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UUNNIITTEEDD IINNDDEEPPEENNDDEENNTT SSCCHHOOOOLL DDIISSTTRRIICCTT Laredo, Texas

CCOOMMPPRREEHHEENNSSIIVVEE

AANNNNUUAALL FFIINNAANNCCIIAALL RREEPPOORRTT

Year Ended August 31, 2015

Prepared by: The Division of Finance

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UNITED INDEPENDENT SCHOOL DISTRICT

COMPREHENSIVE ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED AUGUST 31, 2015

TABLE OF CONTENTS

INTRODUCTION SECTION

Letter of Transmittal .......................................................................................................................... 1

GFOA Certificate of Achievement .................................................................................................... 12

Principal UISD Officials .................................................................................................................... 13

Organizational Chart .......................................................................................................................... 14

Certificate of Board ........................................................................................................................... 15

FINANCIAL SECTION

Independent Auditors’ Report ........................................................................................................... 19

Management’s Discussion and Analysis ........................................................................................... 25

Basic Financial Statements:

Government-wide Financial Statements:Statement of Net Position .......................................................................................................... 39

Statement of Activities ............................................................................................................... 41

Fund Financial Statements:

Balance Sheet – Government Funds .......................................................................................... 42

Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net

Position ...................................................................................................................................... 45

Statement of Revenues, Expenditures and Changes in Fund Balances –

Government Funds................................................................................................................ 46

Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund

Balances of Governmental Funds to the Statement of Activities ......................................... 48

Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget

and Actual - General Fund .................................................................................................... 49Statement of Fiduciary Net Position - Fiduciary Funds ............................................................. 50

Schedule of the District’s Proportionate Share of the Net Pension Liability.............................. 51

Schedule of District Contributions…………………………………………………………….. 52

Notes to the Financial Statements................................................................................................... 55

Combining and Individual Fund Statements and Schedules:

Combining Balance Sheet – Non-major Governmental Funds ...................................................... 94

Combining Statement of Revenues, Expenditures, and Changes in Fund Balances –

Non-major Governmental Funds ............................................................................................... 98

Statement of Changes in Assets and Liabilities - Agency Fund ..................................................... 102

Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and

Actual:

Child Nutrition Program ............................................................................................................... 103Debt Service Fund ........................................................................................................................ 104

Texas Education Agency – Required Schedules:

Schedule of Delinquent Taxes Receivable ................................................................................... 106

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COMPREHENSIVE ANNUAL FINANCIAL REPORT


TABLE OF CONTENTS

FINANCIAL SECTION continued… Capital Assets Used in the Operation of Governmental Funds:

Investment in Governmental Funds Capital Assets by Source ..................................................... 111

Schedule by Function and Activity .............................................................................................. 112

Schedule of Changes in General Capital Assets ........................................................................... 120

STATISTICAL SECTION

Financial Trends Information:

Net Position by Component ............................................................................................................ 134

Change in Net Position ................................................................................................................... 136

General Revenues and Total Changes in Net Position ................................................................... 138

Fund Balances for Governmental Funds ........................................................................................ 140Governmental Funds Revenues ...................................................................................................... 142

Changes in Fund Balances of Governmental Funds ....................................................................... 144

Local Revenues by Source, Governmental Funds .......................................................................... 146

Revenue Capacity Information:

Assessed Value and Actual Value of Taxable Property ................................................................. 148

Property Tax Rates - Direct and Overlapping Governments .......................................................... 150

Principal Property Taxpayers ......................................................................................................... 152

Property Tax Levies and Collections .............................................................................................. 153

Debt Capacity Information:

Ratios of Net Bonded Debt to Taxable Assessed ........................................................................... 154

Legal Debt Margin Information...................................................................................................... 156

Direct and Overlapping Governmental Activities Debt ................................................................. 158Demographic and Economic Information:

Demographic and Economic Statistics ........................................................................................... 159

Principal Employers ....................................................................................................................... 160

Operating Information:

Full-time Equivalent District Employees by Type ......................................................................... 161

Expenditures, Enrollment and Per Pupil Cost ................................................................................ 162

Teacher Base Salaries ..................................................................................................................... 163

Instructional Classroom Usage ....................................................................................................... 164

FEDERAL AWARDS SECTION

Independent Auditors' Report on Compliance and on Internal Control over Financial

Reporting Based on an Audit of Financial Statements Performed in Accordancewith Government Auditing Standards .......................................................................................... 167

Independent Auditors' Report on Compliance with Requirements Applicable To each

Major Program and Internal Control over Compliance in Accordance with OMB

Circular A-133 .............................................................................................................................. 169

Schedule of Findings and Questioned Costs ...................................................................................... 171

Summary Schedule of Prior Audit Findings ...................................................................................... 173

Schedule of Expenditures of Federal Awards .................................................................................... 174

Notes on Accounting Policies for Federal Awards ............................................................................ 176

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United Independent School DistrictDivision of Finance

201 Lindenwood Drive, Laredo, Texas 78045

(956) 473-6222, Fax (956) 473-6399

[email protected]

December 16, 2015

Board of TrusteesUnited Independent School District201 Lindenwood DriveLaredo, Texas 78045

Dear Board Members:

We are pleased to present the United Independent School District (the District)Comprehensive Annual Financial Report (CAFR) for the year ending August 31, 2015.The report was prepared by the Division of Finance-Accounting Department.Responsibility for the accuracy and fairness of the financial information and disclosurescontained in the report rests solely with this division. The District’s annual auditedfinancial statements of the governmental activities, each major fund, and the aggregateremaining fund information are presented in conformity with requirements established bythe Texas Education Agency in their Financial Accountability Systems Resource Guide.The District’s independent auditors were Pattillo, Brown & Hill, L.L.P. and theiropinion letter is hereby made a part of this report. The report as submitted to the TexasEducation Agency has been modified to conform to the reporting format required by the

Government Finance Officers Association. In addition, the Management’s Discussionand Analysis section is an integral part of the CAFR and can be found on page 25.

Texas law requires that each public school district in the state undergo an annual auditconducted by an independent audit firm. This audit must be done in accordance withgenerally accepted auditing standards and the standards applicable to financial auditscontained in Government Auditing Standards issued by the Comptroller General of theUnited States. The audit must also comply with the requirements of the U.S. Office ofManagement and Budget Circular A-133, “Audits of States, Local Governments, and Non-Profit Organizations,” and other grantors regulations. The goal of the independentaudit was to provide reasonable assurance that the financial statements of United

Independent School District for fiscal year ended August 31, 2015, are free of materialmisstatement and are presented in conformity with generally accepted accounting principles (GAAP). The independent auditor’s report can be found on page 19.

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Profile of the Government

The District is a political subdivision and is an independent reporting entity as defined bythe Governmental Accounting Standards Board Statement No. 14 (GASB 14). TheDistrict is located in Webb County, Texas and serves a population of approximately

276,656 persons and provides services to a large portion of the City of Laredo. TheDistrict was established in 1961 and “united” three small school districts that were inexistence at the time. These were Cactus School District, which was located 28 milesnorth of Laredo on the Callaghan Ranch, Johnson School District, which was located inSouth Laredo on state highway 83, and Nye School District, located on the northern edgeof the City of Laredo.

The District currently comprises north and southeast Laredo, as well as, 75 percent ofWebb County covering 2,448 square miles and is considered one of the fastest growing public school districts in the state of Texas. During the last several years, the District’senrollment has risen from 41,876 students in 2010-2011 to 43,575 students in 2013-2014.

Current projections show the District’s student enrollment will continue to grow byapproximately 600 students per year for the next four years.

The District is made up of 26 Elementary Schools (Pre-Kinder to 5th Grade), 9 MiddleSchools (Grades 6, 7 and 8th), 4 High Schools, including one ninth grade campus,(Grades 9, 10, 11 and 12th), 4 Magnet Schools (Grades 9-12th), 1 Alternative EducationCenter, and 4 Recovery and Prevention Programs. The student population of the Districtin 2014-2015 was primarily Hispanic American (98.2%). The remaining populationconsisted of White Americans (0.8%), African American (0.3%), Asian/Pacific Islanders(0.6%) and the rest are two or more races (0.1%).

