ALDINE INDEPENDENT SCHOOL DISTRICT

Transcription

1 ALDINE INDEPENDENT SCHOOL DISTRICT Comprehensive Annual Financial Report For the Year Ended June 30, 2017 Prepared By: Tamika Alford-Stephens, Ed.D. Assistant Superintendent of Finance Alexia Rogers, CPA Executive Director of Finance 2520 W.W. Thorne Drive, Houston, Texas 77073

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3 ALDINE INDEPENDENT SCHOOL DISTRICT TABLE OF CONTENTS Introductory Section Principal Officials and Advisors Certificate of the Board Transmittal Letter GFOA Certificate of Achievement ASBO Certificate of Excellence Organizational Chart Financial Section Page i ii iii vii viii ix Exhibit/ Table Independent Auditor s Report 1 Management s Discussion and Analysis 7 Basic Financial Statements: Government-wide Financial Statements Statement of Net Position 17 A-1 Statement of Activities 18 B-1 Governmental Fund Financial Statements Balance Sheet 20 C-1 Reconciliation of Balance Sheet for Governmental Funds to Statement of Net Position 23 C-2 Statement of Revenues, Expenditures, and Changes in Fund Balance 24 C-3 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance of Governmental Funds to the Statement of Activities 26 C-4 Proprietary Fund Financial Statements Statement of Net Position 27 D-1 Statement of Revenues, Expenses, and Changes in Net Position 28 D-2 Statement of Cash Flows 29 D-3 Fiduciary Fund Financial Statements Statement of Fiduciary Assets and Liabilities 30 E-1 Notes to the Financial Statements 31 F-1 Required Supplementary Information: Budgetary Comparison Schedule - General Fund 60 G-1 Budgetary Comparison Schedule - Child Nutrition Program Fund 61 G-2 Notes to Required Supplementary Information 62 G-3 Schedule of the District s Proportionate Share of the Net Pension Liability 63 G-4 Schedule of District Contributions 64 G-5 Notes to Required Supplementary Information - Pensions 65 G-6

4 ALDINE INDEPENDENT SCHOOL DISTRICT TABLE OF CONTENTS (continued) Exhibit/ Page Table Other Supplementary Information: Combining Fund Statements: Nonmajor Governmental Funds Combining Balance Sheet 72 H-1 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance 78 H-2 Statement of Changes in Assets and Liabilities 84 H-3 Required TEA Schedules: Schedule of Delinquent Taxes Receivable 86 J-1 Budgetary Comparison Schedule - Debt Service Fund 88 J-5 Statistical Section Net Position by Component 92 1 Changes in Net Position 94 2 Fund Balances of Governmental Funds 98 3 Changes in Fund Balances of Governmental Funds Assessed Value and Actual Value of Taxable Property Property Tax Rates - Direct and Overlapping Governments Principal Taxpayers Property Tax Levies and Collections Ratios of Outstanding Debt by Type Ratios of net General Obligation Bonded Debt Outstanding Computation of Estimated Direct and Overlapping Debt Demographic and Economic Statistics Principal Employers Full-Time Equivalent District Employees by Position Operating Statistics Teacher Base Salaries School Building Information

5 Principal Officials and Advisors Board of Trustees Trustee Office Term Expires Dr. Viola M. Garcia President 2019 Rose Avalos Vice President 2017 Steve Mead Secretary 2017 Paul Shanklin Assistant Secretary 2019 Patricia Ann Bourgeois Trustee 2019 Conception Esparza Trustee 2017 Dr. Kimberly Booker Trustee 2019 Administrative Officials Official Position Length of Service with District Dr. Wanda Bamberg Superintendent 35 Dr. Archie Blanson Deputy Superintendent 37 M. Kaye DeWalt Assistant Superintendent and General Counsel 4 Dr. Tamika Alford-Stephens Assistant Superintendent - Finance 16 Kenneth Knippel Assistant Superintendent - Administration 37 Dr. Sara Ptomey Assistant Superintendent - Curriculum and Instruction 23 Abel Garza Assistant Superintendent - Community and Governmental Relations 3 Dr. Selina H. Chapa Assistant Superintendent - Human Resources 20 Dr. Todd Davis Assistant Superintendent - High Schools 24 Mable Holt Assistant Superintendent - Middle Schools 26 Ann Stockwell Assistant Superintendent - Intermediate Schools 27 Dr. Rosalinda Rodriguez Assistant Superintendent - Elementary Schools 30 Pat Leon-Wade Assistant Superintendent - Elementary Schools 29 Dr. Janet Ray Assistant Superintendent - Elementary Schools 19 Consultants and Advisors Whitley Penn, LLP Independent Auditors, Houston, Texas Bracewell LLP Bond Counsel, Houston, Texas FirstSouthwest Company, LLC Financial Advisor, Houston, Texas i

