MIDWAY INDEPENDENT SCHOOL DISTRICT ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED

Transcription

1 MIDWAY INDEPENDENT SCHOOL DISTRICT ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED AUGUST 31, 2017

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3 MIDWAY INDEPENDENT SCHOOL DISTRICT ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED AUGUST 31, 2017 TABLE OF CONTENTS Exhibit Page Certificate of Board 1 Independent Auditors Report 2 Management s Discussion and Analysis 5 Basic Financial Statements Government-wide Statements: A-1 Statement of Net Position 12 B-1 Statement of Activities 13 Governmental Fund Financial Statements: C-1 Balance Sheet 15 C-2 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 16 C-3 Statement of Revenues, Expenditures, and Changes in Fund Balance 17 C-4 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities 18 Proprietary Fund Financial Statements: D-1 Statement of Net Position 19 D-2 Statement of Revenues, Expenses, and Changes in Fund Net Position 20 D-3 Statement of Cash Flows 21 Fiduciary Fund Financial Statements: E-1 Statement of Fiduciary Net Position 22 E-2 Statement of Changes in Fiduciary Fund Net Position 23 Notes to the Financial Statements 24 Required Supplementary Information G-1 Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual General Fund 45 G-2 Schedule of the District s Proportionate Share of the Net Pension Liability 46 G-3 Schedule of District Contributions Teacher Retirement System 47 Notes to Required Supplementary Information 48 Combining Statements Nonmajor Governmental Funds: H-1 Combining Balance Sheet 49 H-2 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 53 Nonmajor Enterprise Funds: H-3 Combining Statement of Net Position Nonmajor Enterprise Funds 57 H-4 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position 58 H-5 Combining Statement of Cash Flows 59 Required TEA Schedules J-1 Schedule of Delinquent Taxes Receivable 60 J-4 Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual Child Nutrition Program 62 J-5 Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual Debt Service Fund 63 i

4 MIDWAY INDEPENDENT SCHOOL DISTRICT ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED AUGUST 31, 2017 (Continued) TABLE OF CONTENTS Exhibit Page Federal Awards Section Independent Auditors Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 64 Independent Auditors Report on Compliance with Requirements Applicable to Each Major Program and Internal Control over Compliance in Accordance with OMB Circular A K-1 Schedule of Expenditures of Federal Awards 68 Notes to Schedule of Expenditures of Federal Awards 69 Schedule of Findings and Questioned Costs 71 Summary Schedule of Prior Audit Findings 72 ii

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7 INDEPENDENT AUDITORS REPORT To the Board of Trustees of Midway Independent School District Hewitt, 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 Midway Independent School District as of and for the year ended August 31, 2017, and the related notes to the financial statements, which collectively comprise the Midway Independent School 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. Auditors Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 2

8 An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of 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. Opinions In our opinion, the financial statements referred to above 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 Midway Independent School District as of August 31, 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, budgetary comparison and pension information on pages 5 11 and be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. 3

9 Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Midway Independent School District s basic financial statements. The combining nonmajor fund financial statements and required TEA schedules and the Schedule of Expenditures of Federal Awards, as required by the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining nonmajor fund financial statements, required TEA schedules and the Schedule of Expenditures of Federal Awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining nonmajor fund financial statements, required TEA schedules and the Schedule of Expenditures of Federal Awards are fairly stated in all material respects in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 19, 2017, on our consideration of the Midway 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 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 Midway Independent School District s internal control over financial reporting and compliance. Waco, Texas December 19,

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11 MIDWAY INDEPENDENT SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS AUGUST 31, 2017 Our discussion and analysis of Midway Independent School District s financial performance provides an overview of the District s financial activities for the fiscal year ended August 31, Please read it in conjunction with the District s financial statements, which begin on page 12. FINANCIAL HIGHLIGHTS The assets and deferred outflows of resources of the District exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $40,877,692. Of this amount, $15,742,881 may be used to meet the District s ongoing obligations to students and creditors. The District s total net position decreased by $1,172,467. As of the close of the current fiscal year, the District s governmental funds reported combined ending fund balances of $28,282,319, a decrease of $1,546,944 in comparison with the prior year. At the end of the current fiscal year, the unassigned fund balance for the General Fund was $20,426,529, or 33.1% of total General Fund expenditures. USING THIS ANNUAL REPORT This annual report consists of a series of financial statements. The government-wide financial statements include the Statement of Net Position and the Statement of Activities (on pages 12 14). These provide information about the activities of the District as a whole and present a long-term view of the District s property and 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 (starting on page 15) 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, fund financial statements tell how services of the District were sold to external customers. The remaining statements, fiduciary statements, provide financial information about activities for which the District acts solely as a trustee. The notes to the financial statements (starting on page 24) provide narrative explanations or additional data needed for full disclosure in the government-wide statements of the fund financial statements. 5

