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Mansfield Independent School District • 605 East Broad Street • Mansfield, Texas 76063 (817) 299-6300 • http://www.mansfieldisd.org/

MANSFIELD INDEPENDENT SCHOOL DISTRICT

ANNUAL FINANCIAL

AND COMPLIANCE REPORT

For the Fiscal Year Ended August 31, 2012

Issued By

Finance Department Elaine Cogburn, CPA, RTSBA

Associate Superintendent of Business and Finance

MANSFIELD INDEPENDENT SCHOOL DISTRICT TABLE OF CONTENTS

Page

Exhibit/ Table

Introductory Section

Board of Trustees i Administrative Council ii Certificate of the Board iii Transmittal Letter v

Financial Section

Report of Independent Auditors

1

Management’s Discussion and Analysis

5

Basic Financial Statements: Government-Wide Financial Statements

Statement of Net Assets 19 A-1 Statement of Activities 20 B-1

Governmental Fund Financial Statements Balance Sheet 22 C-1 Reconciliation of Balance Sheet for Governmental Funds to the

Statement of Net Assets

25

C-2 Statement of Revenues, Expenditures, and Changes in Fund Balance 26 C-3 Reconciliation of the Statement of Revenues, Expenditures, and

Changes in Fund Balance of Governmental Funds to the Statement of Activities

28

C-4 Proprietary Fund Financial Statements

Statement of Net Assets 29 D-1 Statement of Revenues, Expenses and Changes in Fund Net Assets 30 D-2 Statement of Cash Flows 31 D-3

Fiduciary Fund Financial Statements Statement of Fiduciary Net Assets Statement of Changes in Fiduciary Net Assets

32 33

E-1 E-2

Notes to the Financial Statements

34 F-1

Required Supplementary Information: Schedule of Revenues, Expenditures, and Changes in Fund Balances -

Original Budget, Amended Final (GAAP Basis) and Actual - General Fund

58

G-1 Notes to Required Supplementary Information

59 G-2

Other Supplementary Information: Combining Fund Statements:

Combining Balance Sheet - Nonmajor Governmental Funds 62 H-1 Combining Statement of Revenues, Expenditures, and Changes in

Fund Balance - Nonmajor Governmental Funds

68

H-2

MANSFIELD INDEPENDENT SCHOOL DISTRICT TABLE OF CONTENTS (continued)

Page

Exhibit/ Table

Financial Section (continued) Other Supplementary Information (continued):

Combining Fund Statements (cont.): Combining Statement of Net Assets - Nonmajor Enterprise Funds 74 H-3 Combining Statement of Revenues, Expenses, and Changes in Net

Assets - Nonmajor Enterprise Funds

75

H-4 Combining Statement of Cash Flows - Nonmajor Enterprise Funds 76 H-5

Statement of Changes in Assets and Liabilities - Agency Fund 77 H-6 Required TEA Schedules

Schedule of Delinquent Taxes Receivable 80 J-1 Schedule of Expenditures for Computation of Indirect Cost for 2013-2014 -

General and Special Revenue Funds

82

J-2 Schedule of Revenues, Expenditures, and Changes in Fund Balance-

Original Budget, Amended Final and Actual - Child Nutrition Fund

83

J-3 Schedule of Revenues, Expenditures, and Changes in Fund Balance -

Original Budget, Amended Final and Actual - Debt Service Fund

84

J-4 Statistical Section

Net Assets by Component 86 1 Changes in Net Assets 88 2 Fund Balances of Governmental Funds 92 3 Changes in Fund Balances of Governmental Funds 94 4 General Governmental Revenues by Source 96 5 Principal Taxpayers 98 6 Property Tax Levies and Collections 99 7 Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Governmental Expenditures

100

8

Instructional Building Information Economically Disadvantaged by Students

101 102

9 10

Government Auditing Standards Report Section

Report of Independent Auditors 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

105

Report of Independent Auditors on Compliance with Requirements that Could have a Direct and Material Effect on each Major Program and on Internal Control over Compliance in Accordance with OMB Circular A-133

107

Federal Awards Section

Schedule of Findings and Questioned Costs 111 Schedule of Expenditures of Federal Awards 115 K-1 Notes to Schedule of Expenditures of Federal Awards 116 K-2

INTRODUCTORY

SECTION

i

Mansfield Independent School District Board of Trustees

Mr. Terry Moore Place 1, Secretary First elected 2006 Current Term Expires 2015

Ms. Beth Light Place 2, President First elected 2006 Current Term Expires 2015

Dr. Michael Evans Place 3, Vice President First elected 2007 Current Term Expires 2013

Mr. Raul Gonzalez Place 4 First elected 2010 Current Term Expires 2013

Ms. Sandra Vatthauer Place 5 First Elected 2004 Current Term expires 2013

Mr. Danny Baas Place 6 First Elected 2011 Current Term expires 2014

Mrs. Courtney Wilson

Place 7 First Elected 2011

Current Term expires 2014

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Mansfield Independent School District Administrative Council

Dr. Bob Morrison Superintendent of Schools

Dr. Linda Chance Associate Superintendent Human Resources Services

Dr. Jim Vaszauskas Associate Superintendent Curriculum/Instruction/Accountability

Elaine Cogburn Associate Superintendent Business and Finance

Dr. Kyle Heath Associate Superintendent of Student Services and Support

Dr. Doug Brubaker Assistant Superintendent Technology and Information Services

Jeff Brogden Assistant Superintendent Administrative Support

Karen Wentworth Assistant Superintendent Human Resources Services

Terry Morawski Assistant Superintendent Communication and Marketing

Billy Snow Area Superintendent

Lamar Goree Area Superintendent

Darrell Sneed Area Superintendent

Accounting Staff Scott Weber Director of Finance

Karen Wiesman Controller

Tim Hood Accountant

Asha Pai Accountant

Keia Wilson Accounting Clerk


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January 22, 2013 To the Board of Trustees and the Citizens of Mansfield Independent School District: The Annual Financial Report of the Mansfield Independent School District (the District) is hereby submitted. This report has been prepared to provide the Board of Trustees, representatives of financial institutions, the citizenry, and other interested parties information concerning the financial condition of the District. The government-wide financial statements in this report provide an overview of the District's governmental activities, while detailed fund financial statements describe specific activities of each fund used in accounting for the District's financial transactions. This report was prepared by the District's Finance Department in accordance with generally accepted accounting principles (GAAP) and reporting standards as promulgated by the Governmental Accounting Standards Board ("GASB"). Responsibility for the accuracy, completeness, and fairness of the presentation and its disclosures rests with the District. To the best of our knowledge and belief, the enclosed information is accurate in all its material respects. This data is reported in a manner designed to fairly present the financial and operational results of the District as measured by financial activities of its various funds. Disclosures necessary to enable the reader to gain understanding of such financial operations have been included. The Annual Financial Report is presented here in four sections: 1) introductory, 2) financial, 3) statistical, and 4) federal awards. The introductory section includes this transmittal letter, the Certificate of Board, and lists of Board members and administrative staff. The financial section includes the basic financial statements, the required supplementary information, combining and individual fund statements and schedules, and other supplementary information. Also included in the financial section is the independent auditors' report on these financial statements and Management's Discussion and Analysis. Reference should be made to Management's Discussion and Analysis for additional information regarding the District's financial operations. The statistical section consists of unaudited tables which reflect both financial and demographic data. This information is for the purpose of presenting social and economic information, financial trends and fiscal capacity of the District, and is generally presented on a multi-year basis. The District is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act of 1996 and the United States Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Information related to this single audit, including the schedule of expenditures of federal awards, findings and questioned costs, and the independent auditors' reports on compliance and internal control over financial reporting and compliance with requirements applicable to each major program and internal control over compliance are included in the federal awards section. This report includes all funds of the District. The District is a public school system offering a full prekindergarten through grade twelve education for eligible residents within its geographic boundaries. All activities over which the District Board of Trustees exercises authority and/or oversees responsibilities are included.

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GENERAL INFORMATION Mansfield Independent School District was established in 1909. The District is governed by a seven member Board of Trustees (the Board) serving staggered three-year terms with elections held in May of each year. All candidates must be qualified voters and residents of the District. Monthly meetings of the Board are posted and advertised as prescribed under state law so that the Board may meet to fulfill its charge to the students, parents, staff, and taxpayers of the District. Special meetings or study sessions are scheduled as needed. The Board has final control over all school matters except as limited by state law, the courts, and the will of its citizenry as expressed in elections. The Board's responsibilities are generally: to set policy for the District, to ensure efficient operations, to select and evaluate the Superintendent of Schools, to adopt an annual budget and its supporting tax rate, and to foster good community relations and communications. The District provides a well-rounded program of public education from prekindergarten through grade twelve. All schools within the District are fully accredited by the Texas Education Agency. In order to serve its current enrollment of 32,869 students (as of December 2012), the District provides regular, special education, vocational, gifted/talented, and bilingual/ESL curriculums. A broad range of elective and extracurricular programs are also offered. Finally, support departments of the District ensure that student needs for transportation, nutrition, guidance, counseling, and facilities maintenance are addressed.

ECONOMIC CONDITION AND OUTLOOK The District is located southeast of Fort Worth, in the southeastern corner of Tarrant County, due south of Arlington, with a small portion overlapping the northeastern portion of Johnson County. The District encompasses approximately 80 square miles in Tarrant County and 14.5 square miles in Johnson County serving students in Mansfield, Arlington, Grand Prairie, and Burleson. In recent years, the District's tax base has continued to increase at a higher level than some adjoining areas which have seen smaller or level property values. This is a direct result of new housing construction, not being dependent upon any one major industry and the drilling of gas wells in the Barnett Shale. The increased emphasis by the City of Mansfield to enhance their economic development efforts should continue to help with this trend. Property values have increased an average of 4.7 percent over the last three years; however, value increases have been steadily declining. While the District has experienced slower growth in property values due to the economic downturn, this trend began a reversal with the fiscal 2012 values increasing 6%. This expansion in the tax base was primarily attributable to new residential construction accompanied by some growth in retail and commercial development. In fiscal 2013 property values were $9.2 billion reflecting a 2% decline from 2012 due to a drop off in oil and gas values. The District continues to enjoy diversity in its tax base as the top 10 taxpayers constitute a mere 8% of the 2012 assessed value. Job availability and stability have affected both the national and local economies. Despite the concerns of higher unemployment and of stagnating sectors of the local economy, jobs-and the potential for jobs-are still providing pull to Texas and to key suburban locations within the Dallas-Fort Worth-Arlington metro area. Consultants predict that the District’s employment gains will outpace almost all of the State’s school districts as the national recovery begins. The student population of the District has seen explosive growth over the last decade. While the growth has slowed, student enrollment growth has averaged 1.3 percent for the last three years. The current estimated District population is 146,603.

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LONG-RANGE PLANNING Mission: Mansfield Independent School District ensures educational and personal success by: aspiring to high academic standards; fostering a community built on mutual support and excellence; delivering innovative educational opportunities; and cultivating productive, lifelong learners. Strategic Objectives: Each student will 1) master and demonstrate skills that build character and integrity; 2) actively engage in extracurricular activities and community involvement beyond the classroom setting; 3) creatively pursue hopes and dreams which will have a positive impact on society; and 4) graduate on the Distinguished Achievement Program. Beliefs: • Our foundation is built on personal beliefs, integrity, and respect.

• Building positive relationships is vital for success.

• Effective communication is essential.

• Development and achievement are self-determined.

• Responsibility and accountability are crucial.

• Lifelong learning is imperative.

• A safe, nurturing environment strengthens education.

• Leadership is inherent within all of us.

Strategies • Ensure educational opportunities for all students delivered through innovative and inspiring teaching methods.

• Address funding challenges through efficient operations and alternative funding sources.

• Ensure that all District facilities are equitable.

• Unify our District around a common mission.

• Engage all parents in a partnership committed to student success.

• Educate our community about the strengths of our diversity.

• Communicate effectively throughout our community to achieve the district's mission.

MAJOR ACHIEVEMENTS AND INITIATIVES

The following summarizes various District achievements for the 2011-2012 school year:

• The Mansfield Education Foundation, established in 1998, has awarded in excess of $2,477,000 in grants. Current year awards totaled $174,493 to 152 District grantees.

• The National Center for Education Achievement (NCEA) recognized Cora Spencer Elementary and Roberta Tipps Elementary, for being named 2011 NCEA Higher Performing Schools.

• Three students were named National Merit Semifinalists with one becoming a National Merit Scholarship Winner.

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• The District had 22 National Merit Commended students, two National Achievement Program Semifinalist, nine National Achievement Program Participants, and four National Hispanic Scholars. Both National Achievement Program semifinalists received scholarships.

• Twenty District students were selected as Texas Music Educators Association All-State Musicians.

• Ben Barber Career Tech Academy had forty-nine DECA students compete in the State Competition held in Corpus Christi, taking home 13 first-place winners. These students advanced to the International competition.

• The Duke Talent Identification Program recognized 25 MISD seventh grade students (from all six MISD Middle Schools) as eligible for the Duke University Talent Identification Program (TIP).

• Students at Mansfield ISD's Asa Low Intermediate School talked live with NASA astronauts aboard the International Space Station on January 31. The students participated in a NASA in-flight education downlink with the Expedition 30 crew aboard the International Space Station as it orbited Earth.

2006 Bond Election: Work continues on construction related to the 2006 bond election. The new Nancy Neal Elementary School opened for the 2011-2012 school year. During the summer of 2012, construction on Lake Ridge High School (the District’s 5th high school) and the new Center for Performing Arts was completed. The Center for Performing Arts opened in time for the May 2012 graduation ceremonies. Lake Ridge High School opened for the 2012-2013 school year. 2011 Bond Election: District voters approved a $198,530,000 bond package in November 2011. Projects include replacement of older campuses, renovations, technology improvements, safety and security, and many other projects identified through the District facility condition assessment. During 2011-2012 many of these projects were kicked off and continue through 2012-2013.

FINANCIAL INFORMATION

The management of the District is responsible for establishing and maintaining internal controls which are designed to ensure that the assets of the District are protected from loss, theft, and misuse, and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with accounting principles generally accepted in the United States of America. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: 1) the cost of a control should not exceed the benefits likely to be derived; and 2) the valuation of costs and benefits requires estimates and judgments by management. Management believes the internal controls adequately meet the above objectives. Single Audit. As a recipient of federal, state and local awards, the District also is responsible for ensuring that adequate internal controls are in place to provide compliance with applicable laws and regulations related to those programs. These internal controls are subject to ongoing review by management of the District. As a part of the District's single audit described above, tests are made to determine the adequacy of the internal controls, including that portion related to financial award programs, as well as to determine that the District has complied with applicable laws and regulations. The results of the District's single audit for the fiscal year ended August 31, 2012 provided no instances of material weaknesses in the internal controls over financial reporting or over compliance with requirements applicable to each major program. In addition, the audit disclosed no material instances of non-compliance with certain provisions of laws, regulations, contracts and grants and that the District complied with all material compliance requirements applicable to each major program.

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Budgetary Controls. In addition to the above, the District maintains budgetary controls throughout all of its financial systems. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated (official) budget adopted by the Board. Activities in the General Fund, National School Lunch and Breakfast Program Fund, Debt Service Fund are included in the official budget. The level of budgetary control (i.e., the level at which expenditures cannot legally exceed the appropriated amount) is the fund-function level. District systems may exercise budgetary control at varying combinations of the account code structure. The Texas accounting system for school districts as codified in the Texas Education Agency Financial Accountability System Resource Guide creates a 20 digit account code structure and requires budgetary control through the fund-function level. The District also utilizes an encumbrance accounting system to maintain budgetary control through a transaction's life cycle. Outstanding encumbrances at the end of a fiscal year lapse at year-end, and are treated as expenditures in the subsequent year upon receipt of goods. The cost of operating schools and the revenues to cover these costs are accounted for through the General Fund. Special programs, primarily funded by the state or federal governments and designed to accomplish a particular objective, are accounted for in Special Revenue Funds. The District allocates a portion of its tax rate for payment of bond interest and maturities and accounts for these transactions through its Debt Service Fund. The District accounts for school construction financed by bond sales and other revenues through the Capital Projects Fund. The National School Lunch and Breakfast Program Fund (Child Nutrition) is used to account for the operations of the District's cafeterias and other food facilities. Revenues are derived primarily from charges to users and from federal child nutrition programs under which amounts are received by grant and by receipt of commodities from the United States Department of Agriculture ("USDA"). The District also maintains Trust and Agency Funds which encompass private purpose trusts as well as agency funds for student activity and other granting organizations. The financial statement format is prescribed by Financial Accountability System Resource Guide of the Texas Education Agency. As demonstrated by the statements and schedules included in the financial section of this report, the District continues to meet its responsibility for sound financial management. Cash Management. Cash temporarily idle during the year was invested in a diversified portfolio consisting of: demand deposits, U.S. Agencies, Government Sponsored Entities, Municipal Bonds and Constant Dollar Pools. The District's cash and investment policy is to minimize credit and market risks while maintaining a competitive yield on its portfolio. As evidenced by the diversity of its investment portfolio, the District is continuing to take advantage of all investment opportunities available to it. Safety of principal will continue to be foremost in the District's investment decisions. Frost National Bank, N.A. was the official depository of the District, by contract, for the fiscal year ended August 31, 2012. Detailed information regarding the District’s investments can be found in the Notes to the Basic Financial Statements. Fund Balance. The total General Fund balance is managed as an integral part of the subsequent year's budget adoption and tax rate setting process. The Board has been proactive in building the District’s fund balances over time striving to maintain at least three months operating expenditures in the unassigned general fund balance. Changes in fund balance policy occurred in 2011 through the implementation of GASB 54. Fund balance descriptions and policy requirements were added through this new standard. In August 2011, the Board voted to set aside all oil and gas revenues for future capital projects and an additional $2 million per year for technology improvements and replacements.

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In 2011-2012 various expenditure reductions were made, to offset state funding cuts of $4 billion passed in the 82nd Legislative session. These reductions included 10% reductions in departmental budgets, changes in campus schedules, and personnel savings through attrition. Effective with the 2012-2013 budget, the District’s healthy fund balance is being strategically used in addition to the reductions already in place. Risk Management. The District's risk management policies and practices incorporate all the functions of a sound risk management program. Included are surveys identifying potential risks, actions to address and correct those risks, and an overall plan to coordinate risk retention and risk transfer. A Risk Manager is employed to provide ongoing attention to the complex changes in the risk management needs of the school district. Independent Audit. State law and District policy require an annual audit by independent certified public accountants. The annual audit was performed by Whitley Penn for the year ended August 31, 2012. In addition to meeting the requirements set forth in state statutes, the audit was designed to meet the requirements of the federal Single Audit Act of 1996 and related OMB Circular A-133. The independent auditors' report on the basic financial statements is included in the financial section of this report. Also included in this report are the independent auditors' reports relating specifically to the single audit.

ACKNOWLEDGEMENTS The preparation of this report on a timely basis could not have been accomplished without the dedicated efforts of the entire staff of the Finance office. Sincere appreciation for their time and efforts in this endeavor must be expressed. Also, thanks need to be extended to the Board of Trustees for their interest and support in the planning and operations of the financial services area of the District. Their concern that the business of the District be conducted efficiently and responsibly, and their recognition of the importance of such services, makes such tasks rewarding for the staff as a whole. Bob Morrison Superintendent

Elaine Cogburn Associate Superintendent for Business and Finance

Scott Weber Director of Finance

Karen Wiesman Controller

FINANCIAL

SECTION

Fort Worth Offi ce 1400 West 7th StreetSuite 400Fort Worth, Texas 76102817.259.9100 Main

whitleypenn.com

An IndependentMember of

Dallas Fort Worth Houston

1

REPORT OF INDEPENDENT AUDITORS To the Board of Trustees Mansfield Independent School District Mansfield, Texas We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of Mansfield Independent School District (the “District”) as of and for the year ended August 31, 2012, which collectively comprise the District’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the District’s management. 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 includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the District as of August 31, 2012, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated January 17, 2013, 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 to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in for assessing the results of our audit.

To the Board of Trustees Mansfield Independent School District Page 2

2

Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information on pages 5 through 16 and 58 through 59, 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 the 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 any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District’s basic financial statements as a whole. The introductory section, combining and individual nonmajor fund financial statements, Texas Education Agency (“TEA”) required schedules as listed in the table of contents, are presented for the purposes of additional analysis and are not a required part of the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the financial statements. The combining and individual nonmajor fund financial statements, TEA required schedules, and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information 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 information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them.

Fort Worth, Texas January 17, 2013

Management's Discussion

and Analysis

3


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MANSFIELD INDEPENDENT SCHOOL DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS

5

This section of the Mansfield Independent School District’s (the “District”) annual financial report presents our discussion and analysis of the District’s financial performance during the fiscal year ended August 31, 2012. It should be read in conjunction with the report of independent auditors preceding and the basic financial statements following this section.

Financial Highlights

At August 31, 2012, the District’s combined assets exceeded its liabilities by $116,604,970 (net assets). The unrestricted portion of $104,595,133 may be used to meet the District’s ongoing obligations. The District’s total combined net assets decreased by $1,424,452 during the year ended August 31, 2012.

At the close of the fiscal year, the District reported $202,176,946 combined governmental fund balance. Of the combined fund balance at year end, the District had $75,273,604 or 37.2% of total fund balance available for the District’s ongoing obligations (unassigned fund balance).

As of August 31, 2012, the General Fund’s unassigned fund balance was $75.3 representing 34.4% of the total General Fund expenditures in the current fiscal year.

During the fiscal year, the District issued $50 million in new bonds to construct, renovate and equip school buildings. In addition, the District issued $58.2 million refunding bonds that resulted in net present value savings of $8,175,703.