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7 November 9, 2017 Members of the Board of Trustees and Citizens of the Aldine Independent School District: State law requires that each school district must have its fiscal accounts audited annually. A copy of the annual financial report, approved by the Board of Trustees, must be filed with the Texas Education Agency (TEA) by the 150 th day after the end of the fiscal year. The Comprehensive Annual Financial Report (CAFR) of the Aldine Independent School District (AISD or the District) is published to fulfill that requirement for the fiscal year that ended June 30, The independent audit of the financial statements is part of a broader, federally mandated Single Audit designed to meet the special needs of the federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the District s separately issued Single Audit Report. The Comprehensive Annual Financial Report consists of management s representations concerning the finances of the District. Responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the District s administration. To provide a reasonable basis for making these representations, management of the District has established a comprehensive internal control framework that is designed both to protect the District s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the District s financial statements in conformity with generally accepted accounting principles (GAAP). Because the cost of internal controls should not outweigh their benefits, the District s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. The financial statements of the District have been audited by Whitley Penn, L.L.P., a firm of licensed certified public accountants. The goal of the independent audit is to provide reasonable assurance that the financial statements of the District for the fiscal year ended June 30, 2017 are free of material misstatement. The independent audit involves examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditors concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the District s financial statements for the fiscal year ended June 30, 2017, are fairly presented in conformity with GAAP. The independent auditors report is presented as the first component of the financial section of this report. The comprehensive annual financial report is presented in three sections; introductory section, financial section, and statistical section. The introductory section includes this transmittal letter, the District s organizational chart, and a list of principal officers and advisors. iii

8 GAAP require that management provide a narrative introduction, overview and analysis to accompany the basic financial statements in the form of Management s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The District s MD&A can be found immediately following the report of independent auditors. The statistical data section includes selected financial and demographic information, generally presented on a multi-year basis. Profile of the District Aldine Independent School District, established in 1935, encompasses 111 square miles in north Houston. The District is an independent political subdivision of the State of Texas governed by a seven member elected Board of Trustees. The district is located totally within Harris County, Texas, with a portion of the district also located in the City of Houston. AISD is comprised of 7 EC/Pre-K Schools, 34 Elementary Schools (grades K-4), 11 Intermediate Schools (grades 5-6), 10 Middle Schools (grades 7-8), 5 Ninth Grade Schools, 6 High Schools, 1 Early College High School and 3 special program facilities. During the school year, the District had a student enrollment of 69,768 and employed 9,677 staff members including 4,741 teachers. The Aldine Independent School District provides a full range of educational services appropriate to grade levels pre-kindergarten through twelfth grade. These include regular and enriched academic programs, magnet programs, special education for students with disabilities, career and technical education, and educational services for students with limited English proficiency. These basic programs are supplemented by a wide variety of offerings in fine arts, athletics and other extracurricular programs. Aldine Independent School District has a component unit called the Aldine Independent School District Public Facility Corporation. It was created by the Board of Trustees of the District in December 1997 as a non-profit public corporation. The stated purpose is to provide for the acquisition, construction, and equipping of schools along with the related financing of such purposes. Relevant Financial Policies The annual budget serves as the foundation for the District s financial planning and control. The Board adopts an appropriated budget for the general fund, debt service fund and the child nutrition special revenue fund on a basis consistent with GAAP. A meeting of the Board of Trustees is called for the purpose of adopting the proposed budget and discussing a proposed tax rate after ten days public notice of the meeting has been given. Prior to July 1, the budget is formally approved and adopted by the Board. The appropriated budget is prepared and approved by fund and function and includes proposed expenditures and the means of financing them. The final tax rate is set after AISD tax rolls are certified by the Harris County Appraisal District. The district maintains budgetary controls within all of its financial systems to ensure compliance with all the statutory provisions of the Texas Education Agency. The budget may be amended during the year to address unanticipated or changing needs of the District. Changes to the functional expenditure categories require Board of Trustee approval. Budget changes not requiring an increase in total appropriations and within functional categories may be approved by management with Board approval. Local Economy Aldine is positioned in the Houston Metropolitan area and has an estimated population of 300,000. The District has experienced increased assessed value growth over the past ten years. The District s taxable value increased to over $19 Billion in 2017, which represents a 64% increase over the $11.6 Billion taxable value certified in This taxable value growth is largely driven by commercial property appreciation. The five local businesses with the highest taxable values in Aldine are: United Airlines Inc., Halliburton Energy, Baker Hughes Oilfield, FMC Technologies Inc. and Eastgroup Properties. iv

