el paso independent school district annual financial …

EL PASO INDEPENDENT SCHOOL DISTRICT

ANNUAL FINANCIAL AND COMPLIANCE REPORTS

FOR THE YEAR ENDED JUNE 30, 2015

EL PASO INDEPENDENT SCHOOL DISTRICTAnnual Financial and Compliance Reports

For the Year Ended June 30, 2015

Table of ContentsPage Exhibit

Certificate of Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Directory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

FINANCIAL SECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Independent Auditor's Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Management’s Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Basic Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27Government-wide Financial Statements:

Statement of Net Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 A-1Statement of Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 B-1

Governmental Fund Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33Balance Sheet - Governmental Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 C-1Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 C-2Statement of Revenues, Expenditures and Changes in Fund Balance - Governmental Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 C-3Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities . . . . . . . . . . . . . . . . . . . . . . . . . 37 C-4

Proprietary Fund Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39Statement of Net Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 D-1Statement of Revenues, Expenses, and Changes in Fund Net Position . . . . . . . . . . . . . . . . . . . . . 41 D-2Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 D-3

Fiduciary Fund Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43Statement of Fiduciary Net Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 E-1Statement of Changes in Fiduciary Fund Net Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 E-2

Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46Required Supplementary Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual - General Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 G-1Schedule of the District’s Proportionate Share of the Net Pension Liability - Teacher Retirement System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 G-2Schedule of District Contributions - Teacher Retirement System . . . . . . . . . . . . . . . . . . . . . . . . . 96 G-3Notes to Required Supplement Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

Supplementary Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99Nonmajor Governmental Funds

Combining Balance Sheet - Nonmajor Governmental Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 H-1Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 H-2

Internal Service FundsCombining Statement of Net Position - Internal Service Funds . . . . . . . . . . . . . . . . . . . . . . . . . . 112 H-3Combining Statement of Revenues, Expenses, and Changes in Fund Net Position - Internal Service Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 H-4Combining Statement of Cash Flows - Internal Service Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 H-5

Agency FundStatement of Changes in Assets and Liabilities - Agency Fund . . . . . . . . . . . . . . . . . . . . . . . . . . 115 H-6


Table of Contents (Continued)

Page Exhibit

Other Information - Required TEA Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117Schedule of Delinquent Taxes Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 J-1Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual - Child Nutrition Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 J-2Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual - Debt Service Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 J-3

FEDERAL AWARDS SECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123Independent Auditor’s 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 . . . . . . . . . . . . . . . . . . . . . . . 125Independent Auditor’s Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by OMB Circular A-133 . . . . . . . . . . . . . . . . 127Schedule of Findings and Questioned Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129Schedule of Status of Prior Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131Schedule of Expenditures of Federal Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132 K-1Notes on Accounting Policies for Federal Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135

EI Paso Independent School District Name of School District

CERTIFICATE OF BOARD

El Paso County County

071902 Co. -Dis!. Number

We, the undersigned, certify that the attached annual tlnancial and compliance reports of the above named

school district were reviewed and / approved ___ disapproved for the year ended June 30, 2015,

at a meeting of the Board of Trustees of snch school district on the IT" day of November 2015.

Si nature of Board Secretary Signature of Board President

If the Board of Trustees disapproves of the independent auditor's repOlt, the reason(s) for disapproving it is(are): (attach list as necessary)

This page is left blank intentionally.

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DIRECTORY

BOARD OF TRUSTEES

Dori FenenbockPresident

Al VelardeVice-President

Trent HatchSecretary

Bob GeskeMember

Susie ByrdMember

Diane DyeMember

Chuck TaylorMember

ADMINISTRATION

Juan CabreraSuperintendent

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FINANCIAL SECTION

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600 SUNLAND PARK, 6-300 EL PASO, TX 79912

P 915 356-3700 F 915356-3779 W GRP-CPACOM

To the Board of Trustees

INDEPENDENT AUDITOR'S REPORT

EI Paso Independent School District

Report on the Financial Statements

GRP GIBSON RUDDOCK PATTERSON LLC certified public accountants

We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information ofEI Paso Independent School District as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the EI Paso Independent School District's basic financial statements as listed in the table of contents.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting pol icies used and the reasonableness of sign ificant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

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Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the respectivefinancial position of the governmental activities, each major fund, and the aggregate remaining fundinformation of El Paso Independent School District, as of June 30, 2015, and the respective changes infinancial position, and, where applicable, cash flows, thereof for the year then ended in accordance withaccounting principles generally accepted in the United States of America.

Emphasis of Matter

Change in Accounting Principle

As described in Note I to the financial statements, in 2015 El Paso Independent School District adopted newaccounting guidance, GASB Statement no. 68, Accounting and Financial Reporting for Pensions - andamendment of GASB Statement No. 27. and GASB Statement No. 71, Pension Transition for ContributionsMade Subsequent to the Measurement Date - an amendment of GASB Statement No. 68. Our opinion is notmodified with respect to this matter.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’sdiscussion and analysis, budgetary comparison, and pension information on pages 11 through 26 and 93through 97 be presented to supplement the basic financial statements. Such information, although not a partof the basic financial statements, is required by the Governmental Accounting Standards Board, whoconsiders it to be an essential part of financial reporting for placing the basic financial statements in anappropriate operational, economic, or historical context. We have applied certain limited procedures to therequired supplementary information in accordance with auditing standards generally accepted in the UnitedStates of America, which consisted of inquiries of management about the methods of preparing theinformation and comparing the information for consistency with management’s responses to our inquiries,the basic financial statements, and other knowledge we obtained during our audit of the basic financialstatements. We do not express an opinion or provide any assurance on the information because the limitedprocedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Supplementary and Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectivelycomprise the El Paso Independent School District’s basic financial statements. The combining and individualnonmajor fund financial statements and the required TEA schedules are presented for purposes of additionalanalysis and are not a required part of the basic financial statements. The schedule of expenditures of federalawards is presented for purposes of additional analysis as required by the U.S. Office of Management andBudget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also nota required part of the basic financial statements.

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The combining and individual nonmajor fund financial statements and the schedule of expenditures of federalawards are the responsibility of management and were derived from and relate directly to the underlyingaccounting and other records used to prepare the basic financial statements. Such information has beensubjected to the auditing procedures applied in the audit of the basic financial statements and certainadditional procedures, including comparing and reconciling such information directly to the underlyingaccounting and other records used to prepare the basic financial statements or to the basic financial statementsthemselves, and other additional procedures in accordance with auditing standards generally accepted in theUnited States of America. In our opinion, the combining and individual nonmajor fund financial statementsand the schedule of expenditures of federal awards are fairly stated in all material respects in relation to thebasic financial statements as a whole.

The required TEA schedules have not been subjected to the auditing procedures applied in the audit of thebasic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

Other Reporting Required by Government Audit Standards

In accordance with Government Auditing Standards, we have also issued our report dated November 12,2015, on our consideration of the El Paso Independent School District’s internal control over financialreporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grantagreements and other matters. The purpose of that report is to describe the scope of our testing of internalcontrol over financial reporting and compliance and the results of that testing, and not to provide an opinionon internal control over financial reporting or on compliance. That report is an integral part of an auditperformed in accordance with Government Auditing Standards in considering the El Paso Independent SchoolDistrict’s internal control over financial reporting and compliance.

Gibson, Ruddock, Patterson LLCEl Paso, TexasNovember 12, 2015

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MANAGEMENT’S DISCUSSION AND ANALYSIS

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Our discussion and analysis of the El Paso Independent School District’s (the “District”) financial performance provides an overview of the District’s financial activities for the fiscal year ended June 30, 2015. It should be read in conjunction with the basic financial statements, which follow this section. The Management’s Discussion and Analysis is a combination of both government-wide financial statements and fund financial statements. FINANCIAL HIGHLIGHTS The District’s change in net position from normal operations was an increase of $18.8 million. Total net position of the District decreased from $329.9 million in fiscal year 2014 to $275.1 million at year-end 2015. The decrease was due to the new GASB 68 reporting requirement for TRS pension contributions, which resulted in a prior period adjustment of $73.6 million. Due to the GASB adjustment, the ending net position decreased $54.8 million from the prior year. Of this total amount, unrestricted assets decreased by $58.8 million from $92.6 million to $33.8 million. Total revenues increased $11.7 million from $609 million in fiscal year 2014, to $620.7 million in fiscal year 2015. Total expenses increased $9 million, from $592.9 million to $601.9 million.

The District implemented GASB Statement No. 68, Accounting and Financial Reporting for Pensions (“GASB 68”), which establishes accounting and financial reporting standards for school districts to report their portion of the unfunded liability or overfunded asset pension of the Teacher Retirement System of Texas pension plan. The District’s financial statements as of June 30, 2015 are presented in accordance with the guidance provided by this Statement.

The District’s governmental funds financial statements reported a combined ending fund balance in fiscal year 2015 of $219.2 million. The combined ending fund balance of the District decreased $13.7 million from $232.9 million in fiscal year 2014. Of this total amount, $1.5 million is Nonspendable, $115 million is Restricted, $8.1 million is Assigned, and $94.6 million is Unassigned in the General Fund and is available for spending at the District’s discretion. The 2008 Bond Capital Projects fund balance is $73.2 million and includes expenditures of $11.5 million at June 30, 2015.

Several projects were completed during fiscal year 2015. The Reconstruction of Logan Elementary School, located at Fort Bliss, Texas was completed. The project was funded through a Grant from the Department of Defense – Office of Economic Adjustment. Funds from the 2008 Bond Capital Projects fund were utilized for the required local match of $3.3 million. The Grant funded $11.8 million for a total cost of $15.1 million. This is the first Grant of its kind awarded by the Department of Defense. The Reconstruction of Hart Elementary School was also completed during the fiscal year 2015 for $12.1 million and was fully funded by the 2008 Bond Capital Projects fund. There are two classroom additions nearing completion at Milam Elementary School and Chapin High School, both located at Fort Bliss, Texas.

The term for the Bond Committee members ended in May 2015 and the Committee ceased to exist. The Facilities and Construction Department is working to complete all reallocated projects currently in progress in the 2008 Bond Capital Projects fund.

MANAGEMENT’S DISCUSSION AND ANALYSIS

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ACADEMIC HIGHLIGHTS The El Paso Independent School District (EPISD) exceeded performance requirements on state standards (Target Scores) in all four Indexes on the Texas State Accountability System during the 2015 fiscal year. The Student Achievement Index earned 14 points above the target score of 60. Student Progress Index earned 17 points above the target score of 20. Closing Performance Gap Index exceeded the target score of 28 by 13 points and the Post-Secondary Readiness Index exceeded the target score of 57 by 19 points. When comparing EPISD to the State’s overall performance, EPISD was above the State in Student Achievement by three points, but below the State in Closing Performance Gap and the Post-Secondary Readiness by one point.

The following graph indicates the District’s standing in relation to the State’s overall performance: Distinction designations in academic subjects and areas such as top 25% student progress, top 25% closing performance gaps, and post-secondary readiness were awarded to numerous campuses across the district. Fifty-five EPISD campuses received distinction designations, 37 elementary, 9 middle schools (including MacArthur Elementary-Intermediate), and 9 high schools. There were 42 campuses that received academic distinction designations, 29 in Reading/ELA, 11 in Math, 27 in Science, and 8 in Social Studies. Twenty-nine campuses received a Top 25% Student Progress Distinction, 40 campuses received a Top 25% Closing Performance Gaps Distinction, and 31 campuses received a Post-Secondary Readiness Distinction. Three high schools received all seven distinctions, El Paso, Silva Health Magnet, and Transmountain Early College. Wiggs Middle School was the only middle school that received all seven distinctions. There were eight elementary campuses that received all five distinctions, Coldwell, Lamar, Collins, Cielo Vista, Mitzi Bond, Nixon, Green, and Guerrero.

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Government-Wide Financial Statements All of the District’s services are reported in the government-wide financial statements (refer to Exhibits A-1 and B-1), including instruction, student support services, student transportation, general administration, school leadership, facilities acquisition and construction and food services. Property taxes, state and federal aid, and investment earnings finance most of the activities. Additionally, all capital and debt financing activities are reported on these statements. The government-wide financial statements are designed to provide readers a broad overview of the District’s finances, in a manner similar to a private-sector business. The statement of net position presents information on all of the District’s assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in the net position may serve as a useful indicator of whether the District’s financial position is improving or deteriorating. The statement of activities details how the District’s net position changed during the most recent fiscal year. All changes in the net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Therefore, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused sick leave). Both the government-wide financial statements distinguish functions of the District that are 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. Figure A-1 summarizes the major features of the District’s financial statements and the types of information they contain. Figure A-1: Figure A-1 Major Features of the District’s Government‐Wide and Fund Financial Statements

Fund Statements

Type of Statements Government‐Wide Governmental Funds Proprietary Funds Fiduciary Funds

Scope Entire Agency’s Government (except fiduciary funds) and the Agency’s component units

The activities of the District that are not proprietary or fiduciary

Activities the District operates similar to private business

Instances in which the District is the trustee or agent for someone else’s resources

Required financial statements

Statement of net position Balance Sheet Statement of net position Statement of fiduciary position

Statement of activities Statement of revenues, expenditures, & changes in fund balance

Statement of revenues, expenses and changes in fund net position

Statement of changes in fiduciary net position

Statement of cash flows

Accounting basis and measurement focus

Accrual accounting and economic resources focus

Modified accrual accounting and current financial resources focus



Type of asset/liability information

All assets, deferred outflows and liabilities, deferred inflows both financial and capital, short‐term and long‐term

Only assets, deferred outflows, expected to be used up and liabilities, deferred inflows, that come due during the year or soon thereafter; no capital assets included

All assets, deferred outflows and liabilities, deferred inflows, both financial and capital, and short‐term and long‐term

All assets and liabilities, both short‐term and long‐term; the Agency’s funds do not currently contain capital assets, although they can

Type of inflow/outflow information

All revenues and expenses during the year, regardless of when cash is received or paid

Revenues for which cash is received during or soon after the end of the year; expenditures when goods or services have been received and payment is due during the year or soon thereafter

All revenues and expenses during year, regardless of when cash is received or paid

All revenues and expenses during year, regardless of when cash is received or paid

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OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is 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 basic financial statements. This is illustrated in Figure A-2 below. This report also contains required supplementary information, other supplementary information, and TEA required schedules, in addition to the basic financial statements themselves. Fund Financial Statements The District uses fund accounting to keep track of specific sources of funding and spending for particular purposes. The fund financial statements provide additional detailed information about the District’s most significant funds, not the District as a whole. Funds are accounting devices that the District uses to keep track of specific sources of funding and spending for particular purposes:

Some fund designations are required by state law and by bond covenants. The District establishes other funds to control and manage money for particular purposes, or to

show that it is properly using certain grants.

All of the funds of the District can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.

Figure A‐2. The figure shows how the required parts of this

annual report are arranged and related to one another.

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Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. Most of the District’s activities are included in governmental funds using modified accrual accounting. The focus is on 1) how cash and other financial assets can readily be converted to cash flow in and out, and 2) the balances left at year-end that are available. However, unlike the government-wide financial statements, governmental fund financial statements provide a detailed short-term view that helps determine whether there are more or fewer financial resources that can be spent in the near future to finance the District’s programs. Proprietary funds are used to account for operations that are financed similar to those found in the private sector. These funds provide both long and short-term financial information. The District maintains a type of proprietary fund called an Internal Service Fund. The District uses Internal Service Funds to account for its Workers’ Compensation, Health Care Clinic, and Print Shop programs. These funds employ the full accrual method. Fiduciary funds are used to account for assets held by the District, in a trustee capacity or as an agent, for individuals, private organizations and/or other funds. No fiduciary funds are used as clearing accounts to distribute financial resources to other funds. The District is responsible for ensuring that the assets reported in these funds are used for their intended purposes. The District uses Fiduciary funds to account for student activity funds and scholarships. All of the District’s fiduciary activities are reported in a separate statement of fiduciary net position, statement of changes in fiduciary net position, and the statement of changes in assets and liabilities. We exclude these activities from the District’s government-wide financial statements, because the District cannot use these assets to finance its operations.

Notes to the Basic Financial Statements

The notes to the basic financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.

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. Immediately following the required supplementary information, combining statements are included for the non-major funds, the internal service funds, and the fiduciary funds. In addition, this report also includes the required TEA schedules.

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GOVERNMENT-WIDE FINANCIAL ANALYSIS

Statement of Net Position

As noted earlier, the net position may serve over time as a useful indicator of the District’s financial position. The District’s total net position was approximately $275.1 million at June 30, 2015. The District’s governmental activities net position decreased by $54.8 million.

Table I El Paso Independent School District

Statement of Net Position (in millions of dollars)

Governmental Activities Percentage2015 2014 Variance Change

Current and other assets 312.1 333.0 (20.9) (6.3%)Capital and Non-Current Assets 570.9 562.7 8.2 1.5%

Total Assets 883.0 895.7 (12.7) (1.4%)

Deferred Charge for Refunding 20.8 3.9 16.9 433.3% Deferred Outflow Related to TRS 14.4 0 14.4 N/A Total Deferred Outflows of Resources 35.2 3.9 31.3 802.6%

Current Liabilities 103.8 103.1 0.7 0.7%Non-Current Liabilities 519.7 466.6 53.1 11.4%

Total Liabilities 623.5 569.7 53.8 9.4% Deferred Inflow Related to TRS 19.6 0.00 19.6 N/A Total Deferred Inflows of Resources 19.6 0.00 19.6

Net Position: Net Investment in Capital Assets 204.4 188.7 15.7 8.3%

Restricted 36.9 48.6 (11.7) (24.1%)

Unrestricted 33.8 92.6 (58.8) (63.5%)

Total Net Position 275.1 329.9 (54.8) (16.6%)

Statement of Activities

Revenues

The District’s total revenues were $620.7 million. A significant portion, approximately 44 percent, of the District’s revenue comes from state aid-formula grants. Operating and capital grants and contributions provided revenue of 24 percent, 31 percent comes from property taxes, while only 1 percent relates to charges for services and local miscellaneous sources.

Funding for governmental activities is by specific program revenue or through general revenues such as, property taxes and investment earnings. The following is a summary of the governmental activities:

The cost of all governmental activities this year was $601.9 million.

Program revenues directly attributable to specific activities funded some of the governmental activities. These program revenues amounted to $156.8 million.

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The remaining cost of governmental activities, not directly funded by program revenues, was $445 million of which $192.2 million was funded by property taxes, and $270.1 million was funded by state aid – not restricted to specific programs.

Expenses

The District’s total expenses were $601.9 million. The largest portion, $372.5 million or approximately 62 percent, was spent on instruction and instructional related services. Meanwhile, expenses for instructional leadership and school administration were only 7 percent; 8 percent for guidance, social work, health and transportation, while only 2 percent relates to general administration.

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Investment in capital assets (e.g. land, buildings, furniture, and equipment), less any related debt used to acquire those assets that is still outstanding is $204.4 million. 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 position of $36.9 million represents resources that are subject to external restrictions on how they may be used. The remaining balance of the unrestricted net position of $33.8 million may be used to meet the District’s ongoing obligations. Changes in Net Position The net position of the District’s governmental activities decreased by 16.6%, or $54.8 million. The total net position of the District was impacted by the following activities:

A prior period adjustment of $73.6 million was required due to the implementation of GASB Statement No. 68, Accounting and Financial Reporting for Pensions, which establishes accounting and financial reporting standards for school districts to report their portion of the unfunded liability or overfunded asset pension of the Teacher Retirement System of Texas pension.

Property Tax Revenue increased $1 million due to increases in the appraised property values. Appraised values for fiscal year 2015 increased by $74.7 million over 2014.

State Aid-Formula Grants increased by $3.2 million. This was due to an increase of $99 in the adjusted allotment per student in the State Foundation Formula.

Charges for Services decreased $1.6 million primarily due to the participation in the Community Eligibility Provision (CEP) program that allowed qualified schools to provide free meals to students.

Operating grants and contributions increased $13.5 million primarily due to an increase in Instructional Materials Allotment of $2.1 million, an increase in the Child Nutrition Program of $4.5 million, an increase in Title I funds of $5 million, a decrease in Title II funds of $3.3 million, an increase of SHARS Medicare cost reimbursement revenue of $2.1 million and the one-time state contribution of $3.8 million for the TRS Non-OASDI fee.

Capital grants and contributions decreased $3.6 million due to the completion of the reconstruction of Logan Elementary School, mostly funded by the Department of Defense.

Instructional expenses increased $2.5 million primarily due to an increase in expenditures for the Power Up Districtwide Initiative of $4.2 million; an increase in textbook purchases of $1.5 million; an increase in instructional supplies of $1.1 million; an increase in the new TRS Non-OASDI contributions of $2.7 million, a decrease in salaries of $3.5 million due to declining student enrollment; and a decrease in the TRS On-Behalf of $1.5 million. There were no contributions made during fiscal year 2015 for Workers Compensation which accounts for a decrease of $1.8 million.

Instructional resources and media resources increased $1.1 million due to additional library reading material purchases.

20

School Leadership increased by approximately $900 thousand due to an increase in TRS Active Care enrollment, new TRS Non-OASDI charge, and an increase in support salaries.

Food services expenditures increased $4.6 million due to the completion of middle and high school cafeteria remodels and the purchase of security cameras and kitchen equipment.

Debt Service expenditures increased by $1.4 million due to the costs for the issuance of Series 2015 and Series 2015A bonds.

Table II El Paso Independent School District

Statement of Activities (in millions of dollars)


Revenues Program Revenues Charges for Services 6.6 8.2 (1.6) (19.5%) Operating Grants and Contributions 148.4 134.9 13.5 10.0% Capital Grants and Contributions 1.8 5.4 (3.6) (66.7%) Sub-Total 156.8 148.5 8.3 5.6% General Revenues Property Taxes 192.2 191.3 0.9 0.5% State Aid-Formula Grants 270.1 266.9 3.2 1.2% Investment Earnings 0.5 0.5 0.0 0.0% Miscellaneous 1.6 1.8 (0.2) (11.1%) Special Item - Loss on Disposal of Asset (0.5) 0.0 (0.5) N/A Sub-Total 463.9 460.5 3.4 0.7%Total Revenues 620.7 609.0 11.7 1.9%

Expenses Instruction and Instructional Related 372.5 369.3 3.2 0.9% Instructional Leadership/School Administration 42.8 42.3 0.5 1.2% Guidance, Social Work, Health, Transportation 46.6 47.0 (0.4) (0.9%) Food Services 34.6 29.9 4.7 15.7% Extracurricular Activities 12.0 11.4 0.6 5.3% General Administration 10.8 10.5 0.3 2.9% Plant Maintenance, Security & Data Processing 60.6 61.7 (1.1) (1.8%) Community Services 1.5 1.4 0.1 7.1% Debt Service 17.7 16.3 1.4 8.6% Capital Outlay 0.5 0.7 (0.2) (28.6%) Other Intergovernmental Charges 2.3 2.4 (0.1) (4.2%)Total Expenses 601.9 592.9 9.0 1.5%Increase in Net Position 18.8 16.1 2.7 16.8%

Beginning Net Position 329.9 317.2 12.7 4.0%Prior Period Adjustment (73.6) (3.4) (70.2) 2064.7%Ending Net Position 275.1 329.9 (54.8) (16.6%)

21

DEBT ADMINISTRATION AND CAPITAL ASSETS Long-Term Debt At year-end, the District had $455.6 million in total long term debt outstanding versus $466.5 million at the end of 2015. The District issued the $78,740,000 Unlimited Tax Refunding Bonds, Series 2015 to refund $84,280,000 of the Series 2007 Bonds. The District also issued $104,555,000 Unlimited Tax Refunding Bonds, Series 2015A to refund $108,375,000 of the Series 2008 Bonds. The two bond refundings resulted in $21.5 million of debt service savings over the next 18 years. The present value savings of both issues was $15.6 million.

The net change of bonded debt was $32.6 million, to bring the year-end balance to $365.8 million. The District also made a $3 million principal payment on the 2004B variable rate bonds. This reduced the outstanding balance on the variable rate bonds to $29.7 million.

In the General Fund, the District used $3,345,957 to pay off the balance of the Loan Star loan. The early payoff resulted in interest savings of $338,472 over the next 6 years. Other long term obligations include accrued sick leave of $11.5 million, capital leases of $3.5 million, and the Qualified School Construction Maintenance Tax Notes (QSCMTN) of $15.3 million. The District has established a Sinking Fund and has entered into a Repurchase Investment Agreement to pay off the QSCMTN at maturity, on February 15, 2025. The sinking fund has a year-end balance of $4.5 million.

The District has aggressively managed its debt by competitive bidding to obtain the best interest rates available and by refinancing existing debt for lower rates when in the best interest of the District. The efficient management of budgets and Fund Balance has provided an adequate cash flow so that at no time has the District been short of cash when needed. No investment has been sold before its scheduled maturity date. More detailed information about the District’s long-term liabilities is presented in Note IV.J through Note IV.Q of the Financial Statements.

