MANOR INDEPENDENT SCHOOL DISTRICT

Transcription

1 MANOR INDEPENDENT SCHOOL DISTRICT ANNUAL FINANCIAL REPORT

2 Manor Independent School District Annual Financial Report For The Year Ended June 30, 2012 TABLE OF CONTENTS Page Exhibit INTRODUCTORY SECTION Certificate of Board... 1 FINANCIAL SECTION Independent Auditors' Report on Financial Statements... 2 Management's Discussion and Analysis (Required Supplementary Information)... 4 Basic Financial Statements Government-wide Financial Statements: Statement of Net Assets A-1 Statement of Activities B-1 Fund Financial Statements: Balance Sheet - Governmental Funds C-1 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets C-1R Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds C-2 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities C-3 Statement of Fiduciary Net Assets - Fiduciary Funds E-1 Notes to the Financial Statements Required Supplementary Information: Budgetary Comparison Schedules: General Fund G-1 OTHER SUPPLEMENTARY INFORMATION SECTION Schedule of Delinquent Taxes Receivable J-1 Indirect Cost Computation Schedule J-2 Budgetary Comparison Schedules Required by the Texas Education Agency: National School Breakfast and Lunch Program J-3 Debt Service Fund J-4 Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 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 Costs Summary Schedule of Prior Audit Findings Corrective Action Plan Schedule of Expenditures of Federal Awards K-1 Notes to the Schedule of Expenditures of Federal Awards Schedule of Required Responses to Selected School First Indicators K-2

3 Introductory Section

4 CERTIFICATE OF BOARD Manor Independent School District Travis Name of School District County Co.-Dist. Number We, the undersigned, certify that the attached annual financial reports of the above named school district were reviewed and (check one) approved disapproved for the year ended June 30, 2012, at a meeting of the board of trustees of such school district on the day of,. Signature of Board Secretary Signature of Board President If the board of trustees disapproved of the auditors' report, the reason(s) for disapproving it is (are): (attach list as necessary) 1

5 Financial Section

6 WEST, DAVIS & COMPANY, LLP Jollyville Road, Suite 100 Austin, Texas Board of Trustees Manor Independent School District Manor, Texas Members of the Board of Trustees: Independent Auditors' Report on Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Manor Independent School District as of and for the year ended June 30, 2012, which collectively comprise the District's basic financial statements as listed in the table of contents. These financial statements are the responsibility of Manor Independent School District's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of Manor Independent School District as of June 30, 2012, and the respective changes in financial position for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated December 10, 2012, on our consideration of Manor Independent School 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 to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. The Management's Discussion and Analysis and the budgetary comparison information identified as Required Supplementary Information in the table of contents are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was performed for the purpose of forming opinions on the financial statements which collectively comprise the Manor Independent School District's basic financial statements. The accompanying schedule of expenditures of federal awards required by U. S. Office of Management and Budget Circular A-133, Audits 2

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8 Manor Independent School District MANAGEMENT S DISCUSSION AND ANALYSIS MANAGEMENT S DISCUSSION AND ANALYSIS In this section of the Annual Financial and Compliance Report, the management of Manor Independent School District (the District), discusses and analyzes the District s performance for the year ending June 30, Please read it in conjunction with the independent auditors report on page 2, and the District s Basic Financial Statements, which begin on page 10. OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists of a series of financial statements. The government-wide financial statements include the Statement of Net Assets and the Statement of Activities (on pages 10 and 11). These provide information about the activities of the District as a whole and present a longer-term view of the District's property and debt obligations and other financial matters. They reflect the flow of total economic resources in a manner similar to the financial reports of a business enterprise. Fund financial statements, beginning on page 12, report the District's operations in more detail than the government-wide statements by providing information about the District's most significant funds. For governmental activities, these statements tell how services were financed in the short term as well as what resources remain for future spending. They reflect the flow of current financial resources, and supply the basis for tax levies and the appropriations budget. For proprietary activities, internal service fund financial statements tell how goods or services of the District were sold to departments within the District and how the revenues covered the expenses of the goods or services. Examples include Cafeteria Plan and Workers Compensation Insurance. The remaining statements, fiduciary statements, provide financial information about activities for which the District acts solely as a trustee or agent for the benefit of those outside of the District. Examples include Student Activities and Scholarships. The notes to the financial statements, beginning on page 19 provide narrative explanations or additional data needed for full disclosure in the government-wide statements or the fund financial statements. The Required Supplementary Information provides a budgetary comparison schedule of the District s General Fund. This schedule includes financial information and disclosures required by the Governmental Accounting Standards Board but are not considered as part of the basic financial statements. In addition to the required supplementary information, the Other Supplementary Information Section contains data used by monitoring or regulatory agencies for assurance that the District is using funds supplied in compliance with the terms of the grants. Reporting the District as a Whole The Statement of Net Assets and the Statement of Activities The analysis of the District's overall financial condition and operations begins on page 10. Its primary purpose is to show whether the District is improving or not improving as a result of the period's activities. The Statement of Net Assets includes all the District's assets and liabilities at the end of the year while the Statement of Activities includes all the revenues and expenses generated by the District's operations during the year. These apply the accrual basis of accounting which is the basis used by private sector companies. 4

