,806 $ 16,802,299 $ 16,597,022 $ 18,805,766 $ 30,767,586 All Other Governmental Funds PRE GASB 54 Reserved, Debt Service $ 836,039 $ 878,070 $ 927,528 $ 1,013,153 $ 841,837 $ $ Reserved, Food Service 43,028 Reserved, Other Reserves 574, , , , ,454 POST GASB 54 Restricted 1,106, ,833 Committed 54,498 60,947 Total All Other Governmental Funds $ 1,453,112 $ 1,663,660 $ 1,251,977 $ 1,427,465 $ 997,291 $ 1,161,189 $ 1,021,780 Note: Fund balances of governmental funds information is available only from year Source: Zapata County ISD Business Office 82

89 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS LAST SEVEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) TABLE L5 Fiscal Year Revenues Local & Intermediate Sources $ 42,289,209 $ 50,773,560 $ 38,468,400 $ 38,217,925 33,471,776 $ 30,391,317 $ 23,996,747 State Program Revenues 4,084,458 6,488,138 17,040,790 14,578,792 13,905,574 15,824,332 16,571,949 Federal Program Revenues 5,031,773 4,998,728 5,518,557 5,807,073 7,499,597 7,378,830 6,178,406 Total Revenues 51,405,440 62,260,426 61,027,747 58,603,790 54,876,947 53,594,479 46,747,102 Expenditures Instruction 14,689,647 15,183,268 18,203,462 20,194,992 20,313,291 19,225,562 17,256,754 Instructional Resources & Media Services 483, , , , , , ,326 Curriculum & Staff Development 645, , , , , , ,044 Instructional Leadership 909,601 1,154,977 1,100, , , , ,957 School Leadership 1,186,157 1,530,283 1,787,394 1,998,959 2,029,641 2,058,842 1,885,876 Guidance, Counseling & Evaluation Svcs 647, , ,347 1,017, ,515 1,060,997 1,011,705 Social Work Services 8,770 77,160 94,539 95, , , ,528 Health Services 259, , , , , , ,768 Student Transportation 1,130,630 1,544,029 1,768,032 1,609,877 1,589,702 1,047,545 1,020,904 Food Service 1,777,527 1,830,646 2,184,361 2,147,524 2,220,181 2,260,058 1,966,604 Cocurricular/Extracurricular Activities 1,193,752 1,365,427 1,839,270 1,270,268 1,379,659 1,503,298 1,370,575 General Administration 1,617,678 1,530,468 1,443,028 1,315,474 1,341,844 1,328,749 1,338,169 Plant Maintenance & Operations 3,020,314 3,598,536 3,997,925 3,369,889 3,577,616 3,705,148 3,619,217 Security & Monitoring Services 385, , , , , , ,275 Data Processing Services 476, , , , , , ,287 Community Services 58,313 57, , , , ,599 95,871 Principal on LongTerm Debt 3,174,548 3,148,721 3,200,000 1,545,000 1,690,000 2,205,000 2,250,000 Interest on LongTerm Debt 750, , , , , , ,950 Bond Issuance Cost and Fees 88, ,068 Capital Outlay 1,708, ,359 3,760,535 7,334, ,637, ,061 Chapter 41 Payments 12,320,049 18,543,340 16,303,312 16,524,466 10,768,994 8,263,096 5,096,334 Appraisal of Property 342, , , , ,418 Total Expenditures 46,442,319 53,741,600 59,952,091 62,350,808 55,600,576 51,221,838 41,604,691 Excess of Revenues Over (Under) Expenditures 4,963,121 8,518,826 1,075,656 (3,747,018) (723,629) 2,372,641 5,142,411 Debt Service As A Percentage Of Noncapital Expenditures 8.8% 7.1% 6.6% 3.5% 3.8% 5.0% 5.9% Note: Changes in fund balances of governmental funds information is available only from year Source: Zapata County ISD Business Office 83

90 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT GOVERNMENTAL FUNDS OTHER SOURCES, USES AND CHANGES IN FUND BALANCES LAST SEVEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) TABLE L6 Fiscal Year Excess of Revenues Over (Under) Expenditures $ 4,963,121 $ 8,518,826 $ 1,075,656 $ (3,747,018) $ (723,629) $ 2,372,641 $ 5,142,411 Other Financing Sources (Uses) Capital Related Debt Issued 6,865,000 6,680,000 Transfer In 5,478,959 3,900,996 64,047 Premium or Discount on Issuance of Bonds 256,953 Transfer Out (5,478,959) (3,900,996) (64,047) Payment to Bond Refunding Escrow Agent (7,033,775) Extraordinary Item (Resource) 100,775 Total Other Financing Sources (Uses) 100,775 88,178 6,680,000 Net Change in Fund Balances $ 5,063,896 $ 8,518,826 $ 1,075,656 $ (3,747,018) $ (635,451) $ 2,372,641 $ 11,822,411 Note: Changes in fund balances of governmental funds information is available only from year Source: Zapata County ISD Business Office 84

