2010-2011 san juan alamo psja audit final

8/17/2019 2010-2011 San Juan Alamo PSJA Audit Final

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PHARR-SAN JUAN-ALAMO

INDEPENDENT SCHOOL DISTRICT

ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED AUGUST 31, 2011


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This Page Le Intenonally Blank


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Introductory Section


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Pharr-San Juan-Alamo Independent School District

Annual Financial Report

For The Year Ended August 31, 2011

TABLE OF CONTENTS

Page Exhibit

INTRODUCTORY SECTION

List of Principal Officials........................................................................................................ 1

Certificate of Board................................................................................................................ 2

FINANCIAL SECTION

Independent Auditor's Report on Financial Statements........................................................ 3

Management's Discussion and Analysis (Required Supplementary Information)................. 5

Basic Financial Statements

Government-wide Financial Statements:Statement of Net Assets............................................................................................. 13 A-1

Statement of Activities................................................................................................ 14 B-1

Fund Financial Statements:

Balance Sheet - Governmental Funds........................................................................ 15 C-1

Reconciliation of the Governmental Funds

Balance Sheet to the Statement of Net Assets...................................................... 17 C-1R

Statement of Revenues, Expenditures, and Changes in

Fund Balances - Governmental Funds.................................................................. 18 C-2

Reconciliation of the Statement of Revenues, Expenditures, and Changes in

Fund Balances of Governmental Funds to the Statement of Activities.................. 20 C-3

Statement of Net Assets - Internal Service Funds...................................................... 21 D-1

Statement of Revenues, Expenses, and Changes in

Fund Net Assets - Internal Service Funds............................................................. 22 D-2Statement of Cash Flows - Proprietary Funds............................................................ 23 D-3

Statement of Fiduciary Net Assets - Fiduciary Funds................................................. 24 E-1

Notes to the Financial Statements .................................................................................. 25

Required Supplementary Information:

Budgetary Comparison Schedules:

General Fund.............................................................................................................. 40 G-1

Combining Statements as Supplementary Information:

Combining Balance Sheet - All Nonmajor Governmental Funds..................................... 42 H-1Combining Statement of Revenues, Expenditures and Changes in

Fund Balances - All Nonmajor Governmental Funds.................................................. 43 H-2

Special Revenue Funds:

Combining Balance Sheet - Nonmajor Special Revenue Funds................................ 44 H-3

Combining Statement of Revenues, Expenditures and Changes

in Fund Balances - Nonmajor Special Revenue Funds......................................... 53 H-4

Permanent Funds:


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Pharr-San Juan-Alamo Independent School District

Annual Financial Report

For The Year Ended August 31, 2011

TABLE OF CONTENTS

Page Exhibit

Combining Balance Sheet - Nonmajor Permanent Funds.......................................... 61 H-5

Combining Statement of Revenues, Expenditures and Changes

in Fund Balances - Nonmajor Permanent Funds................................................... 63 H-6

Internal Service Funds:

Combining Statement of Net Assets........................................................................... 65 H-7

Combining Statement of Revenues, Expenses and Changes

in Fund Net Assets................................................................................................ 67 H-8

Combining Statement of Cash Flows.......................................................................... 69 H-9

OTHER SUPPLEMENTARY INFORMATION SECTION

Schedule of Delinquent Taxes Receivable............................................................................ 71 J-1

Indirect Cost Computation Schedule .................................................................................... 73 J-2

Budgetary Comparison Schedules Required by the Texas Education Agency:

Interest & Bonded....................................................................................................... 74 J-3

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....................................................... 75

Report on Compliance with Requirements That Could Have a Direct and

Material Effect on each Major Program and on Internal Control over

Compliance In Accordance With OMB Circular A-133..................................................... 77

Schedule of Findings and Questioned Costs ....................................................................... 79

Summary Schedule of Prior Audit Findings........................................................................... 81

Corrective Action Plan........................................................................................................... 82Schedule of Expenditures of Federal Awards ...................................................................... 83 K-1

Notes to the Schedule of Expenditures of Federal Awards................................................... 85

Schedule of Required Responses to Selected School First Indicators................................. 86 K-2


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PHARR-SAN JUAN-ALAMO INDEPENDENT SCHOOL DISTRICT

LIST OF PRINCIPAL OFFICIALS

AUGUST 31, 2011

November 2010 - November 2011

Elected Officials

Name Office

Mr. Reymundo Gonzalez President

Mr. Bobby Rodriguez Vice-President

Mr. Ben Garza, Jr. Secretary-Treasurer

Mr. Ronnie Cantu Assistant Secretary-Treasurer

Mrs. Ramona Barron Member

Mr. Pedro Garcia Member

Mr. Gilbert Herrera Member

November 2011 - November 2012

Elected Officials

Name Office

Mr. Ben Garza, Jr. President

Mr. Bobby Rodriguez Vice-President

Mr. Ronnie Cantu Secretary-Treasurer

Mr. Reymundo Gonzalez Assistant Secretary-Treasurer

Mrs. Ramona Barron Member

Mr. Pedro Garcia Member

Mr. Gilbert Herrera Member

Appointed Officials

Name Position

Dr. Daniel King Superintendent of Schools

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CERTIFICATE OF BOARD

Pharr-San Juan-Alamo Independent School District Hidalgo 108-909

Name of School District County Co.-Dist. Number

We, the undersigned, certify that the attached annual financial reports of the above named school district

were reviewed and (check one) approved disapproved for the year ended August 31, 2011,

at a meeting of the board of trustees of such school district on the day of , .

Signature of Board Secretary Signature of Board President

If the board of trustees disapproved of the auditor's report, the reason(s) for disapproving it is (are):(attach list as necessary)

2


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Financial Section


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Management's Discussion and Analysis


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MANAGEMENT’S DISCUSSION AND ANALYSIS

This section of Pharr-San Juan-Alamo Independent School District’s annual financial report presents our discussion andanalysis of the District’s financial performance during the fiscal year ended August 31, 2011. Please read it inconjunction with the District’s financial statements, which follow this section.

FINANCIAL HIGHLIGHTS

The District’s total combined net assets were $310,775,928 for fiscal year ending August 31, 2011.

During the year, the District’s expenses were $17,568,426 less than the $216,243,889 generated in taxes andother revenues for governmental activities. The net change in general fund balance was $4,704,886. A portionof the increase is due to the district utilizing part of the Education Jobs Fund Grant from the state.

The general fund reported an unassigned fund balance this year of $39,027,027.

OVERVIEW OF THE FINANCIAL STATEMENTS

This annual report consists of three parts— management’s discussion andanalysis (this section), the basic financial statements, and requiredsupplementary information. The basic financial statements include twokinds of statements that present different views of the District:

The first two statements are government-wide financial statements that provide both long-term and short-term information about theDistrict’s overall financial status.

The remaining statements are fund financial statements that focuson 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 forfuture spending.

Proprietary fund statements offer short and long-term financialinformation about the activities the government operates like businesses, such as food service.

Fiduciary fund statements provide information about the financialrelationships 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 theinformation in the financial statements and provide more detailed data. The statements are followed by a section ofrequired 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.

Figure A-1F, Required Components of theDistrict’s Annual Financial Report


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Figure A-2 summarizes the majorfeatures of the District’s financialstatements, including the portion ofthe District government they coverand the types of information theycontain. The remainder of thisoverview section of management’sdiscussion and analysis explains the

structure and contents of each of thestatements.

Government-wide Statements

The government-wide statementsreport information about the Districtas a whole using accounting methodssimilar to those used by private-sector companies. The statement ofnet assets includes all of thegovernment’s assets and liabilities.All of the current year’s revenuesand expenses are accounted for in

the statement of activities regardlessof when cash is received or paid.

The two government-wide statements report the District’s net assets and how they have changed. Net assets—thedifference between the District’s assets and liabilities—is one way to measure the District’s financial health or position.

Over time, increases or decreases in the District’s net assets are an indicator of whether its financial health isimproving or deteriorating, respectively.

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, curriculum and staff development, school district administrativesupport services and general administration. Grants and charges for services finance most of these activities.

Fund Financial Statements

The fund financial statements provide more detailed information about the District’s most significant funds —not theDistrict as a whole. Funds are accounting devices that the District uses to keep track of specific sources of funding andspending 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 showthat it is properly using certain grants and local sources.

