For the Fiscal Year Ended August 31, 2012 - Scanned Retina · for the fiscal year ended August 31, 2012 is presented herein. The CAFR is management’s report of the financial operations

For the Fiscal Year Ended August 31, 2012

KATY INDEPENDENT SCHOOL DISTRICT

COMPREHENSIVE ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED AUGUST 31, 2012

PREPARED BY THE FINANCE DEPARTMENT

William L. Moore Chief Financial Officer

Christopher J. Smith

Business Manager

Coreen T. Miller Accounting Supervisor

Anne M. Faichtinger

Finance Officer

6301 S. Stadium Lane P.O. Box 159

Katy, Texas 77492-0159

TABLE OF CONTENTS

Page Exhibit INTRODUCTORY SECTION Transmittal Letter i Certificate of Achievement viii Certificate of Excellence x Certificate of Board xii Principal Officials and Advisors xiii Administrative Organizational Chart xiv FINANCIAL SECTION Independent Auditors’ Report 1 Management’s Discussion and Analysis 3 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position 17 A-1 Statement of Activities 18 B-1 Fund Financial Statements: Balance Sheet – Governmental Funds 20 C-1 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 23 C-2 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds 24 C-3 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities 26 C-4 Statement of Net Position – Proprietary Funds – Internal Service Funds 27 D-1 Statement of Revenues, Expenses, and Changes in Fund Net Position – Proprietary Fund Types – Internal Service Funds 28 D-2 Statement of Cash Flows – Proprietary Fund Types – Internal Service Funds 29 D-3 Statement of Fiduciary Assets and Liabilities – Agency Funds 30 E-1 Notes to Financial Statements 31

TABLE OF CONTENTS

Page Exhibit FINANCIAL SECTION (continued) Required Supplementary Information: Schedule of Revenues, Expenditures, and Changes in Fund Balances – Original Budget, Amended Final, and Actual – General Fund 74 F-1 Notes to Required Supplementary Information 76 Other Supplementary Information: Comparative Statements, Combining Statements, and Budget Comparisons: General Fund: Comparative Balance Sheet – General Fund 82 G-1 Schedule of Revenues – Budget and Actual – General Fund 83 G-2 Schedule of Expenditures – Budget and Actual – General Fund 84 G-3 Debt Service Fund: Comparative Balance Sheet – Debt Service Fund 91 H-1 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Original Budget, Amended Final, and Actual – Debt Service Fund 92 H-2 Capital Projects Fund: Comparative Balance Sheet – Capital Projects Fund 96 I-1 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Capital Projects Fund 98 I-2 Nonmajor Governmental Funds: Combining Balance Sheet – Nonmajor Governmental Funds 106 J-1 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Governmental Funds 114 J-2 Schedule of Revenues, Expenditures, and Changes in Fund Balances Original Budget, Amended Final, and Actual – Nutrition and Food Service and Education Jobs Fund 122 J-3 Internal Service Funds: Combining Statement of Net Position – Internal Service Funds 126 K-1 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position – Internal Service Funds 127 K-2 Combining Statement of Cash Flows – Internal Service Funds 128 K-3 Fiduciary Funds: Statement of Changes in Fiduciary Assets and Liabilities – Agency Funds 130 L-1 Schedule of Changes in Due to Student Groups – Agency Funds 131 L-2

TABLE OF CONTENTS

Page Exhibit FINANCIAL SECTION (continued) Other Supplementary Information: (continued) Capital Assets Used in the Operations of Governmental Funds: Comparative Schedule by Source 134 M-1 Schedule by Function and Activity 135 M-2 Schedule of Changes by Function and Activity 138 M-3 General Long-Term Debt on Governmental Funds: Bond Schedule 142 N-1 Compliance Schedules: Schedule of Delinquent Taxes Receivable 148 O-1 Schedule of Expenditures for Computation of Indirect Costs for 2013-2014 150 O-2 Schedule of Required Responses to Selected School FIRST Indicators 151 O-3 STATISTICAL SECTION (Unaudited) Financial Trends Information: Net Position by Component – Last Ten Fiscal Years 156 I Changes in Net Position – Last Ten Fiscal Years 158 II Fund Balances of Governmental Funds – Last Ten Fiscal Years 160 III Changes in Fund Balances – Last Ten Fiscal Years 162 IV Revenue Capacity Information: Assessed Value and Actual Value of Taxable Property – Last Ten Fiscal Years 165 V Property Tax Rates – Direct and Overlapping Governments – Last Ten Fiscal Years 166 VI Principal Taxpayers – Current Year and Nine Years Ago 170 VII Property Tax Levies and Collections – Last Ten Fiscal Years 171 VIII Debt Capacity Information: Ratios of Outstanding Debt by Type – Last Ten Fiscal Years 174 IX Ratios of Net General Obligation Bonded Debt Outstanding – Last Ten Fiscal Years 175 X Direct and Overlapping Governmental Activities Debt 176 XI

TABLE OF CONTENTS

Page Exhibit STATISTICAL SECTION (Unaudited) (continued) Demographic and Economic Information: Demographic and Economic Statistics – Last Ten Fiscal Years 180 XII Principal Employers – Current Year and Nine Years Ago 181 XIII Operating Information: Full-Time Equivalent District Employees by Position – Last Ten Fiscal Years 184 XIV Operating Statistics – Last Ten Fiscal Years 186 XV Teacher Base Salaries – Last Ten Fiscal Years 188 XVI School Building Information – Last Ten Fiscal Years 190 XVII Fund Balance and Cash Flow Calculation Worksheet – General Fund 200 XVIII Katy ISD Map and Facility Locations 201

THIS PAGE INTENTIONALLY LEFT BLANK

INTRODUCTORY SECTION


i

January 22, 2013 The Board of Trustees and Citizens Katy Independent School District 6301 South Stadium Lane P.O. Box 159 Katy, Texas 77492-0159 Dear Board Members and Citizens: The Comprehensive Annual Financial Report (CAFR) of the Katy Independent School District (the District) for the fiscal year ended August 31, 2012 is presented herein. The CAFR is management’s report of the financial operations of the District for the Board of Education (the Board), patrons, taxpayers, employees, grantor agencies, the Texas Education Agency (TEA), and other interested parties. The Government-wide Financial Statements in this report provide an overview of the District’s governmental activities, while detailed Fund Financial Statements describe specific activities of each fund group used in accounting for the District’s financial transactions. This report has been prepared by the District’s Finance Department in accordance with the accounting principles and reporting standards promulgated by the governmental Accounting Standards Board (GASB) and the official rules published by the Texas Education Agency. The CAFR is presented in three sections: Introductory, Financial, and Statistical. The Introductory Section includes this transmittal letter, a list of principal officials and advisors, and an organizational chart. The Financial Section includes the Independent Auditors’ Report, Management’s Discussion and Analysis (MD&A), basic financial statements, required supplementary information, and other supplementary information. The Statistical Section is designed to reflect social and economic data, financial and fiscal trends, and demographic information. District management assumes full responsibility for the completeness, fairness, and accuracy of the information contained in this report. We believe that the data presented is accurate in all material respects and is presented in a manner to fairly display the financial position of the District as measured by the financial activity of its various funds. We also believe that all necessary disclosures are included to enable the reader to gain full understanding of the District’s financial activities. The Texas Education Code Section 44.008 requires an annual audit of the accounts, financial records, and transactions of the District by independent certified public accountants selected by the Board. This requirement has been complied with, and the Independent auditors’ Report has been included in this report. The independent audit of the financial statements of the District was part of a broader, federally mandated “Single Audit” designed to meet the special needs of the federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the District’s internal controls and compliance with legal requirements, with special emphasis on internal controls and compliance with legal requirements involving the administration of federal awards. These reports are available in the District’s separately issued Single Audit Report. Generally Accepted Accounting Principles (GAAP) requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The District’s MD&A can be found immediately following the report of the independent auditors.

ii

PROFILE OF THE DISTRICT The Katy Independent School District was established in 1919 and is governed by an elected Board of seven trustees. The District is a recognized political subdivision of the State of Texas and has the responsibility for and control over all activities related to public education within its 181 square mile boundary. Located approximately 28 miles west of downtown Houston, the District has a population of approximately 271,000 and extends beyond the City of Katy into Harris, Fort Bend, and Waller counties. The District and the City of Katy are governed independently, with each having individual taxing authority. The District is an independent entity and has no component units. Katy ISD has an enrollment of more than 62,110 students and is comprised of 53 campuses including 32 elementary schools, 12 junior high schools, 6 comprehensive high schools, a high school of choice, an alternative learning center, and a career and technology center. Katy ISD provides a learning environment that ensures quality education. Its balanced, dynamic curriculum and cooperative partnership with parents and community prepare students for the changes and challenges of the future and empowers them to pursue productive and fulfilling lives. The District is a partnership of teachers, parents, and the community. Because of this working alliance, each year Katy ISD students, staff, schools, and volunteers win numerous state and national awards. Attesting to the solid relationship between the District and the community, Katy ISD offers an award winning Partners in Education program, providing approximately one volunteer for every four children in the District. Volunteers donated more than 768,821 hours in 2011-12. In addition, Katy ISD is the first school district in the world to adopt a Junior Achievement (JA) “whole district” approach, providing JA curriculum at each grade level and at every campus. Katy ISD teachers have online access to a rigorous and relevant curriculum that is aligned to state and national standards. They collaboratively design instruction promoting meaningful learning experiences; encourage connections between and among the disciplines; and promote academic, emotional, physical, social and behavioral skills. Relevant tasks are developed to assess student learning through a variety of ways including formative, summative, authentic, formal, informal, and project-based. Students are encouraged to be actively involved in using evaluation criteria to self-monitor, self-reflect, and self-evaluate. Individual student data is used to inform and guide instruction. Student achievement on statewide tests consistently surpasses statewide achievement levels. Scores for the PSAT, SAT, and ACT rank above both state and national averages. Katy ISD students consistently win individual and team championships (state, national, and international) in academics, athletics, and fine arts. Several publications and services, including School Match, a nationwide service which assists families in matching schools with the needs of their families, consistently rank Katy ISD among the nation’s top school districts. Information on the district website provides parents and community members with the curriculum and other resources used in instruction. Campus and teacher websites offer pertinent communication to assist with the parent-teacher-student connection. The District is a leader among Texas public school districts in the integration of technology and education and maintains more than 27,000 centrally managed computers as well as mobile wireless labs at every campus. An IP based phone system provides each classroom with a phone and integration with various infrastructure applications including email. Katy ISD has implemented a number of web based applications allowing for aggregation of data, in-depth reporting, and remote access. Katy ISD is in its fourth year of a mobile learning program providing 2,300 Smartphones to fifth grade students at 18 elementary campuses and 1,200 Smartphones at three junior high campuses. The District is in the first year of implementing tablets into four elementary campuses with each starting with 100 devices to distribute in a variety of ways. In 2011-12 Katy ISD implemented a “bring your own device” program at every campus allowing students and teachers to bring their personal wireless devices to school and connect to the filtered, public Wi-Fi. Katy ISD continues to push the envelope in regards to preparing our students to learn, live and work in the information age.

iii

Katy ISD is comprised of dedicated and aspiring professionals with a common goal “to do whatever it takes” for student success. The emphasis is on meeting the needs of students through engaging instruction, a supportive classroom environment, and a wide variety of extracurricular activities. ECONOMIC CONDITION AND OUTLOOK Local Economy The area’s economy is diverse with concentrations in healthcare, real estate, oil and gas, commercial building, retail trade, and service producing industries. Many employers recruit their professional workers from the west Houston area; therefore, local educational institutions are a key component to producing employees with high educational backgrounds. The greatest strength of the area’s economy is its human capital. Maintaining the competitive advantage of having well-educated and highly compensated workers requires a number of educational initiatives, including the public support of local schools as they enroll larger and more diverse student bodies and the access to higher education for residents by public schools and businesses working with local universities. When one factors in the reputation of Katy ISD’s educational programs as reflected by its academic achievements, the school district is expected to continue its strong growth and development. Amenities such as the school system, proximity to employment and activity centers, and an effective transportation system combine to attract new residents. Fueled by Houston’s robust energy and oil and gas sectors, several large projects are occurring, including the ongoing construction of several master planned residential developments, and the opening of facilities by Texas Medical Center staples like Texas Children’s, Methodist and Memorial Herman Hospitals. In addition, residents will have more mobility options with access to I-10 and the continued expansion of the Grand Parkway which will stretch across the northwest part of the district from I-10 to Highway 290. These projects continue to stimulate residential and commercial growth with hotels, restaurants and shopping centers leading the way. Growth According to American Schools and Universities Magazine, Katy ISD is the 67th largest school district in the nation and is the second fastest growing school district over the past 10 years and third fastest growing over the past 20 years of the 100 largest districts. With 2011-12 enrollments of 62,110 the District’s growth is showing no signs of stopping. The District’s latest demographic report predicts that with moderate growth projections, over 83,000 students will attend Katy ISD schools by the year 2020. There are many reasons for the District’s growth but a community survey revealed that the primary reason new residents move to the Katy area is because of its schools. It appears that the population of the District continues to grow and all indicators point to continued growth over the next decade. This growth makes it imperative for the District to continue to plan wisely for the future. A need for additional facilities continues to be a financial focal point of the District. A successful Bond election was held in the fall of 2010 providing $459 million for the construction, renovation and equipping of facilities and the purchase of land and buses. In August 2012, three new elementary schools and a new junior high school opened to support the rapid enrollment growth. A new high school and two comprehensive high school renovations are scheduled to be completed in the fall of 2013. The District is an active member of a coalition of fast-growing school districts that work with legislators to address problems, needs, and challenges specific to districts in a fast-growth environment. Facility funding, operating costs associated with additional facilities, tax rate limitations, and other problem areas experienced by growing districts are the focus of the coalition.

iv

FINANCIAL INFORMATION Accounting Systems The Board of Trustees maintains a system of accounting controls designed to assist the administration in meeting its responsibility for accurately reporting the financial condition of the District. The system is designed to provide reasonable assurance that assets are safeguarded against loss, theft, or misuse so activities can be recorded and transacted by the administration for the preparation of the District’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the District’s comprehensive framework of internal controls has been designed to provide reasonable, rather than an absolute, assurance that the financial statements will be free from material misstatement. The cost of operating the District’s schools and the revenues to cover these costs are accounted for through the General Fund. Food service operations and special programs funded by local, state and federal government grants designed to accomplish a particular objective are accounted for in Special Revenue Funds. The District accounts for school construction financed by bond sales through a Capital Projects Fund. A specific portion of the tax rate is dedicated to payment of bond principal and interest. These transactions are recorded in the Debt Service Fund. The District has established Internal Service Funds to account for the transactions of its print shop operations, self-insured workers’ compensation, health insurance, and auto liability plans. With the exception of the auto liability, income is derived primarily from charges to governmental funds based on usage. Included in the CAFR as Agency Funds are financial schedules of student activity funds. Accounting for these funds is managed centrally by the Finance Department, using the same uniform accounting procedures and guidelines as the General Fund. The District’s accounting records are maintained on a modified accrual basis for governmental fund types and a full accrual basis for the proprietary fund types as prescribed by Texas Education Agency Financial Accountability System Resource Guide (Resource Guide). Additionally, the District has prepared the Government-wide Financial Statements on the full accrual basis as required by Governmental Accounting Standards Board Statement No. 34. Financial data is submitted by the District to the Texas Education Agency through the Public Education Information Management System (PEIMS). The data is then analyzed, reviewed and presented to the State Board of Education. Budgetary Process State law requires that every local education agency in Texas prepare and file an annual budget of anticipated revenues and expenditures with the Texas Education Agency. The budget itself is prepared utilizing a detailed line item approach for governmental fund types and is prepared in accordance with the budgeting requirements as outlined in the State Resource Guide. It is the intent of the District that the budgetary process results in the most effective mix of the educational and financial resources available while attaining the goals and objectives of the District. This includes the identification and prioritization of as many separate educational and education support components as reasonably possible. These components are initially identified and prioritized by the organizational manager most directly responsible and are later reviewed by principals, department heads, central administrators, a budget committee, and finally the Board of Trustees. This priority budgeting approach allows the District to establish layers of expenditures that can be matched to the anticipated revenues and desired levels of fund balances. The ultimate decision of the level of funding and components to be funded is the responsibility of the Board.

v

The budget may be amended during the year to address unanticipated or changing needs of the District. Changes to functional expenditure categories, revenue objects, or other sources and uses accounts require Board approval. Significant Financial Activities Katy ISD is now in the second year of the State of Texas’s fiscal biennium and is still managing the effects of State’s budget shortfall. The regular session of the 82nd Texas Legislature focused on a $26.7 billion shortfall for the 2012-2013 Biennium. The regular legislative session ended without any major decisions being made on behalf of public education. However, the Governor called a special session with public education being the primary focus. Senate Bill 1 was passed reducing the state funding for public education $5.4 billion. On average, individual school districts’ funding was reduced approximately five to six percent each year of the biennium. The District’s total tax base grew over $900 million in 2011-12, an increase of 4.6%. The major growth continued to be residential with single-family residential values increasing 2.7%. Residential properties, including multi-family residences, comprised 66.6% of the total tax base, commercial property 27.0%, vacant land 6.1%, and minerals less than 1%. Property located in Katy ISD is appraised by three County Appraisal Districts (CAD’s). The District has an inter-local agreement with the City of Katy to participate in a Tax Increment Reinvestment Zone (TIRZ). Maintenance and Operation (M&O) taxes collected on real property located within the reinvestment zone are contributed to the TIRZ and used to service bonded debt on a multipurpose facility located with the zone. Tax contributions exceeding the annual debt requirements and related expenses are returned to the District to be used within the TIRZ at the discretion of the District. Technology is a high priority with expenditures focused on equipping new schools, the replacement of equipment in existing schools, and providing new and updated software. The technology strategic plan and long-range facility plan continue to be reviewed and modified as necessary to ensure continued support and integration of technology both at the campus and support facilities. State legislation passed in 2005 reduced the District’s M&O tax rate from $1.63 to $1.445 in 2006-07 and to $1.0866 in 2007-08. School Boards are given local discretion to increase the M&O tax rates by four cents without holding an election. The District’s 2011-12 M&O tax rate maintains the additional four cent increase originally adopted in 2006-07. The tax rates per $100 of assessed value at 100% of market value since the legislative change are as follows:

2011-12 2010-11 2009-10 2008-09 2007-08 2006-07 2005-06

General Fund 1.1266$ 1.1266$ 1.1266$ 1.1266$ 1.1266$ 1.4850$ 1.6300$ Debt Service Fund 0.4000 0.4000 0.4000 0.4000 0.4000 0.3300 0.3700 Total 1.5266$ 1.5266$ 1.5266$ 1.5266$ 1.5266$ 1.8150$ 2.0000$

vi

CASH MANAGEMENT POLICIES AND PRACTICES It is the practice of the District to pursue an active cash management program which stresses safety of principal and interest while generating favorable rates of return. This program is maintained in such a fashion so as to provide a sufficient level of liquidity to support anticipated expenditures without subjecting the District to material, unfavorable fluctuations of market and interest rate risk. Direct purchases of U.S. Treasury or Agency securities are competitively bid and invested in accordance with statutory guidelines and local District policy. The District’s investments also include participation in local government investment pools. This provides liquidity and additional diversification of the investment portfolio. Furthermore, the District expedites the receipt of revenues via electronic transfer and the utilization of lockbox accounts and defers expenditures, when appropriate, to maintain maximum use of funds. The total amount of investment income earned by the District for the fiscal year ended August 31, 2012 was $1.2 million. RISK MANAGEMENT The objectives of the risk management program are to safeguard the assets of the District, minimize the financial effect of potential losses, and to provide a reasonable level of employee benefits at an affordable funding level. Through these processes, Risk Management will strive to provide a safe and orderly learning environment for students, employees and patrons. The District’s property and casualty insurance is provided by national commercial carriers. In addition, Workers’ Compensation risks are self-funding and include the purchase of an excess Workers’ Compensation policy for coverage related to excessive Workers’ Compensation claims. Various types of insurance coverages are made available to the employees. Similar to Workers’ Compensation, the District’s medical insurance program is self-funded and includes the purchase of stop loss insurance for excessive claims. Portions of the coverages available, such as medical and life insurance are partially paid by the District. Other available benefits offered to employees on a voluntary basis include dental, vision, supplemental cancer, disability insurance, personal legal, Section 125 flexible spending accounts for qualified medical and dependent care expenses, and group term life as well as dependent and supplemental life policies. AWARDS AND ACKNOWLEDGEMENTS Financial Reporting Awards Katy ISD was awarded the Texas Comptroller of Public Account’s Gold Leadership Award that spotlights local government financial transparency. The award recognizes districts that keep their books open to the public; provide clear, consistent pictures of spending; and shares information in a user-friendly format that lets taxpayers easily access additional information. For the tenth consecutive year, the District scored the highest possible rating of “Superior Achievement” for the Schools FIRST (Financial Integrity Rating System of Texas), a financial accountability system for Texas School Districts developed by the Texas Education Agency in response to Senate Bill 875 of the 76th Texas Legislature in 1999. The primary goal of Schools FIRST is to ensure quality performance in the management of school districts’ financial resources, a goal made more significant due to the complexity of accounting associated with the Texas school finance system. The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the District for its CAFR for the fiscal year ended August 31, 2011 the twenty-ninth consecutive year that the District has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and

efficientlyprinciples A CertificAnnual Fiare submit Additionaof School ended AugComprehestandards Acknowle We apprecwork coopThis coopprograms. Also, we wplanning a Finally, a this report

y organized Cgenerally acc

cate of Achievinancial Repotting it to the G

lly, the DistricBusiness Offigust 31, 2011.ensive Annualfor which this

edgements

ciate the suppperatively to eeration is indi

would like to and conducting

special thankt on a timely b

Comprehensiveepted in the U

vement is valirt continues toGFOA to dete

ct was awardeicials Internati. This award hl Financial Res award was gr

port of the Boensure the besicative of the

express an apg the financial

s to the Finanbasis.

e Annual FinUnited States o

d for a periodo meet the rermine its eligi

ed the Certificional (ASBO) has also been eport for the ranted.

oard, the residst education fostrong suppor

preciation to al affairs of the

nce Departmen

vii

nancial Reporof America and

d of one year quirements ofibility for certi

cate of Excellefor its Comprreceived for tyear ended A

dents of the Dfor its studentsrt for the attain

all employeese District in a r

nt for its dilig

rt. The repod applicable le

only. We belf the Certificaification.

ence in Financrehensive Anntwenty-nine coAugust 31, 20

District, and ths and the prudnment of exce

s in the Districresponsible an

gence and ded

rt must satisfegal requirem

lieve our currate of Achieve

cial Reportingnual Financialonsecutive yea012 continues

he business cdent developmellence in the

ct for their intend progressive

dicated service

fy both accouents.

rent Compreheement program

g by the Assocl Report for thars. We belies to conform

community, alment of the DiDistrict’s edu

erest and suppe manner.

e in helping pr

unting

ensive m and

ciation he year ve the to the

ll who istrict.

ucation

port in

repare

viii


CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE IN FINANCIAL REPORTING

The Government Finance Officers Associate of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to Katy Independent School District, Texas for its Comprehensive Annual Financial Report for the fiscal year ended August 31, 2011. In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized Comprehensive Annual Financial Report, whose contents conform to program standards. Such reports must satisfy both accounting principles generally accepted in the United States of America and applicable legal requirements. Receiving the award is recognition that a school system has met the highest standards of excellence in government accounting and financial reporting.

ix

x


CERTIFICATE OF EXCELLENCE IN

FINANCIAL REPORTING The Association of School Business Officials International (ASBO) awarded a Certificate of Excellence in Financial Reporting to Katy Independent School District for its Comprehensive Annual Financial Report for the fiscal year ended August 31, 2011. The Certificate of Excellence in Financial Reporting is an award of recognition granted by ASBO. The award certifies that the recipient school system has presented its Comprehensive Annual Financial Report to the ASBO Panel of Review for critical review and evaluation and that the report was judged to have complied with the principles and practices of financial reporting recognized by ASBO. Receiving the award is recognition that a school system has met the highest standards of excellence in school financial reporting.

xi

Katy

We, the und

were review

such school

y IndependenName of Sch

dersigned, cer

wed and appro

l district on th

nt School Disthool District

rtify that the a

oved for the y

he 22nd day o

trict

attached annu

year ended Au

of January 20

Certifi

xii

ual financial r

ugust 31, 201

013.

ficate of Boar

HarrisCounty

reports of the

12 at a meetin

ard

e above name

ng of the Boa

101-County D

No

d school distr

ard of Trustee

914Districto.

rict

es of

xiii


COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED AUGUST 31, 2012

PRINCIPAL OFFICIALS AND ADVISORS

Board of Trustees

Rebecca Fox .......................................................................................................................................... President Volunteer Joe M. Adams .............................................................................................................................. Vice President Business Owner Henry Dibrell ........................................................................................................................................ Secretary Business Executive Bryan Michalsky .................................................................................................................................. Treasurer Business Executive Charles Griffin ....................................................................................................................... Sergeant-At-Arms Commercial Pilot Terry Huckaby ....................................................................................................................................... Member Educator Bill Proctor ............................................................................................................................................. Member Retiree

Administrative Staff Alton L. Frailey............................................................................................................................ Superintendent William L. Moore, CPA ................................................................................................. Chief Financial Officer Thomas Gunnell ........................................................................................................... Chief Operations Officer Christine Caskey, Ed.D. ................................................................................................ Chief Academic Officer Lenny J. Schad ........................................................................................................... Chief Information Officer

Accountants and Advisors Whitley Penn, L.L.P. ............................................................................................................................ Auditors Houston, Texas Andrews Kurth, L.L.P. ................................................................................................................. Bond Counsel Houston, Texas RBC Capital Markets ............................................................................................................ Financial Advisors Dallas, Texas

xiv

FINANCIAL SECTION


Houston Offi ce

3411 Richmond Avenue

Suite 500

Houston, Texas 77046

713.621.1515 Main

whitleypenn.com

An IndependentMember of

Dallas Fort Worth Houston

1

REPORT OF INDEPENDENT AUDITORS To the Board of Trustees Katy Independent School District Katy, Texas We have audited the accompanying financial statements of the governmental activities, each major fund and the aggregate remaining fund information of Katy Independent School District (the “District”) as of and for the year ended August 31, 2012, which collectively comprise the District’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the District’s management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the District as of August 31, 2012, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated January 22, 2013, on our consideration of the District’s internal control over financial reporting and on our tests of its compliance with certain provisions of law, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.

2

Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information on pages 3 through 13 and 74 through 76 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District’s basic financial statements as a whole. The introductory section, combining and individual nonmajor fund financial statements, schedules and compliance schedules as listed in the table of contents, and statistical section, are presented for the purpose of additional analysis and are not a required part of the financial statements. The combining and individual nonmajor fund financial statements and schedules and compliance schedules as listed in the table of contents are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

Houston, Texas January 22, 2013

3

MANAGEMENT’S DISCUSSION AND ANALYSIS Our discussion and analysis of Katy Independent School District’s (the District) financial performance provides an overview of the District’s financial activities for the twelve months ended August 31, 2012. It should be read in conjunction with the information in the letter of transmittal and the District’s financial statements. FINANCIAL HIGHLIGHTS As stated in the Government-wide Financial Statements, the assets and deferred outflows of resources of the District exceeded the liabilities and deferred inflows of resources at August 31, 2012 by $188.5 million. Of this amount, $114.3 million is unrestricted. The $188.5 million of the District’s total net position represents an increase of $24.6 million from $163.9 million in fiscal year 2011. Total revenues decreased $7.8 million to $590.5 million in fiscal year 2012. The District’s Governmental Fund Financial Statements reported a combined ending fund balance in fiscal year 2012 of $268.7 million. The total fund balance for the General Fund was $126.9 million or 30.7% of the total General Fund expenditures of $413.6 million. The Debt Service Fund ended its year with a fund balance of $43.8 million which is to be used for the retirement of debt. The Capital Projects Fund ended the year with a fund balance of $85.5 million which is restricted for school district construction projects. All other Governmental Funds had fund balances totaling $12.5 million. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the District’s Basic Financial Statements. The District’s basic financial statements are comprised of three components: 1) Government-wide Financial Statements, 2) Fund Financial Statements, and 3) Notes to the Basic Financial Statements. This report also contains required supplementary information and other supplementary information in addition to the basic financial statements themselves, including schedules required by the Texas Education Agency (TEA). Government-wide Financial Statements All the District’s services are reported in the Government-wide Financial Statements, including instruction, student transportation, general administration, school leadership, facilities acquisition and construction, and child nutrition services. Property taxes, state aid, federal aid, and investment earnings finance most of the activities. Additionally, all capital and debt financing activities are reported here. Government-wide Financial Statements are designed to provide readers a broad overview of the District’s finances in a manner similar to a private-sector business. Statement of Net Position presents information on all of the District’s assets, liabilities and deferred outflows/inflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the District is improving or deteriorating. Statement of Activities presents information showing how the District’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event causing the change occurs, regardless of the timing of related cash flows. Therefore, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and unused leave retirement bonuses). The Government-wide Financial Statements distinguish functions of the District that are principally supported by taxes and revenues from other functions intended to recover all or a significant portion of their costs through user fees and charges.

4

Government-wide Financial Statements can be found on pages 17-19. Fund Financial Statements The District uses fund accounting to track specific sources of funding and spending for particular purposes. A fund is an accounting device used to maintain control over resources that have been segregated for specific activities or objectives. The District, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All the District’s funds can be divided into three categories: Governmental Funds, Proprietary Funds, and Fiduciary Funds. The Fund Financial Statements provide more detailed information about the District’s most significant funds, not the District as a whole. Governmental Funds are used to account for essentially the same functions reported as government activities in the Government-wide Financial Statements. Most of the District’s activities are included in governmental funds which focus on 1) how cash and other financial assets, that can readily be converted to cash, flow in and out and 2) the balances that are available for spending at year-end. Consequently, the Governmental Fund Statements provide a detailed short-term view that helps determine whether more or fewer financial resources can be spent in the near future to finance the District’s programs. Because this information does not encompass the additional long-term focus of the Government-wide Statements, additional information is provided in Figure A-1 to explain the relationship between them. The District maintains 36 governmental funds. Information is presented separately in the Governmental Fund Balance Sheet and in the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances for the General Fund, Debt Service Fund, and Capital Projects Fund which are considered to be major funds. Data from the other government funds are combined in a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in the financial statements. The District adopted an annual appropriated budget for the General Fund, Debt Service Fund, Food Service Fund, and Education Jobs Fund. A budgetary comparison schedule has been provided to demonstrate compliance with these budgets. The basic Governmental Fund Financial Statements can be found on pages 20-26 of this report. Proprietary Funds are used to account for operations that are financed similar to those found in the private sector. These funds provide both short-term and long-term financial information. There are two types of proprietary funds.

The first type is the Enterprise Fund, which is used to report the same functions presented as business type activities in the Government-wide Financial Statements. In the Enterprise Fund, the District charges outside customers a fee for services the District provides. The District has no business-type activities or enterprise funds. The second type is the Internal Service Fund, which is used to accumulate and allocate costs internally among the various functions. Internal Service Funds are used to support governmental activities such as the District’s Workers’ Compensation, Health Insurance, Auto Liability, and Print Shop funds. These four funds are combined into a single aggregated presentation in the Proprietary Fund Financial Statements found on pages 27-29 of this report.

Fiduciary Funds are used to account for assets held by the District in a trustee capacity or as an agent for individuals, private organizations, and other funds. The District is responsible for ensuring that the assets reported in these funds are used for their intended purposes. All of the District’s fiduciary activities are reported in a separate Statement of Net Assets and Statement of Revenues, Expenses, and Changes in Fund Net Assets. The Fiduciary Funds are excluded from the activities in the District’s Government-wide Financial Statements because the District cannot use these assets to finance its operations.

5

The basic Fiduciary Fund Financial Statements can be found on page 30 of this report. Notes to the Financial Statements The notes provide additional information essential to a complete understanding of the data provided in the Government-wide and Fund Financial Statements. The notes can be found on pages 31-72 of this report. Required Supplementary Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information that further explains and supports the information in the financial statements. The required supplementary information relates to comparison of the original adopted budget, the final amended budget, and the actual expenditures for the fiscal year. This is required supplementary information for the General Fund and any major special revenue funds. The District did not have any major special revenue funds; therefore, only the General Fund is presented as required supplementary information. Required Supplementary Information can be found on pages 74-76 of this report. Other Supplementary Information Other Supplementary Information provides additional analysis and is not a required part of the basic financial statements. Other supplementary information includes comparative information on selected funds and additional detail of the General Fund’s revenues and expenditures. It also contains the combining statements referred to earlier in connection with non-major governmental funds and certain compliance schedules required by state regulatory agencies. The Other Supplementary Information can be found on pages 82-151 of this report. The remainder of this overview section of the Management’s Discussion and Analysis explains the structure and contents of each of the statements. Figure A-1 summarizes the major features of the District’s financial statements, including the portion of the District covered and the types of information contained.

6

Figure A-1. Major Features of the District’s Government-wide and Fund Financial Statement

Type of Statements Government-wide Governmental Funds Proprietary Funds Fiduciary Funds

ScopeEntire District's government (except fiduciary funds)

The activities of the District that are not proprietary or fiduciary

Actvities the District operates similar to private business

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

Statement of net position Balance sheetStatement of net position

Statement of fiduciary net assets

Statement of revenues, expenses, and changes in fund net position

Statement of cash flows

Accounting basis and measurement focus

Accrual accounting and economic resources focus

Modified accrual accounting and current financial resources focus

Accrual accounting and economic resources focus

Accrual accounting and economic resouces focus

Type of asset/liability information

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

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

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

All assets and liabilities, both short-term and long-term ; the district's funds do not currently contain capital assets

Type of inflow/outflow information

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

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



Funds Statements

Required financial statements

Statement of activities

Statement of revenues, expenditures, and changes in fund balances

Statement of changes in fiduciary net assets

GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net position can serve as a useful indicator of the District’s financial position. The District’s total net position increased to $188.5 million at August 31, 2012. At the end of the current fiscal year, 60.7% of the District’s net position is unrestricted and are resources available to fund the District’s programs in the following year. An additional $18.0 million, or 9.6% of the District’s net position, reflect its investment in capital assets (e.g. land, building and improvements, and furniture and equipment) less any related debt used to acquire those assets still outstanding. These assets are not available for future spending. The remaining balance of net position represents resources subject to external restrictions on how they may be use. The District’s net position increased $24.6 million during the current fiscal year. The changes in net position are illustrated in Table I.

7

2012 2011 Change

Current and Other Assets 364,216,012$ 356,319,605$ 7,896,407$ Capital Assets 1,146,351,169 996,752,631 149,598,538Total Assets 1,510,567,181 1,353,072,236 157,494,945Total Deferred Outflows of Resources 43,651,540 31,698,963 11,952,577

Long-Term Liabilities 1,298,010,648 1,102,737,366 195,273,282Other Liabilities 65,090,040 86,450,432 (21,360,392)Total Liabilities 1,363,100,688 1,189,187,798 173,912,890Total Deferred Inflows of Resources 2,596,012 31,698,963 (29,102,951)

Net Position:Net Investment in

Capital Assets 17,995,023 21,482,594 (3,487,571)Restricted 56,177,142 53,397,875 2,779,267Unrestricted 114,349,856 89,003,969 25,345,887

Total Net Position 188,522,021$ 163,884,438$ 24,637,583$

Governmental Activities

Net Position SummaryTable I

Governmental Activities The net position of the District’s Governmental Activities increased by $24.6 million. This increase is evidence that the overall financial condition of the District continues to be strong. The total cost of all Governmental Activities for the fiscal year ended August 31, 2012 was $565.9 million. Funding for these Governmental Activities is by specific program revenue or through general revenues such as property taxes and investment earnings. The following is a summary of the governmental activities:

The total revenues of all governmental activities were $590.5 million. The amount paid by the District’s taxpayers for these activities through property taxes was $315.1 million or 53.4%.

The District’s tax rate of $1.5266 per $100 of assessed value was unchanged from the previous fiscal year. With a 4.6% increase in total assessed valuation, maintaining the tax rate increased the District’s tax revenues $12.7 million in 2012.

The cost of all governmental activities as $565.9 million, a decrease of $7.8 million from fiscal year 2011. Despite an increase of 1,626 students, expenses decreased in most functions because of reduced staffing and other budget reductions made necessary by the State’s reduction in funding public education.

The amount paid by those directly benefiting from programs was $19.6 million which was $61,898 less than the prior year.

The amount paid by grants and contributions was $80.0 million which was a 14.0% less than the $93.0 million in 2011.

The cost of governmental activities not directly funded by program revenue was $466.3 million, which was $24.6 million less than general revenues of $490.9 million. Of the $490.9 million in general revenues, 64.2% was funded by property taxes and 35.4% was from state aid not restricted to specific programs.