12 The combining statements for nonmajor funds are presented immediately following the required supplementary information and contain even more information about the District s individual funds. 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 sections labeled TEA Required Schedules and Federal Awards Section contain data used by monitoring or regulatory agencies for assurance that the District is using funds supplied in compliance with the terms of grants. Reporting the District as a Whole The Statement of Net Position and the Statement of Activities The analysis of the District s overall financial condition and operations begins on page 12. Its primary objective is to show the results of operations and whether the District is better off or worse off as a result of the year s activities. The Statement of Net Position includes all the District s assets and liabilities while the Statement of Activities includes all the revenue and expenses generated by the District s operations during the year. These apply the accrual basis of accounting, which is the same method used by most private sector companies. All of the current year s revenue and expenses are taken into account regardless of when cash is received or paid. The District s revenue is divided into those provided by outside parties who share the costs of some programs, such as tuition received from students and grants provided by the U. S. Department of Education to assist children with disabilities or from disadvantaged backgrounds (program revenue), and general revenue provided by the taxpayers or by TEA in equalization funding processes (general revenue). All of 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 position and changes in them. The District s net position (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 position are one indicator of whether its financial health is improving or deteriorating. To fully assess the overall health of the District, however, you should consider nonfinancial factors 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 Position and the Statement of Activities, the District has two kinds of activities: Governmental Activities Most of the District s basic services are reported here, including instruction, counseling, co-curricular activities, food services, transportation, maintenance, community services and general administration. Property taxes, tuition, fees, and state and federal grants finance most of these activities. Business-type Activities The District s activities for which outside users are charged a fee roughly equal to the cost of providing the goods or services to those activities. 6

13 Reporting the District s Most Significant Funds Fund Financial Statements The Fund financial statements begin on page 15 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 ESEA Title I from the U. S. Department of Education. The District s administration establishes many other funds to help it control and manage money for particular purposes (like campus activities). The District s two kinds of funds governmental and proprietary use different accounting approaches. The District as Trustee Governmental Funds The District reports most of its basic services 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 they report balances that are available for future spending. The governmental fund statements provide a detailed short-term view of the District s general operations and the basic services it provides. We describe the differences between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds in reconciliation schedules following each of the governmental fund financial statements. Proprietary Funds Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. Enterprise Funds are used to report the same functions presented as business-type activities in the government-wide financial statements. As mentioned above in the governmentwide definition, the District uses the business-type activities or Enterprise Funds to report activities for the District s employee Pre-K program and the Panther Kids after- school care program. Reporting the District s Fiduciary Responsibilities The District is the trustee, or fiduciary, for money raised by student activities. All of the District s fiduciary activities are reported in separate Statements of Fiduciary Net Position and Changes in Fiduciary Net Position on pages 22 and 23. We exclude these resources from the District s other financial statements because the District cannot use them to support its operations. The District is only responsible for ensuring that the assets reported in these funds are used for their intended purposes. 7

14 GOVERNMENT-WIDE FINANCIAL ANALYSIS The following analysis focuses on the net position (Table l) and changes in net position (Table 2) of the District s governmental and business-type activities. Net position of the District s governmental activities decreased from $41,752,873 to $40,489,850. Unrestricted net position the part of net position that can be used to finance day-to-day operations without constraints established by debt covenants, enabling legislation, or other legal requirements were $15,355,039 at August 31, TABLE 1 MIDWAY INDEPENDENT SCHOOL DISTRICT NET POSITION Governmental Activities Business-type Activities Totals Current and other assets $ 34,657,759 $ 36,879,274 $ 389,595 $ 300,658 $ 35,047,354 $ 49,884,112 Capital assets 133,009, ,049, ,009, ,772,718 Total assets 167,666, ,929, , , ,056, ,229,711 Total deferred outflows of resources 10,510,698 11,677, ,510,698 11,677,948 Other liabilities 4,965,140 4,923,774 1,753 3,372 4,966,893 5,817,444 Long-term liabilities 131,886, ,900, ,886, ,422,229 Total liabilities 136,851, ,824,083 1,753 3, ,853, ,827,455 Total deferred inflows Net position: of resources 836,296 1,030, ,296 1,030,045 Net investment in capital assets, net of related debt 19,590,413 19,817, ,590,413 22,284,334 Restricted 5,544,398 4,726, ,544,398 3,923,287 Unrestricted 15,355,039 17,208, , ,286 15,742,881 20,209,536 Total net position $ 40,489,850 $ 41,752,873 $ 387,842 $ 297,286 $ 40,877,692 $ 42,050,159 8