Overview of the Financial Statements

The District’s basic financial statements consist of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the basic financial statements. This report also contains required supplementary information and other supplementary information in addition to the basic financial statements themselves. The basic financial statements include two types of statements that present different views of the District, the government-wide financial statements and the fund financial statements. Government-wide Financial Statements The government-wide financial statements, including the Statement of Net Assets and the Statement of Activities, report on the District as a whole and are designed to provide readers with a broad overview of the District’s finances. These statements are presented on the accrual basis of accounting similar to the accounting basis used by most private-sector entities. The Statement of Net Assets presents information on all of the District’s assets and liabilities including capital assets and long-term debt. The value of assets less liabilities is reported as net assets. The Statement of Activities presents the increases and decreases in net assets for the current fiscal year regardless of when cash is received or paid. Increases and decreases in net assets over time may serve as one indicator of whether the financial position of the District is improving or deteriorating but should be considered with additional factors as well.

MANSFIELD INDEPENDENT SCHOOL DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

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Government-wide financial statements distinguish net assets and the changes in net assets between governmental activities, which are supported principally by taxes and intergovernmental revenues, and business-type activities, which are intended to recover all or a significant portion of their costs through user fees and charges. Fund Financial Statements The fund financial statements provide detailed information about the District’s most significant funds as opposed to the District as a whole. Funds are accounting devices used to account for specific sources of funding and spending for particular purposes. State law and bond covenants require the District to establish some funds. The District, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related requirements. The District’s funds include three types: 1) governmental funds, 2) proprietary funds, and 3) fiduciary funds. Governmental funds Most of the District’s activities are reported in governmental funds. Governmental funds report on the modified accrual basis of accounting which focuses on 1) how cash and other financial resources can be readily converted to cash inflows and outflows and 2) the balances remaining at year end available for future spending. The governmental fund statements provide a detailed short-term view of the District’s operations and funds available to finance future operations. Because the focus and accounting methods are different for the governmental fund statements and the government-wide statements, reconciliation schedules are presented following each of the fund financial statements. Proprietary funds Proprietary funds are used to account for operations that provide services and/or goods for a fee, whether to outside users or units within the District. Proprietary funds use the same accrual basis of accounting used in the government-wide financial statements. There are two types of proprietary funds: enterprise funds and internal service funds. The enterprise funds report the same functions presented as business-type activities in the government-wide financial statements. Internal service funds are an accounting tool used to accumulate and allocate costs internally among various functions. The District uses enterprise funds to account for its day care operations and the natatorium. Fiduciary funds Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the District’s own programs. The District is the trustee, or fiduciary, for these funds and is responsible for ensuring that the assets reported in these funds are used for their intended purposes. These funds are excluded from the District’s government-wide financial statements as the District cannot use these assets to finance its operations.


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

Governmental funds - Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. The focus of governmental funds is narrower than that of the government-wide financial statements; therefore it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the Governmental Fund Balance Sheet and the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The District maintains 29 governmental funds. Information is presented separately in fund financial statements for the general, debt service and capital projects funds, all of which are considered to be major funds. Data from the other governmental funds is combined into a single, aggregated presentation. Individual fund data for each of the nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The District adopts an annual appropriated budget for its general fund, debt service fund, and the child nutrition fund. A budgetary comparison schedule has been provided to demonstrate compliance with these budgets. Proprietary funds - Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. There are two proprietary fund types. Enterprise funds are used to report the same function presented as business-type activities in the government-wide financial statements. The District has two business-type activities (enterprise funds), which consist of Day Care and Natatorium. The second type of proprietary fund is the internal service fund. Internal service funds are an accounting device used to accumulate and allocate costs internally among the various functions. The District does not have any internal service fund. Fiduciary funds - Fiduciary funds are used to account for resources held for the benefit of parties outside the government. The District is the trustee, or fiduciary, for money raised by student activities. All of the District’s fiduciary activities are reported in a separate Statements of Fiduciary Net Assets on page 32. We exclude these resources from the District’s other financial statements because the District cannot use these assets to finance its operations. The District is only responsible for ensuring that the assets reported in these funds are used for their intended purposes.


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Table I below provides a concise view of the major features of the District’s financial statements including the portion of the District they cover and types of information they contain.

Table I Major Features of the District's Financial Statements

Government-wide Statements

Fund Statements

Governmental Funds Proprietary funds Fiduciary Funds

Scope Entire District (except fiduciary funds)

Activities of the District that are not proprietary or fiduciary

Activities of the District that charge fee for services and or goods

Activities for which the District is the trustee/ agent for other parties

Required financial statements

• Statement of Net Assets

• Statement of Activities

• Balance Sheet • Statement of Revenues,

Expenditures & Changes in Fund Balances

• Statement of Net Assets • Statement of Revenues,

Expenses & Changes in Fund Net Assets

• Statement of Cash Flows

• Statement of Fiduciary Net Assets

• Statement of Changes in Fiduciary Net Assets

Accounting basis and measurement focus

Accrual accounting and economic resources focus

Modified accrual accounting and current financial resources focus



Type of asset/liability information

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

Only assets expected to be used up and liabilities to be paid during the year or soon thereafter; no capital assets or long-term debt

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

All assets and liabilities, both short-term and long-term; the District’s fiduciary funds do not currently have capital assets, although they can

Type of inflow/outflow information

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

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

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

All revenues and expenditures during the year, regardless of when cash is received or paid. Agency funds do not report revenues and expenditures

Notes to the Financial Statements The notes to the basic financial statements provide additional information that is essential to a complete understanding of the data provided in the government-wide and fund financial statements. Other information In addition to the basic financial statements and accompanying notes, this report also presents certain other supplementary information concerning the District.


9

Government-Wide Financial Analysis Net Assets. The District’s combined net assets were $116.6 million at August 31, 2012 (see Table II). The largest portion of the District’s net assets, $104.6 million or 89.7%, are unrestricted and may be used to meet the District’s ongoing obligations. The District’s net assets invested in capital assets, net of related debt is $(6.8) million. Because the District is depreciating buildings and furniture and equipment at a faster rate than the debt is being paid off, this net asset classification is a negative balance. Approximately $18.8 million or 16.1% of the District’s net assets are restricted for use in food service, various grants and debt service.

Table II - Net Assets

Governmental Activities Business-Type Activities Totals2012 2011 2012 2011 2012 2011

AssetsCurrent and other assets 235,324,685$ 241,754,930$ 884,736$ 771,532$ 236,209,421$ 242,526,462$ Capital assets 654,289,637 624,477,174 654,289,637 624,477,174 Total Assets 889,614,322 866,232,104 884,736 771,532 890,499,058 867,003,636

LiabilitiesOther liabilities 24,843,906 34,414,726 10,485 2,846 24,854,391 34,417,572 Long term liabilities 749,039,697 716,514,339 749,039,697 716,514,339 Total Liabilities 773,883,603 750,929,065 10,485 2,846 773,894,088 750,931,911

Net AssetsInvested in capital assets, net of related debt (6,755,499) (1,167,932) (6,755,499) (1,167,932) Restricted 18,765,336 13,249,799 18,765,336 13,249,799 Unrestricted 103,720,882 103,320,172 874,251 768,686 104,595,133 104,088,858 Total Net Assets 115,730,719$ 115,402,039$ 874,251$ 768,686$ 116,604,970$ 116,170,725$

Changes in Net Assets. Total combined net assets of the District decreased $1,424,452 during the year ended August 31, 2012 (see Table III). Funding for government-wide activities is through specific program revenues or general revenues such as property taxes and unrestricted grants and contributions. The following is a summary of governmental funds activities:

The cost of all activities this year was $302,798,877 , a decrease of $5.4million or 1.7% over the previous year.

Some of these costs were funded by program revenues, $53,660,541, directly attributable to

specific activities.

The remaining cost of government-wide activities was funded from general revenues, $247,713,884, such as property taxes and unrestricted state and federal grants and contributions.


10

Table III - Change in Net Assets

2012 2011 % ChangeRevenues

ProgramCharges for services 13,687,588$ 8,227,006$ 66.4%Operating grants and contributions 39,972,953 51,973,150 -23.1%

GeneralProperty taxes 140,413,809 137,768,779 1.9%State-aid formula grants not restricted 105,197,068 108,789,775 -3.3%

Grants and contributions not restricted

23,179

Investment earnings 1,694,908 33,371 4979.0%Miscellaneous 384,920 3,481,005 -88.9%

Total Revenues 301,374,425 310,273,086 -2.9%

ExpensesInstruction 163,507,294 170,101,863 -3.9%Instructional resources and media services 4,219,006 4,487,952

-6.0%

Curriculum and staff development 2,558,425 2,537,353 0.8%Instructional leadership 2,542,173 2,514,569 1.1%School leadership 15,871,214 15,834,356 0.2%Guidance, counseling, and evaluation services 9,355,149 9,581,037

-2.4%

Social work services 71,347 65,867 8.3%Health services 3,844,118 3,700,939 3.9%Student transportation 9,253,814 9,720,955 -4.8%Food service 13,115,760 13,888,854 -5.6%Extracurricular activities 8,171,546 8,250,483 -1.0%General administration 4,867,166 4,818,303 1.0%Facilities maintenance and operations 23,444,731 23,972,101 -2.2%Security and monitoring services 2,660,027 2,555,072 4.1%Data processing services 2,737,051 2,983,474 -8.3%Community services 119,593 155,257 -23.0%Interest and fiscal charges 31,153,787 31,399,229 -0.8%Facilities acquisition and construction 93,949 -100.0%Payments related to shared services arrangements 127,500 112,500

13.3%

Payments to Juvenile Justice Alternative Education Programs 53,500 21,000

154.8%

Other governmental charges 968,689 900,040 7.6%Day Care 189,563 180,976 4.7%Natatorium 375,176 287,078 30.7%

Total Expenses 302,798,877 308,163,207 -1.7%Increase (Decrease) in Net Assets (1,424,452) 2,109,879 -167.5%Net Assets - Beginning 116,170,725 114,060,846 1.8%Prior period adjustments 1,858,697 Net Assets - Ending 116,604,970$ 116,170,725$ 0.4%


11

Figures 1 and 2 depict the District’s revenue sources for fiscal year 2012 and 2011. The graphs show that property taxes are the primary source of revenue for the District followed by state aid and operating grants. Property taxes as a percentage of total revenues increased and state aid as a percentage of total revenues decreased as these two revenues have inverse relationships in the state funding formulas.

Figure 1

Charges for services4.54%

Operating grants and

contributions13.26%

Property taxes46.59%

State-aid formula grants not restricted

34.91%

Grants and contributions not

restricted0.01%

Investment earnings

0.56%

Miscellaneous0.13%

Sources for Revenue for Fiscal Year 2012

Figure 2

Charges for services2.65% Operating grants

and contributions16.75%

Property taxes44.40%

State-aid formula grants not restricted

35.06%

Grants and contributions not

restricted0.00%

Investment earnings

0.01% Miscellaneous1.12%

Sources for Revenue for Fiscal Year 2011


12

Expenses are shown in Table III by functional categories. Various operating expenses are reflected in each functional category. Total expenses in the current fiscal year were $302.8 million, a $5.4 million or 1.7% percent decrease from the prior year which is largely attributable to the reduction of staff due to changes in class scheduling at the middle school level. Table IV shows the Districts largest governmental functions as well as their related net cost (total cost less fees and grants and contributions for the activities). The net cost reflects what was funded by property taxes, unrestricted state and federal grants and contributions and other miscellaneous local revenues.

Table IVCosts of Services for Major Functions

2012 % of Total 2012 % of TotalInstruction 163,507,294$ 54.0% 142,664,287$ 57.2%School Leadership 15,871,214 5.2% 15,008,688 6.0%Facilities Maintenance and

Operations 23,444,731 7.7% 20,226,765 8.1%Interest and Fiscal Charges 31,153,787 10.3% 23,840,227 9.6%

Cost of Services Net Cost of Services

Financial Analysis of the District’s Funds As noted earlier, the District uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements, bond covenants, and segregation for particular purposes. Governmental Funds The focus of the District’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the District’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of the District’s net resources available for spending at the end of a fiscal year. As of August 31, 2012, the District’s governmental funds reported combined fund balances of $202,176,946, an increase of $3.2 million from the prior year. The unassigned fund balance, $75.3 million or 37.2%, of the total ending fund balance is available for spending at the District’s on-going operations. The remainder of fund balance has various spending constraints as detailed in Table V.


13

Table VGovernmental Fund Balances

2012 % of TotalNon-Spendable

Inventory 406,816$ 0.20%Prepaids 23,280 0.01%

Total Non-Spendable 430,096 0.21%

RestrictedFederal, State and Local Grants 6,303,266 3.12%Capital Acquisitions 84,965,832 42.03%Retirement of Long-Term Debt 8,870,666 4.39%

Total Restricted 100,139,764 49.53%

CommittedCapital Acquisition Projects 5,015,355 2.48%Technology Projects 4,000,000 1.98%Other Committed 1,557,317 0.77%

Total Committed 10,572,672 5.23%

AssignedRider 36 195,690 0.10%Advertising 10,776 0.01%Trane Energy Management 209,298 0.10%Insurance Recovery 8,659 0.00%High School Allotment 1,633,897 0.81%Purchase Order Rollovers 479,173 0.24%August 2013 SOF Payment 13,223,317 6.54%

Total Assigned 15,760,810 7.80%

Unassigned 75,273,604 37.23%Total Governmental Fund Balances 202,176,946$ 100.00%

The General Fund is the primary operating fund of the District. At August 31, 2012, unassigned fund balance of the General Fund was $75,273,604, which is 75.0% percent of the total General Fund balance of $100,326,681. As a measure of the General Fund’s liquidity and financial health, it may be useful to compare unassigned fund balance to the total fund expenditures. Unassigned fund balance represents 34.4% of the current year General Fund expenditures. The fund balance of the District’s General Fund increased $1.7 million during the current fiscal year. The Debt Service Fund balance of $8,870,666 is restricted for the payment of debt service. The fund balance increased $1,310,865 from the prior year. The increase was a result of activity related to bond refunding transactions that occurred during the year.


14

At year end, the Capital Projects Fund had a combined fund balance of $84,965,832 which is a decrease of $2.6 million from the prior year. The fund balance is restricted for various construction projects and related encumbrances. The decrease in fund balance resulted from ongoing construction projects approved through the 2006 voter approved bonds. The District’s other governmental funds are composed of various special revenue funds. The other governmental funds ended the year with a combined fund balance of $8,013,767. This represents an increase of $867,186 from the prior year. Revenues typically approximate expenditures in the other governmental funds as grant funds, which make up the largest portion of activity in these funds, and are generally earned when expended. Proprietary Funds The District’s Proprietary Funds include the Day Care Center and the Natatorium. At year end, the Proprietary Funds had net assets of $874,251 which is an increase $105,565 from the prior year. This increase is a result of user fees that are higher than the operating costs incurred by the programs.

General Fund Budgetary Highlights

Over the course of the year, the District revised its General Fund budget. Actual expenditures were $13.7 million or 5.9% below final budgeted expenditures. The majority of the remaining budget, $10.5 million, was in the area of payroll and related to savings in positions as a result of scheduling changes and vacancies. Budget savings of $1.5 million also were achieved in utility costs. Actual reported revenues were approximately $1.2 million less than the final total revenues budgeted. The revenue variance in revenues is due to a $1.5 million adjustment to state aid for prior years. During the year certain budget amendments were passed to address changes in planned expenditures for the District. This activity is normal for the District as the administration responds to changing needs throughout the year.

Capital Asset and Debt Administration Capital Assets As of August 31, 2012, the District had invested approximately $654.3million in a broad range of capital assets, including land, equipment, and buildings, less depreciation (see Table VI). Net capital assets increased $29.8 million from the prior year. The increase was primarily due to the completion of two large construction projects: Lake Ridge High School and the Performing Arts Center.


15

Table VI - Capital Asset Summary (Net of Depreciation)

Governmental Activities2012 2011 % Change

Land 50,930,269$ 50,850,863$ 0.2%Construction in progress 16,335,082 100,082,097 -83.7%Buildings and improvements 570,360,018 459,437,542 24.1%Furniture and equipment 16,664,268 14,106,672 18.1%Total $ 654,289,637 $ 624,477,174 4.8%

More detailed information about the District's capital assets is presented in the Note 6 to Basic Financial Statements. Long-Term Debt The District had $749.0 million in long-term debt at year end, an increase of $32.6million from the prior year (see Table VII). The District issued $50 million in bonds to construct, renovate and equip school buildings and $58.2 million in refunding bonds that resulted in net present value savings of $8,175,703. In addition, the District made principal payments of $15.9 million on the bonds during the fiscal year. More detailed information about the District's debt is presented in Note 7 to Basic Financial Statements.

Table VII - Long-Term Debt Governmental Activities2012 2011 % Change

Bonds payable 724,279,962$ 696,013,429$ 4.1%Accreted interest 3,028,729 3,227,880 -6.2%Bond premiums 36,909,225 31,616,584 16.7%Deferred loss on bond refunding (15,178,219) (14,442,554) 5.1%

749,039,697$ 716,415,339$ 4.6%

The District continues to receive excellent bond ratings. The latest underlying review by the rating agencies was performed in October 2012. The bonds have a municipal bond rating of “Aaa” by Moody’s Investors Service, Inc. (“Moody’s”), “AAA” by Standard & Poor’s Ratings Services (“S&P”) and “AAA” by Fitch Ratings (“Fitch”) by virtue of the guarantee of the Permanent School Fund of the State of Texas. The underlying ratings for the District remained “Aa2” by Moody’s, “AA” by S&P and “AA+” by Fitch.


16

Economic Factors and Next Year's Budgets and Rates During the 82nd Texas Legislative Session in the spring of 2011, the Legislature approved cuts of $4 billion from the Foundation School Program for the 2012-2013 State fiscal biennium. Over the two year period, the District is projecting a $9 million per year reduction in revenue from these legislative actions in comparison with previous funding formulas. District staff began working on budget reduction plans in the fall of 2011 in anticipation of these cuts. Due to the implementation of cost savings measures for the 2011-2012 year (as shown below), revenues exceeded expenditures by $1,745,026.

• Reduced non-personnel department budgets by 10 percent • Maximized state revenue generation of career and technology funding through schedule changes • Utilized attrition for instructional staffing reductions generated through bell schedule changes • Continued implementation of energy efficiency projects to further cut utility costs • Utilized the federal Jobs Grant funds

The District began the 2011-2012 fiscal year with a fund balance of $96.7 million and ended the year with $100.3 million, the largest balance in the district’s history. This healthy fund balance level will assist the District in absorbing the impact of state funding cuts in addition to the changes implemented during the 2011-2012 fiscal year. Beginning with the 2012-2013 budget, the District is strategically using a portion of fund balance to offset further cuts. The 2012-2013 budget was adopted reflecting a $7.8 million budget deficit which included a 2% cost of living increase for all staff. However, historical trends indicate that budget savings will be realized during the year; therefore, management expects a much lower deficit to be realized. Property values for the 2012-2013 fiscal year increased almost 3 percent over the 2011-2012 year. The 2012-2013 total District tax rate per $100 of property value increased to $1.54 with a Maintenance and Operations (M&O) rate of $1.04 and an Interest and Sinking (I&S) rate of $0.50. The District’s enrollment for 2012-2013 increased approximately 1.1 percent over the prior year. 2012-2013 estimated budgets for the Child Nutrition Fund and Debt Service Fund include estimated revenues and expenditures of approximately $14.5 million and $54.8 million, respectively.

Requests for Information This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the District's finances and to show the District's accountability for the funding it receives. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the District’s Finance Department, Mansfield Independent School District, 605 East Broad Street, Mansfield, Texas, 76063.