8

2012 2011 Change Change %Revenues:

Program Revenues:Charges for Services 19,588,686$ 19,650,584$ (61,898)$ (0.31) %Operating Grants and Contributions 79,970,734 92,971,578 (13,000,844) (13.98)

General Revenues: Property Taxes 315,100,360 302,377,165 12,723,195 4.21 State Revenues 173,734,050 181,203,466 (7,469,416) (4.12) Other 2,117,630 2,058,769 58,861 2.86

Total Revenues 590,511,460 598,261,562 (7,750,102) (1.30)

Expenses:Instruction 311,062,572 321,361,278 (10,298,706) (3.20) Instructional Resources and Media Services 8,525,841 8,694,209 (168,368) (1.94) Curriculum and Staff Development 6,942,069 8,323,619 (1,381,550) (16.60) Instructional Leadership 3,798,441 4,078,594 (280,153) (6.87) School Leadership 28,339,372 29,459,540 (1,120,168) (3.80) Guidance, Counseling and Evaluation 19,103,538 19,932,124 (828,586) (4.16) Health Services 4,932,619 5,410,272 (477,653) (8.83) Student Transportation 16,917,348 16,776,762 140,586 0.84 Food Services 26,234,107 25,802,502 431,605 1.67 Cocurricular/Extracurricular Activities 11,808,768 12,465,039 (656,271) (5.26) General Administration 9,799,768 10,142,271 (342,503) (3.38) Plant Maintenance and Operations 45,314,890 48,326,942 (3,012,052) (6.23) Security and Monitoring 4,893,473 5,162,174 (268,701) (5.21) Data Processing Services 11,368,931 11,894,172 (525,241) (4.42) Community Services 1,278,824 1,159,882 118,942 10.25

50,383,193 41,206,516 9,176,677 22.27 Facilities Acquisition and Construction 2,103,510 623,871 1,479,639 237.17 Payments to Shared Services Arrangements 232,862 300,087 (67,225) (22.40) Payments to JJAEP 32,924 47,890 (14,966) (31.25) Payments to Tax Increment Reinvestment Zone 452,731 306,098 146,633 47.90 Payments to Appraisal District 2,348,096 2,242,299 105,797 4.72

Total Expenses 565,873,877 573,716,141 (7,842,264) (1.37)

Increase (Decrease) in Net Position 24,637,583 24,545,421 92,162 0.38

Beginning Net Position 163,884,438 139,339,017 24,545,421 17.62

Ending Net Position 188,522,021$ 163,884,438$ 24,637,583$ 15.03 %

Interest and Issuance Costs on Long-Term Debt


Changes in Net PositionTable II

9

Figure A-2 Revenues by Source – Governmental Activities

53.4%

29.4%

13.5%3.3%

0.4%

Property Taxes

State Aid Formula

Operating Grants & Contributions

Charges for Services

Other

Figure A-3 Program Expenses by Major Function – Governmental Activities

In Millions

$326.5

$32.1

$79.0

$9.8

$61.6

$6.5

$50.4

$0

$50

$100

$150

$200

$250

$300

$350Instruction & InstructionalRelated

Instructional & SchoolLeadership

Support Services - Student

Administrative Support Services

Support Services - Non-Student

Ancillary Services

Debt Service

10

FINANCIAL ANALYSIS OF THE DISTRICT’S FUNDS Governmental Funds The District’s accounting records for general governmental operations are maintained on a modified accrual basis as prescribed by the Financial Accountability System Resource Guide, Texas Education Agency, with the revenues being recorded when available and measurable to finance expenditures of the fiscal period. Expenditures are recorded when services or goods are received and the fund liabilities are incurred. The general governmental operations include the following major funds: General, Debt Service, and Capital Projects. Revenues from all Governmental Funds totaled $586.8 million for the fiscal year ended August 31, 2012, a reduction of 2.5% from the prior fiscal year. Local revenues, including property taxes, continued to be the largest source of revenue received by the District and increased $10.9 million over fiscal year 2011. The reduction in State revenues of $11.1 million or 5.2% from fiscal year 2011 was primarily a result of the state budget reductions, despite the increase in enrollment. Federal revenues decreased $14.5 million or 25.1%. This decrease in Federal revenues was primarily a result of the loss of Title I, Title II, IDEA B and State Fiscal Stabilization Funds (SFSF) all of which were part of the American Recovery and Reinvestment Act of 2009 (ARRA). Expenditures for governmental operations totaled $758.3 million during fiscal year 2012, an increase of 11.6% from fiscal year 2011. This increase was a result of the increased expenditures for capital projects of $105.6 million. The Governmental Funds reported a combined fund balance of $268.7 million, a reduction of $14.6 million from the combined fund balances for 2011. Changes to the combined fund balances include a $27.6 million increase in the General Fund, an increase in the Debt Service Fund of $3.8 million, a reduction in the Capital Projects fund of $44.8 million and a decrease of $1.2 million in the Other Governmental Funds. Out of the combined fund balances, $85.8 million constitutes unassigned fund balances. Of the remainder of the fund balance, $1.5 million is nonspendable, $138.8 million is restricted for items such as debt service, food services, and capital projects, $7.8 million is committed to self-funded insurance and campus activity funds, and $34.9 million is assigned for the opening of new schools, land purchases, employer mandate provisions of the Patient Protection and Affordable Care Act, and future technology needs. The General Fund is the primary operating fund of the District. The most significant factor contributing to the increase of fund balance was the under spending of payroll and related costs combined with campus and departments under spending their budgets. At the end of the current fiscal year, the General Fund’s fund balance was $126.9 million. Unassigned fund balance represents 20.7% of the total General Fund expenditures, and total fund balance represents 30.7%. The Debt Service Fund ended the year with a fund balance of $43.8 million, all of which was restricted for the payment of debt service. The district makes semi-annual debt service payments in February and August of each year. Debt service payments including bond fees for the year ended August 31, 2012 were $88.4 million. The Capital Projects Fund ended the year with a fund balance of $85.5 million which is a decrease of $44.8 million over 2011. This reduction in fund balance was due to construction expenditures associated with ongoing construction projects. The entire fund balance is restricted for future construction.

11

Proprietary Funds The District maintains four internal service funds. Information is presented separately in the Proprietary Funds Combining Statement of Net Position and in the Proprietary Funds Combining Statement of Revenues, Expenses, and Changes in Fund Net Position for the Health Insurance, Workers’ Compensation, Auto Liability, and Print Shop Funds. Net position in these funds as of August 31, 2012 was $6.8 million. Of this amount, $0.9 million was for Health Insurance, $3.6 million was for Workers’ Compensation, $2.3 million for the Print Shop, and the Auto Liability Fund had zero net position. Net position for the fiscal year decreased $1.4 million. GENERAL FUND BUDGETARY HIGHLIGHTS Over the course of the year, the District revised its budget several times. Revisions to the revenue budget were necessary due to changes in estimates for local and state revenue based on updated information relating to tax collections, earnings on investments, student attendance and rental income. Revisions to the expenditure budget were necessary to reflect the utilization of Education Jobs Funding, actual expenditures associated with staffing, fluctuation in spending needs, and various other unforeseen occurrences.

The District’s major budget amendments presented to the Board of Trustees throughout the year are summarized as follows:

The total General Fund revenue budget was decreased by $9.0 million.

The local revenue budget increased by $0.4 million. Current and delinquent property tax collections increased $1.1 million and associated penalty and interest increased $0.4 million. This $1.5 million increase was partially offset by a $1.1 million reduction in budgeted ticket sales, facility rental income, interest earnings, and other miscellaneous revenues.

The state revenue budget decreased $1.3 million primarily due to state revenue offset caused by increases in local property tax revenues due to increased property values and the increase in property tax collections. In addition, TRS On-Behalf revenues were revised to reflect amounts based on actual payroll costs.

Federal revenue decreased by $8.2 million, including $9.3 million to recognize the reclassification of Education Jobs Fund to the Special Revenue Fund. There were also increases of $0.8 million to recognize indirect costs associated with the Food Service Fund, $0.2 million in additional SHARS revenues, and $0.1 million in other federal revenues.

Although the district increased the expenditure budget throughout the year for various items, the expenditure budget was reduced by $18.2 million. Included in the decrease was $9.6 million due to the reclassification of the Education Jobs Fund to the Special Revenue Fund and $8.6 million to reflect payroll vacancies, turnover in positions, and general underspending in contracted services, supplies, travel and other operating costs, and capital outlay.

After revenue and expenditure budgets were adjusted as described above, the District’s actual General Fund amounts differed from the final budget as reported in the budgetary comparison on pages 74-75 of this report. This difference is primarily due to the following factors:

Final revenues realized were under budgeted levels by $0.9 million. Revenues from local sources exceeded the budget by $0.3 million while revenues from state sources were under budget by $0.2 million. Federal Revenues were under the budget by $1.0 million due to eRate revenues not received until after fiscal year end.

Expenditures were $11.0 million less than final budgeted amounts. Remaining unspent were payroll and related costs of $8.3 million, supplies of $0.9 million, contracted services of $0.6 million, other operating expenditures of $0.6 million and capital of $0.6 million.

12

CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets The District has invested $1.15 billion, net of depreciation, in a broad range of capital assets, including land, equipment, buildings, and vehicles. This amount represents a net increase (including additions, deductions and depreciation) of $149.6 million from the prior year.

2012 2011 Change PercentageLand 71,402,749$ 70,658,230$ 744,519$ 1.05 %Land Improvements 29,066,219 29,562,447 (496,228) (1.68) Buildings and Improvements 846,342,136 755,443,152 90,898,984 12.03 Furniture and Equipment 67,968,059 60,366,792 7,601,267 12.59 Vehicles 21,438,112 19,247,346 2,190,766 11.38 Construction in Progress 89,672,665 40,505,653 49,167,012 121.38 Assets Under Capital Lease 20,461,229 20,969,011 (507,782) (2.42)

Total Capital Assets, Net of Depreciation 1,146,351,169$ 996,752,631$ 149,598,538$ 15.01 %


Capital Assets (net of depreciation)Table III

The increase in capital assets net of depreciation was due mainly to construction in progress as a result of the bond election passed in November 2010. In addition, the acquisition and improvements to land combined with the addition of furniture, equipment and vehicles all led to the increase in capital assets. More detailed information about the District’s capital assets is presented in Note 8 to the financial statements. Debt Administration At the end of the fiscal year the District had total debt outstanding of $1.3 billion as illustrated in Table IV. This amount consists primarily of general obligation bonds backed by the full faith of the State of Texas’s Permanent School Fund. The District’s debt includes capital appreciation bonds which accrete interest until their maturity date. Total accreted interest on these capital appreciation bonds totaled $9.4 million at the end of the fiscal year. Included in the outstanding debt of the District for financial reporting purposes is the Capital Lease for the multi-purpose complex constructed for the District by the Katy Development Authority through a Tax Increment Reinvestment Zone (TIRZ). The $17.4 million capital lease will be paid from property taxes collected through the TIRZ. The District’s bonds are rated AAA by Standard & Poor’s (S&P) and Aaa by Moody’s Investor Service (Moody’s) based on the guarantee of the Permanent School Fund of the State of Texas. The District’s underlying ratings are AA by Standard & Poor’s and Aa2 by Moody’s Investor Service. More detailed information about the District’s debt is presented in Notes 9 and 10 to the financial statements.

13

2012 2011 Change

General Obligation Bonds 1,165,099,961$ 1,077,256,097$ 87,843,864$ Accreted Interest on Capital

Appreciation Bonds 9,409,109 9,711,419 (302,310)Capital Leases 17,360,000 19,645,000 (2,285,000)Compensated Absences 19,516,454 18,503,226 1,013,228Imputed Borrowing 43,651,540 43,651,540Premium on Bonds Issued 34,552,367 14,690,362 19,862,005Deferral on Bond Refunding 8,421,217 (480,632) 8,901,849

Total Outstanding Debt 1,298,010,648$ 1,139,325,472$ 158,685,176$

Table IVOutstanding Debt


ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES As part of the budget development process the District’s management has taken into consideration all the factors that drive school district budgets: enrollments, property values, state funding, facility needs and the local economy. The State’s reduction to public education reduced the District’s state funding for 2012-13 by approximately $15 million or 3.5% under what it would have received under old law. However, this reduction is substantially less than the District faced in 2011-12. Fortunately in 2012-13 the District moves away from being a “Target Revenue” to a “Formula” District, enabling the District to benefit from growth in property values and the resulting increased tax revenues. The District has maintained reductions in its expenditure budget to offset the state’s reduction to public education. Although growth has slowed slightly, Katy ISD continues to be one of the fastest growing school districts in the Houston metropolitan area, growing at an average of 5.2% from 2003 to 2012 with the 2012-13 enrollment projected to be 64,059 students. The District has also experienced significant growth in property values over the past ten years with assessed values increasing at an average of 9.9% annually. Unemployment continues to remain low in all geographical areas of the District. All of these factors were considered when adopting the 2012-13 budget. With a total tax rate of $1.5266, the District estimates budgeted revenues of $583.1 million and appropriations of $577.4 million, of which $467.3 million of revenues and $457.6 million of expenditures are in the General Fund. There are no major initiatives or new programs included in the 2012-13 budget. CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the District’s finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Chief Financial Officer, Katy I.S.D., 6301 South Stadium Lane, P.O. Box 159, Katy, Texas 77492.

14


15

BASIC FINANCIAL STATEMENTS

16


17

KATY INDEPENDENT SCHOOL DISTRICTSTATEMENT OF NET POSITION Exhibit A-1AUGUST 31, 2012

Data Primary GovernmentControl Governmental Codes Activities

ASSETS1110 Cash and Investments 330,448,154$ 1110 Property Taxes Receivable 12,659,1391230 Allowance for Uncollectible Taxes (2,789,320)1240 Due from Other Governments 7,791,6861290 Other Receivables (net) 1,187,9791300 Inventories, at cost 1,332,7211410 Deferred Expenses 343,4101420 Capital Bond and Other Debt Issuance Costs 10,646,231

Capital Assets not Being Depreciated:1510 Land 71,402,7491580 Construction in Progress 89,672,665

Capital Assets, net of Accumulated Depreciation:1511 Land Improvements, net of Accumulated Depreciation 29,066,2191520 Buildings and Improvements, net of Accumulated Depreciation 846,342,1361530 Furniture and Equipment, net of Accumulated Depreciation 67,968,0591540 Vehicles, net of Accumulated Depreciation 21,438,1121550 Assets Under Capital Lease, net of Accumulated Depreciation 20,461,2291990 Interest Rate Swaps 2,596,0121000 Total Assets 1,510,567,181

DEFERRED OUTFLOWS OF RESOURCES1990 Deferred Amount on Refunding 43,651,5401000 Total Deferred Outflows of Resources 43,651,540

LIABILITIES 2110 Accounts Payable 36,919,3612140 Interest Payable 2,593,3712150 Payroll Deductions and Withholdings 637,2302160 Accrued Wages Payable 5,479,3482180 Due to Other Governments 17,709,6082200 Accrued Expenses 1,540,3222300 Unearned Revenue 210,800

Noncurrent Liabilities:2501 Compensated Absences Due within One Year 570,0122501 Bonds and Debt Due within One Year 35,255,0002501 Capital Lease Due within One Year 1,115,0002501 Imputed Borrowing Due within One Year 2,600,5832502 Bonds and Debt Due in More than One Year 1,172,818,5452502 Capital Lease Due in More than One Year 16,245,0002502 Compensated Absences Due in More than One Year 18,946,4422502 Imputed Borrowing Due in More than One Year 41,050,9572590 Accreted Interest on Capital Appreciation Bonds 9,409,1092000 Total Liabilities 1,363,100,688

DEFERRED INFLOWS OF RESOURCES2502 Deferred Inflows: Interest Rate Swap 2,596,012

Total Deferred Inflows of Resources 2,596,012

NET POSITION3200 Net Investment in Capital Assets 17,995,023

Restricted for:3840 Food Service 5,833,9053850 Debt Service 43,645,8503890 Tax Increment Zone 3,779,0403870 Campus Activities 2,807,3083890 Medicaid Administrative Claiming 111,0393900 Unrestricted 114,349,8563000 Total Net Position 188,522,021$

See Notes to Financial Statements

18

KATY INDEPENDENT SCHOOL DISTRICTSTATEMENT OF ACTIVITIESFOR THE YEAR ENDED AUGUST 31, 2012

Data Program RevenuesControl Charges for Operating GrantsCodes Functions/Programs Expenses Services and Contributions

Governmental Activities:0011 Instruction 311,062,572$ 907,065$ 40,389,183$ 0012 Instructional Resources and Media Services 8,525,841 4,429 990,2330013 Curriculum and Staff Development 6,942,069 4,689 2,712,3630021 Instructional Leadership 3,798,441 1,155 543,9750023 School Leadership 28,339,372 3,868 1,907,0450031 Guidance, Counseling, and Evaluation Services 19,103,538 5,503 2,928,2630033 Health Services 4,932,619 649 2,354,5130034 Student Transportation 16,917,348 60,940 570,2110035 Food Services 26,234,107 10,456,147 11,721,1670036 Cocurricular/Extracurricular Activities 11,808,768 1,952,969 1,050,7830041 General Administration 9,799,768 231,540 637,3660051 Plant Maintenance and Operations 45,314,890 2,426,812 4,275,6720052 Security and Monitoring Services 4,893,473 14,413 253,4530053 Data Processing Services 11,368,931 43,465 340,9460061 Community Services 1,278,824 149,276 800,2760071 Interest on Long-Term Debt 45,525,829 7,877,7110073 Bond Issuance Costs and Fees 4,857,3640081 Facilities Acquisition and Construction 2,103,510 3,325,766 384,7120093 Payments Related to Shared Services Arrangements 232,862 232,8620095 32,924 0097 Payments to Tax Increment Reinvestment Zone 452,731 0099 Payments to Appraisal Districts 2,348,096TG Total Governmental Activities 565,873,877 19,588,686 79,970,734TP TOTAL PRIMARY GOVERNMENT 565,873,877$ 19,588,686$ 79,970,734$

Data Control Codes

General Revenues:MT Property Taxes, Levied for General PurposesDT Property Taxes, Levied for Debt ServiceSF State Aid - Formula Grants UnrestrictedIE Investment EarningsMI Miscellaneous TG Total General Revenues CN Change in Net PositionNB Net Position - BeginningNE Net Position - Ending

See Notes to Financial Statements.

