mc mud #36 financial info audit 2014

7/21/2019 MC MUD #36 FINANCIAL INFO Audit 2014

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Montgomery CountyMunicipal Utility District No. 36

MONTGOMERY COUNTY, TEXAS

FINANCIAL REPORT

September 30, 2014



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C O N T E N T S

Exhibits PageFINANCIAL SECTION

Independent Auditors’ Report 1-2

Management’s Discussion and Analysis 3-8

Basic Financial StatementsGovernment-wide and Fund Financial Statements

Statement of Net Position and Governmental Funds BalanceSheet B(1) 10-11Statement of Activities and Governmental Funds Revenues,Expenditures and Changes in Fund Balance B(2) 12-13

Notes to Financial Statements B(3) 15-32

Required Supplementary InformationSchedule of Revenues, Expenditures and Changes in Fund Balance

- Budget and Actual - General Fund C(1) 34

SchedulesTEXAS SUPPLEMENTARY INFORMATIONSchedule of Services and Rates TSI-1 36-37Schedule of General Fund Expenditures TSI-2 38Schedule of Temporary Investments TSI-3 39

Analysis of Taxes Levied and Receivable TSI-4 41Long-Term Debt Service Requirements by Years TSI-5 42

Analysis of Changes in Long-Term Bonded Debt TSI-6 43Comparative Schedule of Revenues and Expenditures - Generaland Debt Service Funds TSI-7 44-45Board Members, Key Personnel, and Consultants TSI-8 46-47

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Independent Auditors’ Report

Board of DirectorsMontgomery County Municipal Utility District No. 36Montgomery County, Texas

We have audited the accompanying financial statements of the governmental activities andeach major fund of Montgomery County Municipal Utility District No. 36 (the “District”) as ofand for the year ended September 30, 2014, and the related notes to the financial statements,

which collectively comprise the District’s basic financial statements as listed in the table ofcontents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financialstatements in accordance with accounting principles generally accepted in the United States of

America; this includes the design, implementation, and maintenance of internal control relevantto the preparation and fair presentation of financial statements that are free from materialmisstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. Weconducted our audit in accordance with auditing standards generally accepted in the UnitedStates of America. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor’s

judgment, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments, the auditorconsiders 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 thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of theentity’s internal control. Accordingly, we express no such opinion. An audit also includesevaluating the appropriateness of accounting policies used and the reasonableness of significantaccounting estimates made by management, as well as evaluating the overall presentation ofthe financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our audit opinions.



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Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects,the respective financial position of the governmental activities and each major fund ofMontgomery County Municipal Utility District No. 36 as of September 30, 2014, and therespective changes in financial position for the year then ended in accordance with accountingprinciples generally accepted in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that themanagement’s discussion and analysis and budgetary comparison information on pages 3through 8 and 34, respectively, be presented to supplement the basic financial statements.Such information, although not a part of the basic financial statements, is required by theGovernmental 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, orhistorical context. We have applied certain limited procedures to the required supplementaryinformation in accordance with auditing standards generally accepted in the United States of

America, which consisted of inquiries of management about the methods of preparing theinformation and comparing the information for consistency with management’s responses to ourinquiries, the basic financial statements, and other knowledge we obtained during our audit ofthe basic financial statements. We do not express an opinion or provide any assurance on theinformation because the limited procedures do not provide us with sufficient evidence toexpress an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements thatcollectively comprise the District’s basic financial statements. The Texas SupplementaryInformation (TSI) listed in the table of contents is presented for purposes of additional analysisand is not a required part of the financial statements. This information has been subjected tothe auditing procedures applied in the audit of the financial statements and certain additionalprocedures, including comparing and reconciling such information directly to the underlyingaccounting and other records used to prepare the financial statements or to the financialstatements themselves, and other additional procedures in accordance with auditing standardsgenerally accepted in the United States of America. In our opinion, the information is fairlystated in all material respects in relation to the financial statements as a whole.

Sugar Land, TexasJanuary 7, 2015



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Management’s Discussion and Analysis

As management of Montgomery County Municipal Utility District No. 36 (the District), we offerreaders of the District’s financial statements this narrative overview and analysis of the financialactivities of the District for the year ended September 30, 2014.

FINANCIAL HIGHLIGHTS

The assets of the District exceeded its liabilities at the close of the most recent fiscalyear by $7,971,907 (net position).

As of September 30, 2014, the District’s governmental funds reported an endingfund balance of $693,136.

The District’s cash balance at September 30, 2014 was $397,632, representing adecrease of $224,930 from September 30, 2013.

The District had general revenues of $1,670,197 and program revenues, net ofexpenses, of ($27,900) for the year ended September 30, 2014.

At the end of the fiscal year, unrestricted and unassigned fund balance for the

General Fund was $325,170, or 17 percent of total General Fund expenditures.

OVERVIEW OF THE FINANCIAL STATEMENTS

The discussion and analysis is intended to serve as an introduction to the District’s basicfinancial statements. The District’s basic financial statements include three components: 1)government-wide financial statements, 2) fund financial statements, and 3) notes to thefinancial statements.

GOVERNMENT-WIDE FINANCIAL STATEMENTS

The government-wide financial statements are designed to provide readers with a broadoverview of the District’s finances, in a manner similar to a private-sector business.

The statement of net position presents information on all of the District’s assets and liabilities,with the difference between the two reported as net position. Over time, increases ordecreases in net position may serve as a useful indicator of whether the financial position of theDistrict is improving or deteriorating.

The statement of activities presents information showing how the District’s net position changedduring the most recent fiscal year. All changes in net position are reported as soon as theunderlying event giving rise to the change occurs, regardless of the timing of related cashflows. Thus, revenues and expenses are reported in this statement for some items that will

only result in cash flows in future fiscal periods (e.g., depreciation).

The government-wide financial statements present functions of the District that are providedfrom funding sources (governmental activities). The government-wide financial statements canbe found on pages 10-13 of this report.



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FUND FINANCIAL STATEMENTS

A fund is a grouping of related accounts that is used to maintain control over resources thathave been segregated for specific activities or objectives. The District, like other state and localgovernments, uses fund accounting to ensure and demonstrate compliance with finance-relatedlegal requirements. The funds of the District consist solely of governmental funds (the GeneralFund and Debt Service Fund).

Governmental Funds - Governmental funds are used to account for essentially the same

function reported as governmental activities in the government-wide financial statements.However, unlike the government-wide financial statements, governmental fund financialstatements focus on near-term inflows and outflows of spendable resources, as well as onbalances of spendable resources available at the end of the fiscal year. Such information maybe useful in evaluating a government’s near-term financing requirements.

Because the focus of the governmental funds is narrower than that of the government-widefinancial statements, it is useful to compare the information presented in the governmental

funds with similar information presented for governmental activities in the government-widefinancial statements. By doing so, readers may better understand the long-term impact of thegovernment’s near-term financial decisions. Both the governmental funds balance sheet andthe governmental funds statement of revenues, expenditures, and changes in fund balancesprovide an adjustments column to facilitate this comparison between the governmental fundsand governmental activities . The basic governmental fund financial statements can be found onpages 10-13 of this report.