The District has the following kinds of funds:

Governmental funds —Most of the District’s basic services are included in governmental funds, which focus on(1) how cash and other financial assets that can readily be converted to cash flow in and out and (2) the balancesleft at year-end that are available for spending. Consequently, the governmental fund statements provide adetailed 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 theadditional long-term focus of the government-wide statements, we provide additional information at the bottomof 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 financialinformation.

Type of Statements Government-wide Governmental Funds Proprietary Funds Fiduciary Funds

Scope

Entire Agency’s government

(except fiduciary funds)

and the Agency's component

units

The activities of the district

that are not proprietary or

fiduciary

Activities the district

operates similar to private

businesses: self insurance

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 fiduciarynet assets

Statement of activities Statement of revenues,

expenditures & changes

in fund balances

Statement of revenues,expenses and changes in

fund net assets

Statement of changes

in fiduciary net assets

Statement of cash flows Accounting basis

and measurement

ocus

Accrual accounting and

economic resources focus

Modified accrual

accounting and current

financial resources focus

Accrual accounting and

economic resources focus Accrual accounting and

economic resources focus

Type of

asset/liability

information

All assets and liabilities,

both financial and capital,

short-term and long-term

Only assets expected to

be used up and liabilities

that come due during the

year or soon thereafter;

no capital assets included


both financial and capital,

and short-term and long- term


both short-term and long-

term; the Agency's funds do

not currently contain

capital assets, although

they can

Type of

inflow/outflow

information

All revenues and

expenses during year,

regardless of when cash

is received or paid

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

All revenues and expenses

during year, regardless of

when cash is received or

paid

All revenues and

expenses during year,

regardless of when cash

is received or paid

Fund Statements

Required financial

statements

Figure A-2. Major Features of the District’s Government-wide and Fund Financial Statements


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We use internal service funds to report activities that provide supplies and services for the District’s other programs and activities – such as the district’s Self Insurance Funds and the Print Shop.

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 responsiblefor ensuring that the assets reported in these funds are used for their intended purposes. All of the District’sfiduciary activities are reported in a separate statement of fiduciary net assets and a statement of changes infiduciary net assets. We exclude these activities from the District’s government-wide financial statements

because the District cannot use these assets to finance its operations. Student activity funds are included here.

The Governmental Accounting Standard Board (GASB) released Statement 54 – “Fund Balance Reporting andGovernmental Fund type Definitions” on March 11, 2009, which is effective for fiscal year ending August 31, 2011.This new statement is intended to improve the usefulness of the amount reported in fund balance by providing morestructured classification.

Previously fund balance was classified as ‘reserved’ or ‘unreserved’. GASB 54 will change how fund balance isreported. The hierarchy of five possible classifications is as follows:

Nonspendable Fund Balance

Restricted Fund Balance

Committed Fund Balance

Assigned Fund Balance Unassigned Fund Balance

The five classifications of fund balance of the governmental types are defined as follows:

1. Nonspendable fund balance shall mean the portion of the gross fund balance that is not expendable (such asinventories) or is legally earmarked for a specific use.Examples of nonspendable fund balance reserves for which fund balance shall not be available for generaloperating expenditures include:

Inventories

Prepaid items

Deferred expenditures

Long-term receivables

Outstanding encumbrances

2. Restricted fund balance shall include amounts constrained to a specific purpose by the provider, such as agrantor.Examples of restricted fund balances include:

Child nutrition program

Technology program

Construction Program

Resources from TEA for specific programs

3. Committed fund balance shall mean that portion of the fund balance that is constrained to a specific purpose bythe Board or Superintendent.Examples include:

Potential litigation, claims, and judgments Construction

Capital expenditures for equipment

Student activity funds

4. Assigned fund balance shall mean that portion of the fund balance that is spendable or available forappropriation but has been tentatively earmarked for some specific purpose by the Superintendent. In current practice such plans or intent may change and may never be budgeted, or may result in expenditures in future periods of time.Examples include:

Program Start-Up Costs

Other Legal Uses


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5. Unassigned fund balance shall include amounts available for any legal purpose. This portion fo the total fund balance in the general fund is available to finance operating expenditures. The unassigned fund balance shall be the difference between the total fund balance and the total of the nonspendable fund balance, restricted fund balance, committed fund balance and assigned fund balance.

The introduction of GASB 54 has created changes in the districts Fund Balances classifications beginning with the2010-11 fiscal year.

FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE

Net assets. The District’s combined net assets were $310,775,928 on August 31, 2011. (See Table A-1).

Governmental Governmental

Activities 2010 Activities 2011

Current Assets:

Cash and cash equivalents 244,964,368$ 331,437,116$

Current Investments 150,302 150,906

Property taxes receivable(net of allowance) 9,220,836 9,059,856

Due from other governments 24,258,687 31,096,657

Accrued Interest 417,708 112,723

Other receivables (Net) 1,501,650 1,656,507

Inventories 1,996,622 1,949,229 Deferred Expenses - 11,501

Total Current Assets 282,510,173 375,474,495

Noncurrent Assets:

Capitalized Bond and Other Debt Issuance Costs 4,379,191 5,090,275

Land 15,576,565 15,576,565

Building, net 224,930,606 219,356,221

Furniture and equipment, net 13,272,196 11,593,649

Capital Leases (Net) 0 499,590

Constrution in progress 96,731,714 160,045,292

Infrastructure (Net) 3,912,392 3,169,627

Total Noncurrent Assets 358,802,664 415,331,219

Total Assets 641,312,837 790,805,714

Current Liabilities:

Accounts Payable 8,200,484 16,959,562

Short Term Debt Payable - 1,775,000

Interest Payable 1,181,653 1,508,068

Accrued Liabilities 16,482,198 14,315,978

Due to other governments 2,441,010 5,476,012

Due to student groups 405,477 392,865

Deferred revenue 1,038,221 2,766,044

Total Current Liabilities 29,749,043 43,193,529

Long-Term Liabilities:

Due with in a year 9,131,064 11,202,061

Due in more than one year 309,403,460 425,634,196

Total Liabilities 348,283,567 480,029,786

Net Assets:

Invested in Capital Assets, Net of Related Debt 161,754,248 83,977,537

Restricted for State and Federal Programs 731,803 2,576,949

Restricted for Debt Service 37,190,182 24,623,529

Restricted for Capital Projects 0 120,287,817

Other Purposes 35,466,557 59,385,462

Unrestricted Net Assets 57,886,480 19,924,634

Total Net Assets 293,029,270$ 310,775,928$

Table A-1 Pharr-San Juan-Alamo Independent School District


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45,942,3

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809,434

107,225,63815,530,393

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Program Expenses:

11 Instruction 173,106,190 172,917,132

12 Instructional resources media services 6,767,316 6,472,880

13 Curriculum dev. and instructional staff dev. 7,060,956 8,550,558

21 Instructional leadership 5,545,614 6,003,620

23 School leadership 14,908,851 15,314,330

31 Guidance, counseling, and evaluation services 10,938,910 10,967,257

32 Social work services 2,694,458 2,682,610

33 Health services 2,978,459 3,188,935

34 Transportation 5,364,620 5,640,638

35 Food services 18,796,715 18,690,366

36 Curricular/Extracurricular activities 7,664,174 8,255,877

41 General administration 177,583 6,983,821

51 Plant maintenance and operations 27,962,828 28,571,878

52 Security and monitoring 3,757,881 3,511,651

53 Data processing services 1,825,041 1,386,650

61 Community services 2,164,815 2,189,052

72 Debt Service 14,834,091 18,668,409

73 Bond Issuance Cost and Fees (31,420) (111,766)

81 Facilities acquisition and construction 1,664,270 1,415,168

93 Payments Related to Shared Services Arrangements 272,533 335,586

95 Payments to JJAEP 35,748 5,762

99 Other Intergovernmental Charges 561,982 600,514

Total Expenditures 309,051,615 322,240,928

Increase (Decrease) in Net Assets 22,820,897$ 17,568,426$

Table A-3 presents the cost of each of the District’s largest functions.

The cost of all governmental activities this year was $198,675,462. Those who directly benefited from programactivities paid some of the cost. Other programs and services activities were paid by grants contributions.

