Annual Financial Report August 31, 2018
Table of Contents Page Exhibit Certificate of Board iv v - vii viii - xv Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position 1 A-1 Statement of Activities 2 B-1 Fund Financial Statements: Balance Sheet Governmental Funds 3 C-1 Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds 4 C-2 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 5 C-3 Statement of Fiduciary Net Position Fiduciary Funds 6 E-1 Statement of Changes in Fiduciary Net Position Fiduciary Fund 7 E-2 Notes to Financial Statements 8-42 Required Supplementary Information: Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual General Fund 43 G-1 Note to Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual General Fund 44 Teacher Retirement System of Texas 45 G-2 Texas 46 G-3 Liability TRS-Care 47 G-4 s Contributions to TRS-Care 48 G-5 ii
Other Supplementary Schedules: Combining Schedule Balance Sheet Nonmajor Funds 49 H-1 Combining Schedule Revenues, Expenditures and Change in Fund Balances Nonmajor Funds 50 H-2 Schedule of Delinquent Taxes Receivable 51 J-1 Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - Child Nutrition Program Fund 52 J-2 Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual Debt Service Fund 53 J-3 Compliance, Internal Control and Federal Awards: Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 54-55 Federal Program and on Internal Control Over Compliance Required by the Uniform Guidance 56-57 Schedule of Findings and Questioned Costs 58-59 Summary Schedule of Prior Audit Findings 60 Schedule of Expenditures of Federal Awards 61 K-1 Note to Schedule of Expenditures of Federal Awards 62 iii
Certificate of Board West Independent School District McLennan County 161-916 We, the undersigned, certify that the attached annual financial and compliance reports of the above-named independent school district were reviewed and approved for the year ended August 31, 2018 at a meeting of the Board of School Trustees of such independent school district on the 12 th day of December 2018. Board Secretary Board President iv
The Board of School Trustees West Independent School District: Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of West Independent School District (the August 31, 2018, and the related notes to the financial accompanying table of contents. 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. 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 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 design audit procedures that are appropriate in the circumstances, but not for the purpose of 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. v
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, each major fund, and the aggregate remaining fund information of West Independent School District as of August 31, 2018, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. Change in Accounting Principle As discussed in Note 15, the District adopted the provisions of Governmental Accounting Accounting and Financial Reporting for Postemployment Benefits Other than Pensions effective September 1, 2017. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the ii through xv, the budgetary comparison information on pages 43 through 44, the schedules pension/ OPEB liabilities on pages 45 and 47, and the schedules of District pension / OPEB contributions on pages 46 and 48 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 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 performed for the purpose of forming opinions on the financial statements that The other supplementary schedules, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by Title 2, U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is not a required part of the basic financial statements. vi
The other supplementary information 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 or other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the other supplementary information and the schedule of expenditures of federal awards are fairly stated in all material respects in relation to the basic financial statements taken as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 29, 2018 and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in November 29, 2018 vii
