Raymondville ISD. It All Starts Here!

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1 Raymondville ISD It All Starts Here!

2 Prepared by: Business Office

3 Exhibit COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2018 TABLE OF CONTENTS Certificate of Board 1 Independent Auditors Report 2 FINANCIAL SECTION Management s Discussion and Analysis 5 Basic Financial Statements Government-wide Statements: A-1 Statement of Net Position 12 B-1 Statement of Activities 13 Governmental Fund Financial Statements: C-1 Balance Sheet 14 C-2 Reconciliation of the Governmental Funds Balance Sheet to the 16 Statement of Net Position 15 C-3 Statement of Revenues, Expenditures, and Changes in Fund Balances 17 C-4 Reconciliation of the Governmental Funds Statement of Revenues, 19 Expenditures, and Changes in Fund Balances to the Statement of Activities Fiduciary Fund Financial Statements: E-1 Statement of Fiduciary Net Position 20 Notes to the Financial Statements 21 Required Supplementary Information G-1 Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual General Fund 52 G-2 Schedule of the District s Proportionate Share of the Net Pension Liability 53 G-3 Schedule of District Contributions Teacher Retirement System 54 G-4 Schedule of the District s Proportionate Share of the Net OPEB Liability 55 G-5 Schedule of District OPEB Contributions Teacher Retirement System 56 Notes to Required Supplementary Information 57 Combining Statements Nonmajor Governmental Funds: Special Revenue Descriptions 58 H-1 Combining Balance Sheet 59 H-2 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 62 H-3 Combining Statement of Changes in Assets and Liabilities all Agency Funds 65 Required TEA Schedules J-1 Schedule of Delinquent Taxes Receivable 66 J-4 Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual National School Breakfast and Lunch Program 68 J-5 Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Debt Service Fund 69 Page i

4 Schedule COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2018 TABLE OF CONTENTS CONTINUED STATISTICAL SECTION Page Statistical Section Overview 70 Government-wide Information 1 Net Assets by Component Last Ten Years 71 2 Governmental Activities Expenses and Program Revenues 73 3 General Revenues and Changes in Net Position 75 Fund Information 4 Fund Balances Governmental Funds Last Ten Years 77 5 Governmental Fund Revenues by Source 78 6 Governmental Fund Expenditures by Function 80 7 Governmental Funds Other Sources, Uses and Changes in Fund Balance 82 8 Governmental Fund Expenditures by Function Per Average Daily Attendance 84 Revenue Capacity Information 9 Assessed and Estimated Actual Value of Property Property Tax Levies and Collections Allocation of Property Tax Rates and Levies Property Tax Rates Direct and Overlapping Governments (Per $100 Assessed Valuation)-Last Ten Years Principal Property Taxpayer Current Year and Ten Years Prior 92 Debt Capacity Information 14 Outstanding Debt by Type Last Ten Years Direct and Overlapping Debt General Obligation Bonds Computation of Legal Debt Margin Last Ten Years Ratio of Net General Obligation Bonded Debt to Estimated Actual Value and Per Average Daily Membership Last Ten Years Ratio of Annual Debt Service for General Bonded Debt To Total General Fund Expenditures Last Ten Years 100 Demographic and Economic Information 19 Principal Employers Current Year and Ten Years Ago Construction and Property Values Last Ten Years Economic and Demographic Statistics Last Ten Years 104 Operating Information 22 Work Force Composition by Employee Classification Last Ten Years Schedule of Teacher Information Last Ten Years Schedule of Attendance and Membership Last Ten Years Operating Statistics Last Ten Years Schedule of Student Information Last Ten Years Schedule of School Buildings Last Ten Years 110 ii

5 COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2018 TABLE OF CONTENTS CONTINUED Schedule Page SINGLE AUDIT SECTION Independent Auditors Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 111 Independent Auditors Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance in Accordance with the Uniform Guidance 113 K-1 Schedule of Expenditures of Federal Awards 115 Notes to Schedule of Expenditures of Federal Awards 116 Schedule of Findings and Questioned Costs 117 Summary Schedule of Prior Audit Findings 118 iii

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7 419 FM 3168, Raymondville, Texas Phone: (956) Business Office November 13, 2018 Mr. Stetson Roane, Superintendent Members of the Board of Trustees Raymondville Independent School District Raymondville, Texas Dear Mr. Roane and Members: Every year public school districts throughout the state are required to present within one-hundred fifty days of the end of each fiscal year an audited set of financial statements. These financial statements are to be presented in conformity with generally accepted accounting principles (GAAP) and audited by a licensed certified public accountant in accordance with generally accepted auditing standards. Pursuant to that requirement, we are pleased to present the Raymondville Independent School District Comprehensive Annual Financial Report (CAFR) for the year ending June 30, This report consists of management s representation concerning the finances of the District. The District s audited financial statements of the governmental activities, each major fund, and the aggregate remaining fund information are presented in conformity with requirements established by the Texas Education Agency in their Financial Accountability Systems Resource Guide. Responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures contained in the report, rests solely with the District. To provide a reasonable basis for making these representations, management of the District has established a comprehensive internal control framework that is designed both to protect the government s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the District s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the District s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The District s financial statements have been audited by Pattillo, Brown & Hill, L.L.P. and their opinion letter is hereby made part of this report. The goal of the independent audit was to provide reasonable assurance that the financial statements of Raymondville Independent School District for iv

8 the fiscal year ended June 30, 2018, are free of material misstatement and are presented in conformity with generally accepted accounting principles (GAAP). The independent audit involves examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the District s financial statements for the fiscal year ended June 30, 2018, are fairly presented in conformity with GAAP. The independent auditors report is presented as the first component of the financial section of this report. The independent audit of the financial statements of the District was part of a broader, federally mandated Single Audit designated to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statement, but also on the audited government s internal controls and compliance with legal requirement, with special emphasis on internal controls and legal requirements involving the administration of federal awards. Information related to this single audit, including a schedule of expenditures of federal awards, the independent auditors reports on the internal controls and compliance with applicable laws and regulations, and a schedule of findings and questioned costs are included in the Federal Awards Section of the report. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The District s MD&A can be found immediately following the report of the independent auditors. This comprehensive annual financial report consists of four major sections: (1) the Introductory Section which describes our District and the contents of the report; (2) the Financial Section which contains the basic financial statements and notes, combining schedules and required TEA schedules; (3) the Statistical Section which shows prior years information for comparison purposes and other general information; and (4) the Federal Awards Section, as required. Profile of the Government The District is a political subdivision of the State of Texas governed and operating as an independent school district under the laws thereof. The District primarily services the City of Raymondville which is known as the Gateway to the Rio Grande Valley. The District encompasses approximately 3.8 square miles in Willacy County, Texas. The District is governed by a seven-member Board of Trustees (the Board ) composed of District residents, who are elected by voters of the District. The Board is responsible for managing and governing the schools of the District, including the adoption of goals and objectives for the District, reviewing and acting on policies, adopting an annual budget, levying and collecting District taxes, hiring school personnel as recommended by the superintendent, approving salary schedules, adopting District policies and setting directions for curriculum, and reporting to the public on the District s progress. The District s Superintendent of Schools and staff assist the Board with financial and administrative matters and oversee the day-to-day operations of the District. v

9 Services Provided The District provides a full range of educational services appropriate to grade levels prekindergarten through twelve for its approximate 2,050 students. These include regular and enriched academic education, special education for students with disabilities, occupational education, bilingual instruction for those with limited English proficiency and specialized instruction for disadvantaged students. These basic programs are supplemented by additional offerings in the fine arts and athletics. Budgetary Controls On an annual basis, the District presents the Board of Trustees with the proposed budgets for the General Operating Fund, the Debt Service Fund, and the Food Service Fund for approval as required by the Texas Education Code and as described in the Texas Education Agency s Financial Accountability Systems Resource Guide. The proposed budget is presented to the Board summarized at the function level for each of the funds above. The Board is required to hold a public hearing on the proposed budget and to adopt a final budget no later than June 30 th, the close of the District s fiscal year. After adoption of the budget, the appropriation amounts are entered into the District s accounting and encumbrance system and monitoring of the expenditures and encumbrances in relation to the approved budget begins. Budget managers have the authority to approve budget transfers anytime during the year. A budget transfer is the movement of appropriations between budget line items within the same function. Any request to move appropriations between budget line items to different functions is considered a budget amendment. Any budget amendment requested by budget managers requires Board approval. Expenditure requests will not be processed unless appropriations are available in the line item. The District feels that the budgetary controls currently in place are adequate to ensure that expenditures remain within the approved budget and that the District complies with regulations established by the Texas Education Code and the Financial Accountability Systems Resource Guide. Enrollment Raymondville I.S.D is a Title I District and had a total enrollment of 2,088 students for the school year. Of these students, 98.6% are Hispanic, 1.0% White, 86.02% of the students are economically disadvantaged, 58.4% of the students are At-Risk, and 7.1% of all students are identified as Limited English Proficient language learners. The breakdown of our student membership is as follows: Pre-K 157 K TOTAL 2,088 vi

10 Average daily attendance has been stable and with a small decline in the past few years. ADA is expected to slightly increase for the fiscal year. Factors Affecting Financial Condition The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the District operates. Local Economy Raymondville is the county seat of Willacy County, Texas and is strategically positioned along Interstate 69/US Route 77. Agricultural production, correctional facilities, transportation, energy, and service sector continue to play a major role in the Raymondville area economy. Long-term Financial Planning and Major Initiatives The District continues to maintain a healthy General Fund Balance. The District has maintained the fund balance to ensure that needed resources are available when required to meet unexpected revenue shortfalls and one-time expenditures that may exceed the annual available resources. If certain events occur during the year, the District may react with appropriate budget changes and or amendments as per CE (Local) Policy, The expenditure of funds shall be under the direction of the Superintendent or designee who shall ensure that funds are expended in accordance with the adopted budget. Local funding is expected to increase slightly over the next few years due to an increase in new commercial construction and appraisal values. The District s maintenance and operations tax rate for tax year 2017 is $1.17 per $100 valuation. State funding for the general fund is about 61.4% of the total general fund revenue. District Voters approved a Tax Ratification Election (TRE) on September 9, The total tax rate decreased by $ from $ to $ Estimated additional revenues due to the TRE are approximately $1.7 million per year. Federal funding is expected to decrease due to the sequestration of federal funds at the national level. Grant funding plays an important role as a resource to supplement regular funding and to expand programs needed for greater academic achievement. The District is focusing on greater efficiency through the use of technology to help reduce labor and time-consuming paperwork. Cash Management Policies and Practices The District is required to execute a depository agreement with a banking institution for a period of two years. Competitive bidding is mandated and state law sets general terms. The District s investment policy is to minimize credit and market risks while maintaining a competitive yield on its portfolio. All deposits were secured by the Federal Deposit Insurance Corporation (FDIC) and by vii

11 pledged securities. All investments must be in compliance with the guidelines set by the Public Funds Investments Act. The act set the type of investments governmental entities can make. The District has an active cash management program in prudently investing available cash. Cash temporarily idle during the year was invested in pool investments. The District has investments in the First Public LoneStar investment pool. Pension Plan The District contributes to the Teacher Retirement System of Texas (TRS), a public employee, costsharing multiple employer defined benefit pension plan. Under this plan, all risks and costs are not shared by the District but are a liability of the State of Texas. Additional information on the District s pension arrangements can be found in the Notes to the Financial Statements. Property Tax Rate The District total property tax rate is $1.310 per $100 of property taxable value for fiscal year ending June 30, On September 9, 2017, District Voters approved a Tax Ratification Election that would set the tax rate to $1.310 per $100 of property taxable value. The District has maintained one of the lowest school property tax rates in our area. The District has been able to maintain a low tax rate due to the assistance from the State and Federal government in subsidizing annual debt payment for school bonds. The District s property tax rate will again be $1.310 per $100 of property taxable value for fiscal year ending June 30, School FIRST Rating The Schools FIRST (Financial Accountability Rating System of Texas), was developed by the Texas Education Agency in response to Senate Bill 875 passed in The primary goal of Schools FIRST is to achieve quality performance in the management of school districts' financial resources, a goal made more significant due to the complexity of the State's school finance system. The Raymondville Independent School District received a "Superior" rating under Texas' Schools FIRST financial accountability rating system for the fiscal year. The Superior rating was the State's highest, demonstrating the quality of the school district's financial management and reporting system. The primary goal of School FIRST is to achieve quality performance in the management of school district s financial resources. This goal is now more significant due to the complexity of accounting associated with the Texas school finance system. Debt Service Debt Service is a major area of cost due to the District s building program which is primarily financed by the sale of general obligation bonds. The Texas Education Code (TEC) authorizes the District to issue negotiable coupon bonds to construct, acquire, or equip school buildings, to purchase necessary sites, or to acquire or refinance property financed under a contract entered into under the Public Property Finance Act. The District is further authorized to levy and assess annual ad valorem taxes sufficient to pay the principal and interest on the bonds as they become due. The District s primary objective in debt management is to keep the level of indebtedness within available resources and within legal debt limitations. All bond elections are held in accordance with statutory viii

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17 INDEPENDENT AUDITORS REPORT The Board of Trustees of Raymondville Independent School District Raymondville, Texas 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 Raymondville Independent School District, as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise Raymondville Independent School District s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Raymondville Independent School District s management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 2

18 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. 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 Raymondville Independent School District, as of June 30, 2018, and the respective changes in financial position and, where applicable, cashflows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Change in Accounting Principle As discussed in the notes to the financial statements, in fiscal year 2018 the District adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. 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 management s discussion and analysis, budgetary comparison, pension and OPEB information to be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. 3