Total Cost of Total Cost of %

Services 2010 Services 2011 Chage

Instruction 173,106,190$ 172,917,132$ -0.1%

Plant, Maintenance & Operations 27,962,828 28,571,878 2.2%

Food Service 18,796,715 18,690,366 -0.6%

School Leadership 14,908,851 15,314,330 2.7%

Table A-3

Cost of Selected District's Functions

FINANCIAL ANALYSIS OF THE DISTRICT’S FUNDS

Revenues from governmental fund types totaled $339,958,264. The increase in local revenues is a result of increased

property values. The increase in state revenues is a result of increased state aid. In addition SHARS revenue increased.Another increase in the federal program revenues was in part due to the ARRA grants. These grants were awarded fortwo years beginning with the fiscal year 2009-10. The remaining balance available for the 2010-11 fiscal year wasmore than the amount utilized for the 2009-10 fiscal year.

The General Fund is the chief operating fund of the district. As of August 31, 2011, the fund balance of the generalfund was $96,020,764. The unassigned balance of $39,027,028 or 40.6% of this total amount is available for spendingat the government’s discretion. Of the current ending fund balances, the following categories are recorded and primaryused noted in accordance with implementing GASB No. 54:

$1,958,482 is recorded as nonspendable for inventories and deferred expenditures;


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$17,725,684 is recorded as Restricted; $1,822,128 in Food Service and $10,132,960 for the State Science LabGrant; and $5,770,596 in other State programs;

$16,500,00 is recorded as committed for Construction;

$6,000,000 is recorded as committed for capital expenditures for equipment for new schools;

$12,934,570 is recorded as committed for sick leave payoff;

$1,875,000 is recorded as assigned for E-Rate and other items;

$39,027,028 is the remaining fund balance and is recorded as unassigned.

General Fund Budgetary Highlights

Over the course of the year, the District revised its budget several times. In addition, the school board approved severalincreases in appropriations to prevent budget overruns. The budget was also amended to provide furniture andequipment for a new middle school, a new elementary school and additional furniture and equipment for year two of thenew high school. With these adjustments, actual expenditures were below final budget amounts.

CAPITAL ASSETSAt the end of fiscal year 2011, the District had invested $353,071,700 in a broad range of capital assets, including land,equipment, buildings, and vehicles. (See Table A-4.)

More detailed information about the District’s capital assets is presented in the notes to the financial statements.

LONG TERM OBLIGATION ACTIVITY

Table A-5Long-term obligations include debt and other long-term liabilities. Changes in long-term obligations for the periodending August 31, 2011, are as follows:

Amt Due inGovernmental Activities Beginning Balance Increases Decreases Ending Balance One Year Rating

General Obligation Bonds $287,480,000 $104,475,000 $10,980,000 $380,975,000 $11,050,000 AAAAccretion $ 1,391,101 $ 269,378 $ 300,000 $ 1,360,479 $ -Construction Notes Payable $ - $ 26,755,000 $ - $ 26,755,000 $ 1,775,000Capital Leases (Restated) $ 413,327 $ - $ 218,151 $ 195,176 $ 152,061

Sick Leave $ 16,585,213 $ - $ 3,650,643 $ 12,934,570 $ -Subtotal $305,869,641 $131,499,378 $15,148,794 $ 422,220,225 $ 12,977,061Premium & Discount $ 12,631,098 $ 4,379,690 $ 619,755 $ 16,391,033 $ 626,070Total Governmental Activities $318,500,739 $135,879,068 $15,768,549 $ 438,611,258 $ 13,603,131

Governmental Governmental

Activities 2010 Activities 2011

Capital Assets:

Land 15,576,565$ 15,576,565$

Buildings & Improvements 285,262,525 285,478,098

Furniture & Equipment 25,273,886 26,912,554

Vehicles 12,101,016 12,056,965

Library Books - 3,904

Capital Leases - 499,590

Construction in Progress 96,731,714 160,045,293

Infrastructure 14,181,940 14,248,590

Total Capital Assets at Historical Cos 449,127,646 514,821,559

Less: Accumulated Depreciation (95,042,783) (104,580,614)

Net of Cap ital Assets 354,084,863$ 410,240,945$

Table A-4


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ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES

Appraised value used for the 2012 budget preparation is up only $10.4 million, or .03% from $3.447 billion.

The District’s 2012 refined average daily attendance is expected to be 28,520. No growth was projected.

These indicators were taken into account when adopting the general fund budget for 2012. Amounts available forappropriation in the general fund budget are $297 million. This represents an increase over the original 2011 budget of$283 million due to the district having a successful Tax Ratification Election. Property values continue to rise, but at aslower pace. State revenues will increase when the student population grows but will otherwise remain constant due tostate funding formulas. The district is already examining the budget for 2013 to take into account the state’s continuingfiscal concerns.

Expenditures are budgeted to rise to $294 million in the general fund. The largest increments are increased staffing,teacher salary schedule adjustments, and a purchase of buses. These competitive salary schedule adjustments allowedthe District to open the 2012 school year with few teacher vacancies. Increased wage and cost of living adjustmentswere not made to this year’s salary schedules. The District has continued our highly successful College, Career andTechnology Academy and added a fourth year to Thomas Jefferson T-Stem Early College High School. In addition,Audie Murphy Middle School and Marcia Garza Elementary were opened in August of 2011. Southwest High Schooladded sophomores for 2012. Opening these schools continues to reduce overcrowding in our middle schools, balanceour elementary schools and align our schools vertically.

If these estimates are realized, the District’s budgetary general fund’s fund balance is not expected to changeappreciably by the close of 2012.

CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENTThis financial report is designed to provide our citizens, customers, and investors and creditors with a general overviewof the District’s finances and to demonstrate the District’s accountability for the money it receives. If you havequestions about this report or need additional financial information, contact the District’s Business Office.


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Basic Financial Statements


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EXHIBIT A-1

PHARR-SAN JUAN-ALAMO INDEPENDENT SCHOOL DISTRICTSTATEMENT OF NET ASSETS

AUGUST 31, 2011

1Data

Control GovernmentalCodes Activities

ASSETS:1110 Cash and Cash Equivalents $ 331,437,1161120 Current Investments 150,9061225 Property Taxes Receivable (Net) 9,059,8561240 Due from Other Governments 31,096,6591250 Accrued Interest 112,7231290 Other Receivables (Net) 1,656,5051300 Inventories 1,949,2291410 Deferred Expenses 11,5011420 Capitalized Bond and Other Debt Issuance Costs 5,090,275

Capital Assets:1510 Land 15,576,5651520 Buildings and Improvements, Net 219,356,2211530 Furniture and Equipment, Net 11,589,745

1540 District Defined Fixed Assets, Net 3,9041550 Capital Lease Assets, Net 499,5901580 Construction in Progress 160,045,2921590 Infrastructure, Net 3,169,6271000 Total Assets 790,805,714

LIABILITIES:

2110 Accounts Payable 16,959,5622120 Short-Term Debt Payable 1,775,0002140 Interest Payable 1,508,0682165 Accrued Liabilities 14,315,9782180 Due to Other Governments 5,476,0122190 Due to Student Groups 392,8652300 Unearned Revenue 2,766,044

Noncurrent Liabilities:2501 Due Within One Year 11,202,0612502 Due in More Than One Year 425,634,1962000 Total Liabilities 480,029,786

NET ASSETS

3200 Invested in Capital Assets, Net of Related Debt 83,977,537Restricted For:

3820 State and Federal Programs 2,576,9493850 Debt Service 24,623,5293860 Capital Projects 120,287,8173890 Other Purposes 59,385,4623900 Unrestricted 19,924,6343000 Total Net Assets $ 310,775,928

The accompanying notes are an integral part of this statement.