9 Nearly 60% of accounts on the Aldine Independent School District tax roll are residential, which account for 27% of the District s tax levy. The average home in Aldine has an estimated taxable value of $77,000. Approximately 42% of AISD tax accounts are commercial and business properties, and constitute 73% of the local taxable value within the District. In 2017, a new Amazon distribution facility opened in Aldine. The Amazon facility is expected to bring new jobs while adding increased tax revenue for the District. Approximately 25% of Aldine students reside in apartments, while the remaining 75% reside in residential subdivisions. Since apartment construction, occupancy rates, and development of residential subdivisions heavily influence enrollment rates, District personnel carefully monitor these factors throughout the year. Major Initiatives Currently, Aldine ISD has approximately 24,076 (34%) of its students enrolled in the District s ESL/Bilingual Programs. Additionally, 86.2% of Aldine students are identified as economically disadvantaged, 73% are identified as at-risk and 7.2% of students will receive special education services. As a result of the change in demographics over the past 10 years, the District has responded by providing academic programs adapted to meet the needs of all children. To embrace the cultural difference of students from various ethnic backgrounds, the District provides bilingual programs at each of its Pre-K, Elementary and Intermediate campuses. All 77 Aldine campuses provide ESL services and have programs in place to meet the needs of all students requiring Special Education services. Due to the high percentage of students in the District who are identified as economically disadvantaged, the District receives $34.7 Million in Federal Title Grants to supplement educational services and another $15.7 Million in Federal Idea-B funds that are intended to supplement services for students with disabilities. The District has placed a strong focus on improving graduation rates over the past 10 years. Based on this initiative, AISD has achieved a steady gain in graduation rates and attained a four year graduation rate of 82.9% during the school year, even with more stringent state graduation requirements. Full day Pre-Kindergarten programs have been a major initiative in Aldine over the past 10 years. All eligible 4 year old students in AISD are served in full day programs at the eight designated Pre-K centers that have been constructed to accommodate this early-education initiative. In the fall of 2013, after a year of planning and preparation, Aldine I.S.D. embarked on a partnership with YES Prep Charter Schools to house a YES Prep Program at Hoffman Middle School. Now in its fifth year, the partnership has grown into a full Middle School program and has expanded to the 9 th Grade Program currently located at Eisenhower HS. The YES Prep / Aldine Partnership is expected to grow to a grade 6 through grade 12 program in Long-Term Financial Planning In November, 2015, the Aldine community approved a $798 Million Bond Referendum for new school facilities, new and upgraded technology, major renovations and districtwide repairs and upgrades. Along with the Facility plan developed by a steering committee, the committee also recommended a reconfiguration of grade levels across the district. In 2018, the district will move to a more traditional grade level configuration which will include PK/K centers, Elementary schools that span grades 1 through 5, Middle Schools that include grades 6 through 8, stand-alone 9 th grade schools, and High Schools spanning grades 10 through 12. In addition, given over 70% of the District s campuses were built between 1932 and 1999, renovations and upgrades for instructional facilities will be evaluated continuously. Funds from the 2015 Bond Referendum will be used to construct 8 new campuses that will open in the 2018 school year. v