presents our discussion and analysis of the District's financial performance during the fiscal year ended August 31, 2018. Please read it in conjunction with the District's financial statements, which follow this section. FINANCIAL HIGHLIGHTS The assets and deferred outflows of resources of the District exceeded liabilities and deferred inflows at the close of the most recent fiscal year by $59.2 million. Effective September 1, 2017, the District adopted GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions. The District reduced beginning net position by $8.4 million in connection with the adoption of GASB 75. As of the close of 2018 balance of $15.8 million, a decrease of $2.4 million primarily from a $2.7 million transfer out to the capital projects fund for renovations of the administration building and other capital improvement projects. At the end of 2018, unassigned fund balance for the General Fund was $3.6 million or 33% of total General Fund expenditures, excluding facilities acquisition and construction expenditures and the scheduled principal repayments of $2.9 million and $0.3 million, respectively. At the end of 2018 long-term debt outstanding (including capital leases and net pension and OPEB liabilities) was $16.3 million. On Wednesday, April 17, 2013, the West Fertilizer plant exploded and effectively destroyed the West Intermediate, Middle School and High School campuses. Through the efforts of the Board, the administration, other district personnel, volunteers, other districts throughout the state and various vendors, the students of West were able to return to classes on Monday, April 22, 2013. As a result of the destruction of the three campuses, the District received insurance proceeds of approximately $16.5 million, $4.7 million, $3.5 million and $21.7 million in 2017, 2015, 2014 and 2013, respectively. No insurance proceeds were received in 2018 or 2016. The District has completed construction to remodel its administration building and the new baseball/softball field, as more fully described in Note 10. The District has also received $2.2 million, $0.6 million, $9.7 million, $11.5 million and $2.5 million in 2018, 2017, 2016, 2015 and 2014, respectively, from the Federal OVERVIEW OF THE FINANCIAL STATEMENTS nancial statements consist of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) the notes to the financial statements. This report also includes supplementary information intended to furnish additional detail to support the basic financial statements. viii
Government-wide Financial Statements The government-wide statements are designed to provide readers with a broad overview of the -sector business. The statement of net position liabilities, and deferred outflows/inflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the District is improving or deteriorating. The statement of activities during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. Thus, revenues and expenses are reported for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes, etc.). instruction, extracurricular activities, curriculum and staff development, and general administration. Property taxes, state aid, and grants finance most of these activities. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the District are governmental funds or fiduciary funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows or spendable resources, as well as on balances of spendable resources near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long- -term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The District maintains approximately 20 individual governmental funds. Information is presented in the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, the debt service fund, and the capital projects fund, which are considered to be major funds. Data from the other governmental funds are combined into a single aggregated presentation. ix
The District adopts an annual appropriated budget for its general fund, child nutrition fund, and debt service fund. Budgetary comparison statements are included in supplemental information to demonstrate compliance with these budgets. Fiduciary funds are used to account for resources held for the benefit of parties outside the District. Fiduciary funds are not reported in the government-wide financial statements because the resources of those funds are not available to support the Distri purpose trust fund is used to report resources held in trust for scholarships. The agency fund reports resources held by the District in a custodial capacity for student groups. Notes to the Financial Statements and Other Information The notes provide additional information that is necessary to acquire a full understanding of the data provided in the government-wide and fund financial statements. In addition to the basic financial statements and accompanying notes, this report also presents required supplementary and OPEB benefits. Additional supplementary information is presented as required by the Texas Education Agency. GOVERNMENT-WIDE OVERALL FINANCIAL ANALYSIS position. In the case of the District, assets and deferred outflows exceeded liabilities and deferred inflows by $59.2 million at the close of the most recent fiscal year. West Independent School District Net Position August 31, 2018 and 2017 Governmental Activities 2018 2017 Current and other assets $ 20,764,622 21,436,936 Capital assets 60,908,292 57,781,388 Total assets 81,672,914 79,218,324 Deferred outflows of resources 913,451 1,059,797 Current liabilities 5,768,231 3,047,758 Long-term liabilities 15,316,344 12,574,238 Total liabilities 21,084,575 15,621,996 Deferred inflows of resources 2,317,326 191,901 Net position: Net investment in capital assets 51,201,123 46,042,491 Restricted 1,400,500 1,791,330 Unrestricted 6,582,841 16,630,403 Total net position $ 59,184,464 64,464,224 x
