PANHANDLE INDEPENDENT SCHOOL DISTRICT ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED AUGUST 31, 2013

Transcription

1 PANHANDLE INDEPENDENT SCHOOL DISTRICT ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED AUGUST 31, 2013

2 PANHANDLE INDEPENDENT SCHOOL DISTRICT ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED AUGUST 31, 2013 TABLE OF CONTENTS Exhibit Page CERTIFICATE OF BOARD 1 Independent Auditors' Report 23 Management's Discussion and Analysis 410 Basic Financial Statements Government Wide Statements: A1 Statement of Net Position 11 B1 Statement of Activities 12 Governmental Fund Financial Statements: C1 Balance Sheet 1314 C2 Reconciliation for C1 15 C3 Statement of Revenues, Expenditures, and Changes in Fund Balance 1617 C4 Reconciliation for C3 18 E1 Statement of Fiduciary Net Position 19 E2 Statement of Changes in Fiduciary Fund Net Position 20 Notes to the Financial Statements 2135 Required Supplementary Information G1 Budgetary Comparison Schedule General Fund 36 Combining Schedules Nonmajor Governmental Funds: H1 Combining Balance Sheet 3738 H2 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 3940 Required TEA Schedules J1 Schedule of Delinquent Taxes 4142 J2 Schedule of Expenditures for Computation of Indirect Cost 43 J4 Budgetary Comparison Schedule Child Nutrition Fund 44 J5 Budgetary Comparison Schedule Debt Service Fund 45 Reports on Internal Controls, Compliance and Federal Awards Section 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 4647 Report on Compliance for Each Major Federal Program and on Internal Control Over Compliance Required by OMB Circular A Schedule of Findings and Questioned Costs 50 Summary Schedule of Prior Findings and Questioned Costs 51 Corrective Action Plan 52 K1 Schedule of Expenditures of Federal Awards 5354 Notes on Accounting Policies for Federal Awards 55

3 CERTIFICATE OF BOARD Panhandle Independent School District Carson Name of School District County Co.Dist. Number We, the undersigned, certify that the attached annual financial reports of the abovenamed school district were reviewed and (check one) approved disapproved for the year ended August 31, 2013 at a meeting of the Board of Trustees of such school district on the 11th day of December 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

4 Standard Report on Financial Statements Issued in Accordance with Government Auditing Standards or in a Single Audit INDEPENDENT AUDITOR S REPORT To the Board of Trustees & Superintendent Panhandle Independent School District Panhandle, Texas Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the businesstype activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Panhandle Independent School District (the District) as of and for the year ended August 31, 2013, and the related notes to the financial statements, which collectively comprise the District s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 2

5 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 businesstype activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the District, as of August 31, 2013, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis and budgetary comparison information on pages 410 and 36 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District s basic financial statements. The introductory section, combining and individual nonmajor fund financial statements, and statistical section, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A133, Audits of States, Local Governments, and NonProfit Organizations, and is also not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements 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 and individual nonmajor fund financial statements and the schedule of expenditures of federal awards are fairly stated in all material respects in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 5, 2013, on our consideration of the District s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is 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 District s internal control over financial reporting and compliance. Cornell & Company, P.C. Amarillo, Texas December 5,

6 MANAGEMENT S DISCUSSION AND ANALYSIS This section of Panhandle Independent School District s annual financial report presents our discussion and analysis of the District s financial performance during the fiscal year ended August 31, Please read it in conjunction with the District s financial statements, which follow this section. FINANCIAL HIGHLIGHTS The District s total combined net position was $12,824,041 at August 31, During the year, the District s expenses were $649,676 less than the $10,143,752 generated in taxes and other revenues for governmental activities. The total cost of the District s programs was $228,877 less than last year. One new program was added this year and one program was deleted this year. The general fund reported a fund balance this year of $3,250,399. The District had longterm debt at August 31, 2013 of $22,806,069. OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists of three parts management s discussion and analysis (this section), the basic financial statements, and required supplementary information. The basic financial statements include two kinds of statements that present different views of the District: The first two statements are governmentwide financial statements that provide both longterm and shortterm information about the District s overall financial status. The remaining statements are fund financial statements that focus on individual parts of the government, reporting the District s operations in more detail than the governmentwide statements. The governmental funds statements tell how general government services were financed in the short term as well as what remains for future spending. Fiduciary fund statements provide information about the financial relationships in which the District acts solely as a trustee or agent for the benefit of others, to whom the resources in question belong. Figure A1. Required Components of the District s Annual Financial Report 4