The policy-making functions of the District lie with a seven-member Board of Trustees(the Board), each of which is elected from a single-member district for three-yearstaggered terms. The Board receives funding from local, state and federal source entities.However, the Board is not included in any other reporting entity as defined by GASB 14.This report contains all funds pertaining to the District. Serving without compensation,Board members establish the policies by which schools operate. In carrying out the taskof setting policy, the board identifies needs and establishes priorities for the schoolsystem, allocates financial and human resources among the priority areas and evaluatesschool performance.

On an annual basis, the District presents the Board of Trustees with the proposed budgetsfor the General Operating Fund, the Debt Service Fund, and the Child Nutrition Programfor approval as required by the Texas Education Code and as described in the TexasEducation Agency’s Financial Accountability Systems Resource Guide. The proposed budget is presented to the Board summarized at the function level for each of the fundsabove. The Board is required to hold a public hearing on the proposed budget and toadopt a final budget no later than August 31, the close of the District’s fiscal year. Afteradoption of the budget, the appropriation amounts are entered into the District’s

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accounting and encumbrance system and monitoring of the expenditures andencumbrances in relation to the approved budget begins.

Budget managers have the authority to approve budget transfers anytime during the year.A budget transfer is the movement of appropriations between budget line items within the

same function. Any request to move appropriations between budget line items todifferent functions is considered a budget amendment. Any budget amendment requested by budget managers requires Board approval. Expenditure requests will not be processedunless appropriations are available in the line item.

The District feels that the budgetary controls currently in place are adequate to ensurethat expenditures remain within the approved budget and that the District complies withregulations established by the Texas Education Code and the Financial AccountabilitySystems Resource Guide.

The District evaluates the existing system of internal controls annually through self-

evaluation, internal auditing and the annual independent financial and compliance audit.Internal controls are designed to provide reasonable, but not absolute, assuranceregarding: 1) the safeguarding of assets against loss from authorized use or disposition;and 2) the reliability of financial records for preparing financial statements andmaintaining accountability for assets. The concept of reasonable assurance recognizesthat: 1) the cost of controls should not exceed benefits expected to be derived; and 2) theevaluation of costs and benefits requires estimates and judgments by management.

Academics play a significant role in the lives of our students. Our campuses offer a widevariety of courses in all academic areas, including gifted and talented and advanced placement courses at our high schools. The District continues to support existing programs such as career/technology and expanding programs such as the Science,Business, and Engineering Magnet Schools. The focal point of this year’s budget is oninstruction with budgeted expenditures for students and teachers making up over 50.8%of the General Fund budget. The District budgeted $197,118,057 for the 2014-2015school year on instructional and instructional related service funds. This represents anincrease of $10.5 million over the previous year’s budget.

The E-Chalk Teacher Email System was set up in order to facilitate communications between campuses and parents. With this system, teachers are able to place their classschedules, calendars, and homework online for parents to have easy access to theinformation at any time. Another useful tool is the School Messenger System. Thissystem enables the campuses and the District to communicate with parents by leaving phone messages in the event of an emergency, for special announcements and forattendance issues. Messages are sent in English and Spanish to both residential and cell phone numbers.

With the difficulty in accessing the city’s few libraries, some campuses have becomehubs for learning and reading through Library Nights, Family Reading Nights, Picnic Upa Good Book and Read, and Bibliotherapy. Technology Linking the Community

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program fosters technological literacy in parents and to the community through classesoffered at several campuses.

In addition, the District funds the several college readiness programs which helps providetraining for students from grades 6 – 12 on college preparatory materials and issues.

Some of the critical factors it offers are introducing the idea of college at a very early age,and encourages parental involvement through its FUNdamentals of College AdmissionsProgram that helps families make decisions about college. The District funded $875,859in 2014-2015 for this purpose.

In the spring of 2012, the State of Texas Assessments of Academic Readiness (STAAR)replaced the Texas Assessment of Knowledge and Skills (TAKS). The STAAR programat grades 3-8 will assess the same subjects and grades that are currently assessed onTAKS. At the high school level, however, grade-specific assessments will be replacedwith 12 end-of-course (EOC) assessments: Algebra I, geometry, Algebra II, biology,chemistry, physics, English I, English II, English III, World Geography, World History,and U.S. History.

On the STAAR EOC assessments, there are three levels that describe student performance:

Level III - Advanced Academic PerformanceLevel II - Satisfactory Academic PerformanceLevel I - Unsatisfactory Academic Performance.

The number of teachers with less than five years teaching experience makes up more than31.6% of the total teachers in the District. The District sustains a teacher mentor program, called “Pathfinders of the 21

st Century”, which provides role models of

effective instructional strategies for those teachers new to the profession. The District believes the Pathfinder program has had a positive impact on the TAKS test.

Factors Affecting Financial Condition

Federal Government

On Feb. 13, 2009, Congress passed the American Recovery and Reinvestment Act(ARRA) of 2009 which was signed it into law four days later. A direct response to theeconomic crisis, the Recovery Act has three immediate goals, (1) Create new jobs as wellas save existing ones, (2) Spur economic activity and invest in long-term economic

growth, and (3) Foster unprecedented levels of accountability and transparency ingovernment spending. These funds total over $20,695,336 for United ISD. To date,United ISD has spent all ARRA funds.

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State Government

Approximately 70% of the state revenue earned by the District is attributed to the studentgrowth and special populations of students it serves. The “foundation” funding level isdriven by the average daily attendance (ADA) of students and the full-time equivalents

(FTE) of special populations such as bilingual, special education and economicallydisadvantaged students. It is imperative the District takes measures to encourage studentattendance and identify those students with special needs.

The State of Texas held its 82nd legislative session in the spring of 2011. The passage ofSenate Bill 1 had an impact on state funding for public education by decreasing theamount allocated to schools by approximately 6% for the 2012 year and 8% decrease forthe 2013 year. For UISD, the state revenue based on current law means that we received$16 million less in state funding for 2012 and an expected $9 million less in 2013 for atotal reduction of $25 million.

During the 2013 83

rd

legislative session, the State of Texas adopted a biennial budget that“restored” $3.2 billion of the $4.0 billion that was cut from the basic State Aid for thefinance system during the 2011 legislative session. Several of the revenue reductionformulas were eliminated. The 2014 and 2015 fiscal years saw an increase in the RegularProgram Adjustment Factor (RPAF) from 0.98 to 1.00 which restored the regular program allotment funding to 100%. The basic allotment was increased for the bienniumas well. This increase will result in more funding for United ISD for fiscal years 2014and 2015 by $13.8 and $17.4 over current law, respectively.

Local Economy

Employment and the Labor Force

Laredo is considered the “Gateway to Mexico” and is a strategically positioned land portthat connects Mexico’s principle highway and railroad with U.S. rail lines and U.S.Interstate 35, which services Texas seaports and northern U.S. states. International trade,transportation, retail trade, oil and gas, and tourism continue to play a major role in theLaredo/Webb County area economy. Laredo’s economy reaches the over 6,000,000 people from Monterrey, Mexico and the surrounding areas. Laredo is one of the fastestgrowing cities east of the Rocky Mountains and the most competitive NAFTA crossinginto Mexico.

Webb County continues to show growth in population and industry, with the majority ofthe growth situated within the boundaries of the District. The top ten employers in thearea consist of one medical service facility, one grocery/retail store, one fast foodrestaurant, and seven government institutions including the City of Laredo, the County ofWebb, Laredo ISD, United ISD, Texas A&M International University, the Laredo SectorBorder Patrol, and US Customs. Together, these employers provide jobs for over 24,561 people. The population in the Laredo/Webb County area was estimated to have reached271,797 persons for the year 2014 according to the Laredo Development Foundation.

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The area felt the effect of the peso devaluation in 1995 and 1996 with the unemploymentrate rising into the double-digit range. However, the economy in Mexico has stabilizedand the unemployment rate in the Laredo area is the lowest on the U.S. – Mexican bordercurrently at 6.0%. This is a slight increase over the average of the past 5 years of 5.9%.