NOTES TO THE FINANCIAL STATEMENTS

The notes to the financial statements provide additional information that is essential to a fullunderstanding of the data provided in the government-wide and fund financial statements. Thenotes to the financial statements can be found on pages 15 through 32 of this report.

OTHER INFORMATION

In addition to the basic financial statements and accompanying notes, this report also presentscertain required supplementary information concerning the District’s General Fund budget.Required supplementary information can be found on page 34 of this report.

GOVERNMENT-WIDE FINANCIAL ANALYSIS

As noted earlier, net position may serve over time as a useful indicator of a government’s

financial position. In the case of the District, assets exceeded liabilities by $7,971,907 as ofSeptember 30, 2014.

A portion of the District’s net position reflects its investment in capital assets (e.g. land andinfrastructure), less any related debt used to acquire those assets that is still outstanding. TheDistrict uses these capital assets to provide services to the individuals we serve; consequently,these assets are not available for future spending.



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Additionally, a portion of the District’s net position represents unrestricted financial resourcesavailable for future operations.

Current and other assets $ 995,643 $ 1,214,456

Capital assets, net 7,885,556 7,748,844

Total Assets 8,881,199 8,963,300

Long-term liabilities 612,521 676,639

Other liabilities 296,771 286,854

Total Liabilities 909,292 963,493

Net Position:

Net investment in capital assets 7,273,035 7,072,205

Restricted (29,437) (20,784)

Unrestricted 728,309 948,386

Total Net Position $ 7,971,907 $ 7,999,807

SUMMARY OF STATEMENT OF NET POSITION

As of September 30, 2014 and 2013

2014 2013

Governmental Activities



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Net position of the District, all of which relate to governmental activities, decreased by $27,900.Key elements of the changes are as follows:

Revenues

Program revenues:

Water and sewer charges $ 1,406,138 $ 1,513,481

Property taxes, penalties and interest 153,557 149,200

Investment income and other 110,502 6,900

Total Revenues 1,670,197 1,669,581

Expenses

Purchased water and sewer 1,215,884 1,178,865

Professional fees, contracted services and other 397,054 468,275

Interest on long-term debt 17,925 21,018

Depreciation and amortization 67,234 67,417

Total Expenses 1,698,097 1,735,575

Change in Net Position (27,900) (65,994)

Net position, beginning 7,999,807 8,065,801

Net Position, Ending $ 7,971,907 $ 7,999,807

CHANGES IN NET POSITION

For the Fiscal Year Ended September 30, 2014 and 2013

2014 2013

Governmental Activities

2014 REVENUES

Water and

sewer charges

84%

Property taxes

9%

Investmentand other

7%



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FINANCIAL ANALYSIS OF THE DISTRICT’S FUNDS

As previously noted, the District uses fund accounting to ensure and demonstrate compliancewith finance-related legal requirements. The District’s governmental funds are discussed below:

Governmental Funds - The focus of the District’s governmental funds is to provideinformation on near-term inflows, outflows, and balances of spendable resources. Suchinformation is useful in assessing the District’s financing requirements. In particular, fundbalances may serve as a useful measure of a government’s net resources available for spendingfor program purposes at the end of the fiscal year.

As of September 30, 2014, the District’s governmental funds, which consist of a general fundand debt service fund reported an ending fund balance of $693,136, which is a decrease of$228,028 from last year’s total of $921,164. As a measure of the general fund’s liquidity, it maybe useful to compare unreserved fund balance to total fund expenditures. Unrestricted andunassigned fund balance represents 17 percent of total general fund expenditures.

CAPITAL ASSETS AND DEBT ADMINISTRATION

Capital Assets - The District’s investment in capital assets as of September 30, 2014 amountsto $7,885,556 (net of accumulated depreciation). This investment in capital assets includesland and infrastructure.

Land $ 108,082

Capacity rights 6,863,632

Water system 1,405,207

Wastewater system 1,059,259

Drainage system 675,617

Engineering 564,643

Less: accumulated depreciation (2,790,884)

Total Capital Assets, Net $ 7,885,556

CAPITAL ASSETS SCHEDULE

(net of depreciation)

Additional information on the District’s capital assets can be found in Note 6 in the notes tofinancial statements.

LONG-TERM DEBT

As of September 30, 2014, the District has no bonded debt outstanding. There were no newissues in 2014. Additional information on the District’s long-term debt can be found in Note 7 inthe notes to the financial statements.



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ECONOMIC FACTORS

Unrestricted and unassigned fund balance in the General Fund decreased to $325,170. A planned decrease of fund balance of $262,441 was projected.

REQUESTS FOR INFORMATION

The financial report is designed to provide a general overview of Montgomery County MunicipalUtility District No. 36’s finances for all those with an interest in the District’s finances. Questionsconcerning any of the information provided in this report or requests for additional financialinformation should be addressed to Montgomery County Municipal Utility District No. 36: TheWoodlands Joint Powers Agency, P.O. Box 7580, The Woodlands, Texas 77380.



FINANCIAL STATEMENTS

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Cash and temporary investments $ 391,756 $ 5,876 $ 397,632

Receivables:

Property taxes 5,177 559 5,736

Customer service accounts 194,872 194,872

Internal receivable 777 777

Investment in joint venture 397,403 397,403

Capital assets, net of accumulated depreciation:

Land and capacity rightsInfrastructure

$ 989,985 $ 6,435 $ 996,420

Liabilities, Deferred Inflows and Fund Balances/Net Position

Liabilities

Accounts payable and accrued liabilities $ 190,867 $ 34,536 $ 225,403

Customer deposits 71,368 71,368

Internal payable 777 777

Long-term liabilities:

Unamortized bond premium or (discount)

Due within one year

Due after one year262,235 35,313 297,548

Deferred Inflows of Resources

Unavailable revenue - property taxes 5,177 559 5,736

Fund Balances/Net Position

Fund Balances:

Nonspendable investment in joint venture 397,403 397,403

Restricted for debt service (29,437) (29,437)

Unrestricted and unassigned 325,170 325,170

722,573 (29,437) 693,136

$ 989,985 $ 6,435 $ 996,420

Net Position:

Net investment in capital assets

Restricted for debt service

Unrestricted

See Notes to Financial Statements.

Montgomery County Municipal Utility District No. 36

Total

STATEMENT OF NET POSITION AND GOVERNMENTAL FUNDS

September 30, 2014

BALANCE SHEET

Total Net Position

Total Liabilities

Debt

General Service

Total Fund Balances

Total Liabilities and Fund Balances

Assets

Total Assets

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Exhibit B(1)

$ $ 397,632

5,736

194,872

(777)

397,403

6,971,714 6,971,714913,842 913,842

7,884,779 $ 8,881,199

$ $ 225,403

71,368

(777)

104,156 104,156

59,907 59,907

448,458 448,458611,744 909,292

(5,736)

(397,403)

29,437

(325,170)

(693,136)

7,273,035 7,273,035

(29,437) (29,437)

728,309 728,309$ 7,971,907 $ 7,971,907

Statement of

Net Position

Adjustments

(Note 2)

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Revenues

Water service $ 1,008,738 $ $ 1,008,738

Sewer service 397,400 397,400

Property taxes 153,658 153,658

Penalties and interest 601 601

Tap connection and inspection fees 5,475 5,475

Investment earnings 114 2 116

Other 104,911 104,911

1,670,296 603 1,670,899

Expenditures/Expenses

Current:

Purchased water and sewer service 1,215,884 1,215,884

Purchased services from joint venture 330,326 7,187 337,513

Professional fees 30,532 30,532

Other 44,786 2,069 46,855

Capital Outlay 207,871 207,871

Debt Service:

Principal 57,608 57,608

Interest and fiscal charges 24,435 24,435

Depreciation

1,911,442 9,256 1,920,698

(241,146) (8,653) (249,799)

Other Financing Sources (Uses)

Equity in net income (loss) of joint venture 21,771 21,771

21,771 21,771

(219,375) (8,653) (228,028)

Fund Balances/Net Position - Beginning 941,948 (20,784) 921,164

$ 722,573 $ (29,437) $ 693,136

See Notes to Financial Statements.