The District has a net investment in capital assets of $51.2 million at August 31, 2018, which reflects its investment in capital assets (e.g. land, buildings and improvements, and furniture and equipment), less any outstanding debt that was used to acquire those assets. The District uses these capital assets to provide educational services to its students. Accordingly, these assets are not ported net of related debt, it should be noted that the resources used to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. position ($1.4 million) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position of $6.6 million creditors. At the end of the current and prior fiscal year, the District is able to report positive balances in all reported categories of net position for the government as a whole. West Independent School District Changes in Net Position Years Ended August 31, 2018 and 2017 Governmental Activities 2018 2017 Revenues: Property taxes, general $ 4,462,061 4,189,909 Property taxes, debt service 1,064,675 1,117,441 State aid - formula grants 5,948,140 6,110,323 Grants and contributions not restricted 246,903 166,238 Program revenues: Charges for services 423,184 445,667 Operating grants and contributions 182,550 1,978,719 Capital grants and contributions 2,233,057 1,561,076 Investment earnings 307,369 130,552 Gain (loss) on disposal of capital assets (559,698) 95,110 Miscellaneous 292,626 226,581 Total revenues 14,600,867 16,021,616 Expenditures: Instruction 5,534,308 7,719,579 Instructional resources and media services 113,809 150,537 Curriculum and staff development 97,139 112,972 Instructional leadership 191,565 261,874 School leadership 616,731 969,104 Guidance, counseling, and evaluation services 185,113 279,751 Social work services - 57,981 Health services 107,925 157,051 Student transportation 363,804 461,160 Food services 833,668 851,289 xi
Changes in Net Position (Continued) Governmental Activities 2018 2017 Expenditures: (continued) Extracurricular activities 870,525 960,210 General administration 580,951 738,955 Facilities maintenance and operations 989,478 2,038,522 Security and monitoring services 68,646 73,990 Data processing services 219,315 299,752 Interest on long-term debt 341,743 391,163 Payments to members of shared services arrangement 1,188 - Payments to alternative education program 5,536 5,152 Payments to county appraisal district 74,844 68,234 Total expenditures 11,196,288 15,597,276 Extraordinary item: Net gain (loss) on destruction of campuses, and establishment and operation of temporary campuses (244,034) 15,581,113 Change in net position 3,160,545 16,005,453 Beginning net position, as previously reported 64,464,224 48,458,771 Cumulative effect of change in accounting principle (8,440,305) - Ending net position $ 59,184,464 64,464,224 Operating grants and contributions decreased by approximately $1.8 million due to the recognition of the non- GASB 75. This reduction of income was offset by an increase of $0.7 million in capital grants and contributions from FEMA. Maintenance and debt service tax rates were $1.290656 and $1.317548 per $100 valuation, respectively, in the 2018 and 2017 fiscal year. The cost of all governmental activities this year was $11.2 million, a decrease of approximately $4.4 million from the prior year. In connection with the adoption of GASB 75, the District recognized an OPEB benefit of approximately $2.0 million. Facilities maintenance and operations expenses decreased $1.0 million since this was the first full year of operations for the new High School / Middle School and a reduction of other maintenance costs due to the renovation of the administration building. For 2018, the extraordinary loss of $0.2 million results from the extraordinary noncapital expenditures to demolish the temporary campuses once the new High School / Middle School campuses was completed. For 2017, the extraordinary gain of $15.6 million results from the extraordinary noncapital expenditures to operate the temporary campuses of $0.9 million netted against insurance proceeds received of $16.5 million. xii
