HUGHES SPRINGS INDEPENDENT SCHOOL DISTRICT ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED AUGUST 31, 2009_part2 pot

Management’s Discussion and Analysis
Hughes Springs Independent School District
For the Fiscal Year Ended August 31, 2009


-
UNAUDITED-



Table II
Hughes Springs Independent School
District

CHANGES IN NET ASSETS


Governmental
Activities
2009
Governmental
Activities
2008
Revenues:
Program Revenues:
Charges for Services $340,752 $240,293
Operating grants and contributions 1,540,519 1,721,064
General Revenues:
Maintenance and operations taxes 3,272,108 3,919,852
Debt service taxes -0- 212,782
State aid – formula grants 5,719,724 4,970,602

Investment Earnings 59,185 82,516
Miscellaneous 6,574 29,566
Total Revenue 10,938,862 11,176,675

Expenses:
Instruction, curriculum and media services 5,644,728 5,685,799
Instructional and school leadership 479,124 459,101
Student support services 725,182 503,119
Child nutrition 433,402 459,011
Cocurricular activities 569,532 560,846
General administration 434,737 537,069
Plant maintenance, security & data
processing
1,539,289 973,341
Debt services 150,707 156,660
Payments to Fiscal Agent 168,712 77,052
Total Expenses 10,145,413 9,411,998

Increase in net assets before transfers
and special items
793,449 1,764,677
Beginning net assets at 9/01 7,715,148 5,950,471
Prior Period Adjustment 19,427
Ending net assets at 8/31 $8,528,024 $7,715,148

9
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Management’s Discussion and Analysis
Hughes Springs Independent School District
For the Fiscal Year Ended August 31, 2009


-
UNAUDITED-

TABLE II
CHART A – REVENUES
Investments on
earnings
1%
Charges for Services
3%
Operating Grants
and Contributions
13%
Maintenance and
operations taxes
30%
Miscellaneous
0%
State aid - formula
grants
53%

TABLE II
CHART B – EXPENSES
Co-curricular
6%
Child Nutrition
4%
Student Support
7%
Leadership
5%
Gen. Administration
4%
Plant Maint.,
Security & Data
15%
Debt Service
2%
Pmts. to Fiscal
Agents
2%
Inst., Curr., & Media
55%


10
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Management’s Discussion and Analysis

Hughes Springs Independent School District
For the Fiscal Year Ended August 31, 2009


-
UNAUDITED-



The District's total revenues decreased by 2.13%. The total cost of all programs and services increased by
7.79%. Most of the increases were the results of higher cost in plant maintenance and construction.

• The District’s ADA increased from the prior year.

The cost of all governmental activities this year was $ 10,145,413. As shown in the Statement of
Activities on page 15, the amount that our taxpayers ultimately financed for these activities through
District taxes was $2,478,659 because some of the costs were paid by those who directly benefited from
the programs ($340,752) or by other governments and organizations that subsidized certain programs with
grants and contributions ($1,540,519) or by unrestricted grants and other revenue ($5,785,483).


THE DISTRICT'S FUNDS

As the District completed the year, its governmental funds (as presented in the balance sheet on page 16)
reported a combined fund balance of $5,771,117, which is more than last year's total of $4,880,559.
Included in this year's total change in fund balance is an increase of $876,892 in the District's General
Fund.

Over the course of the year, the Board of Trustees revised the District's budget several times. These
budget amendments fall into two categories. The first category includes amendments and supplemental

appropriations that were approved shortly after the beginning of the year and reflect the actual beginning
balances (versus the amounts we estimated in August 2008). The second category involved amendments
moving funds from programs that did not need all the resources originally appropriated to them to
programs with resource needs.

The District's General Fund balance of $5,682,745 reported on pages 16 and 42 differs from the General
Fund's budgetary fund balance of $4,810,361 reported in the budgetary comparison schedule on page 42.


CAPITAL ASSET AND DEBT ADMINISTRATION

Capital Assets
At the end of 2009, the District had $22,856,662 invested in a broad range of capital assets, including
facilities and equipment for instruction, transportation, athletics, administration, and maintenance. There
was an increase in capital assets of $369,972 over last year. The increase was primarily construction in
progress for new facilities, renovation of existing facilities and purchase of new buses and other vehicles.

The District's fiscal year 2010 has plans for major capital asset expenditures. More detailed information
about the District's capital assets is presented in Note IV-F to the financial statements.

Debt

At year-end, the District had outstanding bonds of $2,970,000, which was a decrease of $90,000.