9 All of the current year s revenues and expenses are taken into account regardless of when cash is received or paid. The District's revenues are divided into those provided by outside parties who share the costs of some programs such as grants provided by the U.S. Department of Education to assist children with disabilities or from disadvantaged backgrounds (program revenues) and revenues provided by the taxpayers or by TEA in equalization funding processes (general revenues). All the District's assets are reported whether they serve the current year or future years. Liabilities are considered regardless of whether they must be paid in the current or future years. These two statements report the District's net assets and changes in the assets. The District's net assets (the difference between assets and liabilities) provide one measure of the District's financial health, or financial position. Over time, increases or decreases in the District's net assets are one indicator of whether its financial health is improving or deteriorating. To fully assess the overall health of the District, however, non-financial factors should be considered as well, such as changes in the District's average daily attendance or its property tax base and the condition of the District's facilities. In the Statement of Net Assets and the Statement of Activities, the District reports one governmental activity: Most of the District's basic services are reported here, including the instruction, counseling, cocurricular activities, food services, transportation, maintenance, community services, and general administration. Property taxes, state aid, and federal grants finance most of these activities. Reporting the District's Most Significant Funds Fund Financial Statements The fund financial statements begin on page 12 and provide detailed information about the most significant funds not the District as a whole. Laws and contracts require the District to establish some funds, such as grants received under the No Child Left Behind Act from the U.S. Department of Education. The District's administration establishes many other funds to control and manage money for particular purposes (like campus activities). The District's three kinds of funds governmental, proprietary, and fiduciary use different accounting approaches. Governmental funds Most of the District's basic services are reported in governmental funds. These use modified accrual accounting (a method that measures the receipt and disbursement of cash and all other financial assets that can be readily converted to cash) and report balances that are available for future spending. The governmental fund statements provide a detailed shortterm view of the District's general operations and the basic services it provides. The differences between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds in reconciliation schedules follow each of the fund financial statements. Proprietary funds The District reports the activities for which it charges users (whether outside customers or other units of the District) in proprietary funds using the same accounting methods employed in the Statement of Net Assets and the Statement of Activities. The internal service funds report activities that provide supplies and services for the District's other programs and activities such as the District's workers compensation program. Fiduciary funds-the District is the trustee, or fiduciary, for money raised by student activities and alumnae scholarship programs. All of the District's fiduciary activities are reported in the Statement of Fiduciary Net Assets-Fiduciary Funds on page 18. These resources are excluded from the District's other financial statements because the District cannot use these assets to finance its operations. The District is only responsible for ensuring that the assets reported in these funds are used for their intended purposes. 5

10 GOVERNMENT-WIDE FINANCIAL ANALYSIS This analysis focuses on net assets (Table I) and changes in net assets (Table II) of the District's governmental activities. Net assets of the District's governmental activities remained the same at $29.5 million. Unrestricted net assets the part of net assets that can be used to finance day-to-day operations without constraints established by debt covenants, enabling legislation, or other legal requirements were $8.7 million at June 30, Table I Manor Independent School District NET ASSETS in thousands Governmental Activities Current and other assets 70,372 51,069 Capital assets 177, ,035 Total assets 248, ,104 Long-term liabilities outstanding 206, ,254 Other liabilities 12,219 9,316 Total liabilities 218, ,570 Net assets: Invested in capital assets, net of related debt -2,526-2,817 Restricted 23,278 23,253 Unrestricted 8,747 9,098 Total net assets 29,499 29,534 6