19 Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise Raymondville Independent School District s basic financial statements. The combining statements, required TEA schedules and the Schedule of Expenditures of Federal Awards, as required by the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining statements, required TEA schedules and the Schedule of Expenditures of Federal Awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, The combining statements, required TEA schedules and the Schedule of Expenditures of Federal Awards are fairly stated in all material respects in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the 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 November 13, 2018, on our consideration of Raymondville Independent School District s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Raymondville Independent School District s internal control over financial reporting and compliance. Brownsville, Texas November 13,

20 MANAGEMENT S DISCUSSION AND ANALYSIS This section of Raymondville I.S.D. s annual financial report presents our discussion and analysis of the District s financial performance during the year ended June 30, 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 $6,362,628 at June 30, This is a decrease of $16,663,511 from the prior year. This significant decrease is a direct result of the implementation of GASB 75 that required a prior period adjustment of $20,658,875. See Note O for additional details. During the year, the District s expenses were $892,633 less than the $28,814,940 generated in taxes and other revenues for governmental activities. The general fund reported a fund balance this year of $10,225,270. The District received a Superior Rating for the Financial Integrity Rating System of Texas (FIRST) for This rating rates quality performance in the management of school district s financial resources. 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: Figure A-1, Required Components of the District s Annual Financial Report The first two statements are government-wide financial statements that provide both long-term and short-term 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 government-wide statements. The governmental funds statements tell how general government services were financed in the short term as well as what remains for future spending. Proprietary fund statements offer short- and long-term financial information about the activities the government operates like businesses, such as food service. 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. 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 A-1 shows how the required parts of this annual report are arranged and related to one another. 5

21 Figure A-2 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. Government-wide Statements The government-wide statements report information about the District as a whole using accounting methods similar to those used by private-sector 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. MANAGEMENT S DISCUSSION AND ANALYSIS - CONTINUED The two government-wide statements report the District s net position and how they have changed. Net position the difference between the District s assets and liabilities is one way to measure the District s financial health or position. In fiscal year 2018, the District adopted the Governmental Accounting Standards Board Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions which superseded GASB Statement No. 45. Statement No. 75 establishes financial reporting standards and/or accounting standards for state and local government defined other postemployment benefit (OPEB) plans and defined contribution OPEB plans. Statement No. 75 requires that, at transition, a government recognizes a beginning deferred outflow of resources for its OPEB contributions, if any, made subsequent to the measurement date of the beginning net OPEB liability. The effect of the adoption of this statement has no impact on the District's governmental fund financial statements. However, adoption has resulted in certain changes to the presentation of the District's government-wide financial statements. More information on the adoption of this statement and the District's OPEB plan is available in Note K and Note L. 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, one needs to consider additional nonfinancial factors such as changes in the District s tax base The government-wide 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. 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 and by bond covenants. 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 the following kinds of funds: Type of Statements Government-wide 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 A-2. Major Features of the District's Government-wide 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, short-term and long-term 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 short-term 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 short-term 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 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 short-term 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 long- 6

22 MANAGEMENT S DISCUSSION AND ANALYSIS - CONTINUED term focus of the government-wide 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. Proprietary funds Services for which the District charges customers a fee are generally reported in proprietary funds. Proprietary funds, like the government-wide statements, provide both long-term and short-term financial information. 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 government-wide financial statements because the District cannot use these assets to finance its operations. FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE The District s combined net position were $5,837,120 as of June 30, (See Table A-1). Table A-1 Raymondville Independent School District s Net Position (in thousands of dollars) Governmental Activities Current & other assets $ 14,184 $ 12,968 Capital assets 34,251 35,615 Total assets 48,435 48,583 Deferred outflows of resources 1,305 1,784 Current liabilities 2,880 1,718 Long-term liabilities 34,209 24,719 Total liabilities 37,089 26,437 Deferred inflows of resources 6, Net position: Net investment in capital assets 17,298 17,669 Restricted 2,049 1,829 Unrestricted (12,984) 3,528 Total net position $ 6,363 $ 23,026 Net position may serve over time as a useful indicator of a government s financial position. The assets and deferred outflows of resources of the District exceeded its liabilities at the close of the most recent fiscal year by $6,362,628. Approximately $17.3 million of Raymondville ISD s net position reflects the investment in capital assets (e.g., land, buildings, machinery, and equipment) less any related debt used to acquire those assets that is still outstanding. Raymondville ISD uses these capital assets to provide services to students; consequently, these assets are not available for future spending. Although the Raymondville ISD s investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the net position (approximately $2 million) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position ($ million) may be used to meet the government s ongoing obligations to students and creditors. Changes in net position Raymondville ISD s net position decreased by $16,663,511 during the current fiscal year. This significant decrease is a direct result of the implementation of GASB 75 that required a prior period adjustment of $20,658,875. See Note O for additional details. The District s total revenues were $25,095,799. A portion, 12.7% of the District s revenue comes from taxes, 57.8% comes from state aid formula grants, while only 4.9% relates to charges for services as reflected in Figure A-5. Unrestricted net position reflects a deficit created by a prior period adjustment resulting from the implementation of GASB 75 in the current fiscal year for OPEB. Although the District reports a deficit, the deficit is primarily due to reporting the District's proportionate share of the net OPEB liability. The total district liability is reported in the governmental activities; however, the actual liability does not require the use of current resources at the fund level, which results in a timing difference since the TRS-Care plan is funded on a pay-as-you-go basis. The District has made all contractually required 7

23 MANAGEMENT S DISCUSSION AND ANALYSIS - CONTINUED contributions as noted in the required supplementary information and has sufficient fund balance to meet the District's ongoing obligations to students and creditors. Governmental Activities As reflected in Table A-2 and Figure A-4: Property tax rates decreased from to /$100 during the current fiscal year ended June 30, Property taxable values increased by 15.5% from the prior year. The cost of all governmental activities this year was $21,100,435, a decrease of $6,645,828 due to the allocation of GASB 75 liabilities and expenditures. However, the amount that our taxpayers paid for these activities through property taxes was $3,187,617. Some of the cost was paid by those who directly benefited from the programs ($1,236,530) or by grants and contributions ($5,623,715). Grants and contributions decreased from the prior year primarily due to adjustments to revenue for implementation of GASB 75. The decrease in functional expenses is primarily due to adjustments to functional expenses to record the State's negative on-behalf contributions for OPEB in conjunction with the implementation of GASB 75. Table A-2 Changes in Raymondville Independent School District s Net position (in thousands of dollars) Governmental Activities Program Revenues: Charges for Services $ 1,237 $ 951 Operating Grants and Contributions 5,624 6,910 Capital Grants and Contributions General Revenues Property Taxes 3,187 3,086 State Aid Formula 13,247 14,310 Investment Earnings Other 1,663 2,040 Total Revenues 25,096 27,363 Instruction 9,652 13,930 Instructional Resources and Media Services Curriculum Dev. And Instructional Staff Dev Instructional Leadership School Leadership 1,109 1,639 Guidance, Counseling and Evaluation Services 804 1,139 Social Work Services Health Services Student (Pupil) Transportation Food Services 1,803 1,861 Curricular/Extracurricular Activities 1,093 1,294 General Administration 1,019 1,084 Plant Maintenance & Operations 2,765 2,873 Security & Monitoring Services Data Processing Services Community Services Debt Service Contracted Instructional Services Between Schools (284) - Payments Related to Shared Services Arrangements Other Governmental Charges Total Expenses 21,100 27,745 $10,000 $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $- Figure A-4 Raymondville ISD Expenses FY Instruction $ in thousands Instr Resources Curriculum Dev Inst Leadership School Leadership Counseling Social Work Health Services Transportation Food Services Curricular/Extra Administration Plant Maint Security Data Processing Services Community Services Debt Service Contracted Instructional Services Between Schools Payments Related to Shared Svc. Arrangements Other Governmental Charges Increase (Decrease) in Net position $ 3,996 $ (383) 8

24 MANAGEMENT S DISCUSSION AND ANALYSIS - CONTINUED Table A-3 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 was funded by state revenues as well as local tax dollars. Table A-3 Net Cost of Selected District Functions (in thousands of dollars) Total Cost of Services % Change Net Cost of Services % Change Instruction 9,953 13,930 (30.7%) (7,709) 10,485 (166.9%) School administration 1,109 1,640 (32.4%) (1,068) 1,532 (169.7%) Food Services 1,803 1,861 ( 3.1%) (31) 54 (157.4%) Plant Maintenance & Operations 2,765 2,873 ( 3.8%) (2,695) 2,753 (197.9%) Debt Service Interest & Fiscal Charges ( 9.9%) (483) 536 (190.1%) The decrease in functional expenses is primarily due to adjustments to functional expenses to record the State's negative on-behalf contributions for OPEB in conjunction with the implementation of GASB 75. FINANCIAL ANALYSIS OF THE DISTRICT S FUNDS As noted earlier, Raymondville ISD uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. General Fund The fund balance of the Raymondville ISD s General Fund is $10,225,270 as of June 30, The 16.5% increase is a result of monitoring budgets and expenditures throughout the fiscal year and additional funding related to TRE. 9

25 MANAGEMENT S DISCUSSION AND ANALYSIS - CONTINUED General Fund Budgetary Highlights Differences between original & final budgets can be briefly summarized as follows: There was a change between the original and final budgets which reflects the use of fund balance for various board approved expenses. As we go through the year, budget amendments are being requested to move monies from one function to another which is consistent with the difference between original and final budgets. Differences between final budget and actual revenues and expenditures can be briefly summarized as follows: Revenues Increase in M&O tax collections as a result of a TRE election in September 2017 Increase in state aid as a result of TRE election Slight increase in enrollment Expenditures Various budget amendments were made during the year for various projects CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets At the end of 2018, the District has invested in buildings and equipment, and vehicles in the amount of $244,815. The District also held an auction in which vehicles and equipment were sold. (See Table A-4.) More detailed information about the District s capital assets is presented in the notes to the financial statements. Table A-4 District s Capital Assets (In thousands of dollars) Governmental Activities Land $ 479 $ 479 Buildings and improvements 53,224 52,980 Furniture & Equipment 4,229 4,229 Vehicles 2,842 2,989 Capital Lease Assets Totals at historical cost 60,802 60,704 Total accumulated (26,551) (25,089) Net capital assets $ 34,251 $ 35,615 10

26 MANAGEMENT S DISCUSSION AND ANALYSIS - CONTINUED Long Term Debt At year-end the District had $16,046,057 outstanding as shown in Table A-5. Of this amount, $1,175,000 is due within the next year. More detailed information about the District s debt is presented in the notes to the financial statements. Table A-5 District s Long Term Debt (In thousands of dollars) Governmental Activities Bonds payable 15,605 16,710 Compensated absences Total long term debt 16,046 18,374 ECONOMIC FACTORS AND NEXT YEAR S BUDGETS AND RATES Appraised value used for the budget preparation is up $53,792,556 or 21% increase from last year. General operating fund spending per student increased in the budget from approximately $11,902 to $12,819, a 7.7% increase. The District s 2018 refined average daily attendance is expected to be 1,825. Additional commercial activity is expected to have a positive impact overall. These indicators were taken into account when adopting the general fund budget for Expenditures as budgeted are $21,961,792, an increase of 8.7% from actual expenditures. If these estimates are realized, the District s budgetary general fund balance is not expected to change depreciably by the close of CONTACTING THE DISTRICT S FINANCIAL MANAGEMENT This financial report is designed to provide citizens, taxpayers, customers, investors, and creditors with a general overview of the District s finances. If you have questions about this report or need additional financial information, contact the District s Business Office. 11

27

28 Data Control Codes STATEMENT OF NET POSITION JUNE 30, 2018 Primary Government Governmental Activities EXHIBIT A-1 ASSETS 1110 Cash and Cash Equivalents $ 1210 Property Taxes - Current 1220 Property Taxes Receivable (Delinquent) 1230 Allowance for Uncollectible Taxes 1240 Due from Other Governments 1267 Due from Fiduciary Funds 1290 Other Receivables, net 1410 Prepayments Capital Assets: 1510 Land 1520 Buildings, Net 1530 Furniture and Equipment, Net 1540 Other Capital Assets, Net 8,534, ,453 1,119,775 (122,823) 3,231, , , , ,351 30,498,010 2,021,455 1,252, Total Assets 48,435,301 DEFERRED OUTFLOWS OF RESOURCES 1705 Deferred Outflow Related to TRS Pension 1,304, Total Deferred Outflows of Resources 1,304,910 LIABILITIES 2110 Accounts Payable 2140 Interest Payable 2150 Payroll Deductions & Withholdings 2160 Accrued Wages Payable 2177 Due to Fiduciary Funds 2300 Unearned Revenue 2400 Payable from Restricted Assets Noncurrent Liabilities: 2501 Due Within One Year 2502 Due in More Than One Year 2540 Net Pension Liability (District's Share) 2545 Net OPEB Liability (District's Share 254, , ,457 1,635,435 61, ,999 2,250 1,616,472 15,573,118 5,251,258 11,768, Total Liabilities 37,089,443 DEFERRED INFLOWS OF RESOURCES 2605 Deferred Inflow Related to TRS Pension 6,288, Total Deferred Inflows of Resources 6,288,139 NET POSITION 3200 Net Investment in Capital Assets 3820 Restricted for Federal and State Programs 3850 Restricted for Debt Service 3860 Restricted for Capital Projects 3890 Restricted for Other Purposes 3900 Unrestricted 17,297, , ,745 1,377, ,000 (12,984,287) 3000 Total Net Position $ 6,362,628 The notes to the financial statements are an integral part of this statement. 12