The industries in the area showing the most gains were transportation, public utilities,communications, and the government sector. The “maquiladora” companies in the areacontinue to cause the manufacturing process to shift into Mexico, with the United Statesside benefiting from increased freight forwarding, transportation, and warehousingservices.

International Trade

Webb County, Texas is located on the border where U.S. Highway 35 meets the Mexico border across from Nuevo Laredo, Tamaulipas, Mexico. International bridges I and II arelocated between Laredo and Nuevo Laredo and international bridge III is located between

Laredo and the city of Colombia, Mexico. International bridge IV is in the northwest portion of Laredo and is used primarily for freight transportation purposes. The openingof this fourth bridge has helped alleviate the traffic congestion that was beingexperienced at the other three bridges. At one point, the Laredo City Council, as well asthe County of Webb, were looking into to constructing a fifth international bridge fornon-commercial use, but to date no progress has been made.

With its proximity to Mexico, the area’s largest factor on the local economy continues to be the trade between the United States and Mexico. Laredo is the number one inland portalong the US-Mexico border crossing over $180.1 billion in imports and export accordingto the Laredo Development Foundation. The North American Free Trade Agreement(NAFTA) continues to provide Laredo with tremendous growth in freight forwarding,freight transportation and freight storage industries. Imports and exports between theUnited States and Mexico passing through the Laredo area have risen steadily over thelast five years. Over 700 of Fortune 1,000 companies do international business viaLaredo. The international bridges crossed over 2,816,285 trucks and 534,811 loaded railcars along with 447.3 million pounds of air freight in 2013-2014. This “traffic” hasspurred increases in other industries such as retail sales, construction and government.

Oil and Gas Industry

The oil and gas industry continues to be a factor in the Webb County/District economy.In prior years, with the District being considered a rural school district, mineral valuesmade up a substantial portion of the total property values for the District. The Eagle FordShale hydrocarbon production is a major oil and gas undertaking located in the NorthWestern part of the District. This production has significant importance due to itscapability of producing both gas and more oil than other traditional shale plays. Theshale play trends across Texas from the Mexican border up into East Texas, roughly 50miles wide and 400 miles long with an average thickness of 250 feet according to theTexas Railroad Commission.

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With the majority of the growth in the Laredo area occurring in our District, the mineral portion of values is approximately 31.2% of the total assessed valuation of the Districtand is expected to increase over the next ten years due to the Eagle Ford Shale production. However, 2014 and 2015 have seen a slow-down in drilling and production

due to the excess supply of oil and gas in the world markets. The District’s financialmanagement team will be studying the impact this may have on the District’s finances.

Retail Industry

The retail industry continues to have a major effect on the economy of the WebbCounty/District area. In 2010, the retail industry continued to provide more jobs than anyother industry located in the area, accounting for approximately 28,700 jobs. Laredo’sWal-Mart has the highest sales per square foot in the nation. In addition, the totalassessed valuation for real commercial property made up almost 14.46% of the District’sentire assessed property valuation, second only to residential single family units. The

retail industry is projected to stay strong if population projections remain as they are.

Banking Industry

The banking industry in the Webb County/District area remains strong with elevenfinancial institutions operating in the county/district. The banking industry has combinedtotal assets of over $1.459 trillion.

Long-term Facilities Planning

The District has experienced some growth in the student population from school year2014 to school year 2015. As such, classrooms must be provided to accommodate thisgrowth. A long-range facility master plan developed by administration includes a projected district-wide enrollment increase of approximately 3,000 students over the nextfive years. The District is projected to be at about 47,000 students for school year 2017-2018.

Faced with the challenge of providing a quality education for increasing numbers ofstudents, the Board of Trustees invited community members to explore options fordealing with this growth. A 100 member Blue Ribbon Committee, composed of parents,District patrons and community members, was appointed by the Board. After conductingdemographic studies, needs assessments, and considering the District’s growth, the BlueRibbon Committee presented its recommendations on how to handle the District’sgrowth. On November 5, 2013, the constituents of United ISD passed a bond election of$408.7 million.

The majority of the funds, $341.7 million, will be for constructing 14 new schoolsincluding the rebuilding of two current elementary schools, and additions/renovations ofapproximately $30.0 million to existing schools and other facilities. A portion of funds

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will be used for instructional technology, $22.0 million, which includes networkwiring/infrastructure and additional equipment designed to aid students and teachers inthe learning process. The remaining funds, $10.9, will be used to upgrade security andsafety equipment for all campuses within the District. Included are $3.9 million inissuance costs.

Phase I of the $408.7 million bond began in Fiscal Year 2013-2014 with the issuance of$100.0 million, which includes a bond premium of $13.2 million at TIC of 3.9%.Construction of the District’s 27

th elementary school is scheduled to be completed by July

of 2015 with the opening of the school in August of 2015. Several technology andsecurity upgrades have started and will be completed by the summer of 2015 as well. Inaddition, in August 2015, United ISD issued a second issuance of $100 million in new bonds from the $408.7 million authorized leaving $208.7 million unissued. The bond proceeds were $100.9 million which includes a bond premium of $12.9 million at TIC of3.89%. The Capital Projects Funds has inception to date expenditures of $43.6 million,of which $37.3 million were spent during 2015.

The District has spent all of the $17.4 million in Qualified School Construction Bondsissued through the American Recovery and Reinvestment Tax Act of 2009. UISD usedthese funds to replace and upgrade fire detection and alarm systems, HVACreplacements, electrical and lighting systems upgrades, roof replacements, ADAcompliance renovations and repair the District’s original athletic complex.

Debt Service

Debt Service is a major area of cost due to the District’s building program which is primarily financed by the sale of general obligation bonds. The Texas Education Code(TEC) authorizes the District to issue negotiable coupon bonds to construct, acquire, orequip school buildings, to purchase necessary sites, or to acquire or refinance propertyfinanced under a contract entered into under the Public Property Finance Act. TheDistrict is further authorized to levy and assess annual ad valorem taxes sufficient to paythe principal and interest on the bonds as they become due. The District’s primaryobjective in debt management is to keep the level of indebtedness within availableresources and within legal debt limitations.

All bond elections are held in accordance with statutory requirements and bonds areissued and taxes are levied in compliance with Sections 45.001, 45.003(b)(1), and45.003(e) of the Texas Education Code.

The District refunded $52,905,000 of outstanding bonds by issuing new bonds of$48,270,000. The District will benefit from this refunding with a net present valuesavings of $5.7 million, with a True Interest Cost (TIC) of 3.34%.

As of August 31, 2015, the District had $383.9 million of School Building Unlimited TaxBonds, Capital Appreciation Bonds and Public Property Finance Contractual Obligations,with maturities extending into the year 2045. The District’s Debt Service fund balance is$4,638,945 as of August 31, 2015.

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Fiduciary Operations

The District maintains the fiduciary responsibility of monitoring the individual campus’student activity funds. The District ensures that proper control over cash is maintainedand that all procedures are in accordance with TEA’s Financial Accountability Systems

Resource Guide. As of August 31, 2015, total assets for student activity funds were$1,495,587.

Financial Management Awards

Texas Comptroller Leadership Circle Award

The Texas Comptroller of Public Accounts launched the Texas Comptroller LeadershipCircle program in December 2009 to recognize local governments across Texas that werestriving to meet a high standard for financial transparency online. The Leadership Circleis awarded to those local governments that are opening their books to the public,

providing clear, consistent pictures of spending and sharing information in a user-friendlyformat that lets taxpayers easily drill down for more information.

Leadership Circle designees receive a certificate reflecting their Circle Award level:Gold, Silver or Bronze. “Gold” highlights those entities that are setting the bar with theirtransparency efforts. “Silver” encourages those who are making progress, and “Bronze”inspires those who are just beginning their transparency efforts.

UISD applied for and received a “Bronze” award for the first time in 2013-2014.Financial transparency will continue to be the District’s ongoing goal.