FINANCIAL ANALYSIS OF GOVERNMENTAL FUNDS balance goal of 15% of the budget, or two to three months of operations costs for their fund balance. The unassigned fund balance in the General Fund increased in 2018 from $2.9 million to $3.6 million. The graph below reflects the historical trend fund balance for unassigned fund balance of the general fund. $4,000,000 $3,000,000 $2,000,000 Unassigned $1,000,000 $0 13-14 14-15 15-16 16-17 17-18 A significant source of general fund revenues is property taxes. Property tax revenues increased $0.2 million due to an increase in property values of approximately $24.9 million. Additionally, federal program revenues increased approximately $1.7 million due to FEMA recoveries from the explosion. Total expenditures for the general fund were $14.1 million, which was a decrease of $6.9 million due to prior year capital outlay for construction of the new High School and Middle School campuses that opened at the beginning of the 2016-2017 school year. Capital expenditures in 2018 included the purchase of two buses, renovation of the administration building, and the completion of the baseball/softball fields. Finally, the general fund transferred $2.6 million to the capital projects fund, as more fully described below. As described in Note 22, the general fund recognized extraordinary expenses of $0.2 million. In the Debt Service Fund, the District has debt obligations that are paid on September 1 of each year. Collection of local taxes to pay the debt obligations does not begin until November of each year. Therefore, the District needed to end the fiscal year with enough reserves to pay those September 1 obligations for the next fiscal year, in addition to any reserves to cover possible Fund is restricted for retirement of long-term debt. Expenditures of $2.6 million were recognized in the capital projects fund for the construction of new baseball/softball fields and the new turf and track at the football field. xiii
CAPITAL ASSETS AND LONG-TERM DEBT Capital Assets At the end of 2018, the District had invested $60.9 million in a broad range of capital assets, including land, buildings and improvements, furniture and equipment, and vehicles. This is an increase from the prior year of $3.1 million, primarily from the completion of the administration building renovation and the baseball/softball fields, as previously described. The new administration building and the baseball/softball fields were completed as of September 1, 2017; thus, these capital assets were reclassified out of construction in process and placed in service on September 1, 2017. Construction in progress consists primarily of costs incurred to date for the new turf and track at the football field. West Independent School District Capital Assets (Net of Depreciation) August 31, 2018 and 2017 2018 2017 Land $ 892,145 892,145 Buildings and improvements 55,741,580 48,740,890 Furniture and equipment 2,070,129 1,963,589 Construction in progress 2,204,438 6,184,764 $ 60,908,292 57,781,388 Additional informat statements. al assets can be found in Note 10 to the financial Long-Term and Short-Term Debt by reducing the costs of any debt issued. At year-end, the District had $16.3 million in long-term debt outstanding. Effective September 1, 2017, the District implemented GASB 75, as previously discussed, and recognized an $8.5 OPEB obligation. Additionally, during 2018, the District issued a $1.5 million tax anticipation note, which is due in April 2019. West Independent School District Long-Term Debt August 31, 2018 and 2017 2018 2017 General obligation bonds $ 8,984,855 9,791,571 Capital lease obligations 666,649 690,525 Net pension liability 1,858,471 2,092,142 Net OPEB liability 4,813,421 8,497,852 Totals $ 16,323,396 21,072,090 xiv
Additional informa -term debt and short-term debt can be found in Note 11 and Note 12 to the financial statements, respectively. ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES General Fund budget is $11.8 million which represents a 3.5% increase of $0.4 million from the original 2018 General Fund budget. The increase in budgeted amounts between fiscal years is due to annual increases in salaries and related benefits. The adopted tax rate for 2019 is $1.261417, a decrease of $0.03 from 2018. REQUESTS FOR INFORMATION This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the District's finances and to demonstrate the District's accountability for the money it receives. If you have questions about this report or need additional at 801 North Reagan Street, West, Texas 76691. xv
Basic Financial Statements
Exhibit A-1 Statement of Net Position August 31, 2018 Data Control Codes Governmental Activities Assets 1110 Cash and cash equivalents $ 19,380,871 1225 Property taxes receivable, net of allowance for uncollectibles of $151,846 206,336 1240 Due from other governments 829,777 1290 Other receivables 289,286 1300 Inventories 53,354 1410 Prepaid expenses 4,998 Capital assets not depreciated: 1510 Land 892,145 1580 Construction in progress 2,204,438 Capital assets, net of accumulated depreciation: 1520 Buildings and improvements 55,741,580 1530 Furniture and equipment 2,070,129 Total assets 81,672,914 Deferred Outflows of Resources 1700 Deferred outflows of resources 913,451 Total deferred outflows of resources 913,451 Liabilities 2110 Accounts payable 2,565,596 2120 Short-term debt - tax anticipation note 1,500,000 2150 Payroll deductions and withholdings 20,253 2160 Accrued wages 584,183 2180 Due to other governments 25 2200 Accrued expenses 88,960 2300 Unearned revenue 2,162 Noncurrent liabilities: 2501 Due within one year 1,007,052 2502 Due after one year 15,316,344 Total liabilities 21,084,575 Deferred Inflows of Resources 2600 Deferred inflows of resources 2,317,326 Net Position 3200 Net investment in capital assets 51,201,123 Restricted for: 3820 Grant requirements 176,082 3850 Debt service 1,224,418 3900 Unrestricted 6,582,841 Total net position $ 59,184,464 See accompanying notes to financial statements. 1