29 Data Control Codes Primary Government: STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2018 Program Revenues EXHIBIT B-1 Net (Expense) Revenue and Changes in Net Position Expenses Charges for Services Operating Grants and Contributions Primary Gov. Governmental Activities GOVERNMENTAL ACTIVITIES: Instruction $ 9,652,463 $ - $ 2,634,899 $ (7,017,564) Instructional Resources and Media Services 202, (202,141) Curriculum and Staff Development 571, ,006 (342,687) Instructional Leadership 334, ,235 (78,757) School Leadership 1,109,484-41,748 (1,067,736) Guidance, Counseling and Evaluation Services 803, ,660 (349,290) Social Work Services 145,343-82,441 (62,902) Health Services 169, ,269 (7,458) Student (Pupil) Transportation 385, (385,705) Food Services 1,803, ,962 1,643,182 (30,923) Extracurricular Activities 1,093,295 79,174 - (1,014,121) General Administration 1,018, ,230 5,833 (45,883) Facilities Maintenance and Operations 2,765,240 61,164 8,928 (2,695,148) Security and Monitoring Services 309, (309,804) Data Processing Services 193, (193,170) Community Services 51,774-49,346 (2,428) Debt Service - Interest on Long Term Debt 483, (483,345) Contracted Instructional Services Between Schools (284,291) ,291 Payments related to Shared Services Arrangements 191,553-55,169 (136,384) Other Intergovernmental Charges 99, (99,034) [TP] TOTAL PRIMARY GOVERNMENT: $ 21,100,435 $ 1,236,530 $ 5,623,715 (14,240,190) Data Control Codes MT DT SF GC IE MI TR General Revenues: Taxes: Property Taxes, Levied for General Purposes Property Taxes, Levied for Debt Service State Aid - Formula Grants Grants and Contributions not Restricted Investment Earnings Miscellaneous Local and Intermediate Revenue Total General Revenues 2,742, ,926 13,247,040 1,250, , ,860 18,235,554 CN Change in Net Position 3,995,364 NB PA NE Net Position - Beginning Prior Period Adjustment Net Position--Ending $ 23,026,139 (20,658,875) 6,362,628 The notes to the financial statements are an integral part of this statement. 13

30 BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2018 Data Control Codes 10 General Fund 211 ESEA Title 1 Part A 313 SSA-IDEA Part B ASSETS 1110 Cash and Cash Equivalents $ 7,948,772 $ - $ Property Taxes - Current 89, Property Taxes - Delinquent 899, Allowance for Uncollectible Taxes (Credit) (98,893) Receivables from Other Governments 1,794, , , Due from Other Funds 1,950, Other Receivables 157, Prepayments 314, Total Assets $ 13,054,925 $ 593,063 $ 517,495 LIABILITIES 2110 Accounts Payable $ 254,542 $ - $ Payroll Deductions and Withholdings Payable 135,084 17,358 14, Accrued Wages Payable 1,359, , , Due to Other Funds 188, , , Unearned Revenues Payable from Restricted Assets 2, Total Liabilities 1,939, , ,495 DEFERRED INFLOWS OF RESOURCES 2601 Unavailable Revenue - Property Taxes 890, Total Deferred Inflows of Resources 890, FUND BALANCES Restricted Fund Balance: 3450 Federal or State Funds Grant Restriction 3480 Retirement of Long-Term Debt Committed Fund Balance: 3510 Construction 3530 Capital Expenditures for Equipment 3600 Unassigned Fund Balance 302, ,000, , ,702, Total Fund Balances 10,225, Total Liabilities, Deferred Inflows & Fund Balances $ 13,054,924 $ 593,063 $ 517,495 The notes to the financial statements are an integral part of this statement. 14

31 EXHIBIT C-1 Other Funds Total Governmental Funds $ 585,341 $ 8,534,113 19, , ,998 1,119,775 (23,930) (122,823) 326,636 3,231, ,856 2,105, , ,308 $ 1,283,202 $ 15,448,685 $ - $ 254,542 5, ,457 27,222 1,635, ,846 1,326, , ,999-2, ,625 3,588, , , , , , ,656 1,377, , ,177 8,920, ,578 10,969,848 $ 1,283,203 $ 15,448,685 15

32 RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION JUNE 30, 2018 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 $60,704,495 and the accumulated depreciation was ($25,089,350). In addition, long-term liabilities, including bonds payable, 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 long-term debt in the governmental activities is to decrease net position. Note: Beginning Balances related to TRS are NOT included in this amount. 2 Current year capital outlays and long-term debt principal payments are expenditures in the fund financial statements, but they should be shown as increases in capital assets and reductions in long-term debt in the government-wide financial statements. The net effect of including the 2017 capital outlays and debt principal payments is to decrease net position. 3 Included in the items related to debt is the recognition of the District's proportionate share of the net pension liability required by GASB 68. At the beginning of the year, the net position related to TRS was a Deferred Resource Outflow in the amount of $1,304,910, a Deferred Resource Inflow in the amount of $6,288,139 and a net pension liability in the amount of $6,351,247. Changes from the current year reporting of the TRS plan resulted in a decrease in net position in the amount of ($5,461,516). The combination of the beginning of the year amounts and the changes during the year resulted in a difference between the ending fund balance and the ending net position in the amount of ($5,212,964). 4 The 2018 depreciation expense increases accumulated depreciation. The net effect of the current year's depreciation is to decrease net position. $ EXHIBIT C-2 10,969,847 17,247, ,922 (5,461,516) (1,607,486) 5 The district implemented GASB 75 reporting requirements for the OPEB benefit plan through TRS. Since this is the first year of implementation, a prior period adjustment had to be made in the amount of ($20,658,875). The District's share of the TRS plan resulted in a net OPEB liability of ($11,768,028), a deferred outflow of $149,618 nd a deferred inflow of ($4,922,589). This resulted in a difference between the ending fund balance and the ending net of position. 6 Various other reclassifications and eliminations are necessary to convert from the modified accrual basis of accounting to accrual basis of accounting. These include recognizing unavailable revenue from property taxes as revenue, reclassifying the proceeds of bond sales as an increase in bonds payable, and recognizing the liabilities associated with maturing long-term debt and interest. The net effect of these reclassifications and recognitions is to increase net position. 19 Net Position of Governmental Activities $ (16,540,999) 890,036 6,362,628 The notes to the financial statements are an integral part of this statement. 16

33 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2018 Data Control Codes 10 General Fund 211 ESEA Title 1 Part A 313 SSA-IDEA Part B REVENUES: Total Local and Intermediate Sources $ 4,422,391 $ - $ - State Program Revenues 17,030, Federal Program Revenues 2,098,168 1,251,293 1,471, Total Revenues 23,550,796 1,251,293 1,471,602 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 0032 Social Work 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 0061 Community Services Debt Service: 0071 Principal on Long Term Debt 0072 Interest on Long Term Debt Capital Outlay: 0081 Facilities Acquisition and Construction Intergovernmental: 0093 Payments to Fiscal Agent/Member Districts of SSA 0099 Other Intergovernmental Charges 10,417, , , , ,582 51,914 94, ,527 70,565-1,433,206-36, , , , , , , ,876, ,241, ,191, ,922, , , ,068 14, , , , Total Expenditures 22,099,579 1,251,293 1,471, Net Change in Fund Balances 1,451, Fund Balance - July 1 (Beginning) 8,774, Fund Balance - June 30 (Ending) $ 10,225,270 $ - $ - The notes to the financial statements are an integral part of this statement. 17

34 EXHIBIT C-3 Other Funds Total Governmental Funds $ 553,362 $ 4,975,753 1,191,439 18,221, ,448 2,541,249 5,617,511 28,814, , , ,036 5,329 45,237 82,441 16, ,227 12, ,008 1,105, ,950-13,075, , , ,128 1,474,954 1,054, , , ,597 1,876,057 1,241,349 1,199,371 2,934, , ,437 55,413 1,105, ,950 65,567 77, ,553-99,034 3,099,833 27,922,307 (558,584) 892,633 1,303,161 10,077,214 $ 744,577 $ 10,969,847 18

35 EXHIBIT C-4 RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2018 Total Net Change in Fund Balances - Governmental Funds Current year capital outlays and long-term debt principal payments are expenditures in the fund financial statements, but they should be shown as increases in capital assets and reductions in long-term debt in the government-wide financial statements. The net effect of removing the 2017 capital outlays and debt principal payments is to 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. $ 892,633 1,460,872 (1,607,486) Various other reclassifications and eliminations are necessary to convert from the modified accrual basis of accounting to accrual basis of accounting. These include recognizing unavailable revenue from property taxes as revenue, adjusting current year revenue to show the revenue earned from the current year's tax levy, reclassifying the proceeds of bond sales, and recognizing the liabilities associated with maturing long-term debt and interest. The net effect of these reclassifications and recognitions is to decrease net position. 931,393 Current year changes due to GASB 68 decreased revenues in the amount of $252,308 but also increased expenditures in the amount of $1,547,616. The net effect on the change in the ending net position was a decrease in the amount of $1,799,924. (1,799,924) The implementation of GASB 75 to report the District's share of the TRS OPEB plan resulted in a prior period adjustment of ($20,658,875). The changes in the ending net position as a result of reporting the OPEB items was a increased in the change in net position in the amount of $4,117,876. Change in Net Position of Governmental Activities $ 4,117,876 3,995,364 The notes to the financial statements are an integral part of this statement. 19

36 STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS JUNE 30, 2018 EXHIBIT E-1 Agency Funds ASSETS Cash and Cash Equivalents $ Due from Other Funds 864,191 61,809 Total Assets $ 926,000 LIABILITIES Accounts Payable $ Payroll Deductions and Withholdings Payable Accrued Wages Payable Due to Other Funds Due to Student Groups 1,132 3,179 16, ,558 63,883 Total Liabilities $ 926,000 The notes to the financial statements are an integral part of this statement. 20

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38 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (the "District") is a public educational agency operating under the applicable laws and regulations of the State of Texas. It is governed by a seven-member Board of Trustees (the "Board") elected by registered voters of the District. The District prepares its basic financial statements in conformity with generally accepted accounting principles (GAAP) promulgated by the Governmental Accounting Standards Board (GASB) and other authoritative sources identified in GASB Statement No. 76, 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. 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 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 to/deductions from TRS's fiduciary net position. Benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Other Post-Employment Benefits. The fiduciary net position of the Teacher Retirement System of Texas (TRS) TRS Care Plan has been determined using the flow of economic resources measurement focus and 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 TRS Care s fiduciary net position. Benefit payments are recognized when due and payable in accordance with the benefit terms. There are no investments as this is a pay-as you-go plan and all cash is held in a cash account. applies Governmental Accounting Standards Board ("GASB") Statement No. 72, Fair Value Measurement and Application. GASB Statement No. 72 provides guidance for determining a fair value measurement for reporting purposes and applying fair value to certain investments and disclosures related to all fair value measurements. 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. 21

39 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS The Statement of Net Position and the Statement of Activities are government-wide financial statements. They report information on all of the RAYMONDVILLE 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. Business-type activities include operations that rely to a significant extent on fees and charges for support. 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 government-wide statements. Interfund activities between governmental funds and fiduciary funds remain as due to/due from on the government-wide Statement of Activities. The fund financial statements provide reports on the financial condition and results of operations for three fund categories - governmental, proprietary, and fiduciary. Since the resources in the fiduciary funds cannot be used for District operations, they are not included in the government-wide statements. The District considers some governmental funds major and reports their financial condition and results of operations in a separate column. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues result from providing goods and services in connection with a proprietary fund's principal ongoing operations; they usually come from exchange or exchange-like transactions. All other revenues are nonoperating. Operating expenses can be tied specifically to the production of the goods and services, such as materials and labor and direct overhead. Other expenses are nonoperating. C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION The government-wide financial statements use the economic resources measurement focus and the accrual basis of accounting. 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. 22

40 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION (CONTINUED) 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 long-term debt, which is recognized when due. The expenditures related to certain compensated absences and claims, and judgments are recognized when the obligations are expected to be liquidated with expendable available financial resources. The District considers all 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 unearned 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. 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 assets, and unrestricted net assets. Agency Funds utilize the accrual basis of accounting but do not have a measurement focus as they report only assets and liabilities. 23

41 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. FUND ACCOUNTING The District reports the following major governmental funds: 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. ESEA, Title 1, Part A Improving Basic Programs (211). To account for funds allocated to allocated to the District to enable the District to provide opportunities for children served to acquire the knowledge and skills contained in the challenging State content standards and to meet the challenging State performance standards developed for all children. SSA, IDEA Part B, Formula (224). To account for funds granted to operate education programs for children with disabilities. Additionally, the District reports the following fund type(s): 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. 2. Debt Service Funds The District accounts for resources accumulated and payments made for principal and interest on long-term general obligation debt of governmental funds in a debt service fund. 3. Capital Projects Funds The proceeds from long-term debt financing and revenues and expenditures related to authorized construction and other capital asset acquisitions are accounted for in a capital projects fund. Fiduciary Funds: 1. Agency Funds The District uses these funds to report student activity funds and other resources held in a purely custodial capacity (assets equal liabilities). Agency funds typically involve only the receipt, temporary investment and remittance of the fiduciary resources to individuals, private organizations, or other governments. E. OTHER ACCOUNTING POLICIES 1. Property taxes are levied by October 1 on the assessed value listed as of the prior January 1 for all real and business personal property in conformance with Subtitle E, Texas Property Tax Code. Taxes are due on receipt of the tax bill and are delinquent if not paid before February 1 of the year following the year in which imposed. On January 1 of each year, a tax lien attaches to property to secure the payment of all taxes, penalties, and interest ultimately imposed. Property tax revenues are considered available (1) when they become due or past due and receivable within the current period and (2) when they are expected to be collected during a 60-day period after the close of the fiscal year. 24