Texas Education Agency SchoolFIRST Award

For the thirteenth consecutive time, the United Independent School District has earnedthe Texas Education Agency’s (TEA) highest fiscal rating of “Superior Achievement”under the First Integrity Rating System of Texas or SchoolFIRST program for the 2013-2014 school year. Implemented in 2001, SchoolFIRST is a yearly Texas public schoolfinancial accountability program in which Texas school districts submit a financial report based on several required indicators.

The SchoolFIRST program was created by TEA in response to the Texas Legislature’srequest to address several public school system accountability issues. The programensures that school districts be held accountable for the quality of their financialmanagement practices through various given ratings.

The system is designed to encourage Texas public schools to manage their financialresources in a more fiscally appropriate manner and to allow the maximum allocation possible for direct instructional purposes. The system also discloses the quality of localmanagement and decision-making processes that impact the allocation of financialresources in Texas public schools.

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Certificates of Achievement and Excellence

The Government Finance Officers Association of the United States and Canada (GFOA)awarded a Certificate of Achievement for Excellence in Financial Reporting to UnitedIndependent School District for its comprehensive annual financial report for the fiscal

year ended August 31, 2014. This was the sixteenth consecutive year that thegovernment has achieved this prestigious award. In order to be awarded a Certificate ofAchievement, a government must publish an easily readable and efficiently organizedcomprehensive annual financial report. This report must satisfy both generally acceptedaccounting principles and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. We believe that ourcurrent comprehensive annual financial report continues to meet the Certificate ofAchievement Program’s requirements and we are submitting it to the GFOA to determineits eligibility for another certificate.

In addition, the District received the GFOA’s Distinguished Budget Presentation Awardfor its annual budget document for fiscal year 2014-2015. This is the thirteenthconsecutive year the award has been received. In order to qualify for the DistinguishedBudget Presentation Award, the government’s budget document was judged to be proficient in several categories, including as a policy document, a financial plan, anoperations guide, and a communications device.

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PRINCIPAL DISTRICT OFFICIALS

Board of Trustees

Javier Montemayor, Jr., President

Juan Roberto Ramirez, Vice-President

Ricardo Rodriguez, SecretaryRicardo Molina Sr., Parliamentarian

Aliza Flores Oliveros, Member

Ramiro Veliz, III, Member

Judd Gilpin, Member

Administrators

Roberto J. Santos, Superintendent

Gloria Rendon, Associate Superintendent for AdministrationEduardo Zuñiga, CPA, Associate Superintendent Student Support Services

David Gonzalez, Associate Superintendent of Curriculum and Instruction

Laida P. Benavides, CPA, Assistant Superintendent for Business & Finance

Enrique Rangel, Assistant Superintendent of Facilities, Construction & Student Services

David Garcia, Assistant Superintendent for Human Resources

Mike Garza, Assistant Superintendent for Administration

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Independent Auditors’ Report

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INDEPENDENT AUDITORS’ REPORT

Board of Trustees


Laredo, Texas

Report on the Financial Statements

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

and the aggregate remaining fund information of the United Independent School District (the “District”),

as of and for the year ended August 31, 2015, and the related notes to the financial statements, which

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

Management’s Responsibility for the Financial Statements

The District’s management is responsible for the preparation and fair presentation of these financial

statements in accordance with accounting principles generally accepted in the United States of America;

this includes the design, implementation, and maintenance of internal control relevant to the preparation

and fair presentation of financial statements that are free from material misstatement, whether due to

fraud or error.

Auditors’ Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted

our audit in accordance with auditing standards generally accepted in the United States of America and

the standards applicable to financial audits contained in Government Auditing Standards, issued by the

Comptroller General of the United States. Those standards require that we plan and perform the audit to

obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in

the financial statements. The procedures selected depend on the auditor’s judgment, including the

assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation

and fair presentation of the financial statements in order to design audit procedures that are appropriate in

the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s

internal control. Accordingly, we express no such opinion. An audit also includes evaluating the

appropriateness of accounting policies used and the reasonableness of significant accounting estimatesmade by management, as well as evaluating the overall presentation of the financial statements.

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

our audit opinions.

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Opinions

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

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

fund information of the United Independent School District as of August 31, 2015, and the respectivechanges in financial position and, where applicable, thereof for the year then ended in accordance with

accounting principles generally accepted in the United States of America.

Emphasis of Matter

As discussed in Note I to the financial statements, in 2015, the District adopted new accounting guidance

prescribed by GASB Statement No. 68 for its pension plan – a multiple-employer, cost-sharing, defined benefit pension plan that has a special funding situation. Because GASB Statement No. 68 implements

new measurement criteria and reporting provisions, significant information has been added to the

Government-Wide Statements. Exhibit A-1 discloses the District’s Net Pension Liability and some

deferred resource outflows and deferred resource inflows related to the District’s pension plan. Exhibit

B-1 discloses the adjustment to the District’s Beginning Net Position. Our opinion is not modified withrespect to the matter.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the Management’s

Discussion and Analysis and budgetary comparison information as listed in the table of contents, be

presented to supplement the basic financial statements. Such information, although not a part of the basic

financial statements, is required by the Governmental Accounting Standards Board who considers it to be

an essential part of financial reporting for placing the basic financial statements in an appropriate

operational, economic, or historical context. We have applied certain limited procedures to the requiredsupplementary 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.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively

comprise the United Independent School District’s basic financial statements. The introductory section,

combining and individual non major fund financial statements, statistical section, Texas EducationAgency (“TEA”) required schedules and the statistical section, as listed on the table of contents, are

presented for the purpose of additional analysis and are not required as part of the financial statements.

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

required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments,and Non-Profit Organizations, and is also not a required part of the basic financial statements.

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Management’sDiscussion and

Analysis

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MANAGEMENT’S DISCUSSION AND ANALYSIS

UNAUDITED

In this section of the Comprehensive Annual Financial Report, we, the managers of United IndependentSchool District, discuss and analyze the District’s financial performance for the fiscal year ended August31, 2015. Please read it in conjunction with the independent auditors report on page 19, and the District’sBasic Financial Statements which begin on page 39.

FINANCIAL HIGHLIGHTS

The District’s Board of Trustees approved for the Child Nutrition Program to change from a more

traditional approach for determining free and reduced lunch and breakfast through IncomeEligibility Application to the Community Eligibility Provision which offers free lunch and breakfast to all students in Districts with high percentages of low-income children. Therefore,the Food Service, Proprietary Fund in Fiscal Year 2014 is now accounted for in the District’sGeneral Fund. Any comparison of the District’s financial data between Fiscal Year 2015 and any prior years must include the Proprietary Fund account balances. Exhibit J-4, Schedule ofRevenues, Expenditures, and Changes in Fund Balance, is still required and can be found on page103.

The District’s net position decreased by $41.9 million as a result of this year’s operations. Themost significant item that affected this change in net position was the implementation of GASB68, Net Pension Liabilities, which caused a negative prior period adjustment to Net Position of$52.6 million.

Revenues for governmental activities increased, specifically through local property taxcollections by $31.6 million. State Aid increased by $1.2 million, property tax collectionsincreased by $26.0 million. This change in revenue resource was anticipated because of the Stateof Texas’ 82 legislative session which addressed the State’s budget shortfall by reducing fundingto school districts and with the steady increase in taxable property values.

The General Fund reported a fund balance this year of $89.9 million, a decrease of $514,178 fromlast year. This decrease is attributed, in part, to the expenditures exceeding revenues after otherfinancing sources and uses are taken into consideration. In addition, the District’s General FundUnassigned Fund Balance decreased by $1,009,956 to $81.7 million. More information isdetailed in the accompanying notes to the financial statements.

The District refunded $52,905,000 of outstanding bonds by issuing new bonds of $48,270,000.The District will benefit from this refunding with a net present value savings of $5.7 million, witha True Interest Cost (TIC) of 3.34%.