Exhibit B-1 Statement of Activities Year Ended August 31, 2018 Net (Expense) Revenue and Changes in Program Revenues Net Position Data Charges Operating Capital Control for Grants and Grants and Governmental Codes Functions/Programs Expenses Services Contributions Contributions Activities Governmental activities: 11 Instruction $ 5,534,308 47,875 (14,360) - (5,500,793) 12 Instructional resources and media services 113,809-5,016 - (108,793) 13 Curriculum and staff development 97,139-4,612 - (92,527) 21 Instructional leadership 191,565 - (37,508) - (229,073) 23 School leadership 616,731 - (107,964) - (724,695) 31 Guidance, counseling, and evaluation services 185,113 - (41,556) - (226,669) 33 Health services 107,925 - (21,701) - (129,626) 34 Student transportation 363,804-90,417 - (273,387) 35 Food services 833,668 325,890 344,286 - (163,492) 36 Extracurricular activities 870,525 49,419 (43,720) - (864,826) 41 General administration 580,951 - (59,665) - (640,616) 51 Facilities maintenance and operations 989,478 - (98,059) 2,233,057 1,145,520 52 Security and monitoring services 68,646 - - - (68,646) 53 Data processing services 219,315-59,883 - (159,432) 72 Interest on long-term debt 341,743-102,869 - (238,874) 93 Payments to shared - services arrangement 1,188 (1,188) 95 Payments to alternative - - education program 5,536 - - - (5,536) 99 Payments to county appraisal district 74,844 - - - (74,844) Total governmental activities $ 11,196,288 423,184 182,550 2,233,057 (8,357,497) Data Control General revenues: Codes Taxes: MT Property taxes, levied for general purposes 4,462,061 DT Property taxes, levied for debt service 1,064,675 SF State aid-formula grants 5,948,140 GC Grants and contributions not restricted 246,903 IE Investment earnings 307,369 MI Miscellaneous 292,626 TG Total general revenues 12,321,774 S1 Loss on disposition of capital assets (559,698) S1 Extraordinary items (244,034) CN Change in net position 3,160,545 Net position, beginning of year, as previously reported 64,464,224 Cumulative effect of change in accounting principle (8,440,305) NB Net position, beginning of year, as restated 56,023,919 NE Net position, end of year $ 59,184,464 See accompanying notes to financial statements. 2
Exhibit C-1 Balance Sheet - Governmental Funds August 31, 2018 10 50 60 Data Debt Capital Other Total Control General Service Projects Governmental Governmental Codes Fund Fund Fund Funds Funds Assets 1110 Cash and cash equivalents $ 17,978,048 1,178,088-224,735 19,380,871 1225 Taxes receivable, net of allowance for uncollectibles of $151,846 167,132 39,204 - - 206,336 1240 Due from other governments 643,758 - - 186,019 829,777 1260 Due from other funds 820,027 7,126 1,992,714-2,819,867 1290 Other receivables 289,039 - - 247 289,286 1300 Inventories 44,668 - - 8,686 53,354 1410 Prepaid expenses 4,998 - - - 4,998 Total assets $ 19,947,670 1,224,418 1,992,714 419,687 23,584,489 Liabilities 2110 Accounts payable $ 1,099,380-1,451,343 14,873 2,565,596 2120 Short term debt - tax anticipation note 1,500,000 - - - 1,500,000 2150 Payroll deductions and withholding payable 13,722 - - 6,531 20,253 2160 Accrued wages 499,328 - - 84,855 584,183 2170 Due to other funds 2,230,519-541,371 47,977 2,819,867 2180 Due to other governments 25 - - - 25 2200 Accrued expenses 52,765 - - - 52,765 2300 Unearned revenue - - - 2,162 2,162 Total liabilities 5,395,739-1,992,714 156,398 7,544,851 Deferred Inflows of Resources 2600 Unavailable property tax revenues 167,132 39,204 - - 206,336 Fund Balances Nonspendable: 3410 Inventories 44,668 - - 8,686 53,354 3430 Prepaid expenses 4,998 - - - 4,998 Restricted for: 3450 Grant requirements - - - 167,396 167,396 3480 Retirement of long-term debt - 1,185,214 - - 1,185,214 Assigned to: 3570 Capital replacement 10,777,696 - - - 10,777,696 3590 Campus activities - - - 87,207 87,207 3600 Unassigned 3,557,437 - - - 3,557,437 Total fund balances 14,384,799 1,185,214-263,289 15,833,302 Total liabilities, deferred inflows of resources, and fund balances $ 19,947,670 1,224,418 1,992,714 419,687 Data Control Codes 1 Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds 60,908,292 2 Other long-term assets are not available to pay for current period expenditures and therefore are deferred in the funds 206,336 3 Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds (17,763,466) 19 Net position of governmental activities $ 59,184,464 See accompanying notes to financial statements. 3