42 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. OTHER ACCOUNTING POLICIES (CONTINUED) 2. Allowances for uncollectible tax receivables within the General and Debt Service Funds are based upon historical experience in collecting property taxes. Uncollectible personal property taxes are periodically reviewed and written off, but the District is prohibited from writing off real property taxes without specific statutory authority from the Texas Legislature. 3. The District uses the purchase method of accounting for inventory. An immediate change for inventory costs is recorded under the appropriate supply expenditure code and inventories are not reported on the balance sheet unless there is a significant amount at the fiscal year end. There were not significant amounts of inventory on hand at June 30, Capital assets, which include land, buildings, furniture and equipment [and infrastructure assets] are reported in the applicable governmental or business-type activities columns 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 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 [and the component units] are depreciated using the straight-line method over the following estimated useful lives: Asset Class Estimated Useful Lives Buildings & Improvements Vehicles 7 Furniture and Equipment Long-term Obligations, in the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. 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. 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 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. 25

43 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. OTHER ACCOUNTING POLICIES (CONTINUED) 6. It is the District's policy to permit some employees to accumulate earned but unused vacation and sick pay benefits. There is no liability for unpaid accumulated sick leave since the District does not have a policy to pay any amounts when employees separate from service with the district. All vacation pay is accrued when incurred in the government-wide, proprietary, and fiduciary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. 7. When the District incurs an expense for which it may use either restricted or unrestricted assets, it uses the restricted assets first unless unrestricted assets will have to be returned because they were not used 8. In the fund financial statements, governmental funds report fund balance as nonspendable if the amounts cannot be spent because they are either not in spendable form or are legally or contractually required to remain intact. Restrictions of fund balance are for amounts that are restricted to specific purposes by an external entity (creditors, grantors, governmental regulations) or the restriction is imposed by law through constitutional provision or enabling legislation. Commitments of fund balance represent amounts that can only be used for specific purposes pursuant to constraints imposed by the District's Board. Assignments of fund balance are amounts set aside by the District's Superintendent or his designee with the intent they be used for specific purposes. 9. 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 10. The District reports investments at fair value for reporting purposes. 11. Deferred outflows of resources, 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 related to the TRS pension plan, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources. 12. Deferred inflows of resources, 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. The District has one type of item which arises only under a modified accrual basis of accounting that qualifies for reporting in this category. Uncollected property taxes which are assumed collectible are reported in this category on the balance sheet for governmental funds. They are not reported in this category on the government wide statement of net position. 13. The Data Control Codes refer to the account code structure prescribed by TEA in the Financial Accountability System Resource Guide. Texas Education Agency requires school districts to display these codes in the financial statements filed with the Agency in order to insure accuracy in building a Statewide data base for policy development and funding plans. 26

44 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 II. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. BUDGETARY DATA The Board of Trustees adopts an "appropriated budget" for the General Fund, Debt Service Fund and the Food Service Fund which is included in the General Fund. The District is required to present the adopted and final amended budgeted revenues and expenditures for each of these funds. The District compares the final amended budget to actual revenues and expenditures. The General Fund Budget report appears in Exhibit G-1 in RSI and the other two reports are in Exhibit J4 and J5. The following procedures are followed in establishing the budgetary data reflected in the general-purpose financial statements: 1. Prior to June 20 the District prepares a budget for the next succeeding fiscal year beginning July 1. The operating budget includes proposed expenditures and the means of financing them. 2. A meeting of the Board is then called for the purpose of adopting the proposed budget. At least ten days' public notice of the meeting must be given. 3. Prior to July 1, the budget is legally enacted through passage of a resolution by the Board. Once a budget is approved, it can only be amended at the function and fund level by approval of a majority of the members of the Board. Amendments are presented to the Board at its regular meetings. Each amendment must have Board approval. As required by law, such amendments are made before the fact, are reflected in the official minutes of the Board, and are not made after fiscal year end. Because the District has a policy of careful budgetary control, several amendments were necessary during the year. However, none of these were significant. 4. Each budget is controlled by the budget coordinator at the revenue and expenditure function/object level. Budgeted amounts are as amended by the Board. All budget appropriations lapse at year end: 5. Encumbrances for goods or purchased services are documented by purchase orders or contracts. Under Texas law, appropriations lapse at June 30 th, and encumbrances outstanding at that time are to be either canceled or appropriately provided for in the subsequent year s budget. B. EXCESS OF EXPENDITURES OVER APPROPRIATIONS The District as of June 30, 2018, the General Fund expenditures over appropriations are as follows: General Fund Function Amount 35 $ 125,510 C. DEFICIT FUND EQUITY As of June 30, 2018, the District did not have deficit fund equity balances. 27

45 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS A. DEPOSITS AND INVESTMENTS Cash and Cash Equivalents District Policies and Legal and Contractual Provisions Governing Deposits Custodial Credit Risk for Deposits State law requires governmental entities to contract with financial institutions in which funds will be deposited to secure those deposits with insurance or pledged securities with a fair value equaling or exceeding the amount on deposit at the end of each business day. The pledged securities must be in the name of the governmental entity and held by the entity or its agent. Since the district complies with this law, it has no custodial credit risk for deposits. Foreign Currency Risk The District limits the risk that changes in exchange rates will adversely affect the fair value of an investment or a deposit by (state an appropriate policy, such as, limiting all deposits denominated in a foreign currency to less than 5% of all deposits.) As of June 30, 2018, the following are the District's cash and cash equivalents with respective maturities and credit rating: Maturity in Maturity In Less Than Maturity y in Over Credit Type of Deposit Fair Value Percent One Year 1-10 Years 10 Years Rating Cash $ 892, % $ - $ - $ - N/A Investment Pools: Lone Start 8,505, % 8,505, AAAm Total Investment Pools: $ 8,505, % $ 8,505,791 $ - $ - Total Cash and Cash Equivalents $ 9,398, % $ 8,505,791 Investments District Policies and Legal and Contractual Provisions Governing Investments Compliance with the Public Funds Investment Act The Public Funds Investment Act (Government Code Chapter 2256) contains specific provisions in the areas of investment practices, management reports, and establishment of appropriate policies. Among other things, it requires a governmental entity to adopt, implement, and publicize an investment policy. That policy must address the following areas: (1) safety of principal and liquidity, (2) portfolio diversification, (3) allowable investments, (4) acceptable risk levels, (5) expected rates of return, (6) maximum allowable stated maturity of portfolio investments, (7) maximum average dollar-weighted maturity allowed based on the stated maturity date for the portfolio, (8) investment staff quality and capabilities, (9) and bid solicitation preferences for certificates of deposit. 28

46 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (CONTINUED) A. DEPOSITS AND INVESTMENTS (CONTINUED) Statutes authorize the entity to invest in (1) obligations of the U.S. Treasury, certain U.S. agencies, and the State of Texas and its agencies; (2) guaranteed or secured certificates of deposit issued by state and national banks domiciled in Texas; (3) obligations of states, agencies, counties, cities and other political subdivisions of any state having been rated as to investment quality not less than an "A"; (4) No load money market funds with a weighted average maturity of 90 days or less; (5) fully collateralized repurchase agreements; (6) commercial paper having a stated maturity of 270 days or less from the date of issuance and is not rated less than A-1 or P-1 by two nationally recognized credit rating agencies OR one nationally recognized credit agency and is fully secured by an irrevocable letter of credit; (7) secured corporate bonds rated not lower than "AA-" or the equivalent; (8) public funds investment pools; and (9) guaranteed investment contracts for bond proceeds investment only, with a defined termination date and secured by U.S. Government direct or agency obligations approved by the Texas public Funds Investment Act in an amount equal to the bond proceeds. The Act also requires the entity to have independent auditors perform test procedures related to investment practices as provided by the Act. RAYMONDVILLE INDEPENDENT SCHOOL DISTRICT is in substantial compliance with the requirements of the Act and with local policies. Additional policies and contractual provisions governing investments for RAYMONDVILLE INDEPENDENT SCHOOL DISTRICT are specified below: Credit Risk To limit the risk that an issuer or other counterparty to an investment will not fulfill its obligations the District limits investments in (list investments covered by the district's credit risk policy, such as commercial paper, corporate bonds, mutual bond funds) to the top (or top 2 or 3) ratings issued by nationally recognized statistical rating organizations (NRSROs). As of June 30, 2018, the district's investments in (category such as commercial paper) were rated (give appropriate information, for example, A1 by Standard & Poor's, F-1 by Fitch Ratings, etc.) (If a credit quality disclosure is required and the investment is unrated, the disclosure should indicate that fact.) Custodial Credit Risk for Investments To limit the risk that, in the event of the failure of the counterparty to a transaction, a government will not be able to recover the value of investment or collateral securities that are in possession of an outside party the District requires counterparties to register the securities in the name of the district and hand them over to the District or its designated agent. This includes securities in securities lending transactions. All of the securities are in the District's name and held by the District or its agent. Concentration of Credit Risk To limit the risk of loss attributed to the magnitude of a government's investment in a single issuer, the District limits investments to less than 5% of its total investments. The District further limits investments in a single issuer when they would cause investment risks to be significantly greater in the governmental and business-type activities, individual major funds, aggregate non-major funds and fiduciary fund types than they are in the primary government. Usually this limitation is 20%. Interest Rate Risk To limit the risk that changes in interest rates will adversely affect the fair value of investments, the District requires (specify some policy guideline such as "at least half of the investment portfolio to have maturities of less than one year on a weighted average maturity basis"). 29

47 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (CONTINUED) A. DEPOSITS AND INVESTMENTS (CONTINUED) Foreign Currency Risk for Investments The District limits the risk that changes in exchange rates will adversely affect the fair value of an investment, such as, "limiting all investments denominated in a foreign currency to less than 5% of all investments".) The District s general policy is to report money market investments and short-term participating interest-earning investment contracts at amortized cost and to report nonparticipating interest-earning investment contracts using a cost-based measure. However, if the fair value of an investment is significantly affected by the impairment of the credit standing of the issuer or by other factors, it is reported at fair value. All other investments are reported at fair value unless a legal contract exists which guarantees a higher value. The term short-term refers to investments which have a remaining term of one year or less at time of purchase. The term nonparticipating means that the investment s value does not vary with market interest rate changes. Nonnegotiable certificates of deposit are examples of nonparticipating interest-earning investment contracts. In this discussion and in the table below, investments are defined according to GASB 72 as a security or other asset that (a) a government holds primarily for the purpose of income or profit and (b) has a present service capacity based solely on its ability to generate cash or to be sold to generate cash. An asset initially reported as a capital asset and later held for sale would not subsequently be reclassified as an investment As of June 30, 2018, had the following investments subject to the fair value measurement (dollar amounts are in thousands). Investment Maturities (in years) Investment Type Fair Value Less Than 1 1 to 5 6 to 10 More Than 10 Loan Star Investment Pool $ 8,505,791 $ 8,505,791 $ - $ - $ - Total $ 8,505,791 $ 8,505,791 $ - $ - $ - B. PROPERTY TAXES Property taxes are levied by October 1 on the assessed value listed as of the prior January 1 for all real and business personal property located in the District in conformity with Subtitle E, Texas Property Tax Code. Taxes are due on receipt of the tax bill and are delinquent if not paid before February 1 of the year following the year in which imposed. On January 31 of each year, a tax lien attaches to property to secure the payment of all taxes, penalties, and interest ultimately imposed. Property tax revenues are considered available (1) when they become due or past due and receivable within the current period, and (2) when they are expected to be collected during a 60-day period after the close of the school fiscal year. 30

48 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (CONTINUED) C. DELINQUENT TAXES RECEIVABLE Delinquent taxes are prorated between maintenance and debt service based on rates adopted for the year of the levy Allowances for uncollectible tax receivables within the General and Debt Service Funds are based on historical experience in collecting property taxes. Uncollectible personal property taxes are periodically reviewed and written off, but the District is prohibited from writing off real property taxes without specific statutory authority from the Texas Legislature. D. DUE FROM OTHER GOVERNMENTS The District participates in a variety of federal and state programs from which it receives grants to partially or fully finance certain activities. In addition, the District receives entitlements from the state through the School Foundation and Per Capita Programs. Amounts due from local, federal and state governments as of June 30, 2018, are summarized below. Fund State Entitlements Federal Grants Total General $ 1,794,223 $ - $ 1,794,223 ESEA Title 1 Part A - $ 593,063 $ 593,063 SSA-IDEA Part B - $ 517,495 $ 517,495 Special Revenue 33, , ,636 Total $ 1,827,636 $ 1,403,781 $ 3,231,417 E. INTERFUND BALANCES AND TRANSFERS The composition of Interfund balances as of June 30, 2018 is as follows: Receivable (Payable) Fund Receivable Fund Payable Fund Amount General Fund Special Revenue $ 1,108,454 General Fund Agency Fund 841,558 General Fund Agency Fund (32,244) Debt Service Fund General Fund (150,136) Special Revenue General Fund (1,108,454) Special Revenue General Fund 5,720 Special Revenue General Fund (5,720) Special Revenue Agency Fund (29,565) Debt Service Fund General Fund 150,136 Agency Fund General Fund 32,244 Agency Fund Special Revenue 29,565 General Fund Agency Fund (841,558) Total $ - 31