15 TABLE 2 MIDWAY INDEPENDENT SCHOOL DISTRICT CHANGES IN NET POSITION Governmental Activities Business-type Activities Totals REVENUES Program revenues: Charges for services $ 2,166,494 $ 2,230,477 $ 730,143 $ 606,161 $ 2,896,637 $ 2,836,638 Operating grants and contributions 9,920,145 10,711, ,920,145 10,711,440 General revenues: Maintenance and operations taxes 47,445,642 45,035, ,445,642 45,035,893 Debt service taxes 12,774,313 12,123, ,774,313 12,123,793 State aid - formula grants 9,269,888 9,933, ,269,888 9,933,994 Investment earnings 385, , , ,228 Miscellaneous local and intermediate 432, , , ,459 Total revenues 82,395,274 80,639, , ,161 83,125,417 81,245,445 EXPENSES Instruction 46,947,103 43,541, ,947,103 43,541,138 Instructional resources and media services 1,017,301 1,034, ,017,301 1,034,650 Curriculum and staff development 1,221,903 1,196, ,221,903 1,196,640 Instructional leadership 1,062, , ,062, ,673 School leadership 3,807,699 3,818, ,807,699 3,818,196 Guidance, counseling and evaluation services 2,833,221 2,756, ,833,221 2,756,878 Social work services 47,843 56, ,843 56,466 Data processing services 1,146,223 1,279, ,146,223 1,279,579 Community services 167, , , ,115 Health services 697, , , ,114 Student (pupil) transportation 2,133,288 2,212, ,133,288 2,212,877 Food services 3,004,566 3,118, ,004,566 3,118,143 Co-curricular/extracurricular activities 3,735,870 4,057, ,735,870 4,057,600 General administration 2,382,861 2,413, ,382,861 2,413,864 Plant maintenance and operations 6,464,365 6,552, ,464,365 6,552,695 Security and monitoring services 389, , , ,733 Debt service - interest on long-term debt 5,057,462 5,360, ,057,462 5,360,138 Debt service - bond issuance costs and fees 1,700 2, ,700 2,200 Contracted instructional services between schools 928, ,611 - Midway Employee Pre-K ,947 34,317 35,947 34,317 PEP fund , , , ,775 Other governmental charges 611, , , ,970 Total expenses 83,658,297 80,197, , ,092 84,297,884 80,714,761 INCREASE IN NET PO SITIO N ( 1,263,023) 441,615 90,556 89,069 ( 1,172,467) 530,684 NET PO SITIO N, BEGINNING 41,752,873 41,311, , ,217 42,050,159 41,519,475 NET PO SITIO N, ENDING $ 40,489,850 $ 41,752,873 $ 387,842 $ 297,286 $ 40,877,692 $ 42,050,159 9

16 THE DISTRICT S FUNDS As the District completed the year, its governmental funds (as presented in the balance sheet on page 15) reported a combined fund balance of $28,282,319, which is less than last year s total of $29,829,263. The District s expenditures increased by $2.8 million. Over the course of the year, the Board of Trustees amended the District s budget several times. These amendments include amounts to reallocate funds from categories having available funds to categories where funds were more needed. The District s General Fund balance of $21.8 million reported on pages 15 and 17 differs from the General Fund s budgetary fund balance of $21.1 million. This is principally due to conservative budgeting principles. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets Debt At the end of 2017, the District had approximately $133.0 million (net of accumulated depreciation) invested in a broad range of capital assets, including instructional facilities and equipment, transportation facilities and equipment, athletic facilities, and administrative and maintenance buildings and equipment. This year s major additions included: Buildings $763,879 Furniture and Equipment 423,259 Additional information about the District s capital assets is presented in Note II B to the financial statements. At year-end, the District had approximately $109.3 million in bonds and loans outstanding versus approximately $116.1 million last year. The District s general obligation bond rating continues to carry the highest rating possible, a rating that has been assigned by national rating agencies. Additional information about the District s longterm liabilities is presented in Note II E to the financial statements. 10

