lubbock independent school district annual …

LUBBOCK INDEPENDENT SCHOOL DISTRICT

ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED JUNE 30, 2019

BOLINGER, SEGARS, GILBERT & MOSS, L.L.P.

CERTIFIED PUBLIC ACCOUNTANTS

LUBBOCK, TEXAS


ANNUAL FINANCIAL REPORT


Bolinger, Segars, Gilbert & Moss, L.L.p. CERTIFIED PUBLIC ACCOUNTANTS


ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2019

TABLE OF CONTENTS (Continued) Page Exhibit CERTIFICATE OF BOARD FINANCIAL SECTION Independent Auditor’s Report: Unmodified Opinions on the Basic Financial Statements ........................................... 1 Management’s Discussion and Analysis (Required Supplementary Information) ............ 4 Basic Financial Statements Government-Wide Financial Statements Statement of Net Position ..................................................................................... 14 A-1 Statement of Activities .......................................................................................... 15 B-1 Governmental Fund Financial Statements Balance Sheet ....................................................................................................... 16 C-1 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position ..................................................................................................... 17 C-1R Statement of Revenues, Expenditures, and Changes in Fund Balances ............. 18 C-2 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance of Governmental Funds to the Statement of Activities ............. 19 C-3 Proprietary Fund Financial Statements Statement of Net Position ..................................................................................... 20 D-1 Statement of Revenues, Expenses, and Changes in Net Position ....................... 21 D-2 Statement of Cash Flows ...................................................................................... 22 D-3 Fiduciary Fund Financial Statements Statement of Fiduciary Net Position ...................................................................... 23 E-1 Notes to Financial Statements .................................................................................... 24 Required Supplementary Information Budgetary Comparison Schedule – General Fund ..................................................... 57 G-1 Schedules of District’s Proportionate Share of the Net Pension Liability .................... 58 G-2 Schedules of District Contributions for Pensions ........................................................ 59 G-3 Schedules of District’s Proportionate Share of the Net OPEB Liability ....................... 60 G-4 Schedules of District Contributions for other Post-Employment Benefits ................... 61 G-5

Notes to Required Supplementary Information ........................................................... 62



ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2019

TABLE OF CONTENTS (Concluded) Page Exhibit Other Supplementary Information Combining Schedules Non-Major Governmental Funds Combining Balance Sheet .............................................................................. 64 H-1 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ....................................................................................................... 67 H-2

Proprietary Funds Combining Statement of Net Position ............................................................. 70 H-3 Combining Statement of Revenues, Expenditures, and Changes in Net Position ......................................................................................................... 71 H-4 Required Texas Education Agency Schedules Schedule of Delinquent Taxes Receivable ........................................................... 72 J-1 Budgetary Comparison Schedule – Child Nutrition Fund ..................................... 73 J-2 Budgetary Comparison Schedule – Debt Service Fund ....................................... 74 J-3 OVERALL COMPLIANCE AND INTERNAL CONTROL SECTION Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards .............................................. 75 Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance Required by the Uniform Guidance ................................. 77 FEDERAL FINANCIAL ASSISTANCE SECTION Schedule of Findings and Questioned Costs .............................................................. 79 Schedule of Status of Prior Year Findings .................................................................. 80 Schedule of Expenditures of Federal Awards ............................................................ 81 K-1 Notes to the Supplementary Schedule of Expenditures of Federal Awards .............. 84


FINANCIAL SECTION


BOLINGER, SEGARS, GILBERT & MOSS, L.L.P. c e r t i f i e d p u b l i c a c c o u n t a n t s

PHONE: (806) 747-3806

FAX: (806) 747-3815

8215 Nashville Avenue

LUBBOCK, TEXAS 79423-1954

Independent Auditor’s Report

UNMODIFIED OPINIONS ON THE BASIC FINANCIAL STATEMENTS Board of School Trustees Lubbock Independent School District Lubbock, Texas Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Lubbock Independent School District (the District), as of and for the year ended June 30, 2019, and related notes to the financial statements, which collectively comprise the 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 of 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 policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of Lubbock Independent School District, as of June 30, 2019, and the respective changes in financial position and, where applicable, the cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, budgetary comparison information, and net pension and other post-employment benefit (OPEB) liability information on pages 4-13 and 60-66, respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide assurance. Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Lubbock Independent School District’s basic financial statements. The other supplementary information comprised of combining balance sheets and statements of revenues, expenditures and changes in fund balance for all non-major funds, combining statements of net position and statements of revenues, expenses and changes in net position for all internal service funds, and required Texas Education Agency (TEA) schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards (SEFA), as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), is also presented for purposes of additional analysis and is also not a required part of the basic financial statements. The other supplementary information and SEFA are the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such other supplementary information and SEFA has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the other information and SEFA are fairly stated in all material respects in relation to the financial statements as a whole.

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Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated October 25, 2019 on our consideration of the District’s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control over financial reporting and compliance.

Certified Public Accountants Lubbock, Texas

October 25, 2019

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Lubbock Independent School District Lubbock, Texas

Management’s Discussion and Analysis

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This section of the Lubbock Independent School District’s (the District) Annual Financial and Compliance Report for the fiscal year ended June 30, 2019 (FY’19) presents management’s narrative overview and analysis of the District’s financial activities. This discussion and analysis is part of the minimum requirements for general purpose external financial statements established by the Governmental Accounting Standards Board (GASB) in its Statement No. 34 – Basic Financial Statements (BFS) - and Management’s Discussion and Analysis (MD&A) - for State and Local Governments (GASB34).

Financial Highlights

These financial highlights summarize the District’s financial position and operations as presented in more detail in the rest of the BFS and Required Supplementary Information (RSI) that follow, as listed in the accompanying table of contents.

Government-wide net position was ($9.5) million and ($8.8) million at June 30, 2019 and June 30, 2018, respectively.

Government-wide total assets and deferred outflows of resources were $543.7 million and $445.9 million at June 30, 2019 and June 30, 2018, respectively. The costs of general capital assets net of accumulated depreciation were $287.2 million and $293.0 million at June 30, 2019 and June 30, 2018, respectively. Cash and temporary investments were $164.3 million and $93.7 million at June 30, 2019 and June 30, 2018, respectively.

Bonded debt outstanding was $269.5 million and $218.0 million at June 30, 2019 and June 30, 2018, respectively.

Government-wide expenses were $318.1 million and $234.9 million for the years ended June 30, 2019 and June 30, 2018, respectively. Government-wide revenues were $317.4 million and $266.9 million for the years ended June 30, 2019 and June 30, 2018, respectively. Government-wide expenses exceeded the government-wide revenues for governmental activities by $.7 million for the year ended June 30, 2019 and government-wide revenues exceeded expenses by $32.0 million for the year ended June 30, 2018.

Government-wide total liabilities include $3.6 million recognition of Derivative Instrument-Interest Rate Lock Liability at June 30, 2019 as a potential liability. The derivative instrument is commonly referred to as a “SWAP”.

Governmental funds general fund balance was $68.6 million and $61.9 million at June 30, 2019 and June 30, 2018, respectively.

Governmental funds general fund expenditures were $231.8 million and $240.5 million for the years ended June 30, 2019 and June 30, 2018, respectively.

Figure MDA-1: Annual Financial and Compliance Report

GASB Minimum Requirements for General Purpose External Financial Statements

§1 Management’s Discussion and Analysis ........................................... Part of Required Supplementary Information §2 Basic Financial Statements:

Government-Wide Financial Statements ............................................... Combined Financial Activities Fund Financial Statements ...................................................... Major Fund / Combined Non-major Fund Detail Notes to Basic Financial Statements .......................................... Explanatory and Supplementary Information §3 Required Supplementary Information: ............................................. Supplementary Information Required By GASB

MD&A ........................................................................................... Presentation Before BFS Required Budgetary Comparisons ............................................................ General and Major Special Revenue Funds

Supplemental Information Presented at the District’s Discretion

§4 Combining Financial Statements .......................................................... Non-major and Internal Service Funds

Supplemental Information Required by the Texas Education Agency

§5 Various Schedules ...................................................................... For State Oversight Purposes and Additional Detail

Information Required Due to Use of Federal Awards §6 Various Reports and Schedules .......................... Government Auditing Standards and Uniform Guidance Requirements

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Overview of the Annual Financial and Compliance Report

Basic Financial Statements (BFS). The BFS include two kinds of statements and notes that present different perspectives of the District’s financial activities:

Government-Wide Financial Statements (GWFS). The Statement of Net Position and Statement of Activities are GWFS that provide both long- and short-term information about the District’s overall financial status.

Fund Financial Statements (FFS). The FFS focus on individual parts of the government, reporting the District’s operations in more detail than the GWFS.

Governmental FFS – Present how general government services were financed in the short term as well as what remains for future spending.

(Proprietary) Internal Service FFS – Present short- and long-term financial information about the District’s employee risk management activities.

(Fiduciary) Agency FFS – Present information about the financial relationships in which the District acts solely as an agent for the benefit of others, to whom the resources in question belong.

Notes to Basic Financial Statements (notes). The notes explain some of the information in the GWFS and FFS and provide additional detail.

Required Supplementary Information. The BFS are followed by a section of RSI that further explains and supports the information in the BFS. RSI in this report includes this section, MD&A, which the GASB requires to precede the BFS, and Budgetary Comparison statements. The GASB requires all other RSI (excluding MD&A) to immediately follow the Notes to the BFS. Although the required Budgetary Comparisons would normally include the general fund and all major special revenue funds (SRFs), presented individually, the District had no major SRFs in FY’19. Accordingly, only the general fund’s budgetary comparison is presented in the accompanying RSI. Presentation of RSI is a GASB requirement.

Other Supplementary Information. The GASB allows the presentation of additional supplementary information that the District believes is beneficial to the users. Accordingly, the District has elected to include Combining Financial Statements to provide detailed support for the combined special revenue funds. The Texas Education Agency also requires the District to present four additional schedules they deem necessary for complete information and to assist their oversight responsibilities.

Federal Awards. The District expended $39.9 million and $40.4 million in federal awards for the years ended June 30, 2019 and June 30, 2018, respectively, a decrease of $0.5 million. As a result, the annual financial audit is required to be performed in accordance with Government Auditing Standards issued by the Comptroller General of the United States and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), which also require presentation of these reports and schedules.

The District’s Basic Financial Statements

Figure MDA-2 on the following page summarizes the major features of the District’s financial statements, including the portion of the District’s government they cover and the types of information they contain. The remainder of this section of MD&A explains the structure and contents of each of the statements.

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The District’s Basic Financial Statements (continued)

Figure MDA-2: Major Features of the District’s Financial Statements

GWFS1 Governmental Funds Proprietary Funds2 Fiduciary Funds3

Scope

Entire District (except Agency funds)

District general governmental activities

Activities operated similar to private businesses: the employee risk management activities

Activities where the District acts as an agent: Student Activity Funds

Required Financial Statements

Statements of: Net Position Activities

Balance Sheets Statements of Revenues, Expenditures and Changes in Fund Balances

Balance Sheet, Statement of Revenues, Expenses and Changes in Net Position Statement of Cash Flows

Statements of Assets and Liabilities

Measurement Focus

Economic Resources

Current Financial Resources

Economic Resources

N/A for Agency Funds, but Economic Resources for other types

Basis of Accounting

Accrual

Modified Accrual

Accrual

Accrual

Type of Asset / Liability Information

All assets and liabilities, both financial and capital and short- and long-term

Only assets expected to be used up and liabilities that came due during the year or soon (generally 60 days) thereafter; no capital assets or long-term liabilities included

All assets and liabilities, both financial and capital and short- and long-term; the District’s funds do not currently contain capital assets, but they could

All assets and liabilities, both financial and capital and short- and long-term; the District’s funds do not currently contain capital assets, but they could

Type of Inflow / Outflow Information

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

Revenues for which cash is received during or soon after the end of the year (generally 60 days); 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

N/A for Agency Funds, but all revenues and expenses during year, regardless of when cash is received or paid for other types

1. GWFS – Government-Wide Financial Statements

2. The District’s only proprietary fund is the internal service fund.

3. The District’s only fiduciary funds are agency funds.

Government-Wide Financial Statements. The GWFS report information about the District as a whole using accounting methods similar to those used by private-sector companies. The statement of net position includes all of the government’s assets and liabilities. All of the current year’s revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid.

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

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

To assess the overall health of the District, you need to consider additional non-financial factors such as changes in the District’s tax base and student enrollment.

The District’s GWFS include only governmental activities – GWFS would also present business-type activities and component units, if the District had any. The District’s internal service fund is combined with the governmental activities at this level since it supports these activities exclusively. The District’s basic services are included here: instruction, extracurricular activities, curriculum and staff development, health services and general administration. Property taxes and state aid formula grants finance most of these activities.

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The District’s Basic Financial Statements (continued)

Fund Financial Statements. The FFS provide more detailed information about the District’s major funds – not the District as a whole. Funds are accounting devices that the District uses to keep track of specific sources of funding and spending for particular purposes.

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

The Board of Trustees establishes other funds to control and manage money for particular purposes or to show that it is properly using certain taxes and grants.

The District has three kinds of funds:

1. Governmental funds – Most of the District’s basic services are included in governmental funds, which include the General Fund, a Debt Service Fund, a Capital Projects Fund, and numerous Special Revenue Funds. The governmental funds focus on:

a. how cash and other financial assets that can readily be converted to cash flow in and out and

b. the balances left at year-end that are available for spending.

Consequently, the governmental FFS provide a detailed, short-term view that helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the District’s programs. Because this information does not encompass the additional long-term focus of the GWFS, we provide additional information on the subsequent page to explain (reconcile) the differences between them.

2. Proprietary fund – Reports the District’s employee risk management activities - health and workers’ compensation benefits.

3. Fiduciary funds – The District is the agent, or fiduciary, for certain assets that belong to others. The District is responsible for ensuring that the assets reported in these funds are used for their intended purposes. These assets and related liabilities are reported in a separate Statement of Assets and Liabilities within the FFS. These financial resources are excluded from the GWFS because the District cannot use them to finance its operations.

Financial Analysis of the District as a Whole

Net Position (see Table MDA-1). Current assets increased $69.1 million mostly due to an increase in Cash and Temporary Investments. The District realized a decrease in net position due to deferred inflows and pension liability related to a prior period adjustment required by GASB 75. Net capital assets decreased $5.8 million due to completion of construction projects and purchases related to the passage of the 2010 bond. Current liabilities increased $0.4 million due to the increase in current portion of long-term debt. Long-term liabilities increased due to deferred inflows related to OPEB liability. Restricted net position decreased $0.4 million due to completion of construction projects. Government-wide net position decreased by $0.8 million.

Table MDA-1: Lubbock Independent School District

Net Position ($ Millions)

6-30-18 6-30-19 Current assets $ 135.0 $ 204.1 Restricted assets 2.6 3.3 Deferred outflows of resources 15.3 49.1 General capital assets 293.0 287.2

Total Assets and Deferred Outflows 445.9 543.7 Current liabilities 42.2 42.6 Long-term liabilities and deferred inflows of resources 412.5 510.7 Total Liabilities and Deferred Inflows 454.7 553.3 Invested in general capital assets, net of related debt 46.8 46.2 Restricted net position 38.4 38.0 Unrestricted net position (93.9) (93.7) Net Position $ (8.8) $ (9.6)

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Financial Analysis of the District as a Whole (continued)

Approximately $2.6 million of the District’s restricted net position represents funds restricted to acquisition or construction of general capital assets.

Revenue Sources: (See Figure MDA-2). In FY’19, government-wide revenues were $317.4 million. Property taxes accounted for 42.4%, with state aid – formula grants accounting for 31.2%, operating grants and contributions provided 22.5% while only 2.8% came from charges for services. Investment earnings made up 0.8% and other revenues 0.3%.

The combined Maintenance and Operation and Debt Service tax rate remained unchanged at $1.235 per $100 valuation. Taxable appraised values increased $401 million to $10.9 billion, while collections increased $7.6 million to $134.6 million. State aid decreased $5.8 million due to increased local tax collections.

Expenses: (See Table MDA-3 on the next page). The total cost of all programs and services was $318.1 million. Included are $188.0 million for instructional services, $22.2 million for instructional leadership, $49.1 million for student services, $6.2 million for administration and $52.6 million for indirect student services.

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

Propertytaxes

State aid -formulagrants

Investmentearnings

Charges forservices

Operatinggrants &

contributions

Capitalgrants &

contributions

Other

% of Total 42.4% 31.2% 0.8% 2.8% 22.5% 0.0% 0.3%

Figure MDA-2:FY'19 Revenue Sources

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Changes in Net Position ($ Millions)

FY’18 FY’19

Charges for services $ 11.8 $ 8.9 Operating grants and contributions 21.1 71.6

Program revenues 32.9 80.5

Property taxes 127.0 134.6 State aid – formula grants 104.7 98.9 Investment earnings 1.7 2.6 Other .6 .8

General revenues 234.0 236.9

Total Revenues $ 266.9 $ 317.4

Instruction 121.7 174.3 Instructional resources and media services 4.1 4.7 Curriculum and staff development 3.2 9.1 Instructional leadership 2.5 4.3 School leadership 12.2 17.9 Guidance, counseling, and evaluation services 7.6 11.9 Social work services 0.4 0.6 Health services 2.5 3.7 Student transportation 5.6 5.9 Food service 16.9 17.5 Extracurricular activities 8.2 9.5 General administration 5.2 6.2 Plant maintenance and operations 26.8 26.2 Security and monitoring services 1.6 2.3 Data processing services 3.5 4.1 Community services 2.6 7.8 Interest on long-term debt 6.1 7.9 Bond issuance cost and fees 0.6 0.9 Capital Outlay 0.0 0.0 Share Service Arrangement payments 2.4 2.2

Other Intergovernmental Charges 1.2 1.2

Total Expenses $ 234.9 $ 318.2

Change in Net Position 32.0 (0.8)

Net position – beginning 115.1 (8.8)

Prior period adjustment required by GASB 75 (155.9) 0.0

Transfers 0.0 0.0

Net position – ending $ (8.8) $ (9.6)

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Table MDA-4 (see also Schedule B-1) presents costs by function, as well as each function’s net cost (total cost less fees generated by the activities and intergovernmental aid). The net cost reflects requirements for general revenues – local tax dollars, state aid and investment earnings.

The cost of all governmental activities this year was $318.1 million.

Local taxes accounted for $134.6 million for these activities while state aid accounted for $98.9 million.

$71.6 million of the cost was paid by grants and contributions.

These costs also include $17.7 million of depreciation expense, which does not require current cash outlay.