Bond Ratings The District’s bonds presently carry an ‘AAA’ rating with both Fitch Ratings and Standard & Poor’s. This long-term rating reflects the guaranty provided by the Texas Permanent School Fund. The underlying rating, reflecting the credit quality before considerations of the guaranty is AA by Fitch and AA- by S&P. Both ratings were affirmed in December 2014, with a stable outlook.

Capital Assets The District has invested $555.3 million, net of depreciation, in a broad range of capital assets including land, buildings and improvements, furniture and equipment and vehicles. This amount represents a net increase (including additions, deductions, and depreciation) of $4.1 million over the past year. Fiscal year 2015 major completed projects include (in millions):

Logan Elementary School Reconstruction $15.1 Hart Elementary School Reconstruction 12.1 Franklin High School Athletic Upgrades 2.2 District-wide Critical Roofing 1.0 Richardson Middle School HVAC Replacement .7 Austin High School Computer labs & Gym upgrades .6 Nixon Elementary School Classroom addition .5 TOTAL MAJOR COMPLETED PROJECTS $32.2

22

Additional detailed information about the District’s capital assets activity is presented in Note IV.G of the Notes to the Financial Statements.

FINANCIAL ANALYSIS OF DISTRICT’S FUNDS

Governmental Funds

The District’s accounting records, for general governmental operations, are maintained on a modified accrual basis as prescribed by the Financial Accountability System Resource Guide, Texas Education Agency, with the revenues being recorded when available and measureable to finance expenditures of the fiscal period. Expenditures are recorded and the fund liabilities are incurred when services or goods are received. The general governmental operations include the following major funds: General Fund and 2008 Capital Projects Fund.

The District has established fund balance categories of nonspendable, restricted, committed, assigned and unassigned. A more detailed explanation about the District’s Fund Balance can be found in Note I.E. 21 and Note IV.X to the financial statements.

The District’s total governmental fund revenues were $620.8 million, compared to $611.2 million in the prior year. Federal Program Revenues increased by $6.3 million. State aid and grants increased by $5.7 million. Local revenues decreased $2.6 million. The Maintenance and Operations tax rate remained at $1.04 (the mandated compressed rate under House Bill 1 of $1.00 plus 4 cents authorized by the Board of Trustees).

The District’s total governmental fund expenditures for fiscal 2015 amounted to $631.2 million compared to $631.5 million in 2014. Instruction, Instructional Resources, and Instructional Staff Development expenses increased by $4.4 million. Transportation increased by $2.2 million, Food Service increased by $7.2 million, and Maintenance decreased approximately $1.3 million. The principal on the debt service cost increased $5.1 million. Facilities, Acquisition and Construction expenses, decreased $13.6 million.

Table III El Paso Independent School District

The District's Capital Assets (in millions of dollars)


Land 53.6 53.6 0.0 0.0% Land Improvements 3.1 2.7 0.4 14.8% Buildings & Improvements 750.2 722.1 28.1 3.9% Furniture, Equipment & Vehicles 77.2 72.1 5.1 7.2% Capital Leases 6.6 7.8 (1.2) (15.4%)Construction/Software in Progress 10.4 26.4 (16.0) (60.6%)

Totals at Historical Cost 901.1 884.7 16.4 1.9%

Total Accumulated Depreciation (345.8) (333.5) (12.3) 3.7%

Net Capital Assets 555.3 551.2 4.1 0.7%

23

The governmental funds reported a combined fund balance of $219.2 million, a decrease of $13.7 million. The net decrease of the combined fund balances was comprised of a fund balance increase in the General Fund of $5.8 million, a decrease of $11.4 million in 2008 Capital Projects Fund, and a decrease in the non-major governmental funds of approximately $8.1 million. The General Fund is the primary operating fund of the District. The General Fund balance increased by $5.8 million during the fiscal year to $107.5 million. Revenues came in at approximately 2% higher than budgeted, primarily due to greater tax collections, higher average daily attendance from originally budgeted, and an increase in SHARS/Medicaid and Impact Aid revenue. A portion of the General Fund balance is Nonspendable and held as inventories. This amount is $1.5 million. Another portion, $3.4 million, is Restricted and therefore, is legally segregated for a specific future use. It is restricted by TEA for use by the High School Allotment, Career and Technology Education, and State Compensatory Education. Another portion of the General Fund balance is classified as Assigned, which indicates tentative plans for financial resource utilization in a future period. The District assigned a total of $8.1 million of fund balance. The General Fund total fund balance of $107.5 million is equivalent to approximately 22.9% of expenditures and 73.4 days of operational expenditures in the unassigned fund balance. The unassigned fund balance of $94.6 million, minimizes the likelihood that the District would be required to enter the short-term debt market to pay for current operating expenditures. The fund balance in the Debt Service Fund is $26.6 million, down from $30.6 at year-end 2014. This decrease is mainly due to less State revenue received due to the decline in the number of students. During fiscal year ending June 30, 2015, the District made a $3 million principal payment on the Series 2004B variable bonds. The Interest and Sinking tax rate for fiscal year 2015 remained at the 2014 level of $0.1950. Proprietary Funds The Proprietary Funds are those funds, which are primarily self-supporting. The District maintains three Proprietary Funds, which are the Internal Service Funds. These funds are the Print Shop, the Workers’ Compensation Fund, and the Health Care Clinic Program Fund. The Print Shop, had an operating loss of $37,102 for the current fiscal year ending 2015. There was also a loss in the prior year, of $161,702. The fund closed the year with a positive total net position balance of $230,026. The District reduced staff in the Print Shop during 2015. The Workers’ Compensation Fund experienced a loss of $3,515,658 for the year ending June 30, 2015. The net position ended at $4,445,502. The large deficit was because the District did not contribute to the fund during the 2014-15 fiscal year. The fund also has $9 million in funds to support the claims liability. The District felt that there were sufficient funds on hand to reduce the net position without adversely effecting future fund operations. The Health Care Clinic Program had a loss of $82,819 for the current fiscal year. During the year, the fund received funding at $8 per participant in the TRS Active Care program. It has an ending net position balance of $380,063.

Fiduciary Funds

Fiduciary Funds (trust and agency funds) are used to account for assets held by a government, in a trustee capacity or as an agent, for individuals, private organizations, other governmental units, and/or other funds. The District accounts for student activity funds that are received and held by a school as agency funds. These funds have no equity and do not include revenues or expenditures of the District. The District accounts for scholarship funds in a trust fund.

24

General Fund - Fund Balances

Days of Operational Expenditures in the Unassigned Fund Balance 2008 2009 2010 2011 2012 2013 2014 2015 40.5 32.2 31.9 64.8 68.1 68.7 40.9 73.4

Percentage of Total Fund Balance to GF Expenditures 2008 2009 2010 2011 2012 2013 2014 2015

14.8% 10.3% 12.4% 21.2% 22.1% 22.4% 21.6% 22.9%

25

General Fund Current Year Budgetary Highlights

Over the course of the year, the District revised its budget several times. Expenditures were increased by $11.4 million. The increase in expenditures was primarily attributed to increases in Function 11 – Instructional in the amount of $3.5 million for the purchase of classroom laptops and student calculators, Function 51 – Facilities, Maintenance and Operations in the amount of $400 thousand for the maintenance of campus buildings and grounds, and Function 81 – Facilities Acquisition and Construction in the amount of $2.5 million of roll-forward funds for ongoing projects and $600 thousand for costs associated with the relocation of a data center. Furthermore, the expenditure budget was increased for purchase orders rolled forward from prior year in the amount of $6.1 million. The roll-forward consisted of High School Allotment funding in the amount of $2.9 million for personnel costs and instructional supplies, $2.3 million from the Food Service Fund for operational and equipment costs, and an aggregate $863 thousand from General Fund for encumbrances from various departments, to include Athletics, Fine Arts, Technology Services, and Instructional Departments. Additionally, the budget was increased under Other Financing Sources classification due to the payoff of the Loan Star loan in the amount of the $3.3 million.

Total actual revenues were 2% greater than budgeted revenues. The final budgeted amount for revenues was $470.6 million, and actual revenues totaled $480.2 million. Actual local revenues exceeded budget by $1.1 million. This was due to tax collections exceeding the budget. The reason for higher tax collections was because the taxable levy billed exceeded the certified levy. State revenue exceeded budget by $4.8 million. This was primarily due to ADA coming in at 397 students above projection. Special Education also had higher student counts than the prior year. The new Food Service Community Eligibility Provision program has increased the number of free and reduced students. This has increased our allotment for State Compensatory Education. Actual federal revenues exceeded budget by $3.7 million. This was due to SHARS/Medicaid and Impact Aid revenue exceeding budget, by $1.7 and $1.5 million.

Actual expenditures were $20 million less than the appropriated budget amounts. These positive variances occurred in several areas: Instruction - $6.3 million, the variance was mainly due to equipment that was not received prior to the fiscal year end; to include technology, athletic, and fine arts equipment. The area of facilities maintenance and operations - $6.4 million was attributed to cost savings mainly due to utility costs savings and an increase in E-rate reimbursements and credits. The facilities acquisition and construction area had unspent construction funds totaling $1.5 million which were rolled forward to next fiscal year to complete various projects. Lastly, guidance, counseling and evaluation services had a remaining budget balance of $1.5 million mainly due to vacant personnel positions. Overall, the District experienced savings due to less expenditures, personnel cost savings due to vacancies across functions, and projections of a higher enrollment number for health insurance due to mandatory provisions. However, two areas reported negative variances – these were the areas of social work services ($64) thousand and student (pupil) transportation ($647) thousand. The variance in the social work services area resulted when the Focus on Children and Families Intervention Specialists were reclassified from an external funding source to better align the funding with the intent of the position role. The budgetary shortfall in student (pupil) transportation occurred due to an error in the system upload of personnel budget.

Staffing is budgeted at one hundred percent of actual salary. Budget amounts for vacant positions are monitored to ensure that only limited revisions are allowed for departments. Schools have a flexible revision policy for non-payroll budgets, but cannot transfer excess salary budgets to be used for non-salary purposes. In most cases, unspent payroll dollars are taken back to the fund balance.

26

ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES

The District’s elected and appointed officials considered many factors when setting the fiscal year 2016 budget and tax rates. Appraised values used for the 2016 budget preparation decreased by $221 million, or 1.41% less than 2015. The change is due to an increase in the homestead exemption from $15 thousand to $25 thousand. The increase in the exemption occurred with the passage of a state constitutional amendment on November 3, 2015. The loss in local revenue will be offset by increased state funding. In addition, the state funding adjusted allotment increased by $110.

On August 22, 2015, the District held a successful Tax Ratification Election which resulted in a 3 cent increase to the M&O rate. The additional 3 cents will increase the 2016 state funding by $13.8 million. The District’s 2015-16 tax rates are $1.07 for Maintenance and Operations and $.1650 for Interest and Sinking. The District’s 2016 refined average daily attendance was budgeted at 55,204 students. This is a decrease of 984 from the final 2014-15 ADA of 56,188. The District’s Board of Trustees adopted a balanced budget for fiscal year 2015-16. Both revenues and expenditures were budgeted at $490.9 million. CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the District’s finances, and to show the District’s accountability for the funding it receives. The administration believes that the El Paso Independent School District has sound financial practices. The District has financial challenges ahead such as, completing bond construction on time and within budget, increasing salaries to a competitive level, while increasing the Unassigned Fund Balance. The District is moving in the right direction both financially and educationally.

Many thanks are owed to teachers, campus administrators, support staff, the District’s elected and appointed officials, volunteers, and central office administrators, whose purpose is to direct the resources of the District to educate our children. In many cases, these individuals have been asked to make sacrifices to assist the District in achieving its current financial position.

If you have questions about this report or need additional financial information, please contact Maria D. Pineda, Executive Director, Financial Services at (915) 230-2145, or Art Martin, Interim Chief Financial Officer, Business Services at (915) 230-2801, or by mail at El Paso Independent School District, 6531 Boeing Drive, El Paso, Texas, 79925. The El Paso Independent School District does not discriminate in its educational programs or employment practices on the basis of race, color, creed, age, gender, religion, national origin, marital status, ancestry, citizenship, military status, mental or physical disability, gender stereotyping and perceived gender, or on any other basis prohibited by law. Inquiries concerning the application of Titles VI, VII, IX, and Section 504 may be referred to the District compliance officer, Patricia Cortez, at 230‐2033; Section 504 inquiries regarding students may be referred to Verna Ball at 230‐2829. El Distrito Escolar Independiente de El Paso no discrimina en los programas de educación o en prácticas de empleo usando el criterio de raza, color, credo, edad, genero, religión, origen nacional, estado civil, ascendencia, ciudadanía, estado militar, discapacidad física o mental, estereotipo genero o generoidad percibida, u otra práctica prohibida por la ley. Preguntas acerca de la aplicación del título VI, VII o IX, y la Sección 504 pueden ser referidas al oficial del distrito, Patricia Cortez al 230‐2033; preguntas sobre 504 tocante a estudiantes pueden ser referidas a Verna Ball al 230‐2829.

BASIC FINANCIAL STATEMENTS

27


28

EXHIBIT A-1EL PASO INDEPENDENT SCHOOL DISTRICT

STATEMENT OF NET POSITIONJUNE 30, 2015

Control

Data

Codes

Governmental

Activities

Primary Government

ASSETS185,515,496 Cash and Cash Equivalents $1110

4,939,734 Current Investments1120

13,861,785 Property Taxes Receivable (Delinquent)1220

(7,162,000)Allowance for Uncollectible Taxes1230

112,839,279 Due from Other Governments1240

111,135 Accrued Interest1250

433,913 Other Receivables, net1290

1,476,908 Inventories1300

235,780 Prepayments1410

Capital Assets:

56,192,124 Land and Land Improvements, Net1510

464,756,159 Buildings, Net1520

20,367,626 Furniture and Equipment, Net1530

3,628,431 Leased Property Under Capital Leases, Net1550

10,379,369 Construction and Software in Progress1580

60,228 Restricted Assets1800

15,362,594 Long Term Investments1990

Total Assets1000 882,998,561

DEFERRED OUTFLOWS OF RESOURCES20,801,124 Deferred Charge for Refunding1701

14,440,449 Deferred Outflow Related to TRS1705

Total Deferred Outflows of Resources1700 35,241,573

LIABILITIES3,133,657 Accounts Payable2110

5,759,905 Interest Payable2140

6,433,486 Payroll Deductions & Withholdings2150

52,742,305 Accrued Wages Payable2160

12,737 Due to Other Governments2180

17,347,073 Accrued Expenses2200

18,291,720 Unearned Revenue2300

Noncurrent Liabilities

23,524,796 Due Within One Year2501

432,063,846 Due in More Than One Year2502

64,148,427 Net Pension Liability (District's Share)2540

Total Liabilities2000 623,457,952

DEFERRED INFLOWS OF RESOURCES19,623,194 Deferred Inflow Related to TRS2605

Total Deferred Inflows of Resources2600 19,623,194

NET POSITION204,394,860 Net Investment in Capital Assets3200

7,107,674 Restricted for Federal and State Programs3820

21,778,229 Restricted for Debt Service3850

8,086,401 Restricted for Other Purposes3890

33,791,824 Unrestricted3900

Total Net Position3000 275,158,988 $

29The notes to the financial statements are an integral part of this statement.

EL PASO INDEPENDENT SCHOOL DISTRICTSTATEMENT OF ACTIVITIES


Control

Data

CodesExpenses Services

Charges for

Contributions

Grants and

Operating

Program Revenues

1 43

Primary Government:

GOVERNMENTAL ACTIVITIES:838,748 342,470,623 72,091,638 Instruction $ $ $11

- 11,273,339 1,364,036 Instructional Resources and Media Services12

89,726 18,654,734 8,135,200 Curriculum and Staff Development13

22,432 4,396,206 1,768,061 Instructional Leadership21

33,647 38,471,312 3,466,019 School Leadership23

56,079 22,380,233 6,936,538 Guidance, Counseling and Evaluation Services31

- 4,182,973 786,727 Social Work Services32

- 7,076,101 10,610,739 Health Services33

149,746 13,086,695 1,114,614 Student (Pupil) Transportation34

3,437,243 34,571,954 28,791,696 Food Services35

1,374,738 11,989,018 466,691 Extracurricular Activities36

549,572 10,801,379 1,579,958 General Administration41

91,498 49,610,698 3,489,067 Facilities Maintenance and Operations51

- 5,720,221 440,656 Security and Monitoring Services52

- 5,250,456 213,968 Data Processing Services53

- 1,462,588 1,360,662 Community Services61

- 15,832,910 5,791,913 Debt Service - Interest on Long Term Debt72

- 1,872,908 - Debt Service - Bond Issuance Cost and Fees73

- 462,639 3,230 Capital Outlay81

- 2,348,227 - Other Intergovernmental Charges99

[TP] TOTAL PRIMARY GOVERNMENT: 601,915,214 6,643,429 148,411,413 $ $ $

DataControlCodes

General Revenues:Taxes:

Property Taxes, Levied for General PurposesMT

Property Taxes, Levied for Debt ServiceDT

State Aid - Formula GrantsSF

Investment EarningsIE

Miscellaneous Local and Intermediate RevenueMI

Special Item - Loss on Disposal of AssetsS2

Total General Revenues and Special ItemsTR

Net Position - Beginning

Change in Net Position

Net Position - Ending

Prior Period Adjustment Required by GASB 68

CN

NB

PA

NE

30

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

EXHIBIT B-1

Net (Expense) Revenue and

Activities

Governmental

Contributions

Grants and

Capital

5

Primary Government

6

Changes in Net Position

(269,540,237)$ - $

(9,909,303) - (10,429,808) -

(2,605,713) - (34,971,646) - (15,387,616) - (3,396,246) - 3,534,638 -

(11,822,335) - (2,343,015) -

(10,147,589) -

(8,671,849) - (46,030,133) - (5,279,565) - (5,036,488) -

(101,926) - (10,040,997) - (1,872,908) - 1,353,619 1,813,028

(2,348,227) -

(445,047,344)1,813,028 $

161,542,945 30,733,241

270,032,641 462,759

1,581,098 (476,580)

463,876,104

18,828,760

329,942,806

275,158,988 $

(73,612,578)

31


32

GOVERNMENTAL FUND FINANCIAL STATEMENTS

33

EXHIBIT C-1EL PASO INDEPENDENT SCHOOL DISTRICT

BALANCE SHEET

GOVERNMENTAL FUNDS

JUNE 30, 2015

Control

Data

Codes

General

Fund Projects

Capital

2008

Funds

Other

Funds

Governmental

Total

ASSETS65,140,042 81,073,136 27,043,285 173,256,463 Cash and Cash Equivalents $ $ $ $1110

- 4,939,734 - 4,939,734 Investments - Current1120

- 11,828,367 2,033,418 13,861,785 Property Taxes - Delinquent1220

- (6,110,000) (1,052,000) (7,162,000)Allowance for Uncollectible Taxes (Credit)1230

- 91,293,342 21,545,937 112,839,279 Receivables from Other Governments1240

16,081 21,136 72,347 109,564 Accrued Interest1250

2,552,947 13,139,438 11,970,479 27,662,864 Due from Other Funds1260

- 396,876 37,037 433,913 Other Receivables1290

- 1,475,114 1,794 1,476,908 Inventories1300

- - 60,228 60,228 Restricted Assets1800

6,847,016 - 6,109,030 12,956,046 Long Term Investments1900

Total Assets1000 198,057,143 74,556,086 67,821,555 340,434,784 $ $ $ $

LIABILITIES - 2,653,447 287,919 2,941,366 Accounts Payable $ $ $ $2110

- 6,433,486 - 6,433,486 Payroll Deductions and Withholdings Payable2150

- 44,622,166 8,118,694 52,740,860 Accrued Wages Payable2160

- 14,691,253 12,492,282 27,183,535 Due to Other Funds2170

- 754 11,983 12,737 Due to Other Governments2180

1,337,110 1,803,255 5,198,307 8,338,672 Accrued Expenditures2200

- 15,764,360 2,527,360 18,291,720 Unearned Revenues2300

Total Liabilities2000 85,968,721 1,337,110 28,636,545 115,942,376

DEFERRED INFLOWS OF RESOURCES - 4,551,692 763,476 5,315,168 Unavailable Revenue - Property Taxes2601

Total Deferred Inflows of Resources2600 4,551,692 - 763,476 5,315,168

FUND BALANCESNonspendable Fund Balance:

- 1,475,114 - 1,475,114 Inventories3410

Restricted Fund Balance:

- - 7,107,674 7,107,674 Federal or State Funds Grant Restriction3450

73,218,976 - - 73,218,976 Capital Acquisition and Contractual Obligation3470

- - 26,644,278 26,644,278 Retirement of Long-Term Debt3480

- 3,416,819 4,669,582 8,086,401 Other Restricted Fund Balance3490

Assigned Fund Balance: - 1,981,987 - 1,981,987 Construction3550

- 6,097,930 - 6,097,930 Other Assigned Fund Balance3590

- 94,564,880 - 94,564,880 Unassigned Fund Balance3600

Total Fund Balances3000 107,536,730 73,218,976 38,421,534 219,177,240

Total Liabilities, Deferred Inflows & Fund Balances4000 198,057,143 74,556,086 67,821,555 340,434,784 $ $ $ $

34



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

JUNE 30, 2015

219,177,240 $Total Fund Balances - Governmental Funds

5,055,591 1 The District uses internal service funds to charge the costs of certain activities, such as self-insurance and printing, to appropriate functions in other funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net position. The net effect of this consolidation is to increase net position.

81,827,874 2 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 $884,695,345 and the accumulated depreciation was ($333,476,000). In addition, long-term liabilities, including bonds payable, are not due and payable in the current period, and, therefore are not reported as liabilities in the funds. The net effect of including the beginning balances for capital assets (net of depreciation) and long-term debt in the governmental activities is to increase net position.

48,581,618 3 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 2015 capital outlays and debt principal payments is to increase net position.

(69,331,172)4 Included in the items related to debt is the recognition of the District's proportionate share of the net pension liability required by GASB 68 in the amount of $64,148,427, a Deferred Resource Inflow related to TRS in the amount of $19,623,194 and a Deferred Resource Outflow related to TRS in the amount of $14,440,449. This amounted to a decrease in Net Position in the amount of $69,331,172.

(18,419,368)5 The 2015 depreciation expense increases accumulated depreciation. The net effect of the current year's depreciation is to decrease net position.

8,267,205 6 Various other reclassifications and eliminations are necessary to convert from the modified accrual basis of accounting to accrual basis of accounting. These include recognizing unavailable revenue from property taxes as revenue, reclassifying the proceeds of bond sales as an increase in bonds payable, and recognizing the liabilities associated with maturing long-term debt and interest. The net effect of these reclassifications and recognitions is to increase net position.

275,158,988 $19 Net Position of Governmental Activities

35



STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE

GOVERNMENTAL FUNDS


Control

Data

Codes

General

Fund Projects

Capital

2008

Funds

Other

Funds

Governmental

Total

REVENUES:133,151 167,039,171 35,060,206 202,232,528 Total Local and Intermediate Sources $ $ $ $5700

- 296,684,012 12,750,700 309,434,712 State Program Revenues5800 - 16,472,761 92,620,269 109,093,030 Federal Program Revenues5900

Total Revenues5020 480,195,944 133,151 140,431,175 620,760,270

EXPENDITURES:Current:

- 282,592,973 47,674,216 330,267,189 Instruction0011 - 9,991,184 848,861 10,840,045 Instructional Resources and Media Services0012 - 10,716,866 7,742,853 18,459,719 Curriculum and Instructional Staff Development0013 - 2,691,994 1,638,533 4,330,527 Instructional Leadership0021 - 35,886,086 902,060 36,788,146 School Leadership0023 - 15,795,544 6,311,113 22,106,657 Guidance, Counseling and Evaluation Services0031 - 3,467,017 647,143 4,114,160 Social Work Services0032 - 6,297,203 478,293 6,775,496 Health Services0033 - 16,026,451 387,798 16,414,249 Student (Pupil) Transportation0034 - - 37,267,243 37,267,243 Food Services0035 - 11,661,237 - 11,661,237 Extracurricular Activities0036 - 9,872,121 - 9,872,121 General Administration0041

505,420 46,641,001 1,623,902 48,770,323 Facilit ies Maintenance and Operations0051 - 5,506,309 102,063 5,608,372 Security and Monitoring Services0052

783,734 5,418,684 - 6,202,418 Data Processing Services0053 - 125,833 1,355,565 1,481,398 Community Services0061

Debt Service: - 2,399,992 23,220,000 25,619,992 Principal on Long Term Debt0071 - 446,759 15,456,349 15,903,108 Interest on Long Term Debt0072 - 661 1,872,247 1,872,908 Bond Issuance Cost and Fees0073

Capital Outlay:10,250,912 2,445,580 1,813,028 14,509,520 Facilit ies Acquisition and Construction0081

Intergovernmental: - 2,348,227 - 2,348,227 Other Intergovernmental Charges0099

Total Expenditures6030 470,331,722 11,540,066 149,341,267 631,213,055

1100 Excess (Deficiency) of Revenues Over (Under)

Expenditures9,864,222 (11,406,915) (8,910,092) (10,452,785)

OTHER FINANCING SOURCES (USES): - - 183,295,000 183,295,000 Capital Related Debt Issued (Regular Bonds)7911 - - 684,059 684,059 Transfers In7915 - - 33,808,270 33,808,270 Premium or Discount on Issuance of Bonds7916 - (684,059) - (684,059)Transfers Out (Use)8911 - (3,345,957) (217,043,789) (220,389,746)Other (Uses)8949

Total Other Financing Sources (Uses) 7080 (4,030,016) - 743,540 (3,286,476)

1200 Net Change in Fund Balances 5,834,206 (11,406,915) (8,166,552) (13,739,261)

0100 Fund Balance - July 1 (Beginning) 101,702,524 84,625,891 46,588,086 232,916,501

3000 Fund Balance - June 30 (Ending) $ 107,536,730 $ 73,218,976 $ 38,421,534 $ 219,177,240

36The notes to the financial statements are an integral part of this statement.