49 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (CONTINUED) E. INTERFUND BALANCES AND TRANSFERS (CONTINUED) Balances resulted from the time lag between the dates that 1) interfund goods and serves are provided and/or reimbursable expenditures occur, and 2) transactions are recorded in the accounting system, and 3) payments between funds are made. Balances also result from interfund payroll transactions and end of year reclasses made between funds. F. CAPITAL ASSET ACTIVITY Capital asset activity for the District for the year ended June 30, 2018 was as follows: Governmental Activities: Primary Government Changes During Year Balance 07/01/17 Additions Retirements Reclassifications/ Adjustments Balance 06/30/18 Land $ 479,351 $ - $ - $ - $ 479,351 Buildings & Improvements 52,979, , ,224,424 Furniture and Equipment 4,228, ,228,866 Vehicles 2,988,902 - (146,820) - 2,842,082 Capital Lease 27, ,767 Totals at Historic Cost 60,704, ,815 (146,820) - 60,802,490 Less Accumulated Depreciation: Buildings & Improvements (21,334,354) (1,392,060) - - (22,726,414) Furniture and Equipment (2,256,656) (96,027) - - (2,352,683) Vehicles (1,470,573) (119,399) 145,272 - (1,444,700) Capital Lease (27,767) (27,767) Total Accumulated Depreciation (25,089,350) (1,607,486) 145,272 - (26,551,564) Governmental Activities Capital Assets, Net $ 35,615,145 $ (1,362,671) $ (1,548) $ - $ 34,250,926 32

50 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (CONTINUED) F. CAPITAL ASSET ACTIVITY (CONTINUED) Depreciation expense was charged to governmental functions as follows: Primary Government Instruction $ 816,030 Instructional Resources and Media Services 16,721 Curriculum and Staff Development 40,003 Instructional Leadership 26,407 School Leadership 92,051 Guidance, Counseling and Evaluation Services 65,830 Social Work Services 12,050 Health Services 13,744 Student Transportation 27,809 Food Services 110,346 Curricular/Extracurricular Activities 77,471 General Administration 74,852 Plant Maintenance and Operations 183,161 Sercurity and Monitoring Services 25,558 Data Processing Services 21,995 Community Services 3,458 Total Depreciation Expense $ 1,607,486 33

51 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (CONTINUED) G. BONDS AND LONG-TERM NOTES PAYABLE Bonded indebtedness of the District is reflected in the General Long-Term Debt Account Group. Current requirements for principal and interest expenditures are accounted for in the Debt Service Fund. A summary of changes in general long-term debt for the year ended June 30, 2018 is as follows: Description Interest Rate Original Interest Amount Interest Current Yr Balance 07/01/17 Principal Retired Balance 06/30/18 Unlimited Tax Refunding Bonds, Series % $ 9,800,000 $ 9,800 $ 245,000 $ (245,000) $ - Unlimited Tax School Building, Series % 3,490, ,212 3,490,000 (515,000) 2,975,000 Unlimited Tax Schools Building, Series %-3.5% 1,805,000 46,200 1,320,000-1,320,000 Unlimited Tax Refunding Bonds, Series %-3.75% 5,590, ,938 3,995,000 (345,000) 3,650,000 Unlimited Tax Refunding Bonds, Series %-4.0% 7,765, ,800 7,660,000-7,660,000 Totals $ 595,950 $ 16,710,000 $ (1,105,000) $ 15,605,000 The Unlimited Tax School Building Bonds, Series 2008 in the amount of $9,800,000 were issued for the purpose of financing the construction of school buildings. The bonds were issued with interest rates varying from 3.5% to 5.0%. The Unlimited Tax Refunding Bonds, Series 2010 in the amount of $3,490,000 were issued for purpose of cashflow savings. The District refunded portions of its U/L Tax School Building Bonds, Series Series 1998 was called in on June 10, 2010 and District paid from bond proceeds par amount of refunded bonds plus accrued interest of refunded bonds. Par amount of bonds refunded from Series 1998 was $3,560,000. Par Amount of Series 2010 was $3,490,000. Average Coupon of Series 1998 Refunded bonds was 4.50%. District was able to close its U/L Tax Refunding Bonds, Series 2010 at a True Interest Cost of 3.39%. Net Present Value Savings was $233,485 or 6.55%. Average Annual Savings from Refunding was $22,512 for FYE 2011 to FYE The Bonds were issued with an interest rate varying from 3.330% to 4.500%. Interest of the Bonds will be payable on each February 15th and August 15th until maturity and will be calculated on the basis of a 360-day year of twelve 30 day months. 34

52 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (CONTINUED) G. BONDS AND LONG-TERM NOTES PAYABLE(CONTINUED) The Unlimited Tax Refunding Bonds, Series 2012 in the amount of $1,805,000 were issued to refund the District s Unlimited Tax School Building Bonds, Series The bonds were issued with interest rates varying from 4.5% to 5.125%. The net proceeds of $1,836,498 (after payment of $117,814 in underwriting fees, insurance, and other issuance costs) were used to currently refund the 2001 Bonds. As a result, the 2001 Bonds are considered to be defeased and the liability for those bonds has been removed from the financial statements. This refunding decreased total debt service payments over 20 years by $435,326, resulting in an economic gain of $354,697. The Unlimited Tax Refunding Bonds, Series 2014 in the amount of $5,590,000 were issued to refund the District s Unlimited Tax Refunding Bonds, Series The bonds were issued with interest rate varying from 2.0% to 3.75%. The net proceeds of $5,758,790 (after payment of $187,008 in underwriting fees, insurance, and other issuance costs) were used to currently refund the 2005 bonds. This refunding decreased total debt service payments over 15 years by $649,738, resulting in an economic gain of $561,426. The Unlimited Tax Refunding Bonds, Series 2016 in the amount of $7,765,000 were issued to refund the District s Unlimited Tax Refunding Bonds, Series The bonds were issued with interest rates varying from 2.0% to 4.0%. The net proceeds of $8,575, (after payment of $219,040 in underwriting fees, insurance, and other issuance costs) were used to currently refund the 2008 Bonds. This refunding decreased total debt service payments 22 years by $1,584,033, resulting in an economic gain of $1,288,612. Debt service requirements for bonds are as follows: Year Ended Go v ern men tal A ctiv ities Total June 30, Principal Interes t Required 2019 $ 1,175,000 $ 556,076 $ 1,731, ,205, ,200 1,721, ,255, ,400 1,729, ,305, ,800 1,735, ,360, ,088 1,750, ,950,000 1,460,492 5,410, ,875, ,552 3,657, ,480, ,600 2,785,600 Totals $ 15,605,000 $ 4,916,208 $ 20,521,208 35

53 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (CONTINUED) H. CHANGES IN LONG-TERM DEBT Activity in the Long-Term Debt for the District for the year ended June 30, 2018, was as follows: Balance 07/01/17 Additions Reductions Balance 06/30/18 Due Within One Year Bonds Payable $ 16,710,000 $ - $ (1,105,000) $ 15,605,000 $ 1,175,000 Compensated Balances 441, , ,472 Premium on Bonds: Bonds Payable ,638 - (23,720) 260,918 - Bonds Payable ,211 - (49,011) 882,200 - Net Pension Liability 6,351, ,251,258 - Totals $ 24,718,568 $ - $ (1,177,731) $ 22,440,848 $ 1,616,472 I. ACCUMULATED UNPAID VACATION AND SICK LEAVE BENEFITS Upon retirement from the District, the District pays any accrued local leave in a lump cash payment to such employee. The District pays a maximum of 40 days, at a rate of $100 per day for professional employees and $50 per day for all other employees. An employee must request reimbursement within 60 days after the effective date of his or her retirement from Teacher Retirement System of Texas. Local Leave Balance July 1, 2017 $165,725 Additions - New Entrants and Salary Increments 0 Deductions - Payments to Participants (10,592) Balance June 30, 2018 $ 155,133 36

54 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (CONTINUED) J. DEFINED BENEFIT PENSION PLAN Plan Description. participates in a cost-sharing multiple-employer defined benefit pension that has a special funding situation. The plan is administered by the Teacher Retirement System of Texas (TRS). It is a defined benefit pension plan established and administered in accordance with the Texas Constitution, Article XVI, Section 67 and Texas Government Code, Title 8, Subtitle C. The pension trust fund is a qualified pension trust under Section 401(a) of the Internal Revenue Code. The Texas Legislature establishes benefits and contribution rates within the guidelines of the Texas Constitution. The pension's Board of Trustees does not have the authority to establish or amend benefit terms. All employees of public, state-supported educational institutions in Texas who are employed for one-half or more of the standard work load and who are not exempted from membership under Texas Government Code, Title 8, Section are covered by the system. Pension Plan Fiduciary Net Position. Detailed information about the Teacher Retirement System's fiduciary net position is available in a separately-issued Comprehensive Annual Financial Report that includes financial statements and required supplementary information. That report may be obtained at by writing to TRS at 1000 Red River Street, Austin, TX, ; or by calling (512) Benefits Provided. TRS provides service and disability retirement, as well as death and survivor benefits, to eligible employees (and their beneficiaries) of public and higher education in Texas. The pension formula is calculated using 2.3 percent (multiplier) times the average of the five highest annual creditable salaries times years of credited service to arrive at the annual standard annuity except for members who are grandfathered, the three highest annual salaries are used. The normal service retirement is at age 65 with 5 years of credited service or when the sum of the member s age and years of credited service equals 80 or more years. Early retirement is at age 55 with 5 years of service credit or earlier than 55 with 30 years of service credit. There are additional provisions for early retirement if the sum of the member s age and years of service credit total at least 80, but the member is less than age 60 or 62 depending on date of employment, or if the member was grandfathered in under a previous rule. There are no automatic post-employment benefit changes; including automatic COLAs. Ad hoc post-employment benefit changes, including ad hoc COLAs can be granted by the Texas Legislature as noted in the Plan description above. Contributions. Contribution requirements are established or amended pursuant to Article 16, section 67 of the Texas Constitution which requires the Texas legislature to establish a member contribution rate of not less than 6% of the member s annual compensation and a state contribution rate of not less than 6% and not more than 10% of the aggregate annual compensation paid to members of the system during the fiscal year. Texas Government Code section prohibits benefit improvements, if as a result of the particular action, the time required to amortize TRS unfunded actuarial liabilities would be increased to a period that exceeds 31 years, or, if the amortization period already exceeds 31 years, the period would be increased by such action. 37

55 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (CONTINUED) J. DEFINED BENEFIT PENSION PLAN(CONTINUED) Employee contribution rates are set in state statute, Texas Government Code Senate Bill 1458 of the 83rd Texas Legislature amended Texas Government Code for member contributions and established employee contribution rates for fiscal years 2014 thru The 84th Texas Legislature, General Appropriations Act (GAA) established the employer contribution rates for fiscal years 2016 and Contribution Rates can be found in the TRS 2017 CAFR, Note 12, on page 88. Contribution Rates Member 7.7% 7.7% Non-Employer Contributing Entity (State) 6.8% 6.8% Employers 6.8% 6.8% District's 2018 Employer Contributions $ 531,329 District's 2018 FY Member Contributions $ 1,162,381 District's 2018 NECE On-Behalf Contributions $ 685,396 District 2018 FY Contributions from School District Records; Member Contributions for FY 2018 from District Records; NECE On-Behalf Contributions as reported for Measurement Year ending August 31, 2017 are found on TRS Non-Employer Contributing Entity On-Behalf Payments. Contributors to the plan include members, employers and the State of Texas as the only non-employer contributing entity. The State contributes to the plan in accordance with state statutes and the General Appropriations Act (GAA). As the non-employer contributing entity for public education and junior colleges, the State of Texas contributes to the retirement system an amount equal to the current employer contribution rate times the aggregate annual compensation of all participating members of the pension trust fund during that fiscal year reduced by the amounts described below which are paid by the employers. Employers (including public schools) are required to pay the employer contribution rate in the following instances: On the portion of the member's salary that exceeds the statutory minimum for members entitled to the statutory minimum under Section of the Texas Education Code. During a new member's first 90 days of employment When any part or all of an employee's salary is paid by federal funding sources or a privately sponsored source. In addition to the employer contributions listed above, there are two additional surcharges an employer is subject to. When employing a retiree of the Teacher Retirement System the employer shall pay both the member contribution and the state contribution as an employment after retirement surcharge. When a school district does not contribute to the Federal Old-Age, Survivors and Disability Insurance (OASDI) Program for certain employees, they must contribute 1.5% of the state contribution rate for certain instructional or administrative employees; and 100% of the state contribution rate for all other employees. 38

56 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (CONTINUED) J. DEFINED BENEFIT PENSION PLAN(CONTINUED) Actuarial Assumptions. The total pension liability in the August 31, 2017 actuarial valuation was determined using the following actuarial assumptions: Actuarial Assumptions can be found in the 2017 TRS CAFR, Note 12, page 90. Valuation Date 8/31/2017 A ctuarial Cost M ethod Asset Valuation Method Individual Entry Age Normal Market Value Single Dis count Rate 8.00% Long-term expected Investment Rate of Return 8.00% Inflation 2.50% Salary Increases including Inflation 3.5% to 9.5% including inflation Payroll Growth Rate 2.50% Benefit Changes During the Year Ad Hoc Post-Employment Benefit Changes None None The actuarial methods and assumptions are based primarily on a study of actual experience for the four year period ending August 31, 2014 and adopted on September 24, Discount Rate. The discount rate used to measure the total pension liability was 8.0%. The Discount Rate can be found in the 2017 TRS CAFR on page 90. There was no change in the discount rate since the previous year. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and those of the contributing employers and the non-employer contributing entity are made at the statutorily required rates. Based on those assumptions, the pension plan s fiduciary net position was projected to be available to make all future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. The long-term rate of return on pension plan investments is 8%. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimates ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of geometric real rates of return for each major asset class included in the Systems target asset allocation as of August 31, 2017 (see page 62 of the TRS CAFR) are summarized below: 39