Exhibit C-2 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds Year Ended August 31, 2018 10 50 60 Data Debt Capital Other Total Control General Service Projects Governmental Governmental Codes Fund Fund Fund Funds Funds Revenues: 5700 Local and intermediate sources $ 4,989,786 1,076,674 1,743 421,412 6,489,615 5800 State program revenues 6,638,782 102,869-85,694 6,827,345 5900 Federal program revenues 2,487,365 - - 1,012,797 3,500,162 5020 Total revenues 14,115,933 1,179,543 1,743 1,519,903 16,817,122 Expenditures: Current: 0011 Instruction 5,385,135 - - 751,345 6,136,480 0012 Instructional resources and media services 47,210 - - 11,146 58,356 0013 Curriculum and instructional staff development 105,123 - - 11,491 116,614 0021 Instructional leadership 297,761 - - - 297,761 0023 School leadership 920,564 - - 11,886 932,450 0031 Guidance, counseling, and evaluation services 288,994 - - - 288,994 0033 Health services 163,464 - - - 163,464 0034 Student transportation 539,441 - - - 539,441 0035 Food services 66,284 - - 624,455 690,739 0036 Extracurricular activities 626,328 - - - 626,328 0041 General administration 736,108 - - - 736,108 0051 Facilities maintenance and operations 1,346,494 - - - 1,346,494 0052 Security and monitoring services 68,646 - - - 68,646 0053 Data processing services 187,247 - - 79,367 266,614 0061 Community services - - - - - 0093 Payments to members of shared services arangement 1,188 - - - 1,188 0095 Payments to alternative education program 5,536 - - - 5,536 0099 Payments to county appraisal district 74,844 - - - 74,844 Debt service: 0071 Principal on long-term debt 259,074 761,312 - - 1,020,386 0072 Interest on long-term debt 37,574 241,233 - - 278,807 0073 Bond issuance cost and fees 1,900 453 - - 2,353 Capital outlay: 0081 Facilities acquistion and construction 2,907,593-2,612,683-5,520,276 6030 Total expenditures 14,066,508 1,002,998 2,612,683 1,489,690 19,171,879 1100 Excess (deficiency) of revenues over (under) expenditures 49,425 176,545 (2,610,940) 30,213 (2,354,757) Other financing sources (uses): 7913 Proceeds from capital leases 186,184 - - - 186,184 7915 Transfers in 8,031-2,610,940 39,058 2,658,029 8911 Transfers out (2,658,029) - - - (2,658,029) 7080 Total other financing sources (uses) (2,463,814) - 2,610,940 39,058 186,184 Extraordinary items: 8913 Extraordinary expenses (244,034) - - - (244,034) 7080 Total extraordinary items (244,034) - - - (244,034) 1200 Net change in fund balances (2,658,423) 176,545-69,271 (2,412,607) 0100 Fund balances, beginning of year 17,043,222 1,008,669-194,018 18,245,909 3000 Fund balances, end of year $ 14,384,799 1,185,214-263,289 15,833,302 See accompanying notes to financial statements. 4
Exhibit C-3 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year Ended August 31, 2018 Net change in fund balances - total governmental funds (Exhibit C-2) $ (2,412,607) Amounts reported for governmental activities in the statement of activities (Exhibit B-1) are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of these assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlay ($5,880,127) exceeded depreciation expense ($2,193,525) in the current period. 3,686,602 In the statement of activities, only the gain or loss on the disposition of capital assets is reported. However, in the governmental funds, the proceeds from the disposition increase financial resources. Thus, the change in net position differs from the change in fund balances by the net book value of capital assets (559,698) disposed. Property tax and other revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. 60,300 The issuance of long-term debt (e.g. bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items. 773,619 Governmental funds report contributions to pension/opeb plans as expenditures, whereas pension/opeb expense is recognized in the statement of activities. This is the amount of the pension/opeb benefit ($1,612,329) in the current period. 1,612,329 Change in net position of governmental activities (Exhibit B-1) $ 3,160,545 See accompanying notes to financial statements. 5
Exhibit E-1 Statement of Net Position Fiduciary Funds August 31, 2018 Private Purpose Trust Fund Agency Fund Assets Cash and cash equivalents $ 1,133 197,667 Due from other governments - 884 Due from others - 505 Total assets 1,133 199,056 Liabilities Due to student groups - 199,056 Total liabilities - 199,056 Net Position Held in trust for scholarships $ 1,133 See accompanying notes to financial statements. 6
Exhibit E-2 Statement of Changes in Net Position - Fiduciary Fund Year Ended August 31, 2018 Trust Fund Additions Contributions $ 3,000 Interest income 27 Total additions 3,027 Deductions Scholarships awarded 4,000 Administration expenses 149 Total deductions 4,149 Change in net position (1,122) Net position, beginning of year 2,255 Net position, end of year $ 1,133 See accompanying notes to financial statements. 7