11
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Management’s Discussion and Analysis
Hughes Springs Independent School District
For the Fiscal Year Ended August 31, 2009

-
UNAUDITED-

12
The District has copiers under capital leases. Interest rates for the leases are 10.5% and all are 48 or 60
month leases. At year-end, the District had outstanding lease payments of $49,853.


ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES

The District's elected and appointed officials considered many factors when setting the fiscal-year 2010
budget and tax rates.

These indicators were taken into account when adopting the General Fund budget for 2010. Amounts
appropriated in the General Fund budget total $8.4 million, a slight decrease as the final 2009 budget of
$8.7 million. Property taxes (up due to an increase in assessed valuation) account for part of the increase
in available revenue. ADA is up which also accounts for the increase in available revenue. If these
estimates are realized, the District's budgetary General Fund balance is expected to remain close to the
same at the close of 2010. More importantly, however, this will have been accomplished in spite of
unfunded mandates.


CONTACTING THE DISTRICT'S FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors
with a general overview of the District's finances and to show the District's accountability for the money it
receives. If you have questions about this report or need additional financial information, contact the
District's business office, at Hughes Springs Independent School District, P.O. Box 398, Hughes Springs,

Texas.

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BASIC FINANCIAL STATEMENTS



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EXHIBIT A-1
HUGHES SPRINGS INDEPENDENT SCHOOL DISTRICT
STATEMENT OF NET ASSETS
AUGUST 31, 2009

Control
Data
Codes
Governmental
Activities
Primary Government
ASSETS
11,533,726
Cash and Cash Equivalents
$
1110
254,800
Property Taxes Receivable (Delinquent)
1220
(15,288)
Allowance for Uncollectible Taxes
1230
536,182
Due from Other Governments
1240
30,403
Inventories
1300
Capital Assets:
100,050
Land
1510
4,323,808
Buildings, Net
1520

1,121,644
Furniture and Equipment, Net
1530
Total Assets
1000
17,885,325
LIABILITIES
25,327
Accounts Payable
2110
94,463
Payroll Deductions & Withholdings
2150
229,443
Accrued Wages Payable
2160
5,986,795
Due to Other Governments
2180
80
Accrued Expenses
2200
1,340
Deferred Revenues
2300
Noncurrent Liabilities
106,511
Due Within One Year
2501
2,913,342

Due in More Than One Year
2502
Total Liabilities
2000
9,357,301
NET ASSETS
2,525,649
Invested in Capital Assets, Net of Related Debt
3200
2,899
Restricted for Debt Service
3850
10,745
Restricted for Campus Activities
3870
5,988,731
Unrestricted Net Assets
3900
Total Net Assets
3000
8,528,024
$
14
The notes to the financial statements are an integral part of this statement.
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EXHIBIT B-1
HUGHES SPRINGS INDEPENDENT SCHOOL DISTRICT
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED AUGUST 31, 2009

Net (Expense)
Revenue and
Changes in Net
Assets
Program Revenues
Data
Control
Codes
1 3 4 6
Operating
Grants and
Contributions
Charges for
Services
Expenses
Governmental
Activities
Primary Gov.
Primary Government:
GOVERNMENTAL ACTIVITIES:
66,113 5,187,168
1,007,633
(4,113,422)
Instruction
$ $ $ $
11
- 421,152
8,074
(413,078)
Instructional Resources and Media Services

12
- 36,408
462
(35,946)
Curriculum and Instructional Staff Development
13
42,174 479,124
17,190
(419,760)
School Leadership
23
- 83,957
3,177
(80,780)
Guidance, Counseling and Evaluation Services
31
- 67,881
11,503
(56,378)
Social Work Services
32
- 57,911
3,088
(54,823)
Health Services
33
- 515,433
45,877
(469,556)
Student (Pupil) Transportation

34
161,737 433,402
340,077
68,412
Food Services
35
51,767 569,532
57,330
(460,435)
Extracurricular Activities
36
- 434,737
11,732
(423,005)
General Administration
41
18,961 1,112,322
33,740
(1,059,621)
Plant Maintenance and Operations
51
- 25,441
637
(24,804)
Security and Monitoring Services
52
- 58,135
-
(58,135)
Data Processing Services

53
- 150,276
-
(150,276)
Debt Service - Interest on Long Term Debt
72
- 431
-
(431)
Debt Service - Bond Issuance Cost and Fees
73
- 343,391
-
(343,391)
Facilities Acquisition and Construction
81
- 63,947
-
(63,947)
Payments to Fiscal Agent/Member Districts of SSA
93
- 104,765
-
(104,765)
Other Intergovernmental Charges
99
[TP] TOTAL PRIMARY GOVERNMENT:
10,145,413 340,752 1,540,519 (8,264,142)$ $ $
Data
Control