Basic Financial

Statements

17


18

19

MANSFIELD INDEPENDENT SCHOOL DISTRICT Exhibit A-1STATEMENT OF NET ASSETSAugust 31, 2012

Data Control Codes

Governmental Activities

Business-type Activities Total

Assets1110 Cash and cash equivalents 215,730,647$ 876,916$ 216,607,563$ 1220 Deliquent property taxes receivable 5,231,046 5,231,046 1230 Allowance for uncollectible taxes (1,138,759) (1,138,759) 1240 Due from other governments 844,859 844,859 1250 Accrued interest 600,243 600,243 1260 Internal balances (4,223) 4,223 1290 Other receivables, net 690,468 3,597 694,065 1300 Inventories 406,816 406,816 1410 Deferred expenses 23,280 23,280 1420 Capital bond and other debt issuance costs 5,742,049 5,742,049

Capital assets not subject to depreciation:1510 Land 50,930,269 50,930,269 1580 Construction in progress 16,335,082 16,335,082

Capital assets net of depreciation:1520 Buildings and improvements, net 570,360,018 570,360,018 1530 Furniture and equipment, net 16,664,268 16,664,268 1910 Long-term investments 7,198,259 7,198,259 1000 Total Assets 889,614,322 884,736 890,499,058

Liabilities2110 Accounts payable 9,001,129 2,624 9,003,753 2140 Interest payable 1,530,504 1,530,504 2150 Payroll deductions and withholdings 2,227,941 2,227,941 2160 Accrued wages payable 7,844,315 7,844,315 2180 Due to other governments 98,065 98,065 2300 Unearned revenue 4,141,952 7,861 4,149,813

Noncurrent Liabilities:2501 Due within one year 21,440,000 21,440,000 2502 Due in more than one year 727,599,697 727,599,697 2000 Total Liabilities 773,883,603 10,485 773,894,088

Net Assets3200 Invested in capital assets, net of related debt (6,755,499) (6,755,499)

Restricted for:3820 Federal and state programs 6,282,266 6,282,266 3850 Debt service 12,483,070 12,483,070 3900 Unrestricted 103,720,882 874,251 104,595,133 3000 Total net assets 115,730,719$ 874,251$ 116,604,970$

See Notes to the Financial Statements

20

MANSFIELD INDEPENDENT SCHOOL DISTRICTSTATEMENT OF ACTIVITIESFor the Year Ended August 31, 2012

Data Control Codes Functions/Programs Expenses

Charges for Services

Operating Grants and

ContributionsGovernmental activities:

11 Instruction 163,507,294$ 3,853,712$ 16,989,295$ 12 Instructional resources and media services 4,219,006 4,615 186,005 13 Curriculum and staff development 2,558,425 10,916 580,152 21 Instructional leadership 2,542,173 500 167,552 23 School leadership 15,871,214 862,526 31 Guidance, counseling, and evaluation services 9,355,149 2,262,989 32 Social work services 71,347 3,758 33 Health services 3,844,118 2,409,905 34 Student transportation 9,253,814 403,796 35 Food service 13,115,760 5,934,271 6,727,959 36 Extracurricular activities 8,171,546 1,021,963 312,272 41 General administration 4,867,166 211,125 51 Facilities maintenance and operations 23,444,731 2,172,967 1,044,999 52 Security and monitoring services 2,660,027 137,556 53 Data processing services 2,737,051 101,784 61 Community services 119,593 18,340 56,310 72 Interest and fiscal charges 31,153,787 7,313,560 81 Facilities acquisition and construction 3,592,248 73,910 93 Payments related to shared services arrangements 127,500 127,500 95 Payments to Juvenile Justice Alternative Education 53,500 99 Other governmental charges 968,689 TG Total governmental activities 302,234,138 13,017,284 39,972,953

Business-type activities01 Day Care 189,563 178,928 02 Natatorium 375,176 491,376 TB Total business-type activities 564,739 670,304 TP Total primary government 302,798,877$ 13,687,588$ 39,972,953$

Data Control Codes

General revenuesTaxes:

MT Property taxes, levied for general purposesDT Property taxes, levied for debt serviceSF State-aid formula grants not restrictedGC Grants and contributions not restricted IE Investment earningsMI MiscellaneousTR Total general revenuesCN Change in net assets

NB Net assets - beginning

PA Prior period adjustments

NE Net assets - ending


Program Revenue

21

Exhibit B-1

Governmental Activities

Business-type Activities Total

(142,664,287)$ $ (142,664,287)$ (4,028,386) (4,028,386) (1,967,357) (1,967,357) (2,374,121) (2,374,121)

(15,008,688) (15,008,688) (7,092,160) (7,092,160)

(67,589) (67,589) (1,434,213) (1,434,213) (8,850,018) (8,850,018)

(453,530) (453,530) (6,837,311) (6,837,311) (4,656,041) (4,656,041)

(20,226,765) (20,226,765) (2,522,471) (2,522,471) (2,635,267) (2,635,267)

(44,943) (44,943) (23,840,227) (23,840,227)

(3,518,338) (3,518,338)

(53,500) (53,500) (968,689) (968,689)

(249,243,901) (249,243,901)

(10,635) (10,635) 116,200 116,200 105,565 105,565

(249,243,901) 105,565 (249,138,336)

97,735,195 97,735,195 42,678,614 42,678,614

105,197,068 105,197,068 23,179 23,179

1,694,908 1,694,908 384,920 384,920

247,713,884 247,713,884 (1,530,017) 105,565 (1,424,452)

115,402,039 768,686 116,170,725

1,858,697 1,858,697

115,730,719$ 874,251$ 116,604,970$

Primary GovernmentNet (Expense) Revenue and Changes in Net Assets

22


GOVERNMENTAL FUNDS

Data Control Codes General Fund

Debt Service Fund

Capital Projects Fund

Assets1110 Cash and cash equivalents 111,913,231$ 9,537,620$ 85,995,610$

Receivables:1220 Delinquent property taxes receivables 3,914,765 1,316,281 1230 Allowance for uncollectible taxes (credit) (852,575) (286,184) 1240 Receivables from other governments 65,223 96,668 1250 Accrued interest 253,349 15,658 317,451 1260 Due from other funds 407,948 107,308 221 1290 Other receivables 609,958 3,200 1300 Inventories, at cost 253,632 1410 Deferred Expenditures 23,280 1910 Investments 1,235,395 5,962,864 1000 Total Assets 117,824,206$ 10,787,351$ 92,279,346$

Liabilities and Fund Balances

Liabilities:2110 Accounts payable 1,660,549$ 14,330$ 7,313,514$ 2150 Payroll deduction and withholdings 2,227,941 2160 Accrued wages payable 7,623,522 2170 Due to other funds 107,919 2180 Payable to other governments 98,065 2300 Deferred revenues 5,779,529 1,902,355 2000 Total Liabilities 17,497,525 1,916,685 7,313,514

Fund Balances:Non-Spendable:

3410 Inventories 253,632 3430 Prepaid items 23,280

Restricted:3450 Grant funds 3470 Capital acquisitions and contractual oblig. 84,965,832 3480 Retirement of long-term debt 8,870,666

Committed: 3510 Capital acquisition projects 5,015,355 3530 Technology projects 4,000,000 3545 Campus activity funds

Assigned:3590 Other purposes 15,760,810 3600 Unassigned 75,273,604 3000 Total fund balances 100,326,681 8,870,666 84,965,832 4000 Total Liabilities and Fund Balances 117,824,206$ 10,787,351$ 92,279,346$

See Notes to the Financial Statements.

August 31, 2012

BALANCE SHEET

23

Exhibit C-1

Non-Major Governmetnal

Funds

Total Governmental

Funds

8,284,186$ 215,730,647$

5,231,046 (1,138,759)

682,967 844,858 13,785 600,243

148,030 663,507 77,310 690,468

153,184 406,816 23,280 7,198,259

9,359,462$ 230,250,365$

12,736$ 9,001,129$ 2,227,941

220,793 7,844,315 559,811 667,730

98,065 552,355 8,234,239

1,345,695 28,073,419

153,184 406,816 23,280

6,303,266 6,303,266

84,965,832 8,870,666

5,015,355

4,000,000 1,557,317 1,557,317

15,760,810 75,273,604

8,013,767 202,176,946 9,359,462$ 230,250,365$


24

25

MANSFIELD INDEPENDENT SCHOOL DISTRICT Exhibit C-2RECONCILIATION OF BALANCE SHEET FOR GOVERNMENTAL FUNDS TO

THE STATEMENT OF NET ASSETS

Data Control Codes Total fund balance, governmental funds (from C-1) 202,176,946$

Amounts reported for governmental activities in the statement of net assets (A-1) are different because:

1 Capital assets used in governmental activities are not financial resources and therefore are not reported as assets in governmental funds.

654,289,637

2 Property taxes receivable have been levied and are due this year, but are not available soon enough to pay for the current period's expenditures, these property taxes (net of allowance for uncollectible accounts) are deferred in the fund financial statements.

4,092,288

3 Bond issuance costs are not financial resources and, therefore, are not reported as assets in governmental funds. These costs are to be amortized over the life of the bonds.

5,742,049

Long-term liabilities, including bonds payable, are not due and payable in the current period, and therefore are not reported as liabilities in the funds. Long-term liabilities at year end consist of:

4 General obligation bonds (724,279,962) 5 Premiums on issuance (36,909,225) 6 Deferred loss on refunding 15,178,219 7 Accreted interest on premium compound interest bonds (3,028,729) 8 Accrued interest payable (1,530,504)

19 Total net assets, governmental activities (from A-1) 115,730,719$


August 31, 2012

26

MANSFIELD INDEPENDENT SCHOOL DISTRICTSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES

IN FUND BALANCE - GOVERNMENTAL FUNDSFor the Year Ended August 31, 2012

Data Control Codes General Fund

Debt Service Fund

Capital Projects Fund

Revenues5700 Local and intermediate sources 102,276,384$ 43,045,922$ 896,602$ 5800 State program revenues 115,510,462 7,313,560 5900 Federal program revenues 2,434,957 5020 Total revenues 220,221,803 50,359,482 896,602

ExpendituresCurrent:

0011 Instruction 133,592,407 0012 Instruction resources and media services 3,227,528 0013 Curriculum and staff development 2,196,555 0021 Instructional leadership 2,480,464 0023 School leadership 14,578,969 0031 Guidance, counseling and evaluation services 7,231,565 0032 Social work services 71,347 0033 Health services 3,348,573 0034 Student transportation 9,649,470 0035 Food services 0036 Extracurricular activities 6,435,948 0041 General administration 4,671,154 0051 Facilities maintenance and operations 23,128,463 0052 Security and monitoring services 2,685,817 0053 Data processing services 4,140,458 0061 Community services 70,522

Debt service:0071 Principal on long-term debt 15,928,467 0072 Interest on long-term debt 33,722,505 0073 Bond issuance costs and fees 794,018

Capital outlay:0081 Capital outlay 53,921,623

Intergovernmental:0093 Payments related to shared services arrangements 0095 Payments to Juvenile Justice Alt. Ed. Prgm. 53,500 0099 Other intergovernmental charges 968,689 6030 Total Expenditures 218,531,429 50,444,990 53,921,623 1100 Excess (deficiency) of revenues over expenditures 1,690,374 (85,508) (53,025,021)

Other Financing Sources (Uses)7901 Refunding bonds issued 58,190,000 7911 Capital-related debt issued (regular bonds) 50,000,000 7912 Sale of real or personal property 54,652 7915 Transfers in 584,500 7916 Premium or discount on issuance of bonds 10,101,466 1,033,000 8911 Transfers out (584,500) 8949 Payment to Bond Refunding Escrow Agent (67,479,593) 7080 Total other financing sources and uses 54,652 1,396,373 50,448,500

1200 Net change in fund balances 1,745,026 1,310,865 (2,576,521)

0100 Fund Balance - September 1 (Beginning) 96,722,958 7,559,801 87,542,353 Prior period adjustment 1,858,697

3000 Fund Balance - August 31 (Ending) 100,326,681$ 8,870,666$ 84,965,832$


27

Exhibit C-3

Non-Major Governmental

Funds

Total Governmental

Funds

9,666,600$ 155,885,508$ 567,214 123,391,236

19,046,983 21,481,940 29,280,797 300,758,684

13,112,328 146,704,735 28,657 3,256,185

501,554 2,698,109 59,335 2,539,799 43,763 14,622,732

1,889,629 9,121,194 71,347

350,794 3,699,367 32,285 9,681,755

11,863,085 11,863,085 253,281 6,689,229

56 4,671,210 128,424 23,256,887

2,685,817 4,140,458

49,071 119,593

15,928,467 33,722,505 794,018

53,921,623

127,500 127,500 53,500 968,689

28,439,762 351,337,804 841,035 (50,579,120)

58,190,000 50,000,000

26,151 80,803 584,500 11,134,466 (584,500) (67,479,593)

26,151 51,925,676

867,186 1,346,556

7,146,581 198,971,693 1,858,697

8,013,767$ 202,176,946$

28

MANSFIELD INDEPENDENT SCHOOL DISTRICT Exhibit C-4

For the Year Ended August 31, 2012

Data Control Codes

Net change in fund balances - total governmental funds (from C-3) 1,346,556$

Amounts reported for governmental activities in the statement of activities (B-1) are different because:

Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense.

1 Governmental funds capital outlays 58,036,594 2 Governmental activities depreciation expense (28,224,131)

3 Property tax revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. (135,367)

4 Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. 15,928,467

5 Proceeds from issuance of long-term debt is reported as an other financing source in the governmental funds. In the government-wide financial statements, proceeds are treated as an increase in long-term liabilities. (108,190,000)

6 Payment to escrow agent for refunding. 67,479,593

7 Premiums received from issuance of long-term debt (11,134,466)

8 Bond issuance costs paid during the current year will be amortized over the life of the bonds. 1,174,360

Some expenses reported in the statement of activities do not require the use of current financial resources and these are not reported as expenditures in governmental funds:

9 Increase in interest payable not recognized in fund statements (73,921)

10 Accreted interest on capital appreciation bonds 199,151

11 Amortization of deferred charges including bond issuance costs as well as premiums and discounts on issuance of bonds 2,063,147

Change in net assets of governmental activities (see B-1) (1,530,017)$


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

29

MANSFIELD INDEPENDENT SCHOOL DISTRICT Exhibit D-1STATEMENT OF NET ASSETSPROPRIETARY FUNDSAugust 31, 2012

Business-type Activities -

Enterprise FundsAssetsCurrent Assets:

Cash and cash equivalents 876,916$ Receivables:

Due from other funds 4,223 Total Assets 884,736

LiabilitiesCurrent Liabilities:

Accounts payable 2,624 Prepaid tuition 7,861

Total Liabilities 10,485

Net AssetsUnrestricted net assets 874,251 Total Net Assets 874,251$


30

MANSFIELD INDEPENDENT SCHOOL DISTRICT Exhibit D-2STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETSPROPRIETARY FUNDSFor the Year Ended August 31, 2012


Enterprise FundsOperating RevenuesCharges for services 670,304$ Total Operating Revenues 670,304

Operating ExpensesPayroll costs 409,386 Professional and contracted services 59,347 Supplies and materials 37,927 Other operating costs 58,079 Total Operating Expenses 564,739

Operating Income (Loss) 105,565

Net Assets - September 1 (Beginning) 768,686

Net Assets - August 31 (Ending) 874,251$


31

MANSFIELD INDEPENDENT SCHOOL DISTRICT Exhibit D-3STATEMENT OF CASH FLOWSPROPRIETARY FUNDSFor The Year Ended August 31, 2012


Enterprise FundsCash Flows from Operating Activities:

Cash received from user charges 689,199$ Cash payments to employees for services (413,609) Cash payments for contracted services (59,347) Cash payments for supplies (40,760) Cash payments for other expenses (58,079)

Net Cash Provided by (Used for) Operating Activities 117,404

Cash and Cash Equivalents at Beginning of Year 759,512 Cash and Cash Equivalents at End of Year 876,916$

Reconciliation to Balance SheetCash and Cash Equivalents Per Cash Flow 876,916

Cash and Cash Equivalents per Balance Sheet 876,916$

Reconciliation of Operating Income to Net CashProvided by Operating Activities:Operating Income (Loss) 105,565$ Change in Assets and Liabilities:

(Decrease) in receivables 11,160 Increase (Decrease) in accounts payable (96) (Decrease) in due to other funds (6,960) Increase in prepaid tuition 7,735

Net Cash Provided by (Used for) Operating Activities 117,404$


32

MANSFIELD INDEPENDENT SCHOOL DISTRICT Exhibit E-1STATEMENT OF FIDUCIARY NET ASSETSFor the Year Ended August 31, 2012

Private Purpose Trust Fund Agency Fund

AssetsCash and cash equivalents 67,981$ 790,328$ Total Assets 67,981 790,328

LiabilitiesAccounts payable 86Due to student groups 774,439Due to others 15,803Total Liabilities 790,328$

Net AssetsRestricted 67,981$ Total Net Assets


33

MANSFIELD INDEPENDENT SCHOOL DISTRICT Exhibit E-2STATEMENT OF CHANGES IN FIDUCIARY NET ASSETSFor the Year Ended August 31, 2012

Private Purpose Trust Fund

AdditionsInvestment income 156$ Total additions 156

Change in net assets 156

Net assets, beginning of year 67,825

Net assets, end of year 67,981$


MANSFIELD INDEPENDENT SCHOOL DISTRICT Exhibit F-1 NOTES TO THE FINANCIAL STATEMENTS

34

Note 1 - Summary of Significant Accounting Policies Mansfield Independent School District (the "District") is an independent public educational agency operating under applicable laws and regulations of the State of Texas. The District is autonomously governed by a seven-member Board of Trustees elected by the District's residents. The District prepares its basic financial statements in conformity with generally accepted accounting principles promulgated by the Governmental Accounting Standards Board (GASB) and other authoritative sources identified in Statement on Auditing Standards No. 69, as amended by Statement on Auditing Standards No.’s 91 and 93 of the American Institute of Certified Public Accountants; and it complies with the requirements of the appropriate version of Texas Education Agency's Financial Accountability System Resource Guide (the "Resource Guide" or “FASRG”) and the requirements of contracts and grants of agencies from which it receives funds.

The District’s Financial Statements are in accordance with GASB Statement No. 34, “Basic Financial Statements and Management Discussion and Analysis for State and Local Governments”, GASB Statement No. 37, “Basic Financial Statements and Management’s Discussion and Analysis for State and Local Governments: Omnibus” which provides additional guidance for the implementation of GASB No. 34, and GASB Statement No. 38 “Certain Financial Statement Disclosures” which changes the note disclosure requirements in the financial statements for governmental entities.

GASB Statement No. 34 established a new financial reporting model for state and local governments that included the addition of management’s discussion and analysis, government-wide financial statements, required supplementary information and the elimination of the effects of internal service activities and the use of account groups to the already required fund financial statements and notes.

The GASB determined that fund accounting has and will continue to be essential in helping governments to achieve fiscal accountability and should, therefore, be retained. The GASB also determined that government-wide financial statements are needed to allow user’s of financial reports to assess a government’s operational accountability. The GASB 34 reporting model integrates fund-based financial reporting and government-wide financial reporting as complementary components of a single comprehensive financial reporting model.

The following is a summary of the most significant accounting policies. A. Reporting Entity The Board of Trustees, a seven-member group, has governance responsibilities over all activities related to public elementary and secondary education within the jurisdiction of Mansfield Independent School District (“the District”). Because members of the Board of Trustees are elected by the public; have the authority to make decisions, appoint administrators and managers, and significantly influence operations; and have the primary accountability for fiscal matters; the District is not included in any other governmental “reporting entity” as defined in Governmental Accounting Standards Board ("GASB") Statement No. 14. Also, there are no component units for which the District or the Board of Trustees is financially accountable. Since the District receives funding from local, state and federal government sources, it must comply with the requirements of the entities providing those funds.

MANSFIELD INDEPENDENT SCHOOL DISTRICT Exhibit F-1 NOTES TO THE FINANCIAL STATEMENTS (continued)

35

Note 1 - Summary of Significant Accounting Policies (continued) B. Government-Wide and Fund Financial Statements The Statement of Net Assets and the Statement of Activities are government-wide financial statements. They report information on all of the District's nonfiduciary activities with most of the interfund activities removed. Governmental activities include programs supported primarily by taxes, State foundation funds, grants and other intergovernmental revenues. Business-type activities, which are reported separately, rely to a significant extent, on fees and charges for support. The Statement of Activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. Program revenues include 1) charges to customers or applicants who purchase, use or directly benefit from goods, services, or privileges provided by a given function and 2) grants and contributions that are restricted to meeting operational or capital requirements of a particular function. Taxes and other items not properly included among program revenues are reported instead as general revenues. The fund financial statements provide reports on the financial condition and results of operations for three fund categories – governmental, proprietary, and fiduciary. Since resources in the fiduciary funds cannot be used for District operations, they are not included in the government-wide statements. The emphasis on fund financial statements is on major governmental funds, each displayed in a separate column. All remaining governmental funds are aggregated and reported as other funds. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. All other revenues and expenses are nonoperating. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements use the economic resources measurement focus and the accrual basis of accounting, as do the proprietary fund and private purpose trust fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the related cash flows. Property taxes are recognized as 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. The District has elected to follow accounting standards issued by GASB and only those accounting standards issued by the Financial Accounting Standards Board on or before November 30, 1989, as allowed by GASB Statement No. 20. Governmental fund financial statements use 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 District considered revenues to be available if they are collected within 60 days of the end of the current fiscal period. 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 payments are due.


36

Note 1 - Summary of Significant Accounting Policies (continued) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (continued) Revenues from local sources consist primarily of property taxes. Property tax revenues, revenues received from the State, and gas lease 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. Grant funds are considered to be earned to the extent of expenditures made under the provisions of the grant. Accordingly, when such funds are received, they are recorded as deferred revenues until related and authorized expenditures have been made. If balances have not been expended by the end of the project period, grantors may require the District to refund all or part of the unused amounts. Proprietary funds operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal operations. The principal operating revenues of the District’s enterprise funds are for charges to patrons for use of the two facilities, District employee day care and the District natatorium. Operating expenses for the enterprise funds include salaries and other operating expenses. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the District's policy to use restricted resources first, then unrestricted resources as they are needed. D. Fund Accounting The District reports the following major Governmental Funds: The General Fund which accounts for financial resources related to the general operations of the District, including financial resources not required to be accounted for in some other fund. The Debt Service Fund which is utilized to account for the accumulation of resources for, and the payment of long-term debt principal, interest and related costs arising from general obligation bonds. The Capital Projects Fund which accounts for proceeds from sales of bonds and other revenues to be used for authorized construction and acquisition of capital facilities. The District also reports the following fund type under Other Governmental Funds as non-major:

The Special Revenue Funds which account for federal, state and locally financed programs where unused balances are generally returned to the grantor at the close of specified project periods. Proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects are accounted for in special revenue funds. Project accounting is employed to maintain integrity for the various sources of funds.


37

Note 1 - Summary of Significant Accounting Policies (continued)

D. Fund Accounting (continued) Additionally, the District reports one type of Proprietary Fund:

Enterprise Funds account for the activities of the District’s employee day care and natatorium.

The District does not have any Internal Service Funds. Fiduciary Funds:

Private Purpose Trust Fund is used to account for resources legally held in trust under which principal and income benefit individuals, private organizations or other governments. Agency Fund which is custodial in nature and accounts for activities of student groups and other types of activities requiring clearing accounts. This fund has no equity. Assets are equal to liabilities and do not include revenues and expenditures for general operations of the District. This accounting reflects the District's agency relationship with the student activity organizations. Fiduciary funds use the accrual basis of accounting to recognize assets and liabilities.

E. Other Accounting Policies- Assets, Liabilities and Net Assets or Equity

1. Cash and Cash Equivalents

The District’s cash, cash equivalents and investments are classified as cash and temporary investments. The cash and temporary investments include cash on hand, deposits with financial institutions, investments in public funds investment pools, and short-term, highly liquid investments that are readily convertible to cash. The District's general policy is to report money market investments and short-term participating interest-earning investment contracts at amortized cost and to report temporary investment contracts using cost based measure. However, if the fair value of an investment is significantly affected by the impairment of the credit standing of the issuer or by other factors, it is reported at fair value. All other investments are reported at fair value unless a legal contract exists which guarantees a higher value. The term temporary refers to investments that have a remaining term of two years or less at the time of purchase. The term "nonparticipating" means that the investment's value does not vary with market interest rate changes.

4. Inventories

Supplies and materials are recorded as expenditures when requisitioned. Inventories of supplies on the balance sheet are recorded at cost, using the average cost method. Supplies and materials are used for almost all functions of activity.


38

Note 1 - Summary of Significant Accounting Policies (continued) E. Other Accounting Policies- Assets, Liabilities and Net Assets or Equity (continued)

5. Interfund Transactions and Receivables and Payables

Interfund receivables and payables arise from interfund transactions in the normal course of operations and are recorded in all affected funds in the period in which transactions are executed. All legally authorized transfers are appropriately treated as transfers and are included in the results of operations.