Notes to Financial Statements August 31, 2018 (1) Summary of Significant Accounting Policies -member group, has governance responsibilities over all activities related to public elementary and secondary school education within the jurisdiction of the West Independent School District (the Because members of the Board are elected by the public; have the authority to make decisions, appoint administrators and managers, and significantly influence operations; and have the primary accountability for fiscal matters; the District is not included in any other entity. The accounting policies of the District substantially comply with the rules prescribed in the ) Financial Accountability System Resource Guide accounting principles applicable to governmental units. (a) 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 government. For the most part, the effect of interfund activity has been removed from these statements. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 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 revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and fiduciary funds even though the latter are excluded from the government-wide financial statements. Major individual governmental funds are reported as separate columns in the fund financial statements. (b) Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements and the private purpose trust fund are reported using the economic resources measurement focus and the accrual basis of 8
Notes to Financial Statements (Continued) (1) Summary of Significant Accounting Policies (continued) (b) Measurement Focus, Basis of Accounting, and Financial Statement Presentation (continued) accounting. The agency fund has no measurement focus but utilizes the accrual basis of accounting for reporting its assets and liabilities. Revenues are 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 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. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to claims and judgments, are recorded only when payment is due. Property taxes and interest associated with the current fiscal period are considered to be susceptible to accrual and have been recognized as revenues of the current fiscal period. All property tax receivables are reported net of an allowance for uncollectible amounts. All other revenue items are considered to be measurable and available only when cash is received by the District. The District reports the following major governmental funds: financial resources of the general government, except those required to be accounted for in another fund. The debt service fund accounts for the resources accumulated and payments made for principal and interest on long-term general obligation debt of governmental funds. The capital projects fund is used for capital projects of the District, specifically, the construction of athletic facilities and other major renovation and maintenance projects. The current year projects have been funded through transfers in from the general fund. 9
Notes to Financial Statements (Continued) (1) Summary of Significant Accounting Policies (continued) (b) Measurement Focus, Basis of Accounting, and Financial Statement Presentation (continued) Additionally, the District reports the following fund types: The private purpose trust fund accounts for resources legally held in trust for scholarships to be awarded to current and former students for post-secondary education. All resources of the fund, including any earnings on invested resources, may be used to support the activities listed in the preceding sentence. e student activity funds and other organizational activities requiring clearing accounts. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. (c) Investments State statutes authorize the District to invest in obligations of the United States or its agencies and instrumentalities and state or local governments, commercial paper, guaranteed investment contracts, repurchase agreements, and certain governmental investment pools. The Dist in obligations of the United States or its agencies and instrumentalities, fully collateralized repurchase agreements by obligations of the United States or its agencies and instrumentalities, money market funds, and local government investment pools. Investments are reported at fair value, except for the governmental investment pools. The governmental investment pools operate in accordance with appropriate state laws and regulations and are reported at amortized cost. (d) Receivables and payables Activity between funds that is representative of lending/borrowing arrangements. the non-current portion of interfund loans). All other outstanding balances between funds 10