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EXHIBIT B-1

PHARR-SAN JUAN-ALAMO INDEPENDENT SCHOOL DISTRICTSTATEMENT OF ACTIVITIES


Net (Expense)1 3 4 5 Revenue and

Changes inProgram Revenues Net Assets

Data Operating CapitalControl Charges for Grants and Grants and GovernmentalCodes Functions/Programs Expenses Services Contributions Contributions Activities

Governmental Activities:11 Instruction $ 172,917,132 $ 52,912 $ 51,245,888 $ 191,452 $ (121,426,880)12 Instructional Resources and Media Services 6,472,880 1,850 3,309,284 412 (3,161,334)13 Curriculum and Staff Development 8,550,558 2,291 5,155,065 46,072 (3,347,130)21 Instructional Leadership 6,003,620 1,332 2,598,018 8,805 (3,395,465)23 School Leadership 15,314,330 5,230 5,602,239 7,799 (9,699,062)31 Guidance, Counseling, & Evaluation Services 10,967,257 957 7,737,499 7,448 (3,221,353)32 Social Work Services 2,682,610 140 2,118,463 31 (563,976)33 Health Services 3,188,935 555 1,992,539 123 (1,195,718)34 Student Transportation 5,640,638 3,211 153,946 714 (5,482,767)35 Food Service 18,690,366 329,636 17,224,998 32 (1,135,700)36 Cocurricular/Extracurricular Activities 8,255,877 363,178 488,412 395 (7,403,892)41 General Administration 6,983,821 3,862 335,328 859 (6,643,772)51 Plant Maintenance and Operations 28,571,878 26,052 1,244,280 3,557 (27,297,989)52 Security and Monitoring Services 3,511,651 16,910 170,897 400 (3,323,444)53 Data Processing Services 1,386,650 780 57,626 173 (1,328,071)

61 Community Services 2,189,052 150 1,787,351 33 (401,518)72 Interest on Long-term Debt 18,668,409 7 4,899,048 15,262,003 1,492,64973 Bond Issuance Costs and Fees (111,766) -- -- -- 111,76681 Capital Outlay 1,415,168 -- 1,040,000 -- (375,168)93 Payments Related to Shared Services Arrangement 335,586 28 59,618 6 (275,934)95 Payments to Juvenile Justice Alternative Ed. Progra 5,762 3 49 1 (5,709)99 Other Intergovernmental Charges 600,514 349 5,089 77 (594,999)TG Total Governmental Activities 322,240,928 809,434 107,225,638 15,530,393 (198,675,463)TP Total Primary Government $ 322,240,928 $ 809,434 $ 107,225,638 $ 15,530,393 (198,675,463)

General Revenues:MT Property Taxes, Levied for General Purposes 36,179,484DT Property Taxes, Levied for Debt Service 11,013,205IE Investment Earnings 1,254,979GC Grants and Contributions Not Restricted to Specific Programs 167,215,720MI Miscellaneous 580,501

TR Total General Revenues 216,243,889CN Change in Net Assets 17,568,426NB Net Assets - Beginning 293,029,270PA Prior Period Adjustment 178,232

Net Assets - Beginning, as Restated 293,207,502NE Net Assets - Ending $ 310,775,928


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PHARR-SAN JUAN-ALAMO INDEPENDENT SCHOOL DISTRICTBALANCE SHEET - GOVERNMENTAL FUNDS

AUGUST 31, 2011

10 50Data Debt

Control General ServiceCodes Fund Fund

ASSETS:1110 Cash and Cash Equivalents $ 114,852,237 $ 10,815,2921120 Current Investments 8,906 --1225 Taxes Receivable, Net 7,444,576 1,615,2801240 Due from Other Governments 6,758,123 --1250 Accrued Interest 78,220 8,4871260 Due from Other Funds 5,381,588 30,132,9561290 Other Receivables 1,341,961 --1300 Inventories 1,946,984 --1410 Deferred Expenditures 11,501 --1000 Total Assets $ 137,824,096 $ 42,572,015

LIABILITIES:

Current Liabilities:

2110 Accounts Payable $ 6,289,416 $ --2150 Payroll Deductions & Withholdings 1,266,997 --2160 Accrued Wages Payable 10,052,410 --2170 Due to Other Funds 9,164,598 27,240,9402180 Due to Other Governments 5,364,974 --2190 Due to Student Groups -- --2300 Deferred Revenue 9,664,937 1,615,2812000 Total Liabilities 41,803,332 28,856,221

FUND BALANCES:

Nonspendable Fund Balances:3410 Inventories 1,958,482 --

Restricted Fund Balances:3450 Federal/State Funds Grant Restrictions 17,725,684 --

3480 Retirement of Long-Term Debt -- 13,715,7943490 Other Restrictions of Fund Balance -- --

Committed Fund Balances:3510 Construction 16,500,000 --3530 Capital Expenditures for Equipment 6,000,000 --3545 Other Committed Fund Balance 12,934,570 --

Assigned Fund Balances:3590 Other Assigned Fund Balance 1,875,000 --3600 Unassigned 39,027,028 --3000 Total Fund Balances 96,020,764 13,715,794

4000 Total Liabilities and Fund Balances $ 137,824,096 $ 42,572,015


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EXHIBIT C-1

60 98Other Total

Construction Governmental GovernmentalFund Funds Funds

$ 202,622,005 $ (18,722,644) $ 309,566,890-- -- 8,906-- -- 9,059,856-- 24,338,534 31,096,657-- 111 86,818

23,666,261 423,442 59,604,24713,536 105,964 1,461,461

-- -- 1,946,984-- -- 11,501

$ 226,301,802 $ 6,145,407 $ 412,843,320

$ 8,802,391 $ 1,471,105 $ 16,562,912-- (237) 1,266,760-- 2,990,106 13,042,516

22,667,828 369,698 59,443,064242 110,796 5,476,012

-- 392,865 392,865-- 545,682 11,825,900

31,470,461 5,880,015 108,010,029

-- -- 1,958,482

-- 254,718 17,980,402

-- -- 13,715,794194,831,341 10,674 194,842,015

-- -- 16,500,000-- -- 6,000,000-- -- 12,934,570

-- -- 1,875,000-- -- 39,027,028

194,831,341 265,392 304,833,291

$ 226,301,802 $ 6,145,407 $ 412,843,320

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EXHIBIT C-1R

PHARR-SAN JUAN-ALAMO INDEPENDENT SCHOOL DISTRICTRECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

AUGUST 31, 2011

Total fund balances - governmental funds balance sheet $ 304,833,291

Amounts reported for governmental activities in the Statement of Net Assets("SNA") are different because:

Capital assets used in governmental activities are not reported in the funds. 410,231,938Property taxes receivable unavailable to pay for current period expenditures are deferred in the funds. 9,059,856The assets and liabilities of internal service funds are included in governmental activities in the SNA. 21,679,893Payables for bond principal which are not due in the current period are not reported in the funds. (380,975,000)Payables for capital leases which are not due in the current period are not reported in the funds. (195,176)Payables for bond interest which are not due in the current period are not reported in the funds. (2,868,547)Payables for notes which are not due in the current period are not reported in the funds. (26,755,000)Payables for compensated absences which are not due in the current period are not reported in the funds. (12,934,569)

Other long-term assets are not available to pay for current period expenditures and are deferred in the funds. (11,300,758)

Net assets of governmental activities - Statement of Net Assets $ 310,775,928


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PHARR-SAN JUAN-ALAMO INDEPENDENT SCHOOL DISTRICTSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES

IN FUND BALANCES - GOVERNMENTAL FUNDS


10 50Data Debt

Control General ServiceCodes Fund Fund

REVENUES:5700 Local and Intermediate Sources $ 38,394,296 $ 11,175,1765800 State Program Revenues 177,961,468 20,135,5025900 Federal Program Revenues 22,154,495 --5020 Total Revenues 238,510,259 31,310,678

EXPENDITURES:

Current:0011 Instruction 131,280,998 --0012 Instructional Resources and Media Services 3,595,684 --0013 Curriculum and Staff Development 3,666,529 --0021 Instructional Leadership 3,673,602 --0023 School Leadership 9,873,683 --0031 Guidance, Counseling, & Evaluation Services 3,680,631 --

0032 Social Work Services 525,319 --0033 Health Services 1,230,962 --0034 Student Transportation 5,515,517 --0035 Food Service 18,278,012 --0036 Cocurricular/Extracurricular Activities 8,117,020 --0041 General Administration 6,730,928 --0051 Plant Maintenance and Operations 27,745,485 --0052 Security and Monitoring Services 3,374,843 --0053 Data Processing Services 1,372,231 --0061 Community Services 362,783 --0071 Principal on Long-term Debt 51,347 10,980,0000072 Interest on Long-term Debt 14,491 18,348,9770073 Bond Issuance Costs and Fees -- 35,6300081 Capital Outlay 3,731,572 --