91 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT GOVERNMENTAL FUND REVENUE BY SOURCE LAST NINE YEARS TABLE L7 Local and Intermediates Sources Fiscal year Property Tax Misc. Income Other Per Capital and Foundation State Programs On Behalf TRS Payments Other Federal Programs Total 2004 $ 21,877,323 $ 6,123,086 $ 2,185,984 $ 3,236,299 $ 989,518 $ 583,837 $ 6,138,058 $ 41,134, ,353, ,875 3,884,358 1,757, , ,091 5,438,202 43,148, ,723,478 1,132,072 4,433,659 2,073, ,415 1,177,487 5,031,773 51,405, ,610,567 1,845,266 4,317,727 4,412, ,103 1,200,754 4,999,153 62,260, ,229,771 2,063,318 4,175,311 15,230,990 1,010, ,257 5,518,557 61,027, ,082, ,157 2,431,629 12,588,552 1,098, ,501 5,807,073 58,603, ,882, ,040 2,185,984 12,225,387 1,096, ,837 7,499,597 54,876, ,154, ,585 2,822,042 14,167,061 1,104, ,311 7,378,830 53,594, ,815, ,008 2,371,207 15,150,003 1,058, ,562 6,178,406 46,747,102 Note: General governmental local revenue by source information is available only from Source: Zapata County ISD Business Office 85

92 REVENUE CAPACITY INFORMATION 86

93 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST SEVEN FISCAL YEARS TABLE L8 Total Total Estimated Assessed Real Property Less: Taxable Direct Actual Value as a Fiscal Year Residential Commercial Personal Tax exempt Assessed Tax Taxable Percentage of Ended Property Property Property Real Property Value Rate Value Actual Value 2006 $ 163,914,362 $ 2,201,069,030 $ 10,227,509 $ 26,616,368 $ 2,348,594, $ 2,319,329, % ,949,310 3,066,638, ,357,336 32,848,400 3,379,096, ,361,753, % ,526,859 2,834,801, ,461,652 49,966,178 3,136,823, ,119,481, % ,071,632 3,058,392, ,558,085 58,399,322 3,416,623, ,408,798, % ,244,642 2,664,047, ,913,333 60,646,660 3,061,558, ,231,303, % ,269,222 2,260,064, ,579,271 61,886,294 2,683,026, ,671,409, % ,957,366 1,826,016, ,264, ,740,330 2,065,498, ,041,640, % Note: Assessed value and estimated actual value of taxable property information is only available from 2006 Source: Zapata County ISD Business Office Zapata Tax Office 87

94 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT PROPERTY TAX RATES DIRECT AND OVERLAPPING GOVERNMENTS LAST SEVEN FISCAL YEARS TABLE L Direct Tax Rate Maintenance and Operations $ $ $ $ $ $ $ Interest and Sinking Total Direct Tax Rate Overlapping Tax Rates Zapata County Total Direct and Overlapping $ $ $ $ $ $ $ Tax Rates Note: Direct and Overlapping governments information is only available from year 2006 Source: Zapata County ISD Business Office Zapata County Tax Assessor Collector 88

95 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR TABLE L Percentage of Taxable Total Taxable Assessed Assessed Taxpayer Value Rank Value Conoco Philips Co. $ 223,039, % Forest Oil Corporation 68,730, % EOG Resources Inc./Min Accts. 64,472, % Chevron USA Inc 64,364, % Chesapeake Operating Co. 62,490, % Oxy USA Inc 56,044, % Comstock Oil & Gas LP 35,559, % Kinder Morgan Tejas Pipeline LP 30,209, % Kinder Morgan Tejas Pipeline Inc 25,914, % Ricochet Energy Inc 23,067, % $ 653,892, % Note: Principal property taxpayers information information before 2010 is not available Source: Zapata Chamber of Commerce Municipal Advisory Council of Texas 89

96 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT PROPERTY LEVIES AND COLLECTIONS LAST SEVEN FISCAL YEARS TABLE L11 Total Tax Collected within the Collections Fiscal Year Levy for Fiscal year of the Levy Subsequent Total Collections to Date Ended Fiscal Year Amount % of Levy Years Amount % of Levy 2006 $ 38,931,290 $ 38,769, % $ 93,967 $ 38,863, % ,414,977 47,393, % 255,865 47,648, % ,389,588 35,007, % 544,007 35,551, % ,508,190 36,208, % 559,985 36,768, % ,570,694 32,007, % 380,190 32,387, % ,301,226 28,682, % 516,523 29,198, % ,968,777 22,326, % 532,458 22,858, % Note: Property tax levies and collections information is only available from 2006 to present Source: Zapata County Tax Office Department 90