17 ECONOMIC FACTORS AND NEXT YEAR S BUDGETS AND RATES The District s elected and appointed officials considered many factors when setting the fiscal year 2018 budget and tax rates. The District expects tax revenue to increase modestly for fiscal year Continued growth in the tax base is expected to be the driving force in increased collections. The District also expects expenditures to grow. CONTACTING THE DISTRICT S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the District s finances and to show the District s accountability for the money it receives. If you have questions about this report or need additional financial information, contact the District Administration office, at Woodway Drive, Woodway, Texas

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19 BASIC FINANCIAL STATEMENTS

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21 MIDWAY INDEPENDENT SCHOOL DISTRICT EXHIBIT A-1 STATEMENT OF NET POSITION AUGUST 31, Data Control Governmental Primary Government Business-type Codes Activities Activities Total ASSETS 1110 Cash and cash equivalents $ 17,004,859 $ 389,357 $ 17,394, Current investments 15,665,711-15,665, Current property taxes receivable 307, , Delinquent property taxes receivable 549, , Allowance for uncollectible taxes (credit) ( 265,627) - ( 265,627) 1240 Due from other governments 1,050,668-1,050, Other receivables (net) 280, , Inventories 64,904-64,904 Capital assets: 1510 Land 8,150,127-8,150, Buildings and improvements, net 120,627, ,627, Furniture and equipment, net 4,231,213-4,231, Construction in progress Total assets 167,666, , ,056,382 DEFERRED OUTFLOWS OF RESOURCES 1701 Deferred loss on bond refunding 3,744,040-3,744, Deferred outflow related to TRS 6,766,658-6,766, Total deferred outflows of resources 10,510,698-10,510,698 LIABILITIES 2110 Accounts payable 412,976 1, , Interest payable 283, , Accrued wages payable 4,061,096-4,061, Due to other governments 22,125-22, Unearned revenue 185, ,907 Noncurrent liabilities: 2501 Due within one year 8,695,000-8,695, Due in more than one year 123,191, ,191, Total liabilities 136,851,339 1, ,853,092 DEFERRED INFLOWS OF RESOURCES 2605 Deferred inflow related to TRS 836, , Total deferred inflows of resources 836, ,296 NET POSITION 3200 Net investment in capital assets 19,590,413-19,590,413 Restricted for: 3820 Federal and state programs 766, , Debt service 4,777,641-4,777, Unrestricted 15,355, ,842 15,742, Total net position $ 40,489,850 $ 387,842 $ 40,877,692 The accompanying notes are an integral part of this financial statement. 12

22 MIDWAY INDEPENDENT SCHOOL DISTRICT STATEMENT OF ACTIVITIES AUGUST 31, 2017 Program Revenues Data Operating Control Charges Grants and Codes Functions/Programs Expenses for Services Contributions Primary government: Governmental activities: 11 Instruction $ 46,947,103 $ 156,080 $ 4,994, Instructional resources and media services 1,017, , Curriculum and staff development 1,221, , Instructional leadership 1,062,455-58, School leadership 3,807, , Guidance, counseling, and evaluation services 2,833, , Social work services 47,843-2, Health services 697, , Student transportation 2,133,288-74, Food service 3,004,566 1,584,100 1,582, Extracurricular activities 3,735, ,262 1,045, General administration 2,382, , Facilities maintenance and operations 6,464, , , Security and monitoring services 389,393-9, Data processing services 1,146,223-38, Community services 167,292-85, Interest on long-term debt 5,057, , Bond issuance costs and fees 1, Other governmental charges 611, TG Total governmental activities 83,658,297 2,166,494 9,920,145 Business-type activities: 02 Midway employee pre-k 35, PEP program 603, ,143 - TB Total business-type activities 639, ,143 - TP Total primary government $ 84,297,884 $ 2,896,637 $ 9,920,145 Data Control Codes General revenues: Taxes: MT Property taxes, levied for general purposes DT Property taxes, levied for debt service GC Grants and contributions not restricted IE Investment earnings MI Miscellaneous local and intermediate revenue TR Total general revenues CN NB NE Change in net position Net position - beginning Net position - ending The accompanying notes are an integral part of this financial statement. 13