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


(13,739,261)$Total Net Change in Fund Balances - Governmental Funds

(3,635,579)The District uses internal service funds to charge the costs of certain activities, such as self-insurance and printing, to appropriate functions in other funds. The net loss of internal service funds are reported with governmental activities. The net effect of this consolidation is to decrease net position.

48,581,618 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 2015 capital outlays and debt principal payments is to increase net position.

(18,419,368)Depreciation is not recognized as an expense in governmental funds since it does not require the use of current financial resources. The net effect of the current year's depreciation is to decrease net position.

1,759,944 Various other reclassifications and eliminations are necessary to convert from the modified accrual basis of accounting to accrual basis of accounting. These include recognizing unavailable revenue from property taxes as revenue, adjusting current year revenue to show the revenue earned from the current year's tax levy, reclassifying the proceeds of bond sales, and recognizing the liabilities associated with maturing long-term debt and interest. The net effect of these reclassifications and recognitions is to increasenet position.

4,281,406 The implementation of GASB 68 required that certain expenditures be de-expended and recorded as deferred resource outflows. The contributions made after the measurement date of 8/31/2014 caused the change in the ending net position to increase in the amount of $9,278,654. Contributions made before the measurement date but during the 2015 FY were also de-expended and recorded as a reduction in the net pension liability for the District. This also caused an increase in the change in net position in the amount of $932,140. The District recorded its proportionate share of the pension expense during the measurement period as part of the net pension liability. The amounts expensed for FY 2015 were $9,964,913 for pension expense columns 6 - 12 from TRS data and the amounts de-expended for the net deferred resource inflow recognized by TRS in the measurement period were $4,035,525. This caused a net decrease in the change in net position of $5,929,388. The impact of all of these is to increase the change in net positionby $4,281,406.

18,828,760 $ Change in Net Position of Governmental Activities

37



38

PROPRIETARY FUND FINANCIAL STATEMENTS

39

EXHIBIT D-1EL PASO INDEPENDENT SCHOOL DISTRICT

STATEMENT OF NET POSITIONPROPRIETARY FUNDS

JUNE 30, 2015

Total

Internal

Service Funds

Governmental

Activities -

ASSETSCurrent Assets:

12,259,033 Cash and Cash Equivalents $

1,571 Accrued Interest

167,827 Due from Other Funds

12,428,431 Total Current Assets

Noncurrent Assets:Capital Assets:

368,294 Furniture and Equipment

(298,389)Depreciation on Furniture and Equipment

2,406,548 Long Term Investments

2,476,453 Total Noncurrent Assets

Total Assets 14,904,884

LIABILITIES

Current Liabilities:

192,291 Accounts Payable

1,445 Accrued Wages Payable647,156 Due to Other Funds

9,008,401 Accrued Expenses

Total Liabilities 9,849,293

NET POSITION

69,905 Net Investment in Capital Assets

4,985,686 Unrestricted Net Position

Total Net Position 5,055,591 $

40



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

PROPRIETARY FUNDS


Total

Internal

Service Funds

Governmental

Activities -

OPERATING REVENUES:

1,456,643 Local and Intermediate Sources $

Total Operating Revenues 1,456,643

OPERATING EXPENSES:

3,893,056 Payroll Costs

994,233 Professional and Contracted Services

136,052 Supplies and Materials

59,133 Other Operating Costs

22,563 Depreciation Expense

Total Operating Expenses 5,105,037

Operating Income (Loss) (3,648,394)

NONOPERATING REVENUES (EXPENSES):

12,815 Earnings from Temporary Deposits & Investments

Total Nonoperating Revenues (Expenses) 12,815


Total Net Position - July 1 (Beginning)

Total Net Position - June 30 (Ending)

(3,635,579)

8,691,170

$ 5,055,591

41



STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED JUNE 30, 2015PROPRIETARY FUNDS

Total

Internal

Service Funds

Governmental

Activities -

Cash Flows from Operating Activities:

25,294 Cash Received from User Charges $

1,575,960 Cash Received from Assessments - Other Funds(1,086,798)Cash Payments to Employees for Services(2,211,850)Cash Payments for Insurance Claims

(938,377)Cash Payments for Suppliers(59,133)Cash Payments for Other Operating Expenses

(2,694,904)Net Cash Used for OperatingActivities

Cash Flows from Investing Activities:

(12,036,518)Purchase of Investment Securities12,522,917 Proceeds from Sale & Maturities of Securities

21,786 Interest and Dividends on Investments

508,185 Net Cash Provided by InvestingActivities

Net Decrease in Cash and Cash Equivalents (2,186,719)

Cash and Cash Equivalents at Beginning of Year 14,445,752

Cash and Cash Equivalents at End of Year 12,259,033 $

Operating Income (Loss):$

Reconciliation of Operating Income (Loss) to Net Cash

Used for Operating Activities:(3,648,394)

to Net Cash Used for Operating Activities:Adjustments to Reconcile Operating Income

22,563 Depreciation

Assets and Liabilities:Effect of Increases and Decreases in Current

161,999 Decrease (increase) in Due from Other Funds127,107 Increase (decrease) in Accounts Payable

(195)Increase (decrease) in Accrued Wages Payable1,854 Increase (decrease) in Accrued Expenses

640,162 Increase (decrease) in Due to Other FundsNet Cash Used for OperatingActivities (2,694,904)$

42


FIDUCIARY FUND FINANCIAL STATEMENTS

43

EXHIBIT E-1EL PASO INDEPENDENT SCHOOL DISTRICTSTATEMENT OF FIDUCIARY NET POSITION

FIDUCIARY FUNDSJUNE 30, 2015

Private

Purpose

Trust Fund Fund

Agency

ASSETS

2,295,929 - Cash and Cash Equivalents $ $

- 190,364 Restricted Assets

Total Assets 190,364 2,295,929 $

LIABILITIES

2,295,929 - Due to Student Groups $

Total Liabilities - 2,295,929 $

NET POSITION

190,364 Restricted for Scholarships

Total Net Position 190,364 $

44


EXHIBIT E-2EL PASO INDEPENDENT SCHOOL DISTRICT

STATEMENT OF CHANGES IN FIDUCIARY FUND NET POSITIONFIDUCIARY FUNDS


Private

Purpose

Trust Fund

ADDITIONS:

1,259 Local and Intermediate Sources $

Total Additions 1,259

DEDUCTIONS:

8,303 Other Operating Costs

Total Deductions 8,303



Total Net Position - June 30 (Ending)

(7,044)

197,408

$ 190,364

45



NOTES TO THE FINANCIAL STATEMENTS

JUNE 30, 2015

I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

El Paso Independent School District (the "District") is a public educational agency operating under theapplicable laws and regulations of the State of Texas. It is governed by a seven-member Board ofTrustees (the "Board") elected by registered voters of the District. The District prepares its basicfinancial statements in conformity with generally accepted accounting principles promulgated by theGovernmental Accounting Standards Board (GASB), and it complies with the requirements of theappropriate version of Texas Education Agency’s Financial Accountability System Resource Guide(the "Resource Guide") and the requirements of contracts and grants of agencies from which it receivesfunds.

A. Reporting Entity

The Board of Trustees (the “Board”) is elected by the public. It has the authority to make decisions,appoint administrators and managers, and significantly influence operations. It also has the primaryaccountability for fiscal matters. The District is not included in any other governmental “reportingentity” as defined by the Governmental Accounting Standards Board (GASB).

The decisions to include or exclude a potential component unit in the reporting entity were made byapplying standards contained in GAAP. The primary standard for including or excluding a potentialcomponent unit is whether it is financially dependent on the reporting entity. The fiscal dependencycriterion also requires that a financial benefit or burden relationship be present in order for a potentialcomponent unit to be included in the financial reporting entity. Other manifestations of the ability toexercise oversight responsibility include, but certainly are not limited to, the selection of the governingauthority, the designation of management, the ability to materially influence operations andaccountability for fiscal matters. The second standard used to evaluate potential component units is thescope of public services. Application of this standard entails considering whether the activity benefitsthe District, or whether the activity is conducted within the geographic boundaries of the District andis generally available to its citizens. The third standard involved in evaluating whether potentialcomponent units are included or excluded from the reporting entity is the existence of special financingrelationships, regardless of whether the District is able to exercise oversight responsibilities. There areno component units included within the reporting entity.

B. Government-Wide and Fund Financial Statements

The Statement of Net Position and the Statement of Activities are government-wide financialstatements. They report information on all of the District’s nonfiduciary activities with most of theinterfund activities removed. Governmental activities include programs supported primarily by taxes,state foundation funds, grants and other intergovernmental revenues.

(Continued)

46



JUNE 30, 2015

I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

In addition to assets, the statement of net position reports a separate section for deferred outflows ofresources. This separate financial statement category represents a consumption of net position thatapplies to a future period(s) and so will not be recognized as an outflow of resources(expense/expenditure) until that time. For pensions, this outflow results from pension plan contributionsmade after the measurement date of the net pension liability and the results of differences betweenexpected and actual actuarial experiences. The deferred outflows of resources related to pensionsresulting from District contributions subsequent to the measurement date will be recognized as areduction of the net pension liability in the next fiscal year. The other pension related deferred outflowswill be amortized over a systematic and rational method over a closed period.

In addition to liabilities, the statement of net positions reports a separate section for deferred inflowsof resources. This separate financial statement category represents an acquisition of net position thatapplies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until thattime. For pensions, these deferred inflows result primarily from differences between projected andactual earnings on pension plan investments. These amounts will be amortized over a systematic andrational method over a closed period.

The fiduciary net position of the Teacher Retirement System of Texas (TRS) has been determined usingthe flow of economic resources measurement focus and full accrual basis of accounting. This includesfor purposes of measuring the net pension liability, deferred outflows of resources and deferred inflowsof resources related to pensions, pension expense, and information about assets, liabilities and additionsto/deductions from TRS’s fiduciary net position. The Plan’s fiduciary net position has been determinedon the same basis as that used by the Plan. Benefit payments (including refunds of employeecontributions) are recognized when due and payable in accordance with the benefit terms. Investmentsare reported at fair value.

The Statement of Activities demonstrates how other people or entities that participate in programs theDistrict operates have shared in the payment of the direct costs. The “charges for services” columnincludes payments made by parties that purchase, use, or directly benefit from goods or servicesprovided by a given function of the District. Examples include tuition paid by students not residing inthe District, school lunch charges, athletic and extracurricular/cocurricular activities, etc. The “grantsand contributions” columns include amounts paid by organizations outside the District to help meet theoperational or capital requirements of a given function. Examples include grants under the Elementaryand Secondary Education Act. If a revenue is not a program revenue, it is a general revenue used tosupport all of the District’s functions. Taxes are always general revenues.

(Continued)

47



JUNE 30, 2015


Interfund activities between governmental funds and between governmental and proprietary fundsappear as a due to or due from on the Governmental Fund Balance Sheet and Proprietary FundStatement of Net Position and as other financing sources and uses on the Governmental Fund Statementof Revenues, Expenditures and Changes in Fund Balance and on the Proprietary Fund Statement ofRevenues, Expenses and Changes in Fund Net Position. All interfund transactions betweengovernmental funds and between governmental and internal service funds are eliminated on thegovernment-wide statements. Interfund activities between governmental funds and fiduciary fundsremain as a due to or due from on the government-wide Statement of Net Position.

The fund financial statements report on the financial condition and results of operations for three fundcategories - governmental, proprietary, and fiduciary. Since the resources in the fiduciary funds cannotbe used for District operations, they are not included in the government-wide statements. The Districtconsiders some governmental funds major and reports their financial condition and results of operationsin a separate column.

Proprietary funds distinguish operating revenues and expenses from non-operating items. Operatingrevenues result from providing goods and services in connection with a proprietary fund’s principalongoing operations; they usually come from exchange or exchange-like transactions. All otherrevenues are nonoperating. Operating expenses can be tied specifically to the production of goods andservices, 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 theaccrual 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, regardlessof the timing of the related cash flows. Property taxes are recognized as revenues in the year for whichthey are levied. Grants and similar items are recognized as revenue as soon as all eligibilityrequirements imposed by the provider have been met.

Governmental fund financial statements use the current financial resources measurement focus and themodified accrual basis of accounting. With this measurement focus, current assets, deferred outflowsof resources, current liabilities, deferred inflows of resources, and fund balances are included on thebalance sheet. Operating statements of these funds present net increases and decreases in current assets(i.e., revenues and other financing sources and expenditures and other financing uses).

The modified accrual basis of accounting recognizes revenues in the accounting period in which theybecome both measurable and available, and it recognizes expenditures in the accounting period inwhich 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 absencesand claims and judgments are recognized when the obligations are expected to be liquidated withexpendable available financial resources. The District considers all revenues, other than property taxrevenues, available if they are collectible within one year after year end.

(Continued)

48



JUNE 30, 2015


Revenues from local sources consist primarily of property taxes. Property tax revenues and revenuesreceived from the State are recognized under the “susceptible -to- accrual” concept, that is, when theyare both measurable and available. The District considers them “available” if they will be collectedwithin 60 days of the end of the fiscal year. Miscellaneous revenues are recorded as revenue whenreceived in cash because they are generally not measurable until actually received. Investment earningsare recorded as earned, since they are both measurable and available.

Unavailable revenue from property taxes arises only under the modified accrual basis of accounting. The governmental funds report this unavailable revenue as a deferred inflow of resources and recognize revenue in the period that the amounts become available.

Grant funds are considered to be earned to the extent of expenditures made under the provisions of thegrant. Accordingly, when such funds are received, they are recorded as unearned revenues until relatedand authorized expenditures have been made. If balances have not been expended by the end of theproject 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 resourcesmeasurement focus and utilize the accrual basis of accounting. This basis of accounting recognizesrevenues in the accounting period in which they are earned and become measurable and expenses inthe accounting period in which they are incurred and become measurable. With this measurementfocus, all assets and deferred outflows of resources, and all liabilities and deferred inflows of resources,associated with the operation of these funds are included on the fund Statement of Net Position. Thefund equity is segregated into net investment in capital assets, restricted, and unrestricted.

D. Fund Accounting

The District reports the following major governmental funds:

1. The General Fund - The general fund is the District’s primary operating fund. It accounts forall financial resources except those required to be accounted for in another fund.

2. 2008 Capital Projects Fund - This fund accounts for the construction activity related to the 2008bonds to construct, renovate, acquire and equip school buildings in the District.

(Continued)

49



JUNE 30, 2015


Additionally, the District reports the following fund types:

Governmental Funds:

1. Special Revenue Funds - The District accounts for resources restricted to, or committed for,specific purposes by the Board or a grantor in a special revenue fund. Most Federal and somestate financial assistance are accounted for in a Special Revenue Fund, and sometimes unusedbalances must be returned to the grantor at the close of specified project periods. The FoodService Fund is the only required deferred fund. For all other funds in this fund type, projectaccounting is employed to maintain fiscal integrity for the various sources of funds. TheDistrict’s Food Service Fund is considered a special revenue fund since it meets the followingcriteria:

C User fees are charged to supplement the National School Lunch Program (NSLP),C The General Fund may subsidize the Food Service Program for expenditures in excess of

NSLP, andC Food Service fund balances are used exclusively for child nutrition program purposes.

2. Debt Service Funds -

Debt Service Fund (Main) - This fund accounts for resources accumulated and paymentsmade for principal and interest on long-term general obligation debt of governmental funds.

QSC-MTN Sinking - The District accounts for resources accumulated to pay for principaland interest on the Qualified School Construction Maintenance Tax Notes in this fund.

3. Capital Projects Funds - The proceeds from long-term debt financing and revenues andexpenditures related to authorized construction, renovation, and other capital asset acquisitionsare accounted for in a capital projects fund.

4. Permanent Funds - The District has no permanent funds.

(Continued)

50



JUNE 30, 2015


Proprietary Funds:

5. Enterprise Funds - The District has no enterprise funds.

6. Internal Service Funds - These funds are used to account for goods or services provided by onedepartment to other departments of the District on a cost reimbursement basis. The revenues andexpenses related to services provided to departments within the District are accounted for in aninternal service fund.

The District’s Internal Service Funds are as follows:

Print Shop - This fund accounts for transactions related to print shop services provided to otherdepartments of the District.

Workers’ Compensation Fund - This fund accounts for all financial activity associated with theDistrict’s self-insured workers’ compensation plan.

Health Care Clinic Program - This fund accounts for all financial activity associated with theDistrict contribution and payments to an outside vendor for employee Health Clinics. Servicesare available to all full-time and part-time employees. Eligible dependents must be covered underthe TRS-AC Health Plan to obtain services.

Fiduciary Funds:

7. Private Purpose Trust Funds - The District accounts for donations for which the donor hasstipulated that both the principal and the income may be used for purposes that benefit partiesoutside the District. The District has a private purpose trust fund to account for scholarships.

8. Pension (and Other Employee Benefit) Trust Funds - The District has no pension (and otheremployee benefit) trust funds.

9. Investment Trust Funds - The District has no investment trust funds.

10. Agency Funds - The District accounts for resources held for others in a custodial capacity inagency funds. The District’s Agency fund is used to account for activities of student groups.

E. Other Accounting Policies

1. For purposes of the statement of cash flows for proprietary funds, the District considers highlyliquid investments to be cash equivalents if they have a maturity of three months or less whenpurchased.

(Continued)

51



JUNE 30, 2015


2. All investments with an original maturity greater than one year from date of purchase are statedat fair value based on quoted market prices as of year end. Investments with an original maturityof less than one year are reported at amortized cost. If applicable, premiums and discounts oninvestments are amortized or accreted using the straight-line method, which approximates theinterest method, over the terms of the related securities.

3. The funds of the District must be deposited and invested under the terms of a contract, contentsof which are set out in the Depository Contract Law. The depository bank places approvedpledged securities for safekeeping and trust with the District’s agent bank in an amount sufficientto protect District funds on a day-to-day basis during the period of the contract. The pledge ofapproved securities is waived only to the extent of the depository bank’s dollar amount of FederalDeposit Insurance Corporation (“FDIC”) insurance.

4. The Public Funds Investment Act (Government Code Chapter 2256) contains specificprovisions in the areas of investment practices, management reports and establishment ofappropriate policies. Among other things, it requires the District to adopt, implement, andpublicize an investment policy. That policy must address the following areas: (1) safety ofprincipal and liquidity, (2) portfolio diversification, (3) allowable investments, (4) acceptable risklevels, (5) expected rates of return, (6) maximum allowable stated maturity of portfolioinvestments, (7) maximum average dollar-weighted maturity allowed based on the stated maturitydate for the portfolio, (8) investment staff quality and capabilities, (9) and bid solicitationpreferences 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 deposit, (3) certain municipal securities, (4)money market savings accounts, (5) repurchase agreements, (6) bankers’ acceptances, (7) mutualfunds, (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 relatedto investment practices as provided by the Act. Management asserts that the District is insubstantial compliance with the requirements of the Act and with local policies.

5. Additional policies and contractual provisions governing deposits and investments for the Districtare specified below:

Credit Risk:

Deposits - Credit risk is not applicable to deposits.

Temporary Investments (Cash Equivalents) - To limit the risk that an issuer or other counterpartyto an investment will not fulfill its obligations, the District limits investments in public fundsinvestment pools to the top ratings issued by nationally recognized statistical rating organizations(NRSROs). As of June 30, 2015, the District’s investments in TexStar and Tex Pool investmentpools were rated AAAm by Standard & Poor’s. The LoneStar Investment Pool was rated AAAby Standard & Poors. Credit Risk is not applicable to the collateralized BBVA Public FundsMoney Market Account.

(Continued)

52



JUNE 30, 2015


Short-term and Long-term Investments - To limit the risk that an issuer or other counterparty toan investment will not fulfill its obligations, the District limits investments in U.S. Agencies tothe top ratings issued by nationally recognized statistical rating organizations (NRSROs). All ofthe Municipal Bonds have a rating of A or better as required by policy. The Federal AgencySecurities and the Collateralized Mortgage Obligations (CMOs) held by the District as of June30, 2015 do not require disclosure of credit quality ratings since they are guaranteed or securedby the Federal Government.

Custodial Credit Risk:

Deposits - State law requires governmental entities to contract with financial institutions in whichfunds will be deposited to secure those deposits with insurance or pledged securities with a fairvalue equaling or exceeding the amount on deposit at the end of each business day. The pledgedsecurities must be in the name of the governmental entity and held by the entity or its agent. Since the District has a contract that complies with this law, it has minimal custodial credit riskfor deposits.

Temporary Investments (Cash Equivalents) - To limit the risk that, in the event of the failure ofthe counterparty to a transaction, the District will not be able to recover the value of investmentor collateral securities that are in possession of an outside party, the District requirescounterparties to register the securities in the name of the District and hand them over to theDistrict or its designated agent. This includes securities in securities lending transactions.Investment pools are not categorized or exposed to custodial risk because they are not evidencedby securities that exist in physical or book-entry form. The BBVA Public Funds Money MarketAccount is covered in part by FDIC, and the remaining amount is secured by a letter of credit inthe amount of $22,000,000.

Short-term and Long-term Investments - To limit the risk that, in the event of the failure of thecounterparty to a transaction, the District will not be able to recover the value of investment orcollateral securities that are in possession of an outside party, the District requires counterpartiesto register the securities in the name of the District and hand them over to the District or itsdesignated agent. This includes securities in securities lending transactions. All of the securitiesare in the District’s name and held by the District or its agent.

Concentration of Credit Risk:

Deposits - Concentration of credit risk is not applicable to the deposits.

Temporary Investments (Cash Equivalents) - To limit the risk of loss attributed to the magnitudeof a government’s investment in a single issuer, the District’s policy states that the portfolio mustbe diversified. Concentration of Credit Risk is not applicable to the BBVA Public Funds MoneyMarket Account or to investment pools since the purpose of these are to diversify the District’sinvestment portfolio.

(Continued)

53



JUNE 30, 2015


Short-term and Long-term Investments - To limit the risk of loss attributed to the magnitude ofthe District’s investment in a single issuer, the District’s policy states that the portfolio must bediversified. The District’s investments in securities are in Municipal Bonds from various entities,Federal Agency Securities, and Collateralized Mortgage Obligations. The Municipal Bonds areapproximately 6.3% of total governmental investments, and the Federal Agency Securities areapproximately 1.5% of total governmental investments. The CMOs are approximately 2.2% oftotal governmental investments.

Interest Rate Risk:

Deposits - Interest rate risk is not applicable to deposits.

Temporary Investments (Cash Equivalents) - To limit the risk that changes in interest rates willadversely affect the fair value of investments, the District requires its investment portfolio for thegeneral fund to have maturities of less than one year and a weighted average maturity of amaximum of 180 days for investments from all funds. Each pool invests in different investmentinstruments and each portfolio has varying maturities. All of the District’s investment poolsqualify as a 2a7-like pool and are excluded from the interest rate risk disclosure requirement inaccordance with GASB. The District has a contract that guarantees a yield of the 30 day Liborrate for the BBVA Public Funds Money Market Account.

Short-term and Long-term Investments - To limit the risk that changes in interest rates willadversely affect the fair value of investments, the District requires its investment portfolio to havematurities of less than one year for the general fund and a weighted average maturity of amaximum of 180 days for all investments. As of June 30, 2015, management calculated theDistrict’s WAM for the general fund at 7 days, and the total WAM was 102 days.

Foreign Currency Risk:

Deposits - The District limits the risk that changes in exchange rates will adversely affect adeposit by not having any deposits denominated in a foreign currency.

Temporary Investments (Cash Equivalents) - The District is not exposed to the risk that changesin exchange rates will adversely affect the fair value of an investment as the money marketaccount and investment pools are not denominated in a foreign currency.