0093 Payments to Shared Service Arrangements 326,650 --0095 Payments to Juvenile Justice Altermative0095 Education Programs 5,609 --0099 Other Intergovernmental Charges 584,525 --6030 Total Expenditures 233,738,421 29,364,607

1100 Excess (Deficiency) of Revenues Over (Under)1100 Expenditures 4,771,838 1,946,071

Other Financing Sources and (Uses):7911 Capital-Related Debt Issued (Regular Bonds) -- --7915 Transfers In 28,181,926 66,9517916 Premium or Discount on Issuance of Bonds -- --8911 Transfers Out (28,248,878) --

7080 Total Other Financing Sources and (Uses) (66,952) 66,9511200 Net Change in Fund Balances 4,704,886 2,013,022

0100 Fund Balances - Beginning 91,292,814 11,702,7721300 Prior Period Adjustment 23,064 --

Fund Balances - Beginning, as Restated 91,315,878 11,702,7723000 Fund Balances - Ending $ 96,020,764 $ 13,715,794


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EXHIBIT C-2

60 98Other Total

Construction Governmental GovernmentalFund Funds Funds

$ 437,041 $ 248,391 $ 50,254,904-- 8,584,631 206,681,601-- 60,867,264 83,021,759437,041 69,700,286 339,958,264

-- 41,400,974 172,681,972-- 3,106,679 6,702,363-- 4,674,773 8,341,302-- 2,170,155 5,843,757-- 5,032,861 14,906,544-- 7,017,058 10,697,689

-- 2,085,859 2,611,178-- 1,873,059 3,104,021-- -- 5,515,517-- -- 18,278,012-- -- 8,117,020-- 7,180 6,738,108-- 179,720 27,925,205-- 80,567 3,455,410-- -- 1,372,231-- 1,773,884 2,136,667-- 166,803 11,198,150-- 9,148 18,372,616

1,183,443 -- 1,219,07359,897,386 -- 63,628,958

-- -- 326,650

-- -- 5,609-- -- 584,525

61,080,829 69,578,720 393,762,577

(60,643,788) 121,566 (53,804,313)

131,230,000 -- 131,230,000-- -- 28,248,877

4,379,690 -- 4,379,690-- -- (28,248,878)

135,609,690 -- 135,609,68974,965,902 121,566 81,805,376

119,865,439 143,826 223,004,851-- -- 23,064

119,865,439 143,826 223,027,915$ 194,831,341 $ 265,392 $ 304,833,291

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35/111

EXHIBIT C-3

PHARR-SAN JUAN-ALAMO INDEPENDENT SCHOOL DISTRICTRECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS

TO THE STATEMENT OF ACTIVITIES


Net change in fund balances - total governmental funds $ 81,805,263

Amounts reported for governmental activities in the Statement of Activities("SOA") are different because:

Capital outlays are not reported as expenses in the SOA. 65,624,783The depreciation of capital assets used in governmental activities is not reported in the funds. (9,940,763) All proceeds from the sale of capital assets are reported in the funds but not in the SOA. 12,071Certain property tax revenues are deferred in the funds. This is the change in these amounts this year. (160,981)Repayment of bond principal is an expenditure in the funds but is not an expense in the SOA. 10,980,000Repayment of capital lease principal is an expenditure in the funds but is not an expense in the SOA. 218,151Bond issuance costs and similar items are amortized in the SOA but not in the funds. (3,792,966)The accretion of interest on capital appreciation bonds is not reported in the funds. 774,737(Increase) decrease in accrued interest from beginning of period to end of period. (326,415)The net revenue (expense) of internal service funds is reported with governmental activities. (46,211)Compensated absences are reported as the amount earned in the SOA but as the amount paid in the funds. 3,650,643

Proceeds of bonds do not provide revenue in the SOA, but are reported as current resources in the funds. (131,230,000)Rounding difference 2

Change in net assets of governmental activities - Statement of Activities $ 17,568,313


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EXHIBIT D-1

PHARR-SAN JUAN-ALAMO INDEPENDENT SCHOOL DISTRICTSTATEMENT OF NET ASSETS

INTERNAL SERVICE FUNDS

AUGUST 31, 2011

Data InternalControl ServiceCodes Funds

ASSETS:Current Assets:

1110 Cash and Cash Equivalents $ 21,870,2261120 Investments 142,000

Receivables:

1250 Accrued Interest 25,9051260 Due from Other Funds 11,7631290 Other Receivables (net) 195,0441310 Inventories, at Cost 2,245

Total Current Assets 22,247,183

Noncurrent Assets:Capital Assets:

1530 Furniture and Equipment 89,059

1570 Accumulated Depreciation (80,053) Total Noncurrent Assets 9,0061000 Total Assets $ 22,256,189

LIABILITIES:

Current Liabilities:2110 Accounts Payable $ 396,6502160 Accrued Wages Payable 6,7022170 Due to Other Funds 172,944

Total Current Liabilities 576,2962000 Total Liabilities 576,296

NET ASSETS:

3800 Restricted Net Assets 223,135

3000 Total Net Assets $ 21,679,893


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EXHIBIT D-2

PHARR-SAN JUAN-ALAMO INDEPENDENT SCHOOL DISTRICTSTATEMENT OF REVENUES, EXPENSES, AND CHANGES

IN FUND NET ASSETS - INTERNAL SERVICE FUNDS


Data InternalControl ServiceCodes Funds

OPERATING REVENUES:5700 Local and Intermediate Sources $ 25,136,5585020 Total Revenues 25,136,558

OPERATING EXPENSES:

6100 Payroll Costs 209,6926200 Professional and Contracted Services 24,863,7416300 Supplies and Materials 109,3276400 Other Operating Costs 96030 Total Expenses 25,182,769

1300 Change in Net Assets (46,211)

0100 Total Net Assets - Beginning 21,731,654

Prior Period Adjustment (5,550)Total Net Assets - Beginning, as Restated 21,726,1043300 Total Net Assets - Ending $ 21,679,893


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EXHIBIT D-3

PHARR-SAN JUAN-ALAMO INDEPENDENT SCHOOL DISTRICTSTATEMENT OF CASH FLOWS

PROPRIETARY FUNDS


InternalServiceFunds

Cash Flows from Operating Activities:Cash Received from Customers $ --Cash Receipts (Payments) for Quasi-external

Operating Transactions with Other Funds 25,203,045Cash Payments to Employees for Services (203,111Cash Payments to Other Suppliers for Goods and Services (24,936,251Cash Payments for Grants to Other Organizations --Other Operating Cash Receipts (Payments) --

Net Cash Provided (Used) by Operating Activities 63,683

Cash Flows from Non-capital Financing Activities:

Proceeds (Payments) from (for) Borrowings --Transfers From (To) Other Funds 504,879

Net Cash Provided (Used) by Non-capital Financing Activities 504,879

Cash Flows from Capital and Related Financing Activities:

Contributed Capital --Net Cash Provided (Used) for Capital & Related Financing Activities --

Cash Flows f rom Investing Activities:

Purchase of Fixed Assets --Net Cash Provided (Used) for Investing Activities --

Net Increase (Decrease) in Cash and Cash Equivalents 568,562Cash and Cash Equivalents at Beginning of Year 21,301,664Cash and Cash Equivalents at End of Year $ 21,870,226

Reconciliation of Operating Income to Net Cash

Provided by Operating Activities:Operating Income (Loss) $ (46,211) Adjustments to Reconcile Operating Income to Net Cash Provided by Operating Activities

Depreciation --Change in Assets and Liabilities:

Decrease (Increase) in Receivables 66,488Increase (Decrease) in Accounts Payable 36,826Increase (Decrease) in Payroll Deductions --Increase (Decrease) in Accrued Wages Payable 6,580Increase (Decrease) in Due to Other Governments --Increase (Decrease) in Unearned Revenue -- Total Adjustments 109,894

Net Cash Provided (Used) by Operating Activities $ 63,683


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EXHIBIT E-1

PHARR-SAN JUAN-ALAMO INDEPENDENT SCHOOL DISTRICTSTATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

AUGUST 31, 2011 Agency

Fund

DataControl StudentCodes Activity

ASSETS:1110 Cash and Cash Equivalents $ 2,037,8461000 Total Assets $ 2,037,846

LIABILITIES:

Current Liabilities:2190 Due to Student Groups $ 2,037,8462000 Total Liabilities 2,037,846

NET ASSETS

3000 Total Net Assets $ --


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PHARR-SAN JUAN-ALAMO INDEPENDENT SCHOOL DISTRICTNOTES TO THE FINANCIAL STATEMENTS


A. Summary of Significant Accounting Policies

The basic financial statements of Pharr-San Juan-Alamo Independent School District (the "District") have been prepared

in conformity with accounting principles generally accepted in the United States of America ("GAAP") applicable togovernmental units in conjunction with the Texas Education Agency's Financial Accountability System Resource Guide("Resource Guide"). The Governmental Accounting Standards Board ("GASB") is the accepted standard setting body for establishing governmental accounting and f inancial reporting principles.