23 EXHIBIT B-1 Net (Expenses) Revenue and Changes in Net Position Primary Government Governmental Business-type Activities Activities Total $( 41,796,495) $ - $( 41,796,495) ( 910,674) - ( 910,674) ( 1,096,071) - ( 1,096,071) ( 1,004,053) - ( 1,004,053) ( 3,513,520) - ( 3,513,520) ( 2,585,061) - ( 2,585,061) ( 45,178) - ( 45,178) ( 74,801) - ( 74,801) ( 2,058,766) - ( 2,058,766) 162, ,021 ( 2,520,564) - ( 2,520,564) ( 2,228,276) - ( 2,228,276) ( 6,025,553) - ( 6,025,553) ( 380,259) - ( 380,259) ( 1,107,864) - ( 1,107,864) ( 81,828) - ( 81,828) ( 4,762,499) - ( 4,762,499) ( 1,700) - ( 1,700) ( 611,906) - ( 611,906) ( 71,571,658) - ( 71,571,658) - ( 35,947) ( 35,947) - 126, ,503-90,556 90,556 ( 71,571,658) 90,556 ( 71,481,102) 47,445,642-47,445,642 12,774,313-12,774,313 9,269,888-9,269, , , , ,891 70,308,635-70,308,635 ( 1,263,023) 90,556 ( 1,172,467) 41,752, ,286 42,050,159 $ 40,489,850 $ 387,842 $ 40,877,692 14

24 MIDWAY INDEPENDENT SCHOOL DISTRICT EXHIBIT C-1 BALANCE SHEET - GOVERNMENTAL FUNDS AUGUST 31, Data Total Control Debt Other Governmental Codes General Service Governmental Funds ASSETS 1110 Cash and cash equivalents $ 9,167,559 $ 4,936,095 $ 1,798,908 $ 15,902, Current investments 15,665, ,665, Current property taxes receivable 242,162 65, , Delinquent property taxes receivable 436, , , Allowance for uncollectible taxes ( 212,108) ( 53,519) - ( 265,627) 1240 Due from other governments 494, ,889 1,050, Due from other funds 476, , Other receivables 279,316-1, , Inventories ,904 64, Total assets 26,550,579 5,060,677 2,420,965 34,032,221 LIABILITIES 2110 Accounts payable 288, , , Accrued wages payable 4,021,846-39,250 4,061, Due to other funds , , Due to other governments 22, , Unearned revenue 2, , , Total liabilities 4,334, ,778 5,158,863 DEFERRED INFLOWS OF RESOURCES 2600 Unavailable revenue - property taxes 466, , ,039 Total deferred inflows of resources 466, , ,039 FUND BALANCES 3410 Nonspendable - inventories ,904 64,904 Restricted for: 3450 Federal and state programs , , Capital acquisition , , Debt service - 4,936,094-4,936,094 Committed for: 3510 Construction 1,108, ,108, Other 215, , ,412 Assigned for: 3600 Unassigned 20,426, ,426, Total fund balances 21,750,038 4,936,094 1,596,187 28,282, Total liabilities, deferred inflows of resources and fund balances $ 26,550,579 $ 5,060,677 $ 2,420,965 $ 34,032,221 The accompanying notes are an integral part of this financial statement. 15

25 MIDWAY INDEPENDENT SCHOOL DISTRICT EXHIBIT C-2 RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION FOR THE YEAR ENDED AUGUST 31, 2017 Total Fund Balances - Governmental Funds $ 28,282,319 The district uses internal service funds to charge the costs of certain activities, such as computer operations, to appropriate functions in other funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net assets. The net effect of this consolidation is to increase net assets. 1,102,297 Capital assets used in governmental activities are not financial resources and therefore are not reported in governmental funds. 133,009,028 Uncollected property taxes are reported as unavailable resources in the governmental funds balance sheet, but are not recognized as a revenue in the statement of activities. 591,039 Long-term liabilities, including bonds and tax notes payable, are not due and payable in the current period and therefore are not reported in the funds. Also, the loss on refunding of bonds and the premium on issuance of bonds payable are not reported in the funds. ( 113,635,595) Interest payable is not due and payable in the current period and, therefore, is not reported as a liability in the government funds. ( 283,036) Included in the items related to debt is the recognition of the District's proportionate share of the net pension liability required by GASB 68. The net position related to TRS included a deferred resource outflow in the amount of $6,766,658, a deferred resource inflow in the amount of $836,296, and a net pension liability in the amount of $14,506,564. This resulted in a decrease in net position. ( 8,576,202) Change in net position of governmental activities $ 40,489,850 The accompanying notes are an integral part of this financial statement. 16