11 Table II Manor Independent School District CHANGES IN NET ASSETS in thousands Governmental Activities Revenues: Program revenues: Charges for services Operating grants and contributions 13,110 7,335 General revenues: Maintenance and operations taxes 24,295 23,991 Debt service taxes 17,745 14,994 Grants and Contributions not restricted to specific functions 26,995 31,620 Investment Earnings Miscellaneous 1, Total Revenues 84,768 79,805 Expenses: Instruction, curriculum and media services 41,889 39,648 Instructional and school leadership 5,328 4,443 Student support services 6,904 6,141 Child nutrition 4,635 4,334 Extracurricular activities 2,229 1,990 General administration 2,020 1,728 Plant maintenance, security & data processing 8,140 7,351 Community services Debt services 12,851 4,631 Payments to juvenile justice AEP 0 20 Other Intergovernmental charges Total Expenses 84,803 70,921 Increase in net assets before transfers and special items -35 8,884 Beginning net assets 29,534 20,650 Ending net assets 29,499 29,534 The District's total revenues overall increased by $5 million resulting from a change in fiscal year. The total costs increased $14 million as a result of a change in the fiscal year resulting in an increase in debt service expenses of $8 million. The cost of all governmental activities this year was $84.8 million. However, as shown in the Statement of Activities on page 11, the amount that local taxpayers ultimately financed for these activities through District taxes was approximately $42.0 million. 7

12 THE DISTRICT'S FUNDS As the District completed the year, its governmental funds (as presented in the balance sheet on pages 12) reported a combined fund balance of $57.5 million, which is $17.6 million more than last year. Over the course of the year, the Board of Trustees revised the District's budget several times. These budget amendments fall into two categories. The first category includes amendments and supplemental appropriations that were approved shortly after the beginning of the year and reflect the actual beginning balances. The second category involved amendments moving funds from programs that did not need all the resources originally appropriated to them to programs with resource needs. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets At the end of 2012, the District had $178 million invested in a broad range of capital assets, including facilities and equipment for instruction, transportation, athletics, administration, and maintenance. This amount represents a decrease from last year. During the year the District spent some $4 million of resources from all funds on capital outlay. More detailed information is contained in Note D to the financial statements. Debt At year-end, the District had $ million in bonds and other obligations outstanding, an increase of $11.4 million from the previous year. Other obligations include accrued compensated absences. More detailed information about the District's long-term liabilities is presented in Note F to the financial statements. ECONOMIC FACTORS AND NEXT YEAR'S BUDGET AND RATES The District s Board of Trustees and Superintendent considered many factors when adopting and setting the budget and tax rates. These included the following: Local Property Values State Aid Average Daily Attendance Federal Aid and Discretionary Grants Even with student enrollment growth, for the fiscal year, the District received $0.4 million less in State aid than in the previous year. The District elected to keep the same tax rate of $1.04 for the general fund budget. State aid, grant funding and other local budget factors resulted in an overall decrease of $0.2 million to the revenue portion of the general fund. The District used its revenues to continue programs currently offered. 8

13 Budgeted expenditures in the general fund increased by $0.5 million for when compared to actual expenditures. This increase is the result of an increase in instructional and school leadership of $0.5 million. The debt service fund tax rate of $0.475 per $100 of value was adopted for the and and school years. The District s capital projects fund has $2 million to complete Board and voter approved renovations and other identified projects. There is capacity in current instructional facilities to absorb the projected growth for the next one to two years, and the District sold the remaining voter-approved bonds in November, 2011 for the construction of the next elementary campus. The District s chief taxpayer, Samsung, has committed to a major investment in new technologies in their wafer manufacturing facility in the near future. Samsung is projected to invest in excess of three billion dollars at the existing facility, which is within District boundaries. Samsung has submitted an application to the district at the start of the next fiscal year for a Chapter 313 agreement for the proposed new investment. The district has approved the application and submitted the application to the State Comptroller for consideration. While a major increase in the District s property values would not directly benefit the District s operating budget under the current state funding formula, the District s ability to fund bonded debt obligations would be greatly improved. Student enrollment growth did slow for one year due to general economic conditions, including the lack of financing for affordable housing. Enrollment growth has increased back to projected levels for the and fiscal years. A demographic update will be completed in December, 2012 and anticipated projections should indicate a continuation of five percent or higher annual growth for at least the next few years. The State Legislative Session in the spring of 2013 is a matter of concern for future District budgets with the projected State budget shortfall and the end of the Federal Stimulus Funding during the budget year. CONTACTING THE DISTRICT'S FINANCIAL MANAGEMENT This financial report is designed to provide citizens, taxpayers, customers, and investors and creditors with a general overview of the District's finances and to show the District's accountability for the money it receives. Questions about this report or additional financial information may be obtained by contacting the District's Business Services Department, at Manor Independent School District. 9