Short-term and Long-term Investments - The District is not exposed to the risk that changes inexchange rates will adversely affect the fair value of an investment as none of the MunicipalBonds or Collateralized Mortgage Obligations are denominated in any foreign currencies.

(Continued)

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JUNE 30, 2015


6. The District reports inventories of supplies at weighted average cost including consumablemaintenance, instructional, office, athletic, and transportation items. Supplies are recorded asexpenditures when they are consumed. Inventories of food commodities are recorded at marketvalues supplied by the Texas Department of Human Services. Although commodities arereceived at no cost, their fair market value is supplied by the Texas Department of HumanServices and recorded as inventory and unearned revenue when received. When requisitioned,inventory and unearned revenue are relieved, expenditures are charged, and revenue is recognizedfor an equal amount.

7. Property taxes are levied by October 1 on the assessed value listed as of the prior January 1 forall real and business personal property located in the District in conformity with Subtitle E, TexasProperty Tax Code. Taxes are due on receipt of the tax bill and are delinquent if not paid beforeFebruary 1 of the year following the year in which imposed. On January 31 of each year, a taxlien attaches to the property to secure the payment of all taxes, penalties, and interest ultimatelyimposed. Property tax revenues are considered available (1) when they become due or past dueand receivable within the current period and (2) when they are expected to be collected duringa 60-day period after the close of the school fiscal year.

8. Delinquent taxes are prorated between maintenance and debt service based on rates adopted forthe year of the levy. Allowances for uncollectible tax receivables within the General and DebtService Funds are based on historical experience in collecting property taxes. Uncollectiblepersonal property taxes are periodically reviewed and written off, but the District is prohibitedfrom writing off real property taxes without specific statutory authority from the TexasLegislature.

9. In the government-wide financial statements and proprietary fund types in the fund financialstatements, long-term debt and other long-term obligations are reported as liabilities in theapplicable governmental activities or proprietary fund type Statement of Net Position. Bondpremiums and discounts are deferred and amortized over the life of the bonds using the straightline method and are presented as a component of non-current liabilities and deferred charges onrefundings are presented as deferred outflows of resources. Bonds payable are reported net ofthe applicable bond premium or discount.

In the fund financial statements, governmental fund types recognized bond premiums anddiscounts, as well as bond issuance costs, during the current period. The face amount of debtissued is reported as other financing sources. Premiums received on debt issuances are reportedas 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 asdebt service expenditures.

(Continued)

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JUNE 30, 2015


10. It is the District’s policy to require vacations to be taken in the year earned and any unused daysat the end of the fiscal year are generally forfeited after a six-month period. Employees areentitled to sick leave based on the category/class of employment. Sick leave is allowed to beaccumulated but does not vest. Upon resignation and qualified retirement of grandfatheredemployees, the District pays one-half accrued sick leave in a lump-sum cash payment to eachemployee or his/her beneficiary or estate based on the salary or wages for the last year ofemployment. A liability for these amounts is reported in the governmental funds only if theyhave matured as a result of employee resignations and retirements, but all eligible sick leave isaccrued when incurred in the government-wide financial statements.

11. Capital assets, which include land, buildings, furniture, vehicles, and equipment are reported inthe governmental activities column in the government-wide financial statements. Capital assetsare defined by the District as assets with an initial, individual cost of more than $5,000 and anestimated useful life in excess of one year. Such assets are recorded at historical cost or estimatedhistorical cost if purchased or constructed. Donated capital assets are recorded at estimated fairmarket value at the date of donation.

The costs of normal maintenance and repairs that do not add to the value of the asset or materiallyextend asset lives are not capitalized. Major outlays for capital assets and improvements arecapitalized as projects are constructed.

Capital Assets of the District are depreciated using the straight line method over the followingestimated useful lives:

Assets Years

Land Improvements 10 - 50Buildings and Building Improvements 20 - 50Furniture and Equipment 10Buses 10Technology Equipment 5Vehicles, Transportation Equipment 5 - 10

12. Since Internal Service Funds support the operations of governmental funds, they are consolidatedwith the governmental funds in the government - wide financial statements. The expendituresof 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.

13. The District sponsors a self-insured plan for worker’s compensation benefits to employees. Revenues for this Internal Service Fund are received from interest on investments as well as fromthe District contributions on behalf of the employees. The contributions are then charged as anexpenditure to the various funds where the employee’s salary is charged. Expenses are comprisedof claims incurred during the fiscal year, professional and contracted services, and othermiscellaneous expenses.

(Continued)

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JUNE 30, 2015


The District provides for estimated incurred but not reported claims for its workers’ compensationthrough the establishment of undiscounted accrued liabilities. At June 30, 2015, the accruedliability amounted to $9,000,000 for the workers’ compensation fund.

The General Fund is contingently liable for liabilities of this fund. Sub-fund accounting isemployed to maintain the integrity of the self-insurance activities of the District.

14. In the fund financial statements, governmental funds report restrictions of fund balance foramounts that are not available for appropriation or are legally restricted by outside parties for usefor a specific purpose. The entire fund balances in the Special Revenue, Debt Service, andCapital Projects Funds have such restrictions. Since the entire fund balance is restricted for thesefunds, all assets are in essence restricted for their specified purpose.

15. 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.

16. The Data Control Codes refer to the account code structure prescribed by TEA in the FinancialAccountability System Resource Guide. Texas Education Agency requires school districts todisplay these codes in the financial statements filed with the Agency in order to ensure accuracyin building a Statewide data base for policy development and funding plans.

17. In accordance with the Resource Guide, the District has adopted and installed an accountingsystem which meets at least the minimum requirements prescribed by the Texas State Board ofEducation and approved by the State Auditor. Specifically, the District’s accounting system usescodes and the code structure presented in the Resource Guide. Mandatory codes are recorded inthe order provided in the Resource Guide.

18. The District receives substantial amounts of funding from special revenue sources. The majorityof this money is cost reimbursement to the District by the federal government or Texas EducationAgency. The portion of revenue allowable for indirect cost is credited as revenue to the GeneralFund and as a reduction to revenue in the Special Revenue Fund, as appropriate. These indirectcosts are fully allocated to function 41.

19. Preparation of these financial statements in conformity with generally accepted accountingprinciples requires the use of management’s estimates and assumptions that affect the reportedamounts of assets and liabilities at the date of the financial statements and the reported amountsof revenues and expenses during the reporting period. Actual results could differ from thoseestimates.

(Continued)

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JUNE 30, 2015


20. Net Position on the Statement of Net Position includes the following:

Net investment in capital assets - this component of net position consists of capital assets, netaccumulated depreciation, reduced by the outstanding balances of bonds, mortgages, notes orother borrowings that are attributable to the acquisition, construction or improvement of thoseassets. Deferred outflows of resources and deferred inflows of resources that are attributable tothe acquisition, construction, or improvement of those assets or related debt will be included inthis component of net position.

Restricted for federal and state programs - this component of net position consists of restrictedassets reduced by liabilities and deferred inflows of resources related to those assets, which arerestricted by federal and state granting agencies.

Restricted for Debt Service - this component of net position consists of restricted assets reducedby liabilities and deferred inflows of resources related to those assets. The assets arise from bondissuances which have constraints placed on them by the bond covenants for the purpose of futuredebt service payments.

Unrestricted net position - this component of net position is the net amount of assets, deferredoutflows of resources, liabilities, and deferred inflows of resources that are not included in thedetermination of net investment in capital assets or the restricted components of net position.

21. Fund Balance

The District reports the following fund balance categories to make the nature and extent of theconstraints placed on a government's fund balances more transparent. The followingclassifications describe the relative strength of the spending constraints:

• Nonspendable fund balance - amounts that are not in spendable form (such as inventory)or are required to be maintained intact.

• Restricted fund balance - amounts constrained to specific purposes by their providers (suchas grantors, bondholders, and higher levels of government), through constitutionalprovisions, or by enabling legislation.

• Committed fund balance - amounts constrained to specific purposes by the District itself,using its highest level of decision-making authority (i.e., Board of Trustees). These amountsare committed through a formal action of the Board. Once reported as committed, amountscannot be used for any other purpose unless the District takes the same highest level actionto remove or change the constraint.

• Assigned fund balance - amounts the District intends to use for a specific purpose. Intentcan be expressed by the Superintendent or the Officer position as named in the local policyapproved by the Board March 29, 2011.

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JUNE 30, 2015


• Unassigned fund balance - amounts that are available for an appropriate purpose. Positiveamounts are reported only in the general fund.

The Board of Trustees establishes (and modifies or rescinds) fund balance commitments bypassage of a resolution. This is typically done through adoption and amendment of the budget. A fund balance commitment is further indicated in the budget document as a commitment of thefund. Assigned fund balance is established by the Superintendent or Chief Business Officer fora specific purpose, such as, the purchase of capital assets, construction, debt service, or for otherpurposes.

When an expenditure is incurred for purposes for which both restricted and unrestricted fundbalance is available, the District considers restricted funds to have been spent first. When anexpenditure is incurred for which committed, assigned, or unassigned fund balances are available,the District considers amounts to have been spent first out of committed funds, then assignedfunds, and finally unassigned funds, as needed, unless the Board of Trustees has providedotherwise in their commitment or assignment actions.

In fiscal year 2011, the Board of Trustees adopted a targeted fund balance policy for the GeneralFund. The policy requires the unassigned fund balance at fiscal year end to be between 17 percent(60 days) and 25 percent (90 days) of the operating expenditures.

The District shall target a yearly minimum restricted debt service fund balance of 25 percent ofannual debt service requirements on all outstanding debt issuance.

F. The District has implemented GASB Statement No. 68, Accounting and Financial Reporting forPensions - an amendment of GASB Statement No. 27 which establishes standards for measuring andrecognizing liabilities, deferred outflows of resources, deferred inflows of resources, andexpense/expenditures. In addition, the District implemented GASB Statement No. 71, PensionTransition for Contributions Made Subsequent to the Measurement Date - an amendment of GASBStatement No. 68 which requires, at transition, that a government recognize a beginning deferredoutflow of resources for its pension contributions, if any, made subsequent to the measurement date ofthe beginning net pension liability. The provisions of GASB Statement No. 71 are required to beapplied simultaneously with the provisions of GASB Statement No. 68.

The District’s financial statements as of June 30, 2015 are presented in accordance with the guidanceprovided by these Statements. See Note IV. II, Prior Period Adjustment, for more informationregarding implementation of this new pronouncement.

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JUNE 30, 2015

II. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS

A. Explanation of Certain Differences Between the Governmental Fund Balance Sheet and theGovernment-Wide Statement of Net Position

Exhibit C-2 provides the reconciliation between the fund balance for total governmental funds on thegovernmental fund balance sheet and the net position for governmental activities as reported in thegovernment-wide statement of net position. One element of that reconciliation explains that capitalassets are not financial resources and are therefore not reported in governmental funds. In addition,long-term liabilities, including bonds payable, and the District’s proportionate share of the net pensionliability are not due and payable in the current period and are not reported as liabilities in the funds.

B. Explanation of Certain Differences Between the Governmental Fund Statement of Revenues,Expenditures, and Changes in Fund Balances and the Government-Wide Statement of Activities

Exhibit C-4 provides a reconciliation between the net changes in fund balance as shown on thegovernmental fund statement of revenues, expenditures, and changes in fund balances and the changesin net position of governmental activities as reported on the government-wide statement of activities. One element of that reconciliation explains that current year capital outlays and debt principal paymentsare expenditures in the fund financial statements, but should be shown as increases in capital assets anddecreases in long-term debt in the government-wide statements. This adjustment affects both the netposition balance and the change in net position.

Another element of the reconciliation on Exhibit C-4 is described as various other reclassifications andeliminations necessary to convert from the modified accrual basis of accounting to accrual basis ofaccounting. This adjustment is the result of reclassifying other resources, other uses and various otheritems. With the implementation of GASB 68, certain pension expenditures were de-expended and theDistrict recorded their proportionate share of the pension expense.

III. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY

A. Budgetary Data

The Board of Trustees adopts an "appropriated budget" for the General Fund, Debt Service Funds andthe Food Service Fund (which is included in the Special Revenue Funds). The District is required topresent the adopted and final amended budgeted revenues and expenditures for each of these funds. The Board does not legally adopt a budget for the other special revenue funds since the budgets aredetermined by the grantor. The District compares the final amended budget to actual revenues andexpenditures. The General Fund Budget report appears in Exhibit G-1 and the other two reports arein Exhibit J-2 and J-3.

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JUNE 30, 2015

III. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (Continued)

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

1. Prior to June 19, the District prepares a budget for the next succeeding fiscal year beginning July1. 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 leastten days' public notice of the meeting must be given.

3. On June 17, 2014, the budget was legally enacted through the approval of a motion by the Board. Once a budget is approved, it can only be amended at the function and fund level by approval ofa majority of the members of the Board. Amendments are presented to the Board at its regularmeetings. Each amendment must have Board approval. As required by law, such amendmentsare made before the fact, are reflected in the official minutes of the Board, and are not made afterfiscal year end. Because the District has a policy of careful budgetary control, severalamendments were necessary during the year.

There were five budget amendments that management feels were most significant. A budgetamendment for $3,351,677 was necessary to process the purchase orders that were rolled forwardfrom fiscal year 2014, and an amendment was also necessary to release the restricted fund balanceof $2,040,638 related to the unspent funds in the High School Allotment. An amendment for$1,195,200 was approved for the purchase of Inspire calculators, which will be utilized bystudents for State mandated testing and college readiness exams. Another amendment for$2,250,000 was approved for the purchase of teacher laptops. Lastly there was an amendmentfor $3,346,230, which was made to pay off the balance of the Loan Star loan. No expenditureswere made prior to approval of the budget amendments.

4. Each budget is controlled by the budget director at the revenue and expenditure function/objectlevel. Budgeted amounts are as amended by the Board. All budget appropriations lapse at yearend.

IV. DETAILED NOTES ON ALL FUNDS

A. Deposits

Cash at Depository Bank - At June 30, 2015, the carrying amount of the District’s general fund,nonmajor governmental funds, internal service funds, and agency funds deposits (cash and interest-bearing savings accounts) were $(875,727), $4,637, $4,798,295 and $828,961, respectively, and thetotal bank balance was $8,541,959. Except as noted below, the District’s cash deposits at June 30, 2015and during the year ended June 30, 2015, were fully covered by federal depository insurance or pledgedcollateral held by the District’s agent bank in the District’s name.

(Continued)

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IV. DETAILED NOTES ON ALL FUNDS (Continued)



JUNE 30, 2015

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

a. Depository: Wells Fargo Bank - El Paso, Texas.

b. The highest combined balances of cash, savings, and time deposit accounts amounted to$11,037,785 and occurred during the month of December 2014.

c. The total amount of FDIC coverage at the time of the highest combined balance was $500,000.

d. The estimated market value of securities pledged as of the date of the highest combined balanceon deposit was $9,747,645. The shortage of $790,140 occurred when a significant amount ofchecks were deposited in the District’s operating account causing the balance to exceed thecollateral. The District monitors this situation daily and, when necessary, transfers any excessfunds to other institutions. However, the bank’s one day float restriction did not allow theDistrict to transfer the money as it is not considered part of their available balance until it clearsthe payer’s account. On the next business day, the District’s funds were fully collateralized.

B. Temporary Investments

The District’s temporary investments included in cash and cash equivalents at June 30, 2015, are shownbelow at fair value which equals cost:

Governmental Activities

Temporary Investments General Fund

2008CapitalProjects

NonmajorGovernmental

FundsInternal

Service Funds

TotalGovernmental

ActivitiesAgencyFunds

TexPool Investment Pool $ 1,030,927 $ - $ - $ - $ 1,030,927 $ 1,466,968TexPool Prime Investment Pool 30,006,651 - 3,968,187 7,460,738 41,435,576 - TexStar Investment Pool 277,616 - - - 277,616 - Lone Star Investment Pool 50,633,669 45,117,025 23,070,461 - 118,821,155 - BBVA Public Funds Money Market Account - 20,023,017 - - 20,023,017 -

Total $ 81,948,863 $ 65,140,042 $ 27,038,648 $ 7,460,738 $ 181,588,291 $ 1,466,968

In addition to the above Texpool Funds, the District also has funds invested in Texpool for the BrayMilk Trust in fund 240 in the amount of $60,228 and in the Private Purpose Trust in fund 810 in theamount of $190,364 which are shown as restricted assets.

TexPool is a local government investment pool in the State of Texas. The State Comptroller of PublicAccounts oversees TexPool. There is also a TexPool Advisory Board, composed of participants, whichadvises on TexPool’s investment policy and approves fee increases. Texas Short Term Asset ReserveProgram, TexStar, is a public funds investment pool created under the Interlocal Cooperation Act, andis administered by First Southwest Company. LLC, Inc. and J.P. Morgan Investment Management Inc.

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JUNE 30, 2015

TexStar has an advisory board composed of participants in TexStar and other persons who do not havea business relationship with TexStar. The TexStar board has the authority to invest deposited funds andperform other administrative activities necessary to accomplish the objectives of TexStar. TheLoanStar Investment Pool is administered TASB’s wholly owned subsidiary, First Public. Theinvestment advisors for the pool are American Beacon Advisors and Standish Mellon InvestmentManagers. The custodian bank is State Street Bank of Boston.

C. Short Term and Long Term Investments

The District’s short term and long term investments at June 30, 2015, are shown below at amortizedcost or fair value where applicable:

Investment Maturities(in years)

InvestmentsGeneral

Fund

2008CapitalProjects

Fund

NonMajorGovernmental

Funds

InternalServiceFunds

Less than1 year

More than1 year

WeightedAverageMaturity(in days)

CreditRatings

Short-term InvestmentsWaterville OH Bans- Various Purpose $ 1,926,097 $ - $ - $ - $ 1,926,097 $ - 29 AA-Waxahachie TX ISD CAP Apprec.-Ref 1,014,665 - - - 1,014,665 - 46 AAAState of Washington Series 2015T-2 1,998,972 - - - 1,998,972 - 216 AA+

Total short-term investments 4,939,734 - - - 4,939,734 -

Long-term InvestmentsRepurchase Agreement invested in Collateralized Mortgage Obligations - - 4,542,230 - - 4,542,230 3,518 N/ASecurities:North Central Wi Tech Clg Dist Promissory Nts - - 1,566,800 - 1,566,800 - 63 Aa1Mooresville NC Ltd Oblig Series 2015 - - - 1,406,461 - 1,406,461 855 AA-Freddie Mac - - - 1,000,087 - 1,000,087 945 N/AColumbus OH Txbl-ref-var purpose Series 6 - 1,185,581 - - 1,185,581 - 46 AAAArlington TX ISD Txbl-ref - 1,000,890 - - 1,000,890 - 230 AAAWisconsin St Gen Fund annual A txbl-ref-series A - 2,656,955 - - 2,656,955 - 306 AA-Federal Farm Credit Bank - 2,003,590 - - - 2,003,590 378 N/A

Total long-term investments - 6,847,016 6,109,030 2,406,548 6,410,226 8,952,368

Total Investments $ 4,939,734 $ 6,847,016 $ 6,109,030 $ 2,406,548 $11,349,960 $ 8,952,368

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JUNE 30, 2015

On February 18, 2010, the District entered into a Master Repurchase Agreement with Morgan Stanleyand The Bank of New York Mellon. The parties agreed that the pricing rate used for the transactionsshall be 4.00% per annum and the margin percentage shall be 102% with regard to eligible securitiesspecified in the Repurchase Agreement. Maturity dates shall not exceed the date that the notes will bepaid which is August 15, 2025. The above CMOs were secured by pledged securities with an estimatedfair market value of $4,609,355 as of June 30, 2015.

D. Receivables from Other Governments

The District participates in a variety of federal and state programs from which it receives grants topartially or fully finance certain activities. In addition, the District receives entitlements from the Statethrough the School Foundation and Per Capita Programs. A majority of federal grants shown beloware passed through the TEA. Management has deemed that no allowance for doubtful accounts isnecessary for fair presentation as there is usually no risk of uncollectibility. Amounts due from federaland state governments as of June 30, 2015, are summarized as follows:

DescriptionGeneral

Fund


Funds Total

State Entitlement Grants $ 77,743,133 $ - $ 77,743,133SHARS 13,543,593 - 13,543,593E-Rate 6,616 - 6,616Title I, A Improving Basic Program - 10,040,548 10,040,548IDEA - Part B Formula - 2,767,752 2,767,752Title II, A Training and Recruiting - 1,270,273 1,270,273Texas Literacy Initiative - 1,693,889 1,693,889SSA - Regional Day School - Deaf - 483,091 483,091Military Connected Schools - 332,908 332,908DOD Construction Grant - 2,649,796 2,649,796Title III, A English Language Acquisition - 847,587 847,587Adult Basic Education - 149,472 149,472Summer Feeding - 201,162 201,162Career and Technical - 168,228 168,228State Textbook Fund - 597,284 597,284Other Federal Grants - 291,695 291,695Other State Grants - 52,252 52,252

Total $ 91,293,342 $ 21,545,937 $ 112,839,279

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JUNE 30, 2015

E. Interfund Balances and Transfers

The interfund balances are the result of normal operations and are cleared out periodically. Management intends to pay out these balances within one year.

Interfund balances at June 30, 2015, consisted of the following amounts:

Due FromOther Funds

Due toOther Funds

General Fund:2008 Capital Project Fund $ - $ 2,552,947 Nonmajor Governmental Funds 12,492,282 11,970,479 Internal Service Funds 647,156 167,827

Total General Fund 13,139,438 14,691,253

2008 Capital Project Fund:General Fund 2,552,947 -

Nonmajor Governmental Funds:General Fund 11,970,479 12,492,282

Internal Service Funds:General Fund 167,827 647,156

Total $ 27,830,691 $ 27,830,691

Interfund transfers generally fall within two categories: (1) transfers to cover debt service payments tocomply with debt covenants, and (2) transfers to cover operating expenditures/deficits in accordancewith District policy or legal requirements.

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JUNE 30, 2015

Interfund transfers for the year ended June 30, 2015, consisted of the following amounts:

Transfers In Transfers OutGeneral Fund:

Nonmajor Governmental Funds $ - $ 684,059

Nonmajor Governmental Funds:General Fund 684,059 -

Total $ 684,059 $ 684,059

F. Disaggregation of Other Receivables and Accrued Expenditures

Other Receivables as of June 30, 2015 consisted of the following:

GeneralFund


Funds Total

Miscellaneous Rebates $ 93,245 $ - $ 93,245 City Tax office 188,779 35,406 224,185 Miscellaneous other receivables 114,852 1,631 116,483

Total $ 396,876 $ 37,037 $ 433,913

Other Receivables are reported at gross value. Management has determined that an allowance fordoubtful accounts is not necessary for fair presentation.