7 The financial statements also include notes that explain some of the information in the financial statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the information in the financial statements. Figure A1 shows how the required parts of this annual report are arranged and related to one another. Figure A2 summarizes the major features of the District s financial statements, including the portion of the District government they cover and the types of information they contain. The remainder of this overview section of management s discussion and analysis explains the structure and contents of each of the statements. Governmentwide Statements The governmentwide statements report information about the District as a whole using accounting methods similar to those used by privatesector companies. The statement of net position includes all of the government s assets and liabilities. All of the current year s revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid. The two governmentwide statements report the District s net position and how they have changed. Net position the difference between the District s assets and liabilities are one way to measure the District s financial health or position. Type of Statements Governmentwide Governmental Funds Fund Statements Proprietary Funds Fiduciary Funds Entire Agency s government The activities of the district Activities the district that are not proprietary or operates similar to private fiduciary businesses: self insurance Scope Figure A2. Major Features of the District's Governmentwide and Fund Financial Statements Required financial statements Accounting basis and measurement focus Type of asset/liability information Type of inflow/outflow information (except fiduciary funds) and the Agency's component units Instances in which the district is the trustee or agent for someone else's resources Statement of net assets Balance sheet Statement of net assets Statement of fiduciary net assets Statement of activities Statement of revenues, Statement of revenues, Statement of changes expenditures & changes expenses and changes in in fiduciary net assets in fund balances fund net assets Accrual accounting and economic resources focus All assets and liabilities, both financial and capital, shortterm and longterm All revenues and expenses during year, regardless of when cash is received or paid Modified accrual accounting and current financial resources focus Only assets expected to be used up and liabilities that come due during the year or soon thereafter; no capital assets included Revenues for which cash is received during or soon after the end of the year; expenditures when goods or services have been received and payment is due during the year or soon thereafter Statement of cash flows Accrual accounting and economic resources focus All assets and liabilities, both financial and capital, and shortterm and longterm All revenues and expenses during year, regardless of when cash is received or paid Accrual accounting and economic resources focus All assets and liabilities, both shortterm and longterm; the Agency's funds do not currently contain capital assets, although they can All revenues and expenses during year, regardless of when cash is received or paid Over time, increases or decreases in the District s net position are an indicator of whether its financial health is improving or deteriorating, respectively. To assess the overall health of the District, you need to consider additional non financial factors such as changes in the District s tax base. The governmentwide financial statements of the District include the Governmental activities. Most of the District s basic services are included here, such as instruction, extracurricular activities, curriculum and staff development, health services, and general administration. Property taxes and grants finance most of these activities. 5

8 Fund Financial Statements The fund financial statements provide more detailed information about the District s most significant funds not the District as a whole. Funds are accounting devices that the District uses to keep track of specific sources of funding and spending for particular purposes. Some funds are required by State law. The Board of Trustees establishes other funds to control and manage money for particular purposes or to show that it is properly using certain taxes and grants. The District has two kinds of funds: Governmental funds Most of the District s basic services are included in governmental funds, which focus on (1) how cash and other financial assets that can readily be converted to cash flow in and out and (2) the balances left at yearend that are available for spending. Consequently, the governmental fund statements provide a detailed shortterm view that helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the District s programs. Because this information does not encompass the additional longterm focus of the governmentwide statements, we provide additional information at the bottom of the governmental funds statement, or on the subsequent page, that explain the relationship (or differences) between them. Fiduciary funds The District is the trustee, or fiduciary, for certain funds. It is also responsible for other assets that because of a trust arrangement can be used only for the trust beneficiaries. The District is responsible for ensuring that the assets reported in these funds are used for their intended purposes. All of the District s fiduciary activities are reported in a separate statement of fiduciary net position and a statement of changes in fiduciary net position. We exclude these activities from the District s governmentwide financial statements because the District cannot use these assets to finance its operations. GOVERNMENTWIDE FINANCIAL ANALYSIS Since the District has implemented GASB Statement #34, two year comparisons are presented. This two year comparison presents both current and prior year data and discusses significant changes in the accounts. Our analysis focuses on the net position (Table A1) and changes in net position (Table A3) of the District s governmental activities. Net position Net position of the District s governmental activities increased from $12,311,014 to $12,824,041(See Table A1). The $3,303,973 of unrestricted net position represents resources available to fund the programs of the District in future years. Changes in net position The increase of $649,676 in governmental net position was due to the increase in property taxes and the decrease in expenditures such as contracted instructional services, student services and food service. 6