Payments to Juvenile Justice Alternative Education Programs

19

Exhibit B-1

Net (Expense)Revenue and

Changes in Net Position


(269,766,324)$ (7,531,179) (4,225,017) (3,253,311)

(26,428,459) (16,169,772) (2,577,457)

(16,286,197) (4,056,793) (8,805,016) (8,930,862)

(38,612,406) (4,625,607)

(10,984,520) (329,272)

(37,648,118) (4,857,364) 1,606,968

(32,924)

(452,731) (2,348,096)

(466,314,457)(466,314,457)

232,528,59482,571,766

173,734,0501,171,162

946,468490,952,04024,637,583

163,884,438188,522,021$

20

KATY INDEPENDENT SCHOOL DISTRICTBALANCE SHEETGOVERNMENTAL FUNDSAUGUST 31, 2012

DataControlCodes General Debt Service Fund

ASSETS1110 Cash and Investments 152,359,584$ 44,573,042$

Receivables:1220 Property Taxes-Delinquent 9,692,828 2,966,3111230 Allowance for Uncollectible Taxes (2,156,407) (632,913)1240 Due from Other Governments 68,1681250 Accrued Interest 7,5721260 Due from Other Funds 3,717,795 222,2611290 Other Receivables 818,7791300 Inventories, at cost 1,005,3861410 Deferred Expenditures 231,458

1000 Total Assets 165,737,591$ 47,136,273$

LIABILITIESCurrent Liabilities:

2110 Accounts Payable 8,001,239$ 51,329$ 2140 Interest Payable 79,3472150 Payroll Withholding Payable 637,2292160 Accrued Wages Payable 5,182,4972170 Due to Other Funds2180 Due to Other Governments 16,863,885 845,7232200 Accrued Expenditures 409,5772300 Deferred Revenues 7,736,982 2,333,3982000 Total Liabilities 38,831,409 3,309,797

FUND BALANCESFund Balances:

3410/30 Nonspendable 1,236,8443450-90 Restricted 43,826,4763510-45 Committed 5,000,0003550-90 Assigned 34,873,093

3600 Unassigned 85,796,2453000 Total Fund Balances 126,906,182 43,826,476

4000 Total Liabilities and Fund Balances 165,737,591$ 47,136,273$


21

Exhibit C-1

Capital Projects Other TotalFund Governmental Funds Governmental Funds

109,292,744$ 13,521,399$ 319,746,769$

12,659,139(2,789,320)

292,700 4,269,789 4,630,6577,572

3,373,007 7,313,063346,853 1,165,632239,268 1,244,65470,793 302,251

109,585,444$ 21,821,109$ 344,280,417$

24,044,243$ 1,792,246$ 33,889,057$ 79,347

637,22913,552 283,298 5,479,34769,669 7,204,034 7,273,703

17,709,608409,577

10,239 10,080,61924,127,464 9,289,817 75,558,487

239,268 1,476,11285,457,980 9,484,716 138,769,172

2,807,308 7,807,30834,873,09385,796,245

85,457,980 12,531,292 268,721,930

109,585,444$ 21,821,109$ 344,280,417$

22


23


RECONCILIATION OF THE GOVERNMENTAL FUNDS Exhibit C-2BALANCE SHEET TO THE STATEMENT OF NET POSITIONAUGUST 31, 2012

Total Fund Balances - Governmental Funds (from Exhibit C-1) 268,721,930$

Amounts reported for governmental activities in the Statement of Net Position aredifferent because:

Capital assets used in governmental activities are not financial resources and thereforeare not reported as assets in governmental funds. 1,146,351,169

Revenues in the Statement of Activities that do not provide current financial resourcesare not reported as revenues in the funds. 3,162,831

Deferred revenue on property taxes receivable and penalty and interest on delinquenttaxes have been levied or assessed and are due this year but are not available soonenough to pay for current period's expenditures and are deferred and added back toFund Balances for Statement of Net Position. 9,869,819

Internal Service Funds are used by the District's management to charge the costs ofthe various insurance programs and printing operations to the individual funds. Theassets and liabilities of the Internal Service Fund are included in the Government-wideStatement of Net Position. 6,233,596

Long-term liabilities, including bonds payable, are not due and payable in the currentperiod, and therefore are not reported as liabilities in the funds. Long-term liabilities atyear end consist of: Bonds payable and premiums - net of refunding losses (1,208,073,545) Capital Lease (17,360,000) Compensated Absences - Long-term Portion (19,106,877) Accreted Interest on Capital Appreciation Bonds (9,409,109) Interest Payable (2,514,024)

Assets in Statement of Net Position not in Fund Financials: Unamortized issuance cost on bonds 10,646,231

Net Position of Governmental Activities 188,522,021$


24

KATY INDEPENDENT SCHOOL DISTRICTSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESGOVERNMENTAL FUNDSYEAR ENDED AUGUST 31, 2012

DataControlCodes General Debt Service Fund

REVENUES5700 Local, Intermediate, and Out-of-State 238,968,668$ 82,719,642$ 5800 State Program Revenues 194,328,921 4,639,7295900 Federal Program Revenues 6,154,9325020 Total Revenues 439,452,521 87,359,371

EXPENDITURESCurrent:

0011 Instruction 260,023,2200012 Instructional Resources and Media Services 5,832,2800013 Curriculum and Staff Development 4,394,3350021 Instructional Leadership 3,391,1650023 School Leadership 26,016,2760031 Guidance, Counseling, and Evaluation Services 16,203,9400033 Health Services 3,887,4080034 Student Transportation 13,967,2560035 Food Services0036 Cocurricular/Extracurricular Activities 8,536,3570041 General Administration 9,144,8470051 Plant Maintenance and Operations 42,811,5050052 Security and Monitoring Services 4,826,9340053 Data Processing Services 7,436,6160061 Community Services 472,376

Debt Service:0071 Principal on Long-Term Debt 35,181,1360072 Interest on Long-Term Debt 50,163,3260073 Bond Issuance Costs and Fees 3,060,6060081 Capital Outlay-Facilities Acquisition and Construction 1,847,534

Intergovernmental Charges: 0093 Payments Related to Shared Service Arrangements0095 Payments to J.J.A.E.P. 32,9240097 Payments to Tax Increment Reinvestment Zone 2,435,8190099 Other Intergovernmental Charges 2,348,0966030 Total Expenditures 413,608,888 88,405,068

1100 Excess (Deficiency) of Revenues Over (Under) Expenditures 25,843,633 (1,045,697)

OTHER FINANCING SOURCES/(USES)7901 Refunding Bonds Issued 167,785,0007911 Capital-Related Debt Issued (Regular Bonds)7912 Sale of Real and Personal Property 4,235,9477915 Transfers In 468,281 3,613,4337916 Premium on Issuance of Bonds 7,502,4047919 Insurance Recoveries 312,7878911 Transfers Out (3,237,982)8940 Payment to Bond Refunding Escrow Agent (174,020,686)

7080 Total Other Financing Sources/(Uses) 1,779,033 4,880,151

1200 Net Change in Fund Balances 27,622,666 3,834,454

100 Fund Balance - September 1 (Beginning) 99,283,516 39,992,022

3000 Fund Balance - August 31 (Ending) 126,906,182$ 43,826,476$


25

Exhibit C-3

Capital Projects Other Governmental Total GovernmentalFund Funds Funds

375,777$ 18,648,299$ 340,712,386$ 3,649,681 202,618,331

37,274,367 43,429,299375,777 59,572,347 586,760,016

25,907,629 285,930,849691,932 6,524,212

2,504,424 6,898,759345,483 3,736,648445,872 26,462,148

2,032,995 18,236,935272,507 4,159,915

5,042 13,972,29823,048,070 23,048,070

640,063 9,176,420935 9,145,782

89,841 42,901,34620,123 4,847,057

7,436,616828,158 1,300,534

35,181,13650,163,326

1,182,418 4,243,024194,811,495 3,255,713 199,914,742

232,862 232,86232,924

2,435,8192,348,096

195,993,913 60,321,649 758,329,518

(195,618,136) (749,302) (171,569,502)

167,785,000129,370,000 129,370,000

23,424 4,259,3714,081,714

21,812,418 29,314,822312,787

(375,451) (468,281) (4,081,714)(174,020,686)

150,806,967 (444,857) 157,021,294

(44,811,169) (1,194,159) (14,548,208)

130,269,149 13,725,451 283,270,138

85,457,980$ 12,531,292$ 268,721,930$

26

KATY INDEPENDENT SCHOOL DISTRICTRECONCILIATION OF THE GOVERNM ENTAL FUNDS STATEM ENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEM ENT OF ACTIVITIES

Exhibit C-4

FOR THE YEAR ENDED AUGUST 31, 2012

Net Change in Fund Balances - Total Governmental Funds (from Exhibit C-3) (14,548,208)$

Amounts reported for governmental ac tivities in the Statement of Activities(Exhibit B-1) are different because:

Internal Service Funds are used by management to charge the cost of variousinsurance programs and printing operations to individual funds. The net ac tivityof the Internal Service Funds is inc luded in the entity-w ide statements.

(1,388,670)

Governmental funds report capital outlays as expenditures. How ever, in theStatement of Activities, the costs of those assets are allocated over theirestimated useful lives as deprec iation expense. 200,034,542

Depreciation is not recognized as an expense in governmental funds, since itdoes not require the use of current financial resources. The net effect of thecurrent year's deprec iation is to decrease net assets. (41,581,371)

Repayment of bond and capital lease princ ipal is recorded as an expenditure inthe governmental funds, but the repayment reduces long-term liabilities in theStatement of Net Position. 36,026,136

Issuance of long-term debt, plus premiums and interest, less issuance cost isrecorded as current financ ial resources in governmental funds and is show n asan increase in long-term debt in the government-w ide statements. (149,085,534)

Interest expense on capital apprec iation bonds are retired in the current year forfund based financial statements, but w ere accrued in previous years for entity- 302,310

Interest accrual on capital appreciation bonds and interest accruals through yearend on bonds are not recorded in the Fund Financ ial Statements but are accruedin the entity w ide statements. 7,587

Loss on disposal of assets not fully deprec iated is not recorded in the FundFinancial Statements but is inc luded in the entity-w ide statements. (8,931,434)

Property taxes and penalty and interest receivable at year end w ill not becollec ted for several months after the Distric t's fiscal year ends, so they are notconsidered available revenues and are deferred in the governmental fundsfinancial statements. Deferred tax revenues are adjusted and are recorded asrevenues and beginning net assets for the Government-w ide Statements. Theamount of change in the current year Statement of Activities due to deferredtaxes are added back to the fund basis financials for the Government-w ide 240,707

Amortization of bond issuance costs, deferred losses on refunding issues, andbond premiums are recorded in the Government-w ide Statement of Activities. 1,485,943

Revenues that are earned but do not provide current financ ial resources arerecorded in the Statement of Activities but are not in the Fund Financ ial 3,162,831

Increase in long-term compensated absence liability is inc luded in the entity-w ide statements. (1,087,256)

Change in Net Assets of Governmental Activities (see Exhibit B-1) 24,637,583$

See Notes to Financ ial Statements.

27

KATY INDEPENDENT SCHOOL DISTRICTSTATEMENT OF NET POSITION Exhibit D-1

PROPRIETARY FUNDSINTERNAL SERVICE FUNDSAUGUST 31, 2012

DataControl GovernmentalCodes Activities

ASSETSCurrent Assets:

1110 Cash and Cash Equivalents 10,701,384$ 1290 Other Receivables 14,7751300 Inventories 88,0661410 Deferred Expenses 39,360

Total Current Assets 10,843,585

Noncurrent Assets:Capital Assets:

1520 Building and Improvements 2,5161540 Furniture and Equipment 1,751,4791573 Accumulated Deprec iation (1,193,273)

Total Non Current 560,722

1000 Total Assets 11,404,307


2110 Accounts Payable 3,030,3072170 Due to Other Funds 39,3602200 Accrued Expenses 1,540,322

2000 Total Liabilitie s 4,609,989

NET POSITION3200 Invested in Capital Assets 560,7223900 Unrestric ted 6,233,5963000 Total Net Position 6,794,318$


28

KATY INDEPENDENT SCHOOL DISTRICTSTATEMENT OF REVENUES, EXPENSES, AND CHANGES IN Exhibit D-2FUND NET POSITIONPROPRIETARY FUND TYPESINTERNAL SERVICE FUNDSFOR THE YEAR ENDED AUGUST 31, 2012

DataControl GovernmentalCodes Activities

OPERATING REVENUES5754 Charges for Services 39,031,273$ 5020 Total Operating Revenues 39,031,273

OPERATING EXPENSES6100 Salary and Benefits 42,9256200 Administrator Fees 7,602,9046200 Insurance Premiums 111,5516200 Claims Expenses 31,129,0936200 Repair and Maintenance Expense 21,7836200 Equipment Rental 110,8806300 Supplies 1,514,3996400 Miscellaneous Operating Expenses 1286400 Depreciation 160,2116030 Total Operating Expenses 40,693,874

1300 Operating Income (Loss) (1,662,601)

NONOPERATING REVENUES5742 Investment Income 36,920

Total Nonoperating Revenue 36,920

Income (Loss) before Contributions and Transfers (1,625,681)

7900 Capital Contributions - Capital Assets 237,0111300 Change in Net Position (1,388,670)

0100 Total Net Position September 1 (Beginning) 8,182,988

3000 Total Net Position August 31 (Ending) 6,794,318$


29

KATY INDEPENDENT SCHOOL DISTRICTSTATEMENT OF CASH FLOWS Exhibit D-3PROPRIETARY FUND TYPES INTERNAL SERVICE FUNDSFOR THE YEAR ENDED AUGUST 31, 2012

GovernmentalActivities

CASH FLOWS FROM OPERATING ACTIVITIES Cash Receipts from Internal Services Provided 38,213,541$ Cash Payments to Suppliers (1,707,736) Cash Payments to Pay Claims (31,243,919) Cash Payments to Contrac t Adminstrators (7,566,997) Cash Payments to Employees (42,925)

Net Cash (Used) by Operating Activities (2,348,036)

CASH FLOWS FROM INVESTING ACTIVITIES Interest Received 36,920

Net Cash Provided by Investing Activities 36,920

Net (Decrease) in Cash and Cash Equivalents (2,311,116)Cash and Cash Equivalents at Beginning of Year 13,012,500

Cash and Cash Equivalents at End of Year 10,701,384$

RECONCILIATION OF OPERATING (LOSS) TO NET CASH (USED) BY OPERATING ACTIVITIESOperating Income (Loss) (1,662,601)$ Adjustments to Reconc ile Operating Income to Net Cash Provided by Operating Activities Deprec iation 160,211Change in Assets and Liabilities: Decrease in Receivables 698 (Increase) in Inventories (846) Inc rease in Accounts Payable 1,074,242 (Decrease) in Interfund Payables (818,429) (Decrease) in Accrued Expenses (1,101,311)

Net Cash (Used) by Operating Activities (2,348,036)$

Noncash Investing, Capital, and Financing Activitie sContributions of Capital Assets from Government 237,011$ Capital Assets Retired (4,848)$


30

KATY INDEPENDENT SCHOOL DISTRICTSTATEMENT OF FIDUCIARY ASSETS AND LIABILITIES Exhibit E-1AGENCY FUNDSAUGUST 31, 2012

DataControlCodes Agency Funds

ASSETS1110 Cash and Investments 4,320,070$

1000 Total Asse ts 4,320,070$

LIABILITIES2110 Accounts Payable 258,475$ 2160 Accrued Wages 1,2762190 Due to Student Groups 4,060,319

2000 Total Liabilitie s 4,320,070$



31

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Katy Independent School District (the District) was formed in February 1919 by a special act of the

Texas State Legislature. The District is an independent public educational agency operating under applicable laws and regulations of the State of Texas. A seven member Board of Trustees elected to staggered three-year terms by the District’s residents autonomously governs the District. The District prepares its Basic Financial Statements in conformity with Generally Accepted Accounting Principles (GAAP) promulgated by the Governmental Accounting Standards Board (GASB) and other authoritative sources identified in Statement on Auditing Standards No. 69 of the American Institute of Certified Public Accountants; and it complies with the requirements of the appropriate version of the Texas Education Agency’s Financial Accountability System Resource Guide (the “Resource Guide” or “FASRG”) and the requirements of contracts and grants of agencies from which it received funds.

The District prepared these financial statements in accordance with GASB Statement No. 34, “Basic

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

GASB Statement No. 34 established a financial reporting model for state and local governments that

included the addition of Management’s Discussion and Analysis, Government-wide Financial Statements, Required Supplementary Information, and the elimination of the effects of internal service activities and the use of account groups to the already required fund Financial Statements and notes.

The following is a summary of the most significant accounting policies:

A. Reporting Entity The District is considered an independent entity for financial reporting purposes and is considered a primary government. As required by Generally Accepted Accounting Principles, these basic financial statements have been prepared based on considerations regarding the potential for inclusion of other entities, organizations, or functions as part of the District’s financial reporting entity. Based on these considerations, the District’s Basic Financial Statements do not include any other entities. Additionally, as the District is considered a primary government for financial reporting purposes, its activities are not considered a part of any other governmental or other type of reporting entity. Considerations regarding the potential for inclusion of other entities, organizations, or functions in the District’s financial reporting entity are based on criteria prescribed by Generally Accepted Accounting Principles. These same criteria are evaluated in considering whether the District is a part of any other governmental or other type of reporting entity. The overriding elements associated with prescribed criteria considered in determining that the District’s financial reporting entity status is that of a primary government are: that it has a separately elected governing body; it is legally separate; and it is fiscally independent of other state and local governments. Additionally prescribed criteria under Generally Accepted Accounting Principles include considerations pertaining to organizations for which the primary government is financially accountable; and considerations pertaining to other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity’s financial statements to be misleading or incomplete.


32

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

A. Reporting Entity (continued) The Board of Trustees (the Board) is elected by the public and has the primary accountability for fiscal matters. Therefore, the District is a financial reporting entity as defined by the Governmental Accounting Standards Board (GASB) in its Statement No. 14, “The Financial Reporting Entity.” The District has also implemented GASB Statement No. 39, “Determining Whether Certain Organizations are Component Units”. The District receives support from various PTO, PTA, and Booster club organizations. None of these organizations meet the criteria specified by GASB 39 to be included in the District’s Financial Statements. Therefore, there are no component units included with the reporting entity.