STATEMENT OF ACTIVITIES AND GOVERNMENTAL FUNDS

REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES

Year Ended September 30, 2014

Financing Sources Over (Under) Expenditures andOther Financing (Uses)

Total Expenditures/Expenses

Total Revenues

Total

Change in Net Position

Over (Under) Expenditures


Fund Balances/Net Position - Ending

Debt

General Service

Total Other Financing Sources (Uses)

Excess (Deficiency) of Revenues

Excess (Deficiency) of Revenues and Other

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Exhibit B(2)

$ $ 1,008,738

397,400

(702) 152,956

601

5,475

116

104,911

(702) 1,670,197

1,215,884

(17,846) 319,667

30,532

46,855

(207,871)

(57,608)

(6,510) 17,925

67,234 67,234

(222,601) 1,698,097

221,899

(21,771)

(21,771)

228,028

(27,900) (27,900)

7,078,643 7,999,807

$ 7,278,771 $ 7,971,907

Adjustments

(Note 2) Activities

Statement of

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(This Page Intentionally Left Blank)

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Montgomery County Municipal Utility District No. 36Exhibit B(3)

NOTES TO FINANCIAL STATEMENTS

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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies of the District conform with generally accepted accounting principles.The following is a summary of the most significant policies:

A. Reporting Entity

Montgomery County Municipal Utility District No. 36 (the “District”) was created pursuantto an order of the Texas Commission on Environmental Quality dated July 28, 1976. TheDistrict operates under the terms and provisions of Chapters 49 and 54 of the TexasWater Code. The Board of Directors held its first meeting on August 14, 1976. The firstbonds were sold on August 1, 1977.

The District has contracted with various consultants to provide services to operate and

administer the affairs of the District. The District has no employees or related payrollcosts.

The District is a political subdivision of the State of Texas governed by an elected fivemember board and is considered a primary government. As required by generallyaccepted accounting principles, these general purpose financial statements have beenprepared based on considerations regarding the potential for inclusion of other entities,organizations, or functions as part of the District's financial reporting entity. Based onthese considerations, no other entities, organizations, or functions have been included inthe District's financial reporting entity. Additionally, as the District is considered a primarygovernment for financial reporting purposes, its activities are not considered a part of any

other governmental or other type of reporting entity.

Considerations regarding the potential for inclusion of other entities, organizations, orfunctions in the District's financial reporting entity are based on criteria prescribed bygenerally accepted accounting principles. These same criteria are evaluated inconsidering whether the District is a part of any other governmental or other type ofreporting entity. The overriding elements associated with prescribed criteria considered ifdetermining that the District's financial reporting entity status is that of a primarygovernment are that it has a separately elected governing body; it is legally separate; andit is fiscally independent of other state and local governments. Although not consideredsignificant in the District's reporting entity evaluation, other prescribed criteria undergenerally accepted accounting principles include considerations pertaining to organizations

for which the primary government is financially accountable; and considerations pertainingto other organizations for which the nature and significance of their relationship with theprimary government are such that exclusion would cause the reporting entity's financialstatements to be misleading or incomplete. The District participates in a joint venturewith other area municipal utility districts as more fully described in Note 8 of thesefinancial statements.





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The District's primary activities include construction, maintenance, and operation of waterand sewer system facilities and debt service on bonds issued to construct the facilities.

As noted above, the District participates in a joint venture with other area municipal utilitydistricts (collectively the “Participating Districts”). As provided in interlocal contracts byand among the Participating Districts, an independently governed agency known as TheWoodlands Joint Powers Agency (the “Agency”) provides administrative services and utilitysystem maintenance and operating services for the Participating Districts. The Agency isgoverned by a Board of Trustees made up of members appointed by the governing Boardsof the Participating Districts. The District records and accounts for its interest in the

Agency in its General Fund by the equity method, as do all of the Participating Districts,with a portion of General Fund equity reserved in the amount of the District’s equityinterest. See Note 8 for additional disclosures regarding the Agency’s operations.

B. Financial Statement Presentation

In June 1999, GASB issued Statement No. 34, Basic Financial Statements – andManagement’s Discussion and Analysis – for State and Local Governments. Thisstatement, known as the “Reporting Model” statement, affects the way the Districtprepares and presents financial information. State and local governments traditionallyhave used a financial reporting model substantially different from the one used to prepareprivate-sector financial information.

GASB Statement No. 34 establishes new requirements and a new reporting model for theannual financial reports of state and local governments. The Statement was developed to

make annual reports easier to understand and more useful to the people who usegovernmental financial information to make decisions.

Some of the significant changes of GASB Statement No. 34 include the following:

Management’s Discussion and Analysis - GASB Statement No. 34 requires thatfinancial statements be accompanied by a narrative introduction and analytical overview ofthe government’s financial activities in the form of “management’s discussion andanalysis” (MD&A). This analysis is similar to the analysis that private sector companiesprovide in their annual reports.

Government-wide Financial Statements - The reporting model includes financial

statements prepared using full accrual accounting for all of the government’s activities.This approach includes not just current assets and liabilities, but also capital assets andlong-term liabilities (such as buildings and infrastructure and general obligation debt).

Accrual accounting reports all of the revenues and costs of providing services each year,not just those received or paid in the current or soon thereafter, as is the case with themodified accrual basis of accounting.

Governments report all capital assets, includinginfrastructure, in the government-wide Statement of Net Position and report relateddepreciation expense, the cost of “using up” capital assets, in the Statement of Activities.





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The net position of a government is broken down into three categories: 1) invested incapital assets, net of related debt; 2) restricted; and 3) unrestricted.

Fund Financial Statements - These statements focus on the District’s major funds andare prepared using the modified accrual basis of accounting.

C. Government-wide and Fund Financial Statements

The government-wide financial statements (i.e. the statement of net position and thestatement of activities) report information on all the non-fiduciary activities of the primarygovernment and its component units, as applicable. The effect of interfund activity hasbeen removed from these statements. Governmental activities , which normally aresupported by taxes and intergovernmental revenues, are reported separately frombusiness-type activities , which rely to a significant extent on fees and charges for support.

Likewise, the primary government is reported separately from certain legally separatecomponent units for which the primary government is financially accountable. The Districthad no business-type activities or component units as of and for the year endedSeptember 30, 2014.