In addition, United ISD issued a second issuance of $100 million in new bonds from the $408.7million authorized leaving $208.7 million unissued. The bond proceeds were $100.9 millionwhich includes a bond premium of $12.9 million at TIC of 3.89%.

OVERVIEW OF THE FINANCIAL STATEMENTS

The Comprehensive Annual Financial Report (CAFR) consists of an Introductory Section, FinancialSection, Statistical Section and a Federal Awards Section. The Financial Section consists of four parts –Management’s Discussion and Analysis (this section), the basic financial statements (with accompanyingnotes), required supplementary information, and an optional section that presents combing statements fornon-major governmental funds, Texas Education Agency required schedules and capital assets used in the

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operation of governmental funds. The statements are intended to be organized so that the reader canunderstand the District as an entire operating entity.

The basic financial statements include two kinds of statements that present different views of the Districtin addition to the notes that explain some of the information in the basic financial statements and providedata that are more detailed:

The first two statements are government wide financial statements, the Statement of Net Positionand the Statement of Activities, which provide both long-term and short-term information aboutthe District’s overall financial status. They provide information about the activities of the Districtas a whole and reflect the flow of total economic resources in a manner similar to the financialreports of a business enterprise.

The remaining statements are fund financial statements that focus on individual parts of thegovernment, reporting the District’s operations in more detail than the government-widestatements.

o The governmental funds statements tell how general government services were financed

in the short-term as well as what remains for future spending.o Fiduciary fund statements provide information about the financial relationships in which

the District acts solely as a trustee or agent for the benefit of others, to whom theresources in question belong.

In Fiscal Year 2013, the District implemented Government Accounting Standards Board (GASB)Statement 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources,and Net Position and early implementation of GASB Statement 65, Items Previously Reported as Assetsand Liabilities, which change the structure of the balance sheet and changed the statement of net assets tothe statement of net position. Deferred outflows of resources is reported in a separate section followingassets, while deferred inflows of resources is reported in a separate section following liabilities. Assets plus deferred outflows of resources less liabilities and deferred inflows of resources equal net position.

However, for governmental funds, the format is assets plus deferred outflows of resources equal liabilities plus deferred inflows of resources plus fund balance. Statement 65 reclassifies items previously reportedas assets and liabilities into deferred outflows and inflows of resources. It also limits the use of the term“deferred” to only items reported as deferred outflows of resources or deferred inflows of resources. Fordetermining major fund status, assets should be combined with deferred outflows of resources andliabilities should be combined with deferred inflows of resources.

The financial statements also include notes starting on page 55 that provide narrative explanations oradditional data needed for full disclosure in the government-wide statements or the fund financialstatements.

The combining statements for non-major funds contain even more information about the District’s

individual funds. These are not required by TEA. The sections labeled TEA Required Schedules andFederal Awards Section contain data used by monitoring or regulatory agencies for assurance that theDistrict is using funds supplied in compliance with the terms of grants.

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Reporting the District as a Whole

The Statement of Net Position and the Statement of Activities

The analysis of the District’s overall condition and operation begins on page 39. The government-widestatements report information about the activities of the District as a whole using accounting methods

similar to those used by private-sector companies. The Statement of Net Position includes all of theDistrict’s assets, d eferred outflows of resources, deferred inflows of resources, liabilities and net positionat the end of the year while the Statement of Activities includes all the revenues and expenses generated by the District’s operations during the year regardless of when cash is received or paid.

The District’s revenues are divided into those provided by outside parties who share the costs of some programs such as tuition received from students from outside the District and grants provided by the U.S.Department of Education to assist children with disabilities or from disadvantaged backgrounds (programrevenues), and revenues provided by the taxpayers or by TEA in equalization funding processes (generalrevenues). All the District’s assets are reported whether they serve the current year or future years.Liabilities are considered regardless of whether they must be paid in the current or future years.

The two government-wide statements report the District’s net position and how they have changed. Net position – the difference between the District’s assets and liabilities – are one way to measure theDistrict’s financial health or financial position. Over time, increase or decrease in the District’s net position is an indicator of whether its financial health is improving or deteriorating, respectively. To fullyassess the overall health of the District, however, you should consider non-financial factors as well, suchas changes in the District’s average daily attendance or its property tax base and the condition of theDistrict’s facilities.

In the Statement of Net Position and the Statement of Activities, we outline the District activities:

Government Activities – Most of the District’s basic services are reported here, including theinstruction, counseling, co-curricular activities, transportation, maintenance, and general

administration. Property taxes and state and federal grants finance most of these activities.

Reporting the District’s Most Significant Funds

Fund Financial Statements

The Fund Financial Statements begin on page 42 and provide detailed information about the District’smost significant funds – not the District as a whole. Laws and contracts require the District to establishsome funds, such as grants received under the No Child Left Behind Act, from the U.S. Department ofEducation and such as bond covenants. The District’s administration establishes many other funds tohelp it control and manage money for particular purposes (like campus activity funds). The District’scurrently has two fund types – governmental and fiduciary – which have different accounting approaches.

Governmental funds – Most of the district’s basic services are reported in the governmentalfunds. These use modified accrual accounting (a method that measures the receipt anddisbursement of cash and all other financial assets that can be readily converted to cash) andreport balances that are available for future spending. The governmental fund statements providea detailed short-term view of the District’s general operations and the basic services it provides.We describe the differences between governmental activities (reported in the Statement of Net position and the Statement of Activities) and governmental funds in reconciliation schedules C2and C4 located on pages 45 and 48 respectively following each of the fund financial statements.

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Fiduciary funds – The District is the trustee, or fiduciary, for certain funds. It is also responsiblefor other assets that – because of a trust arrangement – can be used only for their intended purposes. All of the District’s fiduciary activities are reported in a separate Statement ofFiduciary Net position on page 50. We exclude these activities from the District’s government-wide financial statements because the District cannot use these assets to finance its operations.

FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE

Net Position

Our analysis focuses on the net position (Table A-1) and changes in net position (Table A-2) of theDistrict’s governmental activities. The most significant item that affected this change in net position wasthe implementation of GASB 68, Net Pension Liabilities which caused a negative prior period adjustmentto Net Position of $52.6 million.

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Total

Percentage

Change

Current Ass ets:

Cash and Cash Equivalents 219.4$ 177.6$ 23.5%

Current Investments 45.0 20.0 124.7%

Property Taxes Receivable 5.2 5.3 -1.9%

Allowance for Uncollectible Taxes (1.7) (1.8) -3.3%

Due from Other Governments 10.5 9.4 11.6%

Accrued Interest 0.01 0.10 -91.5%

Internal Balances - - 0.0%

Other Receivables, net 0.2 0.5 -67.5%

Inventories - Supp. and Materials 0.9 0.9 2.6%

Prepayments 0.7 0.7 6.8%

Total Current Assets: 280.1$ 212.7$ 31.7%

Noncurrent Assets :

Capital Assets 644.0$ 599.4$ 7.4%

Less Accum. depreciation (274.7) (257.6) 6.6%

Total Noncurrent Assets 369.3$ 341.8$ 8.1%

Total Assets 649.5$ 554.6$ 17.1%

Deferred Outflows of Resources:

Deferred Charge for Refunding 3.5 2.6 35.5%

Deferred Outflow Related to TRS 12.3 - 100.0%

Total Deferred Outflows of Resources: 15.8$ 2.6$ 516.7%

Current Liabilities:

Accounts Payable 10.8$ 8.7$ 23.4%

Accrued Wages Payable 10.9 9.3 17.4%Due to Other Government 0.5 1.0 -54.7%

Due to Student Groups 0.05 0.04 31.0%

Accrued Expense - 0.17 -100.0%

Unearned Revenue 0.2 0.3 -31.0%

Payable from Restricted Assets 0.1 0.5 -77.7%

Total Current Liabilities 22.5$ 20.1$ 12.3%

Non-Current Liabilities:

Due Within One Year 20.4 23.2 -12.2%

Due in More Than One Year 418.6 328.4 27.5%

Net Pension Liability (District's Share) 46.4 - 100.0%

Total Liabilities 507.8$ 371.7$ 36.6%

Deferred Inflows of Resources:Deferred Inflow Related to TRS 14.2 - 100.0%

Total Deferred Inflows of Resources : 14.2$ -$ 100.0%

89.4$ 81.6$ 9.6%

8.4 5.4 55.7%

71.7 82.7 -13.2%

Restricted for Other Purposes 2.4 0.8 184.4%

(28.8) 14.9 -293.0%

Total Net Position 143.2$ 185.4$ -22.8%

Table A-1

Governmental

Activities

Changes in United Independent School District's Net Pos ition

(In millions of dollars)

Unrestricted

2015-2014

Restricted for Capital Projects

Net Position:

2015 2014

Net Inves tment in Capital Assets

Restricted for Debt Service Fund

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In 2015, the District’s total revenues increased by $33.7 million. A significant portion, 40.3%, of theDistrict’s revenue comes from State Aid Formula funding, 40.6% comes from property taxes, whileanother 17.1% is received from operating grants and contributions (Figure A-1). The total cost of all programs and services also increased from $411.0 to $434.9 million; Over 82.2% of these costs are forinstructional and student services (Table A-2).