14 Basic Financial Statements

15 MANOR INDEPENDENT SCHOOL DISTRICT STATEMENT OF NET ASSETS JUNE 30, 2012 EXHIBIT A-1 1 Data Control Governmental Codes Activities ASSETS: 1110 Cash and Cash Equivalents $ 51,500, Current Investments 7,475, Property Taxes Receivable (Net) 2,165, Due from Other Governments 6,753, Accrued Interest Deferred Expenses 30, Capitalized Bond and Other Debt Issuance Costs 2,446,395 Capital Assets: 1510 Land 16,479, Buildings and Improvements, Net 156,032, Furniture and Equipment, Net 5,339, Total Assets 248,224,409 LIABILITIES: 2110 Accounts Payable 544, Interest Payable 3,932, Accrued Liabilities 4,932, Due to Student Groups 146, Unearned Revenue 2,662,634 Noncurrent Liabilities: 2501 Due Within One Year 3,925, Due in More Than One Year 202,581, Total Liabilities 218,725,287 NET ASSETS 3200 Invested in Capital Assets, Net of Related Debt (2,526,304) Restricted For: 3820 Federal and State Programs 1,053, Debt Service 18,168, Capital Projects 4,056, Unrestricted 8,747, Total Net Assets $ 29,499,122 The accompanying notes are an integral part of this statement. 10

16 MANOR INDEPENDENT SCHOOL DISTRICT STATEMENT OF ACTIVITIES EXHIBIT B-1 Net (Expense) Revenue and Changes in Program Revenues Net Assets Data Operating Control Charges for Grants and Governmental Codes Functions/Programs Expenses Services Contributions Activities Governmental Activities: 11 Instruction $ 38,640,179 $ -- $ 8,244,521 $ (30,395,658) 12 Instructional Resources and Media Services 859, ,444 (831,030) 13 Curriculum and Staff Development 2,389, ,016 (2,249,190) 21 Instructional Leadership 1,405, ,008 (1,365,376) 23 School Leadership 3,922, ,789 (3,759,296) 31 Guidance, Counseling, & Evaluation Services 2,094, ,755 (2,040,789) 32 Social Work Services 611, ,753 (520,496) 33 Health Services 667, ,200 (639,103) 34 Student Transportation 3,530, ,480 (3,464,515) 35 Food Service 4,635, ,251 3,905,730 22, Cocurricular/Extracurricular Activities 2,228,452 81,666 91,845 (2,054,941) 41 General Administration 2,020, ,721 (1,965,204) 51 Plant Maintenance and Operations 6,122, , ,891 (5,873,397) 52 Security and Monitoring Services 494,431 2,785 3,886 (487,760) 53 Data Processing Services 1,522, ,511 (1,486,173) 61 Community Services 595, ,347 (576,962) 72 Interest on Long-term Debt 12,778, (12,778,434) 73 Bond Issuance Costs and Fees 72, (72,827) 95 Payments to Juvenile Justice Alternative Ed. Programs (158) 99 Other Intergovernmental Charges 211, (211,988) TG Total Governmental Activities 84,803, ,196 13,109,897 (70,750,355) TP Total Primary Government $ 84,803,448 $ 943,196 $ 13,109,897 (70,750,355) General Revenues: MT Property Taxes, Levied for General Purposes 24,294,966 DT Property Taxes, Levied for Debt Service 17,745,088 IE Investment Earnings 115,038 GC Grants and Contributions Not Restricted to Specific Programs 26,995,297 MI Miscellaneous 1,565,395 TR Total General Revenues 70,715,784 CN Change in Net Assets (34,571) NB Net Assets - Beginning 29,533,693 NE Net Assets - Ending $ 29,499,122 The accompanying notes are an integral part of this statement. 11

17 MANOR INDEPENDENT SCHOOL DISTRICT BALANCE SHEET - GOVERNMENTAL FUNDS JUNE 30, Data Debt Control General Service Codes Fund Fund ASSETS: 1110 Cash and Cash Equivalents $ 29,351,985 $ 1,003, Current Investments 5,886,431 51, Taxes Receivable, Net 1,589, , Due from Other Governments 4,952, Accrued Interest Due from Other Funds 6,128,322 16,969, Deferred Expenditures 30, Total Assets $ 47,939,467 $ 18,599,948 LIABILITIES: Current Liabilities: 2110 Accounts Payable $ 233,779 $ Interest Payable Payroll Deductions & Withholdings 476, Accrued Wages Payable 4,097, Due to Other Funds 23,071,214 11, Due to Student Groups Deferred Revenue 4,214, , Total Liabilities 32,094, ,975 FUND BALANCES: Restricted Fund Balances: 3450 Federal/State Funds Grant Restrictions Capital Acquisitions & Contractual Obligations Retirement of Long-Term Debt -- 18,011, Other Restrictions of Fund Balance Assigned Fund Balances: 3590 Other Assigned Fund Balance 280, Unassigned 15,564, Total Fund Balances 15,844,817 18,011, Total Liabilities and Fund Balances $ 47,939,467 $ 18,599,948 The accompanying notes are an integral part of this statement. 12