The governmental funds financial statements consist of the balance sheet and statementof revenues, expenditures and changes in fund balance. These financial statements havebeen adjusted to arrive at the government-wide financial statement balances (statementof net position and statement of activities). Major individual governmental funds arereported as separate columns in the fund financial statements.

D. Measurement Focus, Basis of Accounting and Financial Statement Presentation

The government-wide financial statements are reported using the economic resourcesmeasurement focus and the accrual basis of accounting . Revenues are recorded whenearned and expenses are recorded when a liability is incurred, regardless of the timing ofrelated cash flows.

Governmental funds financial statements are reported using the current financialresources measurement focus and the modified accrual basis of accounting . Revenuesare recognized as soon as they are both measurable and available. Revenues areconsidered to be available when they are collectible within the current period or soonenough thereafter to pay liabilities of the current period. For this purpose, the

government considers revenue to be available if collected within 60 days of the end of thecurrent fiscal period. Revenues accrued include interest earned on investments andincome from District operations. Expenditures generally are recorded when a liability isincurred, as under accrual accounting. However, debt service requirements, as well asexpenditures related to compensated absences and claims and judgments, are recordedonly when payment is due.





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The Governmental Accounting Standards Board has issued Statement No. 54, FundBalance Reporting and Governmental Fund Type Definitions (GASB 54). This Statement

defines the different types of fund balances that a governmental entity must use forfinancial reporting purposes. GASB 54 requires the fund balance amounts to be properlyreported within one of the following fund balance categories:

Nonspendable:To indicate fund balance associated with inventories, prepaids, long-term loans and notesreceivable and property held for resale (unless the proceeds are restricted, committed orassigned).

Restricted:To indicate fund balance that can be spent only for the specific purposes stipulated byconstitution, external resource providers or through enabling legislation.

Committed:To indicate fund balance that can be used only for the specific purposes determined by aformal action of the Board of Directors (the District’s highest level of decision-makingauthority).

Assigned:To indicate fund balance to be used for specific purposes but do meet the criteria to beclassified as restricted or committed.

Unassigned:

To indicate the residual classification of fund balance in the General Fund and includes allspendable amounts not contained in the other classifications.

In circumstances where an expenditure is made for a purpose for which amounts areavailable in multiple fund balance classifications, fund balance is generally depleted inthe order of restricted, committed, assigned and unassigned.

GASB 54 requires disclosure of any formally adopted minimum fund balance policies.The District does not currently have any such policies.

The accounting system is organized on a fund basis. A fund is defined as a fiscal andaccounting entity with a self-balancing set of accounts, which comprise its assets,liabilities, fund equity or deficit, revenues and expenditures.

The District reports the following governmental funds:

General FundThe General Fund is used to account for the operations of the District's water andsewer system and all other financial transactions not properly includable in otherfunds. The principal sources of revenue are related to water and sewer serviceoperations. Expenditures include all costs associated with the daily operations of theDistrict.





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Debt Service FundThe Debt Service Fund is used to account for the payment of interest and principal on

the District's general long-term debt. The primary source of revenue for debt serviceis property taxes pursuant to requirements of the District's bond resolutions.Expenditures include costs incurred in assessing and collecting these taxes.

E. Deferred Inflows of Resources

Deferred inflows of resources represent an acquisition of net position that applies to afuture period(s) and so will not be recognized as an inflow of resources (revenue) untilthat time. Deferred inflows of resources consist of unearned tax revenues.

F. Budget

An unappropriated budget is adopted for the General Fund. The budget is prepared usingthe same method of accounting as for financial reporting and serves as a planning tool.Encumbrance accounting is not utilized.

G. Investments

The District classifies investments that have a remaining maturity of one year or less atthe date of purchase as “money market investments” in accordance with Governmental

Accounting Standards Board Statement No. 31, “Accounting and Reporting for CertainInvestments and External Investment Pools” (Statement No. 31). Statement No. 31defines “money market investments” as short-term, highly liquid debt instruments

including commercial paper, banker’s acceptances and U.S. Treasury and agencyobligations. The District values its “money market investments” at cost, which isconsidered to approximate market value. The District’s certificates of deposit, if any, arerecorded at cost in accordance with Statement No. 31.

H. Short-Term Interfund Receivables/Payables

During the course of operations, transactions occur between individual funds for specifiedpurposes. These receivables and payables are classified as "internal receivables" or"internal payables" on the combined balance sheet. These amounts are eliminated forgovernment-wide presentation.

I. Unamortized Bond Premium or (Discount)

Included within long term liabilities are the unamortized bond premium or (discount).They are being amortized over the life of the related obligation on the straight-linemethod. Results obtained are not materially different from the interest method.





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J. Capital Assets

Capital assets, which include property, plant, equipment, and infrastructure assets arereported in the government-wide financial statements. Capital assets, other thaninfrastructure items, are defined by the government as assets with an initial, individualcost of more than $5,000 and an estimated useful life in excess of one year. Such assetsare 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 ofdonation.

Property, plant, and equipment of the primary government, as well as the componentunits, is depreciated using the straight-line method over the following estimated usefullives:

Asset Description

Estimated

Useful LifeLand N/A Capacity rights N/A Water system 30 yearsWastewater system 30 yearsDrainage system 30-50 yearsEngineering 30 years

K. Long-Term Obligations

In the government-wide financial statements, long-term debt and other long-term

obligations are reported as liabilities in the governmental activities statement of netposition. Bond premiums or discounts, as well as issuance costs, are deferred andamortized over the life of the bonds. Bonds payable are reported net of any applicablebond premium or discount.

In the fund financial statements, governmental fund types recognize bond premiums ordiscounts, as well as bond issuance costs, during the current period. The face amount ofnew debt issued is reported as other financing sources. Premiums are reported as otherfinancing uses. Issuance costs, whether or not withheld from the actual debt proceedsreceived, are reported as debt service expenditures.

L. Fund Equity

Reserved/restricted equity balances represent those portions of fund balance/net positionnot appropriable for expenditures/expenses or legally segregated for a specific future use.Designated fund balances represent tentative plans for future use of financial resources.Undesignated/unrestricted fund balances/net position represents available balances forthe District's future use.





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Net position restricted for debt service and fund balance reserved for debt service have adeficit balance as of September 30, 2014. This is due to the customer overpayments

which will be paid. The deficit will be eliminated with operating transfers.

M. Date of Management’s Review

Subsequent events have been evaluated through January 7, 2015, which is the date thefinancial statements were available to be issued.

NOTE 2 – RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS

A. Explanation of certain differences between the governmental fund balancesheet and the government-wide statement of net position

The governmental fund balance sheet includes an adjustments column to arrive at thegovernment-wide statement of net position balances. Amounts reported in the statementof net position are different because:

Total fund balances - governmental funds $ 693,136

Capital assets and deferred charges used in governmental activities

are not financial resources and are not reported in the funds. 7,885,556

Other long-term assets are not available to pay for current

period expenditures and, therefore, are deferred in the funds. 5,736

Long-term liabilities, including bonds payable, are not due and

payable in the current period, and therefore are not reportedin the funds. (612,521)

Net Position of Governmental Activities $ 7,971,907





22

B. Explanation of certain differences between the governmental fund statementof revenues, expenditures and changes in fund balances and the government-

wide statement of activities

The governmental fund statement of revenues, expenditures and changes in fundbalances includes an adjustments column to arrive at changes in net position as reportedin the government-wide statement of activities. Amounts reported in the statement ofactivities are different because:

Net change in fund balances - total governmental funds $ (228,028)

Governmental funds report capital outlays as expenditures.