B. Government-wide and Fund Financial Statements

The Statement of Net Position and the Statement of Activities are Government-wide Financial Statements. They report information on all of the Katy Independent School District operating activities and activities other than the District’s fiduciary (agency type) activities. For the most part, the effect of interfund activities has been removed from these statements. Governmental activities include programs supported primarily by taxes, state foundation funds, grants and other intergovernmental revenues. The District has no business-type activities that rely to a significant extent on fees and charges for support. The Statement of Activities demonstrates how other people or entities that participate in programs the District operates have shared in the payment of the direct costs. The “charges for services” column includes payments made by parties that purchase, use, or directly benefit from goods or services provided by a given function or segment of the District. Examples include school lunch charges, community education tuition, summer school tuition, etc. The “grants and contributions” column includes amounts paid by organizations outside the District to help meet the operational or capital requirements of a given function. Examples include grants under the Elementary and Secondary Education Act. If a revenue is not a program revenue, it is a general revenue used to support all of the District’s functions. Property taxes are always general revenues. Interfund activities between governmental funds and between governmental funds and proprietary funds appear as due to/due from on the Governmental Fund Balance Sheet and Proprietary Fund Statement of Net Position and as other resources and other uses on the Governmental Fund Statement of Revenues, Expenditures and Changes in Fund Balance and on the Proprietary Fund Statement of Revenues, Expenses and Changes in Fund Net Position. In the Government-wide statements, eliminations have been made to minimize double-counting of internal activities. Interfund balances between governmental funds and also between governmental funds and internal service funds are eliminated on the Government-wide Statement of Net Position. Since the internal service funds support the District’s activities, the financial activities of these funds are presented in the governmental activities column in the Government-wide Statement of Activities as a direct expense in the proper functional category. In the Government-wide Statement of Activities, the net activities of the Internal Service such as Health Insurance, Workers’ Compensation, Print Shop, and Auto Liability have been allocated to the appropriate functional expense in order to present a more accurate and complete picture of the direct expenses of the functions. The District has no interfund services provided and used between functions that would be program revenue which would not be eliminated in the process of consolidation. Interfund activities between governmental and fiduciary funds remain as due to/due from on the Government-wide Statement of Activities.


33

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) B. Government-wide and Fund Financial Statements (continued)

The Fund Financial Statements provide reports on the financial condition and results of operations for three fund categories – governmental, proprietary, and fiduciary. Since the resources in the fiduciary funds cannot be used for district operations, they are not included in the Government-wide Statements. The District considers some governmental funds as major and reports their financial condition and results of operations in a separate column. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. All other revenues and expenses are non-operating.

C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation

The Government-wide Financial Statements use the economic resources measurement focus and the accrual basis of accounting, as do the Proprietary Fund and Fiduciary Fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental Fund Financial Statements use the current financial resources measurement focus and the modified accrual basis of accounting. With this measurement focus, only current assets, current liabilities and fund balances are included on the balance sheet. Operating statements of these funds present net increases and decreases in current assets (i.e., revenues and other financing sources and expenditures and other financing uses). The modified accrual basis of accounting recognizes revenues in the accounting period in which they become both measurable and available and recognizes expenditures in the accounting period in which the fund liability is incurred, if measurable, except for unmatured interest and principal on long-term debt, which is recognized when due. The expenditures related to certain compensated absences and claims and judgments are recognized when the obligations are expected to be liquidated with expendable available financial resources. The District considers all revenues available if they are collectible within 60 days after year-end. Revenues from local sources consist primarily of property taxes. Property tax revenues and revenues received from the State are recognized under the susceptible-to-accrual concept. Miscellaneous revenues are recorded as revenue when received in cash because they are generally not measurable until actually received. Investment earnings are recorded as earned, since they are both measurable and available. Grant funds are considered to be earned to the extent of expenditures made under the provisions of the grant. Accordingly, when such funds are received, they are recorded as deferred revenues until related and authorized expenditures have been made. If balances have not been expended by the end of the project period, grantors may require the District to refund all or part of the unused amount.


34

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (continued)

The Proprietary Fund Types and Fiduciary Funds are accounted for on a flow of economic resources measurement focus and utilize the accrual basis of accounting. This basis of accounting recognizes revenues in the accounting period in which they are earned and become measurable and expenses in the accounting period in which they are incurred and become measurable. The Agency Funds apply the accrual basis of accounting but do not have a measurement focus. All assets and all liabilities associated with the operation of these funds are included on the Statement of Net Assets. The fund equity is segregated into invested in capital assets net of related debt, restricted net assets, and unrestricted net assets.

D. Fund Accounting

The accounts of the District are organized on the basis of funds in accordance with the provisions of the Resource Guide. Each fund is considered to be a separate accounting entity. The operations of each fund are accounted for by providing a separate set of self-balancing accounts, which comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses. For financial statement presentation, the District’s Fund Financial Statements provide more detailed information about the District’s most significant funds, not the District as a whole. The funds shown on the Fund Financial Statements are considered major funds because of the size and activity of the funds in relation to all of the funds. The District reports the following major Governmental Funds: 1. General Fund

The General Fund is the government’s primary operating fund. It is used to account for all financial transactions not properly included in other funds. The principal sources of revenues include local property taxes, state funding under the Foundation School Program, interest earnings on fund investments, federal source revenues for indirect costs reimbursed by the programs accounted for in the Special Revenue Fund, and revenues received for School Health and Related Services. Expenditures include all costs associated with the daily operations of the District except for food service, debt service, capital projects, and specific programs funded by the federal or state government.

2. Debt Service Fund

The Debt Service Fund is used to account for the payment of interest and principal on all bonds of the District. The primary sources of revenue for debt service are local property taxes, state existing debt and instructional facilities allotments, and interest earnings on investments.

3. Capital Projects Fund

The Capital Projects fund is used to account for the proceeds of the District’s bond sales and revenues whose expenditures are restricted to the construction and acquisition of major capital facilities.


35


D. Fund Accounting (continued) The District also reports the following non-major Governmental Fund type under Other Governmental Funds: 4. Special Revenue Fund

The Special Revenue Fund is used to account for all financial resources restricted to, or designated for, specific purposes by a grantor. Specifically, this type of fund is used to account for funds that are used for the District’s food service program, including local and federal revenue sources, for federally financed programs (grants) where unused balances are returned to the grantor at the close of specified project periods and other revenue specific programs. Project accounting is employed to maintain integrity for the various sources of funds. Resources accounted for in these funds are awarded to the District for the purpose of accomplishing specific educational tasks as defined by grantors in contracts or other agreements.

Additionally, the District reports the following Proprietary Fund:

5. Internal Service Fund

The Internal Service Fund is used to account for revenues and expenses related to services provided to organizations inside the District on a cost reimbursement basis. The following Internal Service Funds are used by the District:

The Workers’ Compensation Fund is used to account for the operations of the District’s workers’ compensation insurance plan, which is supported principally by employer contributions. Expenses include plan benefit payments to insured employees for claims and premium charges. Estimated amounts due for claims incurred but not reported at year-end are included as fund liabilities.

Similar to the Workers’ Compensation Fund, the Health Insurance Fund is used to account for the District’s health insurance plan, which is supported by both district and employee contributions. Expenses include plan benefit payments to health care providers for claims incurred. Estimated amounts due for claims incurred but not reported at year-end are included as fund liabilities.

The Auto Liability Fund is used to account for the District’s automobile insurance plan which is entirely supported by district contributions. Expenses include payments for automotive claims for both district and non-district vehicles.

The Print Shop Fund is used to account for the District’s internal printing operations. All costs and expenses of operating the print shop are accounted for in the fund. Users of the printing services are charged fees based on amounts estimated to cover the cost of operations.

Additionally, the District reports the following Fiduciary Funds:

6. Agency Funds

The Agency Funds are used to account for activities of student groups. These funds have no equity; assets are equal to liabilities and do not include revenues and expenditures for general operations of the District. The Agency Fund accounts for resources held in a custodial capacity by the District, and consist of funds that are property of students and others and cannot be used by the District in operations.


36


E. Other Accounting Policies – Assets, Liabilities, and Net Assets or Equity 1. Cash and Cash Equivalents

The District’s cash and cash equivalents are considered to be cash on hand, demand deposits, certificates of deposit, balances in privately managed public funds investment pools (TexPool and Lone Star), and short-term investments with original maturities of three months or less from the date of acquisition. For the purpose of the statement of cash flows, the Proprietary Fund Types consider temporary investments, with maturity of three months or less when purchased, to be cash equivalents.

2. Investments

Investments consist of deposits with TexPool and Lone Star, local government investment pools. The District’s investments are carried at fair value based on quoted market prices at August 31, 2012 in accordance with Generally Accepted Accounting Principles. Investments having a maturity of three months or less when purchased are reported as cash and cash equivalents.

3. Short-Term Interfund Receivables/Payables

During the course of operations, transactions occur between individual funds for specified purposes. These receivables and payables are classified as due from other funds or due to other funds on the combined balance sheet.

4. Inventories and Prepaid Items

Inventories consisting of supplies and materials are stated at cost (average cost method) and include consumable custodial, maintenance, transportation, instructional, food consumables and office supplies. Inventories of governmental funds are recorded as expenditures when the supplies and materials are used or consumed (consumption method) rather than when purchased. Inventories of food commodities are recorded as revenues at fair market value supplied by the Texas Department of Human Services on the date received, and are recorded as expenditures when the commodities are consumed. A portion of fund balance is classified as non-spendable to reflect minimum inventory quantities considered necessary for the District’s continuing operations.

Certain payments to vendors reflect costs application to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements.


37

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) E. Other Accounting Policies – Assets, Liabilities, and Net Assets or Equity (continued)

5. Capital Assets

Capital assets, which include land, buildings, furniture and equipment, are reported in the applicable governmental column in the Government-wide Financial Statements. Primarily, capital assets are defined by the District as assets with an initial cost of more than $5,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Costs of the facilities Acquisition and Construction Function that relate to overall planning of District facilities, managing overall District assets and overall construction projects are treated as period costs and are not capitalized unless related to specific assets. Donated capital assets are recorded at estimated fair market value at the date of donation.

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

When assets are retired or otherwise disposed of, the related costs or other recorded amounts are removed.

Buildings, furniture, and equipment of the District are depreciated using the straight line method over the following estimated useful lives:

Assets Years Buildings 50 Temporary Buildings 25 Building Improvements 20 Furniture & Fixtures 20 Vehicles 15 Buses 15 Equipment 10 Office Equipment 6 Computer Equipment 6

Land and construction in progress are not depreciated


38


6. Deferred Outflows/Inflows of Resources

In addition to assets, the Statement of Net Position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, Deferred Outflows of Resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The District has one item that qualifies for reporting in this category. It is related to the hedging derivative instruments associated with the Series 2012-C Bonds and the refunding of the Series 2004-C Bonds. The deferred amount on refunding related to the Series 2004-C Bonds is reported in the Government-wide Statement of Net Position in this category and will be amortized over the life of the debt. In addition to liabilities, the Statement of Net Position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, Deferred Inflows of Resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow or resource (revenue) until that time. The District has one item that qualifies for reporting in this category. The imputed at-the-market swaps associated with the Series 2012-C Bonds are reported as a deferred inflow of resources at market value.

7. Long-Term Obligations

In the Government-wide Financial Statements and in the Proprietary Fund types in the Fund Financial Statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or Proprietary Fund type Statement of Net Assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. Accretion of interest on the capital appreciation bonds is recorded at the accreted value through the end of the fiscal year.

In the Fund Financial Statements, Governmental Fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.


39


8. Transactions Between Funds

Transactions between funds that would be treated as revenues, expenditures or expenses if they involved organizations external to the District are accounted for as revenues, expenditures or expenses in the applicable funds.

Transactions which constitute reimbursements of a fund for expenditures or expenses initially made from that fund, which are properly attributable to another fund, are recorded as expenditures or expenses in the reimbursing fund and as reductions of the expenditures or expenses in the fund that is reimbursed.

Other legally authorized transfers are included in the results of operations of the governmental funds.

9. Compensated Absences – Accumulated Vacation Pay and Sick Leave

The District has a vacation pay policy for twelve-month employees whereby eligible employees shall receive vacation of one to fifteen days dependent upon the number of years of service. Employees become eligible for vacation days after six months of employment. All vacation days are forfeited if not taken by December 31 of the calendar year; therefore, the liability for unused vacation days at August 31, 2012 is not material to the financial statements.

The District pays a portion of accrued sick leave to employees who retire with five or more years of continuous employment in the District and whose retirement can be verified by the Teachers Retirement System. The compensated absences are normally paid through the General Fund when the amounts are due. Payment is limited to the current salary rate for one-half of the locally accumulated sick leave days up to a maximum of 90 accumulated days.

10. Fund Equity

Beginning with fiscal year 2011, the District implemented GASB Statement No. 54 “Fund Balance Reporting and Governmental Fund Type Definitions”. This statement provides more clearly defined fund balance categories to make the nature and extent of the constraints placed on a government’s fund balance more transparent. The following classifications describe the relative strength of the spending constraints: a. Non-spendable Fund Balance

Non-spendable fund balance represents amounts that are not in spendable form or are required to be maintained intact. As such, the inventory and prepaid items have been properly classified in the Governmental Funds Balance Sheet (Exhibit C-1)


40


b. Restricted Fund Balance

Restricted fund balance consists of amounts that can be spent only for specific purposes because of local, state or federal laws, or externally imposed conditions by grantors or creditors. The Fund balance for the Child Nutrition Fund and other grant funds are classified as restricted

c. Committed Fund Balance

Committed fund balances are amounts constrained to specific purposes by the District itself, using its highest decision making authority (the Board of Trustees). To be reported as committed, amounts cannot be used for any other purpose unless the District takes the same highest level of action to remove or change the constraint. The General Fund has committed $5,000,000 for self-insurance purposes. The District has committed the fund balance in the Campus Activity Fund for uses benefitting the respective campuses where the funds were raised.

d. Assigned Fund Balance

Assigned fund balance is the amount the District intends to use for a specific purpose. Intent can be expressed by the District or by an official or body to which the Board of Trustees delegates the authority. The District has assigned fund balances in the General Fund in the amount of $34,873,093 and is detailed in Note 12.

e. Unassigned Fund Balance

Amounts that are available for any purpose are considered unassigned fund balance. Positive numbers can only be reported in the general fund.

The District establishes (and modifies or rescinds) fund balance commitments and assignments by passage of resolution. A fund balance commitment is further indicated in the budget document as a commitment or assignment of the fund. Per the local policy, assigned fund balance amounts are established by the Superintendent or his designee.

11. Use of Estimates

The presentation of financial statements, in conformity with Generally Accepted Accounting Principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those estimates.


41


12. Data Control Codes The Data Control Codes refer to the account code structure prescribed by TEA in the Financial Accountability System Resource Guide. The Texas Education Agency requires school districts to display these codes in the financial statements filed with the Agency in order to insure accuracy in building a statewide database for policy development and funding plans.

13. Use of Funds

When both restricted and unrestricted resources are available for use, it is the District’s policy to use restricted resources first, then unrestricted as they are needed. Additionally, the District would first use committed, then assigned, and lastly unassigned amounts of unrestricted fund balance when expenditures are made. The District does not have a formal minimum fund balance policy.

NOTE 2 – RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS

A. Explanation of Certain Differences between the Governmental Fund Balance Sheet and the Government-wide Statement of Net Position Exhibit C-2 provides the reconciliation between the fund balance for total governmental funds on the governmental fund balance sheet and the net assets for governmental activities as reported in the Government-wide Statement of Net Position. Major elements of that reconciliation include capital assets which are not financial resources and are therefore not reported in governmental funds, long-term liabilities, including bonds payable, which are not due and payable in the current period and are not reported as liabilities in the Fund Financial Statements, and property taxes receivable which are included as deferred in the Fund Financial Statements are adjusted based on when the tax levy was made and for uncollectible amounts.

B. Explanation of Certain Differences between the Governmental Fund Statement of Revenues,

Expenditures and Changes in Fund Balances and the Government-wide Statement of Activities Exhibit C-4 provides a reconciliation between the net changes in fund balance as shown on the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances and the changes in net assets of governmental activities as reported on the Government-wide Statement of Activities. One element of that reconciliation explains that current year capital outlays and debt principal payments are expenditures in the Fund Financial Statements, but should be shown as increases in capital assets and decreases in long-term debt in the Government-wide Statements. This adjustment affects both the net asset balance and the change in net assets. The debt payments on retirement of debt are recorded as expenditures for Fund Basis Financial Statements but are recorded as a reduction of debt in the Government-wide Financial Statements. The capital asset additions are expenditures in the Fund Basis Financial Statements but are capitalized in the Government-wide Financial Statements. The Fund Basis Financial Statements do not include the current depreciation expense. Another element of the reconciliation on Exhibit C-4 is described as various other reclassifications and eliminations necessary to convert from the modified accrual basis of accounting to the accrual basis of accounting. As indicated above, if new debt is issued, it is treated as a source of revenue on the Fund Basis Financial Statements, while in the Government-wide Financial Statements; the amount is recorded as a liability. Property taxes are adjusted for the accrual basis and the deferred revenues are adjusted based on prior year levies and current year uncollectible amounts.


42

NOTE 3 – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY

A. Budgetary Data The Board of Trustees adopts an appropriated budget for the General Fund, Debt Service Fund, and Special Revenue Fund. The Food Service and Education Jobs Funds are included in the Special Revenue Fund. Budgets are prepared using the same method of accounting as for financial reporting. The District is required to present the adopted and final amended budgeted revenues and expenditures for the General Fund and each major special revenue fund. The Food Service Fund and Education Jobs Fund are not major funds. The General Fund budget report appears in the required supplementary information section where the District compares the final amended budget to actual revenues and expenditures. Per regulatory requirements, the Debt Service Fund and the Food Service Fund are required to be reported with the original budget, amended budget and actual. Additionally, the District has chosen to present this schedule for the Education Jobs Fund as well. These statements are included in the Other Supplementary Information of the Comprehensive Annual Financial Report in Exhibits H-2 and J-3. The Capital Projects Fund budget is prepared on a project basis based on the proceeds available from bond issues and planned expenditures outlined in applicable bond ordinances. Capital Projects Fund equity, which represents unexpended appropriations, is re-appropriated in the subsequent fiscal year’s budget until available funds for acquisition and construction of facilities have been utilized. Each major construction contract is approved based on the existing availability of bond proceeds and/or approved but unissued bonds. The non-budgeted Special Revenue funds (primarily federal, state, and local grant programs) utilize a managerial type financial plan approved at the fund level by the Board of Trustees upon acceptance of the grants. These grants are subject to state imposed project length budgets and monitored through submission of reimbursement reports to the state. The following procedures are followed in establishing the budgetary data reflected in the Fund Financial Statements: 1. Prior to August 20, the District prepares a budget for the next succeeding fiscal year beginning

September 1. The operating budget includes proposed expenditures and the means of financing them.

2. A meeting of the Board is then called for the purpose of adopting the proposed budget. At least ten

days public notice of the meeting must be given.

3. Prior to September 1, the budget is legally enacted through passage of a resolution by the Board. Once a budget is approved, it can only be amended at the function and fund level by approval of a majority of the members of the Board. Amendments are presented to the Board at its regular meetings. Each amendment must have Board approval. As required by law, such amendments are made before the fact, are reflected in the official minutes of the Board, and are not made after fiscal year end. Because the District has a policy of careful budgetary control, several amendments were necessary during the year.

4. Each budget is controlled by the budget coordinator at the revenue and expenditure function/object

level. Budgeted amounts are amended by the Board. All budget appropriations lapse at year end.

5. During the fiscal year ended August 31, 2012 the District did not have any expenditures over appropriations in major funds.