6. Capital Assets

Capital assets, which include land, buildings, furniture and equipment are reported in the government-wide financial statements. Assets are capitalized by the District if the cost of the item is more than $5,000 and has a useful life of greater than one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation.

The cost of normal maintenance and repairs that do not add to the value of the assets or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Buildings, furniture and equipment of the District are depreciated using the straight line method over the following estimated useful lives:

Assets YearsBuildings and improvements 20-25Furniture and equipment 5Vehicles 5-15Property under capital leases 5

7. Fund Balance

During fiscal year 2011, the District implemented GASB Statement No. 54, which established a hierarchy of fund balance classifications based primarily on the extent to which a government is bound to observe constraints imposed upon the use of resources. The District reports governmental fund balance in the fund financial statements as follows: Non-spendable – amounts that are not in spendable form or that are legally and contractually required to be maintained intact. Restricted – amounts constrained to a specific purpose by the provider, through constitutional provisions, or by enabling legislation. Committed – amounts constrained to specific purposes by the District’s Board of Trustees; amounts cannot be used for any other purpose unless the Board of Trustees takes action to remove or change the constraint.


39

Note 1 - Summary of Significant Accounting Policies (continued) E. Other Accounting Policies- Assets, Liabilities and Net Assets or Equity (continued)

7. Fund Balance (continued)

Assigned – amounts constrained to a specific purpose by the Superintendent. Unassigned – amounts not in the other classifications; applicable to the General Fund only. The District policy is that the order of spending the fund balances shall be to reduce the funds in the following order: restricted, committed, assigned, and unassigned.

8. Data Control Codes

These codes refer to the account code structure prescribed by the Texas Education Agency ("TEA") in the Resource Guide.

9. Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. The amount of state foundation revenue a school district earns for a year can and does vary until the time when final values for each of the factors in the formula become available. Availability can be as late as midway into the next fiscal year. It is at least reasonably possible that the foundation revenue for fiscal 2012 will ultimately change from the amount calculated as of August 31, 2012 because of the factors that TEA uses in its calculation.

Note 2 - Reconciliation of Government-Wide and Fund Financial Statements A. Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the

Government-Wide Statement of Net Assets

Exhibit C-2 provides the reconciliation between the fund balance for total governmental funds on the governmental fund balance sheet and the net assets for governmental activities as reported in the government-wide statement of net assets. One element of that reconciliation explains that capital assets are not financial resources and are therefore not reported in governmental funds. In addition, long-term liabilities, including bonds payable, are not due and payable in the current period and are not reported as liabilities in the funds. Also, the property taxes receivable which is included as deferred in the fund financial statements are adjusted based on when the tax levy was made and adjusted for uncollectible amounts.


40

Note 2 - Reconciliation of Government-Wide and Fund Financial Statements (continued) B. Explanation of Certain Differences Between the Governmental Fund Statement of Revenues,

Expenditures, and Changes in Fund Balances and the Government-Wide Statement of Activities

Exhibit C-4 provides a reconciliation between the net changes in fund balance as shown on the governmental fund statement of revenues, expenditures, and changes in fund balances and the changes in net assets of governmental activities as reported on the government-wide statement of activities. One element of that reconciliation explains that current year capital outlays and debt principal payments are expenditures in the fund financial statements, but should be shown as increases in capital assets and decreases in long-term debt in the government-wide statements. This adjustment affects both the net asset balance and the change in net assets. The debt payments on retirement of debt are recorded as expenditures for fund basis financial statements but are a reduction of debt in the government wide financial statements. The capital asset additions are expenditures in the fund basis financial statements but are capitalized in the government-wide financial statements. The fund-basis financial statements do not include depreciation expense. The depreciation expense is a deduction to reconcile to the Government-Wide Statement of Activities. New debt issues are treated as sources of revenue for fund-basis financial statements, but for the government-wide statements, those amounts are recorded as a liability. Property taxes are adjusted for the accrual basis and the deferred revenues are adjusted based on prior year levies and current year uncollectible amounts. Note 3 - Deposits (Cash) and Investments Deposits and investment transactions of the District are regulated by State statutes through provisions of Chapter 23, Subchapter E, Sections 23.71 through 23.8 (the School Depository Act) of the Texas Education Code and other Code sections referenced therein and through provisions of the Texas Revised Civil Statutes, Title 47, Articles 2529c, and 2548a regarding security for District funds in depository institutions. In accordance with applicable statutes, the District has a depository contract with an area bank (depository) providing for interest to be earned on deposited funds and for banking charges the District incurs as a result of banking services received. All depository contracts have a term of two years, commencing with the start of every odd-numbered fiscal year. Depository contracts are awarded on the basis of competitive bids received from area banks and can be awarded to more than one bank if the bids received are relatively equal. The District may place funds with the depository in interest and non-interest bearing accounts. Statutes and the depository contract require that all funds in the depository institution be fully secured by federal depository insurance or a combination of federal depository insurance and acceptable collateral securities and/or an acceptable surety bond. The collateral securities must be delivered to the District or placed with an independent trustee institution with safekeeping receipts delivered to the District. In accordance with State statutes pertaining to lawful collateralization of District deposits, safekeeping receipts are issued in the name of the depository with proper indication that the collateral securities are pledged by the depository to secure funds of the District.


41

Note 3 - Deposits (Cash) and Investments (continued) Acceptable collateral securities include direct obligations of the United States of America (U.S.), bonds of any agency of the U.S. (except Farmers Home Administration Insured Notes), Bonds of the State of Texas or of any county, school district, city, or town of the State of Texas that have been rated A or better by Moody's Investors Service, Inc., as authorized by Chapter 2257 Collateral for Public Funds of the Government Code. The District must approve all collateral securities prior to the security being pledged. The depository can change collateral securities pledged to secure District funds only upon obtaining the written approval of the District. All demand and time deposits in the depository bank were entirely covered by federal depository insurance and by acceptable collateral securities held in the District's name by an agent of the District at year-end in accordance with provisions of the depository contract. Demand and time deposits at various banks held on behalf of different student groups were entirely covered by federal depository insurance at year-end. At August 31, 2012, the District’s carrying amount of deposits was $7,678,774 and the bank balance was $12,600,715. The District’s bank balance at August 31, 2012, was entirely covered by FDIC insurance and pledged collateral held by the District’s bank in the District’s name. The deposits were collateralized in accordance with Texas Law. Credit Risk State law and the Mansfield ISD adopted Investment Policy restrict demand deposits, certificates of deposit (CD) and share certificates to those fully collateralized or FDIC insured from eligible depositories (banks and savings banks) doing business in Texas. Such CDs are limited to maturities under one (1) year and are further collateralized to 102% with pledged securities (and 110% if mortgage backed securities) with all collateral held by an independent custodian. State law and the Mansfield ISD adopted Investment Policy limit repurchase agreements to banks and primary dealers, require an industry standard, written master repurchase agreement, require independent safekeeping of collateral, and require a 102% margin on collateral. Fully collateralized flex repurchase agreements are restricted by Policy to be used only with bond funds and are required to match the expected expenditure plan of the bond proceeds.


42

Note 3 - Deposits (Cash) and Investments (continued) Local government investment pools, as defined by state law (2256.016) and approved by adopted Policy are authorized. By State law, all local government pools are rated AAA or equivalent by at least one Nationally Recognized Statistical Rating Organization. As of August 31, 2012,

- municipal bonds rated A or better represented 45.7% of the total portfolio, - the remainder of the portfolio, 54.3%, was in local government investment pools rated AAAm.

On August 5, 2011 Standard and Poor’s, one of three nationally recognized raters of US debt and securities, downgraded the rating of long-term US and government sponsored entities sovereign debt from AAA to AA+ for the first time since 1941 with a negative outlook. The two other national raters, Moody’s and Fitch, continue to have the highest ratings, but also have the debt on their watch lists. Concentration of Credit Risk Mansfield ISD's adopted Investment Policy requires diversification on all authorized investment types which are monitored on at least a monthly basis. As of August 31, 2012,

- funds in one investment pool, LOGIC, represented 30.2% of the total portfolio, - funds in one investment pool, TexSTAR, represented 24.1% of the total portfolio, - the remainder of the portfolio, was invested in municipal bonds rated A or better and represented

45.7% of the total portfolio. Interest Rate Risk In order to limit interest and market rate risk from changes in interest rates, Mansfield ISD's adopted Investment Policy sets a maximum maturity of one year and a maximum weighted average maturity (WAM) of 180 days on any operating and debt service fund. A maximum weighted average maturity of 270 days is established, by Policy, for capital project funds. Maturities longer than one year are authorized provided legal limits are not exceeded. As of August 31, 2012, the portfolio contained:

- no holdings that had a stated maturity beyond 699 days - the dollar weighted average maturity of the total portfolio was 85 days.

A segmented maturity distribution of the portfolio follows:

Credit Quality Percentage ofInvestment Type: Fair Value Rating InvestmentsMunicipal Bonds 99,066,981$ A to AA 45.7%Local Government Investment Pools

LOGIC 65,663,672 AAAm 30.2%TexStar 52,186,223 AAAm 24.1%

Total Value 216,916,876$ 100.0%


43

Note 3 - Deposits (Cash) and Investments (continued) Local Government Investment Pools As of August 31, 2012, the District’s investments included the Local Government Investment Cooperative (“LOGIC”) and TexSTAR local government investment pools. LOGIC and TexSTAR investment pools’ investments are not evidenced by securities that exist in physical or book entry form and, accordingly, do not have custodial risk. LOGIC and TexSTAR are organized under the authority of the Interlocal Cooperation Act, chapter 791, of the Texas Government Code, and the Public Funds Investment Act, chapter 2256, of the Texas Government Code. LOGIC and TexSTAR were created in April 1994 and April 2002, respectively, through contracts among their participating governmental units, and are governed by a board of directors to provide for the joint investments of participant's public funds and funds under their control. LOGIC's policy seeks to invest pooled assets in a manner that will provide for safety of principal, liquidity in accordance with the operating requirements of the participants, and a competitive rate of return by utilizing economies of scale and professional investment expertise. TexSTAR's policy seeks to invest pooled assets in a manner that will provide for preservation and safety of principal and competitive investment returns while meeting the daily liquidity needs of the participants by utilizing economies of scale and professional investment expertise. JPMorgan Chase Bank, N.A. provides custody, fund accounting, and transfer agency services to both LOGIC and TexSTAR. LOGIC's investment objectives are to seek preservation of principal, liquidity, and current income through investment in a diversified portfolio of short-term marketable securities. The portfolio's maximum final stated maturity is 397 days for fixed-rate securities and 24 months for variable rate notes. The portfolio will maintain a dollar-weighted average maturity to reset that does not exceed 60 days and a dollar-weighted average to final maturity of 90 days or less. LOGIC may invest in securities including: certain obligations of the United States or its agencies and instrumentalities; repurchase agreements; and SEC-registered money-market funds rated in the highest rating category by at least one nationally recognized statistical rating organization. It can also invest in commercial paper. TexSTAR’s portfolio is a government-repurchase agreement (REPO) pool, utilizing primarily U.S. Treasury securities, U.S. agency securities - both fixed and floating - and REPO collateralized obligations, the principal and interest of which are unconditionally guaranteed or insured by the full faith and credit of the United States or its agencies or its instrumentalities. The weighted average maturity to reset of the pool's assets is limited to 60 days or less and the weighted average to final maturity of the pool's assets is limited to 90 days or less. The fair value of District portions in LOGIC and TexSTAR are the same as the value of the shares. These external pooled funds operate in a manner consistent with the SEC’s Rule 2a7 of the Investment Company Act of 1940. The external pooled funds use amortized cost rather than market value to report net assets to compute share price. Accordingly, the fair value of the positions of the pooled funds is the same as the value of the external pool shares. The funds are structured similar to a money market mutual fund which allows shareholders the ability to deposit or withdraw funds on a daily basis. Interest rates are also adjusted on a daily basis. Such funds seek to maintain a constant net asset value of $1, although this cannot be fully guaranteed.


44

Note 3 - Deposits (Cash) and Investments (continued) Custodial Credit Risk To control custody risk, State law and Mansfield ISD’s adopted Investment Policy requires collateral for all time and demand deposits as well as repurchase agreements be transferred delivery versus payment and held by an independent party approved by the District and held in the District's name. The custodian is required to provide original safekeeping receipts and monthly reporting of positions and position descriptions including market value. Repurchase agreements and deposits must be collateralized to 102% (and 110% for mortgaged backed securities) and be executed under a written agreement. The counterparty of each type transaction is held contractually liable for monitoring and maintaining the required collateral margins on a daily basis. As of August 31, 2012:

- the portfolio contained no certificates of deposit, - the portfolio contained no flex repurchase agreements, - all bank demand deposits were fully insured and collateralized. All pledged bank collateral for

demand deposits was held by an independent institution outside the bank’s holding company.

Note 4 - Property Taxes Property taxes are levied by October 1 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. The assessed value of the roll on January 1, 2011, upon which the levy for the 2012 fiscal year was based, was $10,402,804,176. The tax rates assessed for the year ended August 31, 2012 to finance general fund operations and the payment of principal and interest on general obligation long-term debt were $1.04 and $.456 per $100 of valuation, respectively, for a total of $1.496 per $100 of valuation. Current tax collections for the year ended August 31, 2012 were 98.8% of the tax levy. Delinquent taxes are prorated between maintenance and debt service based on rates adopted for the year of the levy. Allowances for uncollectible taxes within the General and Debt Service Funds are based upon historical experience in collecting property 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. Note 5 - Interfund Receivables and Payables Interfund balances at August 31, 2012, consisted of the following individual fund receivables and payables:

Due to Other Funds

Due from Other Funds

Governmental FundsGeneral Fund 407,948$ 107,919$ Debt Service Fund 107,308 Capital Projects Fund 221 Nonmajor Governmental Funds 148,030 559,811

Proprietary FundsEnterprise Funds 4,223

Total 667,730$ 667,730$


45

Note 5 - Interfund Receivables and Payables (continued) Interfund balances result from the time lag between the dates reimbursable expenditures occur and payments between funds are made. During fiscal year 2012, transfers from the Capital Projects Fund to the Debt Service Fund totaling $584,500 were made related to issuance of long-term debt. These transactions are eliminated in the government-wide financial statements. Note 6 - Capital Assets The District records assets based on historical costs and calculates depreciation on capital assets in accordance with GASB Statement 34. The District’s capitalization policy is to capitalize assets costing over $5,000 and with a life expectancy of 1 year or more. Depreciation expense is allocated to functional categories based upon expenditures in the general fund. Capital asset activity for the governmental activities of the District for the year ended August 31, 2012, are as follows:

Balance (Retirements) BalanceAugust 31, 2011 Additions and Transfers August 31, 2012

Governmental Activities:Capital assets, not being depreciated:

Land 50,850,863$ 79,406$ $ 50,930,269$ Construction in progress 100,082,097 53,470,072 (137,217,087) 16,335,082

Total Capital assets, not being depreciated 150,932,960 53,549,478 (137,217,087) 67,265,351 Capital assets, being depreciated:

Buildings and improvements 664,098,632 7,655 137,217,087 801,323,374 Furniture and equipment 3,461,938 2,354,253 5,816,191 Vehicles 22,488,554 2,125,208 (335,128) 24,278,634

Total Capital assets, being depreciated 690,049,124 4,487,116 136,881,959 831,418,199 Less accumulated depreciation for:

Buildings and improvements (204,661,090) (26,302,266) (230,963,356) Furniture and Equipment (2,424,673) (455,635) (2,880,308) Vehicles (9,419,147) (1,466,230) 335,128 (10,550,249)

Total Accumulated depreciation (216,504,910) (28,224,131) 335,128 (244,393,913)

Total capital assets being depreciated, net 473,544,214 (23,737,015) 137,217,087 587,024,286

Governmental Capital Assets 624,477,174$ 29,812,463$ $ 654,289,637$


46

Note 6 - Capital Assets (continued) Depreciation expense of the governmental activities was charged to the functions/programs as follows:

Depreciation Expense

Governmental Activities:Instruction 18,208,259$ Instructional resources and media services 1,320,810 Curriculum and staff development 725 Instructional leadership 34,169 School leadership 1,426,355 Guidance, counseling and evaluation services 256,145 Health services 158,826 Student transportation 1,701,974 Food Services 2,444,698 Extracurricular activities 1,782,555 General administration 235,794 Facilities maintenance and operations 443,722 Security and monitoring services 93,105 Data processing services 116,994 Total Governmental Activities 28,224,131$

Function

Note 7 - Long-Term Debt and Debt Service Requirements Bonds and accreted interest are secured by ad valorem taxes levied against all taxable property and are serviced by the Debt Service Fund with an apportionment of the ad valorem tax levy. Interest rates on the bonds range from 1.75% to 5.25%. The principal amount of bond indebtedness cannot exceed 10% of the assessed valuation of taxable property in the District according to the last completed and approved ad valorem tax rolls of the District. At August 31, 2012, $8,870,666 was available in the Debt Service Fund to service these bonds. The District issued $16,915,000 of Unlimited Tax Refunding Bonds, Series 2012 dated December 15, 2011 delivered January 18, 2012. Proceeds from the sale of the bonds were used to refund the District’s Variable Rate Unlimited Tax School Building Bonds, Series 1996 and the District’s Variable Rate Unlimited Tax School Building Bonds, Series 2003 in order to replace such variable rate debt with long-term fixed rate debt and to pay the costs associated with the sale and issuance of the bonds. As a result, the refunded portions of the bonds are considered defeased and the liability has been removed from the general long-term debt of the District. The net carrying amount of the old debt exceeded the reacquisition price resulting in a gain on the refunding of $594,020. This amount is being netted against the new debt and amortized using the straight-line method over the remaining life of the refunded debt. This refunding was undertaken to reduce total debt service payments over the next 15 years by $1,585,000 and resulted in an economic gain/present value of $2,482,983. The issuance cost of $242,184 and premium of $2,103,465 are being amortized over the life of the bonds using the straight-line method. The District issued $50,000,000 of Variable Rate Unlimited Tax School Building Bonds, Series 2012 dated February 15, 2012 delivered March 15, 2012. Proceeds from the sale of the bonds will be used to acquire, construct, renovate, improve and equip various school facilities and to pay the costs associated with the sale and issuance of the bonds. The issuance cost of $448,500 and premium of $1,033,000 are being amortized over the life of the bonds using the straight-line method.


47

Note 7 - Long-Term Debt and Debt Service Requirements (continued) The District issued $41,275,000 of Unlimited Tax Refunding Bonds, Series 2012-A dated July 1, 2012 delivered August 23, 2012. Proceeds from the sale of the bonds were used to refund the District’s Unlimited Tax School Building Bonds, Series 2004 for debt service savings and to pay the costs associated with the sale and issuance of the bonds. As a result, the refunded portions of the bonds are considered defeased and the liability has been removed from the general long-term debt of the District. The reacquisition price exceeded the net carrying amount of the old debt resulting in a loss on the refunding of $2,263,130. This amount is being netted against the new debt and amortized using the straight-line method over the remaining life of the refunded debt. This refunding was undertaken to reduce total debt service payments over the next 17 years by $4,220,000 and resulted in an economic gain/present value of $5,692,720. The issuance cost of $483,676 and premium of $7,998,001 are being amortized over the life of the bonds using the straight-line method. As of August 31, 2012, the District has no authorized but unissued general obligation bonds, see Note 15 Subsequent Event. At year end, $61,995,000 of bonds outstanding are considered defeased and have not been included in the District’s Statement of Net Assets. The following is a summary of changes in long-term obligations of the District for the year ended August 31, 2012:

Balance September 1,

2011 AdditionsRetirements/ Refundings

Balance August 31, 2012

Due Within One Year

Governmental ActivitiesBonds and notes payable:

General obligation bonds 696,013,429$ 108,190,000$ (79,923,467)$ 724,279,962$ 21,440,000$ Accreted interest on premium 3,227,880 (199,151) 3,028,729Premium on bond issuance 31,616,584 11,134,466 (5,841,825) 36,909,225 Loss on refunding (14,442,554) (1,669,110) 933,445 (15,178,219)

Total Bonds and Notes Payable 716,415,339$ 117,655,356$ (85,030,998)$ 749,039,697$ 21,440,000$

Annual requirements to amortize all bonded debt outstanding as of August 31, 2012, follow:

Year EndingAugust 31, Principal Interest Totals

2013 21,440,000$ 33,137,999$ 54,577,999$ 2014 19,316,588 32,906,286 52,222,874 2015 17,093,374 35,043,794 52,137,168 2016 23,440,000 30,295,831 53,735,831 2017 25,015,000 29,154,715 54,169,715

2018-2022 153,225,000 136,216,982 289,441,982 2023-2027 209,245,000 93,403,813 302,648,813 2028-2032 167,255,000 43,694,375 210,949,375 2033-2037 50,520,000 16,840,200 67,360,200 2038-2042 37,730,000 7,054,500 44,784,500

724,279,962$ 457,748,495$ 1,182,028,457$

Note: Accreted interest is included in the interest column in the year it is payable.