26 MIDWAY INDEPENDENT SCHOOL DISTRICT STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS EXHIBIT C-3 FOR THE YEAR ENDED AUGUST 31, Data Total Control Debt Other Governmental Codes General Service Governmental Funds REVENUES 5700 Local and intermediate sources $ 48,706,754 $ 12,866,663 $ 3,180,248 $ 64,753, State program revenues 12,009, , ,872 13,083, Federal program revenues 948,358-3,083,241 4,031, Total revenues 61,664,367 13,161,626 7,042,361 81,868,354 EXPENDITURES Current: 0011 Instruction 37,810,426-4,117,861 41,928, Instructional resources and media services 840,533-58, , Curriculum and staff development 1,100,124-69,315 1,169, Instructional leadership 936,317-11, , School leadership 3,569,250-69,546 3,638, Guidance, counseling, and evaluation services 2,642,960-82,806 2,725, Social work services 46, , Health services 599,613-68, , Student transportation 1,588, ,588, Food service - - 2,804,243 2,804, Extracurricular activities 1,920, ,234 2,862, General administration 2,229, ,229, Facilities maintenance and operations 5,797,459-9,819 5,807, Security and monitoring services 384,790-4, , Data processing services 645, ,691 1,011, Community services 84,907-81, ,042 Debt service: 0071 Principal on long-term debt - 8,120,000-8,120, Interest on long-term debt - 4,204,100-4,204, Bond issuance costs and fees - 1,700-1,700 Capital outlay: 0081 Capital outlay 25, , ,884 Intergovernmental: 0091 Contracted instructional services between schools 928, , Other intergovernmental charges 611, , Total expenditures 61,763,195 12,325,800 9,326,303 83,415, EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES ( 98,828) 835,826 ( 2,283,942) ( 1,546,944) NET CHANGE IN FUND BALANCES ( 98,828) 835,826 ( 2,283,942) ( 1,546,944) 0100 FUND BALANCES, BEGINNING 21,848,866 4,100,268 3,880,129 29,829, FUND BALANCES, ENDING $ 21,750,038 $ 4,936,094 $ 1,596,187 $ 28,282,319 The accompanying notes are an integral part of this financial statement. 17

27 MIDWAY INDEPENDENT SCHOOL DISTRICT EXHIBIT C-4 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED AUGUST 31, 2017 Net change in fund balances - total governmental funds $( 1,546,944) Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. ( 5,040,751) Property tax revenues that do not provide current financial resources are not reported as revenues in the funds. 31,483 The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal long-term debt consume these current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of premiums when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. 8,120,000 Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. ( 853,362) Internal Service Funds are used by management to charge the costs of certain activities, such as computer operations, to individual funds. The net revenue (expense) of the Internal Service Funds is reported with governmental activities. ( 753,377) GASB 68 required that certain plan expenditures be de-expended and recorded as deferred resource outflows. These contributions made after the measurement date of the plan caused the change in ending net position to increase by $1,259,430. Contributions made before the measurement date and during the previous fiscal year were also expended and recorded as a reduction in net pension liability. This caused a decrease in net position totaling $1,219,710. Finally, the proportionate share of the TRS pension expense on the plan as a whole had to be recorded. The net pension expense decreased the change in net position by $1,259,792. The result is a decrease in the change in net position. ( 1,220,072) Change in net position of governmental activities $( 1,263,023) The accompanying notes are an integral part of this financial statement. 18