43

NOTE 3 – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY

A. Budgetary Data (continued)

6. A reconciliation of fund balances for both appropriated budget and non-appropriated budget Special Revenue Funds is as follows:

All Special Unbudgeted BudgetedRevenue Special SpecialFunds Revenue Funds Revenue Funds

Revenues 59,572,347$ 25,316,149$ 34,256,198$ Expenditures 60,321,649 24,442,141 35,879,508Revenues Over (Under) Expenditures (749,302) 874,008 (1,623,310)Other Sources (Uses) (444,857) (468,281) 23,424Fund Balance Beginning 13,725,451 6,291,660 7,433,791

Fund Balance Ending 12,531,292$ 6,697,387$ 5,833,905$

7. During the fiscal year the operating budget must be amended by the Board for changes to function appropriation amounts. All supplemental appropriations must be within limits of available revenues and fund equity.

The following table summarizes changes to the originally adopted budget for all budgeted funds:

Appropriations as of Supplemental Appropriations as ofSeptember 1, 2011 Appropriations August 31, 2012

Fund (Original Budget) and Revisions (Amended Budget)

General Fund 442,797,518$ (18,167,836)$ 424,629,682$ Special Revenue Funds 24,717,916 12,288,424 37,006,340Debt Service Fund 88,700,000 339,059 89,039,059

Total all Budgeted Funds 556,215,434$ (5,540,353)$ 550,675,081$

B. Encumbrances Encumbrance accounting, under which purchase orders, contracts, and other commitments are recorded in order to reserve that portion of the applicable appropriation, is used in all governmental funds. Encumbrances outstanding at year-end are commitments that do not constitute expenditures or liabilities, but are reported as assignments of fund balances. Since appropriations lapse at the end of each fiscal year, outstanding encumbrances are appropriately provided for in the subsequent fiscal year’s budget to provide for the liquidation of the prior commitments.


44

NOTE 4 – DEPOSITS (CASH) AND INVESTMENTS

A. Deposits (Cash) Deposits and investment transactions of the District are regulated by State statutes of the Texas Education Code and other regulations regarding security for District funds in depository institutions. In accordance with applicable statutes, the District has a depository contract with an area bank (depository) providing for interest rates to be earned on deposited funds and for banking charges the District incurs as a result of banking services received. All depository contracts have a term of two years, commencing with the start of every odd-numbered fiscal year. However, the contract can be extended for two additional two year periods should the depository and the District agree to the extension. Depository contracts are awarded on the basis of competitive proposals received from area banks and can be awarded to more than one bank if the bids received are relatively equal.

The District may place funds with the depository in interest and non-interest bearing accounts. Statutes and the depository contract require that all funds in the depository institution be fully secured by federal depository insurance or a combination of federal depository insurance and acceptable collateral securities and/or an acceptable surety bond. The collateral securities must be delivered to the District or placed with an independent third party custodian or trustee institution. In accordance with State statutes pertaining to lawful collateralization of District deposits, safekeeping receipts are issued in the name of the depository with proper identification that the collateral securities are pledged by the depository to secure funds of the District. Acceptable collateral securities include direct obligations of the United States of America (U.S.), bonds of any agency of the U.S., bonds of the State of Texas or of any county, school district, city, or town of the State of Texas that have been rated A or better and other securities as authorized by Chapter 2257 Collateral for Public Funds of the Government Code and Chapter 2256 Public Fund Investment Act. The District may approve all collateral securities prior to their being pledged. The depository can release or replace collateral securities pledged to secure District funds only upon obtaining the written approval of the District. All demand and time deposits in the depository bank were entirely covered by federal depository insurance and by acceptable collateral securities pledged in the District’s name by Prosperity Bank and held in safekeeping by Federal Home Loan Bank of Dallas at year-end in accordance with provisions of the depository contract. At August 31, 2012 the carrying amount of the District’s deposits was $212,761,801. As of August 31, 2012 the deposits and amount of pledged collateral and FDIC coverage was as follows:

Carrying Amount Pledged Collateral Availableof Combined and Surety FDIC

Financial Institution Deposit Bond Coverage Month

Prosperity Bank 212,761,801$ 255,282,692$ 500,000$ August 31, 2012


45

NOTE 4 – DEPOSITS (CASH) AND INVESTMENTS (continued)

B. Investments The Board of Trustees of the District has adopted a written investment policy (the “Investment Policy”) regarding the investment of the funds as defined in the Public Funds Investment Act of 1995 (Chapter 2256, Texas Government Code). The Public Funds Investment Act requires an annual audit of investment practices. Audit procedures in this area, conducted as part of the audit, disclosed that in the area of investment practices, management reports, and establishment of appropriate policies, the District was in substantial compliance with the requirements of the Act. Additionally, the investments and investment practices of the District are in compliance with the Trustees’ investment policies. The District’s Investment Policy emphasizes safety of principal and liquidity, addresses investment diversification, yield, and maturity and addresses the quality and capability of investment personnel. The Investment Policy includes a list of authorized investment instruments, a maximum allowable stated maturity of any individual investment and the maximum average dollar weighted maturity allowed for fund groups.

The District is authorized to invest in the following investment instruments: 1. Obligations of, or guaranteed by, the U.S. Government and its agencies and instrumentalities as

permitted by Government Code 2256.009. This excludes collateralized mortgage obligations. Maximum maturity shall be three years.

2. Certificates of deposit and share certificates as permitted by Government Code 2256.010. 3. Fully Collateralized repurchase agreements permitted by Government Code 2256.011. 4. A1/P1 Commercial paper as defined by Government Code 2256.013 and not to exceed 60 days to

maturity. 5. No-load money market mutual funds as permitted by Government Code 2256.014. 6. Constant dollar public funds investment pools as permitted by Government Codes 2256.016 –

2256.019. A summary of the District’s cash and investments at August 31, 2012 is shown below.

Cash

on Bank Investment Hand Deposits Pools Total

General 34,225$ 128,144,922$ 24,180,437$ 152,359,584$ Debt Service 23,972,214 20,600,828 44,573,042Capital Projects 48,934,938 60,357,806 109,292,744Special Revenue Funds 100 447,279 13,074,020 13,521,399

Total Governmental Funds 34,325 201,499,353 118,213,091 319,746,769

Internal Service Fund 6,944,262 3,757,122 10,701,384

Total Governmental Activities 34,325 208,443,615 121,970,213 330,448,153

Fiduciary Funds Trust and Agency 4,318,186 1,884 4,320,070

Total 34,325$ 212,761,801$ 121,972,097$ 334,768,223$


46

NOTE 4 – DEPOSITS (CASH) AND INVESTMENTS (continued) B. Investments (continued)

The District generally holds all securities to maturity. The District did not purchase any derivative investment products during the current year nor participate in any reverse repurchase agreements or security lending agreements during the fiscal year 2012. The following table includes the portfolio balances, credit rating, and weighted average maturity of the portfolio balance by investment type of the District as of August 31, 2012:

Fair WeightedRating Value Avg. Maturity

Lone Star - Public Funds Investment Pool AAAm 30,196,197$ 45 daysTexPool - Public Funds Investment Pool AAAm 91,775,900 38 days

Total Investments and Cash Equivalent 121,972,097$

As of August 31, 2012, the District’s investments included TexPool and Lone Star Public Funds Investment Pools. The investment pools investments are not evidenced by securities that exist in physical or book entry form and, accordingly, do not have custodial risk. Investment Pool policies require that local government deposits be used to purchase investments authorized by the Public Funds Investment Act of 1987, as amended. Oversight responsibility for Texpool is provided by The Texas State Comptroller of Public Accounts and for Lone Star by The Texas Association of School Boards. The value of District portions in TexPool and Lone Star are the same as the value of the Shares. These external pooled funds operate in a manner consistent with the SEC’s Rule 2a7 of the Investment Company Act of 1940. The external pooled funds are amortized cost rather than market value to report net assets to compute share price, such funds have daily liquidity. Although TexPool and Lone Star have weighted average maturities greater than one, the District considers its holdings in these funds to have a one day weighted average maturity. Credit Risk Related to Investments Credit risk is the risk that another party to a deposit or investment transaction will not fulfill its obligations. This is not to be confused with market risk, which is the risk that the market value of an investment, collateral protecting a deposit, or securities underlying a repurchase agreement, will decline. Market risk is not depicted in this note. In compliance with GASB 40, local policy also addresses credit risk by monitoring investment diversification through specific identification disclosure and weighted average maturity disclosure. As of August 31, 2012, TexPool and Lone Star represented 27.4% and 9.0%, respectively, of the General Fund, Debt Service Fund, Capital Projects Fund, Special Revenue Fund, Internal Service Fund and Fiduciary Fund investments and are rated AAAm by Standard and Poor’s. Interest Rate Risk As a means of minimizing risk of loss due to interest rate fluctuations, the District’s Investment Policy requires that investment maturities in the General Fund, Debt Service Fund, Capital Projects Fund, and Special Revenue Fund will not exceed the lesser of a dollar weighted average maturity of 365 day or the anticipated cash flow requirements of the fund. The District’s Investment Policy also limits that no investment shall have a maturity greater than three years from the date of purchase.


47

NOTE 4 – DEPOSITS (CASH) AND INVESTMENTS (continued) B. Investments (continued)

As of August 31, 2012, 36.4% of the entire portfolio was invested in AAAm rated public investment pools. The dollar weighted average maturity for all securities was 40 days, which is less than the threshold of 180 days.

Custodial Credit Risk The District’s agent holds the securities in the General Fund, Debt Service Fund, Capital Projects Fund,

and Special Revenue Fund in the District’s name; therefore, the District is not exposed to custodial credit risk. Custodial credit risk for investments is the risk that, in event of the failure of the counterparty (e.g. broker dealer) to a transaction, a government will not be able to recover the value of its investments or collateral securities that are in the possession of another party. The District’s policy requires that a third party custodian or a bank trust department hold all securities owned by, or pledged as collateral to the District.


48

NOTE 5 – PROPERTY TAXES The current assessment ratio of the District is 100% of market valuation of all property within the

District’s boundaries. The local maintenance and debt service tax rates for the 2011-12 school year were $1.1266 and $.40 respectively per $100 of assessed valuation. The 2011-12 assessed valuation was $20,727,521,751 and resulted in a final adjusted tax levy of $312,869,011.

Property taxes are levied by October 1 on the assessed value listed the prior January 1 for all real and business personal property located in the District in conformity with Subtitle E, Texas Property Tax Code. Taxes are due on receipt of the tax bill and are delinquent if not paid before February 1 of the year following the year in which imposed. On January 31 of each year, a lien attaches to the property to secure the payment of all taxes, penalties, and interest ultimately imposed. Local taxes assessed on valuations made as of January 1 each year are recorded in the District’s Financial Statements net of the related allowance for uncollectible taxes. The resulting net taxes receivable is stated at the amount estimated to be collectible based upon the District’s collection experience. Uncollectible taxes are periodically reviewed and written off by the District, as provided by specific statutory authority from the State Legislature. Net property taxes receivable at August 31, 2012 consisted of the following:

General Debt ServiceFund Fund Total

Property Taxes Receivable-Current Year Levy 1,927,401$ 684,325$ 2,611,726$ Property Taxes Receivable-Prior Years' Levies 4,318,625 1,323,005 5,641,630 Total Property Taxes Receivable 6,246,026 2,007,330 8,253,356Penalty and Interest on Delinquent Property Taxes 3,446,802 958,981 4,405,783

Total Property Taxes and Penalty and Interest 9,692,828 2,966,311 12,659,139Less Allowance for Uncollectible Taxes 2,156,407 632,913 2,789,320

Net Property Taxes Receivable 7,536,421$ 2,333,398$ 9,869,819$

Appraisal District The Texas Legislature in 1979 adopted a comprehensive Property Tax Code which established an

appraisal district and an appraisal review board in each county in the State of Texas. The District has property in Harris, Fort Bend, and Waller Counties. Beginning January 1, 2008 the District contracted with each county for the appraisal of property for all taxing units in the county’s boundaries, including the District. The District paid Harris County Appraisal District, Fort Bend County Appraisal District, and Waller Country Appraisal District $1,506,622, $695,795 and $145,679 respectively in fiscal 2012 for appraising property.


49

NOTE 6 – AMOUNTS DUE TO/FROM OTHER FUNDS AND INTERFUND TRANSFERS Amounts Due To/From Other Funds at August 31, 2012 include the following:

Interfund InterfundReceivables Payables

General Fund 3,717,795$ $ Debt Service Fund 222,261Capital Projects Fund 69,669Other Governmental Funds Special Revenue Funds:

McKinney-Vento Homeless Education 24,285ESEA, Title I, Part A 540,623IDEA-Part B, Formula 1,106,955IDEA-Part B, Preschool 25,192Nutrition and Food Services 3,110,948Voc. Ed.-Basic Grant 33,064ESEA, Title II, Part A 391,403ESEA, Title III, Part A 513,980Medicaid Administrative Claiming 48,979Education Jobs Fund 613,119Early Childhood Intervention 241,583SSA, IDEA-Part B, Discretionary 17,674SSA, IDEA-Part B, Deaf 561SSA, IDEA-Part B, Preschool Deaf 6,367SSA, IDEA-Part C, Early Intervention 271Non-Educational Community Support 3,307Advanced Placement Incentives 9,609Instructional Materials Allotment 248,220Read to Succeed License Plate Program 103State Funded Special Revenue 41,647SSA, Regional Deaf Cooperative 58,303SSA, Deaf Local Share 6,238Campus Activity Funds 3,066,096Locally Funded Special Revenue 233Tax Increment Reinvestment Zone 468,281 Total Special Revenue Funds/Other Gov. Funds 3,373,007 7,204,034Total Governmental Funds 7,313,063 7,273,703

Internal Service Fund 39,360

Total - All Funds 7,313,063$ 7,313,063$


50

NOTE 6 – AMOUNTS DUE TO/FROM OTHER FUNDS AND INTERFUND TRANSFERS (continued) The District had not cleared the interfund payables and receivables at year end. Most of the amounts

represent short-term borrowings between funds for operating expense payments. Transfers between funds in fiscal year 2012 are as follows:

Transfers TransfersIn Out

Governmental Funds:General Fund 468,281$ 3,237,982$ Debt Service Fund 3,613,433Capital Projects Fund 375,451Other Governmental Funds:

Special Revenue Funds:Tax Increment Reinvestment Zone 468,281

Total Special Revenue Funds 468,281

Total Governmental Funds 4,081,714$ 4,081,714$

Transfers are used to: 1) move interest revenues from the Capital Projects Fund where they are collected to the Debt Service Fund for payment of principal and interest, 2) move Tax Increment Reinvestment Zone Funds to the General Fund to cover net operating costs of the Leonard Merrell Center and 3) move the federal subsidy payment on the Build America Bonds from the General Fund to the Debt Service Fund for payment of principal and interest.

NOTE 7 – AMOUNTS DUE FROM AND TO OTHER GOVERNMENTS Receivables Due from Other Governments at August 31, 2012 consisted of the following:

OtherGeneral Capital Projects Governmental

Fund Fund Funds TotalDue from State Agencies: State Grant Expenditure Reimbursement $ $ 120,224$ 120,224$ State Retirement System Overpayment 68,168 68,168Due from Federal Agencies: Federal Grant Expenditure Reimbursement 4,140,321 4,140,321Due from Local Agencies: Local Grant Expenditure Reimbursement 9,244 9,244 Katy Development Authority Reimbursement 292,700 292,700

Total Due from Other Governments 68,168$ 292,700$ 4,269,789$ 4,630,657$

Payables Due to Other Governments at August 31, 2012 consisted of the following:

General Debt ServiceFund Fund Total

Due to State Agencies: State Summary of Finances 14,428,066$ 845,723$ 15,273,789$ Due to Local Agencies: Katy Development Authority 2,435,819 2,435,819

16,863,885$ 845,723$ 17,709,608$


51

NOTE 8 – CAPITAL ASSETS

Prior to GASB Statement No. 34, the District was not required to calculate depreciation expense on capital assets. In accordance with the implementation of GASB Statement No. 34, capital assets have been adjusted to reflect historical cost for the purpose of calculating depreciation. Capital asset activity for the governmental activities of the District for the year ended August 31, 2012 is as follows:

Balance Additions Retirements BalanceSeptember 1, 2011 and Transfers and Transfers August 31, 2012

Governmental ActivitiesCapital Assets not being Depreciated:

Land 70,658,230$ 1,220,284$ (475,765)$ 71,402,749$ Construction in Progress 40,505,653 89,672,665 (40,505,653) 89,672,665Total Capital Assets, not being

Depreciated 111,163,883 90,892,949 (40,981,418) 161,075,414Capital Assets being Depreciated:

Land Improvements 49,437,573 1,659,496 (50) 51,097,019Buildings and Improvements 999,482,152 75,848,758 39,126,247 1,114,457,157Furniture and Equipment 132,551,810 22,794,891 (9,936,616) 145,410,085Capital Leases 24,033,197 7,088 (860) 24,039,425Vehicles 37,871,170 4,619,557 (966,193) 41,524,534Total Capital Assets, being

Depreciated at Historical Cost 1,243,375,902 104,929,790 28,222,528 1,376,528,220

Less: Accumulated Depreciation for:Land Improvements (19,875,126) (2,155,674) (22,030,800)Buildings and Improvements (244,039,000) (24,106,944) 30,923 (268,115,021)Furniture and Equipment (72,185,018) (12,422,126) 7,165,118 (77,442,026)Capital Leases (3,064,186) (514,870) 860 (3,578,196)Vehicles (18,623,824) (2,381,757) 919,159 (20,086,422)

Total Accumulated Depreciation (357,787,154) (41,581,371) 8,116,060 (391,252,465)

Governmental Activities Capital Assets, Net 996,752,631$ 154,241,368$ (4,642,830)$ 1,146,351,169$

Capital Leases included in the above schedule consist of the following major classes:

Balance Additions Retirements BalanceSeptember 1, 2011 and Transfers and Transfers August 31, 2012

Capital Lease AssetsLand Improvements 163,506$ $ $ 163,506$ Buildings and Improvements 23,218,103 23,218,103Furniture and Equipment 651,588 7,088 (860) 657,816

Total Capital Lease Assets 24,033,197 7,088 (860) 24,039,425

Less: Accumulated Depreciation for:Land Improvements (1,525) (300) (1,825)Buildings and Improvements (2,815,431) (473,935) (3,289,366)Furniture and Equipment (247,230) (40,635) 860 (287,005)

Total Accumulated Depreciation (3,064,186) (514,870) 860 (3,578,196)

Capital Leases, Net 20,969,011$ (507,782)$ $ 20,461,229$


52

NOTE 8 – CAPITAL ASSETS (continued) Depreciation expense of the governmental activities was charged to functions/programs as follows:

Instruc tion 21,905,511$ Instruc tional Resources and Media Services 1,766,640 Curriculum and Instruc tional Staff Development 11,829 Instruc tional Administration 31,620 School Administration 1,518,099 Guidance and Counseling Services 689,229 Health Services 670,867 Student Transportation 3,197,301 Food Service 3,047,331 Cocurricular/Extracurricular Activities 2,361,304 General Administration 568,506 Plant Maintenance and Operations 2,173,681 Security and Monitoring Services 113,704 Data Processing Services 3,517,278 Capital Facilities 8,471Total Deprec iation Expense Governmental Activities 41,581,371$

Construction in progress and remaining commitments under related construction contracts at August 31,

2012 are as follows:

Construction in Progress:

Contract Other ConstructionProject Expenditures Project Costs in Progress

High School #7 56,710,989$ 1,852,432$ 58,563,421$ Katy High West Campus Replacement 11,977,616 533,966 12,511,582Taylor High Renovation 17,962,696 556,719 18,519,415High School Performing Arts Center Renovations 76,125 2,122 78,247

86,727,426$ 2,945,239$ 89,672,665$

Contract and related commitments:

Authorized Contract RemainingProject Contract Expenditures Commitment

High School #7 82,979,197$ 56,710,989$ 26,268,208$ Katy High West Campus Replacement 24,922,511 11,977,616 12,944,895Taylor High Renovation 33,750,670 17,962,696 15,787,974High School Performing Arts Center Renovations 105,000 76,125 28,875

141,757,378$ 86,727,426$ 55,029,952$

As explained in Note 3, encumbrance accounting is utilized to assure effective budgetary control. As of August 31, 2012 the General Fund had $671,077, the Capital Projects Fund had $71,275,524 and Other Governmental Funds had $489,738 in outstanding encumbrances.