57 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (CONTINUED) J. DEFINED BENEFIT PENSION PLAN(CONTINUED) Expected Long-Term Expected Long-Term Target Geometric Real Portfolio Asset Class Allocation Rate of Return Return* Global Equity U.S. 18% 4.6% 1.0% Non-U.S. Developed 13% 5.1% 0.8% Emerging Markets 9% 5.9% 0.7% Directional Hedge Funds 4% 3.2% 0.1% Private Equity 13% 7.0% 1.1% Stable Value U.S. Treasuries 11% 0.7% 0.1% Absolute Return 0% 1.8% 0.0% Stable Value Hedge Funds 4% 3.0% 0.1% Cash 1% -0.2% 0.0% Real Return Global Inflation Linked Bonds 3% 0.9% 0.0% Real Assets 16% 5.1% 1.1% Energy and Natural Resources 3% 6.6% 0.2% Commodities 0% 1.2% 0.0% Risk Parity Risk Parity 5% 6.7% 0.3% Inflation Expectation - 2.2% Alpha - 1% Total % 8.70% Contribution to * The Expected Contribution to Returns incorporates the volatility drag resulting from the conversion between Arithmetic and Geometric mean returns. Discount Rate Sensitivity Analysis. The following schedule shows the impact of the Net Pension Liability if the discount rate used was 1% less than and 1% greater than the discount rate that was used (8%) in measuring the Net Pension Liability. 1% Decrease in Discount Rate (7.0%) Discount Rate (8.0%) 1% Increase in Discount Rate (9.0%) Proportionate share of the net pension liability: $ 8,852,583 $ 5,251,258 $ 2,252,570 These amounts must be calculated using the District's Proportionate Share and the following amounts from the TRS CAFR, Note 12, Page 91 - For Discount rate of 7.0% $53,902,879,534; for Discount rate of 8.0% $31,974,612,699; and for Discount Rate 9.0% $13,715,771,

58 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (CONTINUED) J. DEFINED BENEFIT PENSION PLAN(CONTINUED) Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions. At June 30, 2018, RAYMONDVILLE INDEPENDENT SCHOOL DISTRICT reported a liability of $5,251,258 for its proportionate share of the TRS's net pension liability. This liability reflects a reduction for State pension support provided to. The amount recognized by as its proportionate share of the net pension liability, the related State support, and the total portion of the net pension liability that was associated with RAYMONDVILLE INDEPENDENT SCHOOL DISTRICT were as follows: District's proportionate share of the collective net pension liability $ 5,251,258 State's proportionate share that is associated with the District 6,700,814 Total $ 11,952,072 The net pension liability was measured as of August 31, 2017 and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The employer's proportion of the net pension liability was based on the employer's contributions to the pension plan relative to the contributions of all employers to the plan for the period September 1, 2016 thru August 31, At August 31, 2017 the employer's proportion of the collective net pension liability was % which was an increase (decrease) of % from its proportion measured as of August 31, Changes Since the Prior Actuarial Valuation There were no changes to the actuarial assumptions or other inputs that affected measurement of the total pension liability since the prior measurement period. There were no changes of benefit terms that affected measurement of the total pension liability during the measurement period. For the year ended June 30, 2018, recognized pension expense of $ 2,753,266 and revenue of $ 511,111 for support provided by the State in the Government Wide Statement of Activities. At June 30, 2018, reported its proportionate share of the TRS's deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: (The amounts shown below will be he cumulative layers from the current and prior years combined.) 41

59 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (CONTINUED) J. DEFINED BENEFIT PENSION PLAN(CONTINUED) Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual economic experiences $ 76,828 $ 283,193 Changes in actuarial assumptions 239, ,938 Differences between projected and actual investment earnings - 382,700 Changes in proportion and differences between the employer's contributions and the proportionate share of contributions 397, ,719 Total as of August 31, 2016 measurement date $ 713,061 $ 1,365,550 Contributions paid to TRS subsequent to the measurement date 442,231 - Total as of fiscal year-end $ 1,155,292 $ 1,365,550 The net amounts of the employer's balances of deferred outflows and inflows (not including the deferred contribution paid subsequent to the measurement date) of resources related to pensions will be recognized in pension expense as follows: Pension Expense Year ended June 30, Amount 2018 $ (183,680) , (209,433) 2021 (298,846) 2022 (91,933) Thereafter (20,119) 42

60 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (CONTINUED) K. DEFINED OTHER POST-EMPLOYMENT BENEFIT PLANS Plan Description. The District participates in the Texas Public School Retired Employees Group Insurance Program (TRS-Care). It is a multiple-employer, cost-sharing defined Other Post-Employment Benefit (OPEB) plan that has a special funding situation. The plan is administered through a trust by the Teacher Retirement System of Texas (TRS) Board of Trustees. It is established and administered in accordance with the Texas Insurance Code, Chapter OPEB Plan Fiduciary Net Position. Detail information about the TRS-Care s fiduciary net position is available in the separately-issued TRS Comprehensive Annual Financial Report that includes financial statements and required supplementary information. That report may be obtained on the Internet at by writing to TRS at 1000 Red River Street, Austin, TX, ; or by calling (512) Benefits Provided. TRS-Care provides a basic health insurance coverage (TRS-Care 1), at no cost to all retirees from public schools, charter schools, regional education service centers and other educational districts who are members of the TRS pension plan. Optional dependent coverage is available for an additional fee. Eligible retirees and their dependents not enrolled in Medicare may pay premiums to participate in one of two optional insurance plans with more comprehensive benefits (TRS-Care 2 and TRS-Care 3). Eligible retirees and dependents enrolled in Medicare may elect to participate in one of the two Medicare health plans for an additional fee. To qualify for TRS-Care coverage, a retiree must have at least 10 years of service credit in the TRS pension system. The Board of Trustees is granted the authority to establish basic and optional group insurance coverage for participants as well as to amend benefit terms as needed under Chapter There are no automatic post-employment benefit changes; including automatic COLAs. The premium rates for the optional health insurance are based on years of service of the member. The schedule below shows the monthly rates for the average retiree with Medicare Parts A&B coverage, with 20 to 29 years of service for the basic plan and the two optional plans. 43

61 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (CONTINUED) K. DEFINED OTHER POST-EMPLOYMENT BENEFIT PLANS (CONTINUED) Benefits Provided (Continued) TRS-Care Plan Premium Rates Effective Sept. 1, Dec. 31, 2017 TRS Care-1 TRS Care-2 TRS Care-3 Basic Plan Optional Plan Optional Plan Retiree* $0 $70 $100 Retiree and Spouse Retiree* and Children Retiree and Family Surviving Children Only *or surviving spouse Contributions. Contribution rates for the TRS-Care plan are established in state statute by the Texas Legislature, and there is no continuing obligation to provide benefits beyond each fiscal year. The TRS-Care plan is currently funded on a pay-as-you-go basis and is subject to change based on available funding. Funding for TRS-Care is provided by retiree premium contributions and contributions from the state, active employees, and school districts based upon public school district payroll. The TRS Board of trustees does not have the authority to set or amend contribution rates. Texas Insurance Code, section establishes the state s contribution rate which is 1.0% of the employee s salary. Section establishes the active employee s rate which is.65% of pay. Section establishes an employer contribution rate of not less than 0.25 percent or not more than 0.75 percent of the salary of each active employee of the public. The actual employer contribution rate is prescribed by the Legislature in the General Appropriations Act. The following table shows contributions to the TRS-Care plan by type of contributor. Contribution Rates Member 0.65% 0.65% Non-Employer Contributing Entity (State) 1.00% 1.25% Employers 0.55% 0.75% Federal/Private Funding Remitted by Employers 1.00% 1.25% Current fiscal year employer contributions $ 171,483 Current fiscal year member contributions $ 98, measurement year NECE on-behalf contributions $ 116,578 District 2018 FY Contributions from School District Records; Member Contributions for FY 2018 from District Records; NECE On-Behalf Contributions as reported for Measurement Year ending June 30, In addition to the employer contributions listed above, there is an additional surcharge all TRS employers are subject to (regardless of whether or not they participate in the TRS Care OPEB program). When employers hire a TRS retiree, they are required to pay to TRS Care, a monthly surcharge of $535 per retiree. 44

62 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (CONTINUED) K. DEFINED OTHER POST-EMPLOYMENT BENEFIT PLANS (CONTINUED) Contributions (Continued) TRS-Care received supplemental appropriations from the State of Texas as the Non-Employer Contributing Entity in the amount of $15.6 million in fiscal year House Bill 30 was passed in special session and provided a supplemental appropriation in the amount of $212 million in fiscal year Actuarial Assumptions. The total OPEB liability in the August 31, 2017 actuarial valuation was determined using the following actuarial assumptions: Actuarial Assumptions can be found in the 2017 TRS CAFR, Note 10, page 82. The following assumptions and other inputs used for members of TRS-Care are identical to the assumptions used in the August 31, 2017 TRS pension actuarial valuation: Rates of Mortality Rates of Retirement Rates of Termination Rates of Disability Incidence General Inflation Wage Inflation Expected Payroll Growth Additional Actuarial Methods and Assumptions: Valuation Date August 31, 2017 Actuarial Cost Method Individual Entry Age Normal Inflation 2.50% Discount Rate 3.42% Aging Factors Based on Plan Specific Experience Third-party administrative expenses related to Expenses the delivery of health care benefits are included in the age-adjusted claims costs. Payroll Growth Rate 2.50% Projected Salary Increases 3.50% % Healthcare Trend Rates 4.50% % Election Rates Normal Retirement: 70% participation prior to age 65 and 75% participation after age 65 Ad-hoc Post Employment Benefit Changes None Other Information: There was a significant plan change adopted in fiscal year ending August 31, Effective January 1, 2018, only one health plan option will be offered and all retirees will be required to contribute monthly premiums for coverage. Assumption changes made for the August 31, 2017 valuation include a change to the assumption regarding the phase-out of the Medicare Part D subsidies and a change to the discount rate from 2.98% as of August 31, 2016 to 3.42% as of August 31, Discount Rate. A single discount rate of 3.42% was used to measure the total OPEB liability. There was a change of.44 percent in the discount rate since the previous year. The Discount Rate can be found in the 2017 TRS CAFR on page

63 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (CONTINUED) K. DEFINED OTHER POST-EMPLOYMENT BENEFIT PLANS (CONTINUED) Discount Rate (Continued). Because the plan is essentially a pay-as-you-go plan, the single discount rate is equal to the prevailing municipal bond rate. The projection of cash flows used to determine the discount rate assumed that contributions from active members and those of the contributing employers and the non-employer contributing entity are made at the statutorily required rates. Based on those assumptions, the OPEB plan s fiduciary net position was projected to not be able to make all future benefit payments of current plan members. Therefore, the municipal bond rate was applied to all periods of projected benefit payments to determine the total OPEB liability. The source of the municipal bond rate was Fixed-income municipal bonds with 20 years to maturity that include only federally tax-exempt municipal bonds as reported in Fidelity Index s 20-year Municipal GO AA Index as of August 31, Teacher Retirement System of Texas Asset Allocation and Long-Term Expected Rate of Return As of August 31, 2016 Expected Long-Term Contribution to Expected Long-Term Target Geometric Real Portfolio Asset Class Allocation Rate of Return Return* Global Equity U.S. 18% 4.6% 1.0% Non-U.S. Developed 13% 5.1% 0.8% Emerging Markets 9% 5.9% 0.7% Directional Hedge Funds 4% 3.2% 0.1% Private Equity 13% 7.0% 1.1% Stable Value U.S. Treasuries 11% 0.7% 0.1% Absolute Return 0% 1.8% 0.0% Stable Value Hedge Funds 4% 3.0% 0.1% Cash 1% -0.2% 0.0% Real Return Global Inflation Linked Bonds 3% 0.9% 0.0% Real Assets 16% 5.1% 1.1% Energy and Natural Resources 3% 6.6% 0.2% Commodities 0% 1.2% 0.0% Risk Parity Risk Parity 5% 6.7% 0.3% Inflation Expectation - 2.2% Alpha - 1% Total % 8.70% * The Expected Contribution to Returns incorporates the volatility drag resulting from the conversion between Arithmetic and Geometric mean returns. 46

64 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (CONTINUED) K. DEFINED OTHER POST-EMPLOYMENT BENEFIT PLANS (CONTINUED) Discount Rate Sensitivity Analysis. The following schedule shows the impact of the Net OPEB Liability if the discount rate used was 1% less than and 1% greater than the discount rate that was used (3.42%) in measuring the Net OPEB Liability. 1% Decrease in Discount Rate (2.42%) Discount Rate (3.42%) 1% Increase in Discount Rate (4.42%) Proportionate share of the net pension liability: $ 13,889,194 $ 11,768,028 $ 10,063,088 These amounts must be calculated using the District's Proportionate Share and the following amounts from the TRS CAFR, Note 10, Page 84 - For Discount rate of 2.42% $51,324,568,976; for Discount rate of 3.42% $43,486,248,635; and for Discount Rate 4.42% $37,186,006,400.] OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEBs. At June 30, 2018, RAYMONDVILLE INDEPENDENT SCHOOL DISTRICT reported a liability of $ 11,768,028 for its proportionate share of the TRS s Net OPEB Liability. This liability reflects a reduction for State OPEB support provided to the District. The amount recognized by the District as its proportionate share of the net OPEB liability, the related State support, and the total portion of the net OPEB liability that was associated with RAYMONDVILLE INDEPENDENT SCHOOL DISTRICT were as follows: District's proportionate share of the collective net pension liability $ 11,768,028 State's proportionate share that is associated with the District 9,750,958 Total $ 21,518,986 The Net OPEB Liability was measured as of August 31, 2017 and the Total OPEB Liability used to calculate the Net OPEB Liability was determined by an actuarial valuation as of that date. The employer s proportion of the Net OPEB Liability was based on the employer s contributions to the OPEB plan relative to the contributions of all employers to the plan for the period September 1, 2016 thru August 31, At August 31, 2017 the employer s proportion of the collective Net OPEB Liability was 54.69% which was the same proportion measured as of August 31, Changes Since the Prior Actuarial Valuation The following were changes to the actuarial assumptions or other inputs that affected measurement of the Total OPEB liability since the prior measurement period: These can be found in the TRS CAFR on page 83. Significant plan changes were adopted during fiscal year ending August 31, Effective January 1, 2018, only one health plan option will exist (instead of three), and all retirees will be required to contribute monthly premiums for coverage. The health plan changes triggered changes to several of the assumptions, including participation rates, retirement rates, and spousal participation rates. 47