1. Reporting Entity

The Board of School Trustees ("Board"), a seven-member group, has governance responsibilities over all activitiesrelated to public elementary and secondary education within the jurisdiction of the District. The Board is elected by thepublic and has the exclusive power and duty to govern and oversee the management of the public schools of theDistrict. All powers and duties not specifically delegated by statute to the Texas Education Agency ("TEA") or to theState Board of Education are reserved for the Board, and the TEA may not substitute its judgment for the lawfulexercise of those powers and duties by the Board. The District receives funding from local, state and federalgovernment sources and must comply with the requirements of those funding entities. However, the District is notincluded in any other governmental "reporting entity" as defined by the GASB in its Statement No. 14, "The FinancialReporting Entity," as revised by GASB Statement No.39, and there are no component units included within the reportingentity.

2. Basis of Presentation, Basis of Accounting

a. Basis of PresentationGovernment-wide Financial Statements: The statement of net assets and the statement of activities includethe financial activities of the overall government, except for fiduciary activities. Eliminations have beenmade to minimize the double-counting of internal activities. Governmental activities generally are financedthrough taxes, intergovernmental revenues, and other nonexchange transactions.

The statement of activities presents a comparison between direct expenses and program revenues for eachfunction of the District's governmental activities. Direct expenses are those that are specifically associatedwith a program or function and, therefore, are clearly identifiable to a particular function. The District doesnot allocate indirect expenses in the statement of activities. Program revenues include (a) fees, fines, andcharges paid by the recipients of goods or services offered by the programs and (b) grants and contributionsthat are restricted to meeting the operational or capital requirements of a particular program. Revenues thatare not classified as program revenues, including all taxes, are presented as general revenues.

Fund Financial Statements: The fund financial statements provide information about the District's funds, withseparate statements presented for each fund category. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. All remaining governmental funds areaggregated and reported as nonmajor funds.

Proprietary fund operating revenues, such as charges for services, result from exchange transactionsassociated with the principal activity of the fund. Exchange transactions are those in which each party receivesand gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings,result from nonexchange transactions or ancillary activities.

The District reports the following major governmental funds:

General Fund: This is the District's primary operating fund. It accounts for all financial resources of theDistrict except those required to be accounted for in another fund.

In addition, the District reports the following fund types:

Internal Service Funds: These funds are used to account for revenues and expenses related to services providedto parties inside the District. These funds facilitate distribution of support costs to the users of supportservices on a cost-reimbursement basis. Because the principal users of the internal services are the

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District's governmental activities, this fund type is included in the "Governmental Activities" column of thegovernment-wide financial statements.

Agency Funds: These funds are used to report student activity funds and other resources held in a purely custodialcapacity (assets equal liabilities). Agency funds typically involve only the receipt, temporary investment, andremittance of fiduciary resources to individuals, private organizations, or other governments.

Fiduciary funds are reported in the fiduciary fund financial statements. However, because their assets are held ina trustee or agent capacity and are therefore not available to support District programs, these funds are notincluded in the government-wide statements.

b. Measurement Focus, Basis of AccountingGovernment-wide, Proprietary, and Fiduciary Fund Financial Statements: These financial statements arereported using the economic resources measurement focus. The government-wide and proprietary fundfinancial statements are reported using the accrual basis of accounting. Revenues are recorded when earnedand expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows takeplace. Nonexchange transactions, in which the District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, grants, entitlements, and donations. On an accrualbasis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenuefrom grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirementshave been satisfied.

Governmental Fund Financial Statements: Governmental funds are reported using the current financialresources measurement focus and the modified accrual basis of accounting. Under this method, revenues arerecognized when measurable and available. The District considers all revenues reported in the governmentalfunds to be available if the revenues are collected within sixty days after year-end. Revenues from localsources consist primarily of property taxes. Property tax revenues and revenues received from the State arerecognized under the susceptible-to-accrual concept. Miscellaneous revenues are recorded as revenue whenreceived in cash because they are generally not measurable until actually received. Investment earnings arerecorded as earned, since they are both measurable and available. Expenditures are recorded when therelated fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they havematured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources.

When the District incurs an expenditure or expense for which both restricted and unrestricted resources maybe used, it is the District's policy to use restricted resources first, then unrestricted resources.

Under GASB Statement No. 20, "Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting," all proprietary funds will continue to followFinancial Accounting Standards Board ("FASB") standards issued on or before November 30, 1989. However,from that date forward, proprietary funds will have the option of either 1) choosing not to apply future FASBstandards (including amendments of earlier pronouncements), or 2) continuing to follow new FASBpronouncements unless they conflict with GASB guidance. The District has chosen to apply future FASBstandards.

3. Financial Statement Amounts

a. Cash and Cash EquivalentsFor purposes of the statement of cash flows, highly liquid investments are considered to be cash equivalents if theyhave a maturity of three months or less when purchased.

b. Property TaxesProperty taxes are levied by October 1 on the assessed value listed as of the prior January 1 for all real andbusiness personal property in conformity with Subtitle E, Texas Property Tax Code. Taxes are due on receiptof the tax bill and are delinquent if not paid before February 1 of the year following the year in whichimposed. On January 1 of each year, a tax lien attaches to property to secure the payment of all taxes,

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penalties, and interest ultimately imposed. Property tax revenues are considered available (1) whenthey become due or past due and receivable within the current period and (2) when they are expected to becollected during a 60-day period after the close of the fiscal year.

Allowances for uncollectible tax receivables within the General and Debt Service Funds are based uponhistorical experience in collecting property taxes. Uncollectible personal property taxes are periodicallyreviewed and written off, but the District is prohibited from writing off real property taxes without specificstatutory authority from the Texas Legislature.

c. Inventories and Prepaid ItemsInventories of supplies on the balance sheet are stated at weighted average cost, while inventories of foodcommodities are recorded at market values supplied by the Texas Department of Human Services. Inventoryitems are recorded as expenditures when they are consumed. Supplies are used for almost all functions of activity, while food commodities are used only in the food service program. Although commodities are receivedat no cost, their fair market value is supplied by the Texas Department of Human Services and recorded asinventory and deferred revenue when received. When requisitioned, inventory and deferred revenue arerelieved, expenditures are charged, and revenue is recognized for an equal amount. Inventories also includeplant maintenance and operation supplies as well as instructional supplies.

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaiditems.

d. Capital AssetsPurchased or constructed capital assets are reported at cost or estimated historical cost. Donated fixed assetsare recorded at their estimated fair value at the date of the donation. The cost of normal maintenance and repairsthat do not add to the value of the asset or materially extend assets' lives are not capitalized. A capitalizationthreshold of $5,000 is used.

Capital assets are being depreciated using the straight-line method over the following estimated useful lives:

Estimated Asset Class Useful LivesInfrastructure 30Buildings 50Building Improvements 20Vehicles 2-15Office Equipment 3-15Computer Equipment 3-15

e. Receivable and Payable BalancesThe District believes that sufficient detail of receivable and payable balances is provided in the financialstatements to avoid the obscuring of significant components by aggregation. Therefore, no disclosure is providedwhich disaggregates those balances.

