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WHITE SETTLEMENT INDEPENDENT SCHOOL DISTRICT

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED

AUGUST 31, 2009


Table of Contents for

Year Ended August 31, 2009

Exhibit

Page

Number

Certificate of Board 3

Independent Auditor’s Report 4

Management’s Discussion and Analysis 6

Basic Financial Statements:

Government-wide Financial Statements:

A-1 Statement of Net Assets 16

B-1 Statement of Activities 17

Governmental Fund Financial Statements:

C-1 Balance Sheet 18

C-2 Reconciliation for Exhibit C-1 21

C-3 Statement of Revenues, Expenditures, and Changes in Fund

Balance

22

C-4 Reconciliation for Exhibit C-3 24

Proprietary Fund Financial Statements:

D-1 Statement of Net Assets 25

D-2 Statement of Revenues, Expenses, and Changes in Fund

Net Assets

26

D-3 Statement of Cash Flow 27

Fiduciary Fund Financial Statements:

E-1 Statement of Fiduciary Net Assets 28

Notes to the Financial Statements 29

Required Supplementary Information:

G-1 Budgetary Comparison Schedule - General Fund 48

Combining Schedules:

H-1 Combining Balance Sheet – Nonmajor Governmental Funds 50

H-2 Combining Statement of Revenues, Expenditures, and Changes in

Fund Balances - Nonmajor Governmental Funds

56

Required Texas Education Agency Schedules:

J-1 Schedule of Delinquent Taxes Receivable 62

J-2 Schedule of Expenditures for Computation of Indirect Cost 64

J-3 Fund Balance and Cash Flow Calculation Worksheet 65

J-4 Budgetary Comparison Schedule – NonMajor Fund – Child

Nutrition Program

66

J-5 Budgetary Comparison Schedule – NonMajor Fund – Debt Service

Fund

67


Table of Contents for

Year Ended August 31, 2009

(Continued)

Reports on Internal Controls, Compliance and Federal Awards:

Report on Internal Controls Over Financial Reporting Based and on

Compliance and Other Matters Based on an audit of Financial

Statements Performed in Accordance with Governmental Auditing

Standards

70

Report on Compliance With Requirements Applicable to Each

Major Program and Internal Control Over Compliance in

Accordance with OMB Circular A-133

72

Schedule of Findings and Questioned Costs 74

Schedule of Status of Prior Findings 75

Corrective Action Plan 76

K-1 Schedule of Expenditures of Federal Awards 77

Notes to Schedule of Expenditures of Federal Awards 78

L School First Indicators 79

2

CERTIFICATE OF THE BOARD

White Settlement Independent School District Tarrant 220-920

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, 2009, at a meeting of the board of trustees of such school district on the

_____ day of _____________, 2009.

_______________________________ _____________________________

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)

3

4

KIRK & RICHARDSON, P. C. Members of the American Institute of Certificate Public Accountants

Tom Kirk, CPA Don Richardson, CPA Cindy Poole, CPA

7559 John T. White Road P O. Box 8342 Fort Worth, Texas 76124-0342

(817) 451-7406 E-mail: [email protected] Fax (817) 451-7597

Independent Auditor's Report

Board of Trustees

White Settlement Independent School District

White Settlement, Texas

Members of the Board of Trustees:

We have audited the accompanying financial statements of the governmental activities, each

major fund, and the aggregate remaining fund information of White Settlement Independent

School District (the "District"), as of and for the year ended August 31, 2009, which collectively

comprise the District’s basic financial statements as listed in the table of contents. These

financial statements are the responsibility of the District's Administrators. Our responsibility is

to express an opinion on them based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United

States of America and the standards applicable to financial audits contained in Government

Auditing Standards, issued by the Comptroller General of the United States. Those standards

require that we plan and perform the audit to obtain reasonable assurance about whether the

financial statements are free of material misstatement. An audit includes examining, on a test

basis, evidence supporting the amounts and disclosures in the financial statements. An audit also

includes assessing the accounting principles used and significant estimates made by

management, as well as evaluating the overall financial statement presentation. We believe that

our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects,

the respective financial position of the governmental activities, each major fund, and aggregate

remaining fund information of the District, as of August 31, 2009, and the respective changes in

financial position and cash flows, where applicable, thereof for the year then ended in conformity

with accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued our report dated

December 9, 2009, on our consideration of the District's internal control over financial reporting

and our tests of its compliance with certain provisions of laws, regulations, contracts and grant

agreements and other matters. The purpose of that report is to describe the scope of our testing

of internal control over financial reporting and compliance and the results of that testing, and not

to provide an opinion on the internal control over financial reporting on compliance. That report

is an integral part of an audit performed in accordance with Governmental Auditing Standards

and should be considered in assessing the results of our audit.

mailto:[email protected]

5

The management’s discussion and analysis and budgetary comparison information on pages 6

through 13 and 48 are not a required part of the basic financial statements but are supplementary

information required by accounting principles generally accepted in the United States of

America. We have applied certain limited procedures, which consisted principally of inquires of

management regarding the methods of measurement and presentation of the required

supplementary information. However, we did not audit the information and express no opinion

on it.

Our audit was conducted for the purpose of forming an opinion on the financial statements that

collectively comprise the District’s basic financial statements. The combining and individual

nonmajor fund financial statements and statistical tables are presented for purposes of additional

analysis and are not a required part of the basic financial statements. The accompanying

schedule of expenditures of federal awards is presented for purposes of additional analysis as

required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local

Governments, and Non-Profit Organizations, and is also not a required part of the basic financial

statements. Such information has been subjected to the auditing procedures applied in the audit

of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in

relation to the basic financial statements taken as a whole.

The Texas Education Agency (“TEA”) requires school districts to include certain information in

the Annual Financial and Compliance Report in conformity with laws and regulations of the

State of Texas. This information is in Exhibits identified in the Table of Contents as J-1 through

J-5. Except for Exhibit J-3 (Fund Balance and Cash Flow Calculation Schedule) which is

marked UNADUDITED and on which we express no opinion, these schedules have been

subjected to the auditing procedures applied in the audit of the basic financial statements and, in

our opinion, are fairly stated, in all material respects, in relation to the basic financial statements

taken as a whole.

Kirk & Richardson, P.C.

December 9, 2009

Owner

Typewritten Text

Signed copy on file.

Owner

Typewritten Text

6


MANAGEMENT DISCUSSION AND ANALYSIS

FOR THE FISCAL YEAR ENDED AUGUST 31, 2009

UNAUDITED

As management of the District, we offer readers of the District’s financial statements this

narrative overview and analysis of the financial activities of the District for the year

ended August 31, 2009. We encourage readers to consider the information presented

here in conjunction with additional information that we have furnished in our letter of

transmittal, which can be found at the front of this report and the District’s financial

statements, which follow this section.

Financial Highlights

The liabilities of the District exceeded its assets at the close of the most recent period

by a negative $11,707,789 (net assets). Of this amount, $8,810,471 (unrestricted net

assets) may be used to meet the District’s ongoing obligations.

As of the close of the current fiscal year, the District’s governmental funds reported

combined ending fund balances of $12,357,248. Approximately 42 percent of this

total amount, $5,150,420, is available for spending at the government’s discretion

(unreserved, undesignated fund balance).

At the end of the current fiscal year, unreserved, undesignated fund balance for the

general fund was $4,803,399, or 12 percent of the total general fund expenditures.

Overview of the Financial Statements

This discussion and analysis are intended to serve as an introduction to the District’s

basic financial statements. The District’s basic financial statements are comprised of

three components: (1) government-wide financial statements, (2) fund financial

statements, and (3) notes to the financial statements. This report also contains other

supplementary information in addition to the basic financial statements themselves.

Government-wide financial statements. The government-wide financial statements are

designed to provide readers with a broad overview of the District’s finances, in a manner

similar to a private-sector business.

The statement of net assets presents information on all of the District’s assets and

liabilities, with the difference between the two reported as net assets. Over time,

increases or decreases in net assets may serve as a useful indicator of whether the

financial position of the District is improving or deteriorating.

The statement of activities presents information for all of the current year’s revenues and

expenses regardless of when cash is received or paid. Thus, revenues and expenses are

7

reported in this statement for some items that will only result in cash flows in future fiscal

periods.

Both of the District’s government-wide financial statements distinguish the functions of

the District as being principally supported by taxes and intergovernmental revenues

(governmental activities) as opposed to business-type activities that are intended to

recover all or a significant portion of their costs through user fees and charges. The

District has no business-type activities and no component units for which it is financially

accountable. The government-wide financial statements can be found on pages 16-17 of

this report.

Fund financial statements. A fund is a grouping of related accounts that is used to

maintain control over resources that have been segregated for specific activities or

objectives. The District, like other state and local governments, uses fund accounting to

ensure and demonstrate compliance with finance-related requirements. The fund

financial statements provide more detailed information about the District’s most

significant funds-not the District as a whole.

Some funds are required by State law and/or bond covenants.

Other funds may be established by the Board to control and manage money for

particular purposes or to show that it is properly using certain taxes or grants.

All of the funds of the District can be divided into three categories: governmental funds,

proprietary and fiduciary funds.

Governmental funds. Governmental funds are used to account for essentially the

same functions reported as governmental activities in the government-wide financial

statements. However, unlike the government-wide financial statements,

governmental fund financial statements focus on near-term inflows and outflows of

spendable resources, as well as on balances of spendable resources available at the

end of the fiscal year. Such information may be useful in evaluating a government’s

near-term financing requirements. Because the focus of governmental funds is

narrower than that of the government-wide financial statements, it is useful to

compare the information presented for governmental funds with similar information

presented for governmental activities in the government-wide financial statements.

By doing so, readers may better understand the long-term impact of the government’s

near-term financing decisions. Both the governmental fund balance sheet and the

governmental fund statement of revenues, expenditures, and changes in fund balances

provide a reconciliation to facilitate this comparison between governmental funds and

governmental activities. The District adopts an annual appropriated budget for its

general fund, debt service fund and food service fund. A budgetary comparison

schedule has been provided to demonstrate compliance with these budgets. The basic

governmental fund financial statements can be found on pages 18-24 of this report.

8

Proprietary funds. Proprietary funds provide the same type of information as the

government-wide financial statements, only in more detail. There are two proprietary

fund types. Enterprise funds are used to report the same functions presented as

business-type activities in the government-wide financial statements. The District has

no business-type activities or enterprise funds. The second type of proprietary fund is

the internal service fund. Internal service funds are an accounting device used to

accumulate and allocate costs internally among the various functions. The District

uses the internal service fund to report activities for its self-funded insurance

program. The basic proprietary fund financial statements can be found on pages 25-

27 of this report.

Fiduciary funds. Fiduciary funds are used to account for resources held for the

benefit of parties outside the government. Fiduciary funds are not reflected in the

government-wide financial statements because the resources of those funds are not

available to support the District’s own programs. The District is the trustee, or

fiduciary, for these funds and is responsible for ensuring that the assets reported in

these funds are used for their intended purposes. All of the District’s fiduciary

activities are reported in a separate statement of fiduciary net assets that can be found

on page 28.

Notes to the financial statements. The notes provide additional information that is

essential to a complete understanding of the data provided in the government-wide

and fund financial statements. The notes to the financial statements can be found on

pages 29-46 of this report.

Other information. In addition to the basic financial statements and accompanying

notes, this report also presents certain required supplementary information that further

explains and supports the information in the financial statements. Required

supplementary information can be found on pages 48 of this report.

Government-wide Financial Analysis

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

financial position. In the case of the District, liabilities exceeded assets by $11,707,789

as of August 31, 2009.

9

August 31, 2009 August 31, 2008

Current assets 20,698,131$ 20,587,067$ Capital assets 174,252,351 180,373,557

Total assets 194,950,482 200,960,624

Current liabilities 6,352,272 6,337,781 Long-term liabilities outstanding 200,305,999 198,799,381

Total liabilities 206,658,271 205,137,162

Net assets:Invested in capital assets,

net of related debt (24,801,525) (14,274,392) Restricted 4,283,265 2,903,385 Unrestricted 8,810,471 7,194,469

Total net assets (11,707,789)$ (4,176,538)$

The District's Net Assets

Investment in capital assets (e.g., land, buildings and improvements, and furniture and

equipment) less any related debt used to acquire those assets that is still outstanding is a

negative $24,801,525. The District uses these capital assets to provide services to

students; consequently, these assets are not available for future spending. Although the

District’s investment in its capital assets is reported net of related debt, it should be noted

that the resources needed to repay this debt must be provided from other sources, since

the capital assets themselves cannot be used to liquidate these liabilities. An additional

portion of the District’s net assets ($4,283,265) represents resources that are subject to

external restrictions on how they may be used. The remaining balance of unrestricted net

assets ($8,810,471) may be used to meet the District’s ongoing obligations. This surplus

is not an indication that the District has significant resources available to meet financial

obligations next year, but rather the result of having long-term commitments that are less

than currently available resources.

Governmental activities. The District’s total net assets decreased by $7,531,251. The

total cost of all governmental activities this year was $63,335,110. The amount that our

taxpayers paid for these activities through property taxes was $21,807,973 or 39.1%.