53

NOTE 9 – LONG-TERM DEBT General Obligation Bonds General long-term debt of the District consists of General Obligation Bonds which provide funds to

construct, acquire, and equip school buildings and purchase necessary sites for school buildings. Certain outstanding bonds may be redeemed at their par value prior to their normal maturity dates in accordance with the terms of the related bond orders. The District has never defaulted on any principal or interest payment.

In November 2010 voters authorized $459,795,000 of General Obligation Bonds. The District has

$109,795,000 of remaining authorized but unissued bonds at August 31, 2012. General long-term debt consists of bonds payable and accretion of capital appreciation bonds. Bonds are

payable solely from revenues of the Debt Service Fund which consists primarily of property taxes collected by the District, state existing debt and instructional facilities allotments, and investment income. The capital lease is paid from General Fund property tax revenues generated within the Tax Increment Reinvestment Zone.

Changes in Long-Term Debt A summary of long-term debt transactions of the District for the year ended August 31, 2012 is as follows:

Balance at Balance at Due September 1, August 31, Within

2011 Additions Retirements 2012 One YearGeneral Obligation Bonds 1,077,256,097$ 297,155,000$ 209,311,136$ 1,165,099,961$ 35,255,000$ Accreted Interest on Capital Appreciation Bonds 9,711,419 451,554 753,864 9,409,109Imputed Borrowing 43,969,389 317,849 43,651,540 2,600,583Deferred Amounts: Bond Issuance Premiums 14,690,362 21,812,418 1,950,413 34,552,367 Bond Refundings (480,632) 9,051,718 149,869 8,421,217 Total Bonds Payable 1,101,177,246 372,440,079 212,483,131 1,261,134,194 37,855,583

Capital Leases 19,645,000 2,285,000 17,360,000 1,115,000

Compensated Absences 18,503,226 1,551,684 538,456 19,516,454 570,012

Total 1,139,325,472$ 373,991,763$ 215,306,587$ 1,298,010,648$ 39,540,595$

The District is in compliance with all significant bond and note limitations and restrictions.


54

NOTE 9 – LONG-TERM DEBT (continued) Outstanding bonded debt at August 31, 2012 consisted of the following:

Interest Debt Issue Description Rate Matures Outstanding

25,000,000$ Series 1996-A Limited Tax School Building Bonds 4.75-6.40 % 2017 3,100,000$

64,674,958 Series 2003-A Unlimited Tax School Building Bonds 2.00-5.00 2013 8,065,000

6,029,997 Series 2004-B Limited Tax Refunding Bonds 2.00-4.00 2020 480,001

23,055,000 Series 2005-A Unlimited Tax Refunding Bonds 3.00-5.25 2032 21,765,000

29,685,000 Series 2005-B Unlimited Tax Refunding Bonds 3.00-5.25 2032 26,625,000

29,995,000 Series 2006 Unlimited Tax School Building Bonds 4.00-5.00 2036 27,975,000

65,000,000 Series 2007-A Unlimited Tax School Building Bonds 4.25-5.00 2037 59,810,000

167,944,959 Series 2007-B Unlimited Tax Refunding Bonds 4.00-5.00 2035 164,579,960

61,395,000 Series 2007-C Limited Tax Refunding Bonds 4.00-5.63 2027 55,905,000

80,000,000 Series 2007-D Unlimited Tax School Building Bonds 4.25-5.63 2037 56,800,000


38,235,000 Series 2008-B Limited Tax Refunding Bonds 3.75-4.38 2024 33,745,000

97,700,000 Series 2008-C Unlimited Tax School Building Bonds 2.75-5.00 2038 84,940,000

24,315,000 Series 2009 Unlimited Tax School Building Bonds 2.00-5.00 2038 22,660,000


11,625,000 Series 2010-B Limited Tax Refunding Bonds 3.00-5.00 2027 10,050,000

41,470,000 Series 2010-C Unlimited Tax School Building Bonds 4.00-5.00 2021 36,190,000

155,000,000 Series 2010-D Unlimited Tax School Building Bonds 4.50-5.30 2041 155,000,000

6,220,000 Series 2010-E Limited Tax Refunding Bonds 2.00-4.00 2017 4,720,000

147,680,000 4.00-5.00 2042 147,680,000

34,475,000 Series 2012-B Variable Rate Unlimited Tax Refunding Bonds 4.00-5.00 2031 34,475,000

115,000,000 Series 2012-C Variable Rate Unlimited Tax Refunding Bonds 4.00-5.00 2036 115,000,000

1,165,099,961

(35,255,000)43,651,54034,552,367

8,421,217

1,216,470,085$Total Bonded Debt Long-Term

Total Bonded Debt

Series 2012-A Unlimited Tax School Building & Refunding Bonds

Less Amounts Due Within One Year

Plus Unamortized PremiumsPlus Unamortized Refundings

Plus Unamortized Imputed Borrowing


55

NOTE 9 – LONG-TERM DEBT (continued) Annual requirements to amortize all bonded long-term debt outstanding (including accretion) as of August

31, 2012 are as follows:

FiscalYear Principal Interest Totals2013 35,255,000$ 55,593,306$ 90,848,306$ 2014 34,902,444 55,636,909 90,539,3532015 36,831,822 53,557,147 90,388,9692016 40,571,333 52,588,901 93,160,2342017 39,537,539 51,882,069 91,419,6082018 41,486,823 50,461,065 91,947,8882019 46,395,000 45,558,482 91,953,4822020 47,510,000 43,371,479 90,881,4792021 49,700,000 41,037,393 90,737,3932022 50,570,000 38,679,851 89,249,8512023 51,940,000 36,289,528 88,229,5282024 53,825,000 33,794,505 87,619,5052025 53,045,000 31,232,380 84,277,3802026 54,855,000 28,616,096 83,471,0962027 52,950,000 25,954,522 78,904,5222028 55,330,000 23,274,488 78,604,4882029 49,310,000 20,670,909 69,980,9092030 48,385,000 18,257,887 66,642,8872031 45,820,000 15,924,711 61,744,7112032 40,900,000 13,775,144 54,675,1442033 32,675,000 11,918,541 44,593,5412034 35,225,000 10,175,908 45,400,9082035 36,920,000 8,322,946 45,242,9462036 37,130,000 6,431,247 43,561,2472037 24,860,000 4,579,479 29,439,4792038 19,165,000 3,384,884 22,549,8842039 14,020,000 2,443,360 16,463,3602040 14,660,000 1,612,302 16,272,3022041 15,065,000 750,296 15,815,2962042 6,260,000 156,500 6,416,500

1,165,099,961 785,932,235 1,951,032,196

35,255,000 55,593,306 90,848,306Long Term Debt 1,129,844,961$ 730,338,929$ 1,860,183,890$ Less: Current Portion


56

NOTE 9 – LONG-TERM DEBT (continued) Interest Rate Swap Agreements Variable Interest Rate Bonds Synthetic Fixed Rate Swaps

On July 28, 2004 as a means to reduce its borrowing cost in comparison to the issuance of traditional fixed rate bonds, the District entered into two identical pay fixed/receive variable rate swap agreements on the District’s $115,000,000 Variable Rate Unlimited Tax School Building Bonds, Series 2004-C (“2004-C Bonds”). The swap agreements and the bonds were issued at the same time. The swap agreements are with JP Morgan Chase Bank, N.A. and Bank of America, N.A., each in an original notional amount of $57,500,000 in order to synthetically fix the interest obligations on the variable interest bonds. On July 17, 2012 the District refunded the 2004-C Bonds with the $115,000,000 Variable Rate Unlimited Tax Refunding Bonds, Series 2012-C (“2012-C Bonds”) in order to mitigate bank risk while increasing the effectiveness of the hedging derivative.

Objective

The objective of the swaps is to hedge against the potential of rising interest rates in conjunction with the District’s $115,000,000 outstanding variable rate debt. The interest rate swaps were effective hedges as of the prior reporting period with each swap’s cumulative change in fair value recorded in deferred outflows on the Statement of Net Position. The refunding of the 2004-C Bonds is considered a termination event as described in Governmental Accounting Standards Board (GASB) Statement 53. As of the refunding date the swaps are considered to be off-market, consisting of an imputed at-the-market swap and an imputed borrowing. The fair values of the derivative instruments outstanding at August 31, 2012 and the changes in fair values for the year then ended are as follows:

Fair Value at August 31, 2012Governmental Activities Classification Amount

Cash Flow Hedge:Pay fixed interest rate swap Asset: Interest Rate Swaps $2,596,012

Liability: Imputed Borrowing 43,651,540Negative Fair Value $41,055,528

Changes in Fair Value

Governmental Ac tivities Classification AmountCash Flow Hedge:

Pay fixed interest rate sw ap Deferred Amount on Refunding $12,270,426Deferred Inflow s: Interest Rate Sw ap (2,596,012)

Terms The swaps notional amounts total $115,000,000, the principal amount of the associated 2012-C Bonds.

The District’s swap agreements contain scheduled reductions to outstanding notional amounts that follow anticipated payments of principal of the 2012-C Bonds in varying amounts during the years 2019 to 2036. Under the terms of the swaps, the District will pay a fixed rate of 3.92% and receive a floating rate equal to 67% of the one-month London Interbank Offered Rate (LIBOR) Index. All agreements were effective July 28, 2004, the date of issuance of the 2004-C Bonds. The termination date is August 15, 2036.


57

NOTE 9 – LONG-TERM DEBT (continued) Interest Rate Swap Agreements (continued) For the fiscal year ending August 31, 2012 the effective rate of the bonds associated with the swaps is as

follows:

RatePaid

Terms (Received)

Fixed rate paid for swaps 3.920 %Variable rate payment received from counterparties LIBOR x 67% (0.167)Net rate paid/(received) for swaps 3.753Average variable rate paid on bonds associated with swaps 0.285Remarketing & liquidity fees 0.492Effective rate of bonds associated with swaps 4.530 %

In contrast, the fixed rate the District would have paid on General Obligation Bonds at a comparable maturity on the same original sale date in 2004 would have been 5.15%. The savings in interest expenditures realized by participating in the swap agreement is $14,703,290 as compared to costs the District would have incurred if the debt had been issued as traditional fixed rate bonds at the time of original issuance.

Fair Value

Because LIBOR interest rates have declined since inception of the swaps, the swaps had a negative fair value of $41,055,528 on August 31, 2012. This value was calculated using the zero-coupon method. This method calculates the future net settlement payments required by the swap, assuming that the current forward rates implied by the yield curve correctly anticipate future spot interest rates.

Credit Risk As of August 31, 2012, the District was not exposed to credit risk because the swaps had a negative fair

value. However, should interest rates increase and the fair value of the swaps become positive, the District would be exposed to credit risk on the swaps in the amount of its fair value.

Basis Risk

The 2012-C Bonds were issued as Floating Rate Notes. During the initial three-year rate period, the interest rate on the hedged bonds is indexed to 67% of one-month LIBOR with monthly rate resets plus a constant of 65 basis points. The reference rate on the floating leg of each hedging derivative is also 67% of one-month LIBOR with weekly rate resets. Because the variable amount the District is paying and receiving are both based on the same index, the District is not exposed to basis risk.


58

NOTE 9 – LONG-TERM DEBT (continued) Interest Rate Swap Agreements (continued)

Interest Rate Risk Interest payments on the hedged variable-rate debt are expected to increase (decrease) as LIBOR rates increase (decrease). Because the variable amount the District is paying and receiving are both based on 67% of one-month LIBOR, the District’s exposure to interest rate risk is mitigated. Termination Risk The District has the unilateral right to voluntarily terminate the swap agreements at any time over their term at the then prevailing market value. A counterparty may only terminate a swap if the District fails to perform under the terms of the contract. The District’s options are to terminate with the swap providers at an agreed market value, assign the Swap to a third party based on bids or quotes, or enter into an off-setting swap transaction. If the swap should be terminated, the associated variable-rate bonds would no longer carry synthetic fixed interest rates. Also, if at the time of the termination the swap has a negative fair value, the District would be liable to the counterparty for a payment equal to the swap’s fair value. The negative fair value of the swap agreements does not expose the District to a loss because it is unlikely the District would exercise its termination rights when the fair value is negative. However, should interest rates change and the fair value of the swap agreements become positive, the District would receive payment of the fair value if the agreements were terminated.

The swap agreements are subject to termination in the event of default or if the ratings assigned to either the District’s or the counterparty’s unenhanced long-term debt obligations are withdrawn or reduced to BBB- by S&P or Baa3 by Moody’s. At August 31, 2012, the credit rating assigned to JP Morgan Chase Bank, N.A. is A+ by S&P and Aa3 by Moody’s, while the credit rating assigned to Bank of America, N.A. is A by S&P and A3 by Moody’s.

Remarketing and Rollover Risk The 2012-C Bonds will bear interest initially at the rate of 67% of one-month LIBOR plus 65 basis

points from July 17, 2012 through and including August 14, 2015. The bonds do not require a liquidity agent or a remarketing agent for that time period and therefore the District is not exposed to remarketing risk during the initial rate period.

Thereafter, the bonds will bear interest at a LIBOR rate determined by a remarketing agent to be

selected by the District before the end of the initial rate period. In the event the remarketing agent at the conversion date cannot remarket the bonds, the District does not have any obligation to purchase the bonds at that time. In this event, the bonds that have been unsuccessfully remarketed will bear interest at a rate of eight percent.

The District’s 2012-C Bonds and swaps have matching notional maturity dates of August 15, 2036;

therefore, the District is not exposed to rollover risk at this time.


59

NOTE 9 – LONG-TERM DEBT (continued) Interest Rate Swap Agreements (continued)

Swap Payments and Associated Debt

As of August 31, 2012 the following are debt service requirements assuming current interest rates during the initial rate period, and rates returning to pre-refunding rates thereafter.

Fiscal Year

Ending Principal Interest* Total2013 $ 5,463,651$ 5,463,651$ 2014 5,255,500 5,255,500 2015 5,255,500 5,255,500 2016 5,511,920 5,511,920 2017 5,506,655 5,506,655

2018-36 115,000,000 65,430,335 180,430,335

Total 115,000,000$ 92,423,561$ 207,423,561$

*Initial rate period (July 17, 2012 through August 14, 2015) budgeted at 4.57%. Assumes 3.92% synthetic fixed rate and .65% constant. Variable rate payments and receipts negate as they are based on the same index and percentage.

Thereafter (August 15, 2015 through August 15, 2036) budgeted at 4.795%. Assumes 3.92% synthetic fixed rate, .40% liquidity fees, .35% budgeted reserve, and .125% remarketing fees.

Accreted Interest on Premium Compound Interest Bonds A portion of the Series 1992, 2005, and 2007 refunding bonds are capital appreciation bonds. These

obligations have a principal value of $304,928 and a maturity value of $11,425,000. The interest on these obligations will be paid upon maturity in the fiscal years ending August 31, 2014 through August 31, 2018. The accreted value of these bonds at August 31, 2012 is $9,714,037 including accreted interest on these bonds of $9,409,109, which is reflected in the accompanying general long-term debt accounts.

Current Year Refundings In June 2012 the District issued Series 2012-A Bonds in the amount of $147,680,000 including $18,310,000

in Unlimited Tax Refunding Bonds. The refunding bonds have an average interest rate of 3.04% and were issued to refund outstanding Series 2003-A and 2004-A Unlimited Tax School Building Bonds with an average interest rate of 4.55%. The proceeds were deposited in an irrevocable trust with an escrow agent to provide for future debt service payments on the outstanding bonds. As a result $21,330,000 of the Series 2003-A and 2004-A Bonds are considered to be defeased and the liability for those bonds has been removed from the long-term debt of the District. This refunding reduced the District’s total debt service payment by $3,611,647 for an economic gain of $2,787,832 (difference between the present values of the debt service payments on the old and new debt).

In July 2012 the District issued $34,475,000 of Series 2012-B Variable Rate Unlimited Tax Refunding

Bonds. The refunding bonds have an average interest rate of 5.00% on the 2028 term bond and 1.60% on the 2031 term bond during the initial rate period through August 14, 2017 and a budgeted average interest rate of 5.00% thereafter. These bonds were issued to refund outstanding Series 2000 Unlimited Tax Variable Rate Bonds with an average interest rate of 6.00%. The proceeds were deposited in an irrevocable


60

NOTE 9 – LONG-TERM DEBT (continued) Current Year Refundings (continued) trust with an escrow agent to provide for future debt service payments on the outstanding bonds. As a result

$37,800,000 of the Series 2000 Bonds are considered to be defeased and the liability for those bonds has been removed from the long-term debt of the District. This refunding reduced the District’s total debt service payment by $14,510,902 for an economic gain of $12,562,302 (difference between the present values of the debt service payments on the old and new debt).