28 MIDWAY INDEPENDENT SCHOOL DISTRICT EXHIBIT D-1 STATEMENT OF NET POSITION PROPRIETARY FUNDS AUGUST 31, 2017 Business-type Activities Governmental Activities Total Enterprise Funds Internal Service Funds ASSETS Current assets: Cash and cash equivalents $ 389,357 $ 1,102,297 Receivables, net Total assets 389,595 1,102,297 LIABILITIES Current liabilities: Accounts payable 1,753 - Total liabilities 1,753 - NET POSITION Unrestricted 387,842 1,102,297 Total net position $ 387,842 $ 1,102,297 The accompanying notes are an integral part of this financial statement. 19

29 MIDWAY INDEPENDENT SCHOOL DISTRICT EXHIBIT D-2 STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED AUGUST 31, 2017 Business-type Activities Total Enterprise Funds Governmental Activities Internal Service Funds OPERATING REVENUES Local and intermediate sources $ 730,143 $ 776,371 Total operating revenues 730, ,371 OPERATING EXPENSES Payroll costs 496,152 - Professional and contracted services 14,093 - Supplies and materials 114,177 1,529,748 Other operating costs 15,165 - Total operating expenses 639,587 1,529,748 NET INCOME 90,556 ( 753,377) NET POSITION, BEGINNING 297,286 1,855,674 NET POSITION, ENDING $ 387,842 $ 1,102,297 The accompanying notes are an integral part of this financial statement. 20

30 MIDWAY INDEPENDENT SCHOOL DISTRICT EXHIBIT D-3 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED AUGUST 31, 2017 Business-type Activities Enterprise Funds Nonmajor Funds Governmental Activities Internal Service Funds CASH FLOWS FROM OPERATING ACTIVITIES Cash received from user charges $ 736,037 $ - Cash received from interfund charges for computer operations - 776,371 Cash payments to employees for services ( 496,152) - Cash payments for suppliers ( 130,961) ( 1,529,748) Cash payments for other operating expenses ( 14,093) - Net cash provided by (used for) operating activities 94,831 ( 753,377) NET INCREASE IN CASH AND CASH EQUIVALENTS 94,831 ( 753,377) CASH, BEGINNING 294,526 1,855,674 CASH, ENDING 389,357 1,102,297 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating income 90,556 ( 753,377) Effect of increases and decreases in current assets and liabilities: (Increase) decrease in accounts receivable 5,894 - Increase (decrease) in accounts payable ( 419) - Increase (decrease) in unearned revenues ( 1,200) - Net cash provided by (used for) operating activities $ 94,831 $( 753,377) The accompanying notes are an integral part of this financial statement. 21

31 MIDWAY INDEPENDENT SCHOOL DISTRICT EXHIBIT E-1 STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS AUGUST 31, 2017 Private Purpose Trusts Agency Funds ASSETS Cash and cash equivalents $ 58,583 $ 102,189 Total assets 58, ,189 LIABILITIES Due to student groups - 99,720 Accounts payable - 2,469 Total liabilities - $ 102,189 NET POSITION Unrestricted net position 58,583 Total net position $ 58,583 The accompanying notes are an integral part of this financial statement. 22

32 MIDWAY INDEPENDENT SCHOOL DISTRICT EXHIBIT E-2 STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS FOR THE YEAR ENDED AUGUST 31, 2017 Private Purpose Trusts ADDITIONS Local and intermediate sources $ 6,394 Total additions 6,394 DEDUCTIONS Other operating costs 14,197 Total deductions 14,197 CHANGE IN NET POSITION ( 7,803) NET POSITION, BEGINNING 66,386 NET POSITION, ENDING $ 58,583 The accompanying notes are an integral part of this financial statement. 23

33 MIDWAY INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS AUGUST 31, 2017 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Midway Independent School District (the District ) is a public educational agency operating under the applicable laws and regulations of the State of Texas. It is governed by a seven-member Board of Trustees (the Board ) elected by registered voters of the District. The District prepares its basic financial statements in conformity with generally accepted accounting principles and it complies with the requirements of the appropriate version of Texas Education Agency s Financial Accountability System Resource Guide (the Resource Guide ) and the requirements of contracts and grants of agencies from which it receives funds. A. Reporting Entity The Board of Trustees (the Board ) is elected by the public and it has the authority to make decisions, appoint administrators and managers, and significantly influence operations. It also has the primary accountability for fiscal matters. Therefore, the District is a financial reporting entity as defined by the Governmental Accounting Standards Board. There are no component units included within the reporting entity. B. Government-wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the District. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes, state foundation funds, grants and other intergovernmental revenue, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenue. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenue includes 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services or privileges provided by a given function or segment, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenue are reported instead as general revenue. The fund financial statements provide reports on the financial condition and results of operations for three fund categories - governmental, proprietary, and fiduciary. Since the resources in the fiduciary funds cannot be used for District operations, they are not included in the government-wide statements. The District considers some governmental and enterprise funds major and reports their financial condition and results of operations in a separate column. 24