10

Fiscal Year Fiscal YearAugust 31, 2009 August 31, 2008

Revenues:Program revenues

Charges for services 3,229,685$ 3,046,407$ Operating grants and contributions 7,116,875 8,480,366

General revenuesProperty taxes 21,807,973 18,922,439 State grants 23,280,649 21,969,623 Other 368,677 1,348,165 Special - 2,802,671

Total revenues 55,803,859 56,569,671 Expenses:

Instruction 30,731,799 26,688,340 Instructional resources and media services 955,677 764,431 Curriculum and staff development 271,310 319,351 Instructional leadership 936,186 799,632 School leadership 3,445,182 2,736,972 Guidance, counseling & evaluation services 1,424,601 1,284,790 Social work services 234,602 220,132 Health services 522,542 529,856 Student transportation 1,065,659 1,100,573 Food service 3,164,510 2,784,406 Cocurricular/extracurricular activities 1,920,652 1,973,081 General administration 1,619,393 1,579,505 Plant maintenance and operations 5,840,741 5,259,944 Security and monitoring services 275,974 247,528 Data processing services 141,579 94,634 Community services 849,953 889,296 Interest on long-term debt 9,666,613 8,923,197 Bond issuance costs and fees 55,428 55,235 Capital outlay 71,387 112,560 Payments to other governmental agencies 141,342 18,900

Total expenses 63,335,130 56,382,363

Increase (decrease) in net assets (7,531,271) 187,308 Beginning net assets (4,176,538) (4,363,846) Prior Period Adjustment - - Beginning net assets-Restated - - Ending net assets (11,707,809)$ (4,176,538)$

Changes in the District's Net Assets

Financial Analysis of the District’s Funds

As noted earlier, the District uses fund accounting to ensure and demonstrate compliance

with finance-related legal requirements, bond covenants, and segregation for particular

purposes.

Governmental funds. The focus of the District’s governmental funds is to provide

information on near-term inflows, outflows, and balances of spendable resources. Such

information is useful in assessing the District’s financing requirements. In particular,

unreserved, undesignated fund balance may serve as a useful measure of the District’s

net resources available for spending at the end of a fiscal year.

11

As of the end of the current fiscal year, the District’s governmental funds reported

combined ending fund balances of $12,357,248, an increase of $19,551. Approximately

42 percent of this total amount ($5,150,420) constitutes unreserved, undesignated fund

balance. The remainder of fund balance is reserved or designated to indicate that it is not

available for new spending because it has already been committed (1) for other purposes

($2,802,671), (2) to pay debt service ($3,753,227), (3) for food service ($530,038), (4)

for construction ($93,296), and (5) for other miscellaneous designations ($27,596).

The general fund is the primary operating fund of the District. At the end of the current

fiscal year, unreserved, undesignated fund balance of the general fund was $4,803,399,

out of a total fund balance of $7,633,666. As a measure of the general fund’s liquidity, it

may be useful to compare both unreserved, undesignated fund balance and total fund

balance to the total fund expenditures. Unreserved, undesignated fund balance represents

12 percent of the total general fund expenditures, while total fund balance represents 19.2

percent of that same amount.

The fund balance of the District’s general fund decreased by $538,087 during the current

fiscal year. Key factors in this decrease are:

Receiving less local and state revenues than anticipated offset by expenditures

being less than anticipated.

An emphasis placed on fund balance due to economic conditions.

The debt service fund has a total fund balance of $3,753,227, a net increase of

$1,335,643, all of which is reserved for the payment of debt service.

The capital projects fund is used to account for financial resources to be used for the

acquisition or construction of major capital facilities and equipment purchases. The fund

balance of the District’s capital projects fund was $93,296 as of August 31, 2009. The

net decrease in fund balance during the period in capital projects was $836,649.

General Fund Budgetary Highlights

Over the course of the year, the District recommended and the Board approved several

revisions to the budget at the function level due to spending patterns.

The Revenue budget was revised to reflect changes in estimated revenue

projections: State Program increased due to changes in enrollment projections and

the offset of the reduced tax rate. Actual local revenue increased due to our tax

base increasing, however, the estimated local revenue was very consistent with

our actual receipts.

The Expenditure budget was amended by an insignificant amount for usual

expenditures.

12

Capital Asset and Debt Administration

Capital assets. The District’s investment in capital assets for its governmental activities

as of August 31, 2009, amounts to $174,252,351 (net of accumulated depreciation). This

investment in capital assets includes land, buildings and improvements, and furniture and

equipment.

Districts Capital Assets (net of depreciation)

August 31, 2009 August 31, 2008

Land 4,305,444$ 4,305,444$ Buildings and improvements 166,550,817 49,328,911 Furniture and equipment 3,396,090 4,033,797 Construction in progress - 122,705,405

Total at historical cost 174,252,351$ 180,373,557$

Additional information on the District’s capital assets can be found in Note G on page 40

of this report.

Long-term debt. As of August 31, 2009, the District had total general obligation bonded

debt outstanding of $180,294,121, a decrease of $2,606,522 from the prior year.

Accretion on capital appreciation bonds was a net $4,242,496 for fiscal year 2009,

resulting in an ending balance of $16,122,199. The District had an increase in loss on

refunding of ($23,827), resulting in an ending balance of ($238,264).

The District’s bonds presently carry “AAA” ratings with the underlying ratings as

follows: Fitch “A-” and Standard and Poors “A”.

Additional information on the District’s long-term debt can be found in Note I on pages

41-42 of this report.

Economic Factors and Next Year’s Budgets and Rates

The District’s student attendance rate remains stable at 95 percent.

Even with the declining housing industry, the District’s enrollment maintains a steady

growth.

Basic M&O tax rate for 2009-10 remains at 75.19 percent of 2006-07 M&O rate, plus

4¢. The District is currently at $1.04 per $100 in assessed property value for the third

year. The District’s taxable valuation has decreased by .927 percent.

13

The District’s 2009-10 expenditures, as adopted, exceed adopted revenue projections

by $641,293. Administration is working with the school board to reduce this

expenditure figure during the fiscal year. Any excess of expenditures to revenue will

involve the use of our fund balance.

Requests for Information

This financial report is designed to provide our citizens, taxpayers, customers, investors

and creditors with a general overview of the District’s finances as well as demonstrate

accountability for funds the District receives. Questions concerning any of the

information provided in this report or requests for additional information should be

addressed to the Business Office, at White Settlement I.S.D., 401 S. Cherry Lane, White

Settlement, Texas 76108.

THIS PAGE LEFT BLANK INTENTIONALLY

14

BASIC FINANCIAL STATEMENTS

15

EXHIBIT A-1WHITE SETTLEMENT INDEPENDENT SCHOOL DISTRICT

STATEMENT OF NET ASSETSAUGUST 31, 2009

Control

Data

CodesGovernmental

Activities

Primary Government

ASSETS1,297,452 Cash and Cash Equivalents $1110

16,298,887 Current Investments1120

1,014,517 Property Taxes Receivable (Delinquent)1220

(356,249)Allowance for Uncollectible Taxes1230

844,895 Due from Other Governments1240

6,278 Other Receivables, net1290

36,845 Inventories1300

10,000 Deferred Expenses1410

1,545,506 Capitalized Bond and Other Debt Issuance Costs1420

Capital Assets:

4,305,444 Land1510

166,550,817 Buildings, Net1520

3,396,090 Furniture and Equipment, Net1530

Total Assets1000 194,950,482

LIABILITIES

596,199 Accounts Payable2110

215,163 Interest Payable2140

1,491,915 Accrued Wages Payable2160

4,048,995 Deferred Revenues2300

Noncurrent Liabilities

3,273,943 Due Within One Year2501

197,032,056 Due in More Than One Year2502

Total Liabilities2000 206,658,271

NET ASSETS

(24,801,525)Invested in Capital Assets, Net of Related Debt3200

530,038 Restricted for Federal and State Programs3820

3,753,227 Restricted for Debt Service3850

8,810,471 Unrestricted Net Assets3900

Total Net Assets3000 (11,707,789)$

The notes to the financial statements are an integral part of this statement.

16

EXHIBIT B-1WHITE SETTLEMENT INDEPENDENT SCHOOL DISTRICT

STATEMENT OF ACTIVITIESFOR THE YEAR ENDED AUGUST 31, 2009

Net (Expense)

Revenue and

Changes in Net

AssetsProgram RevenuesData

Control

Codes

1 3 4 6

Operating

Grants and

Contributions

Charges for

ServicesExpenses

Governmental

Activities

Primary Gov.

Primary Government:

GOVERNMENTAL ACTIVITIES:804,970 30,731,779 4,560,357 (25,366,452)Instruction $ $ $ $11

- 955,677 44,819 (910,858)Instructional Resources and Media Services12

- 271,310 12,080 (259,230)Curriculum and Instructional Staff Development13

- 936,186 144,930 (791,256)Instructional Leadership21

- 3,445,182 195,873 (3,249,309)School Leadership23

- 1,424,601 82,663 (1,341,938)Guidance, Counseling and Evaluation Services31

- 234,602 124,078 (110,524)Social Work Services32

- 522,542 74,829 (447,713)Health Services33

- 1,065,659 38,265 (1,027,394)Student (Pupil) Transportation34

1,304,872 3,164,510 1,537,437 (322,201)Food Services35

905,645 1,920,652 58,888 (956,119)Extracurricular Activities36

- 1,619,393 62,119 (1,557,274)General Administration41

214,198 5,840,741 117,190 (5,509,353)Plant Maintenance and Operations51

- 275,974 12,890 (263,084)Security and Monitoring Services52

- 141,579 6,324 (135,255)Data Processing Services53

- 849,953 44,134 (805,819)Community Services61

- 9,666,613 - (9,666,613)Debt Service - Interest on Long Term Debt72

- 55,428 - (55,428)Debt Service - Bond Issuance Cost and Fees73

- 71,387 - (71,387)Facilities Acquisition and Construction81

- 16,500 - (16,500)Payments to Juvenile Justice Alternative Ed. Prg.95

- 124,842 - (124,842)Other Intergovernmental Charges99

[TP] TOTAL PRIMARY GOVERNMENT: 63,335,110 3,229,685 7,116,875 (52,988,550)$ $ $

DataControlCodes General Revenues:

Taxes:15,136,194 Property Taxes, Levied for General PurposesMT

6,671,779 Property Taxes, Levied for Debt ServiceDT

19,495,681 State Aid - Formula GrantsSF

3,784,968 Grants and Contributions not RestrictedGC

174,221 Investment EarningsIE

194,456 Miscellaneous Local and Intermediate RevenueMI

45,457,299 Total General RevenuesTR

Net Assets--Beginning

Change in Net Assets

Net Assets--Ending

CN

NB

NE

(7,531,251)

(4,176,538)

(11,707,789)$


17


BALANCE SHEET

GOVERNMENTAL FUNDS

AUGUST 31, 2009

Control

Data

CodesGeneral

Fund Fund

Debt Service

50

Projects

Capital

6010

ASSETS146,257 288,931 41,576 Cash and Cash Equivalents $ $ $1110

3,603,345 11,939,852 51,720 Investments - Current1120

225,594 788,923 - Property Taxes - Delinquent1220

(48,703)(307,546) - Allowance for Uncollectible Taxes (Credit)1230

- 733,460 - Due from Other Governments1240

3,625 228,810 - Due from Other Funds1260

- 4,696 - Other Receivables1290

- 27,596 - Inventories1300

- 10,000 - Deferred Expenditures1410

Total Assets1000 13,714,722 3,930,118 93,296 $ $ $

LIABILITIES AND FUND BALANCES

Liabilities: - 130,008 - Accounts Payable/Bank Overdrafts $ $ $2110

- 1,449,451 - Accrued Wages Payable2160

- 7,625 - Due to Other Funds2170

176,891 4,493,972 - Deferred Revenues2300

Total Liabilities2000 6,081,056 176,891 -

Fund Balances:

Reserved For: - 27,596 - Investments in Inventory3410

3,753,227 - - Retirement of Long Term Debt3420

- - - Food Service3450

- 2,802,671 - Other Purposes3490

Unreserved Designated For: - - 93,296 Construction3510

Unreserved and Undesignated: - 4,803,399 - Reported in the General Fund3600

- - - Reported in Special Revenue Funds3610

Total Fund Balances3000 7,633,666 3,753,227 93,296

Total Liabilities and Fund Balances4000 13,714,722 3,930,118 93,296 $ $ $


18

EXHIBIT C-1

Other

Funds Funds

Governmental

Total

487,451 964,215 $ $703,970 16,298,887

- 1,014,517 - (356,249)

111,435 844,895 4,000 236,435 1,582 6,278 9,249 36,845 - 10,000

1,317,687 19,055,823 $ $

132,954 262,962 $ $42,464 1,491,915

228,810 236,435 36,400 4,707,263

440,628 6,698,575

- 27,596 - 3,753,227

530,038 530,038 - 2,802,671

- 93,296

- 4,803,399 347,021 347,021

877,059 12,357,248

1,317,687 19,055,823 $ $

19


20

EXHIBIT C-2WHITE SETTLEMENT INDEPENDENT SCHOOL DISTRICT

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THESTATEMENT OF NET ASSETS

AUGUST 31, 2009

12,357,248 $Total Fund Balances - Governmental Funds

(2,527,087)1 Capital assets used in governmental activities are not financial resources and therefore Capital assets used in governmental activities are not financial resources and therefore are not reported in governmental funds. At the beginning of the year, the cost of these Capital assets used in governmental activities are not financial resources and therefore are not reported in governmental funds. At the beginning of the year, the cost of these assets was $210,427,075 and the accumulated depreciation was $30,053,518. In

Capital assets used in governmental activities are not financial resources and therefore are not reported in governmental funds. At the beginning of the year, the cost of these assets was $210,427,075 and the accumulated depreciation was $30,053,518. In addition, long-term liabilities, including bonds payable, are not due and payable in the current period, and, therefore are not reported as liabilities in the funds. At the

Capital assets used in governmental activities are not financial resources and therefore are not reported in governmental funds. At the beginning of the year, the cost of these assets was $210,427,075 and the accumulated depreciation was $30,053,518. In addition, long-term liabilities, including bonds payable, are not due and payable in the current period, and, therefore are not reported as liabilities in the funds. At the beginning of the year, the long-term debt was $182,900,644. The net effect of including

Capital assets used in governmental activities are not financial resources and therefore are not reported in governmental funds. At the beginning of the year, the cost of these assets was $210,427,075 and the accumulated depreciation was $30,053,518. In addition, long-term liabilities, including bonds payable, are not due and payable in the current period, and, therefore are not reported as liabilities in the funds. At the beginning of the year, the long-term debt was $182,900,644. The net effect of including the beginning balances for capital assets (net of depreciation) and long-term debt in the

Capital assets used in governmental activities are not financial resources and therefore are not reported in governmental funds. At the beginning of the year, the cost of these assets was $210,427,075 and the accumulated depreciation was $30,053,518. In addition, long-term liabilities, including bonds payable, are not due and payable in the current period, and, therefore are not reported as liabilities in the funds. At the beginning of the year, the long-term debt was $182,900,644. The net effect of including the beginning balances for capital assets (net of depreciation) and long-term debt in the governmental activities is to increase (decrease) net assets.