Net Cost of Governmental Activities ($ Millions)

Total Cost of Services Net Cost of Services __FY’18 FY’19 FY’18 _ FY’19

Instruction $ 121.7 $ 174.2 $ 113.3 $ 135.7 Instructional resources and media services 4.1 4.7 3.7 4.0 Curriculum and staff development 3.2 9.1 1.0 3.7 Instructional leadership 2.5 4.3 2.4 3.3 School leadership 12.2 17.9 14.3 16.4 Guidance, counseling and evaluation services 7.6 11.9 8.5 8.6 Social work services 0.4 0.6 0.3 0.5 Health services 2.5 3.7 2.8 3.3 Student transportation 5.6 5.9 5.6 5.9 Food service 16.9 17.5 (0.7) 0.0 Extracurricular activities 8.2 9.5 8.1 8.9 General administration 5.2 6.2 5.4 5.8 Plant maintenance and operations 26.8 26.2 26.3 25.4 Security and monitoring services 1.6 2.3 1.6 2.0 Data processing services 3.5 4.1 3.6 3.8 Community services 2.6 7.8 (1.4) .7 Interest on long-term debt 6.1 7.9 5.4 7.5 Bond issuance cost and fees 0.6 0.9 0.6 0.9 Capital Outlay 0.0 0.0 0.0 0.0 Payments related to SSAs 2.4 2.2 0.0 0.0 Other Intergovernmental Charges 1.2__ 1.2 1.2 1.2__ $ 234.9 $ 318.1 $ 202.0 $ 237.6

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Financial Analysis of the District’s Funds

FY’19 revenues totaled $310.3 million, a decrease of $0.8 million compared to FY’18. Expenditures totaled $307.8 million, a decrease of $5.9 million. Other sources/uses totaled 65.6, an increase of 67.3 million. Governmental fund balances totaled $167.8, an increase of $68.1 million.


Governmental Fund Change in Fund Balance ($ Millions)

FY’18 FY’19

Local and intermediate sources $ 139.7 $ 145.0 State programs 122.4 114.4 Federal programs 49.0 50.9

Total Revenues $ 311.1 $ 310.3

Instructional and student services 237.5 233.5 Administrative support 6.0 6.0 Non-student based support 32.5 31.2 Ancillary services 7.0 6.8 Debt service 18.4 18.0 Capital outlay 8.8 8.9 Intergovernmental charges 3.5 3.4 Total Expenditures $ 313.7 $ 307.8

Other financing sources 29.4 65.6 Other financing uses (31.1) 0.0

Other sources/uses $ (1.7) $ 65.6

Change in Fund Balance (4.3) 68.1

Fund balance – beginning 104.0 99.7

Fund balance – ending $ 99.7 $ 167.8

Refer to Table MDA-5 above and Exhibit C-2. Local revenues increased primarily due to the increase in local property values. State funding decreased due to increase in property values when applied to State equalization formulas. The General Fund balance increased by 6.7 million to $68.6 million. The M&O tax rate of 1.06, established in 2016, was maintained in 2019.

Debt service expenditures decreased due to no new issuance of capital related debt until the end of May 2019 and fund balance increased $2.7 million. The I&S tax rate of .175 established in 2016 was maintained in 2019.

Capital Projects Fund increased by $57.9 million to $64.3 million due to the sale of bonds the end of May 2019.

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General Fund Budgetary Highlights


Significant General Fund Budget Variances ($ Millions)

Budget _______ _ Original Final Actual

State program revenues 100.5 114.0 108.9

Expenditures:

Instruction 131.4 141.6 138.9

Student Transportation 5.4 7.4 6.0

Extracurricular Activities 6.7 7.9 6.8

Plant Maintenance and Operations 27.1 27.9 24.2

Facilities Acquisition and Construction 0.0 4.4 2.7

The budget was revised several times during FY’19, as is customary and necessary, to provide for changes in estimates and unexpected circumstances. Explanations for the significant budget variances are presented in Table MDA-6 above and Exhibit G-1.

State program revenues. The budgeted revenues were increased to recognize the payments made by the State of Texas to the Teachers’ Retirement System on behalf of the District.

Instruction. Budgeted expenditures were increased to recognize the payments made by the State of Texas to the Teachers’ Retirement System on behalf of the District. Actual expenditures were less than anticipated due to outstanding purchase orders at year-end and campus budget carryover.

Student Transportation. Budgeted expenditures were increased for any unforeseen year-end transactions to prevent a negative balance for this function. Actual expenditures were less than anticipated.

Extracurricular Activities. Budgeted expenditures were increased for beyond district travel and any unforeseen year-end transactions to prevent a negative balance for this function. Actual expenditures were less than anticipated due to outstanding purchase orders at year-end.

Plant Maintenance and Operations. Budgeted expenditures were increased for any unforeseen year-end transactions to prevent a negative balance for this function. Actual expenditures were less than anticipated due to outstanding summer maintenance projects.

Facilities Acquisition and Construction. Dedicated TRE budget was reallocated for Atkins & Hodges parking lots and S. Wilson windows. Actual expenditures were less than anticipated due to the outstanding purchase orders at year-end and summer projects that were not completed.

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Capital Asset and Debt Administration

Capital Assets. At the end of 2019, the governmental funds had invested $287.2 million in a broad range of general capital assets. Net general capital assets decreased (including additions, disposals and depreciation) $5.8 million from June 30, 2018 to June 30, 2019. See Table MDA-7 below and NOTE 6.


General Capital Assets ($ Millions)

6-30-18___ 6-30-19______

Land $ 20.4 $ 20.4 Construction in progress 9.7 6.6

General Capital Assets Not Being Depreciated, at Cost 30.1 27.0

Buildings and improvements 447.2 449.6 Furniture and equipment 61.5 68.9

General Capital Assets Being Depreciated, at Cost 508.7 518.5

Buildings and improvements 201.8 212.0 Furniture and equipment 44.0 46.3

Accumulated Depreciation 245.8 258.3

General Capital Assets Being Depreciated, Net 262.9 260.2

General Capital Assets, Net $ 293.0 $ 287.2

Economic Factors and Next Year’s Budgets and Rates

One funding reduction mechanism the Legislature used in the last biennium was to implement a reduced Regular Program Factor, essentially altering the formula for calculating WADA, or Weighted Average Daily Attendance. SB1 fully restored this factor while also increasing the Basic Allotment to $5,040 for 2014-2015 and $5,140 for 2015-2016 and beyond.

The appraised value used to prepare the fiscal year 2019 (“FY’20”) budget is up $655.9 million from increased property values. The average daily attendance decreased by 379 students from 25,676 to 25,297 from fiscal year 2018 to 2019 respectively.

During FY’18 the District received the Financial Integrity Rating System of Texas (FIRST) rating of Pass.

Contacting the District’s Financial Management

The Annual Financial and Compliance Report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the District’s finances and to demonstrate the District’s accountability for the money it receives. If you have questions about this report or need additional financial information, contact the District’s Finance Department, 1628 19th Street, Lubbock, Texas 79401-4895.

BASIC FINANCIAL STATEMENTS



Exhibit A-1

STATEMENT OF NET POSITION

JUNE 30, 2019

Primary

Data Government

Control Governmental

Codes Activities

ASSETS AND OTHER DEBITS:

1110 Cash and Temporary Investments $ 164,334,202

1220 Property Taxes - Delinquent 6,279,856

1230 Allowance for Uncollectible Taxes (2,439,218)

1240 Due from Other Governments 32,826,635

1267 Due from Fiduciary Fund 20,617

1290 Other Receivables 1,475,236

1300 Inventories, at Cost 425,489

1410 Deferred Expenditures 1,209,344

1890 Restricted Assets 3,266,084

Capital Assets:

1510 Land 20,392,365

1520 Buildings and Improvements, Net 237,671,225

1530 Furniture and Equipment, Net 22,522,224

1580 Construction in Progress 6,639,923

1000 Total Assets $ 494,623,982

DEFERRED OUTFLOWS OF RESOURCES:

1702 Unamortized Net Loss on Refunding $ 1,291,855

1703 Deferred Outflows Related to TRS OPEB Liability 9,398,343

1706 Deferred Outflows Related to Pension Liability 38,420,009

1700 Total Deferred Outflows of Resources $ 49,110,207

LIABILITIES:

2110 Accounts Payable $ 4,156,316

2140 Interest Payable 2,850,000

2150 Payroll Deductions and Withholdings 1,661,108

2160 Accrued Wages Payable 19,670,051

2180 Due to Other Governments 648

2200 Accrued Expenditures 2,093,000

2300 Unearned Revenues 2,546,171

2501 Due within One Year 9,591,000

2502 Due in More than One Year 269,429,000

2516 Unamortized Bond Premium 18,592,828

2540 Net Pension Liability (District's Share) 78,095,335

2545 Net OPEB Liability (District's Share) 102,923,872

2590 Arbitrage Rebate Payable 48,700

2000 Total Liabilities $ 511,658,029

DEFERRED INFLOWS OF RESOURCES:

2602 Derivative Instrument - Interest Rate Lock Liability $ 3,569,270

2603 Deferred Inflows Related to OPEB Liability 32,547,008

2605 Deferred Inflows Related to Pension Liability 5,510,689

2600 Total Deferred Inflows of Resources $ 41,626,967

NET POSITION:

3200 Net Investment in Capital Assets $ 46,175,748

3820 Restricted for Federal and State Programs 8,601,252

3850 Restricted for Debt Service 26,831,287

3860 Restricted for Capital Projects 2,572,023

3900 Unrestricted (Deficit) (93,731,117)

3000 Total Net Position $ (9,550,807)

The accompanying notes are an integral part of this statement.

-14-



Exhibit B-1

STATEMENT OF ACTIVITIES


Net (Expense)

Revenue and

Changes in

Net Assets

1 3 4 6

Data Operating Total

Control Charges for Grants and Governmental

Codes Expenses Services Contributions Activities

11 Instruction $ 174,161,816 $ 1,408,375 $ 37,041,458 $ (135,711,983)

12 Instructional Resources and Media Services 4,675,299 14,463 621,957 (4,038,879)

13 Curriculum and Staff Development 9,148,913 27,791 5,424,618 (3,696,504)

21 Instructional Leadership 4,338,419 1,024,440 (3,313,979)

23 School Leadership 17,904,390 1,449,567 (16,454,823)

31 Guidance, Counseling, and Evaluation Services 11,920,271 3,262,584 (8,657,687)

32 Social Work Services 648,636 188,704 (459,932)

33 Health Services 3,732,901 392,588 (3,340,313)

34 Student Transportation 5,917,795 3,368 (5,914,427)

35 Food Services 17,468,890 1,534,738 15,946,065 11,913

36 Extracurricular Activities 9,464,633 404,979 152,498 (8,907,156)

41 General Administration 6,207,695 88,625 324,752 (5,794,318)

51 Plant Maintenance and Operations 26,198,263 335,349 502,552 (25,360,362)

52 Security and Monitoring Services 2,328,365 360,168 (1,968,197)

53 Data Processing Services 4,054,616 50,100 160,224 (3,844,292)

61 Community Services 7,800,593 5,077,541 2,056,388 (666,664)

72 Interest on Long-Term Debt 7,918,947 448,658 (7,470,289)

73 Issuance Costs and Fees 861,388 (861,388)

93 Payments to Fiscal Agent/Member Districts 2,219,268 2,240,517 21,249

99 Other Intergovernmental Charges 1,166,089 (1,166,089)

TP Total Primary Government $ 318,137,187 $ 8,941,961 $ 71,601,106 $ (237,594,120)

Data

Control

Codes General Revenues:

MT Property Taxes, Levied for General Purposes $ 115,531,938

DT Property Taxes, Levied for Debt Service 19,069,567

SF State Aid Formula Grants 98,867,051

IE Investment Earnings 2,621,570

MI Miscellaneous Local and Intermediate Revenue 797,909

TR Total General Revenues $ 236,888,035

CN Change in Net Position $ (706,085)

NB Net Position - Beginning (8,844,722)

NE Net Position - Ending $ (9,550,807)

Program Revenues


-15-



Exhibit C-1

BALANCE SHEET

GOVERNMENTAL FUNDS

JUNE 30, 2019

10 50 60 98

Data Debt Capital Other Total

Control General Service Projects Governmental Governmental

Codes Fund Fund Fund Funds Funds

ASSETS AND OTHER DEBITS:

1110 Cash and Temporary Investments $ 57,031,725 $ 22,965,906 $ 67,167,857 $ 9,785,343 $ 156,950,831

1220 Property Taxes - Delinquent 5,382,264 897,592 6,279,856

1230 Allowance for Uncollectible Taxes (2,093,580) (345,638) (2,439,218)

1240 Receivables from Other Governments 26,620,910 48 6,205,677 32,826,635

1260 Due from Other Funds 6,203,710 258,332 6,462,042

1290 Other Receivables 528,462 47,295 22,739 598,496

1300 Inventories 311,613 113,876 425,489

1410 Deferred Expenditures 1,084,421 114,923 1,199,344

1890 Restricted Assets 3,266,084 3,266,084

1000 Total Assets $ 95,069,525 $ 26,831,287 $ 67,426,189 $ 16,242,558 $ 205,569,559

LIABILITIES:

2110 Accounts Payable $ 1,328,625 $ $ 1,660,516 $ 636,091 $ 3,625,232

2150 Payroll Deductions and Withholdings Payable 1,661,108 1,661,108

2160 Accrued Wages Payable 17,970,139 1,699,912 19,670,051

2170 Due to Other Funds 258,387 1,454,696 4,710,451 6,423,534

2180 Due to Other Governments 648 648

2300 Unearned Revenue 1,951,319 594,852 2,546,171

2000 Total Liabilities $ 23,170,226 $ 0 $ 3,115,212 $ 7,641,306 $ 33,926,744

DEFERRED INFLOWS OF RESOURCES:

2601 Unavailable Revenue - Property Taxes $ 3,288,684 $ 551,954 $ 0 $ 0 $ 3,840,638

2600 Total Deferred Inflows $ 3,288,684 $ 551,954 $ 0 $ 0 $ 3,840,638

FUND BALANCES:

Non-Spendable

3410 Investment in Inventories $ 311,613 $ $ $ $ 311,613

3430 Deferred Expenditures 1,081,735 1,081,735

3450 Restricted - Federal/State Grant Items 8,601,252 8,601,252

3470 Restricted - Capital Acquisitions and

Contractual Obligations 64,310,977 64,310,977

3480 Restricted - Retirement of Long-Term Debt 23,013,249 23,013,249

3480 Restricted - Funds Held in Sinking Fund 3,266,084 3,266,084

3545 Committed - Other Purposes 6,030,191 6,030,191

3600 Unassigned 61,187,076 61,187,076

3000 Total Fund Balances $ 68,610,615 $ 26,279,333 $ 64,310,977 $ 8,601,252 $ 167,802,177

4000 Total Liabilities, Deferred Inflows,

and Fund Balances $ 95,069,525 $ 26,831,287 $ 67,426,189 $ 16,242,558 $ 205,569,559

Major Funds


-16-



Exhibit C-1R

RECONCILIATION OF THE GOVERNMENTAL FUNDS

BALANCE SHEET TO THE STATEMENT

OF NET POSITION

JUNE 30, 2019

Total Fund Balances - Governmental Funds (Exhibit C-1) $ 167,802,177

1

287,225,737

2

(296,320,973)

3

5,628,136

4

(3,617,970)

5

(2,850,000)

6

(45,186,015)

7

(126,072,537)

8

3,840,638

19 Net Position of Governmental Activities (Exhibit A-1) $ (9,550,807)

General capital assets are not financial resources and are not reported in the funds.

This amount is the cost, net of accumulated depreciation, of the District's general

capital assets.

Long-term liabilities (e.g., bonds, capital leases, compensated absences, etc.),

including premiums and discounts on related debt, do not require current financial

resources and are not reported in the funds.

Internal service funds are used to capture the net assets of the District's employee

risk management. These activities support the District's governmental activities. This

amount is the net assets of the internal service funds.

Included in the items related to debt is the recognition of the District's proportionate

share of the net pension liabilities required by GASB 68, a deferred resource inflow,

and a deferred resource outflow. This amounted to a decrease in net position.

Property taxes levied, but not available, are not revenues in the governmental funds,

but are accrued when earned (net of estimated uncollectibles) in the Statement of

Activities. This amount eliminates the deferred property tax liability reported in the

governmental funds.

The estimated arbitrage rebate payable and estimated derivative instrument liability

are required to be reported in the Statement of Net Position. This decreases net

position.

Included in the items related to debt is the recognition of the District's proportionate

share of the net post employment obligation liabilities required by GASB 75, a

deferred resource inflow, and a deferred resource outflow. This amounted to a

decrease in net position.