The District took actions to maintain costs for the 2014-2015 Fiscal Year by maintaining the same costsaving measures used in the prior fiscal year to control expenses by limiting budgets and not issuing staff pay raises. In addition, the District implemented a purchasing deadline to address savings in order toredirect expenditures where necessary.

Table A-2 outlines the District’s changes in revenues and expenses.

State Aid40%Property

Taxes

40.4%

Grants &Contributions

17%

Other 2.6%

Sources of Revenues for Fiscal Year 2015

Figure A - 1

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Total

Percentage

Change

Program Revenues

Charges for Service 5.8$ 7.7$ -24.9%

69.8 64.1 9.0%

General Revenues

Property Taxes 179.9 153.9 16.9%

State Aid - formula 178.3 177.2 0.7%

5.9 5.1 16.2%

Investment Earnings 0.3 0.2 101.9%

Other 5.3 3.2 63.7%

Total Revenues 445.4$ 411.3$ 8.3%

232.4$ 224.0$ 3.7%

6.3 6.1 4.3%

4.0 3.7 9.0%

Instructional Leadership 8.6 7.1 21.0%

School Leadership 25.1 24.2 3.7%

15.1 14.3 5.2%

Social Work Services 2.9 2.5 14.8%

Health Services 4.5 4.2 7.7%

Student Transportation 17.6 16.3 7.5%

Food Services 28.3 26.0 9.0%

Co/Extracurricular Activities 12.5 11.5 8.2%General Administration 11.9 11.2 6.4%

Plant Maintenance & Oper. 40.1 37.0 8.3%

Security & Monitoring Svcs. 8.4 6.9 21.9%

Data Processing Services 2.8 3.0 -7.1%

Community Services 0.5 0.5 -0.9%

Debt Service - Interest Long Term Debt 10.9 9.4 16.5%

Debt Service - Bond Issuance Cost/Fees 1.4 1.1 25.9%

0.1 0.2 -20.5%

2.0 1.8 13.9%

Total Expenses 435.4$ 411.0$ 6.0%

Change in Net Position 10.0$ 0.36$ 2685.0%

Net Position -- Beginning 185.4$ 185.0$ 0.2%

Prior Period Adjustment (52.2) - 100.0%

Net Position -- Ending 143.2$ 185.4$ -22.8%

Webb County Appraisal District

Instruction

Instructional Resources and Media

Curriculum Dev./Inst ructional Staff Dev.

Guidance/Counseling/Evaluation Srvs

Juvenile Justice Alt. Education Prg.

Operating Grants and Contributions

2015 2014 2015-2014

Table A-2

Governmental

Activities

Changes in United Independent School District's Revenues and Expenses


Grants and Contributions not Restricted

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Table A-3 presents the cost of each of the District’s largest functions, as well as, each function’s net cost(total cost less fees generated by the activities and intergovernmental aid). The net cost reflects funding by state revenues as well as local tax dollars.

FINANCIAL ANALYSIS OF THE DISTRICT’S FUNDS

As the District completed the year, its governmental funds (as presented in the balance sheet on pages 42and 43 reported a combined fund balance of $253.9 million, which is significantly more than last year’stotal of $186.1 million. The contributing factor to this increase is the issuance of $100 million in new bonds of which $158.4 million remains in Restricted Fund Balance as of August 31, 2015.

Revenues from governmental fund types totaled $443.9 million, an increase of $56.1 million over lastyear’s revenue. The majority of this increase comes from an increase in local tax collections of $26million.

General Fund Budgetary Highlights

Over the course of the year, the Board of Trustees revised the District’s budget several times.

These budget amendments fall into three categories:

The first category includes amendments and supplemental appropriations that were approvedshortly after the beginning of the year and reflect the actual beginning balances (versus theamounts we estimated in August 2015). These amendments are not a part of the original budgetadopted by the Board of Trustees before the beginning of the 14-15 Fiscal Year. Theseamendments included $5.6 million in outstanding encumbrances at the end of August 31, 2014.

The second category includes changes that the Board made during the fiscal year, one of whichaddressed the need to reclassify the Proprietary Fund – Food Services to a General Fund totaling$24.5 million is reclassifications only. The Board amended the budget by $7.9 million to purchase land adjacent to Alexander High School to allow for additional programs being offeredand to purchase a warehouse for additional space needed to house the Facilities Department staffand inventory, $3.9 million and $4.0 million respectively. An additional budget amendmentallowed UISD to build a road at a cost of $819,420. The Board of Trustees allocated funds to purchase more land located in the south portion of the District for a future campus at a cost of$1.2 million. Another amendment allocated $325,358 to purchase buses that are fueled by naturalgas. This amendment allowed UISD to collaborate with the Texas Railroad Commission’s

% Change % Change

Instruction & Instruction Related 242.7$ 233.7$ 3.8% 207.1$ 199.6$ 3.8%

Instructional and School Leadership 33.7 31.3 7.7% 30.0 28.1 6.5%

Plant Maintenance & Operations 40.1 37.0 8.3% 39.2 36.1 8.5%

Debt Service - Interes t & Fiscal Charges 12.3 10.5 17.5% 12.3 10.5 17.5%

20142014 2015

Table A-3

Total Cost of Net Cost of

Net Cost of Selected District Functions(In millions of dollars)

2015-20142015 2015-2014

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Alternative Fuels Clean School Bus Replacement Program. Another amendment allocated $5million for a non-capital lease to purchase computers for teachers and students to supporttechnology in the classrooms. In addition, an amendment was made at the end of the year to add$18.6 million to state program budgeted revenues and appropriated payroll expenditures torecognize the state’s contribution to the Teacher Retirement System of Texas (TRS) on-behalf ofthe District’s employees.

The third category involved amendments moving funds from programs that did not need all theresources originally appropriated to them to programs with resource needs.

Even with these adjustments, the General Fund actual expenditures were $12.2 million below the final budget amount. The most significant positive variances resulted from savings of approximately $4.5million in budgeting for staff for full time employment for positions that were vacant for some portion ofthe year, maintenance projects for $3.9 million in outstanding encumbrances and issuing purchase orderslate in the year for the construction projects discussed above which resulted $6 million of outstandingencumbrances not expended by August 31, 2015.

CAPITAL ASSETS AND DEBT ADMINISTRATION

Capital Assets

At the end of 2015, the District had $369.6 million invested in a broad range of capital assets (net ofdepreciation), including land, equipment, buildings, and vehicles (Table A-4).