9 Table A1 The District's Net Position Governmental Activities Change Current and Other Assets $ 5,317,823 $ 4,650,214 $ 667,609 Capital and NonCurrent Assets 31,168,318 31,820,210 (651,892) Total Assets 36,486,141 36,470,424 15,717 Current Liabilities 836, ,798 9,233 Long Term Liabilities 22,826,069 23,332,612 (506,543) Total Liabilities 23,662,100 24,159,410 (497,310) Net Position $ 12,824,041 $ 12,311,014 $ 513,027 Invested in Capital Assets net of related debt $ 7,837,249 $ 7,983,864 $ (146,615) Restricted 1,682,819 1,111, ,693 Unrestricted 3,303,973 3,216,024 87,949 Total Net Position $ 12,824,041 $ 12,311,014 $ 513,027 The District s total revenues were $10,413,752. A significant portion, sixtyfour percent, of the District s revenue comes from taxes (See Table A2.) Twentyeight percent comes from private, federal and state aidformula grants while two percent relates to charges for services. Table A2 District Sources of Revenue for Fiscal Year 2013 Property Taxes 64% State AidFormula 20% Operating Grants 8% Charges for Services 2% Investment Earnings 0% Other 6% The total cost of all programs and services was $9,494,076; sixtyeight percent of these costs are for instructional and student services. Governmental Activities Property tax rates remained the same this year. Property tax values increased and tax revenues increased to $6,518,051 from $6,178,022 the prior year. 7

10 Table A3 Changes in the District's Net Position Governmental Activities Change Revenues Charges for Services $ 183,538 $ 202,684 $ (19,146) Operating Grants and Contributions 833, ,584 (29,801) Property Taxes 6,518,051 6,178, ,029 State aid formula 1,993,704 2,613,805 (620,101) Investment earnings 15,307 23,659 (8,352) Other 599, ,413 72,956 Total Revenues 10,143,752 10,408,167 (264,415) Expenses Instruction and instructional related 4,587,756 4,566,236 21,520 Instructional leadership/school administration 481, ,589 20,036 Guidance, social work, health, transportation 407, ,698 (73,526) Food services 368, ,038 (17,256) Extracurricular activities 570, ,122 4,636 General Administration 416, ,196 16,539 Plant maintenance and security 916, ,559 53,340 Data processing services 84,123 71,072 13,051 Debt service 1,170,065 1,194,830 (24,765) Contracted Instructional Services 509,452 (509,452) Pmts to fiscal agent/member districts shared service 123, ,900 8,242 Payments to Tax Increment Fund 251, ,221 Other Intergovernmental Charges 115, ,261 7,537 Total Expenses 9,494,076 9,722,953 (228,877) Increase / (decrease) in Net Position 649, ,214 (35,538) Beginning Net Position 12,311,014 11,625, ,214 Prior Period Adjustment (136,649) (136,649) Ending Net Position $ 12,824,041 $ 12,311,014 $ 513,027 Table A4 presents the cost of each of the District s largest functions as well as each function s net cost (total cost less fees generated by the activities and intergovernmental aid). The net cost reflects what state revenues as well as local tax dollars funded. The cost of all governmental activities this year was $9,494,076. However, the amount that our taxpayers paid for these activities through property taxes was only $6,518,051. Some of the cost, $185,538 was paid by those who directly benefited from the programs. By grants and contributions of $833,783 or, By state aid of $1,993,704. 8