126,111,661 2 Current year capital outlays and long-term debt principal payments are expenditures in Current year capital outlays and long-term debt principal payments are expenditures in the fund financial statements,but they should be shown as increases in capital assets Current year capital outlays and long-term debt principal payments are expenditures in the fund financial statements,but they should be shown as increases in capital assets and reductions in long-term debt in the government-wide financial statements. The net

Current year capital outlays and long-term debt principal payments are expenditures in the fund financial statements,but they should be shown as increases in capital assets and reductions in long-term debt in the government-wide financial statements. The net effect of including the 2009 capital outlays and debt principal payments is to increase (decrease) net assets.

(6,920,940)3 The 2009 depreciation expense increases accumulated depreciation. The net effect of The 2009 depreciation expense increases accumulated depreciation. The net effect of the current year's depreciation is to decrease net assets.

(140,728,671)4 Various other reclassifications and eliminations are necessary to convert from the Various other reclassifications and eliminations are necessary to convert from the modified accrual basis of accounting to accrual basis of accounting. These include Various other reclassifications and eliminations are necessary to convert from the modified accrual basis of accounting to accrual basis of accounting. These include recognizing deferred revenue as revenue, eliminating interfund transactions,

Various other reclassifications and eliminations are necessary to convert from the modified accrual basis of accounting to accrual basis of accounting. These include recognizing deferred revenue as revenue, eliminating interfund transactions, reclassifying the proceeds of bond sales as an increase in bonds payable, and recognizing the liabilities associated with maturing long-term debt and interest. The net

Various other reclassifications and eliminations are necessary to convert from the modified accrual basis of accounting to accrual basis of accounting. These include recognizing deferred revenue as revenue, eliminating interfund transactions, reclassifying the proceeds of bond sales as an increase in bonds payable, and recognizing the liabilities associated with maturing long-term debt and interest. The net effect of these reclassifications and recognitions is to increase (decrease) net assets.

(11,707,789)$19 Net Assets of Governmental Activities


21


STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE

GOVERNMENTAL FUNDS

FOR THE YEAR ENDED AUGUST 31, 2009

Control

Data

Codes Fund

General

10

Fund

Debt Service

50

Projects

Capital

60

REVENUES:16,377,006 6,709,662 6,372 Total Local and Intermediate Sources $ $ $570022,890,328 2,790,268 - State Program Revenues5800

- - - Federal Program Revenues5900

Total Revenues5020 39,267,334 9,499,930 6,372

EXPENDITURES:Current:

23,944,184 - - Instruction0011834,378 - - Instructional Resources and Media Services0012223,626 - - Curriculum and Instructional Staff Development0013721,421 - - Instructional Leadership0021

3,000,895 - - School Leadership00231,203,094 - - Guidance, Counseling and Evaluation Services0031

96,023 - - Social Work Services0032392,024 - - Health Services0033805,872 - - Student (Pupil) Transportation0034

- - - Food Services0035979,939 - - Extracurricular Activities0036

1,363,630 - - General Administration00415,056,551 - - Facilities Maintenance and Operations0051

243,989 - - Security and Monitoring Services0052118,257 - - Data Processing Services0053668,839 - - Community Services0061

Debt Service: - 2,860,000 - Debt Service - Principal on Long Term Debt0071 - 5,302,133 - Debt Service - Interest on Long Term Debt0072 - 2,154 - Debt Service - Bond Issuance Cost and Fees0073

Capital Outlay: - - 843,021 Facilities Acquisition and Construction0081

Intergovernmental:16,500 - - Payments to Juvenile Justice Alternative Ed. Prg.0095

124,842 - - Other Intergovernmental Charges0099

Total Expenditures6030 39,794,064 8,164,287 843,021

1100 Excess (Deficiency) of Revenues Over (Under) Expenditures

(526,730) 1,335,643 (836,649)

OTHER FINANCING SOURCES (USES): 14,513 - - Sale of Real and Personal Property7912

(25,870) - - Transfers Out (Use)8911

Total Other Financing Sources (Uses) 7080 (11,357) - -

1200 Net Change in Fund Balances (538,087) 1,335,643 (836,649)

0100 Fund Balance - September 1 (Beginning) 8,171,753 2,417,584 929,945

3000 Fund Balance - August 31 (Ending) $ 7,633,666 $ 3,753,227 $ 93,296


22

EXHIBIT C-3

Other

Funds Funds

Governmental

Total

25,268,801 2,175,761 $ $26,471,644 791,048 3,920,743 3,920,743

6,887,552 55,661,188

26,810,265 2,866,081 834,400 22 225,331 1,705 832,234 110,813

3,026,709 25,814 1,230,691 27,597

213,945 117,922 444,578 52,554 808,294 2,422

2,796,014 2,796,014 1,750,731 770,792 1,363,630 - 5,056,551 -

243,989 - 118,257 - 726,011 57,172

2,860,000 - 5,302,133 -

2,154 -

843,021 -

16,500 - 124,842 -

6,828,908 55,630,280

58,644 30,908

14,513 - (25,870) -

- (11,357)

58,644 19,551

818,415 12,337,697

$ 877,059 $ 12,357,248

23

EXHIBIT C-4WHITE SETTLEMENT INDEPENDENT SCHOOL DISTRICT

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES,AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES


19,551 $Total Net Change in Fund Balances - Governmental Funds

126,111,661 Current year capital outlays and long-term debt principal payments are expenditures in Current year capital outlays and long-term debt principal payments are expenditures in the fund financial statements, but they should be shown as increases in capital assets and Current year capital outlays and long-term debt principal payments are expenditures in the fund financial statements, but they should be shown as increases in capital assets and reductions in long-term debt in the government-wide financial statements. The net effect

Current year capital outlays and long-term debt principal payments are expenditures in the fund financial statements, but they should be shown as increases in capital assets and reductions in long-term debt in the government-wide financial statements. The net effectof removing the 2009 capital outlays and debt principal payments is to increase (decrease) net assets.

(6,920,940)Depreciation is not recognized as an expense in governmental funds since it does not Depreciation is not recognized as an expense in governmental funds since it does not require the use of current financial resources. The net effect of the current year's Depreciation is not recognized as an expense in governmental funds since it does not require the use of current financial resources. The net effect of the current year's depreciation is to decrease net assets.

(126,741,523)Various other reclassifications and eliminations are necessary to convert from the Various other reclassifications and eliminations are necessary to convert from the modified accrual basis of accounting to accrual basis of accounting. These include Various other reclassifications and eliminations are necessary to convert from the modified accrual basis of accounting to accrual basis of accounting. These include recognizing deferred revenue as revenue, adjusting current year revenue to show the

Various other reclassifications and eliminations are necessary to convert from the modified accrual basis of accounting to accrual basis of accounting. These include recognizing deferred revenue as revenue, adjusting current year revenue to show the revenue earned from the current year's tax levy, eliminating interfund transactions, reclassifying the proceeds of bond sales, and recognizing the liabilities associated with

Various other reclassifications and eliminations are necessary to convert from the modified accrual basis of accounting to accrual basis of accounting. These include recognizing deferred revenue as revenue, adjusting current year revenue to show the revenue earned from the current year's tax levy, eliminating interfund transactions, reclassifying the proceeds of bond sales, and recognizing the liabilities associated with maturing long-term debt and interest. The net effect of these reclassifications and

Various other reclassifications and eliminations are necessary to convert from the modified accrual basis of accounting to accrual basis of accounting. These include recognizing deferred revenue as revenue, adjusting current year revenue to show the revenue earned from the current year's tax levy, eliminating interfund transactions, reclassifying the proceeds of bond sales, and recognizing the liabilities associated with maturing long-term debt and interest. The net effect of these reclassifications and recognitions is to increase (decrease) net assets.

(7,531,251)$ Change in Net Assets of Governmental Activities


24

EXHIBIT D-1WHITE SETTLEMENT INDEPENDENT SCHOOL DISTRICT

STATEMENT OF NET ASSETSPROPRIETARY FUNDS

AUGUST 31, 2009

Internal

Service Fund

Governmental

Activities -

ASSETS

Current Assets:

333,237 Cash and Cash Equivalents $

Total Assets 333,237

LIABILITIES

Current Liabilities:

333,237 Accounts Payable

Total Liabilities 333,237


25


STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS

PROPRIETARY FUNDS


Internal

Service Fund

Governmental

Activities -

OPERATING REVENUES:

131,026 Local and Intermediate Sources $

Total Operating Revenues 131,026

OPERATING EXPENSES:

156,896 Professional and Contracted Services

Total Operating Expenses 156,896

Income Before Transfers (25,870)

25,870 Transfer In

Change in Net Assets

Total Net Assets - September 1 (Beginning)

Total Net Assets - August 31 (Ending)

-

-

$ -


26


STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED AUGUST 31, 2009PROPRIETARY FUNDS

Internal

Service Fund

Governmental

Activities -

Cash Flows from Operating Activities:

131,026 Cash Received from User Charges $

(125,185)Cash Payments for Other Operating Expenses

5,841 Net Cash Provided by OperatingActivities

Cash Flows from Non-Capital Financing Activities:

25,870 Operating Transfer Out

Net Increase in Cash and Cash Equivalents 31,711

Cash and Cash Equivalents at Beginning of the Year: 301,526

Cash and Cash Equivalents at the End of the Year: 333,237 $

Operating Income (Loss):$

Reconciliation of Operating Income (Loss) to Net Cash

Provided by Operating Activities:(25,870)

Assets and Liabilities:Effect of Increases and Decreases in Current

31,711 Increase (decrease) in Accounts PayableNet Cash Provided by OperatingActivities 5,841 $


27

EXHIBIT E-1WHITE SETTLEMENT INDEPENDENT SCHOOL DISTRICT

STATEMENT OF FIDUCIARY NET ASSETSFIDUCIARY FUNDSAUGUST 31, 2009

Agency

Funds

ASSETS

25,637 Cash and Cash Equivalents $

Total Assets 25,637 $

LIABILITIES

25,637 Due to Student Groups $

Total Liabilities 25,637 $


28

29


Notes to the Financial Statements

For the Year ended August 31, 2009

I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements of the White Settlement Independent School District (the

"District") have been prepared in conformity with accounting principles generally

accepted in the United States of America (GAAP) as applied to local government units.

The District follows the generally accepted accounting principles promulgated by the

Governmental Accounting Standards Board (GASB) and other authoritative sources

identified in Statement of Auditing Standards No. 69 of the American Institute of

Certified Public Accountants; and it complies with the requirements of the appropriate

version of the Texas Education Agency’s Financial Accountability System Resource

Guide (the “Resource Guide”) and the requirements of contracts and grants of agencies

from which it receives funds.

A. Reporting entity

White Settlement Independent School District is a public educational agency operating

under the applicable laws and regulations of the State of Texas. The District is governed

by a seven member Board of Trustees (the “Board”) elected by the registered voters of

the District. The Board has the authority to make decisions, appoint administrators and

managers, and significantly influence operations. It also has the primary accountability

for fiscal matters. All powers and duties not specifically delegated by statute to the Texas

Education Agency (“Agency”) or to the State Board of Education are reserved for the

Board, and the Agency may not substitute its judgment for the lawful exercise of those

powers and duties by the Board. Therefore, the District is a financial reporting entity as

defined by the GASB in its Statement No. 14, “The Financial Reporting Entity.” The

component unit, as described below, is included in the District’s reporting entity because

of the significance of its operations or financial relationship with the District.

B. Government-Wide and Fund Accounting

The Statement of Net Assets and the Statement of Activities are government-wide

financial statements. They report information on all of the District’s non-fiduciary

activities with most of the interfund activities removed. Governmental activities include

programs supported primarily by taxes, State foundation funds, grants and other

intergovernmental revenues.

The Statement of Activities demonstrates how other people or entities that participate in

programs the District operates have shared in the payment of the direct costs. Direct

costs are those that are clearly identifiable with a specific function. Program revenues of

the District include charges for services and operating grants and contributions. Charges

for services consists of charges to customers or applicants that purchase, use, or directly

benefit from goods or services provided by a given function or segment of the District.

30

Examples include tuition paid by students not residing in the District, school lunch

charges, etc. Operating grants and contributions include amounts paid by organizations

outside the District to help meet the operational or capital requirements of a given

function. Examples include grants under the Elementary and Secondary Education Act.

If a source of revenue is not program revenue, it is general revenue used to support all of

the District’s functions. Taxes are always general revenue.