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Note 7 - Long-Term Debt and Debt Service Requirements (continued) Bonds Payable Bonds payable at August 31, 2012, are composed of the following individual issues:

Description - Authorization (Dated) Interest RateAmount

Original IssueDue Within One Year

Unlimited Tax School Building & Refunding Bonds 2002 (9/3/2002) 3.25% - 5.50% 79,789,984$ 35,000$

Unlimited Tax School Building & Refunding Fixed Rate Bonds - 2003 (7/31/2003) 2.00% - 5.00% 70,435,000 3,455,000

Unlimited Tax School Building Bonds 2003 (3/30/2004) 2.00% - 5.25% 76,330,000 2,730,000

Unlimited Tax Refunding Bonds 2005 (1/15/05) 2.25% - 5.00% 35,744,980 4,440,000



Unlimited Tax Refunding Bonds 2006 (8/15/2006) 4.00% - 5.00% 47,349,797 265,000

Unlimited Tax School Building Bonds - 2006 (5/15/2007) 4.00% - 5.00% 72,070,000 1,945,000

Unlimited Tax School Building Bonds - 2008 (6/15/2008) 4.00% - 5.00% 80,000,000



Unlimited Tax School Building Bonds 2010 (10/1/2010) 2.00% - 5.00% 49,225,000

Unlimited Tax Refunding Bonds 2011 (4/15/2011) 2.00% - 4.00% 9,500,000 350,000

Unlimited Tax School Building Variable Rate Bonds 1.75% as of 2012* (2/15/2012) 8/31/2012 50,000,000

Unlimited Tax Refunding Bonds 2012 (12/15/2011) 3.00% - 5.00% 16,915,000

Unlimited Tax Refunding Bonds 2012A (7/1/2012) 3.00% - 5.00% 41,275,000 385,000

21,440,000$

* The variable rate debt issue has a contractually bound liquidity agent, Dexia CreditLocal bank. The issue has interest rates separately remarketed under a contractual arrangement with First Southwest Company.


49

Note 7 - Long-Term Debt and Debt Service Requirements (continued)

Outstanding September 1,

Accumulated Interest

Outstanding August 31, Due Within

2011 Issued Retired Refunded Accretion 2012 One Year

Unlimited Tax School Building Variable Rate Bonds 1996* (7/15/96) 3,600,000$ $ $ (3,600,000)$ $ $ $

Unlimited Tax School Building & Refunding Bonds 2002 (9/3/2002) 4,389,984 (2,820,000) 1,625,667 3,195,651 35,000

Unlimited Tax School Building & Refunding Fixed Rate Bonds - 2003 (7/31/2003) 38,950,000 (3,200,000) 35,750,000 3,455,000

Unlimited Tax School Building & Refunding Variable Rate Bonds 2003* (8/14/2003) 14,900,000 (14,900,000)

Unlimited Tax School Building Bonds 2003 (3/30/2004) 48,595,000 (50,000) (45,495,000) 3,050,000 2,730,000

Unlimited Tax Refunding Bonds 2005 (1/15/05) 33,798,466 (488,467) 33,309,999 4,440,000

Unlimited Tax School Building Bonds 2005 (7/12/05) 73,570,000 (655,000) 72,915,000 1,430,000

Unlimited Tax School Building Bonds 2006 (7/1/06) 98,510,000 (1,375,000) 97,135,000 1,335,000

Unlimited Tax Refunding Bonds 2006 (8/15/2006) 45,884,979 (255,000) 1,403,062 47,033,041 265,000

Unlimited Tax School Building Bonds - 2006 (5/15/2007) 71,780,000 (560,000) 71,220,000 1,945,000

Unlimited Tax School Building Bonds - 2008 (6/15/2008) 80,000,000 80,000,000

Unlimited Tax Refunding Bonds 2009 (11/20/2009) 40,805,000 (6,195,000) 34,610,000 3,445,000

Unlimited Tax Refunding Bonds 2010 (7/15/10) 85,465,000 85,465,000 1,625,000

Unlimited Tax School Building Bonds 2010 (10/1/2010) 46,425,000 46,425,000

Unlimited Tax Refunding Bonds 2011 (4/15/2011) 9,340,000 (330,000) 9,010,000 350,000

Unlimited Tax School Building Variable Rate Bonds2012* (2/15/2012) 50,000,000 50,000,000

Unlimited Tax Refunding Bonds 2012 (12/15/2011) 16,915,000 16,915,000

Unlimited Tax Refunding Bonds 2012A (7/1/2012) 41,275,000 41,275,000 385,000

696,013,429$ 108,190,000$ (15,928,467)$ (63,995,000)$ 3,028,729$ 727,308,691$ 21,440,000$ Accumulated Interest Accretion (3,028,729)

724,279,962$ 21,440,000$

* For the variable rate debt issues, each one has a contractually bound liquidity agent, Dexia Credit Local bank. Bothe issues have interest rates separately remarketed under a contractual arrangemetn with First Southwest Company.

Description - Authorization (Dated)


50

Note 8 - Operating Leases Commitments under Operating Leases The following is a schedule of the District’s future minimum rental payments required under operating leases that have initial or remaining noncancelable lease terms in excess of one year as of August 31, 2012.

Fiscal Year Amount2013 860,976$ 2014 860,976 2015 860,976 2016 215,244

Rental expense for the year ended August 31, 2012 was $860,976. Note 9 - Deferred Revenue Deferred revenue at year end represents assets that are not available for use by the District to liquidate current year liabilities. A summary of deferred revenue by fund follows:

General FundDebt Service

Fund

Nonmajor Governmental

FundsProprietary

Funds TotalNet tax revenue 2,852,536$ 1,902,355$ $ 4,754,891$ State funding payments 2,902,143 2,902,143 Advertising 24,850 24,850 MISD Foundation 9,588 9,588 Prepaid lunch cards 533,075 533,075 Scholarships 8,050 8,050 Miscellaneous local grants/awards 1,642 1,642 Prepaid tuition 7,861 7,861 Total 5,779,529$ 1,902,355$ 552,355$ 7,861$ 8,242,100$

Property tax revenues are earned but are not available as of year end; therefore, they are recognized as revenues in the government-wide financial statements and deferred in the fund level financial statements. Note 10 - Assigned Fund Balance Assigned fund balance as of August 31, 2012, is composed of the following:

TotalRider 36 195,690$ Advertising 10,776 Trane Energy Management 209,298 Insurance Recovery 8,659 High School Allotment 1,633,897 Purchase Order Rollovers 479,173 August 2013 SOF Payment 13,223,317 Total 15,760,810$


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Note 11 - Retirement Plan Plan Description The Mansfield Independent School District contributes to the Teacher Retirement System of Texas (TRS), a cost-sharing multiple-employer defined benefit pension plan. TRS administers retirement and disability annuities, and death and survivor benefits to employees and beneficiaries of the employees of the public school systems of Texas. It operates primarily under the provisions of the Texas Constitution, Article XVI, Sec. 67, and Texas Government Code, Title 8, Subtitle C. TRS also administers proportional retirement benefits and service credit transfer under Texas Government Code, Title 8, Chapters 803 and 805, respectively. The Texas state legislature has the authority to establish and amend benefit provisions of the pension plan and may, under certain circumstances, grant special authority to the TRS Board of Trustees. TRS issues a publicly available financial report that includes financial statements and required supplementary information for the defined benefit pension plan. That report may be obtained by writing to the TRS Communications Department, 1000 Red River Street, Austin, Texas 78701, by calling the TRS Communications Department at 1-800-223-8778, or by downloading the report from the TRS Internet website, www.trs.state.tx.us, under the TRS Publications heading. Funding Policy State law provides for a member contribution rate of 6.4% for fiscal years 2012, 2011 and 2010, and a state contribution rate of 6.0% for fiscal year 2012, 6.644% for fiscal year 2011, 6.4% from September to December 2009, and 6.644% from January to August 2010. Contribution requirements are not actuarially determined but are established and amended by the Texas state legislature. The state funding policy is as follows: (1) The state constitution requires the legislature to establish a member contribution rate of not less than 6.0% of the member’s annual compensation and a state contribution rate of not less than 6.0% and not more than 10.0% of the aggregate annual compensation of all members of the system; (2) A state statute prohibits benefit improvements or contribution reductions if, as a result of a particular action, the time required to amortize TRS’s unfunded actuarial liabilities would be increased to a period that exceeds 31 years, or, if the amortization period already exceeds 31 years, the period would be increased by such action.

Contributions Staff members of the District are required to pay 6.4% of their eligible gross earnings to the TRS pension plan. The State of Texas contributed 6.0% for fiscal year 2012, 6.644% for fiscal year 2011, 6.4% from September to December 2009, and 6.644% from January to August 2010 of all employees’ eligible gross earnings, except for those staff members subject to statutory minimum requirements and those staff members being paid from and participating in federally funded programs. State statutes establish these rates. The statutory minimum requirements are based on the State of Texas teacher schedule adjusted based on local tax rates. For staff members funded by federal programs, the federal programs are required to contribute 6.644% for fiscal years 2012, 2011 and 2010.


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Note 11 - Retirement Plan (continued) Contributions made by the State, District and staff members to TRS for the years ended August 31, 2012, 2011, and 2010, are as follows:

Fiscal Year

State TRS Contributions

Made on Behalf of the District

District Required

Contributions to TRS

Employee Contributions to

TRS

District's Annual Covered

Payroll2012 7,789,716$ 2,404,076$ 10,867,453$ 169,803,888$ 2011 10,034,246 2,170,019 10,811,555 168,929,048 2010 10,087,206 2,035,148 10,430,383 162,983,547

For the current fiscal year and each of the past two years, the District’s actual contributions were equal to 100 percent of the required contributions. The contributions made by the State on behalf of the District have been recorded in the governmental funds financial statements of the District as both state revenues and expenditures. These contributions are the legal responsibility of the State. TRS - Care Health Insurance Benefits for Retirees Plan Description. The Mansfield Independent School District contributes to the Texas Public School Retired Employees Group Insurance Program (TRS-Care), a cost-sharing multiple-employer defined benefit postemployment health care plan administered by the Teacher Retirement System of Texas (TRS). TRS-Care Retired Plan provides health care coverage for certain persons (and their dependents) who retired under TRS. The statutory authority for the program is Texas Insurance Code, Chapter 1575. Section 1575 grants the TRS Board of Trustees the authority to establish and amend basic and optional group insurance coverage for participants. TRS issues a publicly available financial report that includes financial statements and required supplementary information for TRS-Care. That report may be obtained by writing to the TRS Communications Department, 1000 Red River Street, Austin, Texas 78701, or by calling the TRS Communications Department at 1-800-223-8778, or by downloading the report from the TRS Internet website, www.trs.state.tx.us, under the TRS Publications heading. Funding Policy. Contribution requirements are not actuarially determined but are legally established each biennium by the Texas legislature. Texas Insurance Code, Sections 1575.202, 203, and 204 establish state, active employee, and public school contributions, respectively. The State of Texas and active public school employee contribution rates were 1.0% and .65% of public school payroll, respectively, with school districts contributing a percentage of payroll set at .55% for fiscal years 2012, 2011, and 2010. Per Texas Insurance Code, Chapter 1575, the public school contribution may not be less than .25% or greater than .75% of the salary of each active employee of the public school. For staff members funded by federal programs, the federal programs are required to contribute 1.0%.


53

Note 11 - Retirement Plan (continued) Contributions made by the State, District, and staff members, for the years ended August 31, 2012, 2011, and 2010 are as follows:

Fiscal Year

State TRS Contributions

Made on Behalf of the District

District Required

Contributions to TRS

Employee Contributions to

TRS

District's Annual Covered

Payroll2012 1,639,018$ 1,001,617$ 1,103,720$ 169,803,888$ 2011 1,633,031 929,117 1,098,029 168,929,048 2010 1,572,101 954,090 1,059,346 162,983,547

For the current fiscal year and each of the past two years, the District’s actual contributions were equal to 100 percent of the required contributions. The contributions made by the State on behalf of the District have been recorded in the governmental funds financial statements of the District as both state revenues and expenditures. These contributions are the legal responsibility of the State. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 established prescription drug coverage for Medicare beneficiaries know as Medicare Part D. Under Medicare Part D, TRS-Care receives retiree drug subsidy payments from the federal government to offset certain prescription drug expenditures for eligible TRS-Care participants. For the years ended August 31, 2012, 2011, and 2010, the subsidy payments received by TRS-Care on-behalf of the District were $453,087, $447,928, and $409,519, respectively. These payments are recorded as equal revenues and expenditures in the governmental funds financial statements of the District. The Early Retiree Reinsurance Program (“ERRP”) is a provision of the Patient Protection and Affordable Care Act and provides reimbursement to plan sponsors for a portion of the cost of providing health benefits to retirees between the ages of 55-64 and their covered dependents regardless of age. An “early retiree” is defined as a plan participant ages 55-64 who is eligible for Medicare and is not covered by an active employee of the plan sponsor. This temporary program is available to help employers continue to provide coverage for early retirees. TRS has received funds from the ERRP program in fiscal year 2012. For the year ended August 31, 2012, the subsidy payments received by the ERRP program on-behalf of the District were $428,475. These payments are recorded as equal revenues and expenditures in the governmental funds financial statements of the District. Note 12 - Risk Management During the year ended August 31, 2012, employees of the District were covered by a health insurance plan (“the Plan”). The District paid premiums of $247 per month per employee who worked at least 20 hours per week to the Plan; and employees, at their option, authorized payroll withholdings to pay contributions or premiums for dependents. All premiums were paid to a licensed insurer. The Plan was authorized by Article 3.51-2, Texas Insurance Code and was documented by contractual agreement. As of September 1, 1998, the District has fully insured all workers’ compensation claims. The current contract covers the period from September 1, 2011 through August 31, 2012. Premium payments are expensed as paid.


54

Note 12 - Risk Management (continued) The District is exposed to various risks of loss related to torts, thief of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters. During fiscal year 2012, the District purchased commercial insurance to cover general liabilities. There were no significant reductions in coverage in the past fiscal year, and there were no settlements exceeding insurance coverage for each of the past three fiscal years. Note 13 - Litigation, Commitments and Contingencies Litigation - The District is the defendant in a number of lawsuits arising principally in the normal course of operations. In the opinion of District's management, the potential losses after insurance coverage, on all claims will not have a material adverse effect on the District's financial statements; thus, no provision for losses has been recorded. Grant Programs - 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 the District has not complied with the rules and regulations governing the grants, refunds of any monies received may be required, and the collectability of any related receivable at August 31, 2012, 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 basic statements for such contingencies. Construction - The District was obligated at August 31, 2012, under major contracts for construction, renovations, and repair of various facilities. The construction contract details associated with some of the major projects are as follows:

Approved Construction EstimatedConstruction in Remaining

Project Budget Progress CommitmentTarver Rendon Elementary 13,750,000$ 3,673,602$ 10,076,398$ Judy Miller Elementary 13,370,000 4,802,100 8,567,900 Ag Farm 4,290,929 68,006 4,222,923 Alice Poner Elementary 16,404,495 309,045 16,095,450 J.L. Boren Elementary 16,404,493 306,664 16,097,829 Charlotte Anderson Elementary 17,215,538 10,724 17,204,814 Glenn Harmon Elementary 17,215,538 11,255 17,204,283 Playground Irrigation 708,863 680,739 28,124 Wireless Infrastructure 4,650,776 1,898,719 2,752,057 Campus Security 7,457,713 2,747,936 4,709,777 School ADA Canopies 916,786 9,115 907,671 Renovations Project #1 30,563,512 528,907 30,034,605 Renovations Project #2 22,049,724 1,281,805 20,767,919 Construction Renovations 22,018,260 6,465 22,011,795

187,016,627$ 16,335,082$ 170,681,545$


55

Note 15 - Shared Service Arrangement The District participates in a Shared Service Arrangement (SSA) for students with auditory impairments attending the Regional Day School Program for the Deaf. The District does not account for revenues or expenditures of this program and does not disclose them in these financial statements. However, intergovernmental charges in a special revenue fund include payments to the fiscal agent for the District’s share of project deficits. The District neither has a joint ownership interest in fixed assets purchased by the fiscal agent, Arlington ISD, nor does the District have a net equity interest in the fiscal agent. The fiscal agent is neither accumulating significant financial resources nor fiscal exigencies that would give rise to a future additional benefit or burden to Mansfield ISD. The fiscal agent manager is responsible for all financial activities of the SSA. Shared Service Arrangement expenditures of $127,500 were attributable to Mansfield ISD participation. Note 16 - Prior Period Adjustment During the current year, it was determined that the liability for outstanding self-funded workers’ compensation claims was overstated by $1,858,697. To correct this error, the beginning fund balance of the General Fund of $96,722,958, as originally reported, has been increased to $98,581,655. In addition, beginning net assets for governmental activities of $115,402,039, as originally reported, have been increased to $117,260,736. Note 17 - Subsequent Event The District issued $30,460,000 of Unlimited Tax Refunding Bonds, Series 2012-B dated November 1, 2012, and delivered November 28, 2012, to advance refund $32,295,000 of outstanding Unlimited Tax School Building and Refunding Bonds, Series 2003. The proceeds were deposited in an irrevocable trust with an escrow agent to provide all future debt service payments on the refunded bonds.


56

Required Supplementary

Informa on

57

58

MANSFIELD INDEPENDENT SCHOOL DISTRICT Exhibit G-1SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES -

ORIGINAL BUDGET, AMENDED FINAL (GAAP BASIS) AND ACTUAL - GENERAL FUNDFor the Year Ended August 31, 2012

Budgeted Amounts

Data Control Codes Original Final

Actual Amounts,

GAAP Basis

Variance with Final Budget -

Positive (Negative)

Revenues5700 Local revenues 101,212,561$ 102,346,049$ 102,276,384$ (69,665)$ 5800 State program revenues 123,413,594 116,694,801 115,510,462 (1,184,339) 5900 Federal program revenues 1,735,000 2,397,000 2,434,957 37,957 5000 Total revenues 226,361,155 221,437,850 220,221,803 (1,216,047)


0011 Instruction 139,505,237 141,332,024 133,592,407 7,739,617 0012 Instructional resources and media services 3,487,481 3,379,882 3,227,528 152,354 0013 Curriculum and staff development 2,088,253 2,315,402 2,196,555 118,847 0021 Instructional leadership 2,744,163 2,605,153 2,480,464 124,689 0023 School leadership 15,682,253 15,766,497 14,578,969 1,187,528 0031 Guidance, counseling and evaluation services 7,696,278 7,695,865 7,231,565 464,300 0032 Social work services 66,782 68,882 71,347 (2,465) 0033 Health services 3,517,962 3,492,707 3,348,573 144,134 0034 Student transportation 7,642,189 10,281,223 9,649,470 631,753 0036 Extracurricular activities 6,524,555 6,913,778 6,435,948 477,830 0041 General administration 5,155,794 5,202,551 4,671,154 531,397 0051 Facilities maintenance and operations 26,035,384 24,865,510 23,128,463 1,737,047 0052 Security and monitoring services 2,776,743 2,937,658 2,685,817 251,841 0053 Data processing services 2,214,996 3,988,796 4,140,458 (151,662) 0061 Community services 117,052 164,246 70,522 93,724 0081 Capital Outlay 24,347 16,847 16,847

Intergovernmental:0095 Payments to Juvenile Justice Alt. Ed. Prgm. 17,686 106,686 53,500 53,186 0099 Other intergovernmental charges 1,079,000 1,069,000 968,689 100,311 6030 Total Expenditures 226,376,155 232,202,707 218,531,429 13,671,278 1100 Excess (deficiency) of revenues over

expenditures (15,000) (10,764,857) 1,690,374 12,455,231

Other Financing Sources (Uses):7912 Sale of real or personal property 15,000 53,000 54,652 1,652 7080 Total other financing sources (uses) 15,000 53,000 54,652 1,652

1200 Net change in fund balances (10,711,857) 1,745,026 12,456,883

0100 Fund balances - beginning 96,722,958 96,722,958 96,722,958 Prior period adjustment 1,858,697 1,858,697

3000 Fund balances - ending 96,722,958$ 86,011,101$ 100,326,681$ 14,315,580$

MANSFIELD INDEPENDENT SCHOOL DISTRICT Exhibit G-2 NOTES TO REQUIRED SUPPLEMENTARY INFORMATION

59

Budgets and Budgetary Accounting The District is required by state law to adopt annual budgets for the General Fund, National School Lunch and Breakfast Program fund (Food Service Fund) and Debt Service Fund. Special Revenue Funds, other than the Food Service Fund, are required to be budgeted on a project basis. Each budget is presented on the modified accrual basis of accounting which is consistent with accounting principles generally accepted in the United States of America. The District uses the following procedures in establishing the budgets reflected in the financial statements: Prior to August 20th of the preceding fiscal year, the District prepares a budget for the next succeeding fiscal year beginning September 1. The operating budget includes proposed expenditures and means of financing them. A meeting of the Board of School Trustees is then called for the purpose of adopting the proposed budget after ten days public notice of the meeting has been given. Prior to September 1, the budget is legally enacted by the Board of School Trustees. The officially adopted district budget, as amended, must be filed with TEA through PEIMS (Public Education Information Management System) by the date prescribed in the annual system guidelines. This requirement for filing the amended budget with TEA is satisfied when the school district files its Annual Financial and Compliance Report. Once a budget is approved, it can be amended at the function and fund level only by approval of a majority of the members of the Board of School Trustees. Amendments are presented to the Board at their regular meetings. Each amendment must have Board approval. Such amendments are made before the fact, are reflected in the official minutes of the Board, and are not made after fiscal year end as dictated by law. Each budget is prepared and controlled by the budget coordinator at the revenue and expenditure function/object level. Budgeted amounts are as amended by the Board of School Trustees. All budget appropriations lapse at year end. Expenditures over Appropriations The District had expenditures over appropriations in the following General Fund functions:

Social work services $2,465Data processing services $151,662


60

OTHER SUPPLEMENTARY

INFORMATION

61

62

MANSFIELD INDEPENDENT SCHOOL DISTRICTCOMBINING BALANCE SHEETNONMAJOR GOVERNMENTAL FUNDSAugust 31, 2012

Data Control Codes

ESEA, Title I, Pt A - Improving

Basic Ed.IDEA B - Formula

IDEA B - Preschool

Assets1110 Cash and cash equivalents $ 496$ $

Receivables:1240 Receivables from other governments 108,790 383,126 1,673 1250 Accrued interest 1260 Due from other funds 3,029 8,010 88 1290 Other receivables 1300 Inventories 1000 Total Assets 111,819$ 391,632$ 1,761$

Liabilities and Fund BalancesLiabilities:

Current Liabilities:2110 Accounts payable $ 2,582$ $ 2160 Accrued wages payable 2170 Due to other funds 111,819 389,050 1,761 2300 Deferred revenues 2000 Total Liabilities 111,819 391,632 1,761

Fund Balance:Non-Spendable:

3410 Inventories Restricted:

3450 Grant funds Committed:

3545 Campus activity funds Total Fund Balance

4000 Total liabilities and fund balance 111,819$ 391,632$ 1,761$

63

Exhibit H-1Page 1 of 3

Child Nutrition

FundVocational Ed -

Basic

ESEA, Title II, Pt A -

Improving Teacher Quality

ESEA, Title III, Pt A - BIL/ESL

Medicaid Administrative

Claiming Program

Law Enforcement

Officer Standards

6,621,631$ $ $ $ $ 1,642$

135,097 1,887 32,382 13,785

135,899 249 691 77,310

153,184 7,136,906$ $ 2,136$ 33,073$ $ 1,642$

$ $ $ $ $ $ 220,793

1,576 2,136 33,073 533,075 1,642 755,444 2,136 33,073 1,642

153,184

6,228,278

6,381,462

7,136,906$ $ 2,136$ 33,073$ $ 1,642$

64


Data Control Codes

Air Force ROTC

(Timberview) Education Jobs Fund

Summer School LEP

Assets1110 Cash and cash equivalents $ $ $

Receivables:1240 Receivables from other governments 20,012 1250 Accrued interest 1260 Due from other funds 64 1290 Other receivables 1300 Inventories 1000 Total Assets $ $ 20,076$


Current Liabilities:2110 Accounts payable $ $ $ 2160 Accrued wages payable 2170 Due to other funds 20,076 2300 Deferred revenues 2000 Total Liabilities 20,076



3450 Grant funds Committed:

3545 Campus activity funds Total Fund Balance

4000 Total liabilities and fund balance $ $ 20,076$

65


Advanced Placement Incentive

State Instructional

MaterialsRead to Suceed

Campus Activity Funds

Education Foundation

AwardsTeacher

Appreciation

53,676$ 2,639$ $ 1,557,637$ 18,469$ 2$

53,676$ 2,639$ $ 1,557,637$ 18,469$ 2$

$ $ $ $ 8,881$ $ 320 9,588 320 18,469

53,676 2,639 2

1,557,317 53,676 2,639 1,557,317 2

53,676$ 2,639$ $ 1,557,637$ 18,469$ 2$

66


Data Control Codes

Bikes for Angels

Maverick Donations Pep Donations

Assets1110 Cash and cash equivalents 3,840$ 800$ 2,690$

Receivables:1240 Receivables from other governments 1250 Accrued interest 1260 Due from other funds 1290 Other receivables 1300 Inventories 1000 Total Assets 3,840$ 800$ 2,690$


Current Liabilities:2110 Accounts payable $ $ $ 2160 Accrued wages payable 2170 Due to other funds 2300 Deferred revenues 2000 Total Liabilities



3450 Grant funds 3,840 800 2,690 Committed:

3545 Campus activity funds Total Fund Balance 3,840 800 2,690

4000 Total liabilities and fund balance 3,840$ 800$ 2,690$

67


Walmart Donations

Special Olympics Donations Scholarships

Community Donations

Lockheed Martin

Total Nonmajor Governmental

Funds

99$ 2,500$ 9,323$ 3,183$ 5,559$ 8,284,186$

682,967 13,785 148,030 77,310 153,184

99$ 2,500$ 9,323$ 3,183$ 5,559$ 9,359,462$

$ $ 1,273$ $ $ 12,736$ 220,793 559,811 8,050 552,355 9,323 1,345,695

153,184

99 2,500 3,183 5,559 6,303,266

1,557,317 99 2,500 3,183 5,559 8,013,767

99$ 2,500$ 9,323$ 3,183$ 5,559$ 9,359,462$

68

MANSFIELD INDEPENDENT SCHOOL DISTRICTCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGESIN FUND BALANCE - NONMAJOR GOVERNMENTAL FUNDS For the Year Ended August 31, 2012

Data Control Codes

ESEA, Title I, Pt A -

Improving Basic Ed.

IDEA B - Formula

IDEA B - Preschool

Revenues5700 Local and Intermediate Sources $ $ $ 5800 State Program Revenues 5900 Federal Program Revenues 1,638,795 4,551,650 58,088 5020 Total Revenues 1,638,795 4,551,650 58,088


0011 Instruction 1,502,323 2,121,175 44,764 0012 Instructional Resources and Media Services 23,889 0013 Curriculum and Instructional Staff Development 60,547 57,944 335 0021 Instructional Leadership 1,133 50,466 0023 School Leadership 16,333 0031 Guidance, Counseling and Evaluation Services 15,724 1,862,041 326 0033 Health Services 300,239 12,663 0034 Student Transportation 32,285 0035 Food Services 0036 Cocurricular/Extracurricular Activities 0041 General Administration 0051 Plant Maintenance and Operations 0061 Community Services 18,846 0093 Payments related to shared services arrangements 127,500 6030 Total Expenditures 1,638,795 4,551,650 58,088 1100 Excess (deficiency) of revenues over expenditures

Other Financing Sources (Uses)7912 Sale of real or personal property

Total Other Financing Sources (Uses)

1200 Net change in fund balances

0100 Fund Balance - September 1 (Beginning)

3000 Fund Balance - August 31 (Ending) $ $ $

69


Child Nutrition

Fund Vocational Ed -

Basic

ESEA, Title II, Pt A -

Improving Teacher Quality

ESEA, Title III, Pt A - BIL/ESL

Medicaid Administrative

Claiming Program

Law Enforcement

Officer Standards

5,958,532$ $ $ $ $ $ 78,330

6,722,264 163,305 281,474 367,129 37,892 12,759,126 163,305 281,474 367,129 37,892

163,305 178,264 71,347 77,242 263,455 7,736 25,912 11,538 37,892

11,863,085 56

128,074 13,053

11,991,159 163,305 281,474 367,129 37,892 767,967

26,151 26,151

794,118

5,587,344

6,381,462$ $ $ $ $ $

70


Data Control Codes

Air Force ROTC

(Timberview)Education Jobs Fund

Summer School LEP

Revenues5700 Local, Intermediate and Out-of-State $ $ $ 5800 State Program Revenues 5900 Federal Program Revenues 1,183 5,180,775 44,428 5020 Total Revenues 1,183 5,180,775 44,428


0011 Instruction 1,183 5,180,775 44,428 0012 Instructional Resources and Media Services 0013 Curriculum and Instructional Staff Development 0021 Instructional Leadership 0023 School Leadership 0031 Guidance, Counseling and Evaluation Services 0033 Health Services 0034 Student Transportation 0035 Food Services 0036 Cocurricular/Extracurricular Activities 0041 General Administration 0051 Facilities Maintenance and Operations 0061 Community Services 0093 Payments related to shared services arrangements 6030 Total Expenditures 1,183 5,180,775 44,428 1100 Excess (deficiency) of revenues over expenditures



1200 Net change in fund balances

0100 Fund Balance - September 1 (Beginning)

3000 Fund Balance - August 31 (Ending) $ $ $

71


Advanced Placement Incentive

State Instructional

Materials Read to Suceed

Campus Activity Funds

Education Foundation

AwardsTeacher

Appreciation

$ $ $ 3,388,045$ 168,181$ 500$ 35,063 453,668 153

35,063 453,668 153 3,388,045 168,181 500

535 451,029 3,065,183 156,927 153 4,615

30,449 840 1,518 250,934 5,799

30,984 451,029 153 3,316,117 168,181 1,518 4,079 2,639 71,928 (1,018)

4,079 2,639 71,928 (1,018)

49,597 1,485,389 1,020

53,676$ 2,639$ $ 1,557,317$ $ 2$

72


Data Control Codes

Bikes for Angels

Maverick Donations Pep Donations

Revenues5700 Local, Intermediate and Out-of-State 12,541$ $ 100$ 5800 State Program Revenues 5900 Federal Program Revenues 5020 Total Revenues 12,541 100


0011 Instruction 1,089 0012 Instructional Resources and Media Services 0013 Curriculum and Instructional Staff Development 0021 Instructional Leadership 0023 School Leadership 0031 Guidance, Counseling and Evaluation Services 0033 Health Services 0034 Student Transportation 0035 Food Services 0036 Cocurricular/Extracurricular Activities 0041 General Administration 0051 Facilities Maintenance and Operations 0061 Community Services 11,373 0093 Payments related to shared services arrangements 6030 Total Expenditures 11,373 1,089 1100 Excess (deficiency) of revenues over expenditures 1,168 (989)



1200 Net change in fund balances 1,168 (989)

0100 Fund Balance - September 1 (Beginning) 2,672 800 3,679

3000 Fund Balance - August 31 (Ending) 3,840$ 800$ 2,690$

73


Walmart Donations

Special Olympics Donations Scholarships

Community Donations

Lockheed Martin

Total Nonmajor Governmental

Funds

$ $ 97,200$ 24,991$ 16,510$ 9,666,600$ 567,214 19,046,983 97,200 24,991 16,510 29,280,797

766 97,200 17,039 14,996 13,112,328 28,657 6,742 4,000 501,554 59,335 43,763 1,889,629 350,794 32,285 11,863,085 2,347 253,281 56 350 128,424 49,071 127,500

766 97,200 24,131 21,343 28,439,762 (766) 860 (4,833) 841,035

26,151 26,151

(766) 860 (4,833) 867,186

865 2,500 2,323 10,392 7,146,581

99$ 2,500$ $ 3,183$ 5,559$ 8,013,767$

74

MANSFIELD INDEPENDENT SCHOOL DISTRICT Exhibit H-3COMBINING STATEMENT OF NET ASSETSNONMAJOR ENTERPRISE FUNDSAugust 31, 2012

Day Care Center Natatorium Total

AssetsCurrent assets:

Cash and cash equivalents 119,115$ 757,801$ 876,916$ Receivables:

Due from other funds 379 3,844 4,223 Other receivables 3,597 3,597

Total Assets 119,494 765,242 884,736

LiabilitiesCurrent Liabilities:

Accounts payable 2,624 2,624 Deferred revenue 7,861 7,861

Total Liabilities 7,861 2,624 10,485

Net AssetsUnrestricted net assets 111,633 762,618 874,251 Total Net Assets 111,633$ 762,618$ 874,251$

75

MANSFIELD INDEPENDENT SCHOOL DISTRICT Exhibit H-4COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETSNONMAJOR ENTERPRISE FUNDSFor the Year Ended August 31, 2012


Operating RevenuesLocal and Intermediate Sources 178,928$ 491,376$ 670,304$ Total Operating Revenues 178,928 491,376 670,304

Operating ExpensesPayroll costs 158,550 250,836 409,386 Purchased and contracted services 24,000 35,347 59,347 Supplies and materials 3,891 34,036 37,927 Other operating costs 3,122 54,957 58,079 Total operating expenses 189,563 375,176 564,739

Operating income (loss) (10,635) 116,200 105,565

Net assets - September 1 (beginning) 122,268 646,418 768,686

Net assets - August 31 (ending) 111,633$ 762,618$ 874,251$

76

MANSFIELD INDEPENDENT SCHOOL DISTRICT Exhibit H-5COMBINING STATEMENT OF CASH FLOWSNONMAJOR ENTERPRISE FUNDSFor The Year Ended August 31, 2012


Increase (Decrease) in Cash and Cash EquivalentsCash Flows from Operating Activities:

Cash received from user charges 186,789$ 502,410$ 689,199$ Cash payments to employees for services (158,929) (254,680) (413,609) Cash payments for contracted services (24,000) (35,347) (59,347) Cash payments for supplies (5,968) (34,792) (40,760) Cash payments for other expenses (3,122) (54,957) (58,079)

Net Cash Provided by (Used for) Operating Activities (5,230) 122,634 117,404

Cash and Cash Equivalents at Beginning of Year 124,345 635,167 759,512 Cash and Cash Equivalents at End of Year 119,115$ 757,801$ 876,916$

Reconciliation to Balance Sheet: Cash and Cash Equivalents Per Cash Flow 119,115$ 757,801$ 876,916$

Cash and Cash Equivalents per Balance Sheet 119,115$ 757,801$ 876,916$

Reconciliation of Operating Income (Loss) toNet Cash Provided by Operating Activities:

Operating Income (Loss) (10,635)$ 116,200$ 105,565$ Change in Assets and Liabilities:

Decrease (increase) in receivables 11,160 11,160 Increase (decrease) in accounts payable (711) 615 (96) Increase (decrease) in due to other funds (1,745) (5,215) (6,960) Increase (decrease) in prepaid tuition 7,861 (126) 7,735

Net Cash Provided by (Used for) Operating Activities (5,230)$ 122,634$ 117,404$

77

MANSFIELD INDEPENDENT SCHOOL DISTRICT Exhibit H-6STATEMENT OF CHANGES IN ASSETS AND LIABILITIESAGENCY FUNDFor The Year Ended August 31, 2012

Balance BalanceSeptember 1, 2011 Additions Deductions August 31, 2012

AssetsCash and cash equivalents 706,187$ 2,836,487$ (2,752,346)$ 790,328

Total Assets 706,187$ 2,836,487$ (2,752,346)$ 790,328$

LiabilitiesAccounts payable $ 86$ $ 86$ Due to student groups 690,384 2,836,487 (2,752,432) 774,439Due to others 15,803 15,803

Total liabilities 706,187$ 2,836,573$ (2,752,432)$ 790,328$


78

REQUIRED TEA SCHEDULES

79

80

MANSFIELD INDEPENDENT SCHOOL DISTRICTSCHEDULE OF DELINQUENT TAXES RECEIVABLEFor the Year Ended August 31, 2012

1 2 3 10

Net Assessed/Appraised BeginningLast Ten Tax Rates Value For School Balance

Fiscal Years Maintenance Debt Service Tax Purposes 9/1/2011

2003 and prior Various Various Various 1,235,793$

2004 1.367000 0.315000 $4,782,448,164 180,689

2005 1.377000 0.340000 5,403,399,519 197,334

2006 1.407000 0.365000 6,038,031,204 228,619

2007 1.287500 0.400000 6,896,362,253 225,010

2008 1.040000 0.410000 7,831,929,983 304,577

2009 1.040000 0.410000 8,012,638,378 506,061

2010 1.040000 0.410000 8,321,526,060 814,500

2011 1.040000 0.456000 8,574,290,291 1,601,972

2012 1.040000 0.456000 9,354,124,064

1000 TOTALS 5,294,555$

81

Exhibit J-1

20 31 32 40 50

Current Maintenance Debt Service Entire EndingYear's Total Total Year's Balance

Total Levy Collections Collections Adjustments 8/31/2012

$ 29,419$ 6,779$ (60,838)$ 1,138,757$

10,368 2,389 (1,544) 166,388

9,053 2,235 (804) 185,242

14,500 3,762 (18,504) 191,853

23,636 7,343 (6,781) 187,250

37,334 14,718 (53,732) 198,793

103,206 39,695 (21,981) 341,179

161,494 63,666 (44,238) 545,102

562,184 246,496 (126,250) 667,042

139,937,696 96,164,028 42,164,228 1,609,440

139,937,696$ 97,115,222$ 42,551,311$ (334,672)$ 5,231,046$

Total taxes receivable per Exhibit C-1 5,231,046$

82

MANSFIELD INDEPENDENT SCHOOL DISTRICT Exhibit J-2SCHEDULE OF EXPENDITURES FOR COMPUTATION OF INDIRECT COSTS FOR 2013-2014GENERAL AND SPECIAL REVENUE FUNDSFor the Year Ended August 31, 2012

Function 41 and Related Function 53 and 99 - General Administration(1) (2) (3) (4) (5) (6) (7)702 703 701 750 720 (other)

Account Number Account Name

School Board

Tax Collection

Supt's Office

Indirect Cost Direct Cost Misc. Total

6100 Payroll Costs 54,591$ $ 361,244$ 3,167,184$ $ $ 3,583,019$ 6149 Leave for Separating

in Functions 41 and 53 6149 Leave for Separating not

in Functions 41 and 53 6211 Legal Services 133,527 133,527 6212 Audit Services 101,600 101,600 6213 Tax Appraisal / Collection 968,689 968,689 621X Other Professional

Services 4,341 6,266 10,607 6220 Tuition and Transfer

Payments6230 Education Service Centers 860 860 6240 Maintenance and Repairs 6250 Utilities 6260 Rentals 19,904 19,904 6290 Miscellaneous Contracts 11,778 2,440 289,255 303,473 6320 Textbooks and Reading 290 194 1,352 1,836 63XX Other Supplies 1,029 1,323 82,490 84,842 6410 Travel, Subsistence

and Stipends 6,237 10,974 35,609 52,820 6420 Insurance and Bonding 85,401 191,763 277,164 6430 Election Costs 6490 Miscellaneous Operating 24,958 2,940 35,559 63,457 6600 Capital Outlay 38,101 38,101 6000 Total 189,485$ 968,689$ 379,115$ 3,930,982$ 133,527$ 38,101$ 5,639,899$

Other Information:Total expenditures for General, Special Revenue and Food Service Enterprise Fund (Exhibits C-3 and D-2) (9) 246,866,433$

Less: Deductions of Unallowable Costs:Fiscal YearTotal Capital Outlay (6600) (10) 7,343,883$ Total Debt & Lease (6500) (11) Plant Maintenance (Function 51, 6100-6400) (12) 23,011,818 Food (Function 35, 6341 and 6499) (13) 4,831,844 Stipends (6413) (14) Column 5 above - Total Indirect Cost 3,930,982 Subtotal 39,118,527

Net Allowable Direct Cost 207,747,906$

Cumulative:Total Cost of Buildings before Depreciation (1520) (15) 801,323,374$ Historical Cost of Buildings over 50 years old (16) Amount of Federal Money in building Cost (Net of #16) (17)Total Cost of Furniture & Equipment before Depreciation (1530&1540) (18) 30,094,825 Historical Cost of Furniture & Equipment over 16 years old (19) Amount of Federal Money in Furniture & Equipment (Net of #19) (20)

(8) Note A - $0 in Function 53 expenditures are included in this report on administrative costs.$968,689 in Function 99 expenditures for appraisal district costs are included in this

report on administrative costs.

83

MANSFIELD INDEPENDENT SCHOOL DISTRICT Exhibit J-3SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -

ORIGINAL BUDGET, AMENDED FINAL AND ACTUAL - CHILD NUTRITIONFor the Year Ended August 31, 2012

Budgeted Amounts


Actual Amounts,

GAAP Basis

Variance with Final Budget - Positive

(Negative)Revenues

5700 Local revenues 6,400,982$ 6,400,982$ 5,958,532$ (442,450)$ 5800 State Program Revenues 78,200 78,200 78,3305900 Federal program revenues 6,628,007 6,641,007 6,722,264 81,257 5020 Total Revenues 13,107,189 13,120,189 12,759,126 (361,193)

Expenditures0035 Food services 12,259,314 13,509,729 11,863,085 1,646,644 0051 Facilities maintenance and operations 688,681 650,207 128,074 522,133 6030 Total Expenditures 12,947,995 14,159,936 11,991,159 2,168,777

Other Financing Sources (Uses)7912 Sale of real or personal property 26,151 26,151 7080 Total Other Financing Sources (Uses) 26,151 26,151

1200 Net change in fund balances/net assets 159,194 (1,039,747) 794,118 1,833,735

0100 Net assets - September 1 (beginning) 5,587,344 5,587,344 5,587,344

3000 Net assets - August 31 (ending) 5,746,538$ 4,547,597$ 6,381,462$ 1,833,735$

Child Nutrition

84

MANSFIELD INDEPENDENT SCHOOL DISTRICT Exhibit J-4SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -

ORIGINAL BUDGET, AMENDED FINAL AND ACTUAL - DEBT SERVICE FUNDFor the Year Ended August 31, 2012

Budgeted Amounts


Actual Amounts, Budgetary

Basis

Variance with Final Budget -

Positive (Negative)

Revenues5700 Local and intermediate sources 42,954,469$ 42,954,469$ 43,045,922$ 91,453$ 5800 State program revenues 8,463,436 8,463,436 7,313,560 (1,149,876) 5020 Total revenues 51,417,905 51,417,905 50,359,482 (1,058,423)

ExpendituresDebt Service:

0071 Principal on long-term debt 15,928,467 17,828,467 15,928,467 1,900,000 0072 Interest on long-term debt 35,732,628 34,169,982 33,722,505 447,477 0073 Bond issuance costs and fees 836,491 794,018 42,473 6030 Total expenditures 51,661,095 52,834,940 50,444,990 2,389,950

1100 Excess (deficiency) of revenues over expenditures(243,190) (1,417,035) (85,508) 1,331,527

7911 Capital-related Debt Issued (Regular Bonds) 58,190,000 58,190,000 7915 Operating transfers in 584,500 584,500 7916 Premium or discount on issuance of bonds 10,101,467 10,101,466 (1) 8949 Payment to Bond Refunding Escrow Agent (67,565,576) (67,479,593) 85,983 7080 Total other financing sources (uses) 725,891 1,396,373 670,482

1200 Net change in fund balances/net assets (243,190) (691,144) 1,310,865 2,002,009

0100 Fund balances/net assets - beginning 7,559,801 7,559,801 7,559,801

3000 Fund balances/net assets - ending 7,316,611$ 6,868,657$ 8,870,666$ 2,002,009$

Debt Service

STATISTICAL

SECTION

85

Statistical Tables are used to provide detailed data on the physical, economic, social and political characteristics of a government. They are intended to provide financial report users with a broader and more complete understanding of the government and its financial affairs than it is possible from the basic financial statements. The District’s Statistical Tables usually cover ten fiscal years and often present data from outside the accounting records. The tables are unaudited due to the nature of the information contained therein.