Codes
General Revenues:
Taxes:
3,272,108
Property Taxes, Levied for General Purposes
MT
5,719,724
Grants and Contributions not Restricted
GC
59,185
Investment Earnings
IE
6,574
Miscellaneous Local and Intermediate Revenue
MI
9,057,591
Total General Revenues
TR
Net Assets Beginning
Change in Net Assets
Net Assets Ending
Prior Period Adjustment
CN
NB
NE
PA
793,449
7,715,148
19,427
8,528,024 $

15
The notes to the financial statements are an integral part of this statement.
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EXHIBIT C-1
HUGHES SPRINGS INDEPENDENT SCHOOL DISTRICT
BALANCE SHEET
GOVERNMENTAL FUNDS
AUGUST 31, 2009
Control
Data
Codes
General
Fund Funds
Other
Funds
Governmental
Total
10
ASSETS
63,473 11,464,794 11,528,267
Cash and Cash Equivalents
$ $ $
1110
13,670 241,130 254,800
Property Taxes - Delinquent
1220
(820)(14,468) (15,288)
Allowance for Uncollectible Taxes (Credit)
1230

204,897 331,285 536,182
Due from Other Governments
1240
- 205,045 205,045
Due from Other Funds
1260
18,482 11,921 30,403
Inventories
1300
Total Assets
1000
12,239,707 299,702 12,539,409
$ $ $
LIABILITIES AND FUND BALANCES
Liabilities:
- 25,327 25,327
Accounts Payable
$ $ $
2110
- 94,463 94,463
Payroll Deductions and Withholdings Payable
2150
16,432 213,011 229,443
Accrued Wages Payable
2160
173,807 25,779 199,586
Due to Other Funds
2170
6,940 5,979,855 5,986,795
Due to Other Governments

2180
80
-
80
Accrued Expenditures
2200
14,071 218,527 232,598
Deferred Revenues
2300
Total Liabilities
2000
6,556,962 211,330 6,768,292
Fund Balances:
Reserved For:
18,482 11,921 30,403
Investments in Inventory
3410
2,899 - 2,899
Retirement of Long Term Debt
3420
48,705 - 48,705
Food Service
3450
10,745 - 10,745
Other Purposes
3490
Unreserved Designated For:
- 2,500,000 2,500,000
Construction
3510

- 22,791 22,791
Self Insurance
3540
Unreserved and Undesignated:
- 3,148,033 3,148,033
Reported in the General Fund
3600
7,541 - 7,541
Reported in Special Revenue Funds
3610
Total Fund Balances
3000
5,682,745 88,372 5,771,117
Total Liabilities and Fund Balances
4000
12,239,707 299,702 12,539,409
$ $ $
16
The notes to the financial statements are an integral part of this statement.
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EXHIBIT C-2
HUGHES SPRINGS INDEPENDENT SCHOOL DISTRICT
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE
STATEMENT OF NET ASSETS
AUGUST 31, 2009
5,771,117
$
Total Fund Balances - Governmental Funds
-

1
The District uses internal service funds to charge the costs of certain activities, such as The District uses internal service funds to charge the costs of certain activities, such as
self-insurance and printing, to appropriate functions in other funds. The assets and
The District uses internal service funds to charge the costs of certain activities, such as
self-insurance and printing, to appropriate functions in other funds. The assets and
liabilities of the internal service funds are included in governmental activities in the
The District uses internal service funds to charge the costs of certain activities, such as
self-insurance and printing, to appropriate functions in other funds. The assets and
liabilities of the internal service funds are included in governmental activities in the
statement of net assets. The net effect of this consolidation is to increase(decrease)
net assets.
2,619,304
2
Capital assets used in governmental activities are not financial resources and therefore Capital assets used in governmental activities are not financial resources and therefore
are not reported in governmental funds. At the beginning of the year, the cost of these
Capital assets used in governmental activities are not financial resources and therefore
are not reported in governmental funds. At the beginning of the year, the cost of these
assets was $22,486,650 and the accumulated depreciation was $16,768,596. In
Capital assets used in governmental activities are not financial resources and therefore
are not reported in governmental funds. At the beginning of the year, the cost of these
assets was $22,486,650 and the accumulated depreciation was $16,768,596. In
addition, long-term liabilities, including bonds payable, are not due and payable in the
current period, and, therefore are not reported as liabilities in the funds. The net effect
Capital assets used in governmental activities are not financial resources and therefore
are not reported in governmental funds. At the beginning of the year, the cost of these
assets was $22,486,650 and the accumulated depreciation was $16,768,596. In
addition, long-term liabilities, including bonds payable, are not due and payable in the
current period, and, therefore are not reported as liabilities in the funds. The net effect
of including the beginning balances for capital assets (net of depreciation) and long-
Capital assets used in governmental activities are not financial resources and therefore