34 Proprietary funds distinguish operating revenue and expenses from nonoperating items. Operating revenue and expenses result from providing services and producing and delivering goods in connection with a proprietary fund s principal ongoing operations. All other revenue and expenses are nonoperating. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenue is recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenue in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements use the current financial resources measurement focus and the modified accrual basis of accounting. With this measurement focus, only current assets, current liabilities and fund balances are included on the balance sheet. Operating statements of these funds present net increases and decreases in current assets (i.e., revenue and other financing sources and expenditures and other financing uses). The modified accrual basis of accounting recognizes revenue in the accounting period in which it becomes both measurable and available, and it recognizes expenditures in the accounting period in which the fund liability is incurred, if measurable, except for unmatured interest and principal on long-term debt, which is recognized when due. The expenditures related to certain compensated absences and claims and judgments are recognized when the obligations are expected to be liquidated with expendable available financial resources. The District considers all revenue available if it is collectible within 60 days after year-end. Revenue from local sources consists primarily of property taxes. Property tax revenue and revenue received from the state are recognized under the susceptible-to-accrual concept. Miscellaneous revenue is recorded as revenue when received in cash because it is generally not measurable until actually received. Investment earnings are recorded as earned, since they are both measurable and available. Grant funds are considered to be earned to the extent of expenditures made under the provisions of the grant. Accordingly, when such funds are received, they are recorded as unearned revenue until related and authorized expenditures have been made. If balances have not been expended by the end of the project period, grantors sometimes require the District to refund all or part of the unused amount. The Proprietary Fund Types are accounted for on a flow of economic resources measurement focus and utilize the accrual basis of accounting. This basis of accounting recognizes revenue in the accounting period in which it is earned and becomes measurable, and expenses in the accounting period in which they are incurred and become measurable. The District applies all GASB pronouncements, as well as the Financial Accounting Standards Board pronouncements issued on or before November 30, 1989, unless these pronouncements conflict or contradict GASB pronouncements. With this measurement focus, all assets and all liabilities associated with the operation of these funds are included on the Statement of Net Position. The fund equity is segregated into three categories: net investment in capital assets, restricted net position, and unrestricted net position. 25

35 Fiduciary funds are used to account for resources held for the benefit of parties outside the District. This District s private-purpose trust fund s activities are reported in a separate statement of fiduciary net position and a statement of changes in fiduciary net position. The District uses an agency fund to account for assets held for student groups. This fund is custodial in nature and does not involve measurement of results of operations. Accordingly, it presents only a statement of fiduciary net position and does not present a statement of changes in fiduciary net position. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the District s own programs. The private-purpose trust fund is presented on an economic resources measurement focus and the accrual basis of accounting, similar to the government-wide financial statements. The agency fund has no measurement focus but utilizes the accrual basis of accounting for reporting its assets and liabilities. The District reports the following major governmental funds: General Fund The General Fund is the government s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. Debt Service Fund The Debt Service Fund accounts for the accumulation of resources that are restricted, committed, or assigned for the payment of principal and interest on long-term general obligations of governmental funds. Additionally, the District reports the following fund types: Governmental Funds: Special Revenue Funds The District accounts for resources restricted to, or designated for, specific purposes by the District or a grantor in a Special Revenue Fund. Most federal and some state financial assistance is accounted for in a Special Revenue Fund. Proprietary Funds: Enterprise Funds The District s activities for which outside users are charged a fee roughly equal to the cost of providing the goods or services of those activities are accounted for in an Enterprise Fund. The District s nonmajor Enterprise Funds are the Midway Employee Pre-K Fund and the Panther Kids Fund. Internal Service Funds The District accounts for information technology services provided to other departments on a cost reimbursement basis. Fiduciary Funds: Private Purpose Trust Funds The District accounts for donations for which the donor has stipulated that the principal be expended for a specific purpose. The District s Private Purpose Trust Fund is the Scholarship Fund. 26