10 Awards and Acknowledgements Aldine ISD is proud to have received a 14 th consecutive rating of Superior under the Schools FIRST (Financial Integrity Rating System of Texas), a financial accountability system for Texas School Districts developed by the Texas Education Agency. The primary goal of Schools FIRST is to ensure quality performance in the management of school districts financial resources. Aldine Independent School District received a Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association of the United States and Canada (GFOA) for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized CAFR with contents that conform to program standards. This report must satisfy both generally accepted accounting principles and applicable legal requirements. This Certificate of Achievement is valid for a period of one year only. We believe that our current report will conform to the Certificate of Achievement Program requirements, and we are submitting it to the GFOA for their review. The district also received the Association of School Business Officials (ASBO) Certificate of Excellence in Financial Reporting for the prior fiscal year. This award certifies that the CAFR for the fiscal year ended June 30, 2016 substantially conforms to the principles and standards of reporting as recommended and adopted by ASBO. We believe that our current report will also meet the Certificate of Excellence Program requirements and will be submitted to ASBO for review. We appreciate the support of the Aldine ISD Board of Trustees and the District s administration, staff, parents, citizens, and business community, all of whom work cooperatively to ensure the best education for Aldine students and continuous improvement of the District. The preparation of this report on a timely basis could not have been accomplished without the combined, dedicated efforts of the entire finance department and the team of independent auditors. Sincere appreciation for their time and efforts in this endeavor is expressed. Sincerely, Wanda Bamberg, Ed.D. Superintendent of Schools Tamika Alford-Stephens, Ed.D. Assistant Superintendent of Finance Alexia Rogers, CPA Executive Director of Finance vi

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17 Houston Office 3737 Buffalo Speedway Suite 1600 Houston, Texas Main whitleypenn.com REPORT OF INDEPENDENT AUDITORS To the Board of Trustees Aldine Independent School District Houston, Texas Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of Aldine Independent School District as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the District s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 1 Austin Dallas Fort Worth Houston

18 To the Board of Trustees Aldine Independent School District Opinions In our opinion, the financial statements referred to in the first paragraph present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the District, as of June 30, 2017, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis on pages 7 14, budgetary comparison information on pages and pension information on pages be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District s basic financial statements. The combining and individual nonmajor fund financial statements, and required Texas Education Agency ( TEA ) schedules, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements, and required TEA schedules, as listed in the table of contents are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and required TEA schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. 2

19 To the Board of Trustees Aldine Independent School District Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 3, 2017, on our consideration of the District s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District s internal control over financial reporting and compliance. Houston, Texas November 3,

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21 MANAGEMENT S DISCUSSION AND ANALYSIS 5

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23 ALDINE INDEPENDENT SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS As management of the Aldine Independent School District, we offer readers of the District s financial statements this narrative overview and analysis of the financial activities of the District for the year ended June 30, Financial Highlights The assets and deferred outflows of the District exceeded its liabilities and deferred inflows at the close of the most recent fiscal year by $371,559,783 (net position). Of this amount, $69,568,356(unrestricted net position) may be used to meet the District s ongoing obligations to students and creditors. The District s total net position decreased by $69,602,822. As of the close of the current fiscal year, the District s governmental funds reported combined ending fund balances of $227,577,577, a decrease of $276,613,329 in comparison with the prior year. The decrease in governmental fund balances was primarily due to a decrease in the fund balance of the capital projects fund in the amount of $203,806,094 and a decrease in the fund balance of the general fund in the amount of $72,785,755. As of the close of the current fiscal year, unassigned fund balance of $164,355,519 for the general fund is 25 percent of total general fund expenditures. The District s total bonded debt decreased by $29,605,000 (5 percent) during the current fiscal year, primarily related to the retirement of a portion of the District s outstanding debt with the issuance of $101,050,000 in unlimited tax refunding bonds. The District s net pension liability totaled $188,553,116, an increase of $21,049,100 in comparison to the prior year. This amount represents the District s portion of the Teacher s Retirement System ( TRS ) net pension liability. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the District s basic financial statements. The District s basic financial statements are comprised of three components: 1) governmentwide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains required supplementary information and other supplementary information in addition to the basic financial statements. Government-wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the District s finances, in a manner similar to a private-sector business. The Statement of Net Position presents information on all of the District s assets, deferred outflows of resources, liabilities, and deferred inflows of resources with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the District is improving or deteriorating. The Statement of Activities presents information showing how the District s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused sick leave). 7