65 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (CONTINUED) K. DEFINED OTHER POST-EMPLOYMENT BENEFIT PLANS (CONTINUED) The August 31, 2016 valuation had assumed that the savings related to the Medicare Part D reimbursements would phase out by This assumption was removed for the August 31, 2017 valuation. Although there is uncertainty regarding these federal subsidies, the new assumption better reflects the current substantive plan. This change was unrelated to the plan amendment, and its impact was included as an assumption change in the reconciliation of the total OPEB liability. This change significantly lowered the OPEB liability. The discount rate changed from 2.98 percent as of August 31, 2016 to 3.42 percent as of August 31, This change lowered the total OPEB liability. In this valuation the impact of the Cadillac Tax has been calculated as a portion of the trend assumption. Assumptions and methods used to determine the impact of the Cadillac Tax include: 2018 thresholds of $850/$2,292 were indexed annually by 2.50 percent. Premium data submitted was not adjusted for permissible exclusions to the Cadillac Tax. There were no special adjustments to the dollar limit other than those permissible for non-medicare retirees over 55. Results indicate that the value of the excise tax would be reasonably represented by a 25 basis point addition to the long term trend rate assumption. Future actuarial measurements may differ significantly from the current measurements due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements; and changes in plan provisions or applicable law. There were no changes of benefit terms that affected measurement of the Total OPEB liability during the measurement period. For the year ended June 30, 2018, recognized OPEB expense of $(7,233,032) and revenue of $$3,262,930) for support provided by the State. Deferred Outflows Deferred Inflows of Resources of Resources Differences between expected and actual economic experiences $ - $ 245,667 Changes in actuarial assumptions - 4,676,922 Differences between projected and actual investment earnings 1,788 - Changes in proportion and differences between the employer's contributions and the proportionate share of contributions 56 - Total as of August 31, 2016 measurement date $ 1,844 $ 4,922,589 Contributions paid to TRS subsequent to the measurement date 147,774 - Total as of fiscal year-end $ 149,618 $ 4,922,589 48

66 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (CONTINUED) K. DEFINED OTHER POST-EMPLOYMENT BENEFIT PLANS (CONTINUED) The net amounts of the employer's balances of deferred outflows and inflows (not including the deferred contribution paid subsequent to the measurement date) of resources related to OPEBs will be recognized in OPEB expense as follows: Year ended June 30, OPEB Expense Amount 2018 $ (649,297) 2019 $ (649,297) 2020 $ (649,297) 2021 $ (649,297) 2022 $ (649,297) Thereafter $ (1,673,813) L. HEALTH CARE COVERAGE - ACTIVE EMPLOYEES Plan Description. During the year ended June 30, 2017, employees of the District were covered by a health insurance plan (the "Plan"). The District contributed $236 per month per employee and dependents to the Plan. Employees, at their option, authorized payroll withholdings to pay contributions for dependents. All contributions were paid to a third-party administrator, acting on behalf of the self-funded pool. The Plan was authorized by Article , Texas Insurance Code and was documented by contractual agreement. The Teachers Retirement System (TRS) manages TRS Active Care. The medical plan is administered by AETNA, Allegian HMO Plan. Caremark administers the prescription drug plan. The latest financial information on the state-wide plan may be obtained by writing to the TRS Communications Department, 1000 Red River Street, Austin, Texas 78701, by calling the TRS Communications Department at l , or by downloading the report from the TRS Internet website, under the TRS Publications heading. M. SHARED SERVICE ARRANGEMENTS The District is the fiscal agent for a Shared Services Arrangement ("SSA") which provides special education services to member districts. In addition to the District, other member districts include Lasara ISD, Lyford ISD, San Perlita ISD, and Santa Rosa ISD. All services are provided by the fiscal agent. The member districts provide the funds to the fiscal agent. According to guidance provided in TEA's Resource Guide, the District has accounted for the fiscal agent's activities of the SSA in Special Revenue Fund No. 437, Shared Services Arrangements - Special Education has been accounted for using Model 3 in the SSA section of the Resource Guide. Expenditures of the SSA are summarized below: 49

67 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (CONTINUED) M. SHARED SERVICE ARRANGEMENTS (CONTINUED) Member Districts Expenditures Raymondville ISD $ 149,722 Lasara ISD 32,396 Lyford ISD 113,824 San Perlita ISD 28,894 Santa Rosa ISD 93,685 Totals $ 418,521 N. PRIOR PERIOD ADJUSTMENT During fiscal year 2018, the District adopted GASB statement No. 75 for Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. With GASB 75, the District must assume their proportionate share of the Net OPEB liability of the Teacher Retirement System of Texas. Adoption of GASB 75 required a prior period adjustment to report the effect of GASB 75 retroactively. The prior period adjustment totaled $20,658,875 which restated the beginning net position balance of $23,026,

68 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (CONTINUED) O. Negative Operating Grants and Contributions Statement of Activities Expenses activity is required to be recorded by districts who are participants in cost-sharing pension and OPEB benefit plans with a special funding situation where non-employer contributing entities (NECE) also participate in contributions to the plans. TRS-retirement and TRS-care benefit plans are both cost-sharing plans with special funding situations. Therefore, on-behalf expense activity of the NECE must recorded at the government-wide level of reporting on the Statement of Activities in accordance with GASB 68 and 75. During the year under audit, the NECE expense was negative due to changes in benefits within the TRS-care plan. The accrual for the proportionate share of that expense was a negative on-behalf revenue and negative on-behalf expense. This resulted in negative revenue for operating grants and contributions on the Statement of Activities. According to guidance provided directly from GASB, this is the correct reporting. Following are the effects on the Statement of Activities because of the negative on-behalf accruals recorded: Operating Grants and Operatingf Negative Contributions Grants & On-Behalf Excluding Contributions Accurals On-balf Accurals 11 Instruction $ (2,634,899) $ (1,877,673) $ (757,226) 12 Instructional resources and media services - (53,692) 53, curriculumn and staff development (229,006) (48,540) (180,466) 21 Instructional leadership (256,235) (53,540) (202,695) 23 School leadership (41,748) (259,523) 217, Guidance, counseling, and evaluation services (454,660) (104,138) (350,522) 32 Social work services (82,441) (26,436) (56,005) 33 Health services (162,269) (7,252) (155,017) 34 Student (pupil) transportation - (61,096) 61, Food services (1,643,182) (126,365) (1,516,817) 36 Extracurricular activities - (128,811) 128, General administration (5,833) (177,221) 171, Facilities maintenance and operations (8,928) (234,176) 225, Security and monitoring services - (88,752) 88, Data processing services - (15,715) 15, Community services (49,346) - (49,346) 93 Payments related to shared services arrangements (55,168) - (55,168) $ (5,623,715) $ (3,262,930) $ (2,360,785) 51

69

70 52

71 SCHEDULE OF THE DISTRICT'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TEACHER RETIREMENT SYSTEM OF TEXAS FOR THE YEAR ENDED JUNE 30, 2018 EXHIBIT G-2 FY 2018 Plan Year 2017 FY 2017 Plan Year 2016 FY 2016 Plan Year 2015 FY 2015 Plan Year 2014 District's Proportion of the Net Pension Liability (Asset) % % % % District's Proportionate Share of Net Pension Liability (Asset) $ 5,251,258 $ 6,351,247 $ 6,730,563 $ 4,383,205 State's Proportionate Share of the Net Pension Liability (Asset) associated with the District 6,700,814 8,056,501 8,378,823 7,026,497 Total $ 11,952,072 $ 14,407,748 $ 15,109,386 $ 11,409,702 District's Covered Payroll $ 14,324,316 $ 12,756,473 $ 14,640,425 $ 14,508,521 District's Proportionate Share of the Net Pension Liability (Asset) as a Percentage of its Covered Payroll Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 36.66% 82.17% 49.79% 45.97% 30.21% 78.00% 78.43% 83.25% Note: GASB 68, Paragraph 81 requires that the information on this schedule be data from the period corresponding with the periods covered as of the measurement dates of August 31, 2017 for year 2018, August 31, 2016 for Year 2017, August 31, 2015 for Year 2016 and August 31, 2014 for Note: In accordance with GASB 68, Paragraph 138, only four years of data are presented this reporting period. "The information for all periods for the 10-year schedules that are required to be presented as required supplementary information may not be available initially. In these cases, during the transition period, that information should be presented for as many years as are available. The schedules should not include information that is not measured in accordance with the requirements of this Statement." 53

72 SCHEDULE OF DISTRICT CONTRIBUTIONS FOR PENSIONS TEACHER RETIREMENT SYSTEM OF TEXAS FOR FISCAL YEAR 2018 EXHIBIT G Contractually Required Contribution $ 531,329 $ 541,680 $ 543,799 $ 375,198 Contribution in Relation to the Contractually Required Contribution (531,329) (541,680) (543,799) (375,198) Contribution Deficiency (Excess) $ -0- $ -0- $ -0- $ -0- District's Covered Payroll $ 15,094,866 $ 14,186,019 $ 12,912,005 $ 14,639,813 Contributions as a Percentage of Covered Payroll 3.52% 3.82% 4.21% 2.56% Note: GASB 68, Paragraph 81 requires that the data in this schedule be presented as of the District's respective fiscal years as opposed to the time periods covered by the measurement dates ending August 31 of the preceding year. Note: In accordance with GASB 68, Paragraph 138, only four years of data are presented this reporting period. "The information for all periods for the 10-year schedules that are required to be presented as required supplementary information may not be available initially. In these cases, during the transition period, that information should be presented for as many years as are available. The schedules should not include information that is not measured in accordance with the requirements of this Statement." 54

73 SCHEDULE OF THE DISTRICT'S PROPORTIONATE SHARE OF THE NET OPEB LIABILITY TEACHER RETIREMENT SYSTEM OF TEXAS FOR THE YEAR ENDED JUNE 30, 2018 EXHIBIT G-4 FY 2018 Plan Year 2017 District's Proportion of the Net Liability (Asset) for Other Post Employment Benefits % District's Proportionate Share of Net Post Employment Benefit Liability (Asset) State's Proportionate Share of the Net Post Employment Benefit Liability (Asset) associated with the District $ 11,768,028 9,750,958 Total $ 21,518,986 District's Covered Payroll District's Proportionate Share of the Net OPEB Liability (Asset) as a Percentage of its Covered Payroll Plan Fiduciary Net Position as a Percentage of the Total OPEB Liability $ 14,324, % 0.91% Note: GASB Codification, Vol. 2, P states that the information on this schedule should be determined as of the measurement date. Therefore the amounts reported for FY 2018 are based on the August 31, 2017 measurement date. This schedule shows only the year for which this information is available. Additional information will be added until 10 years of data are available and reported. 55

74 SCHEDULE OF DISTRICT CONTRIBUTIONS FOR OTHER POST EMPLOYMENT BENEFITS TEACHER RETIREMENT SYSTEM OF TEXAS FOR THE TEN MONTHS ENDED JUNE 30, 2018 EXHIBIT G Contractually Required Contribution $ 171,483 Contribution in Relation to the Contractually Required Contribution (171,483) Contribution Deficiency (Excess) $ -0- District's Covered Payroll $ 15,094,866 Contributions as a Percentage of Covered Payroll 1.14% Note: GASB Codification, Vol. 2, P requires that the data in this schedule be presented as of the District's respective fiscal years as opposed to the time periods covered by the measurement dates ending August 31 of the preceding year. Information in this schedule should be provided only for the years where data is available. Eventually 10 years of data should be presented. 56

75 NOTES TO REQUIRED SUPPLEMENTARY INFORMATION JUNE 30, 2018 Budgetary Information The Board of Trustees adopts an appropriated budget for the General Fund, Debt Service Fund and the National School Breakfast and Lunch Fund which is included in the Special Revenue Funds. The District is required to present the adopted and final amended budgeted revenue and expenditures for each of these funds. The district compares the final amended budget to actual revenue and expenditures. The District presented the General Fund budgetary comparison schedule as required supplementary information. The National School Breakfast and Lunch Fund and Debt Service Fund budgetary comparison schedules are presented as required TEA schedules. The following procedures are followed in establishing the budgetary data reflected in the basic financial statements: 1. Prior to June 20, the District prepares a budget for the next succeeding fiscal year beginning July 1. The operating budget includes proposed expenditures and the means of financing them. 2. A meeting of the Board is then called for the purpose of adopting the proposed budget. At least 10 days public notice of the meeting must be given. 3. Prior to July 1, the budget is legally enacted through passage of a resolution by the Board. Once a budget is approved, it can only be amended at the function and fund level by approval of a majority of the members of the Board. Amendments are presented to the Board at its regular meetings. Each amendment must have Board approval. As required by law, such amendments made before the fact, are reflected in the official minutes of the Board, and are not made after fiscal year-end. Because the District has a policy of careful budgetary control, several amendments were necessary during the year. However, none of these were significant. 4. Each budget is controlled by the budget coordinator at the revenue and expenditure function/object level. Budgeted amounts are as amended by the Board. All budget appropriations lapse at year-end. 5. Encumbrances for goods or purchased services are documented by purchase orders or contracts. Under Texas law, appropriations lapse at June 30, and encumbrances outstanding at that time are to be either canceled or appropriately provided for in the subsequent year s budget. The District had not outstanding end-of-year encumbrances. 57