11 Table A4 Net Cost of Selected District Functions Total Cost of Services Net Cost of Services Change Change Instruction $ 4,265,562 $ 4,240,172 $ 25,390 $ 3,785,012 $ 3,623,369 $ 161,643 School Leadership 445, ,634 19, , ,727 19,968 Plant Maintenance & Operations 884, ,477 51, , ,920 (65,590) Debt ServiceInt & Issuance Charges 1,170,065 1,194,830 (24,765) 1,170,065 1,194,830 (24,765) FINANCIAL ANALYSIS OF THE DISTRICT S FUNDS As the District completed the year, its governmental funds (as presented in the balance sheet of Exhibit C 1 of the financial statements) reported a combined fund balance of $4,933,218, which is $625,671 more than last year s total of $4,307,547. This increase was due to an increase in taxes collected for the Debt Service Fund. General Fund Budgetary Highlights Over the course of the year, the Board of Trustees revised the District s budget several times. These amendments involved moving funds from functions that did not need all the resources originally appropriated to functions with resource needs. The significant amendments were to budget for Chapter 313 Wind Farm payment of $251,222 and appraisal costs for taxes of $115,798. These items were not originally budgeted for. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets At the end of 2013, the District had invested $38,081,125 in a broad range of capital assets, including land, equipment, buildings, and vehicles. (See Table A5.) This amount represents a net increase (including additions and deductions) of $244,690 or one percent over last year. Table A5 District's Capital Assets Governmental Activities Change Land $ 76,476 $ 76,476 $ Buildings and improvements 36,129,453 36,005, ,616 Vehicles 1,147,453 1,075,924 71,529 Equipment 727, ,198 49,545 Totals at historical cost 38,081,125 37,836, ,690 Total accumulated depreciation 6,912,807 6,152, ,933 Net capital assets $ 31,168,318 $ 31,683,561 $ (515,243) The District s fiscal year 2014 capital budget projects spending $240,000 for vehicles and capital improvements. 9

12 LongTerm Debt At yearend, the District has outstanding bonds of $23,260,000 and unamortized premium on bonds of $71,069. The current portion of longterm debt is bonds $525,000 and accrued interest payable of $50,492 for a total of $575,492. The District s taxpayers approved Unlimited Tax School Building Bonds on May 12, The Bonds carry a Standard and Poor s rating of AAA. More detailed information about this District s longterm debt is presented in Note III; G, H and Q to the financial statements. ECONOMIC FACTORS AND NEXT YEAR S BUDGETS AND RATES Appraised value used for the 2014 budget preparation will increase $138,156,880, or fifteen percent from General operating fund spending per student increases in the 2014 budget from $13,236 to $14,250. This is a one percent increase. The district s 2014 refined average daily attendance is expected to remain the same. These indicators were taken into account when adopting the general fund budget for Amounts available for appropriation in the general fund budget are $7,230,000, an increase of one percent over the final 2013 revenues of $7,182,006. Property taxes will increase due to increasing values. State revenue will remain the same. Expenditures budgeted to be $7,035,000, a decrease of two percent over the final 2013 expenses. The District has added no major new programs or initiatives to the 2014 budget. If these estimates are realized, the District s budgetary general fund balance is expected to increase by $200,000 by the close of CONTACTING THE DISTRICT S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the District s finances and to demonstrate the District s accountability for the money it receives. If you have questions about this report or need additional financial information, contact the District s Business Office, P.O. Box 1030, Panhandle, Texas

13 BASIC FINANCIAL STATEMENTS

14 PANHANDLE INDEPENDENT SCHOOL DISTRICT STATEMENT OF NET POSITION AUGUST 31, 2013 EXHIBIT A1 Data Control Codes Primary Government Governmental Activities ASSETS 1110 Cash and Cash Equivalents $ 1120 Current Investments 1220 Property Taxes Receivable (Delinquent) 1230 Allowance for Uncollectible Taxes 1240 Due from Other Governments 1250 Accrued Interest Capital Assets: 1510 Land 1520 Buildings, Net 1530 Furniture and Equipment, Net 251,195 3,625, ,349 (43,283) 1,336, ,476 30,460, , Total Assets 36,486,141 LIABILITIES 2110 Accounts Payable 2150 Payroll Deductions & Withholdings 2160 Accrued Wages Payable 2200 Accrued Expenses Noncurrent Liabilities 2501 Due Within One Year 2502 Due in More Than One Year 12, ,368 5, ,492 22,806, Total Liabilities 23,662,100 NET POSITION 3200 Net Investment in Capital Assets 3850 Restricted for Debt Service 3900 Unrestricted 7,837,249 1,682,819 3,303, Total Net Position $ 12,824,041 The notes to the financial statements are an integral part of this statement. 11