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JUNE 30, 2015

Accrued Expenditures as of June 30, 2015 consisted of the following:

GeneralFund

2008CapitalProjects


Funds

TotalGovernmental

Funds


TotalGovernmental

Activities

Workers Compensation Claims $ - $ - $ - $ - $ 9,000,000 $ 9,000,000Professional and Contracted Services 737,434 - 477,593 1,215,027 8,401 1,223,428Supplies and materials 632,941 - 4,604,451 5,237,392 - 5,237,392Capital Outlay 309,827 1,337,110 39,748 1,686,685 - 1,686,685Miscellaneous 123,053 - 76,515 199,568 - 199,568

Total $ 1,803,255 $ 1,337,110 $ 5,198,307 $ 8,338,672 $ 9,008,401 $ 17,347,073

G. Capital Asset Activity

Capital asset activity for the District for the year ended June 30, 2015, was as follows:

BeginningBalance Additions

Transfers/Adjustments Retirements

EndingBalance

Non-depreciable assets: Land $ 53,591,804 $ - $ - $ - $ 53,591,804 Construction in progress 25,918,712 14,243,001 (30,916,001) (193,938) 9,051,774 Software in progress 501,630 825,965 - - 1,327,595

Total non-depreciable assets 80,012,146 15,068,966 (30,916,001) (193,938) 63,971,173

Depreciable assets: Land Improvements 2,663,148 - 409,822 - 3,072,970 Buildings and improvements 722,054,253 2,095,259 30,506,179 (4,473,378) 750,182,313 Furniture and equipment 46,680,605 1,551,234 - (178,459) 48,053,380 Vehicles 25,465,619 4,601,613 1,197,435 (2,019,387) 29,245,280 Capital leases 7,819,574 - (1,197,435) - 6,622,139

Total depreciable assets 804,683,199 8,248,106 30,916,001 (6,671,224) 837,176,082

Less accumulated depreciation for: Land improvements (370,972) (101,678) - - (472,650) Buildings and improvements (276,839,175) (12,489,488) - 3,902,509 (285,426,154) Furniture and equipment (33,173,375) (3,783,189) - 172,489 (36,784,075) Vehicles (20,293,936) (1,153,870) (718,540) 2,019,387 (20,146,959) Capital leases (2,798,542) (913,706) 718,540 - (2,993,708)

Total accumulated depreciation (333,476,000) (18,441,931) - 6,094,385 (345,823,546)

Total net capital assets $ 551,219,345 $ 4,875,141 $ - $ (770,777) $ 555,323,709

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JUNE 30, 2015

Depreciation expense was charged to governmental functions as follows:

Instruction $ 11,901,939 Instructional resources and media services 387,478 Curriculum development and instruction staff 291,053 Instructional leadership 104,381 School leadership 1,575,550 Guidance, counseling and evaluation services 441,573 Social work services 97,460 Health services 284,561 Student (pupil) transportation 373,316 Food services 646,316 Co-curricular/extracurricular activities 329,563 General administration 359,429 Plant maintenance and operations 1,249,647 Security and monitoring services 239,095 Data processing services 133,355 Community services 4,652

Total depreciation expense without internal service funds $ 18,419,368

Depreciation on capital assets held by the District’s internal service funds 22,563

Total depreciation expense $ 18,441,931

H. Deferred Outflows of Resources For Refunding

Deferred charge on Refunded Bonds for the year ended June 30, 2015 were as follows:

DescriptionBeginningBalance

DeferredCharge

New IssuesAmortizationRecognized

EndingBalance

Series 2011 $ 173,483 $ - $ 173,483 $ - Series 2013 3,723,945 - 217,302 3,506,643Series 2013A 38,875 - 5,449 33,426Series 2015 - 7,468,429 193,048 7,275,381Series 2015A - 10,153,082 167,408 9,985,674

Total Deferred Charge $ 3,936,303 $ 17,621,511 $ 756,690 $ 20,801,124

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JUNE 30, 2015

I. Unearned Revenue

Unearned revenue as of June 30, 2015 consisted of the following:

General Fund


Funds

TotalGovernmental

Funds

Foundation $ 15,764,360 $ - $ 15,764,360EDA and IFA - 2,219,741 2,219,741Advanced Placement Incentives - 36,338 36,338Army’s Youth - 180,970 180,970Veteran’s AFF - 20,307 20,307Title VI LEP - 27,664 27,664Other Special Revenue - 42,340 42,340

Total Unearned Revenue $ 15,764,360 $ 2,527,360 $ 18,291,720

J. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2015, was as follows:

BeginningBalance Additions Reductions

EndingBalance

Due WithinOne Year

Governmental Activities:

Debt Service Bonds Payable:Unlimited Tax School Building and Refunding Bonds $ 130,622,308 $ - $ 112,285,000 $ 18,337,308 $ 104,544Unlimited Tax Refunding Bonds 124,702,900 183,295,000 9,855,000 298,142,900 9,800,000Unlimited Tax School Building Bonds 133,610,000 - 93,550,000 40,060,000 5,105,000Unlimited Tax Refunding Bonds Taxable 9,470,000 - 185,000 9,285,000 995,000

Total Debt Service Bonds Payable 398,405,208 183,295,000 215,875,000 365,825,208 16,004,544

Accretion Payable 7,123,449 296,330 - 7,419,779 295,456

Unamortized Premiums on Bonds 21,772,862 33,808,270 7,014,683 48,566,449 3,122,023

(Continued)

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JUNE 30, 2015

BeginningBalance Additions Reductions

EndingBalance

Due WithinOne Year

Other Liabilities:Capital leases 4,744,161 - 1,271,651 3,472,510 1,079,006 Loan Star Loans 3,603,364 - 3,603,364 - - QSC Maintenance Tax Notes 15,275,000 - - 15,275,000 - Limited Tax Refunding Bonds, Series 2014 4,390,000 - 810,000 3,580,000 845,000 Accumulated Unpaid Leave Benefits 11,224,613 2,620,701 2,395,618 11,449,696 2,178,767 Arbitrage Payable 7,751 - 7,751 - -

Totals other liabilities 39,244,889 2,620,701 8,088,384 33,777,206 4,102,773

Total Governmental Long-term liabilities $ 466,546,408 $ 220,020,301 $ 230,978,067 $455,588,642 $ 23,524,796

A summary of changes in the Debt Service bonds payable for the year ended June 30, 2015 is as follows:

Description

InterestRate

Payable

AmountsOriginal

Issue

InterestCurrent

YearBeginningBalance Issued

Refunded/Retired

EndingBalance

Due withinOne year

Unlimited Tax School Building and Refunding Bonds: Series 2004A

3.00%-5.25% 53,380,000 102,638 3,910,000 - 3,910,000 - -

Unlimited Tax School Building Bonds: Series 2004B Variable 44,730,000 43,234 32,730,000 - 3,000,000 29,730,000 -

Unlimited Tax School Building Bonds: Series 2005

3.125%-5.000% 64,465,000 202,875 5,955,000 - 3,795,000 2,160,000 2,160,000

Unlimited Tax School Building Bonds: Series 2006 4.125% 24,345,000 22,513 605,000 - 115,000 490,000 490,000

Unlimited Tax School Building Bonds: Series 2007

4.00%-5.00% 98,485,000 2,503,575 94,320,000 - 86,640,000 7,680,000 2,455,000

Unlimited Tax School Building and Refunding Bonds:Series 2008 Premium CABs 5.00% 16,033,014 - 887,308 - - 887,308 104,544 Series 2008 Serial CIBs 5.00% 50,200,000 6,291,250 50,200,000 - 43,240,000 6,960,000 - Series 2008 Term CIBs 5.00% 75,625,000 - 75,625,000 - 65,135,000 10,490,000 -

Unlimited Tax Refunding Bonds: Series 2008A

4.00%-5.00% 56,535,000 1,456,469 30,355,000 - 5,530,000 24,825,000 5,790,000

(Continued)

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JUNE 30, 2015

Description

InterestRate

Payable

AmountsOriginal

Issue

InterestCurrent

YearBeginningBalance Issued

Refunded/Retired

EndingBalance

Due withinOne year

Unlimited Tax Refunding Bonds:Series 2011 Premium CABs 4.00%- 692,900 - 692,900 - - 692,900 - Series 2011 CIBs 5.00% 38,675,000 1,800,150 38,050,000 - 880,000 37,170,000 3,060,000

Unlimited Tax Refunding Bonds:Series 2013

2.00%-5.00% 56,075,000 2,391,650 55,605,000 - 3,445,000 52,160,000 -

Unlimited Tax Refunding Bonds:Taxable Series 2013A

3.50%-4.00% 9,570,000 318,830 9,470,000 - 185,000 9,285,000 995,000

Unlimited Tax Refunding Bonds: Series 2015

3.00%-5.00% 78,740,000 323,167 - 78,740,000 - 78,740,000 950,000

Unlimited Tax Refunding Bonds:Series 2015A

2.50%-5.00% 104,555,000 - - 104,555,000 - 104,555,000 -

Total Debt Service Bonds Payable $ 15,456,351 398,405,208 183,295,000 215,875,000 365,825,208 16,004,544

Accretion payable for the year ended June 30, 2015 was as follows:


Accrual ofAccretion

AccretionRetired

EndingBalance

DueWithin

One Year

Series 2008 CABs $ 6,893,880 $ 272,272 $ - $ 7,166,152 $ 295,456 Series 2011 CABs 229,569 24,058 - 253,627 -

Total Accretion Payable $ 7,123,449 $ 296,330 $ - $ 7,419,779 $ 295,456

(Continued)

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JUNE 30, 2015

Unamortized Premiums on bonds for the year ended June 30, 2015 were as follows:


Premiums onNew Issues

AmortizationRecognized

EndingBalance

DueWithin

One Year

Series 2004A $ 31,763 $ - $ 31,763 $ - $ - Series 2004B 97,954 - 6,486 91,468 6,486 Series 2005 189,760 - 175,164 14,596 14,597 Series 2006 2,999 - 2,768 231 231 Series 2007 1,427,662 - 1,333,647 94,015 44,243 Series 2008 4,623,614 - 3,589,268 1,034,346 57,067 Series 2008A 1,316,793 - 256,767 1,060,026 256,767 Series 2009 - - - - - Series 2011 4,010,005 - 264,866 3,745,139 264,866 Series 2013 9,279,581 - 541,496 8,738,085 541,496 Series 2013A 792,731 - 111,161 681,570 111,161 Series 2015 - 15,759,264 259,845 15,499,419 854,447 Series 2015A - 18,049,006 441,452 17,607,554 970,662

Total Unamortized Premiums $ 21,772,862 $ 33,808,270 $ 7,014,683 $ 48,566,449 $ 3,122,023

K. Debt Service Bonds Payable

The 2004B Bonds have a variable interest rate. The District has a Standby Bond Purchase Agreementwith JP Morgan Chase to provide liquidity support on the $29,730,000 balance of the 2004B Bonds. The bonds are in a variable rate “flex mode”, whereby the rate is set weekly and then re-marketedquarterly. On February 18, 2015, the District made a $3 million principal redemption on the Series2004B Variable Rate Bonds. The District’s rate was .11% as of June 30, 2015 and the average rate forfiscal year 2015 was .12%.

On January 31, 2013 the District issued Unlimited Tax Refunding Bonds, Series 2013 in the amountof $56,075,000. The bonds are payable February 15 and August 15 of each year commencing August15, 2013 and ending on August 15, 2031. The 2013 bonds were issued to refund the remaining balanceof the Unlimited Tax School Building and Refunding Bonds, Series 2004, and portions of both theUnlimited Tax School Building Bonds Series 2005, and the Unlimited Tax School Building BondsSeries 2006. The refunding of the 2004, 2005, and 2006 reduced future debt service costs (differencebetween cash flow to service old debt and that required for new debt) by $9,275,441 and resulted in aneconomic gain (difference between the present values of the old and new debt service payments) of$6,557,447. The liabilities associated with these bonds were removed from the related payables. Asof June 30, 2015, $55,875,000 of the refunded bonds remains outstanding with an estimated relatedescrow balance of $57,259,252.

(Continued)

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JUNE 30, 2015

On January 15, 2015 the District issued Unlimited Tax Refunding Bonds, Series 2015 in the amountof $78,740,000. The bonds are payable February 15 and August 15 of each year, commencingFebruary 15, 2015 and ending on August 15, 2032. The 2015 bonds were issued to refund $84,280,000of the Series 2007 Bonds. The refunding reduced future debt service costs (difference between cashflow to service old debt and that required for new debt) by $10,378,950, and resulted in an economicgain (difference between the present values of the old and new debt service payments) of $7,448,003. The liability associated with the bond was removed from the related payables. As of June 30, 2015,$84,280,000 of the refunded bond remains outstanding with an estimated related escrow balance of$93,097,307.

On March 11, 2015 the District issued Unlimited Tax Refunding Bonds, Series 2015A in the amountof $104,555,000. The bonds are payable February 15 and August 15 of each year, commencing August15, 2015 and ending on August 15, 2033. The 2015A bonds were issued to refund $108,280,000 ofthe Series 2008 Bonds. The refunding reduced future debt service costs (difference between cash flowto service old debt and that required for new debt) by $11,125,475, and resulted in an economic gain(difference between the present values of the old and new debt service payments) of $8,180,049. Theliability associated with the bond was removed from the related payables. As of June 30, 2015,$108,375,000 of the refunded bond remains outstanding with an estimated related escrow balance of$122,288,843.

The District had two capital appreciation bonds during the year ending June 30, 2015 that were issuedat a deep discount. The discount is being accreted over the life of the bonds. For the year endedJune 30, 2015, $296,330 was accreted.

There are a number of limitations and restrictions contained in the general obligation bond indenture. Management has indicated that the District is in compliance with all significant limitations andrestrictions at June 30, 2015.

Debt service requirements for bonds payable are as follows:

Bonds Payable

Year Ending June 30, Principal Interest Total

2016 $ 16,004,544 $ 17,168,506 $ 33,173,0502017 16,258,028 16,686,622 32,944,6502018 16,918,318 16,278,826 33,197,1442019 17,784,154 15,192,809 32,976,9632020 10,728,593 14,754,932 25,483,525

2021 - 2025 95,971,571 64,362,942 160,334,5132026 - 2030 103,470,000 33,458,275 136,928,2752031 - 2034 88,690,000 8,468,100 97,158,100

Total $ 365,825,208 $ 186,371,012 $ 552,196,220

(Continued)

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JUNE 30, 2015

L. Capital Leases

The District has entered into several lease agreements for the purchase of equipment and vehicles. Thelease terms are generally from three to seven years with interest ranging from 0.96 to 3.89 percent.Total interest paid during the fiscal year ending June 30, 2015 was $84,442.


2016 $ 1,079,006 $ 60,337 $ 1,139,343 2017 665,110 38,846 703,956 2018 676,101 27,855 703,956 2019 687,277 16,679 703,956 2020 365,016 5,316 370,332

Total $ 3,472,510 $ 149,033 $ 3,621,543

M. Loan Star Loan

The District obtained loans from the State Energy Conservation Office to upgrade equipment withinthe District in order to reduce energy costs. All Lone Star projects are complete and all loans wererepaid during the fiscal year ending June 30, 2015. The District used $3,345,957 to payoff the balanceof the principal and interest of the Loan Star loans. The early payoff resulted in interest savings of$338,472 over the next six years. Total interest paid during the fiscal year ending June 30, 2015 was$127,811.

N. Qualified School Construction Maintenance Tax Notes

On October 21, 2009, the District issued Qualified School Construction Maintenance Tax Notes Series2009 in the amount of $15,275,000. In lieu of interest payments, the owners of the notes receiveFederal Tax Credits under the American Recovery and Reinvestment Act of 2009. The District issuedthe notes with a supplemental interest rate of 1.55%. The supplemental interest is payable February15 and August 15 of each year commencing February 15, 2010 and ending on August 15, 2025. Thenotes are scheduled to mature on August 15, 2025 at which time the entire amount is due. The Districthas established a Sinking Fund and has entered into a Repurchase Investment Agreement to pay thenotes. Sinking Fund payments are payable on February 15 of each year commencing on February 15,2010 and ending on February 15, 2025. Since the notes will not be paid until they mature onAugust 15, 2025, the sinking fund deposits are recorded in debt service fund 575 and restricted for thatpurpose. The balance in the sinking fund as of June 30, 2015 totaled $4,542,230. Total interest paidduring the fiscal year ending June 30, 2015 was $236,763.

(Continued)

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JUNE 30, 2015

The Remaining Sinking Fund Deposits required for the QSC Maintenance Tax Notes are as follows:

Fiscal YearSinking Fund

DepositsInterest

PaymentsAnnualTotal

2016 $ 684,059 $ 236,763 $ 920,8222017 684,059 236,763 920,8222018 684,059 236,763 920,8222019 684,059 236,763 920,8222020 684,059 236,763 920,8222021 684,059 236,763 920,8222022 684,059 236,763 920,8222023 684,059 236,763 920,8222024 684,059 236,763 920,8222025 684,059 236,763 920,8222026 - 118,381 118,381

Total 6,840,590 $ 2,486,011 $ 9,326,601

Balance in sinking fund 4,542,230 Estimated future interest earnings 3,892,180

Withdrawal at maturity $ 15,275,000

O. General Fund - Bonds Payable

On February 21, 2015, the District issued Limited Tax Refunding Bonds, Series 2014 in the amountof $4,390,000. Proceeds from the sale were used to pay off the balance of Maintenance Tax Notes,Series 2008. Interest on this General Fund bond obligation is 1.5%. The bonds are payable February15 and August 15 of each year commencing on August 15, 2015 and ending on August 15, 2018. Totalinterest paid during the fiscal year ending June 30, 2015 was $58,678.

General Fund requirements for bonds payable are as follows:


2016 $ 845,000 $ 47,362 $ 892,3622017 875,000 34,462 909,4622018 910,000 21,075 931,0752019 950,000 7,125 957,125

Total $ 3,580,000 $ 110,024 $ 3,690,024

(Continued)

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JUNE 30, 2015

P. Accumulated Unpaid Sick Leave Benefits

Upon retirement or death of certain employees, the District pays any accrued sick leave in a lump sumcash payment to such employee or his/her estate. A summary of changes in the accumulated sick leavefollows:

Sick Leave

Balance June 30, 2014 $ 11,224,613 Additions - New entrants and salary increments 2,620,701 Deductions - Payments to participants 2,395,618

Balance June 30, 2015 $ 11,449,696

Q. Rebatable Arbitrage

The Tax Reform Act of 1986 instituted certain arbitrage restrictions with respect to the issuance of tax-exempt bonds after August 31, 1986. Arbitrage regulations deal with the investment of all tax-exemptbond proceeds at an interest yield greater than the interest yield paid to bondholders. Generally, allinterest paid to bondholders can be retroactively rendered taxable if applicable rebates are not reportedand paid to the Internal Revenue Service (IRS) at least every five years. Arbitrage is evaluated andestimated on an annual basis by a third party arbitrage rebate service company. The company hasestimated no liability for the District.

R. Commitments Under Operating Leases

Commitments under operating (noncapitalized) lease agreements for facilities provide for minimumfuture rental payments as of June 30, 2015, as follows:

Year Ending June 30,

2016 $ 368,429 2017 344,537 2018 62,820 2019 56,539 2020 56,539

2021 - 2025 282,694 2026 - 2030 30,698

Total Minimum Rentals $ 1,202,256

Rental Expenditures for the year ended June 30, 2015 $ 368,429

(Continued)

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JUNE 30, 2015

S. Defined Benefit Pension Plan

Plan Description: The District participates in a cost-sharing multiple-employer defined benefit pensionthat has a special funding situation. The plan is administered by the Teacher Retirement System ofTexas (TRS). TRS’s defined benefit pension plan is established and administered in accordance withthe Texas Constitution, Article XVI, Section 67 and Texas Government Code, Title 8, Subtitle C. Thepension trust fund is a qualified pension trust under Section 401(a) of the Internal Revenue Code. TheTexas Legislature establishes benefits and contribution rates within the guidelines of the TexasConstitution. The pension’s Board of Trustees does not have the authority to establish or amend benefitterms.

All employees of public, state-supported educational institutions in Texas who are employed for onehalf or more of the standard work load and who are not exempted from membership under TexasGovernment Code, Title 8, Section 822.002 are covered by the system.

Pension Plan Fiduciary Net Position: Detailed information about the Teacher Retirement System’sfiduciary net position is available in a separately-issued Comprehensive Annual Financial Report thatincludes financial statements and required supplementary information. That report may be obtainedon the internet at http://www.trs.state.tx.us/about/documents/cafr.pdf#CAFR; by writing to TRS at 1000Red River Street, Austin, TX 78701-2698; or by calling (512) 542-6592. The information providedin the Notes to the Financial Statements in the 2014 Comprehensive Annual Financial Report for TRSprovides the following information regarding the Pension Plan fiduciary net position as of August 31,2014:

Net Pension Liability Total

Total Pension Liability $ 159,496,075,866 Less: Fiduciary Net Position (132,779,243,085)

Net Pension Liability $ 26,716,832,781

Net Pension as percentage of Total Pension Liability 83.25%

(Continued)

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JUNE 30, 2015

Benefits Provided: TRS provides service and disability retirement, as well as death and survivorbenefits, to eligible employees (and their beneficiaries) of public and higher education in Texas. Thepension formula is calculated using 2.3 percent (multiplier) times the average of the five highest annualcreditable salaries times years of credited service to arrive at the annual standard annuity except formembers who are grandfathered, the three highest annual salaries are used. The normal serviceretirement is at age 65 with 5 years of credited service or when the sum of the member’s age and yearsof credited service equals 80 or more years. Early retirement is at age 55 with 5 years of service creditor earlier than 55 with 30 years of service credit. There are additional provisions for early retirementif the sum of the member’s age and years of service credit total at least 80, but the member is less thanage 60 or 62 depending on date of employment, or if the member was grandfathered in under a previousrule. There are no automatic post-employment benefit changes; including automatic COLAs. Ad hocpost-employment benefit changes, including ad hoc COLAs can be granted by the Texas Legislatureas noted in the Plan description above.

Contributions: Contribution requirements are established or amended pursuant to Article 16, section67 of the Texas Constitution which requires the Texas legislature to establish a member contributionrate of not less than 6% of the member’s annual compensation and a state contribution rate of not lessthan 6% and not more than 10% of the aggregate annual compensation paid to members of the systemduring the fiscal year. Texas Government Code section 821.006 prohibits benefit improvements, if asa result of the particular action, the time required to amortize TRS’ unfunded actuarial liabilities wouldbe 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.

Employee contribution rates are set in state statute, Texas Government Code 825.402. Senate Bill 1458 of the 83rd Texas Legislature amended Texas Government Code 825.402 for membercontributions and established employee contribution rates for fiscal years 2014 thru 2017. It also added a 1.5% contribution for employers not paying Old Age Survivor and Disability Insurance(OASDI) on certain employees effective for fiscal year 2015 as discussed in Note 1 of the TRS 2014CAFR. The 83rd Texas Legislature, General Appropriations Act (GAA) established the employercontribution rates for fiscal years 2014 and 2015.

Contribution RatesPlan Fiscal Year

2014 2015Member 6.4% 6.7%Non-Employer Contributing Entity (State) 6.8% 6.8%Employers 6.8% 6.8%

Contributions Required and Made

El Paso ISD 2014 Employer Contributions $ 6,088,567El Paso ISD 2014 Member Contributions (Employee) 23,992,375El Paso ISD 2014 NECE On-Behalf Contributions (State) 19,684,760

(Continued)

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JUNE 30, 2015

Contributors to the plan include members, employers and the State of Texas as the only non-employercontributing entity. The State is the employer for senior colleges, medical schools and state agencies,including TRS. In each respective role, the State contributes to the plan in accordance with statestatutes and the General Appropriations Act (GAA).

As the non-employer contributing entity for public education and junior colleges, the State of Texascontributes to the retirement system an amount equal to the current employer contribution rate timesthe aggregate annual compensation of all participating members of the pension trust fund during thatfiscal year reduced by the amounts described below which are paid by the employers. Employers(public school, junior college, other entities or the State of Texas as the employer for senior universitiesand medical schools) are required to pay the employer contribution rate in the following instances:

• On the portion of the member's salary that exceeds the statutory minimum for members entitled tothe statutory minimum under Section 21.402 of the Texas Education Code.

• During a new member’s first 90 days of employment.

• When any part or all of an employee’s salary is paid by federal funding sources or privatelysponsored sources from non-educational, general, or local funds.

• When the employing district is a public junior college or junior college district, the employer shallcontribute to the retirement system an amount equal to 50% of the state contribution rate for certaininstructional or administrative employees; and 100% of the state contribution rate for all otheremployees.

In addition to the employer contributions listed above, when employing a retiree of the TeacherRetirement System the employer shall pay both the member contribution and the state contribution asan employment after retirement surcharge.

(Continued)

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JUNE 30, 2015

Actuarial Assumptions: The total pension liability in the August 31, 2014 actuarial valuation wasdetermined using the following actuarial assumptions:

Valuation Date August 31, 2014Actuarial Cost Method Individual Entry Age NormalAmortization Method Level Percentage of Payroll, OpenRemaining Amortization Period 30 yearsAsset Valuation Method 5 year Market ValueDiscount Rate 8.00%Long-term expected Investment Rat of Return* 8.00%Salary Increases* 4.25% to 7.25%Weighted-Average at Valuation Date 5.55%Payroll Growth Rate 3.50%

*Includes Inflation of 3%

The actuarial methods and assumptions are primarily based on a study of actual experience for the fouryear period ending August 31, 2010 and adopted on April 8, 2011. With the exception of the post-retirement mortality rates for healthy lives and a minor change to the expected retirement age forinactive vested members stemming from the actuarial audit performed in the Summer of 2014, theassumptions and methods are the same as used in the prior valuation. When the mortality assumptionswere adopted in 2011 they contained a significant margin for possible future mortality improvement. As of the date of the valuation there has been a significant erosion of this margin to the point that themargin has been eliminated. Therefore, the post-retirement mortality rates for current and futureretirees was decreased to add additional margin for future improvement in mortality in accordance withthe Actuarial Standards of Practice No. 35.