Interfund activities between governmental funds and between governmental funds and

proprietary funds appear as due to/due froms on the Governmental Fund Balance Sheet

and Proprietary Fund Statement of Net Assets and as other resources and other uses on

the governmental fund Statement of Revenues, Expenditures and Changes in Fund

Balance and on the Proprietary Fund Statement of Revenues, Expenses and Changes in

Fund Net Assets. All interfund transactions between governmental funds and between

governmental funds and internal service funds are eliminated on the government-wide

statements. Interfund activities between governmental funds and fiduciary funds remain

as internal balances on the government-wide Statement of Net Assets.

The fund financial statements provide reports on the financial condition and results of

operations for three fund categories – governmental, proprietary, and fiduciary. Since the

resources in the fiduciary funds cannot be used for District operations, they are not

included in the government-wide statements. The District considers some governmental

funds major and reports their financial condition and results of operations in a separate

column.

Proprietary funds distinguish operating revenues and expenses from non-operating items.

Operating revenues result from providing services and producing and delivering goods in

connection with a proprietary fund’s principal ongoing operations; they usually come

from exchange or exchange-like transactions. All other revenues are non-operating.

Operating expenses can be tied specifically to the production of the goods and services,

such as materials and labor and direct overhead. Other expenses are nonoperating.

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

The government-wide financial statements use the economic resources measurement

focus and the accrual basis of accounting, as do the proprietary fund and fiduciary fund

financial statements. Revenues are recorded when earned and expenses are recorded

when a liability is incurred, regardless of the timing of the related cash flows. Property

taxes are recognized as revenue in the year for which they are levied. Grants and similar

items are recognized as soon as all eligibility requirements imposed by the provider have

been met.

Governmental fund financial statements use the current financial resources measurement

focus and the modified accrual basis of accounting. With this measurement focus, only

current assets, current liabilities and fund balances are included on the balance sheet.

Operating statements of these funds present net increases and decreases in current assets

(i.e., revenues and other financing sources and expenditures and other financing uses.)

31

The modified accrual basis of accounting recognizes revenues in the accounting period in

which they become both measurable and available, and it recognizes expenditures in the

accounting period in which the fund liability is incurred, if measurable, except for

unmatured interest and principal on long-term debt, which is recognized when due. The

expenditures related to certain compensated absences and claims and judgments are

recognized when the obligations are expected to be liquidated with expendable available

financial resources. The District considers all revenues available if they are collectible

within 60 days after year-end.

Revenues from local sources consist primarily of property taxes. Property tax revenues

and revenues received from the State are recognized under the susceptible to accrual

concept. Miscellaneous revenues are recorded as revenue when received in cash because

they are generally not measurable until actually received. Investment earnings are

recorded as earned, since they are both measurable and available.

Grant funds are considered earned to the extent of expenditures made under the

provisions of the grant. Accordingly, when such funds are received, they are recorded as

deferred revenues until related and authorized expenditures have been made. If balances

have not been expended by the end of the project period, grantors sometimes require the

District to refund all or part of the unused amount.

The Proprietary Fund Types and Fiduciary Funds are accounted for on a flow of

economic resources measurement focus and utilize the accrual basis of accounting. This

basis of accounting recognizes revenues in the accounting period in which they are

earned and become measurable and expenses in the accounting period in which they are

incurred and become measurable. Agency Funds apply the accrual basis of accounting,

but do not have a measurement focus. The District applies all GASB pronouncements as

well as the Financial Accounting Standards Board pronouncements issued on or before

November 30, 1989, unless these pronouncements conflict or contradict GASB

pronouncements. With this measurement focus, all assets and all liabilities associated

with the operation of these funds are included on the fund Statement of Net Assets. The

fund equity is segregated into invested in capital assets net of related debt, restricted net

assets, and unrestricted net assets.

D. Fund Accounting

The District’s accounts are organized on the basis of funds, each of which is considered

to be a separate accounting entity. The operations of each fund are accounted for by

providing a separate set of self-balancing accounts which are comprised of each fund’s

assets, liabilities, equity, revenues, and expenditures or expenses.

32

The District reports the following major governmental funds:

1. The General Fund – The General Fund is used to account for financial resources

used for general operations. It is the basic fund of the school system and covers

all activities for which a special fund has not been established. All fund balances

are considered resources available for current operations. All general tax

revenues and other receipts that are not allocated by law or contractual agreement

to some other fund are accounted for in this fund.

2. Debt Service Funds – This fund is used to account for the payment of principal

and interest on long-term general obligation debt of the District. The main source

of revenue for debt service is the apportionment of local property taxes.

3. Capital Projects Funds – The proceeds from long-term debt financing and

revenues and expenditures related to authorized construction and other capital

asset acquisitions are accounted for in a capital projects fund.

Additionally, the District reports the following fund type(s):

Governmental Funds:

1. Special Revenue Funds – These funds are used to account for resources

restricted to, or designated for specific purposes by the District or a grantor.

Federal and State financial assistance generally is accounted for in a Special

Revenue Fund. Generally, unused balances must be returned to the grantor at the

close of specified project periods.

Proprietary Funds:

1. Internal Service Funds – These funds are conceived to be self-supporting.

Revenues are earned mainly from sales of services to the schools and operating

departments of the District. The District uses this fund type to report its Workers

Compensation activities.

Fiduciary Funds:

1. Private Purpose Trust Funds – The District accounts for donations for which

the donor has stipulated that both the principal and the income may be used for

purposes that benefit parties outside the District.

2. Agency Funds – The District accounts for resources held for others in a custodial

capacity in agency funds. The District’s Agency Fund consists of the Student

Activity Funds and other organizational activities requiring clearing accounts.

33

E. Other Accounting Policies

1. For the purpose of the statement of cash flows for proprietary funds, the District

considers highly liquid investments to be cash equivalents if they have a maturity of

three months or less when purchased.

2. The District uses the consumption method to account for inventories of food

products, school supplies, and athletic equipment. Under this method, these items are

carried in an inventory account of the respective fund at cost, using the first-in, first-

out method of accounting and are subsequently charged to expenditures when

consumed. In the General Fund, reported inventories are offset by a fund balance

reserve. Inventories of food commodities used in the food service program are

recorded at fair market values supplied by the Texas Department of Human Services.

Although commodities are received at no cost, their fair market value is recorded as

inventory and deferred revenue when received. When requisitioned, inventory and

deferred revenues are relieved, expenditures are charged, and revenue is recognized

for an equal amount.

3. In the government-wide financial statements, and proprietary fund types in the fund

financial statements, long-term debt and other long-term obligations are reported as

liabilities in the applicable governmental activities or proprietary fund type statement

of net assets. Bond premiums and discounts, as well as issuance costs, are deferred

and amortized over the life of the bonds using the straight-line method. Bonds

payable are reported net of applicable bond premium or discount. Bond issuance

costs are reported as deferred charges and amortized over the term of the related debt.

In the fund financial statements, governmental fund types recognize bond premiums

and discounts, as well as bond issuance costs, during the current period. The face

amount of debt issued is reported as other financing sources. Premiums received on

debt issuances are reported as other financing sources while discounts on debt

issuances are reported as other financing uses. Issuance costs, whether or not

withheld from the actual debt proceeds received, are reported as debt service

expenditures.

4. Capital assets, which include land, buildings and improvements, furniture and

equipment, are reported in the applicable governmental column in the government-

wide financial statements. The District defines capital assets with an initial,

individual cost of more than $5,000 and an estimated useful life in excess of one year.

Such assets are recorded at historical or estimated historical cost if purchased or

constructed. Donated capital assets are recorded at estimated fair value at the date of

donation.

The costs of normal maintenance and repairs that do not add to the value of the asset

or materially extend assets lives are not capitalized. Major outlays for capital assets

and improvements are capitalized as projects are constructed. Interest incurred during

construction is not capitalized.

34

Buildings, furniture and equipment of the District are depreciated using the straight-

line method over the following estimated lives:

Assets Years

Land Not depreciated

Buildings and improvements 9-39

Furniture and equipment 5-15

5. Bond proceeds not spent are restricted for construction.

6. Since Internal Service Funds support the operations of governmental funds, they are

consolidated with the governmental funds in the governmental-wide financial

statements. The expenditures of governmental funds that create the revenues of

internal service funds are eliminated to avoid “grossing up” the revenues and

expenses of the District as a whole.

7. In the fund financial statements, governmental funds report reservations of fund

balance for amounts that are not available for appropriation or are legally restricted

by outside parties for use for a specific purpose. Designations of fund balances

represent tentative management plans that are subject to change.

8. When the District incurs an expense for which it may use either restricted or

unrestricted assets, it uses the restricted assets first whenever they will have to be

returned if they are not used.

9. The Data Control Codes refer to the account code structure prescribed by the Texas

Education Agency (the “Agency”) in their Resource Guide. The Agency requires

school districts to display these codes in the financial statements in order to insure

accuracy in building a Statewide data base for policy development and funding plans.

10. Certain payments to vendors reflect costs applicable to future accounting periods and

are recorded as prepaid items within the deferred expenditures/expenses line item in

both government-wide and fund financial statements.

11. School Districts are required to report all expenses by function, except certain indirect

expenses. General administration and data processing service functions (data control

codes 41 and 53, respectively) include expenses that are indirect expenses of other

functions. These indirect expenses are not allocated to other functions.

II. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL

STATEMENTS.

Refer to Exhibit C-2 “Reconciliation of the Governmental Funds Balance Sheet to the

Statement of Net Assets”, Item 1 and to Exhibit C-4 “Reconciliation of the Governmental

Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the

Statement of Activities”, first item for explanations.

35

III. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY

A. Budgetary Data

The official budget was prepared for adoption for the General Fund, Debt Service Fund,

and the Food Service Fund, which is included within the Special Revenue Fund. The

budget is prepared using the modified accrual basis of accounting.

The following procedures are followed in establishing the budgetary data reflected in the

financial statements:

1. Prior to August 20 the District prepares a budget for the next succeeding fiscal

year beginning September 1. The operating budget includes proposed

expenditures and the means of financing them.

2. A meeting of the Board is then called for the purpose of adopting the proposed

budget. At least ten day’s public notice of the meeting must be given.

3. Prior to September 1, the budget is legally enacted through passage of a resolution

by the Board.

Once a budget is approved, it can be amended at the function and fund level by

approval of a majority of the members of the Board. Amendments are presented to

the Board at its regular meetings. Each amendment must have Board approval. As

required by law, such amendments are made before the fact, are reflected in the

official minutes of the Board, and are not made after fiscal year end. Because the

District has a policy of careful budgetary control, several amendments were necessary

during the year.

Each budget is controlled by the budget coordinator at the revenue and expenditure

function/object level. Budgeted amounts are as amended by the Board. All budget

appropriations lapse at year end.

Original

Budget

Appropriations

Increase

(Decrease)

Amended

Budget

Appropriations

General Fund $40,139,607 654,118 $40,793,725

Food Service Special Revenue Fund 2,689,500 200,000 2,889,500

Debt Service Fund 8,166,134 0 8,166,134

A reconciliation of fund balances for both appropriated budgeted and non-

appropriated budgeted special revenue funds is as follows:

August 31, 2009

Fund Balance

Appropriated Budgeted Funds – Food Service Special Revenue Fund $530,038

Non-appropriated Budgeted Funds 347,021

All Special Revenue Funds $877,059

36

B. Excess of expenditures over appropriations There were no excess of expenditures over appropriation for the period ended August 31, 2009. C. Deficit fund equity There were no deficit fund equities at the end of the fiscal year. IV. DETAILED NOTES ON ALL FUNDS

A. Deposits and Investments Legal and Contractual Provisions Governing Deposits and Investments

The District’s funds are required to be deposited and invested under the terms of a depository contract. The Depository bank deposits for safekeeping and trust with the District’s agent bank approved securities in an amount sufficient to protect District funds on a day-to-day basis during the period of the contract. The pledge of approved securities is waived only to the extent of the depository bank dollar amount of Federal Deposit Insurance Corporation (“FDIC”) insurance.

1. Cash Deposits:

At August 31, 2009, the carrying amount of the District’s deposits (cash, certificates of deposits, and interest-bearing saving accounts included in temporary investments) was $1,297,452 and the bank balance was $1,768,626. The District’s cash deposits at August 31, 2009, and during the year, were entirely covered by FDIC insurance and pledged collateral held by the District’s agent bank in the District’s name.

2. Investments Considered as Cash Equivalents:

The State Public Funds Investment Act (Government Code Chapter 2256) contains specific provisions in the areas of investment practices, management reports and establishment of appropriate policies. Among other things, it requires the District to adopt, implement, and publicize an investment policy. That policy must address the following areas: (1) safety of principal and liquidity, (2) portfolio diversification, (3) allowable investments, (4) acceptable risk levels, (5) expected rates of returns, (6) maximum allowable stated maturity of portfolio investments, (7) maximum average dollar-weighted maturity allowed based on the stated maturity date for the portfolio, (8) investment staff quality and capabilities, (9) and bid solicitation preferences for certificates of deposit. Statutes authorize the District to invest in (1) obligations of the U.S. Treasury, certain U.S. agencies, and the State of Texas, (2) certificates of deposits, (3) certain municipal securities, (4) money market savings accounts, (5) repurchase agreements, (6) bankers acceptances, (7) Mutual Funds, (8) Investment pools, (9) guaranteed investment contracts, (10) and common trust funds. The Act also requires the District to have independent auditors perform test procedures related

37

to investment practices as provided by the Act. The District is in substantial

compliance with the requirements of the Act and with local policies.