15 Data Control Codes Primary Government: PANHANDLE INDEPENDENT SCHOOL DISTRICT STATEMENT OF ACTIVITIES FOR THE YEAR ENDED AUGUST 31, 2013 Program Revenues EXHIBIT B1 Net (Expense) Revenue and Changes in Net Position Expenses Charges for Services Operating Grants and Contributions Primary Gov. Governmental Activities GOVERNMENTAL ACTIVITIES: 11 Instruction $ 4,265,562 $ $ 480,550 $ (3,785,012) 12 Instructional Resources and Media Services 260,791 8,785 (252,006) 13 Curriculum and Staff Development 61,403 11,405 (49,998) 21 Instructional Leadership 36,460 12,401 (24,059) 23 School Leadership 445,165 20,470 (424,695) 31 Guidance, Counseling and Evaluation Services 147,392 8,245 (139,147) 33 Health Services 53,537 3,018 (50,519) 34 Student (Pupil) Transportation 206,243 4,537 (201,706) 35 Food Services 368, , ,848 (112,963) 36 Extracurricular Activities 570,758 36,998 7,519 (526,241) 41 General Administration 416,735 15,755 (400,980) 51 Facilities Maintenance and Operations 884,227 2, ,328 (737,330) 52 Security and Monitoring Services 32,672 (32,672) 53 Data Processing Services 84,123 4,922 (79,201) 72 Debt Service Interest on Long Term Debt 1,171,108 (1,171,108) 73 Debt Service Bond Issuance Cost and Fees (1,043) 1, Payments related to Shared Services Arrangements 123,142 (123,142) 97 Payments to Tax Increment Fund 251,221 (251,221) 99 Other Intergovernmental Charges 115,798 (115,798) [TP] TOTAL PRIMARY GOVERNMENT: $ 9,494,076 $ 183,538 $ 833,783 (8,476,755) Data Control Codes MT DT GC IE MI TR General Revenues: Taxes: Property Taxes, Levied for General Purposes Property Taxes, Levied for Debt Service Grants and Contributions not Restricted Investment Earnings Miscellaneous Local and Intermediate Revenue Total General Revenues 4,306,661 2,211,390 1,993,704 15, ,369 9,126,431 CN Change in Net Position 649,676 NB PA NE Net Position Beginning Prior Period Adjustment Net PositionEnding $ 12,311,014 (136,649) 12,824,041 The notes to the financial statements are an integral part of this statement. 12

16 Data Control Codes PANHANDLE INDEPENDENT SCHOOL DISTRICT BALANCE SHEET GOVERNMENTAL FUNDS AUGUST 31, General Fund Major 2 Texas Cool Schools Grant 50 Debt Service Fund ASSETS 1110 Cash and Cash Equivalents $ 172,126 $ $ 79, Investments Current 2,022,285 1,603, Property Taxes Delinquent 110,122 37, Allowance for Uncollectible Taxes (Credit) (37,250) (6,033) 1240 Receivables from Other Governments 1,181, , Accrued Interest Due from Other Funds 142, Total Assets $ 3,591,604 $ 123,616 $ 1,714,013 LIABILITIES 2110 Accounts Payable $ 12,863 $ $ 2150 Payroll Deductions and Withholdings Payable Accrued Wages Payable 248, Due to Other Funds 1, , Accrued Expenditures 4, Total Liabilities 268, ,616 DEFERRED INFLOWS OF RESOURCES 2601 Unavailable Revenue Property Taxes 72,872 31, Total Deferred Inflows of Resources 72,872 31,194 FUND BALANCES Restricted Fund Balance: 3480 Retirement of LongTerm Debt Committed Fund Balance: 3510 Construction 3530 Capital Expenditures for Equipment 3600 Unassigned Fund Balance 1,682,819 1,596, ,000 1,553, Total Fund Balances 3,250,399 1,682, Total Liabilities, Deferred Inflows & Fund Balances $ 3,591,604 $ 123,616 $ 1,714,013 The notes to the financial statements are an integral part of this statement. 13