The Board of Trustees held a bond election on November 5, 2013 to meet the needs of overcrowding and projected student growth. A committee of community members composed of parents, teachers andDistrict patrons were faced with the task of developing a plan to meet UISD’s growth. The voters ofUISD approved a $408.7 million bond that will provide 14 new schools (7 elementary schools, 3 middle

Total

Percentage

Change

2015 2014 2015-2014

Land 45.8$ 39.9$ 14.8%

Buildings 517.8 498.8 3.8%

Vehicles 28.8 30.4 -5.3%

Furniture & Equipment 28.0 26.4 5.9%

Other - C.I.P. 23.6 4.0 492.6%

Totals 644.0$ 599.5$ 7.4%

Total accumulated depreciat ion (274.7)$ (257.7)$ 6.6% Net capital ass ets 369.3$ 341.8$ 8.1%

Table A-4

Governmental

Activities

United Independent School District's Capital Assets


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schools and 4 ninth grade campuses), improve technology, increase safety and security and constructseveral renovation projects throughout the entire District. The construction of new schools will use83.6% of the bond proceeds. More detailed information about the District’s capital assets is presented in Note F to the Financial Statements on page 68.

As of August 31, 2015, the District had issued $200 million of the 408.7 million authorized, leaving

$208.7 unissued.

Long Term Debt

At the end of the year, the District had $435.2 million in bonds and notes outstanding as shown in TableA-5. The District’s current ratings for general obligation bonds are “AA-” by Fitch and “Aa2” withMoody’s, as well as, an “A+” with Standard & Poor’s. However, United ISD’s rating backed by theTexas Permanent School Fund guarantee is AAA by all the rating agencies. More detailed informationabout the District’s debt is presented in the Note G to the Financial Statements page 69.

ECONOMIC FACTORS AND NEXT YEAR’S BUDGET AND RATES

The District’s appointed officials considered many factors when setting the Fiscal Year 2016 Budget andtax rates. One major factor is the District’s student population growth. The District’s 2015-2016enrolment is expected to be 43,345, a decrease of 875 students from the 2014-2015 PEIMS FallSubmission. The City of Laredo also continues to experience moderate growth as it has had over the pastcouple of years.

The 79th Legislature for the State of Texas passed HB1 which required all school districts to adopt anM&O tax rate at 66.67% of its 2005-2006 tax rate for the 2007-2008 fiscal year. As a result, UnitedIndependent School District’s M&O tax rate decreased from $1.379 to $0.92. However, HB1 gaveauthority to the Board of Trustees to increase this rate an additional $0.04 over a two year period with anadditional $0.06 increase not to exceed the calculated rollback rate for 2007-2008, which allows UISD tohave an M&O tax rate of $1.04. With the issuance of $100.9 million in new bonds, the Board of Trusteesraised the Debt Service tax rate by $0.01 to $0.18486 in order to meet the increase debt service payments.

Therefore, the Board elected to adopt a tax rate of $1.22486 for fiscal year 2015-2016, with amaintenance and operations tax rate to $1.04 and debt service tax rate of $0.18486.

Total

Percentage

Change

2015 2014 2015-2014

Bonds Payable 403.7$ 318.2$ 26.9%

Notes and Leases Payable 31.5 30.1 4.8%

Total Bonds, Notes and Leases Payable 435.2$ 348.2$ 25.0%

Table A-5

Governmental

Activities

United Independent School District's Long Term Debt(In millions of dollars)

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The State of Texas held its 84th legislative session this past spring which concluded on June 1, 2015.During the session, the Legislature adopted a biennial budget that included an additional $3.2 billion for public education. Even though no significant modifications were made to the underlying school financestructure, the 2015 Legislature increased the Basic Allotment for the 2015-16 fiscal year from $5,040 to$5,140. For a district like UISD, HB7 fractional funding fix will allow UISD to receive approximately$7.3 million in state revenue for each year of the biennium. In addition, homeowners have an opportunity

to reduce their homestead exemption by an additional 10% from the existing 15% by approving thischange in the law in the November 2015 election.

The District’s Board of Trustees adopted a 2016 operating budget with a 1.1% increase from 2015;approximately $3.7 million. The District’s focus for 2016 is starting phase two of the newly authorized bond funds which includes new schools, technology and security upgrades and renovations to existingDistrict facilities, while continuing to meet the needs of 43,345 students.

Amounts available for appropriation in the General Fund budget are $339.8 million. State revenues willincrease as the student population increases. Property tax collections will also increase with the increasein taxable property values. The District will use its revenues to finance programs we currently offer.Furthermore, the District will continue to pursue an instructional facilities needs assessment plan that will

address the need for new instructional facilities throughout the District. If these estimates are realized, theDistrict’s budgetary fund balance of the general fund is not expected to change by the close of 2015-2016.

CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditorswith a general overview of the District’s finances and to demonstrate the District’s accountability for themoney it receives. If you have questions about this report, or need additional financial information,contact the District’s Finance Division, at United Independent School District, 201 Lindenwood Dr.,

Laredo, Texas 78045 or visit us at www.uisd.net.

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Basic Financial

Statements

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EXHIBIT B-1UNITED INDEPENDENT SCHOOL DISTRICT

STATEMENT OF ACTIVITIESFOR THE YEAR ENDED AUGUST 31, 2015 Net (Expense)

Revenue and

Changes in Net

PositionProgram RevenuesData

Control

Codes

1 3 4 6

Operating

Grant s and

Contributions

Charges for

ServicesExpenses

Governmental

Activities

Primary Gov.

Primary Government:

GOVERNMENTAL ACTIVITIES:1,868,764232,355,416 29,567,129 (200,919,523)Instruction $ $ $ $11

-6,339,147 295,513 (6,043,634)Instructional Resources and Media Services12

-4,006,032 3,915,991 (90,041)Curriculum and Staff Development13 -8,615,248 2,388,544 (6,226,704)Instructional Leadership21 -25,089,800 1,360,045 (23,729,755)School Leadership23 -15,067,057 3,034,508 (12,032,549)Guidance, Counseling and Evaluation Services31 -2,871,387 134,124 (2,737,263)Social Work Services32 -4,537,741 222,828 (4,314,913)Health Services33 -17,558,146 684,447 (16,873,699)Student (Pupil) Transportation34

22,74128,327,353 26,050,297 (2,254,315)Food Services35

2,953,12512,478,996 107,562 (9,418,309)Extracurricular Activities36934,38211,922,646 417,879 (10,570,385)General Administration41

-40,111,269 932,059 (39,179,210)Facilities Maintenance and Operations51 -8,420,975 370,665 (8,050,310)Security and Monitoring Services52 -2,765,522 106,193 (2,659,329)Data Processing Services53 -461,278 251,734 (209,544)Community Services61 -10,937,640 - (10,937,640)Debt Service - Interest on Long Term Debt72 -1,385,013 - (1,385,013)Debt Service - Bond Issuance Cost and Fees73 -147,255 - (147,255)Payments to Juvenile Justice Alternative Ed. Prg.95

-2,043,065 - (2,043,065)Other Intergovernmental Charges99

[TP] TOTAL PRIMARY GOVERNMENT: 435,440,986 5,779,012 69,839,518 (359,822,456)$ $ $

DataControlCodes General Revenues:

Taxes:154,008,688Property Taxes, Levied for General PurposesMT25,890,352Property Taxes, Levied for Debt ServiceDT

178,339,308State Aid - Formula GrantsSF5,896,278Grants and Contributions not RestrictedGC

349,021Investment EarningsIE4,179,319Miscellaneous Local and Intermediate RevenueMI1,121,000Special Item - Sale of LandS1

369,783,966Total General Revenues and Special ItemsTR

Net Position - Beginning

Change in Net Position

Net Position--Ending

Prior Period Adjustment

CN

NB

NE

PA

9,961,510

185,412,274

(52,181,042)

143,192,742$

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

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BALANCE SHEET

GOVERNMENTAL FUNDS

AUGUST 31, 2015

Control

Data

Codes

General

Fund Fund

Debt Service

50

Projects

Capital

6010

ASSETS

5,091,83889,264,468 124,087,927Cash and Cash Equivalents $ $ $1110 -5,000,000 40,000,000Investments - Current1120

716,4064,441,550 -Property Taxes - Delinquent1220

(239,080)(1,482,718) -Allowance for Uncollectible Taxes (Credit)1230

-6,805,281 -Receivables from Other Governments1240

-2,471 5,981Accrued Interest1250

-2,239,938 -Due from Other Funds1260 -137,109 40,388Other Receivables1290 -923,738 -Inventories1300 -722,210 -Prepayments1410