(Continued)

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JUNE 30, 2015

Discount Rate: The discount rate used to measure the total pension liability was 8.0%. There was nochange in the discount rate since the previous year. The projection of cash flows used to determine thediscount rate assumed that contributions from plan members and those of the contributing employersand the non-employer contributing entity are made at the statutorily required rates. Based on thoseassumptions, the pension plan’s fiduciary net position was projected to be available to make all futurebenefit payments of current plan members. Therefore, the long-term expected rate of return on pensionplan investments was applied to all periods of projected benefit payments to determine the total pensionliability. The long-term rate of return on pension plan investments is 8%. The long-term expected rateof return on pension plan investments was determined using a building-block method in which best-estimates ranges of expected future real rates of return (expected returns, net of pension plan investmentexpense and inflation) are developed for each major asset class. These ranges are combined to producethe long-term expected rate of return by weighting the expected future real rates of return by the targetasset allocation percentage and by adding expected inflation. Best estimates of geometric real rates ofreturn for each major asset class included in the Systems target asset allocation as of August 31, 2014are summarized below:

Asset ClassTarget

Allocation

Real ReturnGeometric

Basis

Long-TermExpectedPortfolio

Real Rate ofReturn*

Global Equity U.S. 18% 7.0% 1.4% Non-U.S. Developed 13% 7.3% 1.1% Emerging Markets 9% 8.1% 0.9% Directional Hedge Funds 4% 5.4% 0.2% Private Equity 13% 9.2% 1.4%Stable Value U.S. Treasuries 11% 2.9% 0.3% Absolute Return 0% 4.0% 0.0% Stable Value Hedge Funds 4% 5.2% 0.2% Cash 1% 2.0% 0.0%Real Return Global Inflation Linked Bonds 3% 3.1% 0.0% Real Assets 16% 7.3% 1.5% Energy and Natural Resources 3% 8.8% 0.3% Commodities 0% 3.4% 0.0%Risk Parity Risk Parity 5% 8.9% 0.4% Alpha - 1.0%

Total 100% 8.7%

*The Expected Contribution to Returns incorporates the volatility drag resulting from the conversionbetween Arithmetic and Geometric mean returns.

(Continued)

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JUNE 30, 2015

Discount Rate Sensitivity Analysis: The following schedule shows the impact of the Net PensionLiability if the discount rate used was 1% less than and 1% greater than the discount rate that was used(8%) in measuring the 2014 Net Pension Liability:

1% Decreasein DiscountRate (7%)

CurrentDiscountRate 8%

1% Increasein DiscountRate (9%)

District’s proportionate share of the net pension liability $ 114,629,351 $ 64,148,427 $ 26,398,099

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflowsof Resources Related to Pensions: At June 30, 2015, the District reported a liability of $64,148,427for its proportionate share of the TRS’s net pension liability. This liability reflects a reduction for Statepension support provided to the District. The amount recognized by the District as its proportionateshare of the net pension liability, the related State support, and the total portion of the net pensionliability that was associated with the District were as follows:

The District’s proportionate share of the collective net pension liability $ 64,148,427

State’s proportionate share of the net pension liability associated with the District 207,838,673

Total $ 271,987,100

The net pension liability was measured as of August 31, 2014 and the total pension liability used tocalculate the net pension liability was determined by an actuarial valuation as of that date. TheDistrict’s proportion of the net pension liability was based on the District’s contributions to the pensionplan relative to the contributions of all employers to the plan for the period September 1, 2013 throughAugust 31, 2014.

At August 31, 2014 the employer’s proportion of the collective net pension liability was 0.2401539%. Since this is the first year of implementation, the District does not have the proportion measured as ofAugust 31, 2013. The Notes to the Financial Statements for August 31, 2014 for TRS stated that thechange in proportion was immaterial and therefore disregarded this year.

There were no changes of assumptions or other inputs that affected measurement of the total pensionliability during the measurement period.

There were no changes of benefit terms that affected measurement of the total pension liability duringthe measurement period.

(Continued)

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JUNE 30, 2015

There was a change in employer contribution requirements that occurred after the measurement dateof the net pension liability and the employer’s reporting date. A 1.5% contribution for employers notpaying Old Age Survivor and Disability Insurance (OASDI) on certain employees went into laweffective 09/01/2014. The amount of the expected resultant change in the employer’s proportion cannotbe determined at this time.

For the year ended June 30, 2015 the District recognized pension expense of $19,214,299 and revenueof $19,214,299 representing pension expense incurred by the State on behalf of the District. Theamount of pension expense recognized by the District in the reporting period was $5,929,388.

At June 30, 2015, the District reported its proportionate share of the TRS’s deferred outflows ofresources and deferred inflows of resources related to pensions from the following sources:

DeferredOutflows ofResources

DeferredInflows ofResources

Differences between expected and actual actuarial experience $ 992,076 $ - Changes in actuarial assumptions 4,169,719 - Net difference between projected and actual earnings on pension plan investments - 19,606,379Changes in proportion and difference between District’s contributions and proportionate share of contributions - 16,815District contributions to TRS subsequent to the measurement date 9,278,654 -

Total $ 14,440,449 $ 19,623,194

The $9,278,654 reported as deferred outflows of resources related to pensions resulting from Districtcontributions subsequent to the measurement date will be recognized as a reduction of the net pensionliability in the year ended June 30, 2016. The net amounts of the employer’s balances of deferredoutflows an inflows of resources related to pensions will be recognized in pension expense as follows:

Year Ended June 30 Amount

2016 $ (4,033,638)2017 (4,033,638)2018 (4,033,638)2019 (4,033,638)2020 867,957 2021 805,196

(Continued)

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JUNE 30, 2015

T. Retiree Health Plan

Plan Description. The El Paso Independent School District contributes to the Texas Public SchoolRetired Employees Group Insurance Program (TRS-Care), a cost-sharing multiple-employer definedbenefit post-employment health care plan administered by the Teacher Retirement System of Texas. TRS-Care provides health care coverage for certain persons (and their dependents) who retired underthe Teacher Retirement System of Texas. The statutory authority for the program is Texas InsuranceCode, Chapter 1575, Section 1575.052 grants the TRS Board of Trustees the authority to establish andamend basic and optional group insurance coverage for participants. The Teacher Retirement Systemof Texas issues a publicly available financial report that includes financial statements and requiredsupplementary information for TRS-Care. That report may be obtained by visiting the TRS websiteat www.trs.state.tx.us under the TRS Publications heading, by calling the TRS CommunicationsDepartment at 1-800-223-8778, or by writing to the Communications Department of the TeacherRetirement System of Texas at 1000 Red River Street, Austin, Texas 78701.

Funding Policy. Contribution requirements are not actuarially determined but are legally establishedeach biennium by the Texas Legislature. Texas Insurance Code, Sections 1575.202, 203, and 204establish state, active employee and public school contributions, respectively. Funding for free basiccoverage is provided by the program based upon public school district payroll. Per Texas InsuranceCode, 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. Funding for optional coverage is providedby those participants selecting the optional coverage. Contribution rates and amounts are equal to therequired contributions for each year and are shown in the table below for fiscal years 2015, 2014 and2013.

Contribution Rates

Period/Year Ended Member State School District Federal

Rate Amount Rate Amount Rate Amount Rate Amount

2015 0.65% $ 2,412,939 1.0% $ 3,319,026 0.55% $ 2,167,239 1.0% $ 317,415

2014 0.65% $ 2,434,917 1.0% $ 3,357,169 0.55% $ 2,094,586 1.0% $ 310,825

2013 0.65% $ 2,391,686 0.5% $ 1,651,543 0.55% $ 2,055,754 0.5% $ 256,099

The contributions made by the State on behalf of the District have been recorded in the governmentalfunds financial statements of the District as both state revenues and expenditures. These contributionsare the legal responsibility of the State.

(Continued)

84




JUNE 30, 2015

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003, which was effectiveJanuary 1, 2006, established prescription drug coverage for Medicare beneficiaries known as MedicarePart D. One of the provisions of Medicare Part D allows for the Texas Public School Retired EmployeeGroup Insurance Program (TRS-Care) to receive retiree drug subsidy payments from the federalgovernment to offset certain prescription drug expenditures for eligible TRS-Care participants. Medicare Part D contributions made on behalf of the District’s employees for the years ended June 30,2015, 2014, and 2013, were $1,088,982, $1,000,880, and $992,619, respectively. These amounts arerecorded as equal revenues and expenditures in the governmental fund financial statements of theDistrict.

U. Health Care Coverage

On January 1, 2011 the District joined the state sponsored health insurance plan, TRS ActiveCare. Employees have three PPO plan options to choose from, as administered by Blue Cross and Blue Shieldof Texas. All three plans meet the guidelines of the Affordable Health Care Act.

V. Self-Insured Workers’ Compensation

The District self-insures its workers’ compensation claims which are administered by a third party.Estimated incurred but not paid claims are accrued as liabilities of the Workers’ Compensation Fund. The District maintains self insured retention per occurrence of $2,000,000 and employers’ liabilityinsurance of $1,000,000 to limit its claim liability.

The accrued liability for Workers’ Compensation self-insurance of $9,000,000 includes estimatedincurred but not paid claims. This liability reported in the fund at June 30, 2015, is in accordance withthe requirements of Governmental Accounting Standards Board. Because actual claim liabilitiesdepend on such complex factors as inflation, changes in legal doctrines, and damage awards, actualresults may differ from the estimated liability.

Changes in the balances of claim liabilities for June 30 are as follows:

2015 2014

Unpaid claims, beginning of year $ 9,000,000 $ 9,000,000 Incurred claims 2,886,439 3,567,262 Claim Payments (2,886,439) (3,567,262)

Unpaid claims, end of fiscal year $ 9,000,000 $ 9,000,000

(Continued)

85




JUNE 30, 2015

W. Revenue from Local and Intermediate Sources

During the year ending June 30, 2015, revenues from local and intermediate sources consisted of thefollowing:

GeneralFund

2008 CapitalProjects Fund


Funds

TotalGovernmental

Funds


Property taxes $ 162,261,575 $ - $ 30,419,728 $ 192,681,303 $ - Penalty and interest on taxes 1,328,328 - 243,388 1,571,716 - Investment income 137,844 131,651 196,973 466,468 12,815Food Service Activity - - 3,440,150 3,440,150 - Tuition and fees 592,002 - - 592,002 - Extracurricular/Cocurricular activities 862,725 - - 862,725 - Athletics 489,581 - - 489,581 - Rent 91,498 - - 91,498 - Shared service arrangements - - 566,069 566,069 - Army Youth grant - - 166,441 166,441 - Transportation revenue 138,531 - - 138,531 - Refunds/Credits 197,245 - - 197,245 - Print Shop - - - - 826,160Workers Compensation - - - - 48Health Clinic - - - - 630,435Other Local Revenue 939,842 1,500 27,457 968,799 -

Total $ 167,039,171 $ 133,151 $ 35,060,206 $ 202,232,528 $ 1,469,458

(Continued)

86




JUNE 30, 2015

X. Fund Balances

As of June 30, 2015, fund balances were composed of the following:

GeneralFund

2008 CapitalProjects Fund


Funds Total

Nonspendable: Inventories $ 1,475,114 $ - $ - $ 1,475,114Restricted: CATE allotment 1,606,970 - - 1,606,970 SCE allotment 1,246,450 - - 1,246,450 High School Allotment 563,399 - - 563,399 MAC - - 51,651 51,651 Retirement of Long-term debt - - 26,644,278 26,644,278 QSC-MTN Sinking Fund and Bray Trust - - 4,609,354 4,609,354 Food Service Program - - 7,116,251 7,116,251 Capital projects - 73,218,976 - 73,218,976Assigned: Construction 1,981,987 - - 1,981,987 Other Assigned 6,097,930 - - 6,097,930Unassigned 94,564,880 - - 94,564,880

Total fund balances $107,536,730 $ 73,218,976 $ 38,421,534 $219,177,240

As discussed in Note Y, as of June 30, 2015, the District has $17,012,961 of encumbrances of operatingfunds in major and nonmajor funds that rolled over into the next fiscal year.

Y. Encumbrances

Encumbrances for goods or purchased services are documented by purchase orders or contracts. UnderTexas law, appropriations lapse at year end, and encumbrances outstanding at that time are to be eithercanceled or appropriately provided for in the subsequent year's budget. Encumbrance accounting isemployed as an extension of formal budgetary integration for the District's funds. At June 30, 2015,certain amounts which were previously restricted or assigned for specific purposes have beenencumbered in the governmental funds. Significant encumbrances included in governmental fundbalances are as follows:

(Continued)

87




JUNE 30, 2015

Encumbrances included in:

Restrictedfund Balance

AssignedFund Balance Total

General Fund $ - $ 3,494,253 $ 3,494,253 2008 Capital Projects Fund 12,785,875 - 12,785,875 Nonmajor governmental funds 732,833 - 732,833

Total $ 13,518,708 $ 3,494,253 $ 17,012,961

Z. Litigation

The District is the defendant in a number of lawsuits arising principally in the normal course ofoperations. The District maintains insurance with deductibles up to $50,000 per claim to cover thevarious lawsuits. In the opinion of management, the outcome of these lawsuits will not have a materialadverse effect on the accompanying basic financial statements and accordingly, no provision has beenaccrued. The District is part of an ongoing investigation in relation to accountability scores, whichcould have an impact on the District’s future federal funding. However, the outcome of theinvestigation and any potential loss is unknown.

AA. Construction and Other Significant Commitments and Contingencies

Construction CommitmentsThe District has active construction projects as of June 30, 2015 including renovations and siteimprovements. All accumulated resources for capital projects are restricted or assigned for constructioncommitments. As of June 30, 2015, the construction work in progress and estimated commitments withcontractors on various projects are as follows:

SpentTo Date

RemainingCommitment

Classroom Additions $ 4,162,068 $ 4,924,166 Multi-Purpose Classrooms 1,399,366 6,832,183 A/C Replacements & Improvements 1,111,395 82,631 E-17 Far Northeast Elementary 643,681 66,481 ADA Accessibility Compliance Phases 2 & 3 (District-wide) 493,650 52,803 Athletic Improvements 340,554 330,922 Heating System Replacements & Upgrades 149,375 19,090 Administration Building 95,997 1,347,451 District-Wide Critical Roofing 77,653 905,329 DW Elevator Assessment 74,131 301,424 TIS Network Core Relocation 71,220 455,275 Drop off Zones & Safety Controls 66,952 145,126

(Continued)

88




JUNE 30, 2015

SpentTo Date

RemainingCommitment

New Transportation Facilities 65,467 119,099 Parking Lots & Improvements 64,422 253,710 Science Lab Improvements 27,156 19,475 Mechanical and Electrical Upgrades 20,520 185,080 Miscellaneous Contracts (Under $100,000) 188,167 34,907

$ 9,051,774 $ 16,075,152

Federal and State Funding The District participates in numerous state and federal grant programs which are governed by variousrules and regulations of the grantor agencies; therefore, to the extent that the District has not compliedwith the rules and regulations governing the grants, refunds of any money received may be requiredand the collectibility of any related receivable at June 30, 2015 may be impaired. The District is partof an ongoing investigation in relation to accountability scores, which could have an impact on theDistrict’s future federal funding. However, the outcome of the investigation and any potential loss isunknown. In the opinion of administration, there are no other significant contingent liabilities relatingto compliance with the rules and regulations governing the respective grants; therefore, no provisionhas been recorded in the accompanying financial statements for such contingencies.

Vacation and Non-Duty Leave TimeVacation days are earned by certain employees based upon their contract year and how much of theircontract year they have completed. Unused leave time rolls forward, however, any unused days areforfeited six months after the applicable contract year is completed. Upon separation, any remainingbalance earned is paid to the employee at their current rate of pay.

Non-duty days are work days on the District calendar in which the employee may choose not towork. If the employee does not use these days, they are considered days in excess of their contract.Unused days roll forward, however, any unused days are forfeited six months after the applicablecontract year is completed for exempt employees; non-exempt employees are paid. In some instances,the employees may be eligible to receive payment for the unused days if separating from the Districtat the end of their contract.

It is District policy that leave time be used. Management has determined that any resulting obligationat the end of the fiscal year would be insignificant and immaterial to the financial statements. As such,no provision has been recorded in the accompanying financial statements.

(Continued)

89




JUNE 30, 2015

BB. Shared Service Arrangements

The District is the fiscal agent for a Shared Services Arrangement (“SSA”) which provides a RegionalDay School Program for the deaf. All services are provided by the fiscal agent. The member districtsprovide the funds to the fiscal agent. According to guidance provided in TEA’s Resource Guide, theDistrict has accounted for the fiscal agent’s activities of the SSA in Special Revenue Fund No. 435,Shared Services Arrangements - Deaf Education and Fund 446, RDSPD Tuition Funds.

Expenditures of the SSA are summarized below:

El Paso I.S.D. $ 1,041,222Socorro I.S.D. 159,270Ysleta I.S.D. 277San Elizario I.S.D. 14,205Fabens I.S.D. 13,132Canutillo I.S.D. 75,717Clint I.S.D 52,391Anthony I.S.D. 300

Total $ 1,356,514

CC. Risk Management

The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction ofassets; errors and omissions; injuries to employees; and natural disasters. The Board maintainsinsurance policies acquired from independent insurance carriers covering all structural property,automobiles, dishonesty, errors and omissions, boiler and machinery, personal property, and generalliability. There have been no significant reductions in insurance coverage from prior years andsettlements have not exceeded insurance coverage.

DD. Related Party Transactions

From time to time, the District may enter into transactions with related parties through the normalcourse of business. If a Board member has a conflict of interest, proper documentation is completedand he/she is required to abstain from any discussion or voting regarding the matter. Management isnot aware of any material related party transactions that occurred during the year ending June 30, 2015.

(Continued)

90




JUNE 30, 2015

EE. EPISD Education Foundation

The EPISD Education Foundation (the Foundation) is a not-for-profit organization which wasorganized to provide scholarship funds to students and classroom impact grants for teachers of the ElPaso Independent School District. The members of the Board of Directors of the Foundation are eitherappointed or elected. The Superintendent of El Paso Independent School District (EPISD) has the rightto appoint one voting member of the Board of Directors, and the EPISD Board selects two membersfrom the EPISD Board. The remaining members make up a majority and are elected by the currentBoard of Directors of the Foundation. The Foundation’s financial condition and results of operationsare not included in the District’s financial statements.

FF. Other Post Employment Benefits

The District pays the premiums for group life insurance for retired employees. The policies providefor a $1,000 benefit. During the year ending June 30, 2015, the District paid a total of $2,130 inpremiums for retired employees which is approximately four cents per employee per month.Management does not anticipate that the estimated liability related to this obligation would be materialto the government wide financial statements and as such an accrual has not been made.

GG. Top Ten Taxpayers

The following businesses represent the top ten taxpayers for the District:

Name Taxable Value% of Taxable

Value

Western Refining Co. LP $ 488,899,014 3.08%El Paso Electric Co. 187,050,553 1.18%Simon Property Group 177,170,273 1.12%Sierra Providence Physical Rehab. Hospital 115,736,502 0.73%Wal-Mart Stores Inc. 109,008,638 0.69%Hawkins & I-10 Acquisition Co. LP 101,325,248 0.64%Union Pacific Railroad Co. 54,877,064 0.35%EI Dupont De Nemours & Co. 52,639,800 0.33%Texas Gas Service 52,455,773 0.33%JRK Colinas Del Sol LLC 45,281,852 0.29%

$ 1,384,444,717 8.74%

(Continued)

91




JUNE 30, 2015

HH. School District Governance

The Commissioner of Education appointed a five member Board of Managers for a two year term thatexpired on May 18, 2015. On this same day, the elected Board of Trustees took office. A temporarymonitor was assigned to the District at that time and the assignment ended on August 24, 2015.

II. Prior Period Adjustment

During fiscal year 2015, the District adopted GASB Statement No. 68, Accounting and FinancialReporting for Pensions- an amendment of GASB Statement No. 27. With GASB 68, the District mustassume their proportionate share of the Net Pension Liability of the Teacher Retirement System ofTexas. Adoption of GASB 68 required a prior period adjustment to report the effect of GASB 68retroactively. The amount of the prior period adjustment is $73,612,578. The restated beginning netposition is $256,330,228.

JJ. New Accounting Pronouncements

The District has not completed the process of evaluating the impact on its financial position that willresult from adopting Governmental Accounting Standards Board (GASB) Statements No. 72, FairValue Measurement and Application, effective for fiscal years beginning after June 15, 2015, No. 75,Accounting and Financial Reporting for Postemployment Benefits Other than Pensions, effective forfiscal years beginning after June 15, 2017, and No. 77, Tax Abatement Disclosures, effective for fiscalyears beginning after December 15, 2015. GASB No. 72 addresses accounting and financial reportingissues related to fair value measurements. GASB No. 75 addresses accounting and financial reportingfor OPEB that is provided to the employees of state and local governmental employers. GASB No. 77required disclosures of certain information about tax abatements.

92

REQUIRED SUPPLEMENTARY INFORMATION

93

EXHIBIT G-1EL PASO 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:165,947,011 164,915,790 167,039,171 1,092,160 Total Local and Intermediate Sources $ $ $ $5700

291,837,583 291,847,621 296,684,012 4,846,429 State Program Revenues5800

12,810,000 12,810,000 16,472,761 3,662,761 Federal Program Revenues5900

Total Revenues5020 469,573,411 470,594,594 480,195,944 9,601,350

EXPENDITURES:

Current:288,966,441 283,024,179 282,592,973 6,373,468 Instruction0011

10,698,926 10,698,926 9,991,184 707,742 Instructional Resources and Media Services0012

11,521,245 11,003,452 10,716,866 804,379 Curriculum and Instructional Staff Development0013

3,089,928 3,042,211 2,691,994 397,934 Instructional Leadership0021

36,209,727 36,193,348 35,886,086 323,641 School Leadership0023

17,312,285 17,309,203 15,795,544 1,516,741 Guidance, Counseling and Evaluation Services0031

3,402,818 3,299,818 3,467,017 (64,199)Social Work Services0032

6,643,308 6,643,308 6,297,203 346,105 Health Services0033

15,379,003 15,140,549 16,026,451 (647,448)Student (Pupil) Transportation0034

11,679,131 11,417,561 11,661,237 17,894 Extracurricular Activities0036

10,678,095 10,544,574 9,872,121 805,974 General Administration0041

53,126,172 52,678,006 46,641,001 6,485,171 Facilities Maintenance and Operations0051

5,801,115 5,677,116 5,506,309 294,806 Security and Monitoring Services0052

5,885,520 5,483,562 5,418,684 466,836 Data Processing Services0053

161,293 191,618 125,833 35,460 Community Services0061

Debt Service:2,753,485 2,736,273 2,399,992 353,493 Principal on Long Term Debt0071

480,493 497,705 446,759 33,734 Interest on Long Term Debt0072

2,000 2,000 661 1,339 Bond Issuance Cost and Fees0073

Capital Outlay:4,003,121 750,000 2,445,580 1,557,541 Facilities Acquisition and Construction0081

Intergovernmental:2,546,467 2,546,467 2,348,227 198,240 Other Intergovernmental Charges0099


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

(9,306,465) (19,745,979) 9,864,222 29,610,201

OTHER FINANCING SOURCES (USES): (684,059)(684,059) (684,059) - Transfers Out (Use)8911

(3,346,230) - (3,345,957) 273 Other (Uses)8949

Total Other Financing Sources (Uses) 7080 (684,059) (4,030,289) (4,030,016) 273

1200 Net Change in Fund Balances (9,990,524) (23,776,268) 5,834,206 29,610,474

0100 Fund Balance - July 1 (Beginning) 101,702,524 101,702,524 101,702,524 -


94

SCHEDULE OF THE DISTRICT'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY


TEACHERS RETIREMENT SYSTEM

EL PASO INDEPENDENT SCHOOL DISTRICT EXHIBIT G-2

2015

0.2401539%District's Proportion of the Net Pension Liability (Asset)

64,148,427 $District's Proportionate Share of Net Pension Liability (Asset)

207,838,673 State's Proportionate Share of the Net Pension Liability (Asset) Associated with the District

271,987,100 $Total

374,880,694 $District's Covered-Employee Payroll

17.11%District's Proportionate Share of the Net Pension Liability (Asset) as a Percentage of its Covered Employee Payroll

83.25%Plan Fiduciary Net Position as a Percentage of the Total Pension Liability

Note: Only one year of data is presented in accordance with GASB 68, Paragraph 138. "The information for all periods for the 10-year schedules that are required to be presented as required supplementary information may not be available initially. In these cases, during the transition period, that information should be presented for as many years as are available. The schedules should not include information that is not measured in accordance with the requirements of this Statement."

Note: GASB 68, Paragraph 81 requires that the information on this schedule be data from the period corresponding with the period covered as of the measurement date of August 31, 2014 - the period from September 1, 2013 - August 31, 2014.

95

SCHEDULE OF DISTRICT CONTRIBUTIONS

TEACHERS RETIREMENT SYSTEM

FOR FISCAL YEAR 2015

EL PASO INDEPENDENT SCHOOL DISTRICT EXHIBIT G-3

2015

Contractually Required Contribution 10,210,794 $

Contribution in Relation to the Contractually Required Contribution (10,210,794)

Contribution Deficiency (Excess) -0-$

District's Covered-Employee Payroll 369,616,690 $

Contributions as a Percentage of Covered-Employee Payroll 2.76%

Note: Only one year of data is presented in accordance with GASB 68, Paragraph 138. "The information for all periods for the 10-year schedules that are required to be presented as required supplementary information may not be available initially. In these cases, during the transition period, that information should be presented for as many years as are available. The schedules should not include information that is not measured in accordance with the requirements of this Statement."