17 EXHIBIT C1 Other Funds Total Governmental Funds $ $ 251,195 3,625, ,349 (43,283) 30,614 1,336, , ,872 $ 32,462 $ 5,461,695 $ 49 $ 12, , ,368 18, , ,530 32, , , ,066 1,682,819 1,596, ,000 1,553,978 4,933,218 $ 32,462 $ 5,461,695 14

18 PANHANDLE INDEPENDENT SCHOOL DISTRICT RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION AUGUST 31, 2013 EXHIBIT C2 Total Fund Balances Governmental Funds 1 Capital assets used in governmental activities are not financial resources and therefore are not reported in governmental funds. At the beginning of the year, the cost of these assets was $37,836,435 and the accumulated depreciation was $(6,152,874). In addition, longterm liabilities, including bonds payable $(23,765,000), are not due and payable in the current period, and, therefore are not reported as liabilities in the funds. The net effect of including the beginning balances for capital assets (net of depreciation) and longterm debt in the governmental activities is to increase (decrease) net position. 2 Current year capital outlays $312,754 and longterm debt principal payments $505,000 are expenditures in the fund financial statements,but they should be shown as increases in capital assets and reductions in longterm debt in the governmentwide financial statements. The net effect of including the 2013 capital outlays and debt principal payments is to increase (decrease) net position. 3 The 2013 depreciation expense increases accumulated depreciation. The net effect of the current year's depreciation is to decrease net position. $ 4,933,218 7,918, ,754 (822,692) 4 Various other reclassifications and eliminations are necessary to convert from the modified accrual basis of accounting to accrual basis of accounting. These include recognizing tax deferred revenue as revenue $104,066, eliminating interfund transactions, reclassifying the proceeds of bond sales as an increase in bonds payable, recognizing the basis of assets disposed of during the year $(5,305), and recognizing the liabilities associated with maturing longterm debt and interest $(50,492). The net effect of these reclassifications and recognitions is to increase (decrease) net position. 5 Record the Premium $(79,441) on Bonds and amorize them over the life of the Bonds. The accumulated amortized amounts at year end for the Premium was $8,372. The net effect of these reclassifications and recognitions is to increase (decrease) net position. 48,269 (71,069) 19 Net Assets of Governmental Activities $ 12,824,041 The notes to the financial statements are an integral part of this statement. 15

19 Data Control Codes PANHANDLE INDEPENDENT SCHOOL DISTRICT STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS FOR THE YEAR ENDED AUGUST 31, General Fund Major 2 Texas Cool Schools Grant 50 Debt Service Fund REVENUES: Total Local and Intermediate Sources $ 4,920,522 $ $ 2,216,054 State Program Revenues 2,140,789 Federal Program Revenues 109, ,616 33, Total Revenues 7,170, ,616 2,249,234 EXPENDITURES: Current: 0011 Instruction 0012 Instructional Resources and Media Services 0013 Curriculum and Instructional Staff Development 0021 Instructional Leadership 0023 School Leadership 0031 Guidance, Counseling and Evaluation Services 0033 Health Services 0034 Student (Pupil) Transportation 0035 Food Services 0036 Extracurricular Activities 0041 General Administration 0051 Facilities Maintenance and Operations 0052 Security and Monitoring Services 0053 Data Processing Services Debt Service: 0071 Principal on Long Term Debt 0072 Interest on Long Term Debt 0073 Bond Issuance Cost and Fees Intergovernmental: 0093 Payments to Fiscal Agent/Member Districts of SSA 0097 Payments to Tax Increment Fund 0099 Other Intergovernmental Charges 3,662, ,720 41,520 25, , ,432 52, , , , , ,616 28,768 84, ,000 1,172, , , , Total Expenditures 7,078, ,616 1,677, Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES): 7912 Sale of Real and Personal Property 7915 Transfers In 7949 Other Resources 8911 Transfers Out (Use) 8949 Other (Uses) 7080 Total Other Financing Sources (Uses) (37,804) 91, ,693 9, ,000 (47,054) (215,000) 1200 Net Change in Fund Balances 53, , Fund Balance September 1 (Beginning) 3,196,421 1,111, Fund Balance August 31 (Ending) $ 3,250,399 $ $ 1,682,819 The notes to the financial statements are an integral part of this statement. 16