The District’s investments at August 31, 2009, are shown below:

Investment Type/Rating

Carrying Amount

Fair Value

Weighted Average

Maturity (Days)

TexPool/AAAm $15,927,944 $15,927,944 On demand

TexStar/AAAm 278,469 278,469 On demand

MetLife Common Stock 92,474 43,551 N/A

$16,298,887 $16,249,964

The District’s temporary investments consist of balances held by Texas Local

Government Investment Pool (“TexPool”) and TexasStar Local Government

Investment Pool, as detailed above. These investment pools are public funds

investment pools created to provide a safe environment for the placement of local

government funds in authorized short-term, fully-collateralized investments,

including direct obligations of, or obligations guaranteed by, the United States or

State of Texas or their agencies; federally insured certificates of deposit issued by

Texas banks or savings and loans; and fully collateralized direct repurchase

agreements secured by U. S. Government agency securities and placed through a

primary government securities dealer. This pools operates in a manner consistent

with the Security and Exchange Commission’s Rule 2a7 of the Investment Act of

1940.

Policies Governing Deposits and Investments

In compliance with the Public Funds Investment Act, the District has adopted a deposit

and investment policy. That policy does address the following risks:

a. Custodial Credit Risk – Deposits: In the case of deposits, this is the risk that in

the event of a bank failure, the District’s deposits may not be returned to it. The

District’s policy regarding types of deposits allowed and collateral requirements is

all deposits are covered by FDIC insurance and pledged collateral in their

entirety. The District has no custodial credit risk for its deposits.

b. Custodial Credit Risk – Investments: For an investment, this is the risk that, in

the event of the failure of the counterparty, the District will not be able to recover

the value of its investments or collateral securities that are in the possession of an

outside party. The District has no investments exposed to Custodial Credit Risk.

c. Interest-rate Risk – Interest-rate risk occurs when potential purchases of debt

securities do not agree to pay face value for those securities if interest rates rise.

The District does not have any investments considered as Interest-rate Risk.

d. Other Credit Risk Exposure – The District may invest in a securities lending

program if the value of securities loaned is not less than 100 percent

collateralized, including accrued income, and the loan allows for termination at

any time; the loan is secured; the terms of the loan require that the securities being

38

held as collateral be pledged to the investing entity; and, the loan is placed

through a primary government securities dealer or a financial institution doing

business in this state. The District does not have any investments in a securities

lending program.

e. Concentration Risk – The investment portfolio shall be diversified in terms of

investment instruments, maturity scheduling, and financial institutions to reduce

risk of loss resulting from over concentration of assets in a specific class of

investments, specific maturity, or specific issuer. The District is not exposed to

concentration risk.

Defaults and Recovery of Prior-period Losses – The District had no defaults and recovery

of prior-period losses.

B. Property Taxes

Property taxes are levied by October 1 on the assessed value listed as of the prior January

1 for all real and business personal property located in the District in conformity with

Subtitle E, Texas Property Tax Code. Taxes are due on receipt of the tax bill and

delinquent if not paid before February 1 of the year in which imposed. On January 31 of

each year, a tax lien attaches to property to secure the payment of all taxes, penalties, and

interest ultimately imposed.

The tax rates assessed for the year ended August 31, 2009, to finance General Fund

operations and the payment of principal and interest on general obligation long-term debt

were $1.0400 and $0.4584 per $100 valuation, respectively, for a total of $1.4984 per

$100 valuation.

Current tax collections for the year ended August 31, 2009 were 97.9% of the year-end

adjusted tax levy.

C. Delinquent Taxes Receivable

Delinquent taxes are prorated between maintenance (General Fund) and debt service

based on rates adopted for the year of the levy. Allowances for uncollectible taxes within

the General and Debt Service Funds are based on historical experience in collecting

taxes. Uncollectible personal property taxes are periodically reviewed and written off,

but the District is prohibited from writing off real property taxes without specific

statutory authority from the Texas Legislature. As of August 31, 2009, property taxes

receivable, net of estimated uncollectible taxes, totaled $1,218,533 and $104,429 for the

General and Debt Service Funds, respectively.

39

D. Interfund Receivables, Payables, and Transfers

Interfund balances at August 31, 2009 consisted of the following amounts:

Due to General Fund From:

Special Revenue Fund – ESEA I, A, Improving Basic Programs $175,000

Special Revenue Fund – IDEA – Part B, Formula 53,810

$228,810

Due to Debt Service Fund From:

General Operating Fund $3,625

Due to Special Revenue Fund – Campus Activity Fund From:

General Fund $4,000

All interfund balances are expected to be paid within the year.

Interfund transfers for the year ended August 31, 2009 consisted of the following

individual amounts:

Transfers From General Fund To:

Proprietary Fund $25,870

The General Fund transferred these funds to the Proprietary Fund to cover a deficit fund

balance.

E. Disaggregation of Receivables and Payables

The District believes that sufficient detail of receivable and payable balances is provided

in the financial statements to avoid the obscuring of significant components by

aggregation. Therefore, no disclosure is provided which disaggregates those balances.

There are no significant receivables which are not scheduled for collection within one

year of August 31, 2009.

Governmental funds report deferred revenue in connection with receivables for revenues

that are not considered to be available to liquidate liabilities of the current period.

40

F. Deferred Revenues

Governmental funds also defer revenue recognition in connection with resources that

have been received, but not yet earned.

Deferred Revenues at August 31, 2009 were as follows:

Unavailable Unearned Total

Delinquent Property Taxes Receivable – General $ 481,377 $ 0 $ 481,377

Delinquent Property Taxes Receivable – Debt Service 176,891 0 176,891

State Foundation Revenue Received Before Earned – General Fund 0 2,934,092 2,934,092

State Foundation Revenue Received Before Earned – Special Revenue 0 27,151 27,151

Insurance Proceeds Received Before Expenditures 1,074,340 0 1,074,340

Food Service Commodities 0 9,249 9,249

Miscellaneous 0 4,163 4,163

Total Deferred Revenues $1,732,608 $2,974,655 $4,707,263

G. Capital Asset Activity

Capital asset activity for the year ended August 31, 2009 is as follows:

Beginning

Balance

Increases

Decreases

Ending

Balance

Governmental activities:

Capital assets, not being depreciated:

Land $ 4,305,444 $ 0 $ 0 $ 4,305,444

Construction in progress 122,705,405 0 122,705,405 0

Total capital assets, not being

depreciated

127,010,849

0

122,705,405

4,305,444

Capital assets, being depreciated:

Buildings and improvements 75,958,240 123,477,039 0 199,435,279

Furniture and equipment 7,457,986 28,100 0 7,486,086

Total capital assets, being

depreciated

83,416,226

123,505,139

0

206,921,365

Accumulated depreciation for:

Buildings and improvements 26,629,329 6,255,133 0 32,884,462

Furniture and equipment 3,424,189 665,807 0 4,089,996

Total accumulated depreciation 30,053,518 6,920,940 0 36,974,458

Total capital assets, being

depreciated, net

53,362,708

116,584,199

0

169,946,907

Governmental activities capital assets,

Net

$180,373,557

$116,584,199

$122,705,405

$174,252,351

41

Depreciation expense was charged to governmental functions of the District as follows:

Governmental activities:

11 – Instruction $3,921,514

12 – Instructional Resources & Media Services 121,277

13 – Curriculum and Instructional Staff Development 45,979

21 – Instructional Leadership 103,952

23 – School Leadership 418,473

31 – Guidance, Counseling & Evaluation Services 193,910

32 – Social Work Services 20,657

33 – Health Services 77,964

34 – Student Transportation 257,365

35 – Food Services 368,496

36 – Extracurricular Activities 169,921

41 – General Administration 229,893

51 – Plant Maintenance & Operations 812,290

52 – Security & Monitoring Services 31,985

53 – Data Processing 23,322

61 – Community Services 123,942

Total Depreciation Expense $6,920,940

H. Compensated Absences

Upon retirement from the District, employees shall receive $15 for each year of verifiable

service to the District. In addition, retirees who have completed at least five years of

consecutive District service shall be reimbursed for all unused personal and/or sick leave

at the rate of $10 per day.

I. Bonds Payable

The following is a description of the District’s bonds outstanding as of August 31, 2009:

Issue/Maturity

Date

Interest

Rates

Payable

Amounts

Original

Issue

Beginning

Balance

Issued

Retired

Ending

Balance

Amounts

Due in

One Year

2003 Unlimited

School Bldg.

Bonds/2033

3.125%

to

5.90%

$20,883,645

$20,883,645

$ 0

$290,000

$20,593,645

$ 300,000

2004 Unlimited

School Bldg.

Bonds/2034

4.25%

to

6.10%

21,924,739

21,924,739

0

0

21,924,739

1,084,042

2005 Unlimited

School Bldg.

Bonds/2035

3.00%

to

5.33%

38,331,435

37,101,435

0

280,000

36,821,435

0

2006 Unlimited

School Bldg.

& Refunding

Bonds/2045

4.00%

to

5.31%

53,277,592

52,582,593

0

1,089,997

51,492,595

600,000

2007 Unlimited

School Bldg.

& Refunding

Bonds/2045

3.90%

to

4.75%

35,432,938

34,908,235

0

946,525

33,961,711

1,289,901

2008 Unlimited

School Bldg.

Bonds/2033

3.54%

to

6.00%

15,499,996

15,499,996

0

0

15,499,996

0

$182,900,643 $ 0 $2,606,522 $180,294,121 $3,273,943

42

Accreted Interest $11,879,703 $4,495,974 $253,478 $16,122,199 -

Premium/

Discount on

Bonds

$4,281,125

$0

$153,183

$4,127,942

-

Refunding Loss

on Bonds

$(262,091)

$0

$23,827

$(238,264)

-

Interest and fees paid on general obligation bonds during the year was $5,304,287.

The following is a summary of the District’s future annual debt service requirements to

maturity for general obligation bonds.

Year Ended

August 31

Principal

Interest

Total

Requirements

2010 $ 3,273,943 $ 5,796,027 $ 9,069,970

2011 4,044,880 5,990,890 10,035,770

2012 4,704,775 6,168,710 10,873,485

2013 5,485,111 6,392,819 11,877,930

2014 6,209,659 6,586,433 12,796,092

2015-2019 37,199,547 31,301,588 68,501,135

2020-2024 42,255,371 26,572,116 68,827,487

2025-2029 31,655,964 37,312,865 68,968,829

2030-2034 26,434,986 38,639,612 65,074,598

2035-2039 10,938,201 36,703,712 47,641,913

2040-2044 6,918,407 38,631,593 45,550,000

2045-2049 1,173,277 7,936,723 9,110,000

Totals $180,294,121 $248,033,088 $428,327,209

There are a number of limitations and restrictions contained in the various general

obligation bond indentures. The District is in compliance with all significant limitations

and restrictions at August 31, 2009.

J. Changes in Long-Term Liabilities

The following changes occurred in long-term liabilities during the year:

Beginning

Balance

Increase

Decrease

Ending

Balance

Amounts Due

In One Year

Governmental Activities

Gen. Obligation Bonds $182,900,643 $ 0 $2,606,522 $180,294,121 $3,273,943

Accreted Interest 11,879,703 4,495,974 253,478 16,122,199 0

Premium/(Discount)

on Bonds

4,281,125

0

153,183

4,127,942

0

Refunding Loss (262,091) 0 (23,827) (238,264) 0

$198,799,380 $4,495,974 $2,989,356 $200,305,998 $3,273,943

K. Commitments under operating leases

Commitments under operating (noncapitalized) lease agreements for equipment provide

for minimum future rental payments as of August 31, 2009, as follows:

43

Year Ending August 31

2010 $231,581

2011 225,412

2012 225,412

2013 78,452

2014 11,570

Total Minimum Rentals $772,427

Rental expenditures in Fiscal Year 2009: $219,478.

L. Defined Benefit Pension Plan

Plan Description. The District contributes to the Teacher Retirement System of Texas

(“TRS”), a cost-sharing multiple employer defined benefit pension plan. TRS

administers retirement and disability annuities, and death and survivor benefits to

employees and beneficiaries of employees of the public school systems of Texas. It

operates primarily under the provisions of the Texas Constitution, Article XVI, Sec. 67,

and Texas Government Code, Title 8, Subtitle C. TRS also administers proportional

retirement benefits and service credit transfer under Texas Government Code, Title 8,

Chapters 803 and 805, respectively. TRS issues a publicly available financial report that

includes financial statements and required supplemental information for the defined

benefit plan. That report may be obtained by writing to the TRS Communication

Department, 1000 Red River, Austin, Texas 78701, by calling the TRS Communication

Department at 1-800-223-8778, or by downloading the report from the TRS Internet

website, www.trs.state.tx.us, under the TRS Publications heading.

Funding Policy. Contribution requirements are not actuarially determined but are

established and amended by the Texas state legislature. The state funding policy is as

follows: (1) The state constitution requires the legislature to establish a member

contribution rate of not less than 6.0% of the member’s annual compensation and a state

contribution rate of not less than 6.0% and not more than 10.0% of the aggregate annual

compensation of members of the system during that fiscal year; (2) A state statute

prohibits benefit improvements or contribution reductions if, as a result of a particular

action, the time required to amortize TRS’s unfunded actuarial liabilities would be

increased to a period that exceeds 31 years, or, if the amortization period already exceeds

31 years, the period would be increased by such action. State law provides for a member

contribution rate of 6.4% for fiscal years 2009, 2008, and 2007, a state contribution rate

of 6.58% for fiscal years 2009 and 2008 and 6.0% for fiscal year 2007. In certain

instances the reporting district is required to make all or a portion of the state’s 6.58%

contribution for fiscal year. State contributions to TRS made on behalf of the District’s

employees for the years ended August 31, 2009, 2008 and 2007 were $1,967,020,

$1,895,570, and $1,673,143, respectively. The District paid additional state contributions

for the years ended August 31, 2009, 2008, and 2007 in the amounts of $142,500,

$113,475, and $173,269, respectively, on the portion of the employees’ salaries that

exceeded the statutory minimum.

http://www.trs.state.tx.us/

44

M. Retiree Health Plan

Plan Description. The District contributes to the Texas Public School Retired

Employees Group Insurance Program (TRS–Care), a cost-sharing multiple employer

defined benefit postemployment health care plan administered by the Teacher Retirement

System of Texas. TRS-Care Retired Plan provides health care coverage for certain

persons (and their dependents) who retired under the Teacher Retirement System of

Texas. The statutory authority for the program is Texas Insurance Code, Chapter 1575.