Interest on debt is recognized when due in the governmental funds but is accrued as

incurred in the Statement of Activities. This amount recognizes accrued interest at

year end, including interest accrued and added to the principal of the capital


-17-



Exhibit C-2

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDS


10 50 60 98

Data Debt Capital Other Total

Control General Service Projects Governmental Governmental

Codes Fund Fund Fund Funds Funds

Revenues:

5700 Local and Intermediate Sources $ 120,985,257 $ 19,608,242 $ 218,403 $ 4,220,635 $ 145,032,537

5800 State Program Revenues 108,852,328 448,658 5,141,583 114,442,569

5900 Federal Program Revenues 8,695,674 42,153,401 50,849,075

5020 Total Revenues $ 238,533,259 $ 20,056,900 $ 218,403 $ 51,515,619 $ 310,324,181

Expenditures:

0011 Instruction $ 138,942,158 $ $ 8,457 $ 17,591,176 $ 156,541,791

0012 Instructional Resources and Media Services 3,981,061 26,347 4,007,408

0013 Curriculum and Staff Development 3,647,749 4,485,403 8,133,152

0021 Instructional Leadership 3,362,795 681,611 4,044,406

0023 School Leadership 16,454,827 190,663 16,645,490

0031 Guidance, Counseling, and Evaluation Services 8,748,273 2,297,522 11,045,795

0032 Social Work Services 470,620 131,373 601,993

0033 Health Services 3,350,778 145,969 3,496,747

0034 Student Transportation 5,982,035 5,982,035

0035 Food Services 16,249,318 16,249,318

0036 Extracurricular Activities 6,833,505 12,910 6,846,415

0041 General Administration 5,976,265 28,376 6,004,641

0051 Facilities Maintenance and Operation 24,233,344 181,218 79,313 24,493,875

0052 Security and Monitoring Services 1,949,698 168,561 290,260 2,408,519

0053 Data Processing Services 3,279,333 1,041,256 4,320,589

0061 Community Services 754,443 6,076,453 6,830,896

0071 Principal on Long-Term Debt 8,810,000 8,810,000

0072 Interest on Long-Term Debt 8,303,655 8,303,655

0073 Issuance Costs and Fees 279,060 582,328 861,388

0081 Facilities Acquisition and Construction 2,689,119 5,926,618 217,485 8,833,222

0093 Payments to Fiscal Agents/Member Districts 2,219,268 2,219,268

0099 Other Intergovernmental Charges 1,166,089 1,166,089

6030 Total Expenditures $ 231,822,092 $ 17,392,715 $ 7,908,438 $ 50,723,447 $ 307,846,692

1100 Excess (Deficiency) of Revenues

Over (Under) Expenditures $ 6,711,167 $ 2,664,185 $ (7,690,035) $ 792,172 $ 2,477,489

Other Financing Sources (Uses):

7911 Capital Related Debt Issued $ $ $ 60,360,000 $ $ 60,360,000

7916 Premium on Issuance of Bonds 5,222,328 5,222,328

7080 Total Other Financing Sources (Uses) $ 0 $ 0 $ 65,582,328 $ 0 $ 65,582,328

1200 Net Change in Fund Balance $ 6,711,167 $ 2,664,185 $ 57,892,293 $ 792,172 $ 68,059,817

0100 July 1 - Fund Balance 61,899,448 23,615,148 6,418,684 7,809,080 99,742,360

3000 June 30 - Fund Balance $ 68,610,615 $ 26,279,333 $ 64,310,977 $ 8,601,252 $ 167,802,177

Major Funds


-18-



Exhibit C-3

RECONCILIATION OF THE STATEMENT OF REVENUES,

EXPENDITURES, AND CHANGES IN FUND BALANCE

OF GOVERNMENTAL FUNDS

TO THE STATEMENT OF ACTIVITIES


Net Change in Fund Balances - Total Governmental Funds (Exhibit C-2) $ 68,059,817

1

(5,784,693)

2

(56,327,620)

3

(60,000)

4

(158,000)

5

318,969

6

(6,972,185)

7

217,627

$ (706,085)

Internal service funds are used to capture the net costs of the District's employee

risk management. These activities support the District's governmental activities.

This amount is the current year change in net assets for the internal service fund.

Property taxes levied, but not available, are not revenues in the governmental funds,

but are accrued when earned (net of estimated uncollectibles) in the Statement of

Activities. This amount is the net change in deferred property taxes for the year.

Change in Net Position of Governmental Activities (Exhibit B-1)

Amounts reported for governmental activities in the Statement of Activities (Exhibit B-1) are

different because:

Governmental funds report capital outlays as expenditures. However, in the

Statement of Activities, the cost of general capital assets are allocated over their

estimated useful lives as depreciation expense. This is the amount by which

depreciation and loss on retirement of fixed assets exceeded capital outlay

expenditures this year.

The issuance of long-term debt (e.g., bonds, capital leases, etc.) provides current

financial resources to governmental funds while the repayment of principal on the

debt is a use of current financial resources, but neither effects the Statement of

Activities. Also, governmental funds report the effect of issuance costs, premiums,

discounts, and similar items when the debt is issued; these amounts are deferred

and amortized in the Statement of Activities. This amount is the net effect of these

differences.

Interest on debt is recognized when due in the governmental funds, but is accrued

as incurred in the Statement of Activities. This amount is the change in accrued

interest during the year.

Estimated long-term liabilities for compensated absences are recognized as

expenses in the Statement of Activities as earned, but are recognized when current

financial resources are used in the governmental funds. This amount is the net

change in the estimated long-term liability for compensated absences this year.

The implementation of GASB 68 and 75 required that certain expenditures be de-

expended and recorded as deferred resource outflows. These contributions made

after the measurement date of August 31, 2018 are recognized as deferred

outflows. The District's share of the unrecognized deferred inflows and outflows as

of the measurement date had to be amortized. The impact of these transactions is

to decrease the change in net position.


-19-



Exhibit D-1

STATEMENT OF NET POSITION

PROPRIETARY FUND TYPES

JUNE 30, 2019

Governmental

Activities

Internal

Service Fund

ASSETS:

Cash and Equivalents $ 7,383,371

Due From Other Funds 55

Other Receivables 876,740

Deferred Expenses 10,000

Total Assets $ 8,270,166

LIABILITIES:

Accounts Payable $ 531,084

Due To Other Funds 17,946

Accrued Expenses 2,093,000

Total Liabilities $ 2,642,030

NET POSITION:

Unrestricted Net Position $ 5,628,136


-20-



Exhibit D-2

STATEMENT OF REVENUES, EXPENSES, AND

CHANGES IN NET POSITION



Governmental

Activities

Internal

Service Fund

OPERATING REVENUES:

Charges for Services $ 23,103,086

Total Revenues $ 23,103,086

OPERATING EXPENSES:

Insurance Claims and Expenses $ 22,939,416

Total Expenses $ 22,939,416

Operating Income (Loss) $ 163,670

NONOPERATING REVENUES:

Interest Income $ 155,299

Change in Net Position $ 318,969

Net Position - July 1 5,309,167

Net Position - June 30 $ 5,628,136


-21-



Exhibit D-3

STATEMENT OF CASH FLOWS



Governmental

Activities

Internal

Service Fund

INCREASE (DECREASE) IN CASH AND

CASH EQUIVALENTS

Cash Flows From Operating Activities

Cash Receipts From Charges for Services $ 22,355,310

Cash Payments to Suppliers for Goods and Services (23,256,957)

Net Cash From Operating Activities $ (901,647)

Cash Flows From Investing Activities

Cash Receipts From Interest Income $ 155,299

Net Cash From Investing Activities $ 155,299

Net Change in Cash and Cash Equivalents $ (746,348)

Cash and Cash Equivalents at Beginning of the Year 8,129,719

Cash and Cash Equivalents at End of Year $ 7,383,371

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET

CASH FROM OPERATING ACTIVITIES

Operating Income (Loss) $ 163,670

Changes in Assets and Liabilities

Change in Other Receivables (803,965)

Change in Due From/To Other Funds (115,746)

Change in Accounts Payable 140,394

Change in Accrued Expenses (286,000)

Net Cash From Operating Activities $ (901,647)


-22-



Exhibit E-1

STATEMENT OF FIDUCIARY NET POSITION

FIDUCIARY FUNDS

JUNE 30, 2019

Agency

Funds

ASSETS:

Cash and Temporary Investments $ 1,519,767

Other Receivables 4,705

Prepayments 1,830

Total Assets $ 1,526,302

LIABILITIES:

Accounts Payable $ 8,162

Due to Other Funds 20,617

Due to Student Groups 1,497,523

Total Liabilities $ 1,526,302

NET POSITION:

Restricted Net Position $ 0


-23-



NOTES TO FINANCIAL STATEMENTS

-24-

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Lubbock Independent School District (the District) is a public education agency operating under the applicable laws and regulations of the State of Texas. The District prepares its basic financial statements in conformity with accounting principles generally accepted in the United States of America promulgated by the Governmental Accounting Standards Board (GASB) applicable to governmental units. The District also complies with the appropriate version of the Texas Education Agency’s (TEA) Financial Accountability System Resource Guide (FASRG) and the requirements of contracts and grants of agencies from which it receives funds. GASB is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant accounting policies of the District are described below.

A. REPORTING ENTITY

The Board of School Trustees (the Board), a seven member group, has fiscal accountability over all activities related to public elementary and secondary education within the jurisdiction of the District. The Board is elected by the public and has the exclusive power and duty to govern and oversee the management of the District. All powers and duties not specifically delegated by statute to the TEA or to the State Board of Education are reserved for the Board, and the TEA may not substitute its judgment for the lawful exercise of those powers and duties by the Board. The District is not included in any other governmental "reporting entity" as defined in governmental accounting and financial reporting standards. There are no component units included within the reporting entity. The District receives funding from local, state, and federal government sources and must comply with the requirements of these funding entities.

B. BASIS OF ACCOUNTING AND PRESENTATION GOVERNMENT-WIDE FINANCIAL STATEMENTS The Statement of Net Position and the Statement of Activities display information about the government-wide entity as a whole. These statements report information on all of the non-fiduciary activities of the District. For the most part, the effect of interfund activity has been removed from these statements. Governmental Activities, which normally are supported by taxes, state foundation funds, grants, and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support (i.e., internal service funds are considered governmental activities and not business-type activities). The District currently has no business-type activities. These government-wide financial statements were prepared using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenues as soon as all eligibility requirements imposed by the provider have been met.




-25-

In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities or Statement of Net Position. Bond issue costs are expensed when incurred. Bond premiums, discounts, and other related items are deferred and amortized over the life of the bonds. The Statement of Activities demonstrates how other people or entities that participate in programs the District operates have shared in the payment of the direct costs. The “Charges for Services” column includes payments made by parties that purchase, use, or directly benefit from goods or services provided by a given function or segment of the District and examples include tuition paid by students not residing in the District, school lunch charges, etc. The “Grants and Contributions” column includes amounts paid by organizations outside the District to help meet the operational or capital requirements of a given year. If a revenue is not a program revenue, it is a general revenue used to support all of the District’s functions. Taxes are always general revenues. The District reports all direct expenses by function in the Statement of Activities. Direct expenses are those that are clearly identifiable with a function. Indirect expenses of other functions are not allocated to those functions but are reported separately in the Statement of Activities. Depreciation expense is specifically identified by function and is included in the direct expense to each function allocated. Interest on general long-term debt is considered an indirect expense and is reported separately on the Statement of Activities. Interfund activities between governmental funds and proprietary funds appear as due to/due from on the Governmental Fund Balance Sheet and Proprietary Fund Statement of Net Position and as other resources and other uses on the Governmental Fund Statement of Revenues, Expenditures and Changes in Fund Balance and on the Proprietary Fund Statement of Revenues, Expenses, and Changes in Fund Net Position. All interfund transactions between governmental funds and internal service funds are eliminated on the government-wide financial statements. Interfund activities between governmental funds and fiduciary funds remain as due to/due from on the government-wide Statement of Net Position. FUND FINANCIAL STATEMENTS Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds. Since the resources in the fiduciary funds cannot be used for District operations, they are not included in the government-wide statements. Major governmental funds are reported as separate columns in the fund financial statements. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Revenues from local sources consist primarily of property taxes. Amounts have been recorded for property tax revenues collected through June 30, 2019. State revenues are recognized under the susceptible-to-accrual concept. Miscellaneous revenues are recorded as revenue when received in cash because they are generally not measurable until actually received. Investment earnings are recorded as earned, since they are both measurable and available.




-26-

Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures and claims and judgments are recorded only when payment is due. In the fund financial statements, governmental fund types recognize bond issue costs in the current period. The face amount of the debt issued is reported as other financing sources. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Premiums and discounts on bonds issued, as well as an applicable gain or loss on refinancing of bonds, are recognized on the statement of net position and amortized over the life of the applicable bonds. The proprietary fund and the fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. The District applies all GASB pronouncements, as well as the Financial Accounting Standards Board pronouncements issued on or before November 30, 1989, unless these pronouncements conflict or contradict GASB pronouncements. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues result from providing goods and services in connection with a proprietary fund’s principal ongoing operations, they usually come from exchange or exchange-like transactions. All other revenues are nonoperating. Agency Funds utilize the accrual basis of accounting but do not have a measurement focus as they report only assets and liabilities. GOVERNMENTAL FUND TYPES The District reports the following major governmental funds:

General Fund – This fund is established to account for resources used for general operations. All general tax revenues and other receipts that are not allocated by law or contractual agreement to some other fund are accounted for in this fund. This is a budgeted fund, and undesignated fund balances are considered resources available for current operations. Debt Service Fund – This fund is used to account for payment of principal and interest on long-term general obligation debt and other long-term debts for which tax has been dedicated. This is a budgeted fund and any unused sinking fund balances will be transferred to the general fund after all of the related debt obligations have been met. Capital Projects Fund – This governmental fund is established to account for proceeds, on a modified accrual basis, from the sale of bonds and other resources to be used for Board- authorized acquisition, construction, or renovation, as well as, furnishing and equipping of major capital facilities. Upon completion of a project, any unused bond proceeds are transferred to the debt service fund and are used to retire related bond principal.




-27-

Additionally, the District reports the following fund types: Special Revenue Funds – These funds are used to account for resources restricted to, or designated for, specific purposes by a grantor. Federal financial assistance generally is accounted for in a special revenue fund. Except for the food service and technology fund, any unused balances are returned to the grantor at the close of specified project periods. The food service fund is the only required budgeted special revenue fund. For all other funds in this fund type, project accounting is employed to maintain integrity for the various sources of funds. The District's food service fund is considered a special revenue fund since it meets the following criteria: (1) user fees are charged to supplement the National School Lunch Program (NSLP), (2) the general fund subsidizes the food service program for all expenditures in excess of NSLP, and (3) the District does not consider the food service program completely self-supporting. Food service fund balances, if any, are used exclusively for child nutrition program purposes.

PROPRIETARY FUND TYPES Internal Service Funds – The internal service funds are used to account for revenues and expenses related to services provided to parties inside the District, specifically for the operation of its medical and dental programs and its partially self-funded insurance plan for workers' compensation on a cost-reimbursement basis.

FIDUCIARY FUND TYPES Agency Funds – These custodial funds are used to account for activities of student groups and other organizational activities requiring clearing accounts. Financial resources for the agency funds are recorded as assets and liabilities; therefore, these funds do not include revenues and expenditures and have no fund equity. Student activity organizations exist with the explicit approval of, and are subject to revocation by, the Board. If any unused resources are declared surplus by the student groups, they are transferred to the general fund with a recommendation to the Board for an appropriate utilization through a budgeted program.

C. BASIS OF ACCOUNTING APPLICABLE TO ALL FINANCIAL STATEMENTS

Capital assets, which include buildings and improvements, furniture and equipment, and construction in progress are reported in the government-wide financial statements. Capital assets are defined by the District as assets with an individual cost of more than $5,000. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. The costs of normal maintenance and repairs that do not add to the value of the assets or materially extend the assets’ useful lives are not capitalized. Revenues from state and federal grants are considered to be earned to the extent of expenditures made under the provisions of the grant. Funds received but unexpended are reflected as deferred revenues, and funds expended but not yet received are shown as receivables. If balances have not been expended by the end of the project period, grantors generally require the District to refund all or part of the unused amount.




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The consumption method is used to account for inventories of food products and certain other supplies. Under this method, these items are carried in an inventory account of the appropriate fund at cost, using the first-in, first-out method of accounting and subsequently charged to expenditures when consumed. In the general fund, reported inventories are offset by a fund balance reserve indicating that they are unavailable as current expendable financial resources. Although the food service commodity inventories acquired through the US Department of Agriculture are received at no cost, the Texas Department of Agriculture supplies the market value, and the inventory is recognized as deferred revenue when received. As the commodities are used, revenue is recognized in equal amounts. District employees are compensated for sick leave absences during the period in which the absences are incurred. Unused sick leave is accumulated, and employees are compensated annually for accumulated sick leave in excess of specified limits. Retiring employees meeting the criteria of the Teacher Retirement System (TRS) will be paid a lump sum for their accumulated sick leave days up to a specified amount. This compensation is paid one month after the retirement date of the employee and does not affect TRS benefits. The District also allows vacation days to be accrued with the potential for twenty days at a time given. The District has estimated this liability based on the number of days accrued at an average daily rate of pay. The District’s estimated long-term retirement sick leave liability and accrued vacation liability are recognized in the government-wide financial statements. Since the internal service funds support the operations of governmental funds, it is consolidated with the governmental funds in the government-wide financial statements. The expenditures of governmental funds that create the revenues of the internal service fund are eliminated to avoid “grossing up” the revenues and expenses of the District as a whole. When the District incurs an expense, for which it may use either restricted or unrestricted assets, it uses the restricted assets first whenever those funds will have to be returned if not used. In accordance with the FASRG, the District has adopted and installed an accounting system which exceeds the minimum requirements prescribed by the State Board of Education and approved by the State Auditor. Specifically, the District’s accounting system uses codes and the code structure presented in the Accounting Code Section of the FASRG. Mandatory codes are utilized in the form provided in that section.

D. BUDGETARY DATA

The official budget was prepared on the modified accrual basis of accounting, which is consistent with accounting principles generally accepted in the United States of America, for the general fund, debt service fund, and the food service special revenue fund. The remaining special revenue funds adopt project-length budgets which do not correspond to the District’s fiscal year.




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The following procedures are followed in establishing the budgetary data reflected in the basic financial statements:

a. Prior to June 20 of the preceding fiscal year, the District prepares a budget for the next succeeding fiscal year beginning July 1. The operating budget includes proposed expenditures and the means of financing them.

b. A meeting of the Board is then called for the purpose of adopting the proposed budget. At least 10 days public notice of the meeting must be given.

c. Prior to July 1, the budget was legally enacted through passage of a resolution by the Board.

The budget is prepared and controlled at the function level within each fund and is amended at this level as needed. Amendments are presented to the Board at its regular meetings. Each amendment must have Board approval. Such amendments are made before the fact, and they are reflected in the official minutes of the Board. During the year, several amendments were necessary.

E. ENCUMBRANCE ACCOUNTING Encumbrances for goods or purchased services are documented by purchase orders or contracts. Under Texas law, appropriations lapse at June 30, and encumbrances outstanding at that time are to be either cancelled or appropriately provided for in the subsequent year’s budget. The District appropriates encumbrances that lapse in the subsequent year’s budget, and accordingly, these amounts are included in the committed fund balance at June 30.

F. FUND EQUITY The District has adopted GASB Statement 54, which redefined how fund balances of the

governmental funds are presented in the financial statements. Fund balances are classified as follows:

Non-Spendable – Portion of the Fund Balance that is legally or contractually required to be maintained in tact (and is generally not expected to be converted to cash).

Restricted – Amounts that can be spent only for specific purposes because of restrictions by external sources (creditors, laws of other governments, etc.) or by constitutional provision or enabling legislation.

Committed – Amounts that can be used only for specific purposes determined by formal action by the Board of Trustees, the highest level of decision making authority.

Unassigned – Amounts not included in other spendable classifications. When an expenditure is incurred for purposes for which both restricted and unrestricted fund

balance is available, the District considers restricted funds to have been spent first. When an expenditure for which committed, assigned, or unassigned fund balances are available, the District considers amounts to have been spent first out of committed funds, then assigned funds, and finally unassigned funds, as needed, unless the Board has provided otherwise in its commitment or assignment actions.