97 DEBT CAPACITY INFORMATION 91

98 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT LEGAL DEBT MARGIN INFORMATION LAST SEVEN FISCAL YEARS TABLE L Debt Limit $ 318,887,005 $ 341,194,478 $ 318,678,976 $ 347,502,257 $ 312,220,534 $ 274,491,313 $ 223,623,899 Total debt applicable to limit 15,448,961 12,326,930 9,077,472 7,446,847 5,928,163 3,929,563 1,529,678 Legal debt margin $ 303,438,044 $ 328,867,548 $ 309,601,504 $ 340,055,410 $ 306,292,371 $ 270,561,750 $ 222,094,221 Total net debt applicable to limit as a percentage of debt limit 4.84% 3.61% 2.85% 2.14% 1.90% 1.43% 0.68% Legal Debt margin Calculation For Fiscal Year 2011 Assessed Value $ 2,065,498,655 Add back: exempt real property 170,740,330 Total Assesed Value $ 2,236,238,985 Debt Limit (10% of total assessed value) $ 223,623,899 Debt Applicable to Limit: General Obligation Bonds 2,384,450 Less: amount set aside for repayment of debt of general obligation bonds (854,772) Total Debt applicable to Limit $ 1,529,678 Legal Debt Margin $ 222,094,221 Source: Zapata County ISD Business Office 92

99 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT RATIOS OF OUTSTANDING DEBT BY TYPE LAST SEVEN FISCAL YEARS TABLE L13 Governmental Activities GO General Qualified Total Percentage Bonds Estimated Fiscal Obligation Construction Primary of Personal Per Actual Taxable Tax Value Year Bonds Tax Note Government Income Capita Value Per Capita 2006 $ 16,285,000 $ $ 16,285, $ 981 $ 2,319,329,776 $ 175, ,632,645 13,632, ,361,753, , ,366,853 10,366, ,119,481, , ,756,062 8,756, ,408,798, , ,058,322 7,058, ,231,303, , ,771,400 4,771, ,671,409, , ,384,450 11,644,994 14,029, ,121 2,041,640, ,096 Note: Ratios Outstanding Debt by Type is only available from year 2006 to present Source: Zapata County ISD Business Office Zapata County Tax Office 93

100 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT DIRECT & OVERLAPPING GOVERNMENTAL ACTIVITES DEBT TABLE L14 Estimated Estimated Share of Percentage Overlapping Government Unit Debt Outstanding Applicable Debt Zapata County $ 14,585, % $ 14,585,000 Subtotal, overlapping debt 14,585,000 Zapata County Independent School District Debt 14,029,444 Total Direct & Overlapping Debt: $28,614,444 Source: Zapata County Treasurers Office 94

101 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST SEVEN FISCAL YEARS TABLE L15 General Bonded debt Outstanding Percentage of General Less: Amounts Actual Taxable Fiscal Obligation Available in Debt Value of Per Year Bonds Service Fund Total Property (1) Capita (2) 2006 $ 16,778,437 $ 836,039 $ 15,942, % $ ,632, ,070 12,754, % ,366, ,528 9,429, % ,756,062 1,013,153 7,742, % ,058, ,659 6,354, % ,771, ,837 3,929, % ,029, ,772 13,174, % 1,052 Note: Source: (1) See the schedule of Assessed Value and Estimated Actual Value of Taxable Property (2) See the Schedule of Demographic and Economic Statistics Zapata County ISD Business Office 95

102 DEMOGRAPHIC AND ECONOMIC INFORMATION 96

103 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS TABLE L16 Per Percentage Capita Average Economically Fiscal Personal Personal Unemployment Daily Disadvantaged Year Population (3) Income (3) Income (3) Rate (3) Attendance (2) Students (2) , ,029,000 13, % 2, % , ,159,000 13, % 3, % , ,020,000 14, % 3, % , ,843,000 16, % 3, % , ,931,000 17, % 3, % , ,320,310 17, % 3, % , ,733,513 17, % 3, % , ,170,848 12, % 3, % , ,632,557 12, % 3, % , ,364,000 12, % 3, % Notes: Source: (1) Data consist of rural statistics for Zapata County, where Zapata County ISD is located. (2) Data in these columns was retrieved from TEA: Academic Excellence Indicator System. (3) Data in these columns was retrieved from the Texas Workforce Commisison and US Census Bureau Texas Education Agency Texas Workforce Commission U.S. Census Bureau 97

104 ZAPATA COUNTY INDEPENDENT SCHOOL DISTRICT PRINCIPAL EMPLOYERS CURRENT YEAR 2012 TABLE L Percentage of Total County Employer Employees Rank Employment (1) Zapata County Independent School District % County Of Zapata % MedLoz Lease Service, Inc % McDonald's % Cactus Lease Service, Inc % International Bank Of Commerce Zapata % Lowe's Super S Food Store % Zapata National Bank % S & S Specialties, Inc % Susser Holding Corp. (Stripes) % Note: Principal employers information for nine years ago is not available (1) Percentage of total county employment is based on 5,896 residents in the Labor Force. Source: Texas Workforce Commission 98

105 OPERATING INFORMATION 99