Total Assets1000 108,054,047 5,569,164 164,134,296$ $ $

LIABILITIES -4,064,863 5,688,565Accounts Payable $ $ $2110

-10,359,215 -Accrued Wages Payable2160

-160,000 -Due to Other Funds2170

452,893- -Due to Other Governments2180

-- -Due to Student Groups2190

-163,920 -Unearned Revenues2300 -116,377 -Payable from Restricted Ass ets2400

Total Liabilities2000 14,864,375 452,893 5,688,565

DEFERRED INFLOWS OF RESOURCES477,3263,245,936 -Unavailable Revenue - Property Taxes2601

Total Deferred Inflows of Resources2600 3,245,936 477,326 -

FUND BALANCES

Nonsp endable Fund Balance:

-923,738 -Inventories3410

-722,210 -Prepaid Items3430

Restricted Fund Balance:

-1,371,139 -Child Nutrition Program Grant Restriction3450

-- 158,445,731Capital Acquisition and Contractural Obligation34704,638,9453,780,589 -Retirement of Long-Term Debt3480

Committ ed Fund Balance:

-1,260,020 -Capital Expenditures for Equipment3530

Assigned Fund Balance:

-125,000 -Self-Insurance3580

-- -Other Assigned Fund Balance3590

-81,761,040 -Unassigned Fund Balance3600

Total Fund Balances3000 89,943,736 4,638,945 158,445,731

$ 108,054,047 $ 5,569,164 $ 164,134,296Total Liabilities, Deferred Inflows & Fund Balances4000


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EXHIBIT C-1

Other

Funds Funds

Governmental

Total

912,953 219,357,186$ $40,000 45,040,000

- 5,157,956- (1,721,798)

3,667,913 10,473,1947 8,459

- 2,239,938- 177,497- 923,738- 722,210

4,620,873 282,378,380$ $

1,036,411 10,789,839$ $556,366 10,915,581

2,079,938 2,239,938155 453,048

48,683 48,683

43,167 207,087- 116,377

3,764,720 24,770,553

- 3,723,262

- 3,723,262

- 923,738- 722,210

- 1,371,139

- 158,445,731- 8,419,534

- 1,260,020

- 125,000856,153 856,153

- 81,761,040

856,153 253,884,565

$ $ 282,378,3804,620,873

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EXHIBIT C-2UNITED INDEPENDENT SCHOOL DISTRICT

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE

STATEMENT OF NET POSITION

AUGUST 31, 2015

253,884,565$Total Fund Balances - Gove rnmental Funds

(7,253,671)

1 Capital assets used in governmental activities are not financial resources and therefore are not

reported in governmental funds . At the beginning of the year, the cos t of these assets was$599,480,576, the accumulated depreciation was $257,660,368 and the deferred resource out flowof $2,559,800. In addition, long-term liabilities, including bonds payable, Public Property FinanceContractual Obligations (PPFCO's), and leases totaled $348,241,888 and other long-term liabilitiesof $3,391,793 are not due and payable in the current period, and, therefore are not reported asliabilities in the funds . The net effect of including the beginning balances for capital assets (netof depreciation) and long-term debt in the governmental activities is to (decrease) net position.

(41,875,709)2 Current year capital outlays of $ 47,627,415 ($46,779,544 from facilities acquisition andconstruction with the remaining $847,871 coming from the various other functions) and long-term debt principal payments of $19,870,868, amortization of premiums in the amount of$2,717,453, refunded bonds of $52,905,000, and reductions of $4,812,401 of other liabilities, and$907,202 in deferred resource outflows are expenditures in the fund financial statements, butthey should be shown as increases in capital assets and reductions in long-term debt in the

government-wide financial statements . The retirement of capital assets of $3,130,734, the neteffect of issuing General Obligation Bonds of $87,960,000, refunding bonds in the amount of$48,270,000, a new lease of $4,956,966, the premium on the refunding bonds of $6,403,641 and the premium of the new GO bonds $12,949,471, the accret ion on Capital Appreciation Bonds of$1,924,630, and the accumulation of other benefits of $5,120,606 in the financial statementsshould be as decreases in capital assets and increases in long-term debt in the government-widefinancial statements. The net effect of including the 2015 capital outlays and debt principal payments is to (decrease) net position.

(48,290,715)3 Included in the items related to debt is the recognition of the District's proportionate share of thenet pension liability required by GASB 68 in the amount of $46,408,677, a Deferred ResourceInflow related to TRS in the amount of $14,196,552 and a Deferred Resource Outflow related toTRS in the amount of $12,314,514. This amounted to a (decrease) in Net Position in the amount

of $48,290,715.

(16,994,990)4 The 2015 depreciation expense of $19,690,214 net of adjustments/disposals of $2,695,224increases accumulated depreciation. The net effect of the current year's depreciation is to(decrease) net position.

3,723,2625 Various other reclass ifications and eliminations are necessary to convert from the modifiedaccrual basis of accounting to accrual basis of accounting. These include recognizingunavailable revenue from property taxes as revenue, eliminating interfund transactions,reclassifying the proceeds of bond sales as an increase in bonds payable, and recognizing theliabilities associated with maturing long-term debt and interest . The net effect of thesereclass ifications and recognitions is to increase net position.

143,192,742$

19 Net Position of Governmental Activities


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STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE

GOVERNMENTAL FUNDS


Control

Data

Codes Fund

General

10

Fund

Debt Service

50

Projects

Capital

60

REVENUES:

161,110,465 26,134,774 145,300Total Local and Intermediate Sources $ $ $5700

192,580,901 2,136,871 -Stat e Program Revenues5800

30,083,310 - -Federal P rogram Revenues5900

Total Revenues5020 383,774,676 28,271,645 145,300

EXPENDITURES:

Current:

204,816,088 - -Instruction0011

5,832,985 - -Instructional Resources and Media Services0012

356,138 - -Curriculum and In structional Staff Development0013

6,697,255 - -Instructional Leadership002121,991,751 - -School Leadership0023

13,000,925 - -Guidance, Counseling and Evaluation Services0031

2,889,271 - -Social Work Services00324,573,387 - -Health Services0033

15,506,199 - -Student (Pupil) Transportation003426,412,691 - -Food Services0035

11,288,287 - -Extracurricular Activities0036

11,751,236 - -General Administrat ion004137,412,794 - -Facilities Maintenance and Operations0051

8,279,926 - -Security and Monitoring Services0052

2,603,422 - -Data Processing Services0053

223,729 - -Community Services0061

Debt Service:

3,525,869 16,345,000 -Principal on Long Term Debt0071

662,797 10,723,253 -Interest on Long Term Debt0072

1,370 521,603 862,040Bond Issuance Cost and Fees0073

Capital Outlay:

10,350,380 - 36,429,164Facilities Acquisition and Construction0081

Intergovernmental: 147,255 - -Payments to Juvenile Justice Alternative Ed. Prg.00952,043,065 - -Webb County Appraisal District0099

Total Expenditures6030 390,366,820 27,589,856 37,291,204

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

(6,592,144) 681,789 (37,145,904)

OTHER FINANCING SOURCES (USES):

- 48,270,000 -Refunding Bonds Issued7901

- - 87,960,000Capital Related Debt Issued (Regular Bonds)7911

1,121,000 - -Sale of Real and Personal Property7912

4,956,966 - - Non-Capital Leases7913

- 6,403,641 12,949,471Premium or Discount on Issuance of Bonds7916

- (54,156,617) -Payment to Bond Refunding Escrow Agent (Use)8940

Total Other Financing Sources (Uses)7080

6,077,966 517,024 100,909,471

1200 Net Change in Fund Balances (514,178) 1,198,813 63,763,567

0100 Fund Balance - September 1 (Beginning) 90,457,914 3,440,132 94,682,164

3000 Fund Balance - August 31 (Ending) $ 89,943,736 $ 4,638,945 $ 158,445,731

The notes to the financial statements a

united isd 2015

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