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G. NET POSITION ON THE STATEMENT OF NET POSITION

Net Position on the Statement of Net Position include the following:

Net Invested in Capital Assets – this component of net position represents the difference between capital assets less both the accumulated depreciation and the outstanding balance of debt, excluding any unspent bond proceeds that are directly attributable to the acquisition, construction, or improvement of those assets.

Restricted for Federal and State Programs – this component of net position represents assets and liabilities of the child nutrition and technology special revenue funds that consists of assets with constraints placed on their use by the state.

Restricted for Debt Service – this component of net position represents the difference between assets and liabilities of the debt service fund that consists of assets with constraints placed on their use by creditors.

Restricted for Capital Projects – this component of net position represents the difference between assets and liabilities of the capital projects fund. This consists of capital project fund net position with constraints placed on their use by creditors.

Unrestricted – the difference between assets and liabilities that is not reported in Net Investment in Capital Assets or Restricted Net Position.

H. PENSIONS

The fiduciary net position of the Teacher Retirement System of Texas (TRS) has been determined using the flow of economic resources measurement focus and full accrual basis of accounting. This includes for purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, pension expense, and information about assets, liabilities and additions to/deductions from TRS's fiduciary net position. Benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

I. OTHER POST-EMPLOYMENT BENEFITS (OPEB) The fiduciary net position of the TRS Care Plan has been determined using the flow of economic resources measurement focus and full accrual basis of accounting. This includes, for purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to other post-employment benefits, OPEB expense, and information about assets, liabilities and additions to/deductions from TRS Care’s fiduciary net position. Benefit payments are recognized when due and payable in accordance with the benefit terms. There are no investments as this a pay-as-you-go plan, and all cash is held in a cash account.




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J. CASH AND CASH EQUIVALENTS – PROPRIETARY FUNDS

For purposes of the Statement of Cash Flows for proprietary fund types, the District considers petty cash, demand deposits, and money market accounts to be cash equivalents. Temporary cash investments are not considered cash equivalents.

K. MANAGEMENT’S USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those estimates.

2. DEPOSITS AND INVESTMENTS

Legal and Contractual Provisions Governing Deposits and Investments The Public Funds Investment Act (the Act) (Government Code Chapter 2256) contains specific

provisions in the areas of investment practices, management reports, and establishment of appropriate policies. Among other things, it requires the District to adopt, implement, and publicize an investment policy. That policy must address the following areas: (1) safety of principal and liquidity, (2) portfolio diversification, (3) allowable investments, (4) acceptable risk levels, (5) expected rates of return, (6) maximum allowable stated maturity of portfolio investments, (7) maximum average dollar-weighted maturity allowed based on the stated maturity date for the portfolio, (8) investment staff quality and capabilities, and (9) bid solicitation preferences for certificates of deposit.

Statutes authorize the District to invest in (1) obligations of the U.S. Treasury, certain U.S. agencies,

and the State of Texas; (2) certificates of deposit, (3) certain municipal securities, (4) money market savings accounts, (5) repurchase agreements, (6) bankers acceptances, (7) mutual funds, (8) investment pools, (9) guaranteed investment contracts, and (10) common trust funds. The Act also requires the District to have independent auditors perform test procedures related to investment practices as provided by the Act. The District is in substantial compliance with the requirements of the Act and with local policies.




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Policies Governing Deposits and Investments In compliance with the Act, the District has adopted a deposit and investment policy. That policy does

not address the following risks:

a. Custodial Credit Risk – Deposits and Investments: In the case of deposits, this is the risk that in the event of a bank failure, the government's deposits and investments may not be returned to it. The District's policy does not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits and investments, other than the following: The State of Texas requires that a financial institution secure deposits and investments made by state or local governments by pledging securities in excess of the highest cash balance of the government. The District is not exposed to custodial credit risk for its deposits are all covered by depository insurance and pledged securities held by a third party in the District’s name.

b. Concentration of Credit Risk – The investment policy of the District contains no limitations on the

amount that can be invested in any one issuer. Investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) that represent five percent or more of the total entity investments represent a concentration risk. At June 30, 2019, all of the District’s investments are in external investment pools and banks, and as such, the District has no risk.

c. Credit Risk – The risk that an issuer of other counterparty to an investment will not fulfill its

obligations. The ratings of securities by nationally recognized rating agencies are designed to give an indication of credit risk. At June 30, 2019, the District was not significantly exposed to credit risk.

d. Interest Rate Risk – Not applicable e. Foreign Currency Risk – Not applicable The carrying amount of the District’s cash and temporary investments at June 30, 2019, approximates

fair value and consisted of the following shown below:

Maturity inLess than Credit

Amount Percent 1 Year Rating

Cash on Hand $ 275 0.00% $ 275 N/ACash in Bank 130,206,196 78.51% 130,206,196 N/ATexSTAR Investment Pool 23,373 0.01% 23,373 AAAmTexas Term Invesment Pool 20,965 0.01% 20,965 AAAmCertificates of Deposit 35,603,160 21.47% 35,603,160 N/A

$ 165,853,969 100.00% $ 165,853,969

Cash Balances

Statement of Net Position $ 164,334,202

Statement of Fiduciary Net Position 1,519,767

$ 165,853,969




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Public Funds Investment Pools Public funds investment pools in Texas (Pools) are established under the authority of the Interlocal Cooperation Act, Chapter 791 of the Texas Government Code, and are subject to the provisions of the Public Funds Investment Act, Chapter 2256 of the Texas Government Code. In addition to other provisions of the Act designed to promote liquidity and safety of principal, the Act requires Pools to: 1) have an advisory board composed of participants in the Pool and other persons who do not have a business relationship with the Pool and are qualified to advise the Pool; 2) maintain a continuous rating of no lower than AAA or AAA-m or an equivalent rating by at least one nationally recognized rating service; and 3) maintain the market value of its underlying investment portfolio within one half of one percent of the value of its shares. The District’s investment in Pools are reported at an amount determined by the fair value per share of the Pool’s underlying portfolio, unless the Pool is 2a7-like, in which case they are reported at share value. A 2a7-like pool is one which is not registered with the Securities and Exchange Commission as an investment company, but nevertheless has a policy that it will, and does, operate in a manner consistent with the SEC’s Rule 2a-7 of the Investment Company Act of 1940.

3. PROPERTY TAXES

Property taxes are levied by October 1 on the assessed value listed as of the prior January 1 for all real and business personal property located in the District in conformity with Subtitle E, Texas Property Tax Code. Taxes are due on receipt of the tax bill and are delinquent if not paid before February 1 of the year following the year in which imposed. On January 1 of each year, a tax lien attaches to property to secure the payment of all taxes, penalties, and interest ultimately imposed. Delinquent taxes are prorated between maintenance and debt service based on rates adopted for the year of the levy. An estimated amount of uncollectible taxes has been recorded in the allowance for uncollectible taxes. Uncollectible personal property taxes are periodically reviewed and written off, but the District is prohibited from writing off real property taxes without specific statutory authority from the Texas Legislature.

4. DUE FROM OTHER GOVERNMENTS Amounts due from other governments consisted of the following at June 30, 2019:

Due from State - Foundation Payments $ 26,620,958Due from State - Reimbursements 6,205,677

Total Due from Other Governments $ 32,826,635




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5. INTERFUND RECEIVABLES AND PAYABLES

Interfund balances at June 30, 2019, consisted of the following individual fund receivables and payables:

Due from Due to

Other Funds Other FundsGeneral Funds

Special Revenue Fund $ 4,710,451 $Capital Projects Fund 1,454,696 258,332Internal Service Fund 17,946 55Trust & Agency Fund 20,617

$ 6,203,710 $ 258,387 Special Revenue Funds

General Fund $ $ 4,710,451Capital Projects Fund

General Fund $ 258,332 $ 1,454,696Trust & Agency Fund

General Fund $ $ 20,617Internal Service Fund

General Fund $ 55 $ 17,946

$ 6,462,097 $ 6,462,097

6. CAPITAL ASSETS

Capital asset activity for the year ended June 30, 2019, was as follows:

6/30/2018 Additions Transfers Deletions 6/30/2019Capital Assets

Land $ 20,392,365 $ $ $ $ 20,392,365Building and Improvements 447,197,647 1,367,258 4,002,011 2,915,908 449,651,008Furniture and Equipment 61,506,342 4,450,947 5,331,546 2,433,550 68,855,285Construction in Progress 9,758,667 6,214,813 (9,333,557) 6,639,923

$ 538,855,021 $ 12,033,018 $ 0 $ 5,349,458 $ 545,538,581

Accumulated DepreciationBuildings and Improvements $ 201,807,015 $ 12,970,023 $ $ 2,797,255 $ 211,979,783Furniture and Equipment 44,037,576 4,710,395 2,414,910 46,333,061

$ 245,844,591 $ 17,680,418 $ 0 $ 5,212,165 $ 258,312,844

Total Net Value of Capital Assets $ 293,010,430 $ (5,647,400) $ 0 $ 137,293 $ 287,225,737




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Depreciation and loss on retirement were charged to functions of the primary government as follows:

Loss on

Depreciation Retirement

Instruction $ 8,853,938 $ 68,755Instruction Resources and Media Services 512,328 3,978Curriculum and Instructional Staff Development 89,289 693Instructional Leadership 15,791 123School Leadership 310,543 2,411Guidance, Counseling, and Evaluation Services 1,714 13Social Work Services 2,146 17Health Services 44,663 347Student (Pupil) Transportation 890,789 6,917Food Services 1,565,727 12,158Cocurricular/Extracurricular Activities 2,441,186 18,956General Administration 36,009 280Plant Maintenance and Operations 1,998,454 15,518Security and Monitoring Services 82,000 637Data Processing Services 653,467 5,074Community Services 182,374 1,416

$ 17,680,418 $ 137,293

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

Buildings and Improvements 5 - 50 yearsFurniture and Equipment 5 - 20 yearsVehicles 6 - 12 years

7. DEFERRED OUTFLOWS AND INFLOWS OF RESOURCES

The financial statements report separate sections for deferred outflows and inflows of resources. Deferred outflows represent an acquisition of net position that applies to a future period and so will not be recognized as an outflow of resources (expense/expenditure) until that time. Deferred inflows represent an acquisition of fund balance that applies to a future period and so will not be recognized as an inflow of resources (revenue) until that time. Deferred Inflows and Outflows on the Statement on Net Position consist of the following:

Deferred DeferredOutflows Inflows

Pension Related (See Note 13) $ 38,420,009 $ 5,510,689 OPEB Related (See Note 14) 9,398,343 32,547,008 Unamortized Loss (See Note 9) 1,291,855 Derivative Instrument (See Note 9) 3,569,270

Totals $ 49,110,207 $ 41,626,967




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Deferred Inflows on the Balance Sheet – Governmental Funds consist of the following:

DebtGeneral Service

Fund Fund Total

Delinquent Property Taxes $ 5,382,264 $ 897,592 $ 6,279,856 Less: Allowance (2,093,580) (345,638) (2,439,218)

Unavailable Revenue (Exhibit C-1) $ 3,288,684 $ 551,954 $ 3,840,638

8. UNEARNED REVENUE

Unearned revenue is associated with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Unearned revenues consist of the following:

SpecialGeneral Revenue

Fund Funds Total

Unearned Grant Revenues $ $ 594,852 $ 594,852 Other Unearned Revenues 1,951,319 1,951,319

Unearned Revenues $ 1,951,319 $ 594,852 $ 2,546,171

9. LONG-TERM OBLIGATIONS The District’s long-term liabilities consist of general obligation bonds payable and compensated absences

obligations. Debt service requirements for bonds are paid from fund balance and revenues of the debt service funds. Compensated absences are paid from general and special revenue funds’ revenues.

Debt interest expenditures were $8,303,655 during the year ended June 30, 2019; other activity follows:

Due inBeginning Additions Reductions Ending One Year

General Obligation Debt $ 217,970,000 $ 60,360,000 $ 8,810,000 $ 269,520,000 $ 7,805,000Compensated Absences

Other Long-Term Liabilities 9,342,000 3,420,000 3,262,000 9,500,000 1,786,000

Total Long-Term Liabilities $ 227,312,000 $ 63,780,000 $ 12,072,000 $ 279,020,000 $ 9,591,000

Bonded Debt. Certain outstanding bonds may be redeemed at their par value prior to their normal maturity dates in accordance with the terms of the related bond indentures, and the District has never defaulted on any bond or interest payment.




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Qualified School Construction Bonds (QSCB’s) are tax-credit bonds authorized through the American Recovery and Reinvestment Act. The QSCB program provides school districts the opportunity to issue interest-free or very-low interest bonds to finance the construction, rehabilitation, or repair of a public school facility for the acquisition of land on which such a facility is to be constructed. Purchasers of QSCB’s issued in 2009 receive a federal tax credit instead of interest payments.

Purchasers of QSCB’s issued in 2011 receive interest payments from the issuer, and the issuer can

elect to receive subsidy payments from the federal government equal to the lesser of (i) the amount of interest payable under such bond on such date, or (ii) the amount of interest which would have been payable under such bond on such date if such interest were determined at the applicable credit rate under Section 54A(b)(3) of the Internal Revenue Code with respect to such bonds. The District received $819,468 in subsidy payments from the federal government and made sinking fund deposits of $3,266,084 during the year ended June 30, 2019.

The District’s outstanding bond issues at June 30, 2019, follows:

OutstandingDue within

1 year

LISD Unlimited Tax School Building Bonds, Variable Rate, Series 2005A.$17,000,000 original issue comprised of serial current interest bondsoutstanding originally due in minimum variable installments of $3,070,000 to$3,920,000 in August, 2023-2029 at variable interest rates. These VariableRate Bonds, with interest at the initial offering rate (3.375%) for the Initial RatePeriod, which is defined as beginning on the date of initial delivery and endingon December 14, 2005, were issued in January, 2005. Following the initial rateperiod, the Variable Rate Bonds will bear interest in a mode and at a rate thatthe co-marketing agent determines, under prevailing market conditions on thedate of such determination, would result in the market value of the VariableRate Bonds being 100% of the value thereof. The Variable Rate Bonds bearinterest in a flexible rate or variable rate effective for periods selected andapproved by the District. At June 30, 2019, the rate in effect was approximately0.10% exclusive of fees. Early principal redemptions have been made.

$ 17,000,000 $ 0

LISD Unlimited Tax School Building Bonds, Variable Rate, Series 2006 . $25,000,000 original issue comprised of variable rate bonds due in minimumvariable installments, of $2,360,000 to $5,000,000 in 2022-2030. Thesevariable rate bonds, with interest at the initial offering rate (5.250%) for theinitial rate period, which is defined as beginning on the date of initial deliveryand ending on September 6, 2006, were issued in February, 2006. As a meansto reduce its borrowing cost in comparison to the issuance of traditional fixedrate bonds, the District entered into interest rate swap transactions as furtherdescribed in this note to the financial statements.

$ 24,750,000 $ 0

LISD Unlimited Tax Refunding Bonds, Series 2010. $6,930,000 original issuecomprised of current interest bonds outstanding due in variable annualinstallments of $830,000 to $4,290,000 through 2021, at interest rates of4.000% to 5.000%. $ 1,555,000 $ 1,555,000




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1 yearLISD Unlimited Tax School Building Bonds Series 2011. $44,090,000 originalissue comprised of $30,090,000 serial bonds and $14,000,000 term bonds.The majority of these bonds were refunded with LISD Unlimited Tax RefundingBonds, Series 2017 . The remaining balance is due in semi-annual installmentsthrough 2020. $ 755,000 $ 755,000

LISD Unlimited Tax Refunding Bonds, Series 2011. $14,095,000 original issuecomprised of $14,095,000 of serial current interest bonds; $12,245,000 currentinterest bonds outstanding due in variable annual installments of $815,000 to$2,650,000 through 2022, at interest rates of 3.000%- 5.000%.

$ 7,500,000 $ 2,500,000

LISD Unlimited Tax School Building Bonds Series 2012. $23,170,000 originalissue comprised of $9,890,000 serial bonds and $13,280,000 term bonds.$9,640,000 of serial bonds outstanding due in variable annual installments of$100,000 to $1,530,000 through 2033 at interest rates of 2.000% to 5.000%$13,280,000 of term bonds outstanding due in variable annual installments of$1,565,000 to $1,800,000 through 2041 at interest rates of 5.000%.

$ 22,255,000 $ 345,000

LISD Unlimited Tax School Building Bonds, Series 2012A . $57,460,000original issue comprised of $30,435,000 of serial bonds and $27,025,000 termbonds. $54,865,000 current interest bonds outstanding due in variable annualinstallments of $660,000 to $4,670,000 through 2042 at interest rates of2.250% to 5.000%. $ 52,430,000 $ 0

LISD Unlimited Tax School Building Bonds, Series 2013A . $31,915,000original issue comprised of $20,435,000 of serial bonds and $11,570,000 termbonds. $30,735,000 current interest bonds outstanding due in variable annualinstallments of $145,000 to $3,580,000 through 2043 at interest rates of2.000% to 5.000%. $ 26,570,000 $ 0

LISD Unlimited Tax Refunding Bonds, Series 2013. $16,730,000 original issuecomprised of $16,730,000 of serial current interest bonds; $16,445,000 currentinterest bonds outstanding due in variable annual installments of $15,000 to$3,580,000 through 2021, at interest rates of 2.000% - 5.000%.

$ 6,340,000 $ 2,225,000

LISD Tax Qualified School Construction Bonds, Series 2013B . $17,000,000original issue comprised of serial current interest bonds. $17,000,000 currentinterest bonds outstanding due in 2033 at an interest rate of 5.150% (beforethe interest subsidy credit). $ 17,000,000 $ 0

LISD Unlimited Tax School Building Bonds, Series 2014. $11,650,000 originalissue comprised of $3,125,000 of serial bonds and $8,525,000 term bonds;$11,650,000 current interest bonds outstanding due in variable annualinstallments of $80,000 to $4,635,000 through 2044 at interest rates of 2.000% -5.000%. $ 8,525,000 $ 0




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1 year

LISD Unlimited Tax Refunding Bonds, Series 2017. $26,915,000 original issuecomprised of current interest bonds due in variable annual installments of$900,400 to $3,375,350 through 2041, at interest rates of 2.00% - 4.00%.