Section 1575.052 grants the TRS Board of Trustees the authority to establish and amend

basic and optional group insurance coverage for participants. The TRS issues a publicly

available financial report that includes financial statements and required supplemental

information for TRS-Care. That report may be obtained by visiting the TRS Web site at

www.trs.state.tx.us, by writing to the Communication Department of the Teacher

Retirement System of Texas at 1000 Red River Street, Austin, Texas 78711 or by calling

1-800-223-8778.

Funding Policy. Contribution requirements are not actuarially determined but are legally

established each biennium by the Texas Legislature. Texas Insurance Code, Sections

1575.202, 203, and 204 establish state, active employee, and public school contributions,

respectively. The State of Texas and active public school employee contribution rates

were 1.0% and 0.65% of public school payroll, respectively, with school districts

contributing a percentage of payroll set at 0.55% for fiscal years 2009, 2008, and 2007.

Per Texas Insurance Code, Chapter 1575, the public school contribution may not be less

than 0.25% or greater than 0.75% of the salary of each active employee of the public

school. For the years ended August 31, 2009, 2008, and 2007,the State’s contributions to

TRS-Care were $306,570, the active member contributions were $199,270, and the

District’s contributions were $168,616, which equaled the required contributions each

year.

N. Retiree Medicare Part D Coverage

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003,

established prescription drug coverage for Medicare beneficiaries known as Medicare

Part D. One of the provisions of Medicare Part D allows for the Texas Public School

Retired Employee Group Insurance Program (TRS-Care) to receive retiree drug subsidy

payments from the federal government to offset certain prescription drug expenditures for

eligible TRS-Care participants. For the fiscal years ended August 31, 2009, 2008, and

2007, the District recorded $70,288, $32,521, and $58,564, respectively, as on-behalf

payments.

O. Health Care Coverage

During the year ended August 31, 2009, employees of the District were covered by the

Teacher Retirement System-Active Care, a statewide health coverage program for public

education employees. The District paid premiums on behalf of the employees to the

http://www.trs.state.tx.us/

45

Plan; and, employees, at their option, could authorize payroll withholdings to pay

premiums for dependents.

P. Self-insured Worker’s Compensation

In prior years, the District entered into a self-funded workers’ compensation program

with the Texas Educational Insurance Association with claims being administered by

Claims Administrative Services, Inc. Projected discounted liability as of August 31,

2009 is $333,237. The District does not purchase aggregate excess insurance.

The accrued liability of Workers’ Compensation self-insurance of $333,237 includes

incurred but not reported claims. This liability is based on the requirements of

Governmental Accounting Standards Board Statement No. 10, which requires that a

liability for claims be reported if information prior to the issuance of the financial

statements indicates that it’s probable that a liability has been incurred as of the date of

the financial statements, and the amount of loss can be reasonably estimated. Because

actual claim liabilities depend on such complex factors as inflation, changes in legal

doctrines, and damage awards, the process used in computing the liability does not result

necessarily in an exact amount. The liability booked was the discounted estimate of the

actuary at the mean funding level.

Changes in the workers’ compensation claims liability amounts are represented below:

Beginning

Balance

Current Year

Claims and

Changes in

Estimates

Claims

Payments

Ending

Balance

2009 – Workers’ Compensation $301,526 $183,323 $151,612 $333,237

Q. Due from Other Governments

The District participates in a variety of federal and state programs from which it receives

grants to partially or fully finance certain activities. In addition, the District receives

entitlements from the State through the School Foundation and Per Capita Programs.

Amounts due from federal and state governments as of August 31, 2009 are summarized

below. All federal grants shown below are passed through TEA and are reported on the

combined financial statements as Due from Other Governments.

Fund State Entitlements Federal Grants Total

General $733,460 $ 0 $733,460

Special Revenue 45,145 66,290 111,435

Totals $778,605 $66,290 $844,895

46

R. Revenue from Local and Intermediate Sources

During the current year, revenues from local and intermediate sources in the

Governmental Fund Types consisted of the following:

General

Fund

Special

Revenue

Fund

Debt

Service

Fund

Capital

Projects

Fund

Fund

Totals

Property Taxes $15,058,466 $ 0 $6,620,465 $ 0 $21,678,931

Food Sales 0 1,302,814 0 0 1,302,814

Investment Income 120,729 5,137 47,120 6,372 179,358

Penalties, interest & other tax

related income

138,749

0

42,077

0

180,826

Co-curricular/Student activities 138,976 0 0 0 138,976

Other 920,086 867,810 0 0 1,787,896

Total $16,377,006 $2,175,761 $6,709,662 $6,372 $25,268,801

S. Litigation

The District is a party to various legal actions none of which is believed by

administration to have a material effect on the financial condition of the District.

Accordingly, no provision for losses has been recorded in the accompanying combined

financial statements for such contingencies.

The District participates in numerous state and Federal grant programs that are governed

by various rules and regulations of the grantor agencies. Costs charged to the respective

grant programs are subject to audit and adjustment by the grantor agencies; therefore, to

the extent that the District has not complied with the rules and regulations governing the

grants, if any, refunds of any money received may be required and the collectability of

any related receivable at August 31, 2009 may be impaired. In the opinion of the District,

there are no significant contingent liabilities relating to compliance with the rules and

regulations governing the respective grants; therefore, no provision has been recorded in

the accompanying financial statements for such contingencies.

T. 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; injuries to employees; and natural disasters.

During fiscal year 2009, the District purchased commercial insurance to cover general

liabilities. There were no significant reductions in coverage in the past fiscal year, and

there were no settlements exceeding insurance coverage for each of the past three fiscal

years.

REQUIRED SUPPLEMENTARY INFORMATION

47

EXHIBIT G-1WHITE SETTLEMENT INDEPENDENT SCHOOL DISTRICT

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE

BUDGET AND ACTUAL - GENERAL FUND


Control

Data

CodesOriginal Final

(GAAP BASIS)

(Negative)

Positive or

Final BudgetVariance WithActual Amounts

Budgeted Amounts

REVENUES:17,435,612 15,662,777 16,377,006 (1,058,606)Total Local and Intermediate Sources $ $ $ $5700

23,230,274 22,462,274 22,890,328 (339,946)State Program Revenues5800

Total Revenues5020 38,125,051 40,665,886 39,267,334 (1,398,552)

EXPENDITURES:

Current:24,243,223 24,016,002 23,944,184 299,039 Instruction0011

844,463 863,085 834,378 10,085 Instructional Resources and Media Services0012

244,317 269,317 223,626 20,691 Curriculum and Instructional Staff Development0013

742,810 727,897 721,421 21,389 Instructional Leadership0021

3,016,737 2,939,741 3,000,895 15,842 School Leadership0023

1,240,835 940,901 1,203,094 37,741 Guidance, Counseling and Evaluation Services0031

98,467 96,467 96,023 2,444 Social Work Services0032

406,089 433,967 392,024 14,065 Health Services0033

822,226 812,976 805,872 16,354 Student (Pupil) Transportation0034

1,014,594 924,946 979,939 34,655 Extracurricular Activities0036

1,450,306 1,584,915 1,363,630 86,676 General Administration0041

5,447,336 5,326,071 5,056,551 390,785 Facilities Maintenance and Operations0051

254,974 259,974 243,989 10,985 Security and Monitoring Services0052

121,676 117,676 118,257 3,419 Data Processing Services0053

695,672 805,672 668,839 26,833 Community Services0061

Intergovernmental:20,000 20,000 16,500 3,500 Payments to Juvenile Justice Alternative Ed. Prg.0095

130,000 - 124,842 5,158 Other Intergovernmental Charges0099

Total Expenditures6030 40,139,607 40,793,725 39,794,064 999,661

1100 Excess (Deficiency) of Revenues Over (Under) Expenditures

(2,014,556) (127,839) (526,730) (398,891)

OTHER FINANCING SOURCES (USES): 15,000 15,000 14,513 (487)Sale of Real and Personal Property7912

- - (25,870) (25,870)Transfers Out (Use)8911

Total Other Financing Sources (Uses) 7080 15,000 15,000 (11,357) (26,357)

1200 Net Change in Fund Balances (1,999,556) (112,839) (538,087) (425,248)

0100 Fund Balance - September 1 (Beginning) - 8,171,753 8,171,753 -

3000 Fund Balance - August 31 (Ending) $ (1,999,556) $ 8,058,914 $ 7,633,666 $ (425,248)

48

COMBINING SCHEDULES

49


COMBINING BALANCE SHEETNONMAJOR GOVERNMENTAL FUNDS

AUGUST 31, 2009

Control

Data

Codes

ESEA Title IV

Safe & Drug

Free Schools Basic Program

Improving

ESEA I, A

Formula

IDEA - Part B

204 211 224

ASSETS

175,000 - 53,810 Cash and Cash Equivalents $ $ $1110

- - - Investments - Current1120

- - - Due from Other Governments1240

- - - Due from Other Funds1260

- - - Other Receivables1290

- - - Inventories1300

Total Assets1000 - 175,000 53,810 $ $ $


Liabilities:

- - - Accounts Payable/Bank Overdrafts $ $ $2110

- - - Accrued Wages Payable2160

175,000 - 53,810 Due to Other Funds2170

- - - Deferred Revenues2300

Total Liabilities2000 - 175,000 53,810

Fund Balances:

Reserved For:

- - - Food Service3450

Unreserved and Undesignated:

- - - Reported in Special Revenue Funds3610

Total Fund Balances3000 - - -

4000 Total Liabilities and Fund Balances - 175,000 53,810 $ $ $

50

EXHIBIT H-1 (Cont'd)

IDEA - Part B

Preschool Discretionary

IDEA - Part B

Lunch Program

Breakfast and

National

Grant

Basic

Vocational Ed ESEA II,A

Training and

Recruiting

Title II, D

Education

Technology

IDEA, Pt. B

ARRA

Formula

Title III, A

English Lang.

Acquisition

225 226 240 244 255 262 263 283

- - - - - 115,218 - - $ $ $ $ $ $ $ $

- - - - - 477,221 - -

- 6,353 - - - 45,059 - 7,172

- - - - - - - -

- - - - - 1,582 - -

- - - - - 9,249 - -

- - 648,329 6,353 - - - 7,172 $ $ $ $ $ $ $ $

- 6,353 - - - 66,578 - 7,172 $ $ $ $ $ $ $ $

- - - - - 42,464 - -

- - - - - - - -

- - - - - 9,249 - -

- - 118,291 6,353 - - - 7,172

- - - - - 530,038 - -

- - - - - - - -

- - 530,038 - - - - -

- - 648,329 6,353 - - 7,172 $ $ $ $ $ $ $ $ -

51



AUGUST 31, 2009

Control

Data

Codes

ESEA I,A

Improving

Basic Program LEP

School

Summer

Incentives

Placement

Advanced

Funds

Capital

Investment

285 289 397 399

ASSETS

- - 1,617 - Cash and Cash Equivalents $ $ $ $1110

- - - - Investments - Current1120

- 7,706 - 3,299 Due from Other Governments1240

- - - - Due from Other Funds1260

- - - - Other Receivables1290

- - - - Inventories1300

Total Assets1000 7,706 - 1,617 3,299 $ $ $ $


Liabilities:

- 7,706 - 3,299 Accounts Payable/Bank Overdrafts $ $ $ $2110

- - - - Accrued Wages Payable2160

- - - - Due to Other Funds2170

- - 1,617 - Deferred Revenues2300

Total Liabilities2000 7,706 - 1,617 3,299

Fund Balances:

Reserved For:

- - - - Food Service3450


- - - - Reported in Special Revenue Funds3610

Total Fund Balances3000 - - - -

4000 Total Liabilities and Fund Balances 7,706 - 1,617 3,299 $ $ $ $

52


Optional

Extended Year

Initiative

Success

Student

Allotment

Technology

Services

Child Care

Public School High

School

Allotment

Other State

Special

Revenue Funds

Liberty

After School

Program

Campus

Activity

Funds

401 404 411 412 428 429 461 482

Program

- - - - - - 85,540 48,148 $ $ $ $ $ $ $ $

- - - - - - 226,749 -

- - - 5,047 36,799 - - -

- - - - - - 4,000 -

- - - - - - - -

- - - - - - - -

5,047 36,799 - - - - 316,289 48,148 $ $ $ $ $ $ $ $

- - - 5,047 36,799 - - - $ $ $ $ $ $ $ $

- - - - - - - -

- - - - - - - -

- - - - - - - 25,534

5,047 36,799 - - - - - 25,534

- - - - - - - -

- - - - - - 316,289 22,614

- - - - - - 316,289 22,614

5,047 36,799 - - - 316,289 48,148 $ $ $ $ $ $ $ $ -

53


54

EXHIBIT H-1WHITE SETTLEMENT INDEPENDENT SCHOOL DISTRICT


AUGUST 31, 2009

Control

Data

Codes

Foundation

GAP

Awards Funds

Governmental

Nonmajor

486 Total

ASSETS

487,451 8,118 Cash and Cash Equivalents $ $1110

703,970 - Investments - Current1120

111,435 - Due from Other Governments1240

4,000 - Due from Other Funds1260

1,582 - Other Receivables1290

9,249 - Inventories1300

Total Assets1000 8,118 1,317,687 $ $


Liabilities:

132,954 - Accounts Payable/Bank Overdrafts $ $2110

42,464 - Accrued Wages Payable2160

228,810 - Due to Other Funds2170

36,400 - Deferred Revenues2300

Total Liabilities2000 - 440,628

Fund Balances:

Reserved For:

530,038 - Food Service3450


347,021 8,118 Reported in Special Revenue Funds3610

Total Fund Balances3000 8,118 877,059

4000 Total Liabilities and Fund Balances 8,118 1,317,687 $ $

55


COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES INFUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS


Control

Data

Codes

ESEA Title IV

Safe & Drug

Free Schools Basic Program

Improving

ESEA I, A

Formula

IDEA - Part B

204 211 224

REVENUES: - - - Total Local and Intermediate Sources5700 $ $ $ - - - State Program Revenues5800

885,200 16,432 1,085,378 Federal Program Revenues5900

Total Revenues5020 16,432 885,200 1,085,378

EXPENDITURES:

Current:752,691 100 882,755 Instruction0011

- - - Instructional Resources and Media Services00121,705 - - Curriculum and Instructional Staff Development0013

110,813 - - Instructional Leadership002119,991 - 5,823 School Leadership0023

- - 27,597 Guidance, Counseling and Evaluation Services0031 - - 116,649 Social Work Services0032 - - 52,554 Health Services0033 - - - Student (Pupil) Transportation0034 - - - Food Services0035 - 16,332 - Extracurricular Activities0036 - - - Community Services0061

Total Expenditures6030 16,432 885,200 1,085,378

1200 Net Change in Fund Balance

0100 Fund Balance - September 1 (Beginning)

3000 Fund Balance - August 31 (Ending)

- - -

- - -

$ - $ - $ -

56


IDEA - Part B

Preschool Discretionary

IDEA - Part B

Lunch Program

Breakfast and

National

Grant

Basic

Vocational Ed

225 226 240 244 283

IDEA, Pt. B

ARRA

Formula

263

Title III, A

English Lang.