are not reported in governmental funds. At the beginning of the year, the cost of these
assets was $22,486,650 and the accumulated depreciation was $16,768,596. In
addition, long-term liabilities, including bonds payable, are not due and payable in the
current period, and, therefore are not reported as liabilities in the funds. The net effect
of including the beginning balances for capital assets (net of depreciation) and long-
term debt in the governmental activities is to increase (decrease) net assets.
482,267
3
Current year capital outlays and long-term debt principal payments are expenditures in Current year capital outlays and long-term debt principal payments are expenditures in
the fund financial statements,but they should be shown as increases in capital assets
Current year capital outlays and long-term debt principal payments are expenditures in
the fund financial statements,but they should be shown as increases in capital assets
and reductions in long-term debt in the government-wide financial statements. The net
Current year capital outlays and long-term debt principal payments are expenditures in
the fund financial statements,but they should be shown as increases in capital assets
and reductions in long-term debt in the government-wide financial statements. The net
effect of including the 2009 capital outlays and debt principal payments is to increase
(decrease) net assets.
(542,524)
4
The 2009 depreciation expense increases accumulated depreciation. The net effect of The 2009 depreciation expense increases accumulated depreciation. The net effect of
the current year's depreciation is to decrease net assets.
197,860
5
Various other reclassifications and eliminations are necessary to convert from the Various other reclassifications and eliminations are necessary to convert from the
modified accrual basis of accounting to accrual basis of accounting. These include
Various other reclassifications and eliminations are necessary to convert from the
modified accrual basis of accounting to accrual basis of accounting. These include
recognizing deferred revenue as revenue, eliminating interfund transactions,
Various other reclassifications and eliminations are necessary to convert from the

modified accrual basis of accounting to accrual basis of accounting. These include
recognizing deferred revenue as revenue, eliminating interfund transactions,
reclassifying the proceeds of bond sales as an increase in bonds payable, and
recognizing the liabilities associated with maturing long-term debt and interest. The net
Various other reclassifications and eliminations are necessary to convert from the
modified accrual basis of accounting to accrual basis of accounting. These include
recognizing deferred revenue as revenue, eliminating interfund transactions,
reclassifying the proceeds of bond sales as an increase in bonds payable, and
recognizing the liabilities associated with maturing long-term debt and interest. The net
effect of these reclassifications and recognitions is to increase (decrease) net assets.
8,528,024
$
19
Net Assets of Governmental Activities
17
The notes to the financial statements are an integral part of this statement.
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EXHIBIT C-3
HUGHES SPRINGS INDEPENDENT SCHOOL DISTRICT
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED AUGUST 31, 2009
Control
Data
Codes
10
General
Fund Funds
Other

Funds
Governmental
Total
REVENUES:
207,610 3,500,690 3,708,300
Total Local and Intermediate Sources
$ $ $
5700
186,059 5,976,631 6,162,690
State Program Revenues
5800
1,071,186 - 1,071,186
Federal Program Revenues
5900
Total Revenues
5020
9,477,321 1,464,855 10,942,176
EXPENDITURES:
Current:
809,434 4,363,678 5,173,112
Instruction
0011
- 421,152 421,152
Instructional Resources and Media Services
0012
- 36,408 36,408
Curriculum and Instructional Staff Development
0013
- 479,124 479,124
School Leadership

0023
- 83,957 83,957
Guidance, Counseling and Evaluation Services
0031
10,082 57,799 67,881
Social Work Services
0032
- 57,911 57,911
Health Services
0033
40,981 503,785 544,766
Student (Pupil) Transportation
0034
433,402 - 433,402
Food Services
0035
50,856 358,282 409,138
Extracurricular Activities
0036
3,422 404,795 408,217
General Administration
0041
31,327 957,609 988,936
Facilities Maintenance and Operations
0051
- 25,441 25,441
Security and Monitoring Services
0052
- 58,135 58,135
Data Processing Services