20 EXHIBIT C3 Other Funds Total Governmental Funds $ 143,972 $ 7,280,548 67,369 2,208, , , ,329 10,108, ,313 11,405 11, ,573 3,956, ,720 52,925 36, , ,432 52, , , , ,459 1,002,813 28,768 84, ,000 1,172, , , , ,562 9,491,614 (47,054) 616,421 9,250 47,054 47, ,000 (47,054) (215,000) 47,054 9, ,671 4,307,547 $ $ 4,933,218 17

21 EXHIBIT C4 PANHANDLE INDEPENDENT SCHOOL DISTRICT RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED AUGUST 31, 2013 Total Net Change in Fund Balances Governmental Funds Current year capital outlays $312,754 and longterm debt principal payments $505,000 are expenditures in the fund financial statements, but they should be shown as increases in capital assets and reductions in longterm debt in the governmentwide financial statements. The net effect of removing the 2013 capital outlays and debt principal payments is to increase (decrease) net position. Depreciation is not recognized as an expense in governmental funds since it does not require the use of current financial resources. The net effect of the current year's depreciation is to decrease net position. $ 625, ,754 (822,692) Various other reclassifications and eliminations are necessary to convert from the modified accrual basis of accounting to accrual basis of accounting. These include recognizing current tax deferred revenue as revenue $65,040, adjusting current year revenue to show the revenue earned from the current year's tax levy $(33,268), eliminating interfund transactions, reclassifying the proceeds of bond sales, recognizing the basis of assets disposed of during the year $(5,305), and recognizing the liabilities associated with maturing longterm debt and interest $933. The net effect of these reclassifications and recognitions is to increase (decrease) net position. The 2013 increase of amortization of Premiums $1,543 on Bonds. The net effect of the current year's amortization is to decrease net position. 27,400 1,543 Change in Net Assets of Governmental Activities $ 649,676 The notes to the financial statements are an integral part of this statement. 18

22 PANHANDLE INDEPENDENT SCHOOL DISTRICT STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS AUGUST 31, 2013 EXHIBIT E1 ASSETS Private Purpose Trust Fund Cash and Cash Equivalents $ 41,799 $ Agency Fund 54,348 Total Assets 41,799 $ 54,348 LIABILITIES Due to Student Groups $ Total Liabilities 54,348 $ 54,348 NET POSITION Restricted for Scholarships 41,799 Total Net Position $ 41,799 The notes to the financial statements are an integral part of this statement. 19

23 PANHANDLE INDEPENDENT SCHOOL DISTRICT STATEMENT OF CHANGES IN FIDUCIARY FUND NET POSITION FIDUCIARY FUNDS FOR THE YEAR ENDED AUGUST 31, 2013 EXHIBIT E2 Private Purpose Trust Fund ADDITIONS: Local and Intermediate Sources $ 4,649 Total Additions 4,649 DEDUCTIONS: Other Operating Costs 5,230 Total Deductions 5,230 Change in Net Position (581) Total Net Position September 1 (Beginning) 42,380 Total Net Position August 31 (Ending) $ 41,799 The notes to the financial statements are an integral part of this statement. 20

24 PANHANDLE INDEPENDENT SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED AUGUST 31, 2013 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Panhandle 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 generallyaccepted accounting principles promulgated by the Governmental Accounting Standards Board and other authoritative sources identified in Statement on Auditing Standards No. 69 of the American Institute of Certified Public Accountants; 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 ("GASB") in its Statement No. 14, "The Financial Reporting Entity." There are no component units included within the reporting entity. B. GOVERNMENTWIDE AND FUND FINANCIAL STATEMENTS The Statement of Net Position and the Statement of Activities are governmentwide financial statements. They report information on all of the Panhandle Independent School District nonfiduciary activities with most of the interfund activities removed. Governmental activities include programs supported primarily by taxes, State foundation funds, grants and other intergovernmental revenues. The Statement of Activities demonstrates how other people or entities that participate in programs the District operates have shared in the payment of the direct costs. The "charges for services" column includes payments made by parties that purchase, use, or directly benefit from goods or services provided by a given function or segment of the District. Examples include tuition paid by students not residing in the district, school lunch charges, etc. The "grants and contributions" column includes amounts paid by organizations outside the District to help meet the operational or capital requirements of a given function. Examples include grants under the Elementary and Secondary Education Act. If a revenue is not a program revenue, it is a general revenue used to support all of the District's functions. Taxes are always general revenues. Interfund activities between governmental funds appear as due to/due froms on the Governmental Fund Balance Sheet and as other resources and other uses on the governmental fund Statement of Revenues, Expenditures and Changes in Fund Balance. All interfund transactions between governmental funds are eliminated on the governmentwide statements. Interfund activities between governmental funds and fiduciary funds remain as due to/due froms on the governmentwide Statement of Activities. The fund financial statements provide reports on the financial condition and results of operations for two fund categories governmental and fiduciary. Since the resources in the fiduciary funds cannot be used for District operations, they are not included in the governmentwide statements. The District considers some governmental funds major and reports their financial condition and results of operations in a separate column. C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION The governmentwide financial statements use the economic resources measurement focus and the accrual basis of accounting, as do the fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the related cash flows. Property taxes are recognized as revenues 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. 21