24 ALDINE INDEPENDENT SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS (continued) The government-wide financial statements of the District are principally supported by taxes and intergovernmental revenues (governmental activities). The governmental activities of the District include Instruction, Instructional Resources and Media Services, Curriculum and Instructional Staff Development, Instructional Leadership, School Leadership, Guidance, Counseling, and Evaluation Services, Social Work Services, Health Services, Student Transportation, Food Services, Cocurricular/ Extracurricular Activities, General Administration, Facilities Maintenance and Operations, Security and Monitoring Services, Data Processing Services, Community Services, Interest on Long-term Debt, Debt Issuance Costs and Fees, Facilities Repairs and Maintenance, and Other Intergovernmental Charges. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the District can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental Funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a District s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the District s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The District maintains individual governmental funds for general, special revenue, debt service, and capital projects funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, child nutrition fund, debt service fund and capital projects fund, all of which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in the financial statements. The District adopts an annual appropriated budget for its general fund, debt service fund, and child nutrition special revenue fund. Proprietary Fund The District maintains an individual internal service fund for health insurance coverage. Internal service funds, one type of proprietary fund, are an accounting device used to accumulate and allocate costs internally among the District s various funds and functions. Because this service predominantly benefits governmental functions, it has been included within governmental activities in the government-wide financial statements. 8

25 ALDINE INDEPENDENT SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS (continued) The District maintains an enterprise fund for concessions and a child day care program. Enterprise funds, a second type of proprietary fund, are used to report on other activity for which a fee is charged to external users for goods or services. Enterprise funds are included within the business-type activities in the government-wide financial statements. Proprietary fund statements provide the same type of information as the government-wide financial statements, only in more detail. The internal service fund financial statements provide separate information for the Health Insurance Fund. Fiduciary Fund The fiduciary funds are used to account for resources held for the benefit of students and employees. The District s agency fund is used to account for resources held in a custodial capacity by the District and consists of funds that are the property of students or others. The fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the District s own programs. The funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operation. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Required Supplementary Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information that further explains and supports the information in the financial statements. The required supplementary information relates to comparison of the original adopted budget, the final amended budget, and the actual amounts for the fiscal year. This is required supplementary information for the general fund and any major special revenue funds. The general fund and child nutrition funds are presented as required supplementary information. Other Information The combining and individual fund statements and schedules and other supplementary information are presented immediately following the required supplementary information. Government-wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a District s financial position. In the case of the District, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $371,559,783 at the close of the most recent fiscal year. One of the largest portions of the District s net position, $268,751,824, reflects its investment in capital assets (e.g., land, buildings and improvements, furniture and equipment, construction in progress), less any outstanding related debt used to acquire those assets. The District uses these capital assets to provide services to students; consequently, these assets are not available for future spending. Although the District s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. 9