However, in the statement of activities, the cost of those assets

is allocated over their estimated lives and reported as depreciation

expense. This is the amount by which capital outlay exceeded

depreciation in the current period. 136,712

Repayment of bond principal is reported as an expenditure in the

governmental funds, but the repayment reduces long-term

liabilities in the Statement of Net Position. 64,118

Revenue in the statement of activities that do not provide current

financial resources are not reported as revenues in the funds. (702)

Change in Net Position of Governmental Activities $ (27,900)

NOTE 3 - CASH AND TEMPORARY INVESTMENTS

Cash consists of interest bearing checking and money market accounts. Cash and temporaryinvestments in the Debt Service Fund are restricted for use in paying interest and principal onlong-term debt, paying agent fees and costs of assessing and collecting property taxespursuant to the District's bond resolutions.

The carrying amounts for cash and temporary investment balances, which approximate fairvalues, by fund at September 30, 2014, are as follows:

General $ 109,248 $ 58,753 $ 223,755 $ 391,756

Debt Service 3,872 2,004 5,876

$ 113,120 $ 58,753 $ 225,759 $ 397,632

TotalChecking TexstarTexpool





23

Investment PoliciesThe District has adopted a written investment policy regarding the investment of its funds as

defined in the Public Funds Investment Act, Chapter 2256, Texas Government Code. Theinvestments of the District are in compliance with its investment policy.

Applicable state laws and regulations allow the District to invest its funds in direct or indirectobligations of the United States, the State, or any county, city, school district, or otherpolitical subdivision of the State. Funds may also be placed in certificates of deposit of stateor national banks or savings and loan associations (depository institutions) domiciled withinthe State. Related state statutes and provisions included in the District's bond resolutionsrequire that all funds invested in depository institutions be guaranteed by federal depositoryinsurance and/or be secured in the manner provided by law for the security of public funds.Balances in checking accounts in depository institutions were entirely guaranteed by federaldepository insurance or security as provided by statutes and bond provisions at September

30, 2014.

Investment PoolsThe State Comptroller of Public Accounts exercises oversight responsibility of Texpool, theTexas Local Government Investment Pool. Oversight includes the ability to significantlyinfluence operations, designation of management and accountability for fiscal matters.

Additionally, the State Comptroller has established an advisory board composed of bothparticipants in Texpool and other persons who do not have a business relationship withTexpool. The advisory board members review the investment policy and management feestructure. Texpool is rated AAAm by Standard & Poors. Texpool operates in a mannerconsistent with the SEC’s Rule 2a7 of the Investment Company Act of 1940.

Texstar operates as a pool in accordance with the SEC’s Rule 2a7 of the Investment Company Act of 1940.

Both Texpool and Texstar use amortized cost rather than market value to report net positionto compute share prices. Accordingly, the fair value of the position of each pool is the sameas the value of the underlying shares.

Interest Rate Risk In accordance with its investment policy, the District manages its exposure to declines in fairvalues by limiting the weighted average maturity of its investment portfolio to less than twoyears to meet cash requirements for ongoing operation.

Credit Risk – InvestmentsIn accordance with its investment policy, the District minimized credit risk losses due todefault of a security issuer or backer, by limiting investments to the safest types of securities.

As the District’s investments are in investment pools, the District is not exposed to custodialcredit risk.





24

NOTE 4 - PROPERTY TAXES

The voters of the District have authorized the District's Board of Directors to levy maintenancetaxes annually for use in financing general operations limited to $0.25 per $100 of assessedvalue. The District's bond resolution requires that ad valorem taxes be levied for use inpaying interest and principal on long-term debt and for use in paying the cost of assessingand collecting taxes. Taxes levied for debt service requirements are without limitation as torate or amount.

All property values are determined by the Montgomery County Appraisal District. A tax lienattaches to all properties within the District on January 1st of each year. Taxes are generallylevied on October 1 and are due upon receipt of the tax bill by the property owner. Penaltiesand interest are charged if taxes are not paid by the succeeding January 31st. There is anadditional twenty percent penalty charged on accounts delinquent after July 1st of each year

which generally is payable to the District's delinquent tax attorney.

Property taxes are prorated between operations and debt service based on the respectiverates adopted for the year of the levy. For the current year, the District levied a combinedrate of $0.035 per $100 of assessed valuation of which all was allocated to maintenance andoperations. The resulting tax levy was $153,598 on the adjusted taxable valuation of$438,850,086 for the 2013 tax year.

Property taxes receivable at September 30, 2014, consisted of the following:

2013 Levy $ 1,014 $ $ 1,014

2012 Levy 738 738

2011 Levy 464 464

2010 Levy 817 817

2009 and prior 2,144 559 2,703

$ 5,177 $ 559 $ 5,736

TotalGeneralFund

Debt

ServiceFund





25

NOTE 5 - RECEIVABLES

Receivables as of year-end for the government’s individual major funds are as follows:

Receivables:

Taxes $ 5,177 $ 559 $ 5,736

Accounts 194,872 194,872

$ 200,049 $ 559 $ 200,608Total Receivables

TotalGeneral

Debt

Service

Governmental funds report deferred revenue in connection with receivables for revenues thatare not considered to be available to liquidate liabilities of the current period. At the end of

the current fiscal year, the various components of deferred revenue reported in thegovernmental funds were as follows:

Delinquent property taxes receivable - general fund $ 5,177 $

Delinquent property taxes receivable - debt service fund 559

Total Deferred Revenue for Governmental Funds $ 5,736 $

Unavailable Unearned

NOTE 6 - CAPITAL ASSETS

A summary of changes in capital assets for the year ended September 30, 2014, follows:

Governmental Activities:Non-depreciable Assets:

Land $ 108,082 $ $ $ 108,082Capacity rights 6,659,686 203,946 6,863,632Total Non-depreciable Assets 6,767,768 203,946 6,971,714

Depreciable Assets:Water system 1,405,207 1,405,207Wastewater system 1,059,259 1,059,259Drainage system 675,617 675,617Engineering 564,643 564,643

Total Depreciable Assets 3,704,726 3,704,726Less Accumulated Depreciation (2,723,650) (67,234) (2,790,884)

$ 7,748,844 $ 136,712 $ $ 7,885,556Totals

Balance BalanceSept 30, 2014Oct 1, 2013 Increases (Decreases)

Depreciation expense for the year ended September 30, 2014, totaled $67,234.





26

NOTE 7 - LONG-TERM DEBT

Long-term debt consists of bonds payable. Payments of principal and interest on the bondsare to be provided from tax levies on properties within the District. Investment incomerealized by the Debt Service Fund from investment of funds will be used to pay outstandingbond principal and interest.

At year end, the District has no bonds payable.

At September 30, 2014, the District had voted and unissued tax bonds in the amount of$1,800,000.