$ 24,480,000 $ 425,000

LISD Unlimited Tax School Building Bonds, Series 2019. $60,360,000 originalissue due in variable annual installments of $2,414,400 to $6,848,400 through2049 at an interest rate of 4.000%. $ 60,360,000 $ 0

Totals $ 269,520,000 $ 7,805,000

The annual debt service requirements for retirements of bond principal and interest follows:

Years Ending June 30, Principal Interest Total

2020 $ 7,805,000 $ 10,342,305 $ 18,147,3052021 8,090,000 10,809,054 18,899,0542022 6,655,000 10,523,141 17,178,1412023 6,765,000 10,266,041 17,031,0412024 7,220,000 10,032,791 17,252,7912025-2029 39,250,000 45,192,913 84,442,9132030-2034 57,440,000 36,212,645 93,652,6452035-2039 50,910,000 25,722,800 76,632,8002040-2044 55,345,000 13,189,100 68,534,1002044-2049 30,040,000 3,717,800 33,757,800

$ 269,520,000 $ 176,008,590 $ 445,528,590

Interest Rate Swap Agreements As a means to reduce its borrowing cost in comparison to the issuance of traditional fixed rate bonds

at the time of issuance, during the year ended August 31, 2006, the District entered into an interest rate swap transaction pursuant to agreements (the Swap Agreements) with JPMorgan Chase Bank N.A., as successor in interest to Bear Stearns Financial Products, Inc. (JPMorgan) in an original notional amount of $25,000,000, in order to synthetically fix the interest obligation on the District’s $25,000,000 Variable Rate Unlimited Tax School Building Bonds, Series 2006 (the Bonds). The Swap Agreements and the Bonds were issued at the same time.

Under the Swap Agreements, the District is obligated to make payments to JPMorgan calculated on a

notional amount that is equal to the scheduled outstanding principal amount of the Bonds at a fixed rate of 3.539% per annum and JPMorgan is obligated to make floating rate payments to the District through October, 2007 calculated on a notional amount that is equal to the scheduled outstanding principal amount of the Bonds at a rate equal to 68.000% of the one-month London Interbank Offered Rate (LIBOR) for U.S. deposits. After October, 2007 the notional rate was converted to 60.050% of the ten year US ISDA (International Swaps and Derivatives Association) rate. The Bonds and the Swap Agreements have a stated final maturity date in 2030.




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Arrangements made in respect of the Swap Agreements do not alter the District’s obligation to pay principal and interest on the Bonds. The Swap Agreements do not provide a source of security or other credit for the Bonds. The District’s obligations under the Swap Agreements are secured by a levy of an annual ad valorem tax on a parity with the District’s obligation to pay principal and interest on the Bonds.

As of June 30, 2019, the fair value of the swap, based on the prevailing interest rates on that date and

calculated through the end of the agreements, had a negative indicative fair value of $3,569,270. The Swap Agreements are subject to an optional termination by the District at any time over their term at the then prevailing market value. JPMorgan does not have the elective right to optionally terminate the Swap Agreements.

The Swap Agreements are subject to mandatory redemption in the event of default or as follows:

Agreement with JPMorgan: If the ratings assigned to the District’s unenhanced long-term debt obligations are withdrawn or reduced to “BBB-” by Standard & Poor’s (S&P), or “Baa2” by Moody’s Investors Service (Moody’s), or if the ratings assigned to JPMorgan’s unenhanced long-term debt obligations are withdrawn or reduced to “BBB-” by S&P or “Baa2” by Moody’s.

As of June 30, 2019, the ratings assigned to JPMorgan by Moody’s and S&P were Aa3 (above those

identified in the preceding paragraph). Derivative Instruments

As described above, the District has entered into interest rate swap agreements to hedge against changes in floating interest rates on the Variable-Rate, Series 2006 bonds. The floating interest rate swap agreements effectively convert floating rates into fixed rates so that the District can predict with greater assurance what its future interest costs will be and reduce its exposure against increases in floating rates. The fair value of derivative instruments designated as cash flow hedges are recorded in the government-wide financial statements for the effective portion. As of June 30, 2019, the entire hedge is considered effective under the dollar offset, current period method. The following reflects the amounts that are recorded at June 30, 2019, for the District’s derivative instruments:

Current Notional Amount $ 24,750,000Total Derivative Liabilities - Interest Rate Lock $ 3,569,270Total Loss in Fair Value of Derivative Instrument

Recognized on the Statement of Activities $ (596,805)

The District expects the entire hedge to remain effective throughout the term of the related debt, and is not anticipating termination of the hedge at a significant loss.




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Debt Service Requirements – Swap Agreements Stand Alone

As of June 30, 2019, the debt service requirements of the Bonds are scheduled below. As interest rates change in the future, the differences between the floating rates payable to the District under the Swap Agreements and the actual interest rates payable by the District on the Bonds will vary.

As of June 30, 2019, the debt service requirement for the Bonds are as follows:

Years ended June 30, Principal Interest (A) Total

2020 $ $ 1,113,750 $ 1,113,7502021 1,113,750 1,113,7502022 2,360,000 1,113,750 3,473,7502023 2,195,000 1,007,550 3,202,5502024 2,315,000 908,775 3,223,7752025 2,420,000 804,600 3,224,6002026 2,640,000 695,700 3,335,7002027 2,870,000 576,900 3,446,9002028 2,950,000 447,750 3,397,7502029 2,000,000 315,000 2,315,0002030 5,000,000 225,000 5,225,000

Total $ 24,750,000 $ 8,322,525 $ 33,072,525

(A) Interest was calculated at a rate of 4.500% pursuant to information supplied by the District’s

financial advisors. At June 30, 2019, the effective net interest rate was approximately 2.38%. The District provides annual reports and material event notices to the State Information Depository of Texas (SID), which is the Municipal Advisory Council. This information is required under SEC Rule 15c2-12 to enable investors to analyze the financial condition and operation of the District.

10. ARBITRAGE

In accordance with the provisions of Section 148(f) of the Internal Revenue Code of 1986, as amended, bonds must satisfy certain arbitrage rebate requirements. Positive arbitrage is the excess of (1) the amount earned on investments purchased with bond proceeds over (2) the amount that such investments would have earned if such investments had been invested at a rate equal to the yield on the bonds issue. In order to comply with the arbitrage rebate requirements, positive arbitrage must be paid to the U.S. Treasury at the end of each five year anniversary date of the bond issue. The estimated liability of $48,700 as of June 30, 2019, has been recorded on the government-wide financial statements.




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11. REVENUES FROM LOCAL AND INTERMEDIATE SOURCES

During the current year, fund financial statements revenues from local and intermediate sources consisted of the following:

General Special Capital Debt ServiceFund Revenue Funds Projects Fund Fund Total

Property Taxes, Penalties, Interest, and Other Tax-Related Income $ 115,344,725 $ $ $ 19,039,153 $ 134,383,878Food Sales 1,524,273 1,524,273Interest Income 1,645,425 33,352 218,403 569,089 2,466,269Cocurricular Student Activities 380,650 616,151 996,801Tuition and Fees 788,057 788,057Rent 175,960 175,960Foundations & Gifts 708,463 516,887 1,225,350Insurance Recovery 4,369 4,369Services to Other Districts 124,460 1,157,895 1,282,355ERATE 762,103 762,103Other 1,051,045 372,077 1,423,122

$ 120,985,257 $ 4,220,635 $ 218,403 $ 19,608,242 $ 145,032,537

12. GENERAL FUND FEDERAL SOURCED REVENUES

The District recognized revenues from certain federal programs in the general fund. These programs are reimbursement type programs. Federal revenues received during the year ended June 30, 2019 consisted of the following:

Federal CFDA Current YearNumber Revenues

R.O.T.C. n/a $ 132,794Medicaid, Title XIX n/a 7,600,445Indirect Costs

ESEA Title I, Part A and Part D 84.010A 187,495ESEA Title I, Part C, Migrant Education Programs 84.011 3,570IDEA Part B, Formula and Capacity Building 84.027 90,200National School Lunch Program 10.555 585,550Title I Part C, Carl Perkins Vocational Education 84.048 12,767ESEA Title II, Part A TPTR 84.367A 22,744ESEA Titles IV, Part A, Subpart 1 84.424A 12,195Title III, Part A, English Language Acquisition 84.365 3,054Texas Title I Priority School 84.377A (47)Early Childhood Intervention, Member District various 44,907

General Fund - Federal Source Revenues $ 8,695,674




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13. DEFINED BENEFIT PENSION PLAN

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

All employees of public, state-supported educational institutions in Texas who are employed for one-half or more of the standard work load and who are not exempted from membership under Texas Government Code, Title 8, Section 822.002 are covered by the system. Pension Plan Fiduciary Net Position Detailed information about the TRS's fiduciary net position is available in a separately-issued Comprehensive Annual Financial Report that includes financial statements and required supplementary information. That report may be obtained on the Internet at https://www.trs.texas.gov; by writing to TRS at 1000 Red River Street, Austin, TX, 78701-2698; or by calling (512) 542-6592. The information provided in the Notes to the Financial Statements in the 2018 Comprehensive Annual Financial Report for TRS provides the following information regarding the Pension Plan fiduciary net position as of August 31, 2018 and 2017.

Net Pension Liability 2018 2017

Total Pension Liability $ 209,611,328,793 $ 179,336,534,819

Less: Plan Fiduciary Net Position (154,568,901,833) (147,361,922,120)

Net Pension Liability $ 55,042,426,960 $ 31,974,612,699

Net Position as Percentage of

Total Pension Liability 73.74% 82.17%

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




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Contributions Contribution requirements are established or amended pursuant to Article 16, Section 67 of the Texas Constitution which requires the Texas Legislature to establish a member contribution rate of not less than 6.0% of the member's annual compensation and a state contribution rate of not less than 6.0% and not more than 10.0% of the aggregate annual compensation paid to members of the system during the fiscal year. Texas Government Code Section 821.006 prohibits benefit improvements, if as a result of the particular action, the time required to amortize TRS's unfunded actuarial liabilities would be increased to a period that exceeds 31 years, or, if the amortization period already exceeds 31 years, the period would be increased by such action. 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 member contributions and established employee contribution rates for fiscal years 2014 thru 2017. The 85th Texas Legislature, General Appropriations Act (GAA) affirmed that the employer contribution rates for fiscal years 2018 and 2019 would remain the same.

2018 2019

Member 7.70% 7.70%

Non-Employer Contributing Entity (State) 6.80% 6.80%

Employers 6.80% 6.80%

Contribution Rates

2019 Employer Contributions $ 4,723,556

2019 Member Contributions 12,203,310

2018 NECE On-Behalf Contributions 7,505,386

Contributors to the plan include members, employers and the State of Texas as the only non-employer contributing entity. The State is the employer for state agencies including TRS. In that role, the State contributes to the plan in accordance with state statutes and the General Appropriations Act (GAA).

As the non-employer contributing entity for public education, the State of Texas contributes to the retirement system an amount equal to the current employer contribution rate times the aggregate annual compensation of all participating members of the pension trust fund during that fiscal year reduced by the amounts described below which are paid by the employers. Employers including public schools are required to pay the employer contribution rate in the following instances:

On the portion of the member's salary that exceeds the statutory minimum for members entitled to the statutory minimum under Section 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 source or a privately

sponsored source.




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In addition to the employer contributions listed above, there are two additional surcharges an employer is subject to:

When employing a retiree of the Teacher Retirement System, the employer shall pay both the member contribution and the state contribution as an employment after retirement surcharge.

When a school district or charter school does not contribute to the Federal Old-Age, Survivors and Disability Insurance (OASDI) Program for certain employees, they must contribute 1.5% of the state contribution rate for certain instruction or administrative employees; and 100% of the state contribution rate for all other employees.

Actuarial Assumptions Roll Forward – A change was made in the measurement date of the total pension liability for the 2018 measurement year. The actuarial valuation was performed as of August 31, 2017. Update procedures were used to roll forward the total pension liability to August 31, 2018. This is the first year using the roll forward procedures. The total pension liability is determined by an annual actuarial valuation. The actuarial methods and assumptions were selected by the Board of Trustees based upon analysis and recommendations by the System’s actuary. The Board of Trustees has the sole authority to determine the actuarial assumptions used for the Plan. The active mortality rates were based on 90 percent of the RP 2014 Employee Mortality Tables for males and females. The post-retirement mortality rates were based on the 2018 TRS of Texas Healthy Pensioner Mortality Tables. The following table discloses the assumptions that were applied to the measurement period:

Valuation Date August 31, 2017, rolled forward to August 31, 2018Actuarial Cost Method Individual Entry Age - NormalAsset Valuation Method Market ValueDiscount Rate 6.907%Long-Term Expected Investment Rate of Return 7.250%Municipal Bond Rate at August 31, 2018 3.690% *Last year ending August 31 in Projection Period (100 years) 2116Inflation 2.300%Salary Increases Including Inflation 3.050% to 9.050% inlcuding inflationPayroll Growth Rate 2.50%Ad hoc Post-Employment Benefit Changes None

* - Source for the rate is the Fixed Income Market Data/Yield Curve/Data Municipal Bonds with 20 years tomaturity that include only federally tax-exempt municipal bonds as reported in Fidelity Index's "20-YearMunicipal GO AA Index."

The actuarial methods and assumptions are primarily based on a study of actual experience for the four year period ending August 31, 2017 and adopted in July 2018.




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Discount Rate The discount rate used to measure the total pension liability was 6.907%. The single discount rate was based on the expected rate of return on pension plan investments of 7.25% and a municipal bond rate of 3.69%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and those of the contributing employers and the non-employer contributing entity are made at the statutorily required rates. Based on those assumptions, the pension plan's fiduciary net position was sufficient to finance the benefit payments until the year 2069. As a result, the long-term expected rate of return on pension plan investments was applied to projected benefit payments through the year 2069, and the municipal bond rate was applied to all benefit payments after that date. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimates ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation.

Best estimates of geometric real rates of return for each major asset class included in the Systems target asset allocation as of August 31, 2018 are summarized below:

Real Long-TermReturn Expected

Target Geometric Portfolio RealAsset Class Allocation* Basis Rate of ReturnGlobal Equity

U.S. 18.00% 5.70% 1.04%Non-U.S. Developed 13.00% 6.90% 0.90%Emerging Markets 9.00% 8.95% 0.80%Directional Hedge Funds 4.00% 3.53% 0.14%Private Equity 13.00% 10.18% 1.32%

Stable ValueU.S. Treasuries 11.00% 1.11% 0.12%Absolute Return 0.00% 0.00% 0.00%Hedge Funds (Stable Value) 4.00% 3.09% 0.12%Cash 1.00% -0.30% 0.00%

Real ReturnGlobal Inflation-Linked Bonds 3.00% 0.70% 0.02%Real Assets 14.00% 5.21% 0.73%Energy and Natural Resources 5.00% 7.48% 0.37%Commodities 0.00% 0.00% 0.00%

Risk ParityRisk Parity 5.00% 3.70% 0.18%Inflation Expectation 2.30%Volatility Drag** -0.79%

Total 100.00% 7.25%

* - Target Allocations are based on the FY 2016 policy model** - The Expected Contribution to Returns incorporates the volatility drag resulting from the

conversion between Arithmetic and Geometric mean returns.




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Discount Rate Sensitivity Analysis The following schedule shows the impact of the net pension liability if the discount rate used was one percent less than and one percent greater than the discount rate that was used (6.907%) in measuring the 2018 Net Pension Liability.

1% Decrease in 1% Increase inDiscount Rate Discount Rate Discount Rate

(5.907%) (6.907%) (7.907%)District's Proportionate Share of the

Net Pension Liability $ 117,864,587 $ 78,095,335 $ 45,899,767

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2019, the District reported a liability of $78,095,335 for its proportionate share of the TRS's net pension liability. This liability reflects a reduction for State pension support provided to the District. The amount recognized by the District as its proportionate share of the net pension liability, the related State support, and the total portion of the net pension liability that was associated with the District were as follows:

District's Proportionate Share of the Collective Net Pension Liability $ 78,095,335

State's Proportionate Share that is Associated with the District 122,707,929

Total $ 200,803,264

The net pension liability was measured as of August 31, 2017 and rolled forward to August 31, 2018 and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of August 31, 2017 rolled forward to August 31, 2018. The employer's proportion of the net pension liability was based on the employer's contributions to the pension plan relative to the contributions of all employers to the plan for the period September 1, 2017 through August 31, 2018. At August 31, 2018, the District's proportion of the collective net pension liability was 0.14188207%, which was an increase of 0.00422987% from its proportion measured as of August 31, 2017. For the year ended June 30, 2019, the District recognized pension expense of $12,144,814 and revenue of $7,505,386 for support provided by the State. Changes since the Prior Actuarial Valuation Assumptions, methods, and plan changes which are specific to the Pension Trust Fund were updated from the prior year’s report. The Net Pension Liability increased significantly since the prior measurement date due to a change in the following actuarial assumptions:

The total pension liability as of August 31, 2018 was developed using a roll-forward method from the August 31, 2017 valuation.

Demographic assumptions including post-retirement mortality, termination rates, and rates of retirement were updated based on the experience study performed for TRS for the period ending August 31, 2017.




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Economic assumptions including rates of salary increase for individual participants were updated based on the same experience study.

The discount rate changed from 8.00% as of August 31, 2017 to 6.907% as of August 31, 2018. The long-term assumed rate of return changed from 8.00% to 7.25%. The change in the long-term assumed rate of return combined with the change in the single

discount rate was the primary reason for the increase in the net pension liability. There were no changes of benefit terms that affected measurement of the total pension liability during the measurement period. Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2019, the District reported its proportionate share of the TRS's deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Deferred

Outflows of Inflows ofResources Resources

Differences Between Expected and Actual Economic Experience $ 486,782 $ 1,916,151 Changes in Actuarial Assumptions 28,157,130 879,911 Difference Between Projected and Actual Investment Earnings 1,481,803 Changes in Proportion and Difference Between the Employer's Contributions and the Proportionate Share of Contributions 5,850,572 1,232,824 Contributions Paid to TRS Subsequent to the Measurement Date 3,925,525

Total $ 38,420,009 $ 5,510,689

The net amounts of the employer's balances of deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows:

Pension ExpenseAmount

2020 $ 7,763,878 2021 4,645,541 2022 3,803,604 2023 4,787,094 2024 4,751,946 Thereafter 3,231,732

14. DEFINED OTHER POST-EMPLOYMENT BENEFIT PLANS

Plan Description The District participates in the Texas Public School Retired Employees Group Insurance Program (TRS-Care). It is a multiple-employer, cost-sharing defined Other Post-Employment Benefit (OPEB) plan that has a special funding situation. The plan is administered through a trust by the Teacher Retirement System of Texas (TRS) Board of Trustees. It is established and administered in accordance with the Texas Insurance Code, Chapter 1575.