18 EXHIBIT C School Other Total Facilities Governmental Governmental Assistance Funds Funds $ 21,077,707 $ 67,361 $ 51,500,566 1,537, ,475, ,165, ,801,320 6,753, ,134,167 2,254,337 29,485, ,752 $ 26,749,966 $ 4,123,018 $ 97,412,399 $ 287,555 $ 23,525 $ 544, , , ,000 4,406,884 4,061,795 2,341,111 29,485, , ,219 2,144 35,225 4,828,454 4,351,494 2,903,924 39,938, ,053,799 1,053,799 22,398, ,398, ,011, , , , ,564,668 22,398,472 1,219,094 57,474,356 $ 26,749,966 $ 4,123,018 $ 97,412,399 13

19 MANOR INDEPENDENT SCHOOL DISTRICT RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS JUNE 30, 2012 EXHIBIT C-1R Total fund balances - governmental funds balance sheet $ 57,474,356 Amounts reported for governmental activities in the Statement of Net Assets ("SNA") are different because: Capital assets used in governmental activities are not reported in the funds. 177,851,535 Property taxes receivable unavailable to pay for current period expenditures are deferred in the funds. 2,165,820 Payables for bond principal which are not due in the current period are not reported in the funds. (202,184,999) Accumulated accretion of interest on capital appreciation bonds is not reported in the funds. (591,310) Payables for bond interest which are not due in the current period are not reported in the funds. (3,932,765) Bond issuance costs and similar items are capitalized in the SNA but not in the funds. 1,468,932 Bond premiums are reported in the SNA but not in the funds. (3,086,907) Special termination benefits are reported as the amount earned in the SNA but as the amount paid in the funds (643,002) The amount transfered to refund bonds net of par value is capitalized in the SNA. 977,462 Net assets of governmental activities - Statement of Net Assets $ 29,499,122 The accompanying notes are an integral part of this statement. 14

20 MANOR INDEPENDENT SCHOOL DISTRICT STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS Data Debt Control General Service Codes Fund Fund REVENUES: 5700 Local and Intermediate Sources $ 25,349,135 $ 17,593, State Program Revenues 26,682,359 80, Federal Program Revenues 179, Total Revenues 52,211,043 17,673,994 EXPENDITURES: Current: 0011 Instruction 28,910, Instructional Resources and Media Services 689, Curriculum and Staff Development 1,118, Instructional Leadership 1,050, School Leadership 3,688, Guidance, Counseling, & Evaluation Services 1,555, Social Work Services 317, Health Services 651, Student Transportation 3,079, Food Service Cocurricular/Extracurricular Activities 1,095, General Administration 1,719, Plant Maintenance and Operations 5,731, Security and Monitoring Services 480, Data Processing Services 1,358, Community Services 401, Principal on Long-term Debt -- 6,055, Interest on Long-term Debt -- 8,929, Bond Issuance Costs and Fees , Capital Outlay Payments to Juvenile Justice Altermative 0095 Education Programs Other Intergovernmental Charges 211, Total Expenditures 52,061,511 15,187, Excess (Deficiency) of Revenues Over (Under) 1100 Expenditures 149,532 2,486,231 Other Financing Sources and (Uses): 7901 Refunding Bonds Issued -- 8,779, Capital-Related Debt Issued (Regular Bonds) Premium or Discount on Issuance of Bonds -- 1,216, Other Uses -- (9,811,765) 7080 Total Other Financing Sources and (Uses) , Net Change in Fund Balances 149,532 2,670, Fund Balances - Beginning 15,695,285 15,341, Fund Balances - Ending $ 15,844,817 $ 18,011,973 The accompanying notes are an integral part of this statement. 15

21 EXHIBIT C School Other Total Facilities Governmental Governmental Assistance Funds Funds $ 94,666 $ 756,514 $ 43,793, ,831,079 28,593, ,331,807 11,511,356 94,666 13,919,400 83,899,103 1,952,918 6,570,959 37,434, , ,169,546 2,287, ,410 1,395,333 13, ,071 3,837,328 2, ,411 2,051, , , , , , ,265, ,222,348 4,222, , ,270, ,674 1,763, , ,656 6,075,062 11, , ,359 41,926 2,196,176 2, , , ,055, ,929, , , , , ,988 4,140,720 13,650,957 85,040,951 (4,046,054) 268,443 (1,141,848) ,779,999 17,465, ,465,000 1,109, ,326, (9,811,765) 18,574, ,759,599 14,528, ,443 17,617,751 7,869, ,651 39,856,605 $ 22,398,472 $ 1,219,094 $ 57,474,356 16