Note: GASB 68, Paragraph 81 requires that the data in this schedule be presented as of the District's current fiscal year as opposed to the time period covered by the measurement date of September 1, 2013 - August 31, 2014.

96


NOTES TO REQUIRED SUPPLEMENTARY INFORMATION


Changes of benefit terms.

There were no changes of benefit terms that affected measurement of the total pension liability during themeasurement period.

Changes of assumptions.

There were no changes of assumptions or other inputs that affected measurement of the total pension liabilityduring the measurement period.

97


98

SUPPLEMENTARY INFORMATION

99


COMBINING BALANCE SHEETNONMAJOR GOVERNMENTAL FUNDS

JUNE 30, 2015

Control

Data

Codes

ESEA

Title X, Pt.C

Homeless Basic Program

Improving

ESEA I, A

Federal

Education

Adult

Assistance

Family

TANF

206 211 220 223

ASSETS

- - - - $ $ $ $1110 Cash and Cash Equivalents

- - - - 1220 Property Taxes - Delinquent

- - - - 1230 Allowance for Uncollectible Taxes (Credit)

10,040,548 49,013 149,472 37,108 1240 Receivables from Other Governments

- - - - 1250 Accrued Interest

- - - - 1260 Due from Other Funds

- - - - 1290 Other Receivables

- - - - 1300 Inventories

- - - - 1800 Restricted Assets

- - - - 1900 Long Term Investments

Total Assets1000 49,013 10,040,548 149,472 37,108 $ $ $ $

LIABILITIES

54,781 - 331 29 $ $ $ $2110 Accounts Payable

4,342,407 - 91,251 13,028 2160 Accrued Wages Payable

5,477,084 46,323 56,319 23,976 2170 Due to Other Funds

7 - - - 2180 Due to Other Governments

166,269 2,690 1,571 75 2200 Accrued Expenditures

- - - - 2300 Unearned Revenues

Total Liabilities2000 49,013 10,040,548 149,472 37,108

DEFERRED INFLOWS OF RESOURCES

- - - - 2601 Unavailable Revenue - Property Taxes

Total Deferred Inflows of Resources2600 - - - -

FUND BALANCES


- - - - 3450 Federal or State Funds Grant Restriction

- - - - 3480 Retirement of Long-Term Debt

- - - - 3490 Other Restricted Fund Balance

Total Fund Balances3000 - - - -

4000 Total Liabilities, Deferred Inflows & Fund Balances 49,013 10,040,548 149,472 37,108 $ $ $ $

100

EXHIBIT H-1 (Cont'd)

IDEA - Part B

Formula Preschool

IDEA - Part B

Lunch Program

Breakfast and

National

Program

Feeding

Summer Career and

Technical -

Basic Grant

ESEA II,A

Training and

Recruiting

Medicaid

Admin. Claim

MAC

Title III, A

English Lang.

Acquisition

224 225 240 242 244 255 263 272

- - - - - 4,637 - - $ $ $ $ $ $ $ $

- - - - - - - -

- - - - - - - -

168,228 201,162 1,270,273 2,767,752 6,449 - 847,587 58,212

- - - - - - - -

- 1,615,515 - - - 6,376,815 - 4,768

- - - - - 1,631 - -

- - - - - 1,794 - -

- - - - - 60,228 - -

- - - - - - - -

2,767,752 6,449 6,445,105 1,816,677 168,228 1,270,273 847,587 62,980 $ $ $ $ $ $ $ $

1,458 97 7,606 14,165 336 167,415 8,410 - $ $ $ $ $ $ $ $

28,480 112,162 342,147 1,494,180 - 729,797 195,680 11,329

138,290 - 852,814 1,232,306 5,813 - 640,015 -

- - 11,965 - - - - -

- - 55,741 27,101 300 134,266 3,482 -

- - - - - 1,794 - -

2,767,752 6,449 1,033,272 112,259 168,228 1,270,273 847,587 11,329

- - - - - - - -

- - - - - - - -

- 1,704,418 - - - 5,351,605 - 51,651

- - - - - - - -

- - - - - 60,228 - -

- - 5,411,833 1,704,418 - - - 51,651

2,767,752 6,449 6,445,105 1,816,677 168,228 1,270,273 847,587 62,980 $ $ $ $ $ $ $ $

101



JUNE 30, 2015

Control

Data

Codes

Title I SIP

Academy

Grant ARRA Revenue Funds

Special

Other Federal

Discretionary

IDEA, Part B

SSA

Deaf

IDEA, Part B

SSA

286 289 315 316

ASSETS

- - - - Cash and Cash Equivalents $ $ $ $1110

- - - - Property Taxes - Delinquent1220

- - - - Allowance for Uncollectible Taxes (Credit)1230

2,133,970 - 13,891 16,693 Receivables from Other Governments1240

- - - - Accrued Interest1250

- - - - Due from Other Funds1260

- - - - Other Receivables1290

- - - - Inventories1300

- - - - Restricted Assets1800

- - - - Long Term Investments1900

Total Assets1000 - 2,133,970 13,891 16,693 $ $ $ $

LIABILITIES

33,171 - - - Accounts Payable $ $ $ $2110

537,766 - 10,772 8,884 Accrued Wages Payable2160

1,025,311 - 3,119 7,709 Due to Other Funds2170

- - - - Due to Other Governments2180

510,058 - - 100 Accrued Expenditures2200

27,664 - - - Unearned Revenues2300

Total Liabilities2000 - 2,133,970 13,891 16,693


- - - - Unavailable Revenue - Property Taxes2601


FUND BALANCES


- - - - Federal or State Funds Grant Restriction3450

- - - - Retirement of Long-Term Debt3480

- - - - Other Restricted Fund Balance3490

Total Fund Balances3000 - - - -

4000 Total Liabilities, Deferred Inflows & Fund Balances - 2,133,970 13,891 16,693 $ $ $ $

102


SSA - IDEA, B

Preschool

Intervention

Deaf - Early

SSA - IDEA C

State

Education

Adult Basic

Incentives

Placement

Advanced High School

Completion

and Success

State

Textbook

Fund

SSA

Regional Day

School - Deaf

Other State

Special

Revenue Funds

317 340 381 397 409 410 429 435

Deaf

- - - - - - - - $ $ $ $ $ $ $ $

- - - - - - - -

- - - - - - - -

38,741 - 597,284 3,130 26 13,511 - 132,289

- - - - - - - -

- 36,338 3,687,759 - - - 25,059 -

- - - - - - - -

- - - - - - - -

- - - - - - - -

- - - - - - - -

3,130 26 13,511 36,338 38,741 4,285,043 25,059 132,289 $ $ $ $ $ $ $ $

- - - - - - - 120 $ $ $ $ $ $ $ $

- - - - - 4,568 - 117,482

34,217 - - 3,130 26 8,943 - 14,687

- - - - - - - -

- - 4,285,043 - - - 26 -

4,524 36,338 - - - - 25,033 -

3,130 26 13,511 36,338 38,741 4,285,043 25,059 132,289

- - - - - - - -

- - - - - - - -

- - - - - - - -

- - - - - - - -

- - - - - - - -

- - - - - - - -

3,130 26 13,511 36,338 38,741 4,285,043 25,059 132,289 $ $ $ $ $ $ $ $

103



JUNE 30, 2015

Control

Data

Codes

RDSPD

Tuition

Funds Revenue Funds

Special

Other Local

Revenue Funds

Special

Nonmajor

Sinking Fund

QSC-MTN

446 499 Total 575

ASSETS

- - 4,637 - Cash and Cash Equivalents $ $ $ $1110

- - - - Property Taxes - Delinquent1220

- - - - Allowance for Uncollectible Taxes (Credit)1230

- 350,802 18,896,141 - Receivables from Other Governments1240

- - - 67,124 Accrued Interest1250

224,225 - 11,970,479 - Due from Other Funds1260

- - 1,631 - Other Receivables1290

- - 1,794 - Inventories1300

- - 60,228 - Restricted Assets1800

- - - 4,542,230 Long Term Investments1900

Total Assets1000 350,802 224,225 30,934,910 4,609,354 $ $ $ $

LIABILITIES

- - 287,919 - Accounts Payable $ $ $ $2110

363 78,398 8,118,694 - Accrued Wages Payable2160

- 272,404 9,842,486 - Due to Other Funds2170

11 - 11,983 - Due to Other Governments2180

11,585 - 5,198,307 - Accrued Expenditures2200

212,266 - 307,619 - Unearned Revenues2300

Total Liabilities2000 350,802 224,225 23,767,008 -


- - - - Unavailable Revenue - Property Taxes2601


FUND BALANCES


- - 7,107,674 - Federal or State Funds Grant Restriction3450

- - - - Retirement of Long-Term Debt3480

- - 60,228 4,609,354 Other Restricted Fund Balance3490

Total Fund Balances3000 - - 7,167,902 4,609,354

4000 Total Liabilities, Deferred Inflows & Fund Balances 350,802 224,225 30,934,910 4,609,354 $ $ $ $

104

EXHIBIT H-1

Debt Service

Fund

Funds

Debt Service

Nonmajor

Grant

Construction

DOD

Funds

Governmental

Nonmajor

599 Total 620 Total

27,043,285 27,038,648 27,038,648 - $ $ $ $

2,033,418 2,033,418 2,033,418 -

(1,052,000)(1,052,000) (1,052,000) -

21,545,937 - - 2,649,796

72,347 5,223 72,347 -

11,970,479 - - -

37,037 35,406 35,406 -

1,794 - - -

60,228 - - -

6,109,030 1,566,800 6,109,030 -

29,627,495 34,236,849 2,649,796 67,821,555 $ $ $ $

287,919 - - - $ $ $ $

8,118,694 - - -

12,492,282 - - 2,649,796

11,983 - - -

5,198,307 - - -

2,527,360 2,219,741 2,219,741 -

2,219,741 2,219,741 2,649,796 28,636,545

763,476 763,476 763,476 -

763,476 763,476 - 763,476

7,107,674 - - -

26,644,278 26,644,278 26,644,278 -

4,669,582 - 4,609,354 -

26,644,278 31,253,632 - 38,421,534

29,627,495 34,236,849 2,649,796 67,821,555 $ $ $ $

105


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


Control

Data

Codes

ESEA

Title X, Pt.C

Homeless Basic Program

Improving

ESEA I, A

Federal

Education

Adult

Assistance

Family

TANF

206 211 220 223

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

32,479,020 145,448 940,859 172,243 Federal Program Revenues5900

Total Revenues5020 145,448 32,479,020 940,859 172,243

EXPENDITURES:

Current:24,108,349 35,133 663,136 116,744 Instruction0011

775,612 - - - Instructional Resources and Media Services00122,332,759 - 64,066 18,372 Curriculum and Instructional Staff Development00131,156,483 36,447 112,598 18,971 Instructional Leadership0021

364,922 - - - School Leadership0023590,095 - 48,756 8,169 Guidance, Counseling and Evaluation Services0031489,734 73,868 52,303 9,987 Social Work Services0032335,535 - - - Health Services0033387,798 - - - Student (Pupil) Transportation0034

- - - - Food Services0035517,623 - - - Facilities Maintenance and Operations005183,421 - - - Security and Monitoring Services0052

1,336,689 - - - Community Services0061

Debt Service: - - - - Principal on Long Term Debt0071 - - - - Interest on Long Term Debt0072 - - - - Bond Issuance Cost and Fees0073

Capital Outlay: - - - - Facilities Acquisition and Construction0081

Total Expenditures6030 145,448 32,479,020 940,859 172,243


- - - -

OTHER FINANCING SOURCES (USES): - - - - Capital Related Debt Issued (Regular Bonds)7911 - - - - Transfers In7915 - - - - Premium or Discount on Issuance of Bonds7916 - - - - Other (Uses)8949

Total Other Financing Sources (Uses) 7080 - - - -

1200 Net Change in Fund Balance - - - -

0100 Fund Balance - July 1 (Beginning) - - - -

3000 Fund Balance - June 30 (Ending) $ - $ - $ - $ -

106


IDEA - Part B

Formula Preschool

IDEA - Part B

Lunch ProgramBreakfast and

National

Program

Feeding

Summer

224 225 240 242 272

Medicaid

Admin. Claim

MAC

263

Title III, A

English Lang.

Acquisition

255

ESEA II,A

Training and

Recruiting

244

Career and

Technical -

Basic Grant

- - 3,437,976 5,884 - - - - $ $ $ $ $ $ $ $ - - 183,974 - - - - -

69,198 12,395,466 29,399,694 297,345 164,258 1,536,865 3,178,732 874,925

12,395,466 69,198 33,021,644 303,229 164,258 1,536,865 3,178,732 874,925

28,937 5,695,783 - - - 422,590 2,025,297 718,057 - 73,060 - - - - - -

3,082 691,345 - - - 1,089,953 1,030,261 43,242 - 115,780 - - - - 58,642 22,838 - 458,225 - - - 14,562 62,932 -

36,813 5,353,273 - - - - 1,440 90,788

- - - - - - 160 - - - - - 138,651 - - - - - - - - - - - - - 36,773,899 493,344 - - - - - - 1,093,026 - - - - - - - - - - - - -

366 8,000 - - - 9,760 - -

- - - - - - - -

- - - - - - - - - - - - - - - -

- - - - - - - -

12,395,466 69,198 37,866,925 493,344 138,651 1,536,865 3,178,732 874,925

- - (4,845,281) (190,115) - - - 25,607

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

- - - - - - - -

- - (4,845,281) (190,115) - - - 25,607

- - 10,257,114 1,894,533 - - - 26,044

$ - $ - $ 5,411,833 $ 1,704,418 $ - $ - $ - $ 51,651

107




Control

Data

Codes

Title I SIP

Academy

Grant ARRA Revenue Funds

Special

Other Federal

Discretionary

IDEA, Part B

SSA

Deaf

IDEA, Part B

SSA

286 289 315 316

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

8,864,473 146,000 59,353 71,023 Federal Program Revenues5900

Total Revenues5020 146,000 8,864,473 59,353 71,023

EXPENDITURES:

Current:6,452,258 114,322 59,353 69,384 Instruction0011

- 19 - - Instructional Resources and Media Services00122,369,983 12,415 - - Curriculum and Instructional Staff Development0013

2,609 - - - Instructional Leadership0021 - 1,419 - - School Leadership0023 - 13,808 - - Guidance, Counseling and Evaluation Services0031

20,895 196 - - Social Work Services0032 - 2,468 - 1,639 Health Services0033 - - - - Student (Pupil) Transportation0034 - - - - Food Services0035

4,452 145 - - Facilities Maintenance and Operations005114,276 1,208 - - Security and Monitoring Services0052

- - - - Community Services0061



Total Expenditures6030 146,000 8,864,473 59,353 71,023


- - - -

OTHER FINANCING SOURCES (USES): - - - - Capital Related Debt Issued (Regular Bonds)7911 - - - - Transfers In7915 - - - - Premium or Discount on Issuance of Bonds7916 - - - - Other (Uses)8949

Total Other Financing Sources (Uses) 7080 - - - -

1200 Net Change in Fund Balance - - - -

0100 Fund Balance - July 1 (Beginning) - - - -

3000 Fund Balance - June 30 (Ending) $ - $ - $ - $ -

108


SSA - IDEA, B

Preschool

Deaf Intervention

Deaf - Early

SSA - IDEA C

State

Education

Adult Basic

Incentives

Placement

Advanced

317 340 381 397 435

SSA

Regional Day

School - Deaf

429

Other State

Special

Revenue Funds

410

State

Textbook

Fund

409

High School

Completion

and Success

- - - - - - - - $ $ $ $ $ $ $ $ - - 141,516 16,514 790,444 5,339 5,752,246 68,754

1,815 10,524 - - - - - -

10,524 1,815 141,516 16,514 790,444 5,339 5,752,246 68,754

1,676 9,733 78,353 1,235 776,885 1,760 5,752,246 53,273 - - - - - 170 - - - 431 54,630 15,279 2,920 - - 13,815 - - 8,398 - 748 - - - - - - - - - - - - - 135 - 9,891 - - 1,666

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 3,158 - -

139 360 - - - 251 - -

- - - - - - - -

- - - - - - - - - - - - - - - -

- - - - - - - -

10,524 1,815 141,516 16,514 790,444 5,339 5,752,246 68,754

- - - - - - - -

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

- - - - - - - -

- - - - - - - -

- - - - - - - -

- $ - $ - $ - $ - $ - $ - $ - $

109




Control

Data

Codes

RDSPD

Tuition

Funds Revenue Funds

Special

Other Local

Revenue Funds

Special

Nonmajor

Sinking Fund

QSC-MTN

446 499 Total 575

REVENUES:193,897 566,069 4,203,826 162,142 Total Local and Intermediate Sources5700 $ $ $ $

- - 6,958,787 - State Program Revenues5800 - - 90,807,241 - Federal Program Revenues5900

Total Revenues5020 566,069 193,897 101,969,854 162,142

EXPENDITURES:

Current:184,941 304,771 47,674,216 - Instruction0011

- - 848,861 - Instructional Resources and Media Services0012300 - 7,742,853 - Curriculum and Instructional Staff Development0013

- 105,019 1,638,533 - Instructional Leadership0021 - - 902,060 - School Leadership0023 - 156,279 6,311,113 - Guidance, Counseling and Evaluation Services0031 - - 647,143 - Social Work Services0032 - - 478,293 - Health Services0033 - - 387,798 - Student (Pupil) Transportation0034 - - 37,267,243 - Food Services0035

8,656 - 1,623,902 - Facilities Maintenance and Operations0051 - - 102,063 - Security and Monitoring Services0052 - - 1,355,565 - Community Services0061



Total Expenditures6030 566,069 193,897 106,979,643 -


- - (5,009,789) 162,142

OTHER FINANCING SOURCES (USES): - - - - Capital Related Debt Issued (Regular Bonds)7911 - - - 684,059 Transfers In7915 - - - - Premium or Discount on Issuance of Bonds7916 - - - - Other (Uses)8949

Total Other Financing Sources (Uses) 7080 - - - 684,059

1200 Net Change in Fund Balance

0100 Fund Balance - July 1 (Beginning)

3000 Fund Balance - June 30 (Ending)

- - (5,009,789) 846,201

3,763,153

4,609,354 $

12,177,691

$ 7,167,902

-

$ -

-

$ -

110

EXHIBIT H-2

Debt Service

Fund

Funds

Debt Service

Nonmajor

Grant

Construction

DOD

Funds

Governmental

Nonmajor

599 Total 620 Total

30,856,380 30,694,238 - 35,060,206 $ $ $ $5,791,913 5,791,913 - 12,750,700

- - 1,813,028 92,620,269

36,486,151 36,648,293 1,813,028 140,431,175

- - - 47,674,216 - - - 848,861 - - - 7,742,853 - - - 1,638,533 - - - 902,060 - - - 6,311,113

- - - 647,143 - - - 478,293 - - - 387,798 - - - 37,267,243 - - - 1,623,902 - - - 102,063 - - - 1,355,565

23,220,000 23,220,000 - 23,220,000

15,456,349 15,456,349 - 15,456,349 1,872,247 1,872,247 - 1,872,247

- - 1,813,028 1,813,028

40,548,596 40,548,596 1,813,028 149,341,267

(4,062,445) (3,900,303) - (8,910,092)

183,295,000 183,295,000 - 183,295,000 684,059 - - 684,059

33,808,270 33,808,270 - 33,808,270 (217,043,78(217,043,78 - (217,043,78

59,481 743,540 - 743,540

(4,002,964) (3,156,763) - (8,166,552)

30,647,242 34,410,395 - 46,588,086

$ 38,421,534 $ - $ 31,253,632 $ 26,644,278

111

EXHIBIT H-3EL PASO INDEPENDENT SCHOOL DISTRICT

COMBINING STATEMENT OF NET POSITIONINTERNAL SERVICE FUNDS

JUNE 30, 2015

Print Shop

Insurance

Compensation

Workers

Program

Clinic

Health Care

Service Funds

Internal

Total

772752 753

ASSETSCurrent Assets:

11,811,833 - 447,200 12,259,033 Cash and Cash Equivalents $ $ $ $1,571 - - 1,571 Accrued Interest

- 167,827 - 167,827 Due from Other Funds

167,827 11,813,404 447,200 12,428,431 Total Current Assets

Noncurrent Assets:

Capital Assets:

- 368,294 - 368,294 Furniture and Equipment - (298,389) - (298,389)Depreciation on Furniture and Equipment

2,406,548 - - 2,406,548 Long Term Investments

69,905 2,406,548 - 2,476,453 Total Noncurrent Assets

Total Assets 237,732 14,219,952 447,200 14,904,884

LIABILITIES

Current Liabilities:179,847 - 12,444 192,291 Accounts Payable

- - 1,445 1,445 Accrued Wages Payable594,603 - 52,553 647,156 Due to Other Funds

9,000,000 7,706 695 9,008,401 Accrued Expenses

Total Liabilities 7,706 9,774,450 67,137 9,849,293

NET POSITION - 69,905 - 69,905 Net Investment in Capital Assets

4,445,502 160,121 380,063 4,985,686 Unrestricted Net Position

Total Net Position 230,026 4,445,502 380,063 5,055,591 $ $ $ $

112

EXHIBIT H-4EL PASO INDEPENDENT SCHOOL DISTRICT

COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITIONINTERNAL SERVICE FUNDS


Print Shop

Insurance

Compensation

Workers

Program

Clinic

Health Care

Service Funds

Internal

Total

772752 753

OPERATING REVENUES:

48 826,160 630,435 1,456,643 Local and Intermediate Sources $ $ $ $

Total Operating Revenues 826,160 48 630,435 1,456,643

OPERATING EXPENSES:

3,144,081 554,916 194,059 3,893,056 Payroll Costs325,754 165,519 502,960 994,233 Professional and Contracted Services

9,491 119,620 6,941 136,052 Supplies and Materials48,816 644 9,673 59,133 Other Operating Costs

- 22,563 - 22,563 Depreciation Expense

Total Operating Expenses 863,262 3,528,142 713,633 5,105,037

Operating Income (Loss) (37,102) (3,528,094) (83,198) (3,648,394)

NONOPERATING REVENUES (EXPENSES):

12,436 - 379 12,815 Earnings from Temporary Deposits & Investments

Total Nonoperating Revenues (Expenses) - 12,436 379 12,815



Total Net Position June 30 (Ending)

(37,102)

267,128

$ 230,026

(3,515,658)

7,961,160

$ 4,445,502

(82,819)

462,882

$ 380,063

(3,635,579)

8,691,170

$ 5,055,591

113

EXHIBIT H-5EL PASO INDEPENDENT SCHOOL DISTRICTCOMBINING STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED JUNE 30, 2015INTERNAL SERVICE FUNDS

Workers Health Care Total

Print Shop Compensation Clinic Internal

Insurance Program Service Funds

752 753 772

Cash Flows from Operating Activities:

- 25,294 - 25,294 Cash Received from User Charges $ $ $ $

144,659 800,866 630,435 1,575,960 Cash Received from Assessments - Other Funds(337,628)(554,936) (194,234) (1,086,798)Cash Payments to Employees for Services

(2,211,850) - - (2,211,850)Cash Payments for Insurance Claims(156,483)(270,580) (511,314) (938,377)Cash Payments for Suppliers(48,816)(644) (9,673) (59,133)Cash Payments for Other Operating Expenses

- Net Cash Used For Operating

(2,610,118) (84,786) (2,694,904)Activities

Cash Flows from Investing Activities:

(12,036,518) - - (12,036,518)Purchase of Investment Securities12,522,917 - - 12,522,917 Proceeds from Sale & Maturities of Securities

21,407 - 379 21,786 Interest and Dividends on Investments

- Net Cash Provided by Investing

507,806 379 508,185 Activities

Net Decrease in Cash and Cash Equivalents - (2,102,312) (84,407) (2,186,719)

Cash and Cash Equivalents at Beginning of Year - 13,914,145 531,607 14,445,752

Cash and Cash Equivalents at End of Year - 11,811,833 447,200 12,259,033 $ $ $ $

Operating Income (Loss): $ $ $ $

Reconciliation of Operating Income (Loss) to Net Cash

Used for Operating Activities:

(37,102) (3,528,094) (83,198) (3,648,394)

to Net Cash Used for Operating Activities:Adjustments to Reconcile Operating Income

- 22,563 - 22,563 Depreciation

Assets and Liabilities:Effect of Increases and Decreases in Current

144,611 17,388 - 161,999 Decrease (increase) in Due from Other Funds179,048 (4,274) (47,667) 127,107 Increase (decrease) in Accounts Payable

- (20) (175) (195)Increase (decrease) in Accrued Wages Payable(286)1,445 695 1,854 Increase (decrease) in Accrued Expenses

594,603 - 45,559 640,162 Increase (decrease) in Due to Other FundsNet Cash Used for Operating