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Other Post-Employment Benefit Plan Fiduciary Net Position Detail information about the TRS-Care's fiduciary net position is available in the separately-issued TRS Comprehensive Annual Financial Report that includes financial statements and required supplementary information. That report may be obtained on the Internet at https://www.trs.texas.gov; by writing to TRS at 1000 Red River Street, Austin, TX, 78701-2698; or by calling (512) 542-6592.

Components of the net OPEB liability of the TRS-Care plan as of August 31, 2018 are as follows:

Net OPEB Liability 2018 2017

Total OPEB Liability $ 50,729,490,103 $ 43,885,784,621 Less: Plan Fiduciary Net Position (798,574,633) (399,535,986)

Net OPEB Liability $ 49,930,915,470 $ 43,486,248,635

Net Position as Percentage ofTotal OPEB Liability 1.57% 0.91%

Benefits Provided TRS-Care provides a basic health insurance coverage at no cost to all retirees from public schools, charter schools, regional education service centers and other educational districts who are members of the TRS pension plan. Optional dependent coverage is available for an additional fee. Eligible non-Medicare retirees and their dependents may pay premiums to participate in the high-deductible health plans. Eligible Medicare retirees and their dependents may pay premiums to participate in the Medicare Advantage health plans. To qualify for TRS-Care coverage, a retiree must have at least 10 years of service credit in the TRS pension system. The Board of Trustees is granted the authority to establish basic and optional group insurance coverage for participants as well as to amend benefit terms as needed under Chapter 1575.052. There are no automatic post-employment benefit changes; including automatic COLAs. The premium rates for the optional health insurance are based on years of service of the member. The schedule below shows the monthly rates for the average retiree with and without Medicare coverage. These new premium rates for retirees with Medicare Part A and Part B became effective January 1, 2018.

Medicare Non-Medicare

Retiree or Surviving Spouse $ 135 $ 200 Retiree and Spouse 529 689 Retiree or Surviving Spouse and Children 468 408 Retiree and Family 1,020 999

TRS-Care Plan Premium RatesEffective January 1, 2018 - December 31, 2018




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Contributions Contribution rates for the TRS-Care plan are established in state statute by the Texas Legislature, and there is no continuing obligation to provide benefits beyond each fiscal year. The TRS-Care plan is currently funded on a pay-as-you-go basis and is subject to change based on available funding. Funding for TRS-Care is provided by retiree premium contributions and contributions from the state, active employees, and school districts based upon public school district payroll. The TRS Board of trustees does not have the authority to set or amend contribution rates. Texas Insurance Code, Section 1575.202 establishes the state's contribution rate which is 1.25% of the employee's salary. Section 1575.203 establishes the active employee's rate which is 0.65% of pay. Section 1575.204 establishes an employer contribution rate of not less than 0.25% or not more than 0.75% of the salary of each active employee of the public. The actual employer contribution rate is prescribed by the Legislature in the General Appropriations Act which is 0.75% of each active employee’s pay for fiscal year 2018. The following tables show contributions to the TRS-Care plan by type of contributor:

2018 2019

Active Employee 0.65% 0.65%Non-Employer Contributing Entity (State) 1.25% 1.25%Employers 0.75% 0.75%Federal/Private Funding Remitted by Employers 1.25% 1.25%

Contribution Rates

2019 Employer Contributions $ 1,397,705 2019 Member Contributions 1,030,150 2018 NECE On-Behalf Contributions 1,776,913

In addition to the employer contributions listed above, there is an additional surcharge all TRS employers are subject to (regardless of whether or not they participate in the TRS Care OPEB program). When employers hire a TRS retiree, they are required to pay to TRS-Care, a monthly surcharge of $535 per retiree. TRS-Care received supplemental appropriations from the State of Texas related to House Bill 21 in the amount of $212 million in 2018. The District recognized $2.28 million and $2.34 million in fiscal years ended June 30, 2019 and 2018, respectively. Actuarial Assumptions The total OPEB liability in the August 31, 2017 actuarial valuation was rolled forward to August 31, 2018. The actuarial valuation was determined using the following actuarial assumptions.




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The following assumptions and other inputs used for members of TRS-Care are identical to the assumptions used in the August 31, 2017 TRS pension actuarial valuation that was rolled forward to August 31, 2018:

Rates of Mortality General InflationRates of Retirement Wage InflationRates of Termination Expected Payroll GrowthRates of Disability Incidence

Additional Actuarial Methods and Assumptions:

Valuation Date August 31, 2017 rolled forward to August 31, 2018Actuarial Cost Method Individual Entry Age NormalInflation 2.30%Single Discount Rate 3.69%*Aging Factors Based on Plan Specific ExperienceElection Rates Normal Retirement 70% participation prior to

age 65 and 75% participation after age 65Expenses Third-party administrative expenses related to

the delivery of health care benefits are includedin the age-adjusted claims costs

Projected Salary Increases 3.05% to 9.05%Ad Hoc Post-Employment

Benefit Changes None

* - Sourced from fixed income municipal bonds with 20 years to maturity that include only federal tax-exempt municipal bonds as reported in Fidelity Index's "20-Year Municipal GO AA Index" as ofAugust 31, 2018

In this valuation, the impact of the Cadillac Tax has been calculated as a portion of the trend assumption. Assumptions and methods used to determine the impact of the Cadillac Tax include: 2018 thresholds of $850/$2,292 were indexed annually by 2.50%. Premium data submitted was not adjusted for permissible exclusions to the Cadillac Tax. There were no special adjustments to the dollar limit other than those permissible for non-

Medicare retirees over 55.

Results indicate that the value of the excise tax would be reasonably represented by a 25 basis point addition to the long-term trend rate assumption. Discount Rate A single discount rate of 3.69% was used to measure the total OPEB liability. There was an increase change of 0.27% in the discount rate since the previous year. Because the plan is essentially a "pay-as-you-go" plan, the single discount rate is equal to the prevailing municipal bond rate. The projection of cash flows used to determine the discount rate assumed that contributions from active members and those of the contributing employers and the non-employer contributing entity are made at the statutorily required rates.




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Based on those assumptions, the OPEB plan's fiduciary net position was projected to not be able to make all future benefit payments of current plan members. Therefore, the municipal bond rate was applied to all periods of projected benefit payments to determine the total OPEB liability. Discount Rate Sensitivity Analysis The following schedule shows the impact of the Net OPEB Liability if the discount rate used was 1% less than and 1% greater than the discount rate that was used (3.69%) in measuring the Net OPEB Liability.

1% Decrease in 1% Increase inDiscount Rate Discount Rate Discount Rate

(2.690%) (3.690%) (4.690%)District's Proportionate Share of

the Net OPEB Liability $ 122,514,770 $ 102,923,872 $ 87,426,209

Healthcare Cost Trend Rates Sensitivity Analysis The following presents the net OPEB liability of the plan using the assumed healthcare cost trend rate, as well as what the net OPEB liability would be if it were calculated using a trend rate that is one-percentage point lower or one-percentage point higher than the assumed healthcare cost trend rate.

Current Healthcare1% Decrease Cost Trend Rate 1% Increase

District's Proportionate Share ofthe Net OPEB Liability $ 85,479,952 $ 102,923,872 $ 125,897,892

OPEB Liabilities and OPEB Expense At June 30, 2019, the District reported a liability of $102,923,872 for its proportionate share of the TRS's net OPEB liability. This liability reflects a reduction for State OPEB support provided to the District. The amount recognized by the District as its proportionate share of the net OPEB liability, the related State support, and the total portion of the net OPEB liability that was associated with the District were as follows:

District's Proportionate Share of the Collective Net OPEB Liability $ 102,923,872 State's Proportionate Share that is Associated with the District 128,794,087

Total $ 231,717,959

The Net OPEB Liability was measured as of August 31, 2018 and the Total OPEB Liability used to calculate the Net OPEB Liability was determined by an actuarial valuation as of that date. The employer's proportion of the Net OPEB Liability was based on the employer's contributions to the OPEB plan relative to the contributions of all employers to the plan for the period September 1, 2017 thru August 31, 2018. At August 31, 2018, the District's proportion of the collective net OPEB liability was 0.20613255% which was an increase of 0.00190108% from its proportion measured as of August 31, 2017. For the year ended June 30, 2019, the District recognized OPEB expense of $4,684,756 and revenue of $1,776,913 for support provided by the State.




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Changes Since the Prior Actuarial Valuation The following were changes to the actuarial assumptions or other inputs that affected measurement of the Total OPEB liability since the prior measurement period: Adjustments were made for retirees that were known to have discontinued their health care

coverage in fiscal year 2018. This change increased the Total OPEB Liability. The health care trend rate assumption was updated to reflect the anticipated return of the Health

Insurer Fee (HIF) in 2020. This change increased the Total OPEB Liability. Demographic and economic assumptions were updated based on the experience study

performed for TRS for the period ending August 31, 2017. This change increased the Total OPEB Liability.

The discount rate changed from 3.42% as of August 31, 2017 to 3.69% as of August 31, 2018. This changed lowered the Total OPEB Liability by $2.3 billion.

Changes in Benefit Terms The 85th Legislature, Regular Session passed the following statutory changes which became effective on September 1, 2017: Created a high-deductible health plan that provides a zero cost for generic prescriptions for

certain preventative drugs and provides a zero premium for disability retirees who retired as a disability retiree on or before January 1, 2017 and are not eligible to enroll in Medicare.

Created a single Medicare Advantage Plan and Medicare prescription drug plan for all Medicare – eligible participants.

Allowed the System to provide other, appropriate health benefit plans to address the needs of enrollees eligible for Medicare.

Allowed eligible retirees and their eligible dependents to enroll in TRS-Care when the retiree reaches 65 years of age, rather than waiting for the next enrollment period.

Eliminated free coverage under TRS-Care, except for certain disability retirees enrolled during the Plan Years 2018 through 2021, requiring members to contribute $200 per month toward their health insurance premiums.

Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEBs At June 30, 2019, the District reported its proportionate share of the TRS's deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Deferred

Outflows of Inflows ofResources Resources

Differences Between Expected and Actual Actuarial Experience $ 5,461,787 $ 1,624,290 Changes in Actuarial Assumptions 1,717,521 30,922,718 Difference Between Projected and Actual Investment Earnings 18,000 Changes in Proportion and Difference Between the Employer's

Contributions and the Proportionate Share of Contributions 1,039,870 Contributions Paid to TRS Subsequent to the Measurement Date 1,161,165

Total $ 9,398,343 $ 32,547,008




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The net amounts of the employer's balances of deferred outflows and inflows of resources (not including the deferred contribution paid subsequent to the measurement date) related to OPEBs will be recognized in pension expense as follows:

Pension ExpenseAmount

2020 $ (3,921,475) 2021 (3,921,475) 2022 (3,921,475) 2023 (3,924,879) 2024 (3,926,826) Thereafter (4,693,700)

15. RISK MANAGEMENT The District’s risks of loss related to: torts; theft of, damage to and destruction of assets; errors and

omissions; and natural disasters are mitigated by commercial insurance coverage. Claim settlements have not exceeded insurance coverage during any of the previous three years ended June 30, 2017, 2018, and 2019.

The District retains certain risks related to various employee benefit programs that are mitigated to

varying degrees with stop-loss or full insurance coverage. These programs are accounted for in the internal service fund and are reported in the government-wide and fund financial statements on the same basis. All District employees are eligible for the programs, and governmental funds make payments to the internal service fund based on estimates of the amounts needed to cover the current year’s claims, premiums and administrative costs and revisions of prior years’ estimates. District contributions are recorded as expenditures in the governmental funds and revenues in the internal service fund when paid; employee contributions are withheld from the governmental funds’ payroll and remitted to the internal service fund, which are recognized as revenues in the internal service fund. Program expenses are recognized in the internal service fund when incurred.

Medical Program. The District offers health, dental, accidental death and dismemberment (AD&D),

disability and life benefits for employees who work 20 or more hours per week and their eligible dependents. Health benefits include major medical at elected coverage levels with varying employee contribution levels, a “hospital income plan” for employees with major medical coverage from another source and prescription drugs. The dental plan reimburses participants for 100% of the first $100 of dental expenses, 80% on the next $250, and 50% thereafter up to a maximum annual benefit of $1,000. Cancer, life, AD&D, disability, vision, long-term care, and gap benefits are optional benefits. A third-party administrator processes employee health claims; the District administers dental claims.

Optional benefits are administered by the respective third-party insurers. Estimated health claims incurred but not paid, including claims incurred but not reported (IBNR), are

recognized in the internal service fund at each year end. This liability is estimated by an actuary using historical claim payment patterns to complete paid and incurred claims for the most recent months to estimate recent incurred claims. The estimated unpaid health claims liability is then the difference between the total estimated incurred claims and total paid claims. Due to the relatively short-term nature of these liabilities, they are not discounted to present value.




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Estimated dental claims incurred but not paid are not significant. Optional benefits are fully insured under policies with third-party insurers, and there are no related unpaid claims that are not insured. Risks related to health benefits are limited by stop-loss insurance. During the year ended June 30, 2019, coverage for claims incurred per person during the 12 months then ended and paid within the 15 months ended September 30, 2019, was limited to a $320,000 specific deductible with a $1,750,000 lifetime limit of liability. During the year ended June 30, 2019, coverage for claims incurred in the aggregate during the 12 months then ended and paid within the 12 months then ended was limited to a $12,500,000 minimum deductible with a $1,000,000 aggregate limit of liability. The District retains all other risk of loss related to health benefits.

Employee and District contribution rates are determined by the District based on historical experience

and consideration of health care cost trends. During the year ended June 30, 2019, the District contributed approximately $330 per month per employee for estimated self-insured premiums, stop-loss coverage, life and accidental death and dismemberment policies, cost containment provisions and administrative costs.

Workers’ Compensation Program. The District provides workers’ compensation benefits for all

employees. The Workers’ Compensation Program activity is accounted for in the internal service fund. Estimated workers’ compensation claims incurred but not paid, including IBNR, are recognized in the

internal service fund at each year end. This liability is estimated by an actuary using projections for medical losses, indemnity losses and allocated loss adjustment expense; no other types of insurance expenses (i.e., risk management, claims administration, claims audits, excess insurance, actuarial, auditing, etc.) are considered. These projections are applied in the Reported Loss Development, Paid Loss Development, Reported Loss Generalized Cape Cod, Paid Loss Generalized Cape Cod and Exposure methods. Loss reporting and payout patterns were based on recent Texas loss development experience as published by the National Council on Compensation Insurance (NCCI). Trends for losses and for pure premiums (i.e., losses per exposure unit) were based on recent NCCI Texas loss experience and Texas Workers’ Compensation Insurance Fund loss experience. A method incorporating loss payment patterns and a three percent interest rate was used to discount the loss reserves.

Risks related to workers’ compensation benefits are limited by stop-loss insurance. During the year

ended June 30, 2019, coverage for claims incurred was limited to a $450,000 retention with a statutory maximum limit of indemnity per occurrence and $1,497,622 minimum loss with a $2,000,000 maximum limit of indemnity in aggregate. The District retains all other risk of loss related to workers’ compensation benefits.

District contribution rates are determined by the District based on historical experience and

consideration of actuarial projection of ultimate losses for the following year. During the year ended June 30, 2019, the District contributed approximately 0.44% of monthly actual payroll.




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Claims Liability: Information about the estimated claims liability and net asset position as of June 30, 2019 and June 30, 2018, follow:

2019 2018Year End Claims Liability Balance

Health and Dental Fund $ 1,180,000 $ 1,503,000Workers' Compensation Fund 913,000 876,000

$ 2,093,000 $ 2,379,000

Year End Net Position BalanceHealth and Dental Fund $ 1,782,105 $ 617,120Workers' Compensation Fund 3,846,031 4,692,047

$ 5,628,136 $ 5,309,167

Payments made on behalf of the District by the state for Medicare, Part D fringe benefits and salaries amounted to $509,682 and $643,086 for the years ended June 30, 2019 and 2018, respectively.

16. LITIGATION

Management represents there is no litigation pending against the District which would have a material effect on the financial statements.

17. COMMITMENTS AND CONTINGENCIES

Federal and State Funding The District participates in numerous state and federal grant programs which are governed by various rules and regulations of the grantor agencies. Costs charged to the respective grant programs are subject to audit and adjustment by the grantor agencies; therefore, to the extent that the District has not complied with the rules and regulations governing the grants, refunds of any money received may be required and the collectability of any related receivable may be impaired. In the opinion of the District, there are no significant contingent liabilities relating to compliance with the rules and regulations governing the respective grants; therefore, no provision has been recorded in the accompanying combined financial statements for such contingencies.