22 MANOR INDEPENDENT SCHOOL DISTRICT RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES EXHIBIT C-3 Net change in fund balances - total governmental funds $ 17,617,751 Amounts reported for governmental activities in the Statement of Activities ("SOA") are different because: Capital outlays are not reported as expenses in the SOA. 4,198,798 The depreciation of capital assets used in governmental activities is not reported in the funds. (6,382,184) Donations of capital assets increase net assets in the SOA but not in the funds. 9,811,765 Certain property tax revenues are deferred in the funds. This is the change in these amounts this year. 626,251 Repayment of bond principal is an expenditure in the funds but is not an expense in the SOA. 6,055,000 Bond issuance costs and similar items are amortized in the SOA but not in the funds. 339,869 The accretion of interest on capital appreciation bonds is not reported in the funds. (591,310) (Increase) decrease in accrued interest from beginning of period to end of period. (3,160,002) Compensated absences are reported as the amount earned in the SOA but as the amount paid in the funds. (168,365) Bond proceeds are reported as a liability in the SNA but not in the funds. (26,244,999) Bond premiums are reported in the funds but not in the SOA. (2,082,843) The amount transfered to refund bonds net of par value is amortized in the SOA. (54,303) Rounding difference 1 Change in net assets of governmental activities - Statement of Activities $ (34,571) The accompanying notes are an integral part of this statement. 17

23 MANOR INDEPENDENT SCHOOL DISTRICT STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30, 2012 Agency Fund EXHIBIT E-1 Data Control Student Codes Activity ASSETS: 1110 Cash and Cash Equivalents $ 99, Total Assets $ 99,331 LIABILITIES: Current Liabilities: 2190 Due to Student Groups $ 99, Total Liabilities 99,331 NET ASSETS 3000 Total Net Assets $ -- The accompanying notes are an integral part of this statement. 18

24 MANOR INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS A. Summary of Significant Accounting Policies The basic financial statements of Manor Independent School District (the "District") have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") applicable to governmental units in conjunction with the Texas Education Agency's Financial Accountability System Resource Guide ("Resource Guide"). The Governmental Accounting Standards Board ("GASB") is the accepted standard setting body for establishing governmental accounting and financial reporting principles. 1. Reporting Entity The Board of School Trustees ("Board"), a seven-member group, has governance responsibilities over all activities related to public elementary and secondary education within the jurisdiction of the District. The Board is elected by the public and has the exclusive power and duty to govern and oversee the management of the public schools of the District. All powers and duties not specifically delegated by statute to the Texas Education Agency ("TEA") or to the State Board of Education are reserved for the Board, and the TEA may not substitute its judgment for the lawful exercise of those powers and duties by the Board. The District receives funding from local, state and federal government sources and must comply with the requirements of those funding entities. However, the District is not included in any other governmental "reporting entity" as defined by the GASB in its Statement No. 14, "The Financial Reporting Entity," as revised by GASB Statement No.39, and there are no component units included within the reporting entity. 2. Basis of Presentation, Basis of Accounting a. Basis of Presentation Government-wide Financial 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 double-counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. 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. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. 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 funds: General Fund: This is the District's primary operating fund. It accounts for all financial resources of the District except those required to be accounted for in another fund. 19

25 MANOR INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS In addition, the District reports the following fund types: Agency Funds: These funds are used to report student activity funds and other resources held in a purely custodial capacity (assets equal liabilities). Agency funds typically involve only the receipt, temporary investment, and remittance of fiduciary resources to individuals, private organizations, or other governments. Fiduciary funds are reported in the fiduciary fund financial statements. However, because their assets are held in a trustee or agent capacity and are therefore not available to support District programs, these funds are not included in the government-wide statements. b. Measurement Focus, Basis of Accounting Government-wide and Fiduciary Fund Financial Statements: These financial statements are reported using the economic resources measurement focus. They 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. Under this method, revenues are recognized when measurable and available. The District considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after year-end. Revenues from local sources consist primarily of property taxes. Property tax revenues and revenues received from the State are recognized under the susceptible-to-accrual concept. Miscellaneous revenues are recorded as revenue when received in cash because they are generally not measurable until actually received. Investment earnings are recorded as earned, since they are both measurable and available. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources. When the District incurs an expenditure or expense for which both restricted and unrestricted resources may be used, it is the District's policy to use restricted resources first, then unrestricted resources. 3. Financial Statement Amounts a. 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 in conformity with Subtitle E, Texas Property Tax Code. Taxes are due on receipt of the tax bill and are delinquent if not paid before February 1 of the year following the year in which imposed. On January 1 of each year, a tax lien attaches to property to secure the payment of all taxes, penalties, and interest ultimately imposed. Property tax revenues are considered available when they become due or past due and receivable within the current period. Allowances for uncollectible tax receivables within the General and Debt Service Funds are based upon historical experience in collecting property taxes. Uncollectible personal property taxes are periodically reviewed and written off, but the District is prohibited from writing off real property taxes without specific statutory authority from the Texas Legislature. 20