NOTE 8 – JOINT VENTURE – THE WOODLANDS JOINT POWERS AGENCY

The District has entered into interlocal contracts with other area municipal utility districts(collectively the “Participating Districts”) to create the Woodlands Joint Powers Agency (the

“Agency”). The contracts provide for the Agency to purchase certain equipment and supplies,to install taps and connections to the Participating District’s water and sewer systems, toperform required repair and maintenance work on these systems and to provide certainadministrative services for the Participating Districts.

Each Board of the Participating Districts appoints one of its members to the Agency’s Board ofTrustees annually. The Agency’s Board of Trustees controls the operations of the Agency,which includes adopting operating and capital budgets.

The Agency’s summary financial position at September 30, 2014 is presented below:

Total Assets $ 3,155,821

Total Liabilities 181,277

$ 2,974,544

The Participating Districts account for their share of the Agency’s net position on the equitymethod in their General Funds. Each Participating Districts’ respective shares are determinedbased on their proportionate share of cash contributions and all other cash payments andcontributions made to the Agency on a cumulative basis.





27

At September 30, 2014, the Agency’s net position are allocated among the ParticipatingDistricts as follows:

The Woodlands MUD No. 2 $ 65,791

Montgomery County MUD No. 6 367,950









The Woodlands Metro Center MUD 66,145

$ 2,974,544

Each Participating District’s share of participants’ equity at September 30, 2014 includes aninitial contribution of $7,500, which will not be refunded except on withdrawal from the

Agency or termination of the interlocal contracts.

The Agency’s summary operating results for the year ended September 30, 2014 arepresented below along with the District’s related share:

Total Revenues $ 5,428,816 $ 343,529

Total Expenses 5,084,767 321,758

Revenues Over (Under) Expenses 344,049 21,771

Participant distributions (333,536) (17,315)

Participants' Equity - Beginning 2,964,031 392,947

Participants' Equity - Ending $ 2,974,544 $ 397,403

Agency District





28

Charges for the Agency’s operating costs are based on the Participating District’s number ofmonthly water and sewer billings, tap connections and direct costs incurred. During the year

ended September 30, 2014, the District’s contribution for the Agency’s costs was made up ofthe following charges:

Tax administration $ 7,187

Administration 112,668

Engineering 8,657

Meter reading 18,291

Water repair and maintenance 34,262

Sewer repair and maintenance 6,227

Billing income 6,271

Large ditch repair and maintenance 100,946

Storm sewer repair and maintenance 21,980Postage 7,340

Other 8,444

Water tap installation 1,650

Inspections and connections 2,275

Capital budget contribution 5,240

$ 341,438





29

NOTE 9 – FINANCING AGREEMENTS WITH SAN JACINTO RIVER AUTHORITY

The District has entered into a series of financing agreements with the San Jacinto River Authority (SJRA). The agreements are for design, construction and other improvements toThe Woodlands Waste Disposal System Project and The Woodlands Water Supply SystemProject. The agreements include provisions for advances to be made by the District in theinitial stages of the project under certain circumstances. The District has made no advancesin the fiscal year ended September 30, 2014.

The District’s financing agreements with the SJRA also provide for the allocation of pro ratashares of SJRA revenue bond principal and interest to the District proportionate to theDistrict’s interest in the portion of project financed.

The District’s proportionate share of the total revenue bond obligations of the SJRA varies by

project. During the year ended September 30, 2014, the District funded $82,043 from theGeneral Fund relating to the obligations of which $57,608 was for principal and $24,435 wasfor interest.

The following reflects the District’s portion of existing debt of the SJRA for both the WasteDisposal System Project and the Water Supply System Project. The debt bears interest atvarying rates and matures in 2030.

Year

2015 $ 59,907 $ 22,005 $ 81,912

2016 27,131 20,084 47,215

2017 42,379 18,630 61,0092018 43,921 16,773 60,694

2019 45,759 14,729 60,488

2020-2024 131,873 50,418 182,291

2025-2029 128,215 22,828 151,043

2030 29,180 693 29,873

$ 508,365 $ 166,160 $ 674,525

Interest TotalPrincipal





30

The following reflects the bond issues related to the SJRA debt and the District’s relatedshare.

Series

1989 $ 3,100,000 $ 256,680 $

1991 2,735,000 226,458

1995 9,960,000 824,688

1995 1,380,000 75,910

1998R 6,520,000 358,646

2004R 21,310,000 628,106 351,065

2010R 4,440,000 244,232 157,300

$ 508,365

Share Balance AmountIssue District Current

R – The Series 1998, 2004 and 2011 bond issues are refunding bond issues.

NOTE 10 – CONTRACT WITH SAN JACINTO RIVER AUTHORITY

The District has contracted with the SJRA to provide its customers with water and sewerutility services through planning, construction, operation and maintenance of central watersupply and waste disposal facilities. The initial contract was entered into on September 27,1983, and continues in full force and effect unless terminated by mutual agreement of theDistrict and the SJRA. Thereafter, the District retains a proportionate and equitableownership interest in such central facilities.

Under the terms of the agreement, the District pays its proportionate share of capital andoperating costs for reserved capacity in the water supply and waste disposal facilities. Capitalpayments have come from the proceeds of bonds issued by the District and are included ascapital assets. Operating costs are recorded as current expenditures in the District’s GeneralFund. During the year ended September 30, 2014, the District paid $1,215,884 for its shareof operating costs. Pursuant to the agreement and a resolution approved by the SJRA on

August 28, 2014, the SJRA maintains reserve funds for operation of the water supply andwaste disposal facilities to cover cash flow needs year round in an amount ranging betweentwo and three months of total operating costs, excluding costs related to the payment ofgroundwater reduction plan fees. This operating reserve changes during the year based onavailable funds and changes in operating conditions. No amounts have been recorded on the

District's financial statements to reflect the District's share of this reserve. The SJRA alsomaintains reserve funds in accordance with the agreement and resolution for the plannedrepair and replacement of water supply and waste disposal facilities having a significantreplacement value and a relatively long useful life (generally in excess of ten years). Theamount of such reserve varies from year to year based upon a five year capital improvementand construction plan developed, maintained and annually updated by the SJRA. No amountshave been recorded on the District's financial statements to reflect the District's share of thisreserve.





31

Pursuant to the agreement and the resolution, the SJRA also maintains an emergency reserve

for purpose of providing funding for unexpected catastrophic events. The emergency reserveis funded periodically by the District and other participating districts from available sources.The amount of such reserve varies from year to year pursuant to the resolution. No amountshave been recorded on the District's financial statements to reflect the District's share of thisreserve.

The relationship between the SJRA and its customer districts is purely contractual. The SJRAis a separate functioning governmental entity whose management and Board of Directors arenot subject to the control of the customer districts. The District, together with other areamunicipal utility districts with similar contracts with the SJRA (collectively the “CustomerDistricts”), contracts directly with the SJRA for required facilities and does not have a contractwith other Customer Districts. The SJRA is not a participating facility user.

The SJRA serves as the sponsor and common provider to each of its Customer Districts offacilities and related services and has full legal title and ownership to facilities, subject only tothe contractual rights of the Customer Districts to receive services.