REQUIRED SUPPLEMENTARY INFORMATION

EXHIBITS G-1 THROUGH G-5



Exhibit G-1

BUDGETARY COMPARISON SCHEDULE

GENERAL FUND

YEAR ENDED JUNE 30, 2019

Variance

With Final

Data 1 2 3 Budget

Control Favorable

Codes Original Amended Actual (Unfavorable)

Revenues:

5700 Local and Intermediate Sources $ 118,288,502 $ 119,860,516 $ 120,985,257 $ 1,124,741

5800 State Program Revenues 100,506,549 113,979,926 108,852,328 (5,127,598)

5900 Federal Program Revenues 5,071,324 8,643,518 8,695,674 52,156

5020 Total Revenues $ 223,866,375 $ 242,483,960 $ 238,533,259 $ (3,950,701)

Expenditures:

0011 Instruction $ 131,382,810 $ 141,603,641 $ 138,942,158 $ 2,661,483

0012 Instructional Resources and Media Services 3,943,472 4,260,888 3,981,061 279,827

0013 Curriculum and Instructional Staff Development 3,592,985 4,168,715 3,647,749 520,966

0021 Instructional Leadership 3,599,096 3,875,748 3,362,795 512,953

0023 School Leadership 15,630,408 17,075,957 16,454,827 621,130

0031 Guidance, Counseling, and Evaluation Services 10,134,366 9,708,715 8,748,273 960,442

0032 Social Work Services 442,930 576,670 470,620 106,050

0033 Health Services 3,083,664 3,477,129 3,350,778 126,351

0034 Student Transportation 5,400,120 7,446,666 5,982,035 1,464,631

0036 Extracurricular Activities 6,702,228 7,860,676 6,833,505 1,027,171

0041 General Administration 6,247,124 6,841,523 5,976,265 865,258

0051 Plant Maintenance and Operations 27,132,622 27,874,044 24,233,344 3,640,700

0052 Security and Monitoring Services 1,890,846 2,331,565 1,949,698 381,867

0053 Data Processing Services 3,243,659 4,013,084 3,279,333 733,751

0061 Community Services 271,011 1,049,432 754,443 294,989

0081 Facilities Acquisition and Construction 4,353,083 2,689,119 1,663,964

0099 Other Intergovernmental Charges 1,169,034 1,169,034 1,166,089 2,945

6030 Total Expenditures $ 223,866,375 $ 247,686,570 $ 231,822,092 $ 15,864,478

1200 Net Change in Fund Balance $ 0 $ (5,202,610) $ 6,711,167 $ 11,913,777

0100 July 1 - Fund Balance 61,899,448 61,899,448 61,899,448 0

3000 June 30 - Fund Balance $ 61,899,448 $ 56,696,838 $ 68,610,615 $ 11,913,777

Budgeted Amounts

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Exhibit G-2

SCHEDULES OF THE DISTRICT'S PROPORTIONATE SHARE

OF THE NET PENSION LIABILITY

TEACHERS RETIREMENT SYSTEM

FOR THE YEARS ENDED JUNE 30

2019 2018 2017 2016 2015

Plan Yr 2018 Plan Yr 2017 Plan Yr 2016 Plan Yr 2015 Plan Yr 2014

District's Proportion of the Net Pension Liability 0.1418821% 0.1376522% 0.1411050% 0.1484630% 0.1073461%

District's Proportionate Share of the Net Pension Liability $ 78,095,335 $ 44,013,760 $ 53,321,480 $ 52,479,694 $ 28,673,628

State's Proportionate Share of the Net Pension Liability

Associated with the District 122,707,929 78,903,528 96,494,064 94,309,996 80,610,420

Total $ 200,803,264 $ 122,917,288 $ 149,815,544 $ 146,789,690 $ 109,284,048

District's Covered Payroll $ 157,372,152 $ 160,986,560 $ 159,894,384 $ 156,559,585 $ 151,094,055

District's Proportionate Share of the Net Pension Liability

as a Percentage of its Covered Payroll 49.62% 27.34% 33.35% 33.52% 18.98%

Plan Fiduciary Net Position as a Percentage of the

Total Pension Liability 73.74% 82.17% 78.00% 78.43% 83.25%

Note: In accordance with GASB 68, paragraph 138, only five years of data are presented this reporting period. "The information for all periods for the ten

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 periods covered as of the

measurement dates ending August 31 for each plan year.

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Exhibit G-3

SCHEDULES OF THE DISTRICT CONTRIBUTIONS

FOR PENSIONS



2019 2018 2017 2016 2015

Contractually Required Contribution $ 4,779,648 $ 4,511,436 $ 4,483,263 $ 4,396,052 $ 2,721,522

Contribution in Relation to the Contractually

Required Contribution (4,779,648) (4,511,436) (4,483,263) (4,396,052) (2,721,522)

Contribution Deficiency (Excess) $ 0 $ 0 $ 0 $ 0 $ 0

District's Covered Payroll $ 158,484,546 $ 157,527,282 $ 160,712,806 $ 159,822,802 $ 155,727,303

Contributions as a Percentage of Covered Payroll 3.02% 2.86% 2.79% 2.75% 1.75%

Note: In accordance with GASB 68, paragraph 138, only five years of data are presented this reporting period. "The information for all periods for the

ten 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 presented as of the District's respective fiscal years as opposed to the

time periods covered by the measurement dates ending August 31 of the preceding year.

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Exhibit G-4

SCHEDULES OF THE DISTRICT'S PROPORTIONATE SHARE

OF THE NET OPEB LIABILITY



2019 2018

Plan Yr 2018 Plan Yr 2017

District's Proportion of the Net OPEB Liability 0.2061326% 0.2042311%

District's Proportionate Share of the Net OPEB Liability $ 102,923,872 $ 88,812,463

State's Proportionate Share of the Net OPEB Liability

Associated with the District 128,794,087 119,597,680

Total $ 231,717,959 $ 208,410,143

District's Covered Payroll $ 157,372,152 $ 160,986,560

District's Proportionate Share of the Net OPEB Liability

as a Percentage of its Covered Payroll 65.40% 55.17%

Plan Fiduciary Net Position as a Percentage of the

Total OPEB Liability 1.60% 0.91%

Note: GASB Codification, Vol. 2, P50.238 states that the information on this schedule be determined as of the measurement dates

ending August 31 for each plan year.

Note: This schedule shows only two years for which this information is available. Additional information will be added until ten

years of data are available and reported.

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Exhibit G-5

SCHEDULES OF THE DISTRICT CONTRIBUTIONS

FOR OTHER POST-EMPLOYMENT BENEFITS



2019 2018

Contractually Required Contribution $ 1,188,634 $ 1,127,340

Contribution in Relation to the Contractually

Required Contribution (1,188,634) (1,127,340)

Contribution Deficiency (Excess) $ 0 $ 0

District's Covered Payroll $ 158,484,546 $ 157,527,382

Contributions as a Percentage of Covered Payroll 0.75% 0.72%

Note: GASB Codification, Vol. 2, P50.238 requires that the data in this schedule be presented as of the District's respective fiscal

years as opposed to the time periods covered by the measurement dates ending August 31 of the preceding year.

Note: This schedule shows only two years or which this information is available. Additional information will be added until ten years

of data are available and reported.

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NOTES TO REQUIRED SUPPLEMENTARY INFORMATION

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A. NOTES TO SCHEDULES FOR THE TRS PENSION Changes of Benefit Terms There were no changes of benefit terms that affected measurement of the total pension liability during the measurement period. Changes of Assumptions Assumptions, methods, and plan changes which are specific to the Pension Trust Fund were updated from the prior year’s report. The Net Pension Liability increased significantly since the prior measurement date due to a change in the following actuarial assumptions: The total pension liability as of August 31, 2018 was developed using a roll-forward method from

the August 31, 2017 valuation. Demographic assumptions including post-retirement mortality, termination rates, and rates of

retirement were updated based on the experience study performed for TRS for the period ending August 31, 2017.

Economic assumptions including rates of salary increase for individual participants were updated based on the same experience study.

The discount rate changed from 8.00% as of August 31, 2017 to 6.907% as of August 31, 2018. The long-term assumed rate of return changed from 8.00% to 7.25%. The change in the long-term assumed rate of return combined with the change in the single

discount rate was the primary reason for the increase in the net pension liability.

B. NOTES TO SCHEDULES FOR THE TRS OPEB PLAN Changes of Benefit Terms The 85th Legislature, Regular Session passed the following statutory changes which became effective on September 1, 2017: Created a high-deductible health plan that provides a zero cost for generic prescriptions for

certain preventative drugs and provides a zero premium for disability retirees who retired as a disability retiree on or before January 1, 2017 and are not eligible to enroll in Medicare.

Created a single Medicare Advantage Plan and Medicare prescription drug plan for all Medicare—eligible participants.

Allowed the System to provide other, appropriate health benefit plans to address the needs of enrollees eligible for Medicare.

Allowed eligible retirees and their eligible dependents to enroll in TRS-Care when the retiree reaches 65 years of age, rather than waiting for the next enrollment period.

Eliminated free coverage under TRS-Care, except for certain disability retirees enrolled during the Plan Years 2018 through 2021, requiring members to contribute $200 per month toward their health insurance premiums.



NOTES TO REQUIRED SUPPLEMENTARY INFORMATION

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Changes of Assumptions

The following were changes to the actuarial assumptions or other inputs that affected measurement of the Total OPEB liability since the prior measurement period:

Adjustments were made for retirees that were known to have discontinued their health carecoverage in fiscal year 2018. This change increased the Total OPEB Liability.

The health care trend rate assumption was updated to reflect the anticipated return of the HealthInsurer Fee (HIF) in 2020. This change increased the Total OPEB Liability.

Demographic and economic assumptions were updated based on the experience studyperformed for TRS for the period ending August 31, 2017. This change increased the Total OPEBLiability.

The discount rate changed from 3.42% as of August 31, 2017 to 3.69% as of August 31, 2018.This changed lowered the Total OPEB Liability by $2.3 billion.

In this valuation, the impact of the Cadillac Tax has been calculated as a portion of the trend assumption. Assumptions and methods used to determine the impact of the Cadillac Tax include:

2018 thresholds of $850/$2,292 were indexed annually by 2.50%. Premium data submitted was not adjusted for permissible exclusions to the Cadillac Tax. There were no special adjustments to the dollar limit other than those permissible for non-

Medicare retirees over 55.

Results indicate that the value of the excise tax would be reasonably represented by a 25 basis point addition to the long-term trend rate assumption.


OTHER SUPPLEMENTARY INFORMATION

EXHIBITS H-1 THROUGH J-3


LUBBOCK INDEPENDENT SCHOOL DISTRICT LUBBOCK INDEPENDENT SCHOOL DISTRICT

Exhibit H-1

(Continued)

COMBINING BALANCE SHEET - NON-MAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET - NON-MAJOR GOVERNMENTAL FUNDS

JUNE 30, 2019 JUNE 30, 2019

Special Revenue Funds Special Revenue Funds

205 211 212 224 225 240 244 255

Headstart ESEA Title I ESEA Title IDEA - IDEA - National Vocational ESEA II,

Part A I, Part C Part B Part B Breakfast & Education Training

Improving Migrant Formula Preschool Lunch Basic and

Basic Program Grant Recruitment

ASSETS:

Cash and Temporary Investments $ $ $ $ $ $ 7,487,089 $ $

Receivables from Other Governments 645,964 3,454,177 17,798 992,667 28,500 172,895 65,172

Other Receivables 97

Inventories 113,876

Deferred Expenditures 1,821 79,117 292 28,454

Total Assets $ 647,785 $ 3,533,391 $ 17,798 $ 992,667 $ 28,500 $ 7,600,965 $ 173,187 $ 93,626

LIABILITIES:

$ 725 $ 12,113 $ $ 156 $ $ 585,186 $ 10,489 $

Accrued Wages Payable 363,842 668,098 4,716 556,560 14,019 3,937 4,519

Due to Other Funds 283,218 2,853,180 13,082 435,951 14,481 158,179 93,626

Unearned Revenues 113,876

Total Liabilities $ 647,785 $ 3,533,391 $ 17,798 $ 992,667 $ 28,500 $ 702,999 $ 173,187 $ 93,626

FUND EQUITY:

Restricted for Food Service $ $ $ $ $ $ 6,897,966 $ $

Restricted for Other Purposes

Total Fund Equity $ 0 $ 0 $ 0 $ 0 $ 0 $ 6,897,966 $ 0 $ 0

Total Liabilities and Fund Equity $ 647,785 $ 3,533,391 $ 17,798 $ 992,667 $ 28,500 $ 7,600,965 $ 173,187 $ 93,626

-64- -65-

Accounts Payable

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Exhibit H-1

(Continued)

COMBINING BALANCE SHEET - NON-MAJOR GOVERNMENTAL FUNDS

JUNE 30, 2019


263 272 274 288 289 315 397 410

English Medicaid Gear ECI Other Federal SSA Advanced State

Language Admin Up Program Special IDEA Placement Textbook

Acquisitions & Claim Income Revenue Part B, Incentives Fund

Enhancement MAC Funds Discretionary

ASSETS:

Cash and Temporary Investments $ $ $ $ $ $ $ 105,770 $ 198,262

Receivables from Other Governments 9,480 88,631 25,987 206,349 340,174 60,805

Other Receivables 19

Inventories

Deferred Expenditures 1,412 462

Total Assets $ 10,892 $ 88,631 $ 25,987 $ 206,811 $ 340,174 $ 60,805 $ 105,789 $ 198,262

LIABILITIES:

Accounts Payable $ $ $ $ 1,864 $ $ $ 287 $

Accrued Wages Payable 8,619 (103,970) 10,290

Due to Other Funds 10,892 88,631 17,368 308,917 340,174 50,515

Unearned Revenues 105,502 198,262

Total Liabilities $ 10,892 $ 88,631 $ 25,987 $ 206,811 $ 340,174 $ 60,805 $ 105,789 $ 198,262

FUND EQUITY:

Restricted for Food Service $ $ $ $ $ $ $ $

Restricted for Other Purposes

Total Fund Equity $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0

Total Liabilities and Fund Equity $ 10,892 $ 88,631 $ 25,987 $ 206,811 $ 340,174 $ 60,805 $ 105,789 $ 198,262

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Exhibit H-1

(Concluded)

Special Revenue Funds

429 435 452 459 461 489-499 Total Total

Other ECI Other Other Campus Other Special Nonmajor

State Funded SSA SSA SSA Activity Local Revenue Governmental

Special Regional SRF's SRF's Funds SRF's Funds June 30,

Revenue Deaf 2019

ASSETS:

Cash and Temporary Investments $ 7,745 $ $ $ 342,504 $ 1,467,214 $ 176,759 $ 9,785,343 $ 9,785,343

Receivables from Other Governments 95,601 1,477 6,205,677 6,205,677

Other Receivables 313 22,310 22,739 22,739

Inventories 113,876 113,876

Deferred Expenditures 2,289 760 316 114,923 114,923

Total Assets $ 7,745 $ 95,601 $ 1,477 $ 345,106 $ 1,467,974 $ 199,385 $ 16,242,558 $ 16,242,558

LIABILITIES:

Accounts Payable $ $ $ $ $ 1,271 $ 24,000 $ 636,091 $ 636,091

Accrued Wages Payable 54,841 108,523 5,918 1,699,912 1,699,912

Due to Other Funds 40,760 1,477 4,710,451 4,710,451

Unearned Revenues 7,745 169,467 594,852 594,852

Total Liabilities $ 7,745 $ 95,601 $ 1,477 $ 108,523 $ 1,271 $ 199,385 $ 7,641,306 $ 7,641,306

FUND EQUITY:

Restricted for Food Service $ $ $ $ $ $ $ 6,897,966 $ 6,897,966

Restricted for Other Purposes 236,583 1,466,703 1,703,286 1,703,286

Total Fund Equity $ 0 $ 0 $ 0 $ 236,583 $ 1,466,703 $ 0 $ 8,601,252 $ 8,601,252

Total Liabilities and Fund Equity $ 7,745 $ 95,601 $ 1,477 $ 345,106 $ 1,467,974 $ 199,385 $ 16,242,558 $ 16,242,558


COMBINING BALANCE SHEET - NON-MAJOR GOVERNMENTAL FUNDS

JUNE 30, 2019

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Exhibit H-2

(Continued)

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES

IN FUND BALANCES - NON-MAJOR GOVERNMENTAL FUNDS IN FUND BALANCES - NON-MAJOR GOVERNMENTAL FUNDS

FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019


205 211 212 224 225 226 240 244 255 263

Headstart ESEA Title I, ESEA Title I, IDEA - IDEA - IDEA - National Vocational ESEA Title II, English

Part A, Part C, Part B, Part B, Part B, School Education Part A, Language

Improving Migrant Formula Preschool Discretionary Breakfast & Basic Teacher & Acquisition &

Basic Programs Children Lunch Program Grant Principal Training Enhancement

REVENUES:

Local and Intermediate Sources $ $ $ $ $ $ $ 1,568,091 $ $ $

State Program Revenues 86,596

Federal Program Revenues 3,654,043 9,940,653 166,164 5,680,386 106,682 122,654 15,271,740 524,138 952,039 109,442

Total Revenues $ 3,654,043 $ 9,940,653 $ 166,164 $ 5,680,386 $ 106,682 $ 122,654 $ 16,926,427 $ 524,138 $ 952,039 $ 109,442

EXPENDITURES:

Instruction $ 2,941,259 $ 5,727,469 $ 92,041 $ 3,265,238 $ 106,682 $ 79,224 $ $ 484,251 $ 55,204 $ 30,102

Instructional Resources and Media Services 95 15,713

Curriculum and Instructional Staff Development 125,879 3,059,388 231,419 35,740 895,539 7,531

Instructional Leadership 154,890 235,398 85,529 4,147 1,296 71,809

School Leadership 102,781

Guidance, Counseling, and Evaluation Services 2,825 2,078,265 43,430

Social Work Services 131,373

Health Services 62,012 4,899 19,935

Food Services 16,249,318

Extracurricular Activities 700

General Administration

Facilities Maintenance and Operation 38,861

Security and Monitoring Services

Community Services 369,908 660,107 74,123

Capital Outlay 127,485

Payments to Fiscal Agents/Member Districts

Total Expenditures $ 3,654,043 $ 9,940,653 $ 166,164 $ 5,680,386 $ 106,682 $ 122,654 $ 16,415,664 $ 524,138 $ 952,039 $ 109,442

Net Change in Fund Balance $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 510,763 $ 0 $ 0 $ 0

Fund Balance - July 1 (Beginning) 6,387,203

Fund Balance - June 30 (Ending) $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 6,897,966 $ 0 $ 0 $ 0

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Exhibit H-2

(Continued) (Continued)

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES

IN FUND BALANCES - NON-MAJOR GOVERNMENTAL FUNDS IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS

FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019


272 274 276 288 289 315 340 370 397 410

Medicaid Gear Title I - SIP ECI Other SSA SSA ECI Advanced State

Administrative Up Academy Program Federal IDEA Part B, IDEA Part C, Fiscal Placement Textbook

Claim Grant Income SRF's Discretionary Early Intervention Agent Initiatives Fund

Enhancement MAC Deaf Federal

REVENUES:

Local and Intermediate Sources $ $ $ $ 361,611 $ $ $ $ $ $

State Program Revenues 6,544 2,290,344

Federal Program Revenues 123,450 177,871 102,021 3,457,742 525,997 131,544 174 1,106,661

Total Revenues $ 123,450 $ 177,871 $ 102,021 $ 3,819,353 $ 525,997 $ 131,544 $ 174 $ 1,106,661 $ 6,544 $ 2,290,344

EXPENDITURES:

Instruction $ $ 59,569 $ 87,329 $ $ 182,995 $ 124,406 $ 174 $ $ $ 2,272,344

Instructional Resources and Media Services

Curriculum and Instructional Staff Development 6,163 9,605 51,297 6,544 18,000

Instructional Leadership

School Leadership 81,564 724 3,237

Guidance, Counseling, and Evaluation Services 123,450 749

Social Work Services

Health Services 7,138

Food Services

Extracurricular Activities 2,610

General Administration

Facilities Maintenance and Operation 24,266

Security and Monitoring Services 288,468

Community Services 27,216 4,363 3,795,087

Capital Outlay

Payments to Fiscal Agents/Member Districts 1,106,661

Total Expenditures $ 123,450 $ 177,871 $ 102,021 $ 3,819,353 $ 525,997 $ 131,544 $ 174 $ 1,106,661 $ 6,544 $ 2,290,344