25 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., revenues and other financing sources and expenditures and other financing uses). The modified accrual basis of accounting recognizes revenues in the accounting period in which they become 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 longterm 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 revenues available if they are collectible within 60 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, that is, when they are both measurable and available. The District considers them "available" if they will be collected within 60 days of the end of the fiscal year. 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. 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 deferred revenues 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 Fiduciary Funds are accounted for on a flow of economic resources measurement focus and utilize the accrual basis of accounting. This basis of accounting recognizes revenues in the accounting period in which they are earned and become measurable and expenses in the accounting period in which they are incurred and become measurable. 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 fund Statement of Net Position. The fund equity is segregated into invested in capital assets net of related debt, restricted net position, and unrestricted net position. D. FUND ACCOUNTING The District reports the following major governmental fund: 1. The General Fund The general fund is the District's primary operating fund. It accounts for all financial resources except those required to be accounted for in another fund. 2. Texas Cool Schools Grant This is an Energy Efficiency and Conservation Block Grant Program funded by the American Recovery and Reinvestment Act of 2009, issued through the Department of Energy. 3. Debt Service Funds The District accounts for resources accumulated and payments made for principal and interest on longterm general obligation debt of governmental funds in a debt service fund. Additionally, the District reports the following fund types: Governmental Funds: 1. 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, and sometimes unused balances must be returned to the grantor at the close of specified project periods. Fiduciary Funds: 2. Private Purpose Trust Funds The District accounts for donations for which the donor has stipulated that both the principal and the income may be used for purposes that benefit parties outside the District. The District's Private Purpose Trust Fund is the Scholarship Fund. 22

26 3. Agency Funds The District accounts for resources held for others in a custodial capacity in agency funds. The District s Agency Funds are the Student Activity Fund and the Cafeteria Sec. 125 Plan. E. OTHER ACCOUNTING POLICIES 1. For purposes of the statement of cash flows the District considers highly liquid investments to be cash equivalents if they have a maturity of three months or less when purchased. 2. The District reports inventories of supplies at weighted average cost including consumable maintenance, instructional, office, athletic, and transportation items. Supplies are recorded as expenditures when they are consumed. Inventories of food commodities are recorded at market values supplied by the Texas Department of Human Services. 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. 3. The District allows for six days of compensated absences during the year. This includes five days from state policy and one day from local policy. State unused days are accumulated for future benefit but are not paid by the District at termination or retirement. 4. Capital assets, which include land, buildings, furniture and equipment are reported in the applicable governmental activities columns in the governmentwide financial statements. Capital assets are defined by the District as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Buildings, furniture and equipment of the District is depreciated using the straight line method over the following estimated useful lives: Assets Years Buildings 40 Building Improvements 2530 Vehicles 510 Office Equipment 5 Miscellaneous Equipment When the District incurs an expense for which it may use either restricted or unrestricted assets, it uses the restricted assets first whenever they will have to be returned if they are not used. 6. Beginning with the year ended June, 30, 2011 the District implemented GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. This Statement provides more clearly defined fund balance categories to make the nature and extent of the constraints placed on a government s fund balances more transparent. The following classifications describe the relative strength of the spending constraints: Nonspendable Fund Balance Represents amounts that are not in spendable form or are legally or contractually required to be maintained intact, such as inventories. Restricted Fund Balance Represents amounts constrained to specific purposes by their providers, such as grantors, bondholders and higher levels of government, through constitutional provisions, or by enabling legislation. 23