Notes to Financial Statements (Continued) (1) Summary of Significant Accounting Policies (continued) (d) Receivables and payables (continued) Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. (e) Supplies and inventory All inventories are valued at cost using the first-in/first-out method. Inventories of governmental funds are recorded as expenditures when consumed rather than when purchased. (f) Capital assets Capital assets, which include land, buildings and improvements and furniture and equipment, are reported in the government-wide 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 acquisition 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. Buildings and improvements, furniture and equipment, and vehicles are depreciated using the straight-line method over their estimated useful lives: Assets Years Buildings 30 Building improvements 10-15 Furniture and equipment 3-15 Vehicles 5 7 (g) Compensated absences District employees are entitled to vacation and sick leave days earned by them for services performed. Vacation days lapse at the end of each year and have not been accrued. Sick days do accumulate, but employees are not paid the benefits on termination or retirement if they are not used. Consequently, the benefits have not been accrued. 11
Notes to Financial Statements (Continued) (1) Summary of Significant Accounting Policies (continued) (h) Long-term obligations In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the governmental type statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective-interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are expensed when incurred. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of the debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources, while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. (i) Pensions The fiduciary net position of the Teacher Retirement System of Texas ( TRS ) has been determined using the flow of economic resources measurement focus and the full accrual basis of accounting. This includes for purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, pension expense, and information about assets, liabilities and additions of employee contributions) are recognized when due and payable in accordance with benefit terms. Investments are reported at fair value. (j) Other Post- - - measurement focus and the full accrual basis of accounting. This includes for purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to other post-employment benefits, OPEB expense, and information about assets, liabilities, and additions to/deductions from TRSfiduciary net position. Benefit payments are recognized when due and payable in accordance with benefit terms. There are no investments as this is a pay-as-you-go plan and all cash is held in a cash account. 12
Notes to Financial Statements (Continued) (1) Summary of Significant Accounting Policies (continued) (k) Deferred outflows and deferred inflows In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. (l) Fund equity Governmental fund balances classified as restricted are balances with constraints placed on the use of resources by creditors, grantors, contributors, or laws or regulations of other governments. Fund balances classified as committed can only be used for specific purposes pursuant to constraints imposed by the Board through an ordinance. Assigned fund balances are constrained by an intent to be used for specific purposes but are neither restricted nor committed. Assignments are made by District management based on Board direction. policy to use restricted resources first, then unrestricted resources as they are needed. The order of spending available resources is as follows: restricted, committed, assigned, and unassigned. (m) Data Control Codes Data control codes refer to the account code structure prescribed by the TEA in the Resource Guide. 13
Notes to Financial Statements (Continued) (2) Reconciliation of Government-wide and Fund Financial Statements (a) Explanation of Certain Differences Between the Governmental Funds Balance Sheet and the Government-wide Statement of Net Position The governmental funds balance sheet includes a reconciliation between fund balances total governmental funds and net position governmental activities as reported in the government-wide statement of net position. One element of that reconciliation explains -term liabilities are not due and payable in the current period and, therefore, are not reported in the fu 63,466 difference are as follows: General obligation bonds, including debt issuance premiums $ (9,013,736) Add: Discounts 28,881 Add: Deferred charge on refunding 188,360 Capital lease obligations (666,649) Accrued interest payable (36,195) Net pension and OPEB liabilities and pension/opeb related deferred inflows of $2,317,326 and deferred outflows of $725,091 (8,264,127) (b) Net adjustment to reduce fund balance - total governmental funds to arrive at net position - govermental activities $ (17,763,466) Explanation of Certain Differences Between the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances and the Government-wide Statement of Activities balances includes a reconciliation between net changes in fund balances total governmental funds and changes in net position of governmental activities as reported in the government-wide statement of activities. One element of that reconciliation -term debt (e.g. bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long- The details of this $773,619 difference are as follows: 14