Net Change in Fund Balance $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0

Fund Balance - July 1 (Beginning)

Fund Balance - June 30 (Ending) $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0

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Exhibit H-2

(Continued) (Concluded)

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES

IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS


Special Revenue Funds

427 429 435 450 452 459 461 489-499 Total Total

State State ECI ECI Other Other Campus Other Special Nonmajor

Funded Funded SSA Federal SSA SSA Activity Local Revenue Governmental

Grants Grants Regional Agent SRF's SRF's Funds SRF's Funds June 30,

Deaf State State 2019

REVENUES:

Local and Intermediate Sources $ $ $ $ $ $ 1,157,895 $ 616,151 $ 516,887 $ 4,220,635 $ 4,220,635

State Program Revenues 1,099,138 25,214 521,140 1,099,139 13,468 5,141,583 5,141,583

Federal Program Revenues 42,153,401 42,153,401

Total Revenues $ 1,099,138 $ 25,214 $ 521,140 $ 1,099,139 $ 13,468 $ 1,157,895 $ 616,151 $ 516,887 $ 51,515,619 $ 51,515,619

EXPENDITURES:

Instruction $ $ 22,128 $ 505,761 $ $ $ 823,908 $ 461,663 $ 269,429 $ 17,591,176 $ 17,591,176

Instructional Resources and Media Services 1,994 8,545 26,347 26,347

Curriculum and Instructional Staff Development 7,599 30,699 4,485,403 4,485,403

Instructional Leadership 481 128,061 681,611 681,611

School Leadership 2,357 190,663 190,663

Guidance, Counseling, and Evaluation Services 5,807 42,996 2,297,522 2,297,522

Social Work Services 131,373 131,373

Health Services 14,898 37,087 145,969 145,969

Food Services 16,249,318 16,249,318

Extracurricular Activities 9,600 12,910 12,910

General Administration 28,376 28,376 28,376

Facilities Maintenance and Operation 16,050 136 79,313 79,313

Security and Monitoring Services 1,092 700 290,260 290,260

Community Services 1,083,088 62,561 6,076,453 6,076,453

Capital Outlay 90,000 217,485 217,485

Payments to Fiscal Agents/Member Districts 1,099,139 13,468 2,219,268 2,219,268

Total Expenditures $ 1,099,138 $ 25,214 $ 521,140 $ 1,099,139 $ 13,468 $ 1,002,462 $ 490,175 $ 516,887 $ 50,723,447 $ 50,723,447

Net Change in Fund Balance $ 0 $ 0 $ 0 $ 0 $ 0 $ 155,433 $ 125,976 $ 0 $ 792,172 $ 792,172

Fund Balance - July 1 (Beginning) 81,150 1,340,727 7,809,080 7,809,080

Fund Balance - June 30 (Ending) $ 0 $ 0 $ 0 $ 0 $ 0 $ 236,583 $ 1,466,703 $ 0 $ 8,601,252 $ 8,601,252

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Exhibit H-3

COMBINING STATEMENT OF NET POSITION


JUNE 30, 2019

Health/ Total

Dental Worker's Internal

Insurance Compensation Service Fund

ASSETS:

Cash and Equivalents $ 2,649,798 $ 4,733,573 $ 7,383,371

Due From Other Funds 55 55

Other Receivables 819,619 57,121 876,740

Deferred Expenses 10,000 10,000

Total Assets $ 3,479,417 $ 4,790,749 $ 8,270,166

LIABILITIES:

Accounts Payable $ 499,366 $ 31,718 $ 531,084

Due To Other Funds 17,946 17,946

Accrued Expenses 1,180,000 913,000 2,093,000

Total Liabilities $ 1,697,312 $ 944,718 $ 2,642,030

NET POSITION:

Unrestricted Net Position $ 1,782,105 $ 3,846,031 $ 5,628,136

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Exhibit H-4

COMBINING STATEMENT OF REVENUES, EXPENSES,

AND CHANGES IN NET POSITION



Health/ Total

Dental Worker's Internal

Insurance Compensation Service Fund

OPERATING REVENUES:

Charges for Services $ 22,390,093 $ 712,993 $ 23,103,086

Total Revenues $ 22,390,093 $ 712,993 $ 23,103,086

OPERATING EXPENSES:

Insurance Claims and Expenses $ 22,266,405 $ 673,011 $ 22,939,416

Total Expenses $ 22,266,405 $ 673,011 $ 22,939,416

Operating Income $ 123,688 $ 39,982 $ 163,670

NONOPERATING REVENUES:

Interest Income $ 41,297 $ 114,002 $ 155,299

Income (Loss) Before Transfers $ 164,985 $ 153,984 $ 318,969

Transfers In (Out) 1,000,000 (1,000,000) 0

Change in Net Position $ 1,164,985 $ (846,016) $ 318,969

Net Position - July 1 617,120 4,692,047 5,309,167

Net Position - June 30 $ 1,782,105 $ 3,846,031 $ 5,628,136

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Exhibit J-1

SCHEDULE OF DELINQUENT TAXES RECEIVABLE


1 2 3 10 20 31 32 40 50

Assessed/

Last Ten Appraised Beginning Current Maintenance Debt Service Entire Ending

Years Ended Tax Rates Value for School Balance Year's Total Total Year's Balance

June 30, Maintenance Debt Service Tax Purposes 7/1/2018 Total Levy Collections Collections Adjustments 6/30/2019

2010 and Prior Years Various Various $ Various $ 977,657 $ $ 44,228 $ 6,305 $ (44,348) $ 882,776

2011 1.04000 0.19500 8,724,682,030 185,591 12,103 2,269 (3,203) 168,016

2012 1.04000 0.19500 8,914,595,488 200,974 16,430 3,081 (2,188) 179,275

2013 1.04000 0.19500 9,170,688,160 232,210 21,620 4,054 (2,860) 203,676

2014 1.04000 0.19500 9,335,879,996 292,535 40,740 7,639 6,098 250,254

2015 1.04000 0.19500 9,614,345,112 392,714 61,765 11,581 8,389 327,757

2016 1.04000 0.19500 9,632,573,815 510,736 101,849 19,097 13,399 403,189

2017 1.06000 0.17500 10,133,705,778 830,597 210,939 34,825 (32,710) 552,123

2018 1.06000 0.17500 10,529,798,324 2,074,946 706,843 116,696 (377,835) 873,572

2019 (School Year Under Audit) 1.06000 0.17500 10,930,982,521 134,997,634 113,262,204 18,698,949 (597,263) 2,439,218

1000 TOTALS $ 5,697,960 $ 134,997,634 $ 114,478,721 $ 18,904,496 $ (1,032,521) $ 6,279,856

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Exhibit J-2


CHILD NUTRITION FUND


Variance

With Final

Data 1 2 3 Budget

Control Favorable


Revenues:

5700 Local and Intermediate Sources $ 1,778,158 $ 1,778,158 $ 1,568,091 $ (210,067)

5800 State Program Revenues 82,500 82,500 86,596 4,096

5900 Federal Program Revenues 16,111,150 16,121,210 15,271,740 (849,470)

5020 Total Revenues $ 17,971,808 $ 17,981,868 $ 16,926,427 $ (1,055,441)

Expenditures:

0035 Food Services $ 17,871,808 $ 18,023,294 $ 16,249,318 $ 1,773,976

0051 Plant Maintenance and Operations 130,699 38,861 91,838

0081 Capital Outlay 100,000 548,141 127,485 420,656


1200 Net Change in Fund Balance $ 0 $ (720,266) $ 510,763 $ 1,231,029



Budgeted Amounts

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Exhibit J-3


DEBT SERVICE FUND


Variance

With Final

Data 1 2 3 Budget

Control Favorable


Revenues:

5700 Local and Intermediate Sources $ 19,031,162 $ 19,031,162 $ 19,608,242 $ 577,080

5800 State Program Revenues 400,488 400,488 448,658 48,170

5020 Total Revenues $ 19,431,650 $ 19,431,650 $ 20,056,900 $ 625,250

Expenditures:

0071 Principal on Long-Term Debt $ 9,409,903 $ 9,409,903 $ 8,810,000 $ 599,903

0072 Interest on Long-Term Debt 9,901,107 9,901,107 8,303,655 1,597,452

0073 Issuance Cost and Fees 319,500 319,500 279,060 40,440


1200 Net Change in Fund Balance $ (198,860) $ (198,860) $ 2,664,185 $ 2,863,045



Budgeted Amounts

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OVERALL COMPLIANCE AND INTERNAL CONTROL SECTION



PHONE: (806) 747-3806

FAX: (806) 747-3815



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

Independent Auditor’s Report Board of School Trustees Lubbock Independent School District Lubbock, Texas We have audited, in accordance with the auditing standards generally accepted in the Unites 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 of Lubbock Independent School District (the District) as of and for the year ended June 30, 2019, and related notes to the financial statements, which collectively comprise Lubbock Independent School District’s basic financial statements and have issued our report thereon dated October 25, 2019. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Lubbock 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 opinion on the financial statements, but not for the purpose of expressing our opinions on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the 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 over financial reporting that we consider to be material weaknesses. However material weaknesses may exist that have not been identified.

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Compliance and Other Matters As part of obtaining reasonable assurance about whether the District’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.


October 25, 2019

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PHONE: (806) 747-3806

FAX: (806) 747-3815



REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE

Independent Auditor’s Report

Board of School Trustees Lubbock Independent School District Lubbock, Texas Report on Compliance for Each Major Federal Program We have audited Lubbock Independent School District’s (the District) compliance with the types of compliance requirements described in the Compliance Supplement that could have a direct and material effect on each of the District’s major federal programs for the year ended June 30, 2019. The District’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Management’s Responsibility

Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor’s Responsibility

Our responsibility is to express an opinion on compliance for each of the 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 the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance 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 Lubbock 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 on the District’s compliance with those requirements.

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Opinion on Each Major Federal Program

In our opinion, Lubbock 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, 2019. Report on Internal Control Over Compliance Management of Lubbock Independent School District is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the District’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of the internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Purpose of this Report

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.


October 25, 2019

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FEDERAL FINANCIAL ASSISTANCE SECTION



SCHEDULE OF FINDINGS AND QUESTIONED COSTS


A. Section I - Summary of Auditor's Results

1. Financial Statements

Type of auditor's report issued

Internal control over financial reporting

Material weakness(es) identified? yes X no

Significant deficiencies identified that are

not considered to be material weaknesses? yes X none reported

Noncompliance material to financial statements noted? yes X no

2. Federal Awards

Internal control over major programs:

Material weakness(es) identified? yes X no

Significant deficiency identified that are

not considered to be material weaknesses? yes X none reported

Type of auditor's report issued on compliance for major

programs.

Any audit findings disclosed that are required to be

reported in accordance with 2 CFR 200.516(a)? yes X no

Identification of major programs:

CFDA Number(s) Name of Federal Program or Cluster

10.553 Child Nutrition Cluster

10.555 Child Nutrition Cluster

93.600 Head Start

Dollar threshold used to distinguish between

type A and type B programs: $

Auditee qualified as low-risk auditee? X yes no

B. Section II - Findings Related to the Financial Statements

The audit disclosed no findings required to be reported.

C. Section III - Findings and Questioned Costs Related to the Federal Awards

The audit disclosed no findings required to be reported.

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1,197,160

Unmodified

Unmodified



SCHEDULE OF STATUS OF PRIOR YEAR FINDINGS FOR THE YEAR ENDED JUNE 30, 2019

Prior Year’s Finding/Noncompliance and Status: None

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Exhibit K-1

(Continued)

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS


2a 1 2 3

Project / Federal Grantor/ Federal

Pass-Through Pass-Through CFDA Federal

Entity ID Number Grantor/Program or Cluster Title Number Expenditures

U.S. Department of Education:

Passed-Through Texas Education Agency:

18610101152901 ESEA Title I Part A, Improving Basic Programs 84.010A $ 127,749

19610101152901 ESEA Title I Part A, Improving Basic Programs 84.010A 9,402,638

19610103152901 ESEA Title I Part D, Subpart 2 84.010A 256,246

18610123152901 ESEA Title I, Priority and School Focus 84.010A 166,424

19610141152901 ESEA Title I, Priority and School Focus 84.010A 175,091

Total ESEA Title I - Part A and Part D $ 10,128,148

18615001152901 ESEA Title I, Part C, Migrant Education Programs 84.011A $ 30,212

19615001152901 ESEA Title I, Part C, Migrant Education Programs 84.011A 139,522

Total ESEA Title I, Part C, Migrant Education Programs $ 169,734

18420006152901 Title I, Part C, Carl Perkins Vocational Education - Basic 84.048A $ 71,498

19420006152901 Title I, Part C, Carl Perkins Vocational Education - Basic 84.048A 465,407

Total Title I, Part C, Carl Perkins Vocational Education - Basic $ 536,905

193911011529013911 IDEA, Part C, Deaf 84.181A $ 174

69551802 Summer School LEP 84.369A $ 6,258

18680101152901 Title IV, Part A, Subpart 1 84.424A $ 31,261

19680101152901 Title IV, Part A, Subpart 1 84.424A $ 500,673

Total Title IV, Part A, Subpart 1 $ 531,934

18671001152901 Title III, Part A, English Language Acquisition and Language Enhancement 84.365A $ 21,589

19671001152901 Title III, Part A, English Language Acquisition and Language Enhancement 84.365A 90,907

Total Title III, Part A, English Language Acquisition and Language Enhancement $ 112,496

18694501152901 Title II, Part A Teacher/Principal Training & Recruiting 84.367A $ 100,841

19694501152901 Title II, Part A Teacher/Principal Training & Recruiting 84.367A 864,772

196945677110013 Title II, Part A Teacher/Principal Training & Recruiting 84.367A 9,169

Total Title II, Part A, Teacher/Principal Training & Recruiting $ 974,782

185110017110002 Gear Up Grants 84.334S $ 6,625

195110017110002 Gear Up Grants 84.334S 171,246

Total Gear Up Grants $ 177,871

146107137110007 Texas Title I Priority School 84.377A $ 101,940

Total Passed-Through Texas Education Agency $ 12,740,242

Passed-Through Texas Department of Assistive and Rehabilitative Services

5382001540 Special Education Grants for Infants and Families with Disabilities - ECI 84.181A $ 887,477

Total Passed-Through Texas Department of Assistive and Rehabilitative Services $ 887,477

Total U.S. Department of Education $ 13,627,719

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Exhibit K-1

(Continued)



2a 1 2 3




U.S Department of Health and Human Services:

Direct Programs:

529-07-0157-00018 Medicaid Administrative Claiming Program 93.778 $ 123,450

06CH7166-04-01 Part Year Head Start Center-Based Program Option 93.600 $ 2,627,377

06CH7166-05-01 Part Year Head Start Center-Based Program Option 93.600 1,026,666

Total Part Year Head Start Center-Based Program Option $ 3,654,043

Total Direct Programs $ 3,777,493

Passed-Through Texas Department of Assistive and Rehabilitative Services

5382001540 Temporary Assistance for Needy Families (TANF) 93.558 $ 257,764

5382001540 Medicaid Administrative Claiming Program 93.778 114,351

Total TANF and Medical Assistance Program $ 372,115

Total Passed-Through Texas Department of Assistive and Rehabilitative Services $ 372,115

Total U.S. Department of Health and Human Services $ 4,149,608

U.S. Department of Agriculture

Passed-Through Texas Department of Agriculture:

71501201 Fresh Fruit and Vegetable Program 10.582 $ 170,255

71501201 Child and Adult Care Food Program 10.558 35,624

Total Passed-Through Texas Department of Agriculture $ 205,879

Total U.S. Department of Agriculture $ 205,879

Special Education Cluster (IDEA)

U.S. Department of Education:


186600011529016600 IDEA, Part B, Formula 84.027A $ 264,616

196600011529016600 IDEA, Part B, Formula 84.027A 5,505,770

186600021529016674 IDEA, Part B, Discretionary 84.027A 122,654

186600111529016673 IDEA, Part B, Discretionary Deaf 84.027A 10,816

196600111529016673 IDEA, Part B, Discretionary Deaf 84.027A 120,928

Total IDEA, Part B Passed-Through Texas Education Agency: $ 6,024,784

Passed-Through Texas Department of Assistive and Rehabilitative Services:

5382001540 Special Education Grants to States - ECI 84.027A $ 139,266

Total IDEA, Part B Passed-Through Texas Department of Assistive and Rehabilitative Services: $ 139,266


186610011529016610 IDEA, Part B, Preschool 84.173A $ 1,414

196610011529016610 IDEA, Part B, Preschool 84.173A 105,268

Total IDEA, Part B, Preschool Passed-Through Texas Education Agency $ 106,682

Total U.S. Department of Education - Special Education Cluster (IDEA) $ 6,270,732

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Exhibit K-1

(Concluded)



2a 1 2 3




Child Nutrition Cluster

U.S. Department of Agriculture

Passed-Through Texas Department of Agriculture:

71501201 School Breakfast Program 10.553 $ 4,701,735

71501201 National School Lunch Program - Cash Assistance 10.555 10,097,602

N/A Commodities - Non-Cash Assistance 10.555 852,074

Total Passed-Through Texas Department of Agriculture $ 15,651,411

Total U.S. Department of Agriculture - Child Nutrition Cluster $ 15,651,411

Total Expenditures of Federal Awards $ 39,905,349

Reconciliation of total federal program revenues to expenditures of federal awards:

General Fund $ 8,695,674

Special Revenue Funds 42,153,401

Federal Program Revenues - Exhibit C-2 $ 50,849,075

Less: General Fund Excluding Indirect Cost (SHARS) 7,600,445

ROTC Payments 132,794

ECI SHARS Allocation 1,768,401

ECI State Reimbursements 335,425

ECI Fiscal Agent 1,106,661

Expenditures of Federal Awards - Exhibit K-1 $ 39,905,349

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NOTES TO THE SUPPLEMENTARY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2019

Basis of Presentation

The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of Lubbock Independent School District under programs of the federal government for the year ended June 30, 2019. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).

Summary of Significant Accounting Policies

(A) Expenditures reported on the Schedule are reported on the accrual basis of accounting. Suchexpenditures are recognized following the cost principles contained in the Uniform Guidance, whereincertain types of expenditures are not allowable or are limited as to reimbursement.

(B) Lubbock Independent School District has not elected to use the 10 percent de minimis indirect costrate as allowed under the Uniform Guidance.

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