26 ALDINE INDEPENDENT SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS (continued) As of June 30, 2017 the District s net position included the following: Governmental Activities Business-type Activities Total Current and other assets $ 345,134,816 $ 502,428,584 $ 592,682 $ 591,559 $ 345,727,498 $ 503,020,143 Noncurrent Assets: Capital assets net of depreciation 905,980, ,663,024 66,856 26, ,047, ,689,699 Other noncurrent assets 47,987, ,839,547 47,987, ,839,547 Total Assets 1,299,102,681 1,328,931, , ,234 1,299,762,219 1,329,549,389 Deferred outflows of resources 107,074,800 81,838, ,074,800 81,838,261 Total Deferred Outflows of Resources 107,074,800 81,838, ,074,800 81,838,261 Current liabilities 146,606,750 99,031,910 87,939 62, ,694,689 99,094,599 Long term liabilities 857,343, ,699, ,343, ,699,147 Total Liabilities 1,003,950, ,731,057 87,939 62,689 1,004,038, ,793,746 Deferred inflows of resources 31,239,167 12,431,299 31,239,167 12,431,299 Total Deferred Inflows of Resources 31,239,167 12,431,299 31,239,167 12,431,299 Net Position: Net investment in capital assets 268,684, ,545,672 66,856 26, ,751, ,572,347 Restricted 33,239,603 32,258,384 33,239,603 32,258,384 Unrestricted 69,063, ,803, , ,870 69,568, ,331,874 Total Net Position $ 370,988,184 $ 440,607,060 $ 571,599 $ 555,545 $ 371,559,783 $ 441,162,605 Net position is restricted for various purposes as follows: Governmental Activities Federal and state programs $ 16,839,965 $ 8,640,843 Debt service 16,399,638 23,617,541 $ 33,239,603 $ 32,258,384 The balance of unrestricted net position, $69,568,356, may be used to meet the District s ongoing obligations to students and creditors. At the end of the current fiscal year, the District reports positive balances in all three categories of net position. The District's net position decreased by $69,602,822 during the current fiscal year. 10

27 ALDINE INDEPENDENT SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS (continued) Comparative Schedule of Changes in Net Position For the Years Ended June 30, 2017 and 2016 Governmental Activities Business-type Activities Total Program Revenues Charges for services $ 10,071,508 $ 8,616,094 $ 605,246 $ 637,273 $ 10,676,754 $ 9,253,367 Operating grants and contributions 144,517, ,202, ,517, ,202,706 General Revenues Property taxes 258,476, ,223, ,476, ,223,027 State Aid - Formula Grants 330,893, ,404, ,893, ,404,164 Interest earnings 3,089,532 2,235,632 3,089,532 2,235,632 Other 317, , , ,601 Total Revenues 747,365, ,113, , , ,970, ,750,497 Expenses Instruction 440,039, ,652, ,039, ,652,228 Instructional resources and media services 3,253,887 3,626,581 3,253,887 3,626,581 Curriculum and staff development 26,704,990 12,180,167 26,704,990 12,180,167 Instructional leadership 12,070,199 10,884,997 12,070,199 10,884,997 School leadership 49,939,188 48,154,562 49,939,188 48,154,562 Guidance, counseling, and evaluation services 32,932,500 31,219,305 32,932,500 31,219,305 Social work services 2,667,740 2,505,040 2,667,740 2,505,040 Health services 6,633,912 6,772,011 6,633,912 6,772,011 Student transportation 40,227,565 39,198,086 40,227,565 39,198,086 Food service 44,474,659 48,563,544 44,474,659 48,563,544 Extracurricular activities 11,555,501 9,846,366 11,555,501 9,846,366 General administration 16,759,642 17,102,074 16,759,642 17,102,074 Facilities maintenance and operations 65,329,273 62,739,275 65,329,273 62,739,275 Security and monitoring services 8,422,644 7,990,629 8,422,644 7,990,629 Data processing services 13,148,065 14,546,012 13,148,065 14,546,012 Community services 1,841,176 1,871,894 1,841,176 1,871,894 Interest on long-term debt 24,692,962 20,294,845 24,692,962 20,294,845 Debt issuance costs and fees 885,979 3,286, ,979 3,286,314 Facilities repairs and maintenance 7,753,741 8,783,549 7,753,741 8,783,549 Payments to Tax Increment Fund 5,830,282 5,386,108 5,830,282 5,386,108 Other intergovernmental charges 1,821,276 1,802,815 1,821,276 1,802,815 Enterprising Activities 589, , , ,636 Total Expenses 816,984, ,406, , , ,573, ,968,038 Excess (deficiency) before transfers (69,618,876) (24,293,178) 16,054 75,637 (69,602,822) (24,217,541) Transfers 14,676 (14,676) Increase (Decrease) in Net Position (69,618,876) (24,278,502) 16,054 60,961 (69,602,822) (24,217,541) Beginning Net Position 440,607, ,885, , , ,162, ,380,146 Ending Net Position $ 370,988,184 $ 440,607,060 $ 571,599 $ 555,545 $ 371,559,783 $ 441,162,605 Governmental Activities Governmental activities decreased the District s net position by $69,618,876. Revenues are generated primarily from three sources. Property taxes, state-aid formula grants, and operating grants and contributions represent 98 percent of total revenues. The remaining 2 percent is generated from charges for services, investment earnings, and miscellaneous revenues. % of Total Total Revenues Revenues Property taxes $ 258,476,003 35% State Aid - Formula Grants 330,893,794 44% Operating grants and contributions 144,517,437 19% Charges for services 10,071,508 1% Other revenue 3,406,702 1% Total Revenues $ 747,365, % 11