Acquisition

262

Title II, D

Education

Technology

255

ESEA II,A

Training and

Recruiting

- - 1,307,950 - - - - - $ $ $ $ $ $ $ $ - - 19,062 - - - - -

1,273 44,667 1,513,238 63,530 7,172 43,608 7,783 240,344

44,667 1,273 2,840,250 63,530 7,172 43,608 7,783 240,344

- 44,667 - 63,530 - 43,608 7,783 240,344 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

1,273 - - - - - - - - - - - - - - - - - - - - - - - - - 2,796,014 - - - - - - - - - - - - - - - - - 7,172 - - -

44,667 1,273 2,796,014 63,530 7,172 43,608 7,783 240,344

-

-

$ -

-

-

$ -

44,236 -

485,802

$ 530,038

-

$ -

- - - -

- - - -

$ - $ - - $ $ -

57




Control

Data

Codes

ESEA I,A

Improving

Basic Program LEP

School

Summer

Incentives

Placement

Advanced

Funds

Capital

Investment

285 289 397 399

REVENUES: - - - - Total Local and Intermediate Sources5700 $ $ $ $ - - 1,852 44,580 State Program Revenues5800

4,412 7,706 - - Federal Program Revenues5900

Total Revenues5020 7,706 4,412 1,852 44,580

EXPENDITURES:

Current:4,412 7,706 1,852 44,580 Instruction0011 - - - - Instructional Resources and Media Services0012 - - - - Curriculum and Instructional Staff Development0013 - - - - Instructional Leadership0021 - - - - School Leadership0023 - - - - Guidance, Counseling and Evaluation Services0031 - - - - Social Work Services0032 - - - - Health Services0033 - - - - Student (Pupil) Transportation0034 - - - - Food Services0035 - - - - Extracurricular Activities0036 - - - - Community Services0061

Total Expenditures6030 7,706 4,412 1,852 44,580




- - - -

- - - -

$ - $ - $ - $ -

58


Optional

Extended Year

Program Initiative

Success

Student

Allotment

Technology

Services

Child Care

Public School

401 404 411 412 482

Liberty

After School

Program

461

Campus

Activity

Funds

429

Other State

Special

Revenue Funds

428

High

School

Allotment

- - - 50,000 35,000 766,669 - - $ $ $ $ $ $ $ $167,853 26,563 166,921 - 1,556 - 22 362,639

- - - - - - - -

26,563 167,853 166,921 50,000 36,556 766,669 22 362,639

167,853 26,563 166,921 - 29,301 - - 362,639 - - - - - - 22 - - - - - - - - - - - - - - - - - - - - - - - - -

- - - - - - - - - - - - - - - - - - - - - - - - - - - - 2,422 - - - - - - - - - - - - - - - - 754,460 - - - - - 50,000 - - - -

26,563 167,853 166,921 50,000 31,723 754,460 22 362,639

-

-

$ -

-

-

$ -

-

-

$ -

-

-

$ -

-

-

$ -

-

-

$ -

12,209

304,080

$ 316,289

4,833

17,781

$ 22,614

59

EXHIBIT H-2WHITE SETTLEMENT INDEPENDENT SCHOOL DISTRICT



Control

Data

Codes

Foundation

GAP

Awards Funds

Governmental

Nonmajor

486 Total

REVENUES:2,175,761 16,142 Total Local and Intermediate Sources5700 $ $

791,048 - State Program Revenues58003,920,743 - Federal Program Revenues5900

Total Revenues5020 16,142 6,887,552

EXPENDITURES:

Current:2,866,081 18,776 Instruction0011

22 - Instructional Resources and Media Services00121,705 - Curriculum and Instructional Staff Development0013

110,813 - Instructional Leadership002125,814 - School Leadership002327,597 - Guidance, Counseling and Evaluation Services0031

117,922 - Social Work Services003252,554 - Health Services00332,422 - Student (Pupil) Transportation0034

2,796,014 - Food Services0035770,792 - Extracurricular Activities003657,172 - Community Services0061

Total Expenditures6030 18,776 6,828,908




(2,634)

10,752

$ 8,118

58,644

818,415

$ 877,059

60

REQUIRED TEXAS EDUCATION AGENCY SCHEDULES

61


SCHEDULE OF DELINQUENT TAXES RECEIVABLE

FISCAL YEAR ENDED AUGUST 31, 2009

Last 10 Years Ended

August 31

Tax Rates

Debt ServiceMaintenance Tax Purposes

Value for School

Assessed/Appraised

(1) (2) (3)

VariousVarious 516,006,553 and prior years2000 $

0.1200001.420000 564,856,737 2001

0.1200001.460000 614,205,703 2002

0.1050001.475000 696,798,704 2003

0.1050001.500000 790,158,412 2004

0.1750001.500000 886,233,966 2005

0.2900001.500000 998,804,982 2006

0.3980001.370000 1,158,357,399 2007

0.4260001.040000 1,280,767,190 2008

0.4584001.040000 1,330,129,732 (School year under audit)2009

1000 TOTALS

62

EXHIBIT J-1

9/1/2008

Balance

Beginning

Total Levy

Year's

Current

(20)(10) (50)

Ending

Balance

8/31/2009

(40)

Entire

Year's

Adjustments

(31)

Maintenance

Collections

(32)

Debt Service

Collections

- 140,224 722 (12,169)$ $ $ $ $ 127,236 $ 97

- 31,818 554 (178) 31,039 47

- 47,524 - - 47,524 -

- 36,751 181 179 36,736 13

- 48,490 1,385 - 47,008 97

- 42,827 2,515 (1,586) 38,433 293

- 65,828 10,931 (355) 52,429 2,113

- 155,723 53,256 (13,653) 73,342 15,472

- 274,578 118,947 270 107,179 48,722

19,930,664 - 14,870,161 1,947,397 453,591 6,554,309

$ 1,014,517 $ 1,919,905 $ 15,058,652 $ 19,930,664 $ 843,763 $ 6,621,163

63

EXHIBIT J-2WHITE SETTLEMENT INDEPENDENT SCHOOL DISTRICT

SCHEDULE OF EXPENDITURES FOR COMPUTATIONS OF INDIRECT COST FOR 2010-2011GENERAL AND SPECIAL REVENUE FUNDS

AUGUST 31, 2009

FUNCTION 41 AND RELATED FUNCTION 53 - GENERAL ADMINISTRATION, 99 - APPRAISAL DISTRICT COST

Account

Number Board

School

(702)

Collections

Tax

(703)

Office

Supt's

(701)

21 3 4

(750)

Indirect

Cost

5

(720)

Direct

Cost

6

(other)

Miscellaneous

7

Total

Account

Name

-4,339 297,275 696,505 - 116,531 1,114,650$ $ $ $ $ $ $PAYROLL COSTS611X-6146

-- - 27,062 - - 27,062Leave for Separating

Employees in Fn 41 & 53

6149

-- - - - - -Leave - Separating Employees

not in 41 & 53

6149

-- 82,506 - - - 82,506Legal Services6211

-- - 24,750 - - 24,750Audit Services6212

129,344- - - - - 129,344Tax Appraisal/Collection -

Appraisal in Fn 99

6213

-- 6,972 43,175 - 6,724 56,871Other Professional Services621X

-- - - - - -Tuition and Transfer Payments6220

-- - - 3,000 - 3,000Education Service Centers6230

-- - - 843 - 843Contr. Maint. and Repair6240

-- - - - - -Utilities6250

-- 3,608 11,282 - 12,727 27,617Rentals6260

-- - - - - -Miscellaneous Contr.6290

-- 49 - - - 49Textbooks and Reading6320

-- - - - - -Testing Materials6330

3495,849 4,060 43,255 - 10,189 63,702Other Supplies Materials63XX

653,770 1,938 4,945 - 50 10,768Travel, Subsistence, Stipends6410

-- - - - - -Ins. and Bonding Costs6420

-5,112 - - - - 5,112Election Costs6430

-1,924 16,370 29,687 - 2,651 50,632Miscellaneous Operating6490

-- - - - - -Debt Service6500

-- - - - - -Capital Outlay6600

$TOTAL6000 20,994 129,758 412,778 880,661 3,843 148,872 1,596,906$ $ $ $ $ $

Total expenditures/expenses for General and Special Revenue Funds: 46,622,972

LESS: Deductions of Unallowable Costs

Total Capital Outlay (6600) 44,149(10)

Total Debt & Lease(6500)

Plant Maintenance (Function 51, 6100-6400)

Food (Function 35, 6341 and 6499)

Stipends (6413)

Column 4 (above) - Total Indirect Cost

SubTotal:

Net Allowed Direct Cost

Total Cost of Buildings before Depreciation (1520)

Historical Cost of Building over 50 years old

Amount of Federal Money in Building Cost (Net of #16)

Total Cost of Furniture & Equipment before Depreciation (1530 & 1540)

(8) NOTE A:

-(11)

(12) 5,028,451

(13) 1,268,963

(14) (28,352)

880,661

7,193,872

39,429,100

199,435,279(15)

(16) 122,077,128

(17) -

(18) 7,486,086

$108,434 in Function 53 expenditures are included in this report on administrative costs.

$

$

$

$

$

$

$

(9)

Historical Cost of Furniture & Equipment over 16 years old (19) $ 897,795

Amount of Federal Money in Furniture & Equipment (Net of #19) (20) $ -

FISCAL YEAR

CUMULATIVE

$124,842 in Function 99 expenditures for appraisal district costs are included in this report on administrative costs.

64

EXHIBIT J-3


FUND BALANCE AND CASH FLOW CALCULATION WORKSHEET

GENERAL FUND AS OF AUGUST 31, 2009

UNAUDITED

Total General Fund Balance as of 8/31/09 (Exhibit C-1 object 3000 for the General Fund Only)

7,633,666 1 $

Total Reserved Fund Balance (from Exhibit C-1 - total of object 3400s for the General Fund Only)

2 2,830,267 $

Total Designated Fund Balance (from Exhibit C-1 - total of object 3500s for the General Fund Only)

3 -

4 Estimated amount needed to cover fall cash flow deficits in the General Fund (Net of borrowed funds and funds representing deferred revenues.)

4,628,201

5 Estimate of one month's average cash disbursements during the regular school session (9/1/09-5/31/10).

4,022,917

6

Optimum Fund Balance and Cash Flow (Lines 2+3+4+5+6+7+8+9) 12,214,845

11Excess (Deficit) Undesignated Unreserved General Fund Balance (Line 1 minus Line 10)

(4,581,179)$

10

7

8

9

Estimate of delayed payments from state sources (58xx) including August payment delays

-

Estimate of underpayment from state sources equal to variance between Legislative Payment Estimate (LPE) and District Planning Estimate (DPE) or District's calculated earned state aid amount.