There are no significant receivables which are not scheduled for collection within one year of year end.

f. Compensated AbsencesOn retirement or certain employees, the District pays any accrued sick leave in a lump case payment to suchemployee.

g Interfund ActivityInterfund activity results from loans, services provided, reimbursements or transfers between funds. Loans arereported as interfund receivables and payables as appropriate and are subject to elimination uponconsolidation. Services provided, deemed to be at market or near market rates, are treated as revenues andexpenditures or expenses. Reimbursements occur when one fund incurs a cost, charges the appropriatebenefiting fund and reduces its related cost as a reimbursement. All other interfund transactions are treatedas transfers. Transfers In and Transfers Out are netted and presented as a single "Transfers" line on the

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government-wide statement of activities. Similarly, interfund receivables and payables are netted andpresented as a single "Internal Balances" line of the government-wide statement of net assets.

h. Use of EstimatesThe preparation of financial statements in conformity with GAAP requires the use of management's estimates.

i. Data Control CodesData Control Codes appear in the rows and above the columns of certain financial statements. The TEA requiresthe display of these codes in the financial statements filed with TEA in order to insure accuracy in building astatewide database for policy development and funding plans.

j. The District has adopted GASB 54 as part of its 2010-11 fiscal year reporting. Implementation of GASB 54 isrequired for all districts for the fiscal year ending in 2011. The intention of the GASB is to provide a morestructured classification of fund balance and to improve the usefulness of fund balance reporting to theusers of the District's financial statements. The reporting standard establishes a hierarchy for fund balanceclassifications and the constraints imposed on teh sues of those resources. GASB 54 provides for two major types of fund balances which are non-spendable and spendable.

Non-spendable fund balances are balances that cannot be spent becasue they are not expected to beconverted to cash or they are legally or contractually required to remain intact. Examples of this classificationare prepaid items, inventories, and principal (corpus) of an endowment fund. The District has inventories thatare considered non-spendable. The District does not have any prepaid items or non-spendable funds relatedto endowments.

In addition to the non-spendable fund balance, GASB 54 has provided a hierarchy of spendable fundbalances, based on a hierarchy of spending constraints.

- Restricted: Fund balances that are constrained by external parties, constitutional provisions, or enabling legislation.

- Committed: Fund balances that contain self-imposed constraints of the government from its highestlevel of decision making authority. The responsibility to commit funds rests with the Board of Trustees.Committed amounts cannot be used for any other purpose unless the governing board removes thoseconstraints by taking the same type of formal action.

- Assigned: Fund balances that contain self-imposed constraints of the government to be used for aparticular purpose. The responsibility to assign funds rests with the Superintendent.

- Unassigned: Fund balance of the general fund that is not constrained for any particular purpose.

When an expenditure is incurred for a purpose for which both restricted and unrestricted fund balance isavailable, the District consideres restricted funds to have been spent first. When an expenditures is incurredfor which committed, assigned, or unassigned fund balance are available, the District considers amounts tohave been spent first out of commited funds, then assigned funds, and finally unassigned funds.

B. Compliance and Accountability

1. Finance-Related Legal and Contractual Provisions

In accordance with GASB Statement No. 38, "Certain Financial Statement Note Disclosures," violations of finance-related legal and contractual provisions, if any, are reported below, along with actions taken to address such violations:

Violation Action TakenNone reported Not applicable

2. Deficit Fund Balance or Fund Net Assets of Individual Funds

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Following are funds having deficit fund balances or fund net assets at year end, if any, along with remarks which addresssuch deficits:

Fund Name Deficit Amount Remarks752 Print Shop Fund $ 20,870 This deficit has been reserved in the fund balance of the General Fund.

C. Deposits and Investments

The District's funds are required to be deposited and invested under the terms of a depository contract. The depositorybank deposits for safekeeping and trust with the District's agent bank approved pledged securities in an amount sufficientto protect District funds on a day-to-day basis during the period of the contract. The pledge of approved securities iswaived only to the extent of the depository bank's dollar amount of Federal Deposit Insurance Corporation ("FDIC")insurance.

1. Cash Deposits:

At August 31, 2011, the carrying amount of the District's deposits (cash, certificates of deposit, and interest-bearingsavings accounts included in temporary investments) was $ 331,437,116 and the bank balance was $ 333,516,174 .The District's cash deposits at August 31, 2011 and during the year ended August 31, 2011, were entirely coveredby FDIC insurance or by pledged collateral held by the District's agent bank in the District's name.

In addition, the following is disclosed regarding coverage of combined balances on the date of highest deposit:

a. Depository: BBVA Compass

b. The market value of securities pledged as of the date of the highest combined balance on deposit was$267,747,697.

c. The highest combined balances of cash, savings and time deposit accounts amounted to $249,128,618 andoccurred during the month of July, 2011.

d. Total amount of FDIC coverage at the time of the largest combined balance was $250,000.

2. Investments:

The District is required by Government Code Chapter 2256, The Public Funds Investment Act, to adopt, implement,and publicize an investment policy. That policy must address the following areas: (1) safety of principal andliquidity, (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-weightedmaturity allowed based on the stated maturity date for the portfolio, (8) investment staff quality and capabilities,and (9) bid solicitation preferences for certificates of deposit.

The Public Funds Investment Act ("Act") requires an annual audit of investment practices. Audit procedures in thisarea conducted as a part of the audit of the basic financial statements disclosed that in the areas of investmentpractices, management reports and establishment of appropriate policies, the District adhered to the requirementsof the Act. Additionally, investment practices of the District were in accordance with local policies.

The Act determines the types of investments which are allowable for the District. These include, with certainrestrictions, 1) obligations of the U.S. Treasury, U.S. agencies, and the State of Texas, 2) certificates of deposit, 3)certain municipal securities, 4) securities lending program, 5) repurchase agreements, 6) bankers acceptances, 7)mutual funds, 8) investment pools, 9) guaranteed investment contracts, and 10) commercial paper.

The District's investments at August 31, 2011 are shown below.

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Terms PercentInvestment or Investment Type Fair Value Cost Maturity of PortfolioTexpool $ 111,999,915 $ 111,999,915 0-3 Months 33.866%

Texas Term 23,985 23,985 0-3 Months 0.007%Certificates of Deposit 69,110,149 69,110,149 0-10 Months 20.898%Money Market 149,576,053 149,576,053 0-3 Months 45.229%Total Investments $ 330,710,102 $ 330,710,102 100.00%

3. Analysis of Specific Deposit and Investment Risks

GASB Statement No. 40 requires a determination as to whether the District was exposed to the following specificinvestment risks at year end and if so, the reporting of certain related disclosures:

a. Credit RiskCredit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The ratingsof securities by nationally recognized rating agencies are designed to give an indication of credit risk. At year end,the District was not significantly exposed to credit risk.

b. Custodial Credit RiskDeposits are exposed to custodial credit risk if they are not covered by depository insurance and thedeposits are uncollateralized, collateralized with securities held by the pledging financial institution, or collateralized with securities held by the pledging financial institution's trust department or agent but not in theDistrict's name.

Investment securities are exposed to custodial credit risk if the securities are uninsured, are not registered inthe name of the government, and are held by either the counterparty or the counterparty's trust departmentor agent but not in the District's name.

At year end, the District was not exposed to custodial credit risk.

c. Concentration of Credit RiskThis risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. At year end, the District was not exposed to concentration of credit risk.

d. Interest Rate RiskThis is the risk that changes in interest rates will adversely affect the fair value of an investment. At year end,the District was not exposed to interest rate risk.

e. Foreign Currency RiskThis is the risk that exchange rates will adversely affect the fair value of an investment. At year end, theDistrict was not exposed to foreign currency risk.

Investment Accounting PolicyThe District's general policy is to report money market investments and short-term participating interest-earninginvestment contracts at amortized cost and to report nonparticipating interest-earning investment contracts using acost-based measure. However, if the fair value of an investment is significantly affected by the impairment of the creditstanding of the issuer or by other factors, it is reported at fair value. All other investments are reported at fair value unless alegal contract exists which guarantees a higher value. The term "short-term" refers to investments which have a remainingterm of one year or less at time of purchase. The term "nonparticipating" means that the investment's value does not varywith market interest rate changes. Nonnegotiable certificates of deposit are examples of nonparticipating interest-earninginvestment contracts.Public Funds Investment PoolsPublic funds investment pools in Texas ("Pools") are established under the authority of the Interlocal Cooperation Act,Chapter 79 of the Texas Government Code, and are subject to the provisions of the Public Funds Investment Act (the "Act"),Chapter 2256 of the Texas Government Code. In addition to other provisions of the Act designed to promote liquidity andsafety of principal, the Act requires Pools to: 1) have an advisory board composed of participants in the pool and other persons who do not have a business relationship with the pool and are qualified to advise the pool; 2) maintain a continuous

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rating of no lower than AAA or AAA-m or an equivalent rating by at least one nationally recognized rating service; and 3)maintain the market value of its underlying investment portfolio within one half of one percent of the value of its shares.