26 MANOR INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS b. Inventories and Prepaid Items Inventories of supplies on the balance sheet are stated at weighted average cost, while inventories of food commodities are recorded at market values supplied by the Texas Department of Human Services. Inventory items are recorded as expenditures when they are consumed. Supplies are used for almost all functions of activity, while food commodities are used only in the food service program. Although commodities are received at no cost, their fair market value is supplied by the Texas Department of Human Services and recorded as inventory and deferred revenue when received. When requisitioned, inventory and deferred revenue are relieved, expenditures are charged, and revenue is recognized for an equal amount. Inventories also include plant maintenance and operation supplies as well as instructional supplies. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. c. Capital Assets Purchased or constructed capital assets are reported at cost or estimated historical cost. Donated fixed assets are recorded at their estimated fair value at the date of the donation. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets' lives are not capitalized. A capitalization threshold of $5,000 is used. Capital assets are being depreciated using the straight-line method over the following estimated useful lives: Asset Class Estimated Useful Lives Infrastructure 30 Buildings 40 Building Improvements 20 Vehicles 2-15 Office Equipment 3-15 Computer Equipment 3-15 d. Receivable and Payable Balances The District believes that sufficient detail of receivable and payable balances is provided in the financial statements to avoid the obscuring of significant components by aggregation. Therefore, no disclosure is provided which disaggregates those balances. There are no significant receivables which are not scheduled for collection within one year of year end. e. Compensated Absences On retirement or death of certain employees, the District pays any accrued sick leave and vacation leave in a lump cash payment (in accordance with District policy) to such employee or his/her estate. f. Interfund Activity 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, deemed to be at market or near market rates, are treated as revenues and expenditures or expenses. Reimbursements occur when one fund incurs a cost, charges the appropriate benefiting fund and reduces its related cost as a reimbursement. All other interfund transactions are treated as transfers. Transfers In and Transfers Out are netted and presented as a single "Transfers" line on the government-wide statement of activities. Similarly, interfund receivables and payables are netted and presented as a single "Internal Balances" line of the government-wide statement of net assets. 21

27 MANOR INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS g. Use of Estimates The preparation of financial statements in conformity with GAAP requires the use of management's estimates. h. Data Control Codes Data Control Codes appear in the rows and above the columns of certain financial statements. The TEA requires the display of these codes in the financial statements filed with TEA in order to insure accuracy in building a statewide database for policy development and funding plans. i. Fund Balances - Governmental Funds Fund balances of the governmental funds are classified as follows: Nonspendable Fund Balance - represents amounts that cannot be spent because they are either not in spendable form (such as inventory or prepaid insurance) or legally required to remain intact (such as notes receivable or principal of a permanent fund). Restricted Fund Balance - represents amounts that are constrained by external parties, constitutional provisions or enabling legislation. Committed Fund Balance - represents amounts that can only be used for a specific purpose because of a formal action by the District's governing board. Committed amounts cannot be used for any other purpose unless the governing board removes those constraints by taking the same type of formal action. Committed fund balance amounts may be used for other purposes with appropriate due process by the governing board. Commitments are typically done through adoption and amendment of the budget. Committed fund balance amounts differ from restricted balances in that the constraints on their use do not come from outside parties, constitutional provisions, or enabling legislation. Assigned Fund Balance - represents amounts which the District intends to use for a specific purpose, but that do not meet the criteria to be classified as restricted or committed. Intent may be stipulated by the governing board or by an official or body to which the governing board delegates the authority. Specific amounts that are not restricted or committed in a special revenue, capital projects, debt service or permanent fund are assigned for purposes in accordance with the nature of their fund type or the fund's primary purpose. Assignments within the general fund conveys that the intended use of those amounts is for a specific purpose that is narrower than the general purposes of the District itself. Unassigned Fund Balance - represents amounts which are unconstrained in that they may be spent for any purpose. Only the general fund reports a positive unassigned fund balance. Other governmental funds might report a negative balance in this classification because of overspending for specific purposes for which amounts had been restricted, committed or assigned. When an expenditure is incurred for a purpose for which both restricted and unrestricted fund balance is available, the District considers restricted funds to have been spent first. When an expenditure is incurred for which committed, assigned, or unassigned fund balances are available, the District considers amounts to have been spent first out of committed funds, then assigned funds, and finally unassigned funds. 22