86

MANSFIELD INDEPENDENT SCHOOL DISTRICTNET ASSETS BY COMPONENTLAST TEN FISCAL YEARS (Accrual Basis of Accounting)

2012 2011 2010 2009Governmental ActivitiesInvested in Capital Assets, Net of Related Debt (6,755,499)$ (1,167,932)$ 2,753,827$ 9,753,562$ Restricted 18,765,336 13,249,799 17,244,725 14,369,220 Unrestricted 103,720,882 103,320,172 93,408,667 94,191,642 Total Governmental Activities Net Assets 115,730,719 115,402,039 113,407,219 118,314,424

Business-type ActivitiesUnrestricted 874,251 768,686 653,627 512,418 Total Business-type Activities Net Assets 874,251 768,686 653,627 512,418

Primary GovernmentInvested in Capital Assets, Net of Related Debt (6,755,499) (1,167,932) 2,753,827 9,753,562 Restricted 18,765,336 13,249,799 17,244,725 14,369,220 Unrestricted 104,595,133 104,088,858 94,062,294 94,704,060 Total Primary Government Net Assets 116,604,970$ 116,170,725$ 114,060,846$ 118,826,842$

87

Table 1

2008 2007 2006 2005 2004 2003

15,982,154$ 13,767,614$ 23,937,249$ 16,189,753$ 13,092,137$ 14,765,832$ 13,511,636 11,695,292 10,014,949 7,669,175 8,193,411 7,655,689 80,247,815 65,194,668 35,288,949 36,711,865 36,469,137 35,251,385

109,741,605 90,657,574 69,241,147 60,570,793 57,754,685 57,672,906

306,751 117,797 28,522 306,751 117,797 28,522

15,982,154 13,767,614 23,937,249 16,189,753 13,092,137 14,765,832 13,511,636 11,695,292 10,014,949 7,669,175 8,193,411 7,655,689 80,554,566 65,312,465 35,317,471 36,711,865 36,469,137 35,251,385

110,048,356$ 90,775,371$ 69,269,669$ 60,570,793$ 57,754,685$ 57,672,906$

88

MANSFIELD INDEPENDENT SCHOOL DISTRICTCHANGES IN NET ASSETSLAST TEN FISCAL YEARS (Accrual Basis of Accounting)

2012 2011 2010 2009Expenses

Governmental Activities:Instruction 163,507,294$ 170,101,863$ 163,272,516$ 150,057,613$ Instructional resources & Media Services 4,219,006 4,487,952 4,418,426 4,031,093 Curriculum & Staff Development 2,558,425 2,537,353 2,934,834 2,387,118 Instructional Leadership 2,542,173 2,514,569 2,403,080 2,002,363 School Leadership 15,871,214 15,834,356 15,646,416 14,382,678 Guidance & Counseling Services 9,355,149 9,581,037 9,237,209 8,946,235 Social Work Services 71,347 65,867 64,763 62,476 Health Services 3,844,118 3,700,939 3,642,173 3,241,021 Student Transportation 9,253,814 9,720,955 9,101,290 7,983,672 Food Service 13,115,760 13,888,854 13,613,046 12,449,256 Extracurricular Activities 8,171,546 8,250,483 8,284,147 7,980,978 General Administration 4,867,166 4,818,303 4,407,044 4,316,196 Plant Maintenance and Operations 23,444,731 23,972,101 23,350,908 21,646,664 Security and Monitoring Services 2,660,027 2,555,072 2,564,195 2,334,253 Data Processing Services 2,737,051 2,983,474 3,877,101 2,165,964 Community Services 119,593 155,257 233,572 197,786 Interest and fiscal charges 31,153,787 31,399,229 30,614,760 33,053,653 Facilities Acquisition and Construction 3,592,248 93,949 37,097 69,705 Payments to Districts Related to SSA 127,500 112,500 Payments to Juvenile Justice Alt. Ed. Prog. 53,500 21,000 127,884 171,933 Other Intergovernmental Charges 968,689 900,040 869,244 931,441

Total Governmental Activities 302,234,138 307,695,153 298,699,705 278,412,098

Business-type Activities:Enterprise Fund - Day Care1 189,563 180,976 196,526 179,799 Enterprise Fund - Natatorium1 375,176 287,078 277,898 220,585

Total Business-type Activities 564,739 468,054 474,424 400,384

Total Primary Government Expenses 302,798,877 308,163,207 299,174,129 278,812,482

Program RevenuesGovernmental Activities:

Charges for Services:Instruction 3,853,712 306,423 3,540,000 4,164,085 Food Service 5,934,271 5,921,093 5,750,929 5,533,108 Extracurricular Activities 1,021,963 785,728 881,800 847,782 Other 2,207,338 630,649 442,405 500,741

Operating Grants and Contributions 39,972,953 51,973,150 45,723,842 40,754,158 Total Governmental Activities 52,990,237 59,617,043 56,338,976 51,799,874

Business-type Activities:Charges for Services:Enterprise Fund - Day Care1 178,928 180,633 213,504 208,968 Enterprise Fund - Natatorium1 491,376 402,480 402,129 397,083

Total Business-type Activities 670,304 583,113 615,633 606,051

Total Primary Government Program Revenues 53,660,541 60,200,156 56,954,609 52,405,925

Net (Expense) / RevenueGovernmental Activities (249,243,901) (248,078,110) (242,360,729) (226,612,224) Business-type Activities 105,565 115,059 141,209 205,667

Total Primary Government Net (Expense) / Revenue (249,138,336) (247,963,051) (242,219,520) (226,406,557)

89

Table 2Page 1 of 2

2008 2007 2006 2005 2004 2003

135,516,619$ 118,760,250$ 108,159,386$ 98,520,031$ 89,017,482$ 78,075,748$ 3,702,772 3,746,113 2,938,673 2,655,597 2,158,792 1,847,820 2,418,015 2,550,473 2,101,693 1,551,717 1,548,785 1,467,543 1,827,040 1,645,236 1,644,198 1,515,561 1,439,259 1,194,163

16,176,022 15,079,181 12,988,034 11,722,706 9,761,336 8,725,344 7,833,097 6,685,272 6,251,689 5,693,197 4,853,632 4,136,343

59,722 22,562 54,915 3,052,568 2,577,899 2,262,622 1,981,895 1,550,873 1,383,833 7,235,427 6,162,455 5,186,853 4,377,859 4,248,039 3,987,808

11,387,701 10,092,907 9,114,489 7,712,525 6,367,375 5,477,450 7,505,036 6,695,046 4,428,243 4,330,073 3,487,623 3,099,236 4,363,211 4,225,047 3,834,351 3,544,630 3,275,262 3,041,352

23,661,508 19,731,930 17,448,738 16,084,667 13,172,948 11,090,051 2,124,971 1,711,638 1,465,348 1,314,240 1,094,225 1,033,243 1,751,777 1,521,952 1,400,922 1,280,561 1,017,428 1,081,643

196,613 183,725 174,678 167,110 166,745 132,955 29,991,212 26,777,679 22,944,117 15,795,741 19,822,889 16,402,107

144,760 105,453

164,834 101,026 109,082 74,682 64,778 77,351

259,112,905 228,247,829 202,453,116 178,322,792 163,070,033 142,414,358

170,702 133,025 86,444 166,520 86,776 8,190 337,222 219,801 94,634

259,450,127 228,467,630 202,547,750 178,322,792 163,070,033 142,414,358

537,739 1,317,304 460,013 507,252 311,794 266,344 5,340,554 4,681,802 4,313,705 4,013,254 3,372,254 3,038,140

696,727 715,130 497,512 526,475 377,104 334,638 3,659,880 3,340,749 3,088,956 2,804,139 2,442,414 2,328,889

36,395,859 34,889,444 34,175,153 25,673,852 26,285,932 23,806,134 46,630,759 44,944,429 42,535,339 33,524,972 32,789,498 29,774,145

213,727 149,752 63,156 312,449 159,324 526,176 309,076 63,156

47,156,935 45,253,505 42,598,495 33,524,972 32,789,498 29,774,145

(212,482,146) (183,303,400) (159,917,777) (144,797,820) (130,280,535) (112,640,213) 188,954 89,275 (31,478)

(212,293,192) (183,214,125) (159,949,255) (144,797,820) (130,280,535) (112,640,213)

90

MANSFIELD INDEPENDENT SCHOOL DISTRICTCHANGES IN NET ASSETSLAST TEN FISCAL YEARS (Accrual Basis of Accounting)

2012 2011 2010 2009General Revenues and Other Changes in Net Assets

Governmental Activities:Property Taxes, Levied for General Purposes 97,735,195$ 95,956,165$ 97,950,432$ 92,931,920$ Property Taxes, Levied for Debt Service 42,678,614 41,812,614 38,606,576 36,579,114 State-aid Formula Grants Not Restricted 105,197,068 108,789,775 98,649,734 99,130,655 Grants and Contributions Not Restricted 23,179 Investment Earnings 1,694,908 33,371 658,752 4,695,226 Extraordinary Item 252,062 Miscellaneous 384,920 3,481,005 1,588,030 1,596,066 Transfers

Total Governmental Activities 247,713,884 250,072,930 237,453,524 235,185,043

Business-type Activities:Transfers

Total Business-type Activities

Total Primary Government General Revenues and Other Changes in Net Assets 247,713,884 250,072,930 237,453,524 235,185,043

Prior Period Adjustments 1,858,697

Change in Net AssetsGovernmental Activities (1,530,017) 1,994,820 (4,907,205) 8,572,819 Business-type Activities 105,565 115,059 141,209 205,667

Total Primary Government Change in Net Assets (1,424,452)$ 2,109,879$ (4,765,996)$ 8,778,486$

1 These activities did not start until fiscal year 2006

91

Table 2Page 2 of 2

2008 2007 2006 2005 2004 2003

83,310,338$ 90,259,714$ 86,310,970$ 76,746,234$ 67,199,679$ 59,698,432$ 32,557,528 27,945,826 22,395,705 18,897,541 15,534,720 13,791,384

102,577,334 74,377,336 52,850,345 48,251,525 45,997,926 44,642,705

10,203,353 10,522,339 6,692,914 3,718,628 1,629,989 1,940,025

2,917,624 1,614,612 398,197 (60,000)

231,566,177 204,719,827 168,588,131 147,613,928 130,362,314 120,072,546

60,000 60,000

231,566,177 204,719,827 168,648,131 147,613,928 130,362,314 120,072,546

19,084,031 21,416,427 8,670,354 2,816,108 81,779 7,432,333 188,954 89,275 28,522

19,272,985$ 21,505,702$ 8,698,876$ 2,816,108$ 81,779$ 7,432,333$

92

MANSFIELD INDEPENDENT SCHOOL DISTRICTFUND BALANCES OF GOVERNMENTAL FUNDSLAST TEN FISCAL YEARS(Modified Accrual Basis of Accounting)

2012 2011 2010 2009General Fund

Non-SpendableInventories 253,632$ 276,973$ 185,449$ 330,379$ Prepaid items 23,280

Committed: Benefits/workmen's compensation 746,815 745,308 Capital acquisitions projects 5,015,355 5,015,355 1,953,934 6,860,851 Technology projects 4,000,000 3,669,190 9,491,328 Other 1,546,218 391,097

Assigned:Other purposes 15,760,810 18,671,663

Unassigned 75,273,604 69,089,777 73,477,462 79,219,128 Total General Fund 100,326,681$ 96,722,958$ 87,401,206$ 87,546,763$

All Other Governmental FundsNon-Spendable

Inventories 153,184$ $ $ $ Restricted:

Grant funds 6,303,266 7,146,581 6,980,825 8,395,009 Capital acquisitions and contractual oblig. 84,965,832 87,542,353 109,346,166 134,688,039 Retirement of long-term debt 8,870,666 7,559,801 13,584,642 11,539,117

Committed: Campus activity funds 1,557,317

Total All Other Governmental Funds 101,850,265$ 102,248,735$ 129,911,633$ 154,622,165$

Fund balance classifications for fiscal years prior to 2011 have been recast to reflect GASB No. 54 classifications for comparative purposes.

93

Table 3

2008 2007 2006 2005 2004 2003

255,926$ 275,404$ 207,238$ 256,744$ 262,223$ 328,317$

737,918 712,756 676,210 646,517 630,600 624,637 6,603,542 6,226,316 1,194,592 1,618,432 1,458,220 3,000,000

254,314 290,853 334,795 328,341 272,316 329,006

69,083,321 56,861,074 40,917,314 31,117,231 29,178,270 26,546,077 76,935,021$ 64,366,403$ 43,330,149$ 33,967,265$ 31,801,629$ 30,828,037$

$ $ $ $ $ $

7,218,824 5,327,753 3,249,552 2,480,392 1,746,317 1,384,653 184,842,750 142,494,195 103,349,621 107,773,018 100,388,894 96,167,273 10,123,053 9,022,740 7,685,187 5,928,475 7,072,599 6,761,837

202,184,627$ 156,844,688$ 114,284,360$ 116,181,885$ 109,207,810$ 104,313,763$

94

MANSFIELD INDEPENDENT SCHOOL DISTRICTCHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDSLAST TEN FISCAL YEARS(Modified Accrual Basis of Accounting)

2012 2011 2010 2009RevenuesLocal and Intermediate Sources 155,885,508$ 150,949,495$ 149,869,587$ 145,999,234$ State Program Revenues 123,391,236 130,078,101 119,578,422 123,816,649 Federal Program Revenues 21,481,940 26,885,791 24,335,291 15,581,495 Total Revenues 300,758,684 307,913,387 293,783,300 285,397,378

ExpendituresInstruction 146,704,735 152,297,294 145,746,962 133,894,331 Instructional Resources and Media Services 3,256,185 3,183,395 3,139,000 2,885,878 Curriculum and Instructional Staff Development 2,698,109 2,535,935 2,933,416 2,384,183 Instructional Leadership 2,539,799 2,480,448 2,368,959 1,968,242 School Leadership 14,622,732 14,432,664 14,274,401 13,110,289 Guidance, Counseling, and Evaluation Services 9,121,194 9,330,377 8,991,462 8,713,965 Social Work Services 71,347 65,867 64,763 62,476 Health Services 3,699,367 3,543,459 3,489,049 3,097,217 Student (Pupil) Transportation 9,681,755 9,585,763 9,683,749 7,574,703 Food Services 11,863,085 11,599,797 11,439,137 10,343,778 Cocurricular/Extracurricular Activities 6,689,229 6,469,586 6,499,619 6,162,963 General Administration 4,671,210 4,582,982 4,171,723 4,080,875 Plant Maintenance and Operations 23,256,887 23,603,548 22,971,553 21,242,119 Security and Monitoring Services 2,685,817 2,611,565 2,534,475 2,223,533 Data Processing Services 4,140,458 2,933,737 4,933,357 2,209,573 Community Services 119,593 155,257 233,572 197,235 Debt Service - Principal on Long-term Debt 15,928,467 19,946,514 16,827,892 13,991,906 Debt Service - Interest on Long-Term Debt 33,722,505 33,932,523 33,090,112 34,081,381 Debt Service - Bond Issuance Cost and Fees 794,018 781,908 Facilities Acquisition and Construction 53,921,623 74,446,945 25,645,000 53,283,148 Payments to Fiscal Agent/Member Districts of SSA 127,500 112,500 127,884 171,933 Payments to Juvenile Justice Alternative Ed. Prog. 53,500 21,000 Other Intergovernmental Charges 968,689 900,040 869,244 931,441 Total Expenditures 351,337,804 379,553,104 320,035,329 322,611,169

Excess of Revenue Over (Under) Expenditures (50,579,120) (71,639,717) (26,252,029) (37,213,791)

Other Financing Sources (Uses)Transfers in 584,500 262,974 8,027,726 2,000,000 Transfers (Out) (584,500) (262,974) (8,027,726) (2,000,000) Proceeds from the Sale of Bonds 50,000,000 58,725,000 Proceeds of Sale of Refunding Bonds 58,190,000 130,065,000 Sale of Real and Personal Property 80,803 44,409 16,790 11,009 Premium or Discount on Issuance of Bonds 11,134,466 4,327,968 16,084,926 Payments to Refunded Bonds Escrow Agent (67,479,593) (9,783,003) (144,770,776) Extraordinary Iten, Insurance Proceeds 252,062 Other Use (15,803) Total Other Financing Sources (Uses) 51,925,676 53,298,571 1,395,940 263,071

Net Change in Fund Balances 1,346,556$ (18,341,146)$ (24,856,089)$ (36,950,720)$

Debt Service as a Percentage ofNoncapital Expenditures 16.9% 17.8% 17.2% 17.9%

Note: Debt service as a percentage of noncapital expenditures is determined by dividing debt service expenditures by total expenditures less capital outlay.

95

Table 4

2008 2007 2006 2005 2004 2003

138,178,356$ 143,903,963$ 125,428,541$ 107,629,092$ 91,106,351$ 81,588,326$ 126,837,436 98,475,684 75,298,345 66,604,321 64,574,115 62,361,926 11,496,168 10,276,112 10,906,659 7,668,426 6,823,831 5,533,540

276,511,960 252,655,759 211,633,545 181,901,839 162,504,297 149,483,792

119,956,811 105,327,398 96,371,503 88,059,852 82,147,296 72,361,079 2,589,716 2,931,845 2,119,800 1,923,111 1,651,340 1,502,589

2,414,942 2,555,202 2,100,038 1,550,062 1,556,921 1,467,543 1,792,919 1,611,115 1,610,077 1,507,031 1,439,259 1,194,163

14,998,055 14,034,743 12,065,484 10,894,427 9,205,656 8,274,469 7,607,895 6,498,787 6,084,630 5,541,629 4,750,986 4,051,135

59,722 22,562 54,915 2,914,308 2,454,941 2,152,967 1,884,915 1,490,411 1,339,127

12,769,502 8,134,025 5,205,418 4,362,250 4,370,256 4,199,607 9,581,138 8,348,935 7,568,994 6,362,623 5,550,690 4,752,497 5,805,559 5,187,215 4,260,065 4,153,704 3,553,068 3,015,889 4,167,767 3,996,611 3,606,648 3,323,044 3,159,504 2,935,094

23,461,662 19,511,045 17,171,844 16,062,429 13,339,468 11,089,513 2,115,985 1,730,064 1,439,035 1,322,761 1,152,922 1,007,311 1,704,213 1,512,689 1,339,072 1,323,546 1,013,350 1,042,037

188,527 175,639 166,592 159,024 200,040 132,955 12,487,069 9,976,913 9,270,433 7,463,536 8,047,452 6,309,259 31,190,661 29,952,365 24,851,615 23,125,309 17,084,699 14,823,072

43,486,470 41,297,263 107,703,799 74,996,033 77,128,451 90,292,794 164,834 101,026 109,082 74,682 64,778 77,351

299,457,755 265,337,821 305,197,096 254,089,968 236,929,109 229,922,399

(22,945,795) (12,682,062) (93,563,551) (72,188,129) (74,424,812) (80,438,607)

400 1,974 (400) (1,974) (60,000)

80,000,000 72,070,000 98,830,000 77,610,000 76,330,000 150,500,000 47,349,979 35,744,980 19,724,984

13,693 15,695 8,310 28,124 4,887 17,262 840,659 6,131,134 2,250,600 7,085,394 3,967,564 6,178,316

(49,288,164) (39,140,658) (25,874,014)

80,854,352 76,278,644 101,028,910 81,327,840 80,302,451 150,546,548

57,908,557$ 63,596,582$ 7,465,359$ 9,139,711$ 5,877,639$ 70,107,941$

17.6% 18.1% 17.4% 17.3% 15.9% 15.2%

96

MANSFIELD INDEPENDENT SCHOOL DISTRICTGENERAL GOVERNMENTAL REVENUES BY SOURCE 1

Last Ten Fiscal Years(Unaudited)

2012 2011 2010 2009Revenue From Local Sources:

Property Taxes 140,549,176$ 135,758,894$ 136,636,129$ 129,782,632$ Interest 1,694,908 33,371 676,580 4,745,746 User Charges, Tuition, Rental and Other 13,641,424 15,157,230 12,556,878 11,470,856

Total Revenue From Local Sources 155,885,508 150,949,495 149,869,587 145,999,234

Revenue From State Sources:Per Capita and Foundation 105,197,068 108,789,775 100,702,207 103,441,987 Other State Revenue 18,194,168 21,288,326 18,876,215 20,374,662

Total Revenue From State Sources 123,391,236 130,078,101 119,578,422 123,816,649

Revenue From Federal Sources:Received Direct from Federal Agencies 260,849 576,050 673,042 323,860 Received Through State Agencies 21,221,091 26,309,741 23,662,249 15,257,635

Total Revenue From Federal Sources 21,481,940 26,885,791 24,335,291 15,581,495

Total Revenues 300,758,684$ 307,913,387$ 293,783,300$ 285,397,378$

1 Includes General Fund, Debt Service Fund, Capital Projects Fund and Other Nonmajor Funds

97

Table 5

2008 2007 2006 2005 2004 2003

115,867,866$ 118,205,540$ 108,706,675$ 95,638,699$ 82,734,399$ 73,500,780$ 10,339,500 10,707,730 6,834,602 3,773,973 1,629,989 1,923,774 11,970,990 14,990,693 9,887,264 8,216,420 6,741,963 6,163,772

138,178,356 143,903,963 125,428,541 107,629,092 91,106,351 81,588,326

104,653,879 76,310,902 54,367,412 49,604,797 47,376,095 45,925,025 22,183,557 22,164,782 20,930,933 16,999,524 17,198,020 16,436,901

126,837,436 98,475,684 75,298,345 66,604,321 64,574,115 62,361,926

172,205 160,519 175,681 110,343 129,854 216,590 11,323,963 10,115,593 10,730,978 7,558,083 6,693,977 5,316,950 11,496,168 10,276,112 10,906,659 7,668,426 6,823,831 5,533,540

276,511,960$ 252,655,759$ 211,633,545$ 181,901,839$ 162,504,297$ 149,483,792$

98

MANSFIELD INDEPENDENT SCHOOL DISTRICT Table 6PRINCIPAL TAXPAYERSCurrent Year and Nine Years Ago(Unaudited)

% of Total % of TotalTaxable Taxable TaxableAssessed Assessed Assessed Assessed

Name of Taxpayer Nature of Property Valuation Valuation 1 Rank Valuation Valuation 2 RankXTO Energy Inc Oil and Gas 138,498,816$ 1.48% 1TTI Inc/Mouser Electronics Electronics Manufacturer 88,093,065 0.94% 2Oncor Electric Delivery Co Inc* Electric Utility 77,830,694 0.83% 3 53,811,443$ 1.16% 1Carrizo Oil & Gas Oil and Gas 71,333,120 0.76% 4Chesapeake Operating Oil and Gas 65,680,080 0.70% 5 50,447,776 1.09% 2Walmart Retail Store 54,476,402 0.58% 6Mid-America Apartments LP Apartment Managers 46,700,000 0.50% 7DFW Midstream Oil and Gas 30,170,190 0.32% 8Kroger Texas LP Retail Store 28,329,265 0.30% 9Mansfield KDC II & III LP Apartment Managers 24,872,584 0.27% 10Solvay Engineered Polymers Plastics Manufacturer 21,430,874 0.46% 3Southwestern Bell Telephone Utility 17,686,403 0.38% 4Home Depot Retail Store 17038322 0.37% 5Pier I Imports (U.S.), Inc. Retail Store 16,896,688 0.36% 6VDM LP Apartment Manager 15,263,459 0.33% 7Lowe's Home Centers, Inc. Retail Store 14591967 0.32% 8Parkland Pointe Ltd. Prtshp Apartment Manager 14,500,000 0.31% 9Spyglass of Mansfield Apartment Manager 11871211 0.26% 10

625,984,216$ 6.69% 233,538,143$ 5.04%

1 2012 Taxable Value $9,354,124,0642 2003 Taxable Value $4,629,862,528*Formerly Texas Utilities Electric Company

Source: Tax information obtained from Tarrant Appraisal District

Fiscal Year 2012 Fiscal Year 2003

99

MANSFIELD INDEPENDENT SCHOOL DISTRICT Table 7PROERTY TAX LEVIES AND COLLECTIONSLast Ten Fiscal Years(Unaudited)

Tax Roll

For Assessed or Adjusted CollectionsFiscal Appraised Tax Percent in Subsequent PercentYear Valuation Levy1 Amount of Levy1 Years2 Amount of Levy1

2003 4,197,906,445$ 71,861,650$ 69,452,461$ 96.6% 2,249,969$ 71,702,430$ 99.8%

2004 4,782,448,164 82,004,929 79,441,297 96.9% 2,397,244 81,838,541 99.8%

2005 5,403,399,519 92,980,189 90,637,869 97.5% 2,157,078 92,794,947 99.8%

2006 6,038,031,204 107,631,973 104,764,183 97.3% 2,675,937 107,440,120 99.8%

2007 6,896,362,253 116,799,359 113,825,706 97.5% 2,786,403 116,612,109 99.8%

2008 7,831,929,983 113,442,010 111,118,257 98.0% 2,124,960 113,243,217 99.8%

2009 8,012,638,378 128,357,289 125,625,216 97.9% 2,390,894 128,016,110 99.7%

2010 8,321,526,050 135,013,066 132,807,047 98.4% 1,660,917 134,467,964 99.6%

2011 8,574,290,921 135,785,731 134,310,039 98.9% 808,680 135,118,719 99.5%

2012 9,354,124,064 139,937,696 138,328,256 98.8% 138,328,256 98.8%

2 Amounts are total collections net of adjustments, and do NOT include penalties and interest.

Year of Levy To Date

1 Prior to 2009 original levy includes all property categories, 2009 and subsequent include adjustments due to gas well category not included in orginal levy. See detailed adjustments on Schedule J-1.