28 ALDINE INDEPENDENT SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS (continued) The primary functional expenses of the District are instruction, facilities maintenance and operations, school leadership, food service, and student transportation which represent 78 percent of total expenses. The remaining individual functional categories of expenses are each less than 5 percent of total expenses. % of Total Total Expenses Expenses Instruction $ 440,039,139 54% Facilities maintenance and operations 65,329,273 8% School Leadership 49,939,188 6% Food service 44,474,659 5% Student transportation 40,227,565 5% Other expenses 176,974,496 22% Total Expenses $ 816,984, % Financial Analysis of the Government's Funds As noted earlier, the District uses fund accounting to ensure and demonstrate compliance with financerelated legal requirements. Governmental Funds The focus of the District s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the District s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a District's net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the District s governmental funds reported combined ending fund balances of $227,577,577, a decrease of $276,613,329 in comparison with the prior year. The decrease in ending governmental fund balances is primarily due to expenditures exceeding revenues in the general fund, the debt service fund, and the capital projects fund during the fiscal year. The general fund is the chief operating fund of the District. At the end of the current fiscal year, unassigned fund balance of the general fund was $164,355,519, while total fund balance reached $168,133,787. As a measure of the general fund's liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 25 percent of total general fund expenditures, and total fund balance represents 25 percent of that same amount. The fund balance of the District s general fund decreased by $72,785,755 during the current fiscal year. The decrease is attributable expenditures for District facilities acquisition and construction, and a reduction in state aid due to lower attendance. The child nutrition fund has a total fund balance of $16,839,965, all of which is restricted for federal grants. The net increase in the child nutrition fund balance during the current year of $8,199,122 was attributed to a decrease in expenditures of approximately $8 million and an increase in total revenues of approximately $2 million. The debt service fund has a total fund balance of $23,062,611, all of which is restricted for the retirement of funded indebtedness. The net decrease in fund balance during the current year of $8,235,459 was in line with budgeted expectations for the repayment of debt. 12

29 ALDINE INDEPENDENT SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS (continued) The capital projects fund has a total fund balance of $17,022,978, all of which is restricted for construction. The decrease in fund balance during the current year of $203,806,094 is a result of ongoing construction and renovations throughout the District. General Fund Budgetary Highlights Differences between the original budget and the final amended budget of the general fund can be briefly summarized as follows: Budget Original Final Amended Total revenues $ 612,032,811 $ 612,032,811 Total expenditures 676,970, ,970,087 Other financing sources(uses), net (340,238) (340,238) Net change in fund balance $ (65,277,514) $ (70,277,514) The review of the final amended budget versus actual for the general fund reflected that revenues were less than budgetary estimates and expenditures were less than budgetary estimates. The amendment approved for the General Fund was to increase the budget due to a land purchase in November Capital Assets and Long-term Liabilities Capital Assets The District s investment in capital assets for its governmental type activities as of June 30, 2017, includes land, buildings and improvements, furniture and equipment, and construction in progress. The investment in capital assets for the current year was $905,980,831. The following table summarizes the investment in capital assets as of June 30, 2017 and Land $ 133,027,711 $ 117,563,016 Buildings and improvements 928,226, ,965,950 Furniture and equipment 140,227, ,219,801 Construction in progress 196,778,658 36,293,781 Total 1,398,260,012 1,166,042,548 Accumulated depreciation (492,279,181) (459,379,524) Net capital assets $ 905,980,831 $ 706,663,024 Additional information on the District s capital assets can be found in Note 4 to the financial statements. Long-term Liabilities At the end of the current fiscal year, the District had $593,130,000 in bonded debt outstanding, a decrease of $29,605,000 over the previous year. The District s bonds are sold with an AAA rating and are guaranteed through the Texas Permanent School Fund Guarantee Program. The underlying rating of the bonds from Standard and Poor's is AA- and from Moody's Investors Service is Aa1 for general obligation debt. 13