The District's investments in Pools are reported at an amount determined by the fair value per share of the pool's underlyingportfolio, unless the pool is 2a7-like, in which case they are reported at share value. A 2a7-like pool is one which is notregistered with the Securities and Exchange Commission ("SEC") as an investment company, but nevertheless has a policythat it will, and does, operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940.

D. Capital Assets

Capital asset activity for the year ended August 31, 2011, was as follows:

RestatedBeginning Ending

Governmental activities: Balances Increases Decreases BalancesCapital assets not being depreciated:

Land $ 15,576,565 $ -- $ -- $ 15,576,565Construction in progress 96,716,264 63,611,252 282,223 160,045,293Total capital assets not being depreciated 112,292,829 63,611,252 282,223 175,621,858

Capital assets being depreciated:

Land Improvements 14,181,940 66,650 -- 14,248,590Buildings 198,693,655 -- -- 198,693,655Buildings and improvements 86,568,870 215,573 -- 86,784,443Furniture & Equipment 25,273,886 1,942,527 303,859 26,912,554Vehicles 12,101,016 67,092 111,143 12,056,965Lease Equipment 499,590 -- -- 499,590Library Books -- 3,904 -- 3,904Total capital assets being depreciated 337,318,957 2,295,746 415,002 339,199,701

Less accumulated depreciation for:Land Improvements (10,269,548) (809,415) -- (11,078,963)Buildings (46,391,130) (3,995,586) -- (50,386,716)Buildings and improvements (13,940,789) (1,794,371) -- (15,735,160)Furniture & Equipment (17,030,235) (2,445,202) (291,788) (19,183,649)Vehicles (7,411,081) (896,188) (111,143) (8,196,126)

Total accumulated depreciation (95,042,783) (9,940,762) (402,931) (104,580,614)Total capital assets being depreciated, net 242,276,174 (7,645,016) 12,071 234,619,087

Governmental activities capital assets, net $ 354,569,003 $ 55,966,236 $ 294,294 $ 410,240,945

Depreciation was charged to functions as follows:

Instruction $ 4,723,921Instructional Resources and Media Services 183,351Curriculum and Staff Development 228,186Instructional Leadership 159,863School Leadership 407,786Guidance, Counseling, & Evaluation Services 292,648Social Work Services 71,432Health Services 84,914Student Transportation 150,884Food Services 501,662Extracurricular Activities 222,051General Administration 184,329Plant Maintenance and Operations 763,927Security and Monitoring Services 94,527

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Data Processing Services 37,539Community Services 58,451Facilities Acquisition and Construction 1,750,213

Payments Related to Shared Service Arrangements 8,936Other Intergavernmental 15,990

$ 9,940,763

E. Interfund Balances and Activities

The balances result from a routine lag between the dates that transactions such as year-end payroll accruals, worker'scompensation adjustments and other year-end accruals in the accounting system and payments between the funds aremade. All amounts are scheduled to be repaid within one year.

1. Due To and From Other FundsFund Receivable Payable

General Fund:General Fund $ 2,560 $ 2,560Debt Service Fund 3,939,683 6,728,407Capital Projects Fund 22,062 985,861Internal Service Fund 261 --Permanent Fund 1,229,908 230,022

Total General Fund 5,194,474 7,946,850

Special Revenue Fund:Special Revenue Fund 162,480 162,480Internal Service Fund 189 3,741Permanent Fund 1,275 41,873

Total Special Revenue Fund 163,944 208,094

Debt Service Fund:General Fund 6,728,407 3,939,683Debt Service Fund 23,300,958 23,300,958Permanent Fund 103,591 300

Total Debt Service Fund 30,132,956 27,240,941

Capital Projects Fund:General Fund 985,861 22,062Capital Projects Fund 22,644,738 22,644,738Internal Service Fund -- 36Permanent Fund 35,662 992

Total Capital Projects Fund 23,666,261 22,667,828

Internal Service Fund:General Fund -- 261Special Revenue Fund 3,741 189Capital Projects Fund 36 --Permanent Fund 7,984 172,494

Total Internal Service Fund 11,761 172,944Permanent Fund

General Fund 230,022 1,229,908Special Revenue Fund 41,873 1,275Debt Service Fund 300 103,591Capital Projects Fund 992 35,662Internal Service Fund 172,494 7,984Permanent Fund 930 930

Total Permanent Fund 446,611 1,379,350

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Total $ 59,616,007 $ 59,616,007

2. Transfers To and From Other Funds

Transfers to and from other funds at August 31, 2011, consisted of the following:

Transfers Fro Transfers To Amount Reason

General fund General Fund $ 28,181,926 To account for administrative costs allocated togeneral fund from other state programs.

General fund Debt Service Funds 66,951 Relates to initial payment on QSCB bond.

Total $ 28,248,877

F. Long-Term Obligations

The District has entered into a continuing disclosure undertaking to provide Annual Reports and Material Event Noticesto the State Information Depository of Texas, which is the Municipal Advisory Council. This information is required under SEC Rule 15c2-12 to enable investors to analyze the financial condition and operations of the District.

Unlimited Tax Building Bonds (UTBB) OutstandingOriginal Final Coupon Original Balance

Description Issue Maturity Rate % Issue 09/01/2010UTBB, Series 2006 10/26/06 08/01/36 5.00-5.125% 167,040,000 152,185,000UTBB, Series 2007 07/15/07 02/01/37 4.55-5.500% 29,810,000 29,810,000UTBB, Series 2007 07/15/07 02/02/37 4.55-5.500% 5,190,000 4,515,000UTBB, Series 2007/ Accretion 07/15/07 08/01/18 4.55-5.500% 724,972 1,391,101UTBB, Series 2008 09/08/08 02/01/38 3.50-5.000% 104,725,000 100,970,000Total Bonds Payable $ 365,489,972 $ 288,871,101

Interest paid on bonded indebtness during the current year was $ 18,000,828Outstanding Outstanding Amounts

Balance Issued Accretion Retired Balance Due WithinDescription 09/01/2010 Current Current Current 08/31/2011 One Year UTBB, Series 2006 152,185,000 -- -- 6,470,000 145,715,000 6,800,000UTBB, Series 2007 29,810,000 -- -- -- 29,810,000 --UTBB, Series 2007 4,515,000 -- -- 585,000 3,930,000 585,000UTBB, Series 2007/ Accr 1,391,101 -- 269,378 300,000 1,360,479 --UTBB, Series 2008 100,970,000 -- -- 1,760,000 99,210,000 1,820,000UTBB, Series 2010 -- 104,475,000 -- 2,165,000 102,310,000 1,845,000

Subtot 288,871,101 104,475,000 269,378 11,280,000 382,335,479 11,050,000Premium & Discount 12,631,098 4,379,690 -- 619,755 16,391,033 626,070Total Bonds Payable $301,502,199 $ 108,854,690 $ 538,756 $ 11,899,755 $ 398,726,512 $ 11,676,070

Cost of Issuance (4,379,191) (1,183,443) -- (472,359) (5,090,275) (478,100)Construction Notes -- 26,755,000 -- -- 26,755,000 1,775,0001. Long-Term Obligation Activity

Long-term obligations include debt and other long-term liabilities. Changes in long-term obligations for the year ended August 31, 2011, are as follows:

AmountBeginning Ending Due Within

Governmental Activities Balance Increases Decreases Balance One Year General Obligation Bonds $ 287,480,000 $ 104,475,000 $ 10,980,000 $ 380,975,000 $ 11,050,000 Accretion 1,391,101 269,378 300,000 1,360,479 --

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Construction Notes Payable -- 26,755,000 -- 26,755,000 1,775,000Capital Leases (Restated) 413,327 -- 218,151 195,176 152,061Sick and Vacation Leave 16,585,213 -- 3,6

2010-2011 san juan alamo psja audit final

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