Collected Within Fiscal Total Collections

100

MANSFIELD INDEPENDENT SCHOOL DISTRICT Table 8RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR

GENERAL BONDED DEBT TO TOTAL GENERAL GOVERNMENTAL EXPENDITURESLast Ten Fiscal Years

Ratio ofDebt Service

Year Debt Service Expenditures Total General to GeneralEnded Interest and Governmental Governmental

August 31, Principal Fiscal Charges Total Expenditures1 Expenditures1

2003 6,309,259$ 14,823,072$ 21,132,331$ 229,922,399$ 9.19%2004 8,047,452 17,084,699 25,132,151 236,929,109 10.61%2005 7,463,536 22,318,553 29,782,089 254,089,968 11.72%2006 9,270,433 23,868,665 33,139,098 305,197,096 10.86%2007 9,976,913 29,195,082 39,171,995 265,337,821 14.76%2008 12,487,069 30,350,402 42,837,471 299,457,755 14.31%2009 13,991,906 34,081,381 48,073,287 322,611,169 14.90%2010 16,827,892 33,090,112 49,918,004 320,035,329 15.60%2011 19,946,514 34,184,596 54,131,110 379,553,104 14.26%2012 15,928,467 50,444,990 66,373,457 351,233,046 18.90%

1 Includes General Fund, Debt Service Fund, Capital Projects Fund and Other Nonmajor Funds

101

MANSFIELD INDEPENDENT SCHOOL DISTRICT Table 9INSTRUCTIONAL BUILDING INFORMATIONAugust 31, 2012(Unaudited)

District Geographic Area: 94.5 square miles

ConstructedBuilding - Sq.

Ft. AcreageElementary Schools:

Alice Ponder Elementary 1967 77,641 12.120Tarver Rendon Elementary 1969 71,047 17.500J.L. Boren Elementary 1979 57,241 16.197Charlotte Anderson Elementary 1986 69,947 10.340Glenn Harmon Elementary 1988 74,081 10.500Willie Brown Elementary 1998 65,885 16.000D.P. Morris Elementary 1998 65,885 10.000Kenneth Davis Elementary 2001 72,256 17.238Imogene Gideon Elementary 2001 72,256 12.482Thelma Jones Elementary 2003 77,038 16.592Roberta Tipps Elementary 2003 77,038 15.075Erma Nash Elementary (New) 2003 84,631 18.751Elizabeth Smith Elementary 2004 77,038 13.316Martha Reid Elementary 2004 77,038 12.500Mary Jo Sheppard Elementary 2005 79,070 12.150Janet Brockett Elementary 2005 79,070 12.758Anna May Daulton Elementary 2006 79,274 12.200Cora Spencer Elementary 2006 79,274 12.004Carol Holt Elementary 2007 79,274 12.000Louise Cabaniss Elementary 2008 74,275 12.000Annette Perry Elementary 2010 79,679 12.860Nancy Neal Elementary 2011 80,584 13.789

Intermediate Schools:Cross Timbers Intermediate 1994 108,000 16.637Mary Orr Intermediate 1998 110,229 44.000Donna Shepard Intermediate 2001 116,794 23.800Della Icenhower Intermediate 2004 122,600 32.977Mary Lillard Intermediate 2006 128,340 50.000Asa Low Intermediate 2008 133,385 37.533

Middle Schools:Brooks Wester Middle 1974 251,151 56.000Rogene Worley Middle 1986 126,689 27.310T.A. Howard Middle 1994 130,000 41.000Danny Jones Middle 2004 160,000 40.110James Coble Middle 2006 164,719 40.455Linda Jobe Middle 2008 165,350 37.217

High Schools:ACE Campus 1952 64,021 11.040Summit High 1995 370,000 60.141Mansfield High 2002 390,000 69.991Timberview High 2004 416,000 75.340Ben Barber Career Tech Academy/Frontier High 2005 180,964 13.300Legacy High 2007 426,650 69.069Lake Ridge 2012 422,411 71.637

102

MANSFIELD INDEPENDENT SCHOOL DISTRICT Table 10ECONOMICALLY DISADVANTAGED BY CAMPUSLast Ten Fiscal Years(Unaudited)

2012 2011 2010 2009 2008 2007 2006 2005 2004 2003Elementary Schools:

Alice Ponder 68.9% 73.4% 72.6% 68.3% 65.8% 59.3% 56.9% 38.6% 39.4% 36.3%Tarver Rendon 49.0% 47.8% 46.1% 41.2% 41.2% 40.5% 38.1% 36.5% 37.4% 37.3%J.L. Boren 16.5% 14.8% 12.9% 8.6% 6.5% 6.4% 7.0% 5.7% 5.8% 3.5%Charlotte Anderson 51.5% 45.8% 42.5% 40.1% 39.0% 15.7% 16.8% 13.0% 12.3% 11.7%Glenn Harmon 76.3% 75.4% 74.1% 67.2% 63.5% 50.5% 53.7% 49.6% 43.3% 42.5%Erma Nash 75.7% 74.0% 73.0% 69.5% 70.1% 66.8% 68.1% 66.2% 61.5% 58.9%Willie Brown 11.4% 11.4% 12.3% 19.6% 18.8% 17.0% 15.6% 17.2% 13.3% 11.0%D.P. Morris 61.7% 53.2% 49.5% 43.6% 39.5% 36.4% 36.8% 36.0% 30.0% 21.5%Kenneth Davis 56.7% 57.8% 54.8% 51.2% 45.4% 48.9% 42.0% 31.8% 29.2% 29.3%Imogene Gideon 52.7% 55.0% 53.3% 51.0% 43.8% 37.3% 34.1% 27.2% 26.1% 26.3%Thelma Jones 48.2% 48.4% 46.2% 42.7% 42.0% 39.0% 36.8% 32.9% 32.6%Roberta Tipps 22.3% 21.1% 21.6% 19.8% 20.2% 20.3% 21.7% 16.5% 12.7%Martha Reid 33.0% 32.7% 33.3% 29.4% 26.7% 27.8% 12.3% 8.3%Elizabeth Smith 18.0% 17.9% 17.0% 17.8% 19.2% 18.7% 19.9% 12.8%Mary Jo Sheppard 41.6% 34.8% 33.6% 30.0% 26.3% 26.8% 24.1%Janet Brockett 42.6% 44.0% 42.7% 37.4% 34.5% 31.7% 34.0%Anna May Daulton 17.4% 16.5% 20.5% 19.6% 15.9% 17.1%Cora Spencer 18.7% 18.2% 17.3% 14.6% 16.4% 12.9%Carol Holt 36.4% 37.0% 35.6% 34.1% 25.8%Louise Cabaniss 46.6% 42.9% 44.2% 39.6%Annette Perry 48.0% 54.0% 50.9%Nancy Neal 26.0%

Intermediate Schools:Cross Timbers 55.6% 50.1% 47.9% 39.6% 35.3% 29.6% 35.4% 28.8% 27.6% 24.7%Mary Orr 32.8% 34.6% 34.2% 13.6% 12.1% 13.9% 13.1% 10.3% 15.5% 13.9%Donna Shepard 46.1% 47.4% 42.6% 43.7% 40.9% 40.1% 38.1% 40.2% 40.9% 37.1%Della Icenhower 43.4% 44.8% 47.5% 42.3% 36.5% 38.6% 27.8% 24.9%Mary Lillard 24.6% 24.7% 27.7% 25.7% 24.4% 19.3%Asa Low 26.9% 24.8% 25.2%

Middle Schools:Brooks Wester 24.3% 25.4% 21.6% 14.9% 13.1% 13.3% 10.6% 10.9% 14.4% 12.3%Rogene Worley 34.4% 36.0% 42.3% 40.0% 38.3% 39.2% 38.8% 37.5% 34.3% 32.3%T.A. Howard 50.0% 46.3% 42.5% 36.4% 32.7% 29.5% 32.9% 27.9% 24.9% 20.9%Danny Jones 25.0% 26.4% 27.6% 23.3% 21.7% 23.2% 29.2%James Coble 45.8% 46.6% 43.9% 42.2% 35.8% 38.3%Linda Jobe 37.0% 36.4% 35.6%

High Schools:Mansfield 19.7% 19.7% 18.6% 15.7% 13.7% 18.6% 18.9% 16.3% 15.2% 11.8%Summit 45.6% 44.0% 43.2% 37.9% 30.5% 21.4% 14.8% 15.2% 19.6% 18.3%Timberview 34.5% 33.5% 33.1% 27.7% 27.8% 30.2% 17.8% 28.8%Legacy 31.1% 29.9% 27.5% 23.9% 25.0%Frontier 32.8% 30.7%ACE Campus 44.8% 43.3% 43.5% 31.6% 13.6% 16.3% 12.5% 26.2% 15.1% 27.5%

District 37.3% 37.0% 36.2% 32.7% 30.3% 29.1% 28.2% 25.3% 24.2% 22.4%

Source: Texas Education Agency AEIS report

GOVERMENT AUDITING

STANDARDS REPORT

SECTION

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REPORT OF INDEPENDENT AUDITORS ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN

AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

To The Board of Trustees Mansfield Independent School District Mansfield, Texas We have audited the financial statements of the governmental activities, the business type activities, each major fund, and the aggregate remaining fund information of Mansfield Independent School District (the “District”) as of and for the year ended August 31, 2012 which collectively comprise the District’s basic financial statements and have issued our report thereon dated January 17, 2013. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control over Financial Reporting In planning and performing our audit, we considered the District’s internal control over financial reporting as a basis for designing our audit procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control over financial reporting. A 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 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. Our consideration of internal control over financial reporting 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 financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.

Board of Trustees Mansfield Independent School District Page 2

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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. Closing This report is intended solely for the information and use of the board of trustees, the audit committee, management, others within the organization and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.



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REPORT OF INDEPENDENT AUDITORS ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR

PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133

To the Board of Trustees Mansfield Independent School District Mansfield, Texas Compliance We have audited Mansfield Independent School District’s (the “District”) compliance with the types of compliance requirements described in the U. S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that could have a direct and material effect on each of the District’s major federal programs for the year ended August 31, 2012. The District's major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of the District’s management. Our responsibility is to express an opinion on the District's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the District's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the District's compliance with those requirements. In our opinion, the District complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended August 31, 2012.

Board of Trustees Mansfield Independent School District Page 2

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Internal Control over Compliance Management of the District is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the District’s internal control over compliance with the requirements that could have a direct and material effect on a major federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, 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. Our consideration of 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, as defined above. Closing This report is intended solely for the information and use of the board of trustees, the audit committee, management, others within the organization and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.


FEDERAL AWARDS

SECTION

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MANSFIELD INDEPENDENT SCHOOL DISTRICT SCHEDULE OF FINDNGS AND QUESTIONED COSTS For the Year Ended August 31, 2012

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I. Summary of Auditors’ Results Financial Statements

Type of auditors’ report issued: Unqualified Internal control over financial reporting:

Material weakness(es) identified? No Significant deficiencies identified that are not considered to be material weaknesses?

Yes: Findings #12-01, #12-02 and #12-03

Noncompliance material to financial statements noted? No Federal Awards Internal control over major programs:

Material weakness(es) identified? No Significant deficiencies identified that are not considered to be material weaknesses? None reported Type of auditors’ report issued on compliance with major programs: Unqualified Any audit findings disclosed that are required to be reported in accordance with section 510(a) 2-7 of OMB Circular A-133? None

Identification of major programs: Name of Federal Program or Cluster: CFDA Numbers:

Education Jobs Fund ESEA Title III, Part A Limited English Proficiency

84.410A

84.365A

Dollar Threshold Considered Between Type A and Type B Federal Programs $578,657 Auditee qualified as low risk auditee? Yes

MANSFIELD INDEPENDENT SCHOOL DISTRICT SCHEDULE OF FINDNGS AND QUESTIONED COSTS (continued) For the Year Ended August 31, 2012

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II. Financial Statement Findings

Finding #12-01 – Segregation of Duties in Accounts Payable and Purchasing

Criteria: Segregation of duties is critical for strong internal controls, which in turn allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatement on a timely basis.

Condition: The District’s current software does not have the capability to segregate the accounts payable and purchasing functions. As such, the accounts payable employees have the ability to add vendors. An independent review of vendors added was not done throughout the year. In addition, we were unable to view the full approval chain for purchase orders. That is, the requisition approvals are removed once the purchase order is created.

Cause: The system does not provide the necessary segregation of duties nor does it provide an audit trail for the requisition approval.

Effect: A lack of segregation of duties could lead to material misstatements.

Recommendation: The District should review its vendor list for accuracy and ensure that proper internal controls are in place for critical areas such as purchasing and accounts payable.

Finding #12-02 – Capital Assets

Criteria: Capital outlay and repairs and maintenance should be recorded in specific accounts in accordance with the Texas Education Agency’s Financial Accountability System Resource Guide. In addition, capital outlay accounts should reconcile to the capital asset roll forward.

Condition: We noted that incorrect account codes were used for capital outlay and repairs and maintenance. As such, there were items that did not qualify as a capital asset that were capitalized.

Cause: Unknown.

Effect: Several adjustments were made to correct the capital asset schedules for reporting purposes.

Recommendation: The District should conduct a review of all of its capitalized assets and ensure they meet the criteria for capitalization. In addition, current year capital outlay should be recorded to the proper accounts. Training of staff on what constitutes a capital asset is also recommended.


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II. Financial Statement Findings (continued)

Finding #12-03 Campus/Student Activity Funds

Criteria: Supporting documentation for activity in campus and student accounts should be maintained. This includes issuing receipts for cash collected, deposit slips for funds deposited, receipt from courier, and supporting documentation for journal entries posted.

Condition: We visited five campuses and selected certain cash receipts, disbursements and journal entries for review. At two campuses we noted that supporting documentation is not maintained for journal entries. Only a brief description is entered into the memo field in the system. In addition, at one campus we found that receipts are not always provided for cash collected and courier receipts were not maintained. We also noted that bank deposit slips were not maintained.

Cause: Unknown Effect: The potential for a material misstatement in the campus/student activities funds is

high. Recommendation: The campus/student activity fund manuals should be reviewed and revised as

deemed necessary. In addition, at least annually, training with campus personnel on cash handling procedures should be conducted.

III. Federal Awards Findings And Questioned Costs The audit disclosed no findings or questioned costs required to be reported. IV. Summary Schedule Of Prior Audit Findings No prior year findings.


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V. Corrective Action Plan

Corrective Action Plan Finding #12-01 – Segregation of Duties in Accounts Payable and Purchasing Corrective Action: With the implementation of Skyward, this issue will be resolved. The

new software properly segregates the accounts payable and purchasing functions.

Responsible Party: Scott Weber

Estimated Completion Date: January 2013

Finding #12-02 – Capital Assets Corrective Action: The District will review its capital asset records to ensure only items

qualifying as a capital asset are included. Capital outlay and repairs and maintenance will be recorded in the proper amounts.

Responsible Party: Karen Wiesman/Elaine Cogburn

Estimated Completion Date: July 2013

Finding #12-03 – Campus/Student Activity Funds Corrective Action: Revise activity fund manuals and implement mandatory annual training

for campus staff on cash management procedures. Perform random audits throughout the year to test procedures.

Responsible Party: Karen Wiesman

Estimated Completion Date: July 2013

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MANSFIELD INDEPENDENT SCHOOL DISTRICT Exhibit K-1SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFor the Year Ended August 31, 2012

(1) (2) 2(A) (3)Federal Grantor/ Federal Pass Through

Pass-Through Grantor/ CFDA Entity Identifying FederalProgram Title Number Number Expenditures

U.S. Department of DefensePassed through the State of Texas, State Comptroller:

Flood Control - Department of the Army, Office of the Chief Dept. 12.106 None 242,775$ Total U.S. Department of Defense 242,775

U.S. Department of AgricultureDirect Programs: (Non-Cash Awards)

Natonal School Lunch Program - USDA Commodities* 10.555 220-908 596,233 Passed Through State Department of Education: (Cash Awards)

National School Breakfast Program * 10.553 71401201 1,240,099 National School Lunch Program * 10.555 71301201 4,885,932

Total Passed Through State Department of Education 6,126,031

Total U.S. Department of Agriculture 6,722,264

U.S. Department of EducationPassed Through State Department of Education:

ESEA, Title I, Part A - Improving Basic Programs 84.010A 12610101220908 1,638,795 ESEA Title II, Part A, Teacher/Principal Training 84.367A 12694501220908 281,474 ESEA Title III, Part A Limited English Proficiency 84.365A 12671001220908 367,129 IDEA-B Formula * 84.027A 126600012209086000 4,551,651 IDEA-B Preschool * 84.173A 126610012209086000 58,088 Carl D. Perkins Basic Grant 84.048A 12420006220908 163,305 Title VI, Part A Summer Shool LEP 84.369A 69551102 44,428 Education Jobs Fund 84.410A 11550101220908 5,180,775

Total U.S. Department of Education 12,285,645

U.S. Department of Health and Human ServicesPassed Through Department of State Health Services

Medical Administrative Claiming (MAC) 93.778 220-908 37,892 Total U. S. Department of Health and Human Services 37,892

Total Expenditures of Federal Awards 19,288,576$

* Clustered programs under OMB Circular A-133.

MANSFIELD INDEPENDENT SCHOOL DISTRICT Exhibit K-2 NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended August 31, 2012

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Note 1 Basis of Presentation The District accounts for all awards under federal programs in the General Fund and certain Special Revenue Funds in accordance with the Texas Education Agency’s Financial Accountability System Resource Guide. These programs are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (i.e. revenues and other financing sources) and decreases (i.e. expenditures and other financing uses) in net current assets. The modified accrual basis of accounting is used for these funds. This basis of accounting recognizes revenues in the accounting period in which they become susceptible to accrual, i.e., both measurable and available, and expenditures in the accounting period in which the liability is incurred, if measurable, except for certain compensated absences and claims and judgments, which are recognized when the obligations are expected to be liquidated with expendable available financial resources. Expenditures are recognized following the cost principles contained in OMB Circular A-87, Cost Principles for State, Local and Indian Tribal Governments, wherein certain types of expenditures are not allowable or are limited to reimbursement. Pass-through entity identifying numbers are presented where available. Federal grant funds are considered to be earned to the extent of expenditures made under the provisions of the grant, and, accordingly, when such funds are received, they are recorded as deferred revenues until earned. Generally, unused balances are returned to the grantor at the close of specified project periods. Note 2 - Basis of Presentation The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal grant activity of the District under programs of the federal government for the year ended August 31, 2012. The information in this schedule is presented in accordance with the requirements of the Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Government, and Non-Profit Organizations. Because the schedule presents only a selected portion of the operations of the District, it is not intended to and does not present the financial position, changes in net assets or cash flows of the District. Note 3 - Reconciliation of Basic Financial Statements The following is a reconciliation of expenditures of federal awards program per the Schedule of Expenditures of Federal Awards and expenditures reported on Exhibit C-3: Total shown on Schedule of Expenditures of Federal Awards 19,288,576$ IRS Refund of Federal Excise Taxes 73,910Medicaid SHARS 1,858,605 Junior ROTC 260,849

Reconciled balance 21,481,940$

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