30 ALDINE INDEPENDENT SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS (continued) Changes in general obligation bonds, for the year ended June 30, 2017, are as follows: Outstanding Outstanding 07/01/16 Issued Retired 06/30/17 $ 622,735,000 $ 101,050,000 $ (130,655,000) $ 593,130,000 Additional information on the District s long-term liabilities can be found in the Note 7 to the financial statements. Economic Factors and Next Year s Budgets and Rates As part of the budget development process the District has taken into consideration the primary factors that drive school district budgets: student enrollment, state funding, property values, facility needs and the local economy. The District maintains over 77 campuses for instruction and employs 9,677 staff members, which primarily consists of 4,741 teachers and 575 instructional aides. District property values have increased 24.04% over the past year. The adopted budget for the fiscal year includes a total tax of $ The maintenance and operations tax rate remains unchanged from the prior year at $ , while the debt service tax rate increased to $ as a result of the $798 million bond referendum that was approved by Aldine voters in November, The district continues to be recognized for operating efficiently to maximize resources that flow to students and provide for all educational programs. These indicators were taken into account when adopting the General Fund budget for The total Aldine Independent School District adopted budget for is $724,651,529 which represents the General Fund, the Debt Service Fund and the Child Nutrition Fund. Requests for Information This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the District s finances and to demonstrate the District s accountability for the money it receives. If you have questions about this report or need additional financial information, contact the Assistant Superintendent of Finance, Aldine Independent School District, 2520 W.W. Thorne Blvd., Houston, Texas

31 BASIC FINANCIAL STATEMENTS 15

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33 ALDINE INDEPENDENT SCHOOL DISTRICT Exhibit A-1 STATEMENT OF NET POSITION June 30, 2017 Data Control Codes Governmental Activities Business-type Activities Total Assets 1110 Cash and cash equivalents $ 46,484,866 $ 592,682 $ 47,077, Current investments 171,691, ,691, Property taxes receivables, net 24,272,041 24,272, Due from other governments 99,642,804 99,642, Accrued interest 457, , Other receivables, net 283, , Inventories 1,972,719 1,972, Prepaid items 330, ,946 Capital assets not subject to depreciation: 1510 Land 133,027, ,027, Construction in progress 196,778, ,778,658 Capital assets net of depreciation: 1520 Buildings and improvements, net 526,071, ,071, Furniture and equipment, net 50,103,078 66,856 50,169, Long-term investments 47,987,034 47,987, Total Assets 1,299,102, ,538 1,299,762,219 Deferred outflows of resources 1700 Deferred charge on refunding 3,460,665 3,460, Deferred outflows - pension 103,614, ,614,135 Total deferred outflows of resources 107,074, ,074,800 Liabilities 2110 Accounts payable 45,039,450 2,618 45,042, Other liabilities - current 2,007,296 2,007, Interest payable 9,855,118 9,855, Payroll deductions and withholdings 9,926,106 41,006 9,967, Accrued wages payable 45,698,519 42,566 45,741, Due to other governments 21,430,277 21,430, Accrued expenses 10,451,859 1,749 10,453, Unearned revenue 2,198,125 2,198,125 Noncurrent Liabilities: 2501 Due within one year 25,299,784 25,299, Due in more than one year 643,490, ,490, Net pension liability 188,553, ,553, Total Liabilities 1,003,950,130 87,939 1,004,038,069 Deferred Inflows of Resources 2605 Deferred inflows - pension 31,239,167 31,239,167 Deferred Inflows of Resources 31,239,167 31,239,167 Net Position 3200 Net investment in capital assets 268,684,968 66, ,751,824 Restricted for: 3820 Federal and state programs 16,839,965 16,839, Debt service 16,399,638 16,399, Unrestricted 69,063, ,743 69,568, Total Net Position $ 370,988,184 $ 571,599 $ 371,559,783 See Notes to the Financial Statements 17