28 MANOR INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS B. Compliance and Accountability 1. Finance-Related Legal and Contractual Provisions In accordance with GASB Statement No. 38, "Certain Financial Statement Note Disclosures," violations of financerelated legal and contractual provisions, if any, are reported below, along with actions taken to address such violations: Violation None reported Action Taken Not applicable 2. Deficit Fund Balance or Fund Net Assets of Individual Funds Following are funds having deficit fund balances or fund net assets at year end, if any, along with remarks which address such deficits: Deficit Fund Name Amount Remarks None reported Not applicable Not applicable C. Deposits and Investments The District's funds are required to be deposited and invested under the terms of a depository contract. The depository bank deposits for safekeeping and trust with the District's agent bank approved pledged securities in an amount sufficient to protect District funds on a day-to-day basis during the period of the contract. The pledge of approved securities is waived only to the extent of the depository bank's dollar amount of Federal Deposit Insurance Corporation ("FDIC") insurance. 1. Cash Deposits: At June 30, 2012, the carrying amount of the District's deposits (cash, certificates of deposit, and interest-bearing savings accounts included in temporary investments) was $51,500,566 and the bank balance was $54,798,544. The District's cash deposits at June 30, 2012 and during the year ended June 30, 2012, were entirely covered by FDIC insurance or by pledged collateral held by the District's agent bank in the District's name. 2. Investments: The District is required by Government Code Chapter 2256, The Public Funds Investment Act, to adopt, implement, and publicize an investment policy. That policy must address the following areas: (1) safety of principal and liquidity, (2) portfolio diversification, (3) allowable investments, (4) acceptable risk levels, (5) expected rates of return, (6) maximum allowable stated maturity of portfolio investments, (7) maximum average dollar-weighted maturity allowed based on the stated maturity date for the portfolio, (8) investment staff quality and capabilities, and (9) bid solicitation preferences for certificates of deposit. The Public Funds Investment Act ("Act") requires an annual audit of investment practices. Audit procedures in this area conducted as a part of the audit of the basic financial statements disclosed that in the areas of investment practices, management reports and establishment of appropriate policies, the District adhered to the requirements of the Act. Additionally, investment practices of the District were in accordance with local policies. 23

29 MANOR INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS The Act determines the types of investments which are allowable for the District. These include, with certain restrictions, 1) obligations of the U.S. Treasury, U.S. agencies, and the State of Texas, 2) certificates of deposit, 3) certain municipal securities, 4) securities lending program, 5) repurchase agreements, 6) bankers acceptances, 7) mutual funds, 8) investment pools, 9) guaranteed investment contracts, and 10) commercial paper. The District's investments at June 30, 2012 are shown below. Investment or Investment Type Maturity Rating Fair Value TexPool Investment Pool 28 days average AAAm $ 5,947,950 Lone Star Investment Pool 24 days average AAA 25,841 Federal Home Loan Bank Bond > 1 year AAA 1,501,541 Total Investments $ 7,475, Analysis of Specific Deposit and Investment Risks GASB Statement No. 40 requires a determination as to whether the District was exposed to the following specific investment risks at year end and if so, the reporting of certain related disclosures: a. Credit Risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The ratings of securities by nationally recognized rating agencies are designed to give an indication of credit risk. At year end, the District was not significantly exposed to credit risk. At June 30, 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: b. Custodial Credit Risk Deposits are exposed to custodial credit risk if they are not 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. Investment securities are exposed to custodial credit risk if the securities are uninsured, are not registered in the name of the government, and are held by either the counterparty or the counterparty's trust department or agent but not in the District's name. At year end, the District was not exposed to custodial credit risk. c. Concentration of Credit Risk This risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. At year end, the District was not exposed to concentration of credit risk. d. Interest Rate Risk This is the risk that changes in interest rates will adversely affect the fair value of an investment. At year end, the District was not exposed to interest rate risk. e. Foreign Currency Risk This is the risk that exchange rates will adversely affect the fair value of an investment. At year end, the District was not exposed to foreign currency risk. 24