733,460

Estimate of delayed payments from federal sources (59xx) -

Estimate of expenditures to be reimbursed to General Fund from Capital Projects Fund (uses of General Fund cash after bond referendum and prior to issuance of bonds)

-

65


SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE

BUDGET AND ACTUAL - CHILD NUTRITION PROGRAM


Control

Data

CodesOriginal Final

(GAAP BASIS)

(Negative)

Positive or


Budgeted Amounts

REVENUES:1,308,000 1,302,000 1,307,950 (50)Total Local and Intermediate Sources $ $ $ $5700

20,000 20,000 19,062 (938)State Program Revenues5800

1,561,500 1,367,500 1,513,238 (48,262)Federal Program Revenues5900

Total Revenues5020 2,689,500 2,889,500 2,840,250 (49,250)

EXPENDITURES:

Current:4,200 - - 4,200 Instruction0011

2,879,300 2,683,500 2,796,014 83,286 Food Services0035

6,000 6,000 - 6,000 Data Processing Services0053


1200 Net Change in Fund Balances - - 44,236 44,236

0100 Fund Balance - September 1 (Beginning) - 485,802 485,802 -

3000 Fund Balance - August 31 (Ending) $ - $ 485,802 $ 530,038 $ 44,236

66


SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE

BUDGET AND ACTUAL - DEBT SERVICE FUND


Control

Data

CodesOriginal Final

(GAAP BASIS)

(Negative)

Positive or


Budgeted Amounts

REVENUES:6,734,227 6,534,227 6,709,662 (24,565)Total Local and Intermediate Sources $ $ $ $5700

2,790,268 1,694,880 2,790,268 - State Program Revenues5800

Total Revenues5020 8,229,107 9,524,495 9,499,930 (24,565)

EXPENDITURES:

Debt Service:2,714,998 2,714,998 2,860,000 (145,002)Debt Service - Principal on Long Term Debt0071

5,447,136 5,447,136 5,302,133 145,003 Debt Service - Interest on Long Term Debt0072

4,000 4,000 2,154 1,846 Debt Service - Bond Issuance Cost and Fees0073


1200 Net Change in Fund Balances 62,973 1,358,361 1,335,643 (22,718)

0100 Fund Balance - September 1 (Beginning) - 2,417,584 2,417,584 -

3000 Fund Balance - August 31 (Ending) $ 62,973 $ 3,775,945 $ 3,753,227 $ (22,718)

67


68

REPORTS ON INTERNAL CONTROLS, COMPLIANCE

AND FEDERAL AWARDS

69

70





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

Board of Trustees




We have audited the accompanying financial statements of the governmental activities,

each major fund, and the aggregate remaining fund information of White Settlement

Independent School District (the “District”) as of and for the year ended August 31, 2009,

which collectively comprise the District’s basic financial statements and have issued our

report thereon dated December 9, 2009. We conducted our audit in accordance with

auditing standards generally accepted in the United States of America and the standards

applicable to financial audits contained in Government Auditing Standards, issued by the

Comptroller General of the United States.

Internal Control Over Financial Reports

In planning and performing our audit, we considered the District's internal control as a

basis for designing our auditing procedures for the purpose of expressing our opinion on

the financial statements, but not for the purpose of expressing an opinion on the

effectiveness of the District’s internal control over financial reporting. Accordingly, we

do not express an opinion on the effectiveness of the District’s internal control over

financial reporting.

A control deficiency exists when the design or operation of a control does not allow

management or employees, in the normal course of performing their assigned functions,

to prevent or detect misstatements on a timely basis. A significant deficiency is a control

deficiency, or a combination of control deficiencies, that adversely affects the District’s

ability to initiate, authorize, record, process, or report financial data reliably in

accordance with generally accepted accounting principles such that there is more than a

remote likelihood that a misstatement of the District’s financial statements that is more

than inconsequential will not be prevented or detected by the District’s internal control.


71

A material weakness is a significant deficiency, or combination of significant

deficiencies, that results in more than a remote likelihood that a material misstatement of

the financial statements will not be prevented or detected by the District’s internal

control.

Our consideration of the internal control over financial reporting was for the limited

purpose described in the first paragraph of this section and would not necessarily identify

all deficiencies in internal control that might be significant deficiencies or material

weaknesses. We did not identify any deficiencies in internal control over financial

reporting that we consider to be material weaknesses, as defined above.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the District's financial

statements are free of material misstatement, we performed tests of its compliance with

certain provisions of laws, regulations, contracts and grant agreements, noncompliance

with which could have a direct and material effect on the determination of financial

statement amounts. However, providing an opinion on compliance with those provisions

was not an objective of our audit and, accordingly, we do not express such an opinion.

The results of our tests disclosed no instances of noncompliance or other matters that are

required to be reported under Government Auditing Standards.

We noted certain matters that we reported to management of the District in a separate

letter dated December 9, 2009.

This report is intended solely for the information and use of the District’s Board, the

administration, federal awarding agencies and pass-through entities and is not intended to

be used and should not be used by anyone other than those specified parties.


December 9, 2009

Owner

Typewritten Text


72





REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO

EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER

COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133

Board of Trustees




Compliance

We have audited the compliance of White Settelement Independent School District (the

“District’) with the types of compliance requirements described in the U. S. Office of

Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to

each of its major federal programs for the year ended August 31, 2009. The District's major

federal programs are identified in the summary of auditor's results section of the accompanying

schedule of findings and questioned costs. Compliance with the requirements of laws,

regulations, contracts and grants applicable to each of its major federal programs is the

responsibility of the District's management. Our responsibility is to express an opinion on the

District's compliance based on our audit.

We conducted our audit of compliance in accordance with auditing standards generally accepted

in the United States of America; the standards applicable to financial audits contained in

Government Auditing Standards, issued by the Comptroller General of the United States; and

OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations.

Those standards and OMB A-133 require that we plan and perform the audit to obtain reasonable

assurance about whether noncompliance with the types of compliance requirements referred to

above that could have a direct and material effect on a major federal program occurred. An audit

includes examining, on a test basis, evidence about the District's compliance with those

requirements and performing such other procedures as we considered necessary in the

circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit

does not provide a legal determination on the District's compliance with those requirements.

In our opinion, the District complied, in all material respects, with the requirements referred to

above that are applicable to each of its major federal programs for the year ended August 31,

2009.


73

Internal Control Over Compliance

The management of the District is responsible for establishing and maintaining effective internal

control over compliance with requirements of laws, regulations, contracts and grants applicable

to federal programs. In planning and performing our audit, we considered the District's internal

control over compliance with requirements that could have a direct and material effect on a

major federal program in order to determine our auditing procedures for the purpose of

expressing our opinion on compliance, but not for the purpose of expressing an opinion on the

effectiveness of internal control over compliance. Accordingly, we do not express an opinion on

the effectiveness of the District’s internal control over compliance

A control deficiency in the District’s internal control over compliance exists when the design or

operation of a control does not allow management or employees, in the normal course of

performing their assigned functions, to prevent or detect noncompliance with a type of

compliance requirement of a federal program on a timely basis. A significant deficiency is a

control deficiency, or combination of control deficiencies, that adversely affects the District’s

ability to administer a federal program such that there is more than a remote likelihood that

noncompliance with a type of compliance requirement of federal program that is more than

inconsequential will not be prevented or detected by the entity’s internal control.

A material weakness is a significant deficiency, or a combination of significant deficiencies, that

results in more than a remote likelihood that material noncompliance with a type of compliance

requirement of a federal program will not be prevented or detected by the District’s internal

control.

Our consideration of internal control over compliance was for the limited purpose described in

the first paragraph of this section and would not necessarily identify all deficiencies in internal

control over compliance that we consider to be material weaknesses, as defined above. We did

not identify any deficiencies in internal control over compliance that we consider to be material

weaknesses, as defined above.

This report is intended for the information of the District’s Board, the administration, federal

awarding agencies and pass-through entities and is not intended to be used and should not be

used by anyone other than these specified parties.


December 9, 2009

Owner

Typewritten Text


74


SCHEDULE OF FINDINGS AND QUESTIONED COSTS


Section I - Summary of Auditor’s Results

Financial Statements

Type of auditor’s report issued: Unqualified.

Internal control over financial reporting:

Material weakness(es) identified? _____ yes __x__ no

Significant deficiencies identified that are not

considered to be material weakness?

_____ yes

__x__ none reported

Noncompliance material to financial statements noted? _____ yes __x__ no

Federal Awards

Internal control over major programs:

Material weakness(es) identified? _____ yes __x__ no

Significant deficiencies identified that are not

considered to be material weakness?

_____ yes

__x__ none reported

Type of auditor’s report issued on compliance for major programs: Unqualified

Any audit findings disclosed that are required to be

reported in accordance with Section 510(a) of OMB

Circular A-133?

_____ yes

__x__ no

Identification of major programs:

CFDA Number(s) Name of Federal Program or Cluster

84.027 IDEA – Part B, Formula

84.027 IDEA – Part B, Discretionary

84.389 ESEA – Title I, A – ARRA – Improving Basic Programs

84.391 IDEA, Part B, Formula - ARRA

Dollar threshold used to distinguish between Type A and Type B programs: $300,000.

Auditee qualified as low risk auditee?: Yes

Section II – Financial Statement Findings

N/A - None

Section III – Federal Award Findings and Questioned Costs

N/A – None.

75


SUMMARY SCHEDULE OF PRIOR YEAR AUDIT FINDINGS


PRIOR YEAR’S FINDING/NONCOMPLIANCE: None

STATUS OF PRIOR YEAR’S FINDINGS/NONCOMPLIANCE: None required.

76


CORRECTIVE ACTION PLAN


CORRECTIVE ACTION PLAN: None required.

EXHIBIT K-1WHITE SETTLEMENT INDEPENDENT SCHOOL DISTRICT

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS


(1)

Federal

Entity Identifying

(4)

NumberCFDA

ExpendituresFederal

Number

(3)(2)

FEDERAL GRANTOR/

PASS-THROUGH GRANTOR/PROGRAM or CLUSTER TITLE

Pass-Through

U.S. DEPARTMENT OF EDUCATION

Passed Through State Department of Education

885,200ESEA, Title I, Part A - Improving Basic Programs 84.010A $09610101220920

1,085,378IDEA - Part B, Formula 84.027 09660001220920066001,273IDEA - Part B, Discretionary 84.027 09660006220920

Total CFDA Number 84.027 1,086,651

63,530Career and Technical - Basic Grant 84.048 0942000622092044,667IDEA - Part B, Preschool 84.173 09661001220920661016,432ESEA Title IV - Safe and Drug-Free Schools 84.186A 096910012209207,783Title II, Part D -Enhancing Ed. Through Technology 84.318X 09630001220920

43,608Title III, Part A - English Language Acquisition 84.365A 09671001220920240,344ESEA, Title II, Part A, Teacher/Principal Training 84.367A 09694501220920

7,706ESEA, Title I, A - ARRA - Improving Basic Programs 84.389 105510012209207,172IDEA, Part B, Formula - ARRA 84.391 105540012209204,412Summer School LEP 84.369A 69550802

Total Passed Through State Department of Education 2,407,505$

TOTAL DEPARTMENT OF EDUCATION 2,407,505$

U.S. DEPARTMENT OF AGRICULTURE

Passed Through the State Department of Agriculture

276,139School Breakfast Program* 10.553 $714009011,085,986National School Lunch Program - Cash Assistance* 10.555 71300901

151,113Commodity Supplemental - Non-Cash Assistance 10.565 220920

Total Passed Through the State Department of Agriculture 1,513,238$

TOTAL DEPARTMENT OF AGRICULTURE 1,513,238$

TOTAL EXPENDITURES OF FEDERAL AWARDS 3,920,743$

*Clustered Programs as required by Compliance Supplement March, 2009

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NOTES TO SCHEDULE OF EXPENDITURES

OF FEDERAL AWARDS

YEAR ENDED AUGUST 31, 2009

1. For all federal programs, the District uses the fund types specified in Texas Education

Agency’s “Financial Accountability System Resource Guide.” Special revenue funds are

used to account for resources restricted to, or designated for, specific purposes by a grantor.

Federal and state financial assistance is generally accounted for in a Special Revenue Fund.

2. The accounting and financial reporting treatment applied to a fund is determined by its

measurement focus. The Governmental Fund types and Expendable Trust Funds, if any, are

accounted for using a current financial resources measurement focus. All Federal grant funds

were accounted for in a Special Revenue Fund that is a Governmental Fund type. With this

measurement focus, only current assets and current liabilities and the fund balance are

included on the balance sheet. Operating statements of these funds present increases and

decreases in net current assets.

The modified accrual basis of accounting is used for the Governmental Fund types, the

Expendable Trust Funds, if any, and Agency Funds. This basis of accounting recognizes

revenues in the accounting period in which they become susceptible to accrual, i.e., both

measurable and available, and expenditures in the accounting period in which the fund

liability is incurred, if measurable, except for unmatured interest on General Long-Term

Debt, which is recognized when the obligations are expected to be liquidated with

expendable available financial resources.

Federal grant funds are considered to be earned to the extent of expenditures made under the

provisions of the grant, and, accordingly, when such funds are received, they are recorded as

deferred expenditures until earned.

3. The period of availability for federal grant funds for the purpose of liquidation of outstanding

obligations made on or before the ending date of the federal project period extended 30 days

beyond the federal project period ending date, in accordance with provisions of Section H,

Period of Availability of Federal Funds, Part 3, OMB Circular A-133 Compliance Statement

– Provisional 6/97.

4. The District participates in numerous Federal grant programs that are governed by various

rules and regulations of the grantor agencies. Costs charged to the respective grant programs

are subject to audit and adjustment by the grantor agencies; therefore, to the extent that the

District has not complied with the rules and regulations governing the grants, if any, refunds

of any money received may be required and the collectability of any related receivable at

August 31, 2009, may be impaired. In the opinion of the District, there are no significant

contingent liabilities relating to compliance with the rules and regulations governing the

respective grants; therefore, no provisions have been recorded in the accompanying financial

statements for such contingencies.

SCHOOLS FIRST QUESTIONNAIRE

White Settlement Independent School District Fiscal Year 2009

Were there any disclosures in the Annual Financial Report and/or other sources of information concerning default on bonded indebtedness obligations?

NoSF2

Did the district receive a clean audit? - Was there an unqualified opinion in the Annual Financial Report?

YesSF4

Did the Annual Financial Report disclose any instances of material weaknesses in internal controls?

NoSF5

Was there any disclosure in the Annual Financial Report of material noncompliance? NoSF9

Total accumulated accretion on capital appreciation bonds included in government-wide financial statements at fiscal year end.

16122199SF10

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