0053
Debt Service:
90,000 22,295 112,295
Debt Service - Principal on Long Term Debt
0071
145,325 4,951 150,276
Debt Service - Interest on Long Term Debt
0072
- 431 431
Debt Service - Bond Issuance Cost and Fees
0073
Capital Outlay:
- 465,862 465,862
Facilities Acquisition and Construction
0081
Intergovernmental:
- 63,947 63,947
Payments to Fiscal Agent/Member Districts of SSA
0093
- 104,765 104,765
Other Intergovernmental Charges
0099
Total Expenditures
6030
8,470,327 1,614,829 10,085,156
1100
Excess (Deficiency) of Revenues Over (Under)
Expenditures
1,006,994 (149,974) 857,020
OTHER FINANCING SOURCES (USES):

- 33,398 33,398
Capital Leases
7913
163,640 - 163,640
Transfers In
7915
- (163,500) (163,500)
Transfers Out (Use)
8911
Total Other Financing Sources (Uses)
7080
(130,102) 163,640 33,538
1200
Net Change in Fund Balances
876,892 13,666 890,558
0100
Fund Balance - September 1 (Beginning)
4,805,853 74,706 4,880,559
3000
Fund Balance - August 31 (Ending)
$
5,682,745
$
88,372
$
5,771,117
18
The notes to the financial statements are an integral part of this statement.
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EXHIBIT C-4
HUGHES SPRINGS INDEPENDENT SCHOOL DISTRICT
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED AUGUST 31, 2009
890,558 $
Total Net Change in Fund Balances - Governmental Funds
-
The District uses internal service funds to charge the costs of certain activities, such as The District uses internal service funds to charge the costs of certain activities, such as
self-insurance and printing, to appropriate functions in other funds. The net income
The District uses internal service funds to charge the costs of certain activities, such as
self-insurance and printing, to appropriate functions in other funds. The net income
(loss) of internal service funds are reported with governmental activities. The net effect
The District uses internal service funds to charge the costs of certain activities, such as
self-insurance and printing, to appropriate functions in other funds. The net income
(loss) of internal service funds are reported with governmental activities. The net effect
of this consolidation is to increase (decrease) net assets.
482,267
Current year capital outlays and long-term debt principal payments are expenditures in Current year capital outlays and long-term debt principal payments are expenditures in
the fund financial statements, but they should be shown as increases in capital assets and
Current year capital outlays and long-term debt principal payments are expenditures in
the fund financial statements, but they should be shown as increases in capital assets and
reductions in long-term debt in the government-wide financial statements. The net effect
Current year capital outlays and long-term debt principal payments are expenditures in
the fund financial statements, but they should be shown as increases in capital assets and
reductions in long-term debt in the government-wide financial statements. The net effect
of removing the 2009 capital outlays and debt principal payments is to increase
(decrease) net assets.
(542,524)
Depreciation is not recognized as an expense in governmental funds since it does not Depreciation is not recognized as an expense in governmental funds since it does not

require the use of current financial resources. The net effect of the current year's
Depreciation is not recognized as an expense in governmental funds since it does not
require the use of current financial resources. The net effect of the current year's
depreciation is to decrease net assets.
(36,852)
Various other reclassifications and eliminations are necessary to convert from the Various other reclassifications and eliminations are necessary to convert from the
modified accrual basis of accounting to accrual basis of accounting. These include
Various other reclassifications and eliminations are necessary to convert from the
modified accrual basis of accounting to accrual basis of accounting. These include
recognizing deferred revenue as revenue, adjusting current year revenue to show the
Various other reclassifications and eliminations are necessary to convert from the
modified accrual basis of accounting to accrual basis of accounting. These include
recognizing deferred revenue as revenue, adjusting current year revenue to show the
revenue earned from the current year's tax levy, eliminating interfund transactions,
reclassifying the proceeds of bond sales, and recognizing the liabilities associated with
Various other reclassifications and eliminations are necessary to convert from the
modified accrual basis of accounting to accrual basis of accounting. These include
recognizing deferred revenue as revenue, adjusting current year revenue to show the
revenue earned from the current year's tax levy, eliminating interfund transactions,
reclassifying the proceeds of bond sales, and recognizing the liabilities associated with
maturing long-term debt and interest. The net effect of these reclassifications and
Various other reclassifications and eliminations are necessary to convert from the
modified accrual basis of accounting to accrual basis of accounting. These include
recognizing deferred revenue as revenue, adjusting current year revenue to show the
revenue earned from the current year's tax levy, eliminating interfund transactions,
reclassifying the proceeds of bond sales, and recognizing the liabilities associated with
maturing long-term debt and interest. The net effect of these reclassifications and
recognitions is to increase (decrease) net assets.
793,449 $
Change in Net Assets of Governmental Activities

19
The notes to the financial statements are an integral part of this statement.
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