The SJRA invests its own capital funds in the construction and acquisition of the requiredfacilities. Each Customer District makes a payment to the SJRA to defray the costs ofconstruction of capital facilities proportionate to the contractual rights of use (or capacityrights) of such customer pursuant to its contract with the SJRA. Thus, each Customer Districthas invested from its bond proceeds capital funds in the acquisition of such contract rights;however, no Customer District owns nor has legal title to all or any portion of the physical

facilities providing such services.

Under these circumstances, the District’s relationship with the SJRA is not considered toconstitute either a shared facilities agreement or a joint venture arrangement. Disclosure hasbeen made that a substantial portion of water and sewer facility costs in the District’s generalfixed assets consist of the District’s investment in the acquisition of contractual rights of use,rather than ownership of facilities.

NOTE 11 – RISK MANAGEMENT

The District is exposed to various risks of loss related to torts; theft of, damage to and

destruction of assets, errors and omissions; and natural disasters for which the District carriescommercial insurance. The District has not significantly reduced insurance coverage or hadsettlements which exceeded coverage amounts for the past three fiscal years.





32

NOTE 12 – ANNEXATION DEFERRAL AGREEMENT

The District and the adjacent Woodlands Municipal Utility Districts (the “Woodlands Districts”)are located entirely within The Woodlands Township, a political subdivision of the State of

Texas which overlaps substantially all of The Woodlands. The Township has recently

concluded agreements with the City of Houston and the City of Conroe pursuant to which the

area of the Township, including the Woodlands Districts, may not be annexed for fifty (50)

years, and the area of the Township may, on or after May 29, 2014, and on request by the

Township, be excluded from the extraterritorial jurisdiction of either or both cities, and may

thereafter be incorporated as a municipality or may adopt a new form of local government.

In the event of incorporation of the Township, the Township must dissolve the Woodlands

Districts and assume the assets, obligations and liabilities of the Woodlands Districts.



REQUIRED SUPPLEMENTARY INFORMATION

33



Exhibit C(1)

Revenues

Water and sewer service $ 1,709,153 $ 1,709,153 $ 1,406,138 $ (303,015)

Property taxes 153,718 153,718 153,658 (60)

Penalties and interestTap connection and inspection 5,475 5,475

Interest on investments 574 574 114 (460)

Other 3,200 3,200 104,911 101,711

1,866,645 1,866,645 1,670,296 (196,349)

Expenditures

Current:

Purchased water and sewer 1,362,906 1,362,906 1,215,884 (147,022)

Purchased services 402,576 402,576 330,326 (72,250)

Professional fees 27,200 27,200 30,532 3,332

Other 49,353 49,353 44,786 (4,567)

Capital Outlay:

From joint venture 203,946 203,946 207,871 3,925From other

Debt Service:

Principal 30,788 30,788 57,608 26,820

Interest and fiscal charges 52,317 52,317 24,435 (27,882)

2,129,086 2,129,086 1,911,442 (217,644)


(262,441) (262,441) (241,146) 21,295

Other Financing Source

Equity in net income of JV 21,771 21,771


and Other Financing Source Over

(262,441) (262,441) (219,375) 43,066

Fund Balances - Beginning 941,948 941,948 941,948

$ 679,507 $ 679,507 $ 722,573 $ 43,066

(Under) Expenditures

Total Revenues

Fund Balances - Ending

(Under)

Total Expenditures

Over (Under) Expenditures

ActualOriginal


SCHEDULE OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL -

GENERAL FUND

Final


Variance

OverBudgeted Amounts

34



ADDITIONAL INFORMATION

35



1. Services provided by the District:

X Retail Water Wholesale Water X DrainageX Retail Sewer Wholesale Sewer Irrigation

Parks/Recreation Fire Protection Security

Solid Waste/Garbage Flood Control Roads

X

Other (specify):

2. Retail rates based on 5/8" meter Retail rates not applicable

The most prevalent type of meter (if not a 5/8"):

Flat Rate per 1,000

Minimum Minimum Rate Gallons Over

Charge Usage /N Minimum Usage LevelsWater $ 5.00 N 1,000 - 3,000

Water N 4,000 - 15,000

Water N 16,000 - 30,000

Water N 31,000 - >

Waste $10.35 N per 1,000

Surcharge $ 1.75 Per 1,000 Groundwater Reduction Plan Fee

District employs winter averaging for wastewater usage? Yes X No

Total water and sewer charges per 10,000 gallons usage

(including surcharges)

3. Retail Service Providers: Number of retail water and/or wastewater*

connections within the District as of the fiscal year end. Provide actualnumbers and single family equivalents (ESFC) as noted:

Active Active Inactive

Single Family 17

Multi-Family 5 660

Commercial 28 1

Other - recreational centers,

government & VFD 36 75

TOTAL 18

* Number of connections relates to water service, if provided. Otherwise,

the number of wastewater connections should be provided.

** "Inactive" means that water and wastewater connections were made, but

service is not being provided.

4. Total Water Consumption (In Thousands) During the Fiscal Year:

Gallons pumped into system:

Gallons billed to customers:

Percent of gallons billed to pumped


SCHEDULE OF SERVICES AND RATES


$ 1.38

3,000

$ 2.75

$ 5.50

1,718 2,442

1,649 1,649

58

ESFC

$ 4.15

N/A

N/A

Connections**

$93.21

204,450

Participates in joint venture, regional system and/or wastewater service

(other than emergency interconnect)

$ 3.45

Connections

36



TSI-1

5. Standby Fees: Does the District assess standby fees?

For the most recent full fiscal year:Debt Service: Total levy $

Total collected $

Percentage collected %

Operation & Maintenance Total levy $

Total collected $

Percentage collected %

constituting a lien on property? Yes ___ No ___

6. Location of District:

County in which District is located. Montgomery

Is the District located entirely within one county? Yes _X_ No ___ Is the District located within a city? Entirely ___ Partly ___ Not at all X

City in which District is located.

Is the District located within a city's extra territorial jurisdiction (ETJ)?

Entirely _ X _ Partly ___ Not at all ___

ETJ's in which District is located. Houston

Is the general membership of the Board appointed by an office outside the District?

Yes ___ No _X_

If yes, by whom?

Have standby fees been levied in accordance with Water Code Section 49.231, thereby

Yes ___ No_X_

37



TSI-2

Current

Purchased Water and Sewer Services from SJRA $ 1,215,884 $ 1,178,865

Purchased Services from Joint Venture 330,326 379,627

Professional Fees:

Auditing 3,200 3,200

Legal 27,332 50,586

30,532 53,786

Other Current Expenditures:

Directors' fees 10,500 10,650

Regulatory assessments 10,558 10,818

Bank charges 15,502 6,714

Elections 834 14,574

Insurance 2,700 1,275

Miscellaneous 4,692 8,439

44,786 52,470

Capital Outlay 207,871 900

Debt Service:

Principal 57,608 55,732

Interest and fiscal charges 24,435 27,528

82,043 83,260

$ 1,911,442 $ 1,748,908

Number of employees employed by the District: Full-time

Part-time

Total Expenditures

2014 2013


SCHEDULE OF GENERAL FUND EXPENDITURES

Years Ended September 30, 2014 and 2013

38



TSI-3

Balances at

Interest Maturity September 30, AccruedFunds Rate (%) Date Interest

General Fund

Checking N/A N/A $ 109,248 $

Texpool Variable N/A 58,753

Texstar Variable N/A 223,755

Total General Fund 391,756

Debt Service Fund

Checking N/A N/A 3,872

Texstar Variable N/A 2,004

Total Debt Service Fund 5,876

Total - All Funds $ 397,632 $

SCHEDULE OF CASH AND TEMPORARY INVESTMENTS


2014


39



(This Page Intentionally Left Blank)

40



TSI-4

Debt

General ServiceFund Fund Total

Taxes Receivable - October 1, 2013 $ 5,849 $ 589 $ 6,438

2013 Original tax roll 153,511 153,511

Additions and corrections (525) (30) (555)

Adjusted tax roll 152,986 (30) 152,956

Total to be Accounted for 158,835 559 159,394

Tax Collections

Current year 152,583 152,583

Prior years 1,075 1,075

Total Collections 153,658 153,658

Taxes Receivable - September 30, 2014 $ 5,177 $ 559 $ 5,736

Taxes Receivable - By Year

2013 $ 1,014 $ $ 1,014

2012 738 738

2011 464 464

2010 817 817

2009 and prior 2,144 559 2,703

Taxes Receivable - September 30, 2014 $ 5,177 $ 559 $ 5,736

Assessed

Property Valuations

Land, improvementsand personal

property $ 438,850,086 $ 420,875,714 $ 423,834,000 $ 411,453,073 $ 398,761,190

$ 438,850,086 $ 420,875,714 $ 423,834,000 $ 411,453,073 $ 398,761,190

Tax Rates Per $100

aluations

Debt service $ $ $ $ $

General operations 0.035 0.035 0.040 0.055 0.100

Total Tax Rate per

$100 Valuation $ 0.035 $ 0.035 $ 0.040 $ 0.055 $ 0.100

Adjusted Tax Levy $ 153,598 $ 147,306 $ 169,534 $ 226,299 $ 398,761

ear Ended September 30, 2014 All TaxesPercent of current taxes collected to current taxes levied (as adjusted) 99.8%

Percent of current and delinquent taxes collected to current levied

(as adjusted) and delinquent taxes outstanding at the beginning of

the year (as adjusted) 96.4%


ANALYSIS OF TAXES LEVIED AND RECEIVABLE


20092013 2012 2011 2010

41



TSI-5

The District had no general long-term debt outstanding at September 30, 2014.


GENERAL LONG-TERM DEBT SERVICE REQUIREMENTS BY YEARS

September 30, 2014

42



TSI-6

The District had no general long-term debt outstanding at September 30, 2014.

Bond Authority

Amount authorized by voters $ 12,710,000

Amount issued $ 10,910,000

Remaining $ 1,800,000

Debt Service Fund Cash and Temporary Investment Balances at End of Year $ 5,876

Average Annual Debt Service Payment for Remaining Term of all Debt $


ANALYSIS OF CHANGES IN GENERAL LONG-TERM DEBT


Tax Bonds

43



General Fund Revenues

Water and sewer service $ 1,406,138 $ 1,513,481 $ 1,384,640 $ 1,277,390 $ 912,279

Property taxes 153,658 146,570 173,005 226,260 399,261

Tap connections & culverts 5,475 2,375 450

Interest and other 105,025 5,076 11,157 6,253 5,716

Total Revenues 1,670,296 1,667,502 1,569,252 1,509,903 1,317,256

General Fund ExpendituresCurrent 1,621,528 1,664,748 1,423,143 1,409,654 1,033,098

Capital outlay 207,871 900 375

Debt service 82,043 83,260 82,609 89,591 81,887

Total Expenditures 1,911,442 1,748,908 1,506,127 1,499,245 1,114,985

Revenues Over (Under)

Expenditures $ (241,146) $ (81,406) $ 63,125 $ 10,658 $ 202,271

Debt Service Fund Revenues

Property taxes $ $ $ 3,440 $ 73 $ 1,498

Penalty and interest 601Interest 2

Total Revenues 603 3,440 73 1,498

Debt Service Fund Expenditures

Tax collection 9,256 6 174 1,141

Debt service

Total Expenditures 9,256 6 174 1,141

Revenues Over (Under)

Expenditures $ (8,653) $ (6) $ 3,440 $ (101) $ 357

20132014


COMPARATIVE SCHEDULE OF REVENUES AND EXPENDITURES -

Last Five Fiscal Years

GENERAL AND DEBT SERVICE FUNDS

Amounts

2011 20102012

44



TSI-7

84.2 % 90.8 % 88.2 % 84.6 % 69.3 %

9.2 8.8 11.0 15.0 30.3

0.3 0.1

6.3 0.3 0.8 0.4 0.4

100.0 100.0 100.0 100.0 100.0

97.1 99.8 90.7 93.4 78.4

12.4 0.1

4.9 5.0 5.3 5.9 6.2

114.4 104.9 96.0 99.3 84.6

(14.4) % (4.9) % 4.0 % 0.7 % 15.4 %

% % 100.0 % 100.0 % 100.0 %

99.70.3

100.0 100.0 100.0 100.0

1,535.0 238.4 76.2

1,535.0 238.4 76.2

(1,435.0) % % 100.0 % (138.4) % 23.8 %

2011 2010

Percent of Total Fund Revenues

2014 2013 2012

45



District's Mailing Address: 2455 Lake Robbins DriveP.O. Box 7580

The Woodlands, Texas 77380

District's Business Telephone Number: (281) 367-1271

Resident

Name Term Title of District?

Board Members

J. Scott Haynes 5/12- $ 2,400 $ 1,717 President Yes

5/16

Kent Maggert 5/14- 1,500 Vice- Yes

5/18 President

Brent Tucker 5/12- 1,350 Assistant Yes

5/16 Vice

President

Jeanette P. Price 5/12- 3,600 Secretary/ Yes

5/16 Treasurer

WJPA Trustee

Mamie Polk 5/14- 1,650 Assistant Yes

5/18 Secretary/

Treasurer

Note: No director is disqualified from serving on this board under the Texas Water Code.


BOARD MEMBERS, KEY PERSONNEL AND CONSULTANTS

September 30, 2014

Fees Expenses

46



TSI-8

Date Resident

Name and Address Hired Title of District?

Key Administrative Personnel

Jim Stinson 7/94 $ 175,990 * General No

42 Gallant Oak Place Manager

The Woodlands, Texas 77381 Woodlands JPA

Consultants

Schwartz, Page & Harding, L.L.P. 3/1/88 13,771 Attorney No

1300 Post Oak Boulevard, Suite 1400

Houston, Texas 77056

Montgomery County Appraisal District 10/1/84 1,599 Central No

109 Gladstell Appraisal

Conroe, Texas 77301 District

Sandersen Knox & Co., L.L.P. 8/1/01 2,800 Independent No

130 Industrial Blvd., Suite 130 Auditor

Sugar Land, Texas 77478

RBC Capital Markets 11/13/89 625 Financial No

1001 Fannin, Suite 500 Advisor

Houston, Texas 77002

* Represents the General Manager's salary paid by the JPA.

Salaries

and Fees

47

mc mud #36 financial info audit 2014

Documents