76

77 SPECIAL REVENUE FUNDS The Special Revenue Funds generally account for state and federally financed programs where unused balances are returned to the grantors at the close of specified project periods. Project accounting is employed to maintain integrity for the various sources of funds. Funds included in the Special Revenue Funds are described in the following pages. ESEA, TITLE IP ART C-EDUCATION OF MIGRATORY CHILDREN (212) To account for funds granted for programs benefiting children of migrant agriculture or agriculture-related workers and children of migrant fishermen. CAREER AND TECHNICAL - BASIC GRANT(244) To account for funds granted to provide Career and Technical education to develop new and/or improve Career and Technical education programs for paid and unpaid employment. Full participation in the basic grant is from individuals who are members of special populations, at (1) a limited number of campuses (sites) or (2) a limited number of program areas. ESEA TITLE II PART A TEACHER AND PRINCIPAL TRAINING AND RECRUITING (255) To provide financial assistance to LEAs to (1) Increase student academic achievement through improving teacher and principal quality and increasing the number of highly qualified teachers in classrooms and highly qualified principals and assistant principals in schools, and (2) hold local education agencies and schools accountable for improving student academic achievement. TITLE III, ENGLISH LANGUAGE ACQUISITION AND LANGUAGE ENHANCEMENT (263) To account for funds granted to improve the education of limited English proficient children, by assisting them to learn English and meet challenging State academic content and student academic achievement standards. ESEA VI, PART B RURAL & LOW INCOME (270) To account for funds awarded to the District to address the needs of rural, low-income schools to increase student academic achievement, decrease dropout rates. GAINING EARLY AWARENESS FOR COLLEGE READINESS: GEAR UP (274) To account for funds granted to provide services and support to low-income minority school districts to ensure that students are academically prepared for higher education, graduate from high school, and have access to higher education opportunities. FEDERALLY FUNDED SPECIAL REVENUE FUNDS (289) This fund classification is to be used to account, on a project basis, for federally funded special revenue funds that have not been specified above. IDEA, PART B AND PRESCHOOL (314) To account for funds granted to the District to provide a free public education to children with disabilities age three through five. STATE TEXTBOOK FUND (410) This fund classification is to be used to account, on a project basis, for funds awarded to school districts under the textbook allotment. STATE FUNDED SPECIAL REVENUE FUNDS (429) State funded special revenue funds not listed above are to be accounted for in this fund. Special Education (437) To account for state funds granted to operate educational programs for children with disabilities. 58

78 Data Control Codes COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, ESEA Title I Part C Migrant Career and Technical - Basic Grant ESEA II,A Training and Recruiting Title III, A English Lang. Acquisition ASSETS 1110 Cash and Cash Equivalents $ - $ - $ - $ Property Taxes - Current Property Taxes - Delinquent Allowance for Uncollectible Taxes (Credit) Receivables from Other Governments 165,033 48,673 13,887 9, Due from Other Funds 5, Total Assets $ 170,753 $ 48,673 $ 13,887 $ 9,770 LIABILITIES 2150 Payroll Deductions and Withholdings Payable $ 4,955 $ - $ - $ Accrued Wages Payable 21, Due to Other Funds 144,433 48,673 13,887 9, Unearned Revenues Total Liabilities 170,753 48,673 13,887 9,770 FUND BALANCES Restricted Fund Balance: 3470 Capital Acquisition and Contractural Obligation Retirement of Long-Term Debt Unassigned Fund Balance Total Fund Balances Total Liabilities and Fund Balances $ 170,753 $ 48,673 $ 13,887 $ 9,770 59

79 EXHIBIT H-1 (Cont'd) Total ESEA VI, Pt B Rural & Low Income GEAR UP Other Federal Special Revenue Funds SSA IDEA, Part B Preschool State Textbook Fund Other State Special Revenue Funds SSA Special Education Nonmajor Special Revenue Funds $ - $ - $ 1,187 $ - $ - $ - $ 184,413 $ 185, ,821 17,933 16,131 19,975 33, , ,720 $ 1,821 $ 17,933 $ 17,318 $ 19,975 $ 33,413 $ - $ 184,413 $ 517,956 $ - $ - $ - $ - $ 88 $ - $ 515 $ 5, ,857 27,222 1,821 17,933 17,318 19,975 33, , ,821 17,933 17,318 19,975 33,413-7, , , , , ,330 $ 1,821 $ 17,933 $ 17,318 $ 19,975 $ 33,413 $ - $ 184,413 $ 517,956 60

80 Data Control Codes COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, Total Debt Service Capital Projects Nonmajor Governmental Funds EXHIBIT H-1 ASSETS 1110 Cash and Cash Equivalents $ 13,028 $ 386,713 $ 585, Property Taxes - Current 19,301-19, Property Taxes - Delinquent 219, , Allowance for Uncollectible Taxes (Credit) (23,930) - (23,930) 1240 Receivables from Other Governments , Due from Other Funds 150, , Total Assets $ 378,533 $ 386,713 $ 1,283,202 LIABILITIES 2150 Payroll Deductions and Withholdings Payable $ - $ - $ 5, Accrued Wages Payable , Due to Other Funds , Unearned Revenues 197, , Total Liabilities 197, ,625 FUND BALANCES Restricted Fund Balance: 3470 Capital Acquisition and Contractural Obligation - 386, , Retirement of Long-Term Debt 180, , Unassigned Fund Balance , Total Fund Balances 180, , , Total Liabilities and Fund Balances $ 378,533 $ 386,713 $ 1,283,202 61

81 Data Control Codes COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, ESEA Title I Part C Migrant Career and Technical - Basic Grant ESEA II,A Training and Recruiting Title III, A English Lang. Acquisition REVENUES: 5700 Total Local and Intermediate Sources $ - $ - $ - $ State Program Revenues Federal Program Revenues 493,312 78, ,590 25, Total Revenues 493,312 78, ,590 25,540 EXPENDITURES: Current: 0011 Instruction 0013 Curriculum and Instructional Staff Development 0021 Instructional Leadership 0023 School Leadership 0031 Guidance, Counseling and Evaluation Services 0032 Social Work Services 0033 Health Services 0041 General Administration 0051 Facilities Maintenance and Operations 0061 Community Services Debt Service: 0071 Principal on Long Term Debt 0072 Interest on Long Term Debt Intergovernmental: 0093 Payments to Fiscal Agent/Member Districts of SSA 304,148 65, ,474 18,790 1,046 11,432 4,045 6,750 56,090 2, , , , , Total Expenditures 493,312 78, ,590 25, Net Change in Fund Balance Fund Balance - July 1 (Beginning) Fund Balance - June 30 (Ending) $ - $ - $ - $ - 62

82 EXHIBIT H-2 (Cont'd) Total ESEA VI, Pt B Other Federal SSA State Other State SSA Nonmajor Rural & Low Income GEAR UP Special Revenue Funds IDEA, Part B Preschool Textbook Fund Special Revenue Funds Special Education Special Revenue Funds $ - $ - $ - $ - $ - $ - $ - $ ,500 15, , ,640 39,558 1,763 17,497 27, ,448 39,558 1,763 17,497 27, ,500 15, ,727 1,277,088 39,558 1,505 17,497 27, ,500 13,967 10, , , , , , , ,237 45, , , ,227 8, ,593 12, ,446-35, ,813 77,813 39,558 1,763 17,497 27, ,500 15, ,521 1,398, (121,794) (121,794) , ,124 $ - $ - $ - $ - $ - $ - $ 177,330 $ 177,330 63

83 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2018 EXHIBIT H-2 Data Control Codes Total Debt Service Capital Projects Nonmajor Governmental Funds REVENUES: 5700 Total Local and Intermediate Sources $ 547,423 $ 5,939 $ 553, State Program Revenues 710,799-1,191, Federal Program Revenues , Total Revenues 1,258,222 5,939 2,541,249 EXPENDITURES: Current: 0011 Instruction , Curriculum and Instructional Staff Development , Instructional Leadership , School Leadership - - 5, Guidance, Counseling and Evaluation Services , Social Work Services , Health Services , General Administration - - 8, Facilities Maintenance and Operations , Community Services ,008 Debt Service: 0071 Principal on Long Term Debt 1,105,001-1,105, Interest on Long Term Debt 595, ,950 Intergovernmental: 0093 Payments to Fiscal Agent/Member Districts of SSA , Total Expenditures 1,700,951-3,099, Net Change in Fund Balance (442,729) 5,939 (558,584) 0100 Fund Balance - July 1 (Beginning) 623, ,774 1,303, Fund Balance - June 30 (Ending) $ 180,534 $ 386,713 $ 744,577 64

84 COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES ALL AGENCY FUNDS JUNE 30, 2018 EXHIBIT H-3 BALANCE BALANCE JULY 1 JUNE ADDITIONS DEDUCTIONS 2018 TAX SUCCESSOR IN INTEREST Assets: Cash and Temporary Investments $ 41,440 $ 5,152,304 $ 4,352,186 $ 841,558 Liabilities: Due to Other Funds $ 41,440 $ 4,550,321 $ 3,750,203 $ 841,558 STUDENT ACTIVITY Assets: Cash and Temporary Investments $ 75,977 $ 114,487 $ 126,581 $ 63,883 Liabilities: Due to Student Groups $ 75,977 $ 115,198 $ 127,292 $ 63,883 TOTAL AGENCY FUNDS Assets: Cash and Temporary Investments $ 117,417 $ 5,266,791 $ 4,478,767 $ 905,441 Liabilities: Due to Other Funds $ 41,440 $ 4,550,321 $ 3,750,203 $ 841,558 Due to Student Groups 75, , ,292 63,883 Total Liabilities $ 117,417 $ 4,665,519 $ 3,877,495 $ 905,441 65

85

86 SCHEDULE OF DELINQUENT TAXES RECEIVABLE FISCAL YEAR ENDED JUNE 30, 2018 Last 10 Years (1) (2) (3) Assessed/Appraised Tax Rates Value for School Maintenance Debt Service Tax Purposes 2009 and prior years Various Various $ Various ,063, ,487, ,298, ,876, ,643, ,059, ,030, ,558, (School year under audit) ,588, TOTALS 66

87 EXHIBIT J-1 (10) (20) (31) (32) (40) (50) Current Entire Year's Maintenance Debt Service Year's Total Levy Collections Collections Adjustments Beginning Balance 7/1/2017 Ending Balance 6/30/2018 $ 280,681 $ - $ 9,313 $ 1,198 $ (12,479) $ 257,691 49,311-3,808 1,165 (330) 44,008 57,787-4,969 1,342 (959) 50,517 63,448-6,447 1,735 (149) 55,117 69,967-10,012 3,272 (1,026) 55,657 72,665-12,727 2,778 (1,122) 56,038 95,684-18,109 5,196 (1,678) 70, ,620-30,337 8,258 (3,458) 103, , ,373 41,750 (131,013) 142,188-3,549,459 2,816, ,960 (112,189) 284,291 $ 1,303,487 $ 3,549,459 $ 3,065,114 $ 403,654 $ (264,403) $ 1,119,775 67

88 Data Control Codes SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - CHILD NUTRITION PROGRAM FOR THE YEAR ENDED JUNE 30, 2018 Original Budgeted Amounts Final Actual Amounts (GAAP BASIS) EXHIBIT J-4 Variance With Final Budget Positive or (Negative) REVENUES: Total Local and Intermediate Sources $ 105,387 $ 105,387 $ 285,844 $ 180,457 State Program Revenues ,542 46,542 Federal Program Revenues 1,607,632 1,607,632 1,635,407 27, Total Revenues 1,713,019 1,713,019 1,967, , EXPENDITURES: Food Services 1,679,532 1,770,272 1,767,867 2, Total Expenditures 1,679,532 1,770,272 1,767,867 2, Net Change in Fund Balances 33,487 (57,253) 199, , Fund Balance - July 1 (Beginning) 415, , , Fund Balance - June 30 (Ending) $ 448,908 $ 358,168 $ 615,347 $ 257,179 Note: The Child Nutrition program is accounted for in the District's General Fund. 68

89 Data Control Codes SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - DEBT SERVICE FUND FOR THE YEAR ENDED JUNE 30, 2018 Original Budgeted Amounts Final Actual Amounts (GAAP BASIS) EXHIBIT J-5 Variance With Final Budget Positive or (Negative) REVENUES: Total Local and Intermediate Sources $ 850,475 $ 850,475 $ 547,423 $ (303,052) State Program Revenues 850, , ,799 (139,677) 5020 Total Revenues 1,700,951 1,700,951 1,258,222 (442,729) EXPENDITURES: Debt Service: Principal on Long Term Debt Interest on Long Term Debt 1,105,000 1,105,001 1,105, , , , Total Expenditures 1,700,950 1,700,951 1,700, Net Change in Fund Balances 1 - (442,729) (442,729) 0100 Fund Balance - July 1 (Beginning) 623, , , Fund Balance - June 30 (Ending) $ 623,264 $ 623,263 $ 180,534 $ (442,729) 69

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