(2,610,118) (84,786) (2,694,904)Activities - $ $ $ $

114

EXHIBIT H-6


STATEMENT OF CHANGES IN ASSETS AND LIABILITIES

AGENCY FUND


BALANCE

JULY 1

2014 ADDITIONS

DEDUCTIONS

2015

JUNE 30

BALANCE

STUDENT ACTIVITY ACCOUNTAssets:

296,851 2,272,987 273,909 Cash and Temporary Investments 2,295,929 $ $ $ $

Liabilities:296,851 2,272,987 273,909 Due to Student Groups 2,295,929 $ $ $ $

TOTAL AGENCY FUNDSAssets:

296,851 2,272,987 273,909 Cash and Temporary Investments 2,295,929 $ $ $ $

Liabilities:296,851 2,272,987 273,909 Due to Student Groups 2,295,929 $ $ $ $

115


116

OTHER INFORMATION - REQUIRED TEA SCHEDULES(UNAUDITED)

117


SCHEDULE OF DELINQUENT TAXES RECEIVABLE

FISCAL YEAR ENDED JUNE 30, 2015

Last 10 Years

Tax Rates

Debt ServiceMaintenance Tax Purposes

Value for School

Assessed/Appraised

(1) (2) (3)

VariousVariousand prior years2006 $ Various

0.1535001.370000 11,824,525,920 2007

0.1635001.040000 13,367,590,860 2008

0.1950001.040000 14,224,345,530 2009

0.1950001.040000 14,270,165,506 2010

0.1950001.040000 14,540,539,823 2011

0.1950001.040000 15,002,911,955 2012

0.1950001.040000 15,392,960,892 2013

0.1950001.040000 15,708,746,343 2014

0.1950001.040000 15,783,486,372 (School year under audit)2015

1000 TOTALS

118

EXHIBIT J-1

7/1/2014

Balance

Beginning

Total Levy

Year's

Current

(20)(10) (50)

Ending

Balance

6/30/2015

(40)

Entire

Year's

Adjustments

(31)

Maintenance

Collections

(32)

Debt Service

Collections

- 2,412,975 47,366 1,171 $ $ $ $ $ 2,361,692 $ 5,088

- 480,881 22,545 (144) 455,666 2,526

- 478,783 23,737 (396) 450,918 3,732

- 663,528 44,729 (985) 609,427 8,387

- 798,257 75,575 1,763 710,275 14,170

- 1,081,329 78,771 (84,848) 902,941 14,769

- 1,318,251 17,173 (274,205) 1,023,653 3,220

- 1,818,544 (179,287) (770,168) 1,261,279 (33,616)

- 4,613,182 1,172,787 (1,452,291) 1,768,207 219,897

194,926,057 - 160,512,274 - 4,317,727 30,096,056

$ 13,861,785 $ (2,580,103)$ 161,815,670 $ 194,926,057 $ 13,665,730 $ 30,334,229

119

EXHIBIT J-2EL PASO INDEPENDENT SCHOOL DISTRICT

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:6,375,581 6,370,000 3,437,976 (2,937,605)Total Local and Intermediate Sources $ $ $ $5700

250,000 250,000 183,974 (66,026)State Program Revenues5800

31,000,000 31,000,000 29,399,694 (1,600,306)Federal Program Revenues5900

Total Revenues5020 37,620,000 37,625,581 33,021,644 (4,603,937)

EXPENDITURES:42,223,060 39,873,729 36,773,899 5,449,161 Food Services0035

5,000 5,000 - 5,000 General Administration0041

1,610,000 1,610,000 1,093,026 516,974 Facilities Maintenance and Operations0051


1200 Net Change in Fund Balances (3,868,729) (6,212,479) (4,845,281) 1,367,198



120

EXHIBIT J-3EL PASO INDEPENDENT SCHOOL DISTRICT

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:30,243,898 30,243,898 30,856,380 612,482 Total Local and Intermediate Sources $ $ $ $5700

6,777,251 6,777,251 5,791,913 (985,338)State Program Revenues5800

Total Revenues5020 37,021,149 37,021,149 36,648,293 (372,856)

EXPENDITURES:

Debt Service:23,220,000 17,844,373 23,220,000 - Principal on Long Term Debt0071

15,463,226 18,876,776 15,456,349 6,877 Interest on Long Term Debt0072

1,887,047 300,000 1,872,247 14,800 Bond Issuance Cost and Fees0073

Total Expenditures6030 37,021,149 40,570,273 40,548,596 21,677


- (3,549,124) (3,900,303) (351,179)

OTHER FINANCING SOURCES (USES): 183,295,000 - 183,295,000 - Capital Related Debt Issued (Regular Bonds)7911

684,059 684,059 684,059 - Transfers In7915

33,808,270 - 33,808,270 - Premium or Discount on Issuance of Bonds7916

(217,043,789) - (217,043,789) - Other (Uses)8949

Total Other Financing Sources (Uses) 7080 684,059 743,540 743,540 -

1200 Net Change in Fund Balances 684,059 (2,805,584) (3,156,763) (351,179)


3000 Fund Balance - June 30 (Ending) $ 35,094,454 $ 31,604,811 $ 31,253,632 $ (351,179)

121


122

FEDERAL AWARDS SECTION

123


124

600 SUNLAND PARK, 6-300 EL PASO, TX 79912

P 915356-3700 F 915 356-3779 W GRP-CPACOM

GRP-GIBSON RUDDOCK PATTERSON LLC certified public accountants

INDEPENDENT AUDITOR' S 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

To the Board of Trustees El Paso Independent School District

We have audited, in accordance with the 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, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information ofEI Paso Independent School District, as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise El Paso Independent School District's basic financial statements and have issued our report thereon dated November 12,2015.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered El Paso Independent School District's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of El Paso Independent School District ' s internal control. Accordingly, we do not express an opinion on the effectiveness of El Paso Independent School District's internal control.

A deficiency in internal control 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 and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether El Paso Independent School District's financial statements are free from 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.

125

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance andthe results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal controlor on compliance. This report is an integral part of an audit performed in accordance with GovernmentAuditing Standards in considering the entity’s internal control and compliance. Accordingly, thiscommunication is not suitable for any other purpose.


126

600 SUNLAND PARK 6-300 EL PASO, TX 79912

P 915 356-3700 F 915356-3779 W GRP-CPACOM

GRP GIBSON RUDDOCK PATTERSON LLC certified public accountants

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL

OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133

To the Board of Trustees El Paso Independent School District

Report on Compliance for Each Major Federal Program

We have audited El Paso Independent School District's compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each ofEI Paso Independent School District's major federal programs for the year ended June 30, 2015. El Paso Independent School District's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs.

Management's Responsibility

Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.

Auditor's Responsibilities

Our responsibility is to express an opinion on compliance for each El Paso Independent School District ' s major federal programs based on our audit of the types of compliance requirements referred to above. 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, andNon-Profit Organizations. Those standards and OMB Circular 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 El Paso Independent School 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 on compliance for each major federal program. However, our audit does not provide a legal determination of El Paso Independent School District's compliance.

Opinion on Each Major Federal Program

In our opinion, El Paso Independent School District, complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2015.

127

Other Matters

The results of our auditing procedures disclosed instances of noncompliance, which are required to bereported in accordance with OMB Circular A-133 and which are described in the accompanying schedule of findings and questions costs as item 2015-001. Our opinion on each major federal program is not modifiedwith respect to this matter.

El Paso Independent School District’s response to the noncompliance finding identified in our audit isdescribed in the accompanying schedule of findings and questioned costs. El Paso Independent SchoolDistrict’s response was not subjected to the auditing procedures applied in the audit of compliance andaccordingly, we express no opinion on the response.

Report on Internal Control Over Compliance

Management of El Paso Independent School District, is responsible for establishing and maintaining effectiveinternal control over compliance with the types of compliance requirements referred to above. In planningand performing our audit of compliance, we considered El Paso Independent School District’s internal controlover compliance with the types of requirements that could have a direct and material effect on each majorfederal program to determine the auditing procedures that are appropriate in the circumstances for the purposeof expressing an opinion on compliance for each major federal program and to test and report on internalcontrol over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing anopinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinionon the effectiveness of El Paso Independent School District’s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control overcompliance does not allow management or employees, in the normal course of performing their assignedfunctions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federalprogram on a timely basis. A material weakness in internal control over compliance is a deficiency, orcombination of deficiencies, in internal control over compliance, such that there is a reasonable possibilitythat material noncompliance with a type of compliance requirement of a federal program will not beprevented, or detected and corrected, on a timely basis. A significant deficiency in internal control overcompliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a typeof compliance requirement of a federal program that is less severe than a material weakness in internal controlover compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the firstparagraph of this section and was not designed to identify all deficiencies in internal control over compliancethat might be material weaknesses or significant deficiencies and therefore, material weaknesses or significantdeficiencies may exist that were not identified. We did not identify any deficiencies in internal control overcompliance that we consider to be material weaknesses. However, we identified certain deficiencies ininternal control over compliance, as described in the accompanying schedule of findings and questioned costsas item 2015-001 that we consider to be a significant deficiency.

El Paso Independent School District’s response to the internal control over compliance finding identified inour audit is described in the accompanying schedule of findings and questioned costs. El Paso IndependentSchool District’s response was not subjected to the auditing procedures applied in the audit of complianceand accordingly, we express no opinion on the response.

The purpose of this report on internal control over compliance is solely to describe the scope of our testingof internal control over compliance and the results of that testing based on the requirements of OMB CircularA-133. Accordingly, this report is not suitable for any other purpose.


128


SCHEDULE OF FINDINGS AND QUESTIONED COSTS


ScheduleReferenceNumber PROGRAM DESCRIPTION

SUMMARY OF AUDITOR’S RESULTS

Financial Statements

Type of Auditor’s Report issued: Unmodified

Internal control over financialreporting:

Material weaknesses identified? No

Significant deficiencies identifiedthat are not considered to bematerial weaknesses? None reported

Noncompliance material to the financialstatements: No material noncompliance was noted.

Federal Awards

Internal control over major programs:

Material weaknesses identified? No

Significant deficiencies identifiedthat are not considered to bematerial weaknesses? Yes 2015-001

Type of auditor’s report issued oncompliance for major programs: Unmodified

Any audit findings disclosed that arerequired to be reported in accordancewith section 510(a) of Circular A-133? Yes 2015-001

Major Federal Programs: Title I, A Improving Basic Program -CFDA 84.010A

Title II, A Training and Recruiting -CFDA 84.637A

Title III, A English LanguageAcquisition -CFDA 84.365A

Dollar threshold used to distinguishbetween type A and type B programs: $ 2,980,919

Auditee qualified as low-risk auditee? Yes

(Continued)

129


SCHEDULE OF FINDINGS AND QUESTIONED COSTS


FINANCIAL STATEMENT FINDINGS

There are no current year findings.

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

DEPARTMENT OF EDUCATION

2015-001 Title I, A Improving Basic Program (CFDA 84.010A) - Activities Allowed or Unallowed &Allowable Costs/Cost Principles Criteria: The OMB Compliance Supplement requires that the District spend federal funds only on allowableactivities.

Condition Found: Personnel wages were coded to the Title I grant which are unallowed per OMB ComplianceSupplement or grant requirements. The District reclassified all the unallowable expenditures in our sample andreviewed an additional sample for similar instances which were also reclassified as necessary.

Context: The initial sample of 40 Title I employees and substitutes were selected for testing from a population of2,599 Title I employees and substitutes. In six instances, amounts were charged to Title I inappropriately. Questioned Costs/Basis: Known questioned costs were determined by totaling the items tested which were foundto be improperly charged to the program identified within this finding and adding the additional items found bymanagement as a result of their additional review. Likely Questioned Costs were determined by dividing thedollar error found in the sample by the total dollar of the sample and then multiplying that percentage times thetotal population for salaries and wages. Known Questioned Cost: $91,490

Cause: The oversight in monitoring and reviewing the expenditures being charged to the Title I program wasineffective thus leading to unallowable costs charged to the program.

Effect: Costs incurred for unallowable activities are ineligible for reimbursement and could have been chargedand reimbursed by the grantor. As such, the District would be in non-compliance with provisions of the grantagreement. However, the District reclassified the known questioned costs out of fund 211 prior to the close of theyear, and they are not included as grant expenditures on Exhibit K-1.

Recommendation: We recommend the District provide training to all personnel that code employee pay to TitleI and assign the program administrator to conduct periodic reviews of pay charged to the program in order toensure that it is allowable under the terms of the grant.

View of Responsible Official: The District provided Uniform Grant Guidance training to campus and central officestaff in July and September 2015. In addition, the District will be providing training in November 2015 whichwill include Business Services related topics including External Funding. Reorganization of duties and resourceswithin the External Funding department has allowed the assigning of three External Funding Specialists, one toeach area, to support campus financial activity. These Specialists will be responsible for their respective areaschools ensuring that proper training and support is provided as needed. For fiscal year 2016, Specialists willmonitor external fund budget activity as well as meet with campus principals to review and correct personnelcoding, including coding for substitutes. Specialists will also monitor/approve all expenditure requests includingout of state travel and field trips. Specialists will ensure that signed job descriptions for all externally fundedpersonnel are maintained. The Executive Director of Budget and External Funding will ensure overall compliancewith Federal regulations as well as program guidelines.

130


SCHEDULE OF STATUS OF PRIOR FINDINGS


ScheduleReferenceNumber

PRIOR YEAR FINDING/NONCOMPLIANCE

STATUS OF PRIOR YEAR’SFINDINGS/NONCOMPLIANCE

FINANCIAL STATEMENT FINDINGS

There were no prior year findings.

FEDERAL AWARD FINDINGS & QUESTIONED COSTS

There were no prior year findings.

131

EXHIBIT K-1 (Cont'd)EL PASO 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

US DEPARTMENT OF TRANSPORTATION

Passed Through Texas Department of Transportation

14,276Selective Traffice Enforcement Program (STEP) 20.600 $585EGF6218

Total Passed Through Texas Department of Transportation 14,276$

TOTAL US DEPARTMENT OF TRANSPORTATION 14,276$

U.S. DEPARTMENT OF DEFENSE

Direct Programs

599,507JROTC 12.357 $NA24,374Impact Aid Severe Disability 12.558 NA

4,114Promoting Student Achievement-Expansion 12.556 HE12541010007188,480Promoting Student Achievement-Expansion & Support 12.556 HE12541110038835,660Military Connected Schools 12.556 HE12541310040

Total CFDA Number 12.556 1,028,254

2,609SPED Reading Strong 12.557 HE125414100281,813,028Fort Bliss School - Logan Reconstruction Program 12.600 HQ00051210013

Total Direct Programs 3,467,772$

TOTAL U.S. DEPARTMENT OF DEFENSE 3,467,772$

U.S. DEPARTMENT OF EDUCATION

Direct Programs

5,086,553Impact Aid 84.041 $SO41B20114905

Total Direct Programs 5,086,553$

Passed Through Region 10

25,397Texas Support for Homeless Education Program 84.196A $14-027122,748Texas Support for Homeless Education Program 84.196A 15-060

Total CFDA Number 84.196A 148,145

Total Passed Through Region 10 148,145$

Passed Through Texas Workforce Commission

11,417English Literacy and Civics Education Grant 84.002A $1014ELC006103,483Adult Education (ABE) - Federal 84.002A 1014ABE002


Total Passed Through Texas Workforce Commission 114,900$

Passed Through Ysleta Independent School District

109,605SSA - English Literacy and Civics Education Grant 84.002A $1014AEL000718,027SSA - Adult Education (ABE) - Federal 84.002A 1014AEL000


Total Passed Through Ysleta Independent School District 827,632$

Passed Through State Department of Education

3,444,045ESEA. Title I, Part A - Improving Basic Programs 84.010A $1461010107190230,260ESEA, Title I, Part D, Subpart 2-Delinquent Prog 84.010A 146101030719028,326ESEA, Title I, Priority and Focus School 84.010A 14610112071902008

684ESEA, Title I, Priority and Focus School 84.010A 146101120719020414,696ESEA, Title I, Priority and Focus School 84.010A 14610112071902046

30ESEA, Title I, Priority and Focus School 84.010A 1461011207190204912,797ESEA, Title I, Priority and Focus School 84.010A 14610112071902054

132

EXHIBIT K-1 (Cont'd)EL PASO INDEPENDENT SCHOOL DISTRICT



(1)

Federal

Entity Identifying

(4)

NumberCFDA

ExpendituresFederal

Number

(3)(2)

FEDERAL GRANTOR/


Pass-Through

4,179ESEA, Title I, Priority and Focus School 84.010A 146101120719021183,669ESEA, Title I, Priority and Focus School 84.010A 14610112071902136

28,953,957ESEA, Title I, Part A - Improving Basic Programs 84.010A 15610101071902241,426ESEA, Title I, Part D, Subpart 2-Delinquent Prog 84.010A 1561010307190226,872ESEA, Title I, Priority and Focus School 84.010A 1561011207190200880,964ESEA, Title I, Priority and Focus School 84.010A 15610112071902020

121,930ESEA, Title I, Priority and Focus School 84.010A 156101120719020274,165ESEA, Title I, Priority and Focus School 84.010A 15610112071902041

24,361ESEA, Title I, Priority and Focus School 84.010A 1561011207190204625,762ESEA, Title I, Priority and Focus School 84.010A 1561011207190204921,831ESEA, Title I, Priority and Focus School 84.010A 1561011207190205415,540ESEA, Title I, Priority and Focus School 84.010A 1561011207190211819,784ESEA, Title I, Priority and Focus School 84.010A 15610112071902136

Total CFDA Number 84.010A 33,045,278

380,909*IDEA - Part B, Formula 84.027A 14660001071902660012,242,595*IDEA - Part B, Formula 84.027A 156600010719026600

1,713*SSA - IDEA - Part B, Discretionary Deaf 84.027A 14660011071902667357,640*SSA - IDEA - Part B, Discretionary Deaf 84.027A 156600110719026673

169*SSA - IDEA - Part B, Formula Deaf 84.027A 14660001071902660172,148*SSA - IDEA - Part B, Formula Deaf 84.027A 156600010719026601


70,470*IDEA - Part B, Preschool 84.173A 156610010719026610568*SSA - IDEA - Part B, Preschool Deaf 84.173A 146610010719026611

10,280*SSA - IDEA - Part B, Preschool Deaf 84.173A 156610010719026611


12,836,492Total Special Education Cluster (IDEA)

4,056Career and Technical - Basic Grant 84.048A 14420006071902885,080Career and Technical - Basic Grant 84.048A 15420006071902


404SSA - IDEA, Part C - Early Intervention (Deaf) 84.181A 1439110107190239111,411SSA - IDEA, Part C - Early Intervention (Deaf) 84.181A 153911010719023911


3,714,029Texas Literacy Initiave 84.371C 1364600371100124,234,447Texas Literacy Initiative 84.371C 146460037110012

Total CFDA Number 84.371C 7,948,476

12,029Title III, Part A - English Language Acquisition 84.365A 146710010719021,550,938Title III, Part A - English Language Acquisition 84.365A 15671001071902


143,281ESEA, Title II, Part A, Teacher/Principal Training 84.367A 146945010719023,093,494ESEA, Title II, Part A, Teacher/Principal Training 84.367A 15694501071902


11,212Texas Title I Priority School - ARRA 84.388A 100520017110020138,885Texas Title I Priority School - ARRA 84.388A 100520017110021


Total Passed Through State Department of Education 59,671,036$

TOTAL U.S. DEPARTMENT OF EDUCATION 65,848,266$

133

EXHIBIT K-1 EL PASO INDEPENDENT SCHOOL DISTRICT



(1)

Federal

Entity Identifying

(4)

NumberCFDA

ExpendituresFederal

Number

(3)(2)

FEDERAL GRANTOR/


Pass-Through

U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES

Direct Programs

164,258Medicaid Administrative Claiming Program - MAC 93.778 $NA

Total Direct Programs 164,258$

Passed Through Texas Workforce Commission

23,858Temporary Assistance for Needy Families (TANF) 93.558 $1014ABE002

Total Passed Through Texas Workforce Commission 23,858$

Passed Through Ysleta Independent School District

148,483Temporary Assistance for Needy Families (TANF) 93.558 $1014AEL000

Total Passed Through Ysleta Independent School District 148,483$

TOTAL U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 336,599$

U.S. DEPARTMENT OF AGRICULTURE

Passed Through the State Department of Agriculture

8,135,266**School Breakfast Program 10.553 $NA

19,128,234**National School Lunch Program - Cash Assistance 10.555 NA2,136,194**National School Lunch Prog.-Non-Cash Assistance 10.555 NA

Total CFDA Number 10.555 21,264,428

297,345**Summer Feeding Program - Cash Assistance 10.559 NA

29,697,039Total Child Nutrition Cluster

Total Passed Through the State Department of Agriculture 29,697,039$

TOTAL U.S. DEPARTMENT OF AGRICULTURE 29,697,039$

TOTAL EXPENDITURES OF FEDERAL AWARDS 99,363,952$

*, ** Clustered Programs

134


NOTES ON ACCOUNTING POLICIES FOR FEDERAL AWARDS


1. For all federal programs, the District uses the fund types specified in the Texas Education Agency’sFinancial Accountability System Resource Guide.

Special Revenue Funds are used to account for resources restricted to, specific purposes by a grantor. Federal and state financial assistance generally is accounted for in a Special Revenue Fund. If balanceshave not been expended by the end of the project period, grantors sometimes require the District torefund all or part of the unused amount.

2. The accounting and financial reporting treatment applied to a fund is determined by its measurementfocus. The Governmental Fund types are accounted for using a current financial resourcesmeasurement focus. All Federal grant funds were accounted for either in the General Fund, SpecialRevenue Fund, or a Capital Projects fund which are Governmental Fund types. With this measurementfocus, only current assets, deferred outflows of resources, current liabilities, and deferred inflows ofresources generally are included on the balance sheet. Operating statements of these funds presentincreases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and otherfinancing uses) in net current assets.

The modified accrual basis of accounting is used for the Governmental Fund types. This basis ofaccounting 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 fundliability is incurred, if measurable, except for unmatured interest on General Long-Term Debt, whichis recognized when due, and certain compensated absences and claims and judgments, which arerecognized when the obligations are expected to be liquidated with expendable available financialresources.

Federal grant funds are considered to be earned to the extent of expenditures made under the provisionsof the grant. When grant funds are received before expenditures are made, they are recorded asunearned revenues until earned. Due to the nature of the reporting process for the SHARS program,the District recognizes SHARS revenue upon receipt of the reimbursement notice from the federalgovernment.

3. The period of performance for federal grant funds for the purpose of liquidation of outstandingobligations made on or before the ending date of the federal project period extended 90 days beyondthe federal project period ending date, in accordance with provisions in Section H, Period ofPerformance of Federal Funds, Part 3, OMB Compliance Supplement - June 2015.

(Continued)

135


NOTES ON ACCOUNTING POLICIES FOR FEDERAL AWARDS


4. The total federal revenue presented in Exhibit K-1 can be reconciled to Exhibit C-3 as follows:

Expenditures of federal awards per Exhibit K-1 $ 99,363,952

School Health and Related Services (SHARS) reimbursements 9,729,078

Total federal revenue per Exhibit C-3 $ 109,093,030

5. Of the federal expenditures presented in the Exhibit K-1, the District accounted for certain funds in theGeneral Fund as follows:

Program TitleFederal CFDA

Number Amount

JROTC - AF 12.000 $ 599,507 Impact Aid 84.041 5,086,553 Impact Aid Severe Disability 12.558 24,374 Indirect Costs - Other 84.XXX 1,033,249

6,743,683 SHARS (not included on Exhibit K-1) 9,729,078

Total General Fund $ 16,472,761

136

SCHOOLS FIRST QUESTIONNAIRE

El Paso Independent School District Fiscal Year 2015

Were there any disclosures in the Annual Financial Report and/or other sources of information concerning nonpayment of any terms of any debt agreement at fiscal year end?

NoSF2

Was there an unmodified opinion in the Annual Financial Report on the financial statements as a whole?

YesSF4

Did the Annual Financial Report disclose any instances of material weaknesses in internal controls over financial reporting and compliance for local, state, or federal funds?

NoSF5

Was there any disclosure in the Annual Financial Report of material noncompliance for grants, contracts, and laws related to local, state, or federal funds?

NoSF6

Did the school district make timely payments to the Teachers Retirement System (TRS), Texas Workforce Commission (TWC), Internal Revenue Service (IRS), and other government agencies?

YesSF7

Did the school district not receive an adjusted repayment schedule for more than one fiscal year for an over allocation of Foundation School Program (FSP) funds as a result of a financial hardship?

NoSF8

Total accumulated accretion on CABs included in government-wide financial statements at fiscal year-end.

7419779SF10

Net Pension Assets (1920) at fiscal year-end. 0SF11

Net Pension Liabilities (2540) at fiscal year-end. 64148427SF12

Pension Expense (6147) at fiscal year-end. 5929388SF13

el paso independent school district annual financial …

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