Also in July 2012 the District issued $115,000,000 of Series 2012-C Variable Rate Unlimited Tax Refunding

Bonds. The refunding bonds have an average interest rate of 4.57% during the initial rate period through August 14, 2012 and a budgeted average interest rate of 4.795% thereafter. These bonds were issued to refund outstanding Series 2004-C Unlimited Tax Variable Rate Bonds with an average interest rate of 4.795%. The proceeds were deposited into an irrevocable trust with an escrow agent to provide for future debt service payments on the outstanding bonds. As a result $115,000,000 of the Series 2004-C Bonds are considered defeased and the liability for those bonds has been removed from the long-term debt of the District. The refunding reduced the District’s total debt service payment by $1,037,483 for an economic gain of $1,027,671 (difference between the present values of the debt service payments on the old and new debt).

Prior Year Advanced Refunding of General Long-Term Debt In prior years the District defeased certain outstanding School Building and Refunding Bonds by placing the

proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the respective trust account assets and the liability for the defeased bonds are not included in the District’s Financial Statements. At August 31, 2012 approximately $242.4 million previously refunded bonds outstanding are considered defeased.

Build America Bonds In February 2009, as part of the American Recovery and Reinvestment Act of 2009, Congress added

Sections 54AA and 6431 to the Internal Revenue Code of 1986, which permit state and local governments to obtain certain tax advantages when issuing taxable obligations that meet certain requirements of the Code and the related Treasury regulations. Such obligations are referred to as Build America Bonds (BABs).

In December 2010, the District issued Series 2010-D Bonds in the amount of $155,000,000 under the BABs

program. Under this program, the District receives semi-annual subsidies equal to 35% of the interest it pays on the bonds. The subsidy payments received by the District will not be pledged as security for the payment of the Series 2010-D Bonds and no holder of the Series 2010-D Bonds will be entitled to a tax credit or any subsidy payment with respect to the Series 2010-D Bonds. The District intends to use the subsidy payments for any lawful purpose, which may include payment of principal and interest on the Series 2010-D Bonds. In the fiscal year ended August 31, 2012 the District received $3,237,982 in such subsidies. The amount received was recorded as federal revenue in the General Fund and, at the discretion of the District, was transferred to the Debt Service Fund.


61

NOTE 10 – COMMITMENT TO FINANCE MULTI-PURPOSE COMPLEX THROUGH PARTICIPATION IN TAX INCREMENT REINVESTMENT ZONE AGREEMENTS Under a series of agreements, the District agreed to provide funding to finance $25,590,000 of tax-exempt

bonds issued in September 2002 by the Katy Development Authority (KDA). The Bonds are legally described as The Katy Development Authority Tax Increment Contract Revenue Bonds (Katy ISD Contract), Series 2002. The Bonds were issued pursuant to the terms and conditions of a Bond Resolution approved by the KDA Board. The issuance of the bonds was approved by the Zone Board and the City Council of the City of Katy (City). In June 2012 the KDA refunded the $18,800,000 outstanding Series 2002 Bonds by issuing Series 2012 Refunding Bonds in the amount of $17,360,000.

Capital Lease Arrangement The arrangements under the series of agreements constitute a capital lease arrangement for the District in

constructing a multi-purpose complex and this arrangement is not altered by the refunding. The District recorded a capital lease obligation and a related asset in the approximate amount of the original bonds. Total assets under capital lease at August 31, 2012 were $24,039.425. Of that amount $23,218,103 is classified as Buildings and Improvements, $657,816 is Furniture and Equipment and $163,506 is Land Improvements.

The bond proceeds were used to construct a multi-purpose complex for large District functions. It is also

available for rent by outside entities. Although the KDA legally owns the multi-purpose center, the agreements provide that the District lease, construct, and control the use of this facility during the life of the bonds issued to construct it. Ownership of the multi-purpose complex will revert to the District once the bonds are retired. District collected tax increments from the General Fund will be used to pay the debt during this term through a lease arrangement between the District and the KDA. No rent paid to the District for use of the multi-purpose complex will be pledged as security for the bonds. Bond proceeds and interest earnings not yet disbursed for construction are shown as a receivable from other governments in the Capital Projects Fund at August 31, 2012.

Pursuant to an Amended and Restated Interlocal Agreement between the City and the District (the Interlocal

Agreement), the District has agreed to pay to the City for deposit to a special account of the Tax Increment Fund established for the Zone (the Tax Increment Fund) certain of its tax collections resulting from its taxation of the increase, if any, in the appraised value of real property located in the Zone since the designated base year of 1997 (the District Tax Increments). The City, the KDA, and the Zone have entered into an agreement (the Tri-Party Agreement) which sets forth, among other things, the agreement of the City on behalf of itself and the Zone, to pay to the KDA the District Tax Increments. Once debt service on the bonds for the current bond year has been deposited and the applicable fees have been paid, the District may use any surplus as specified in the Interlocal Agreement.

The KDA has pledged to the payment of the bonds all of its rights to the District Tax Increments and all of

its rights in the project and project site.


62

NOTE 10 – COMMITMENT TO FINANCE MULTI-PURPOSE COMPLEX THROUGH PARTICIPATION IN TAX INCREMENT REINVESTMENT ZONE AGREEMENTS (continued) Capital Lease Arrangement (continued) Significant aspects of the bonds/capital lease obligation of the District are shown below:

Maturity DateSerially, Interest

Amount Interest Beginning/ Payment CallableSeries Outstanding Rates Ending Dates Dates

2012 17,360,000$ 2.88% 5/15/13 to May 15/ 2017*5/15/25 November 15 2020**

*Bonds maturing on or after May 15, 2017 through May 15, 2020 are subject to redemption at a price of 102% of par value plus unpaid accrued interest from the most recent interest payment date to the date fixed for redemption.

**Bonds maturing on or after May 15, 2021 are subject to redemption in whole, or from time to time in part, at the option of KDA prior to their maturity dates on May 15, 2020 or on any date thereafter at a price of par value plus unpaid accrued interest from the most recent interest payment date to the date fixed for redemption.

The debt service requirements on the bonds/capital lease obligation of the District are as follows:

Fiscal Year Ended Annual

August 31, Princ ipal Interest Debt Service2013 1,115,000$ 452,749$ 1,567,749$ 2014 1,150,000 467,856 1,617,8562015 1,185,000 434,736 1,619,7362016 1,220,000 400,608 1,620,6082017 1,255,000 365,472 1,620,4722018 1,290,000 329,328 1,619,3282019 1,325,000 292,176 1,617,1762020 1,365,000 254,016 1,619,0162021 1,405,000 214,704 1,619,7042022 1,445,000 174,240 1,619,2402023 1,490,000 132,624 1,622,6242024 1,535,000 89,712 1,624,7122025 1,580,000 45,504 1,625,504

Total 17,360,000 3,653,725 21,013,725Less: Current Portion 1,115,000 452,749 1,567,749Long Term Lease 16,245,000$ 3,200,976$ 19,445,976$


63

NOTE 10 – COMMITMENT TO FINANCE MULTI-PURPOSE COMPLEX THROUGH PARTICIPATION IN TAX INCREMENT REINVESTMENT ZONE AGREEMENTS (continued) Capital Lease Arrangement (continued) The average annual calendar debt service on the bonds is $1,616,440 through maturity. The maximum

annual calendar debt service on the bonds is $1,625,504 through maturity. Through the fiscal year ended August 31, 2012, the District has paid $29,066,793 in collected tax increments

and state revenues to the KDA. The District will pay additional tax increments of $1,683,555 collected in fiscal 2011-12 and state revenues of $752,264 to the KDA in fiscal 2012-13, and these amounts have been included as a liability in these financial statements. The District estimates that it will collect an additional $2,693,784 in tax increments and state revenues in fiscal 2012-13 to be paid to the KDA in the 2013-14 fiscal year. The tax increment base value is $4,397,510 and the certified taxable value in the Zone for the 2012 tax year is $165,262,840. The District has received $7,047,082 in tax collections in excess of bond payment requirements and related expenses. These proceeds have been placed in a special revenue fund to be used within the TIRZ at the discretion of the District.

Other Significant Information

The KDA, a public not-for-profit local government corporation, was authorized to be established by the City

of Katy, Texas in 1998, to aid, assist, and act on behalf of the City in the performance of the City’s governmental functions and to provide a means of financing certain project costs in connection with Reinvestment Zone Number One, City of Katy, Texas (the Zone). The KDA is governed by a board of directors (the Board), whose voting members are appointed by the City. KDA is the administrator of the Zone. The KDA is considered a discretely presented component unit of the City in accordance with accounting principles generally accepted in the United States of America applicable to state and local governments.

The Zone was created by the City Council of the City, pursuant to the provisions of the Tax Increment

Financing Act, Chapter 311, Texas Tax Code (the TIF Act), to facilitate development of the land within the boundaries of the Zone, consisting of land located entirely within the City and Fort Bend County (the County). The majority of the Zone, consisting of 479 acres, is bounded by Interstate 10 on the north, Pin Oak Village and Falcon Point on the south, Katy Fort Bend Road on the east, and Pin Oak Road on the west. An interchange on Interstate provides direct access to the Zone. The remainder of the property in the Zone is located north of Interstate 10 and is owned by the District.

The ordinance of the City establishing the Zone also established a board of directors of the Zone (the Zone

Board). The Board of Directors of the Zone consists of nine persons: five appointed by the City, one appointed by the County, one appointed by the District, one appointed by the state senator in whose district the Zone is located, and one appointed by the state representative in whose district the Zone is located.

As required under the TIF Act, the Zone Board adopted, and the City Council of the City approved, a Project

Plan and Reinvestment Zone Financing Plan, which has been amended (as amended, the Plan). The Plan sets out the public improvements needed to develop or induce development within the Zone (the Public Improvements). The cost of the Public Improvements, the cost of creation of the Zone, and related organizational costs (the Project Costs) constitute eligible project costs under the TIF Act, which may be financed with proceeds of the bonds.


64

NOTE 11 – DEFERRED REVENUES Governmental funds report deferred revenue in connection with receivables for revenues that are not

considered to be available to liquidate liabilities in the current period. Government funds also defer revenue recognition in connection with resources that have been received but not yet earned. At the end of the current fiscal year, the various components of deferred revenue and unearned revenue at August 31, 2012 reported in the governmental funds were as follows:

Unavailable Unearned

Net Property Taxes Receivable (General Fund) 7,536,421$ $ Net Property Taxes Receivable (Debt Service Fund) 2,333,398Proceeds-Expenditure Driven State Grants (Special Revenue Fund) 10,239Revenues Received Prior to Meeting all Expenditure Requirements (General Fund) 200,561

Total 9,880,058$ 200,561$

NOTE 12 – FUND EQUITY Nonspendable, Restricted, Committed and Assigned Fund Balance A summary of nonspendable, restricted, committed and assigned fund balance at August 31, 2012 is as

follows:

Capital OtherFund Balances: General Debt Service Projects Governmental

Nonspendable: Inventory 1,005,386$ $ $ 239,268$ Prepaid Items 231,458 Total Nonspendable 1,236,844$ $ $ 239,268$ Restricted for: Long-Term Debt $ 43,826,476$ $ $ Capital Acquisitions and Contracts 85,457,980 Food Services 5,594,637 Tax Increment Zone 3,779,040 Health Services 111,039 Total Restricted $ 43,826,476$ 85,457,980$ 9,484,716$ Committed to: Self Funded Insurance 5,000,000$ $ $ $ Campus Activity Funds 2,807,308 Total Committed 5,000,000$ $ $ 2,807,308$ Assigned to: Future Technology Retrofits 14,350,000$ $ $ $ Opening Additional Schools 7,913,350 Patient Protection and Affordable Care Act 6,300,000 Future Land Purchase 5,000,000 Capital Expenditures for Equipment 638,666 Other Assignments-Encumbrances 671,077 Total Assigned 34,873,093$ $ $ $


65

NOTE 13 – REVENUES FROM LOCAL AND INTERMEDIATE SOURCES During the current year, revenues from local and intermediate sources consisted of the following:

Capital OtherGeneral Debt Service Projects Governmental Total

Property Taxes 230,844,411$ 81,929,558$ $ $ 312,773,969$ Penalties, Interest, and Other Tax Related Income 1,574,863 510,822 2,085,685Summer School, Tuition and Fees 1,357,487 1,357,487Investment Income 517,358 218,258 375,777 22,848 1,134,241Food Sales 13,674,370 13,674,370Cocurricular Student Activities 1,320,056 1,320,056Facility Rental 2,144,053 2,144,053Other 1,210,440 61,004 4,951,081 6,222,525

Total 238,968,668$ 82,719,642$ 375,777$ 18,648,299$ 340,712,386$

NOTE 14 – GENERAL FUND FEDERAL PROGRAM REVENUES For purposes of regulatory requirements of the Texas Education Agency, a summary of federal program

revenues received in the General Fund for the year ended August 31, 2012 follows:

CFDAProgram or Source Number Amount

Naval Junior Reserve Officers Training Program n/a 70,511$ SHARS 93.778 1,854,340E-Rate School and Libraries Universal Support n/a (7,629)Build America Bonds Subsidy n/a 3,237,982Indirect Costs National School Breakfast Program 10.553 136,656 National School Lunch Program 10.553 634,638 ESEA Title I, Part A - Improving Basic Programs 84.010A 57,745 IDEA Part B - Formula 84.027A 72,087 IDEA Part B - Preschool 84.173A 1,251 Carl D. Perkins, Title I, Part C 84.048A 4,967 ESEA Title II, Part A - Teacher & Principal 84.367A 5,479 ESEA Title III, Part A 84.365 36,409 ARRA Title II, Part D 84.386A 256 ARRA IDEA Part B - Formula 84.391A 28,962 ARRA IDEA Part B - Preschool 84.392A 653 ARRA Title I, Part A 84.389A 9,247 Early Childhood Intervention Various 11,025 IDEA Part B - Deaf 84.027 343 IDEA Part B - Preschool Deaf 84.173 10

Total 6,154,932$


66

NOTE 15 – RETIREMENT PLAN Retirement Plan Plan Description The Teacher Retirement System of Texas (TRS) is a multiple-employer Public Employee Retirement

System (PERS). It is a cost-sharing PERS with one exception, all risks and costs are not shared by the employer but are the liability of the State of Texas. By statute, the State of Texas contributes to the retirement system an amount equal to the current authorized rate times the aggregate annual compensation of all members of the retirement system during that fiscal year. The payroll for District employees covered by the system for the fiscal year ended August 31, 2012 was approximately $328 million. The District’s total payroll was approximately $337 million.

For members of the retirement system entitled to the state’s statutory minimum salary for certain school

personnel, the District pays the state’s contribution on the portion of the member’s salary that exceeds the statutory minimum.

Types of Employees Covered All employees of public, state-supported educational institutions in Texas who are employed for one-

half or more of the standard workload and who are not exempted from membership under Texas Government Code are covered by the plan.

Benefit Provisions The Teacher Retirement System of Texas administers retirement and disability annuities and death and

survivor benefits to employees and beneficiaries of employees of the public school system of Texas. It operates primarily under the provisions of Texas Constitution Article XVI, Section 67 and Texas Government Code, Title 8, Subtitle C. The system also administers proportional retirement benefits and service credit transfers under Texas Government Code, Title 8, Chapter 803 and Chapter 805, respectively.

Service Retirement 1. Normal Age 65 with 5 years of service Age 60 with 20 years of service (members on or after 9/01/07) Any combination of age plus years of service which equals 80 2. Reduced Age 55 with at least 5 years of service Any age below 50 (age 60 if member on or after 9/01/07) with 30 years of service Age plus years of service total 80 and less than age 60 (members on or after 9/01/07) A member is fully vested after five years of creditable service and entitled to any benefit for which

eligibility requirements have been met.


67

NOTE 15 – RETIREMENT PLAN (continued) Retirement Plan (continued) Funding Policy State law provides a state contribution rate of 6.0% for fiscal year 2012 and 6.644% for fiscal years 2011

and 2010. State law further provides a member contribution rate of 6.4% for fiscal years 2012, 2011, and 2010. In certain instances, the reporting district is required to make all or a portion of the state’s 6.0% contribution.

Contribution requirements are not actuarially determined but are legally established each biennium

pursuant to the following state funding policy: (1) The state constitution requires the legislature to establish a member contribution rate of not less than 6.0% of the member’s annual compensation and a state contribution rate of not less than 6.0% of the member’s annual compensation and not more than 10% of the aggregate annual compensation of all members of the system during the fiscal year. (2) A state statute prohibits benefit improvements or contribution reductions if, as a result of the particular actions, the time required to amortize TRS’s unfunded actuarial liabilities would be increased to a period that exceeds 31 years or if the amortization period exceeds 31 years , the period would be increased by such action.

Contributions Required and Made Employees are required by state statute to pay 6.4% of their eligible gross earnings to TRS for

retirement benefits. The State of Texas contributed 6.0% of all employees’ eligible gross earnings toward retirement benefits for fiscal year 2012 and 6.644% for fiscal years 2011 and 2010, except for those District employees subject to statutory minimum requirements and those employees being paid from and participating in federally funded programs. The statutory minimum requirements are based on the State of Texas teacher schedule and then adjusted, based on local tax rates. For employees funded by federal programs, the federal programs are required to contribute 6.0% for fiscal year 2012 and 6.644% for fiscal years 2011 and 2010.

Contributions made by the state, District, and employees, and the District’s annual covered payroll for

the fiscal years are as follows:

State TRS District Percentage of District'sPension Contribuitons Required Total Payroll Employees' Annual Fiscal Made on Behalf Contributions Contributed Contributions CoveredYear of the District to TRS By District to TRS Payroll

2010 16,808,021$ 4,397,046$ 1.32% 21,243,892$ 331,937,388$ 2011 18,891,747 4,731,099 1.33 22,752,573 355,508,5882012 15,916,845 3,783,874 1.15 21,014,124 328,345,312

The contributions made by the state on behalf of the District have been recorded in the financial

statements of the District as both state revenue and payroll expenditures. These contributions are the legal responsibility of the state.


68

NOTE 15 – RETIREMENT PLAN (continued) Retirement Plan (continued) Contributions Required and Made (continued) TRS issues a publicly available financial report that includes financial statements and required

supplementary information for the defined benefit pension plan. That report may be obtained by writing to the TRS Communications Department, 1000 Red River Street, Austin, Texas 78701, by calling the TRS Communications Department at 1-800-223-8778, or by downloading the report from the TRS internet website, www.trs.state.tx.us, under the TRS Publications heading.

Retiree Health Plan Plan Description The District contributes to the Texas Public School Retired Employees Group Insurance Program (TRS-

Care), a cost-sharing multiple-employer defined benefit postemployment health care plan administered by the Teacher Retirement System of Texas. TRS-Care Retired Plan provides health care coverage for certain persons (and their dependents) who retired under the Teacher Retirement System of Texas. The statutory authority for the program is Texas Insurance Code, Chapter 1575. Section 1575.052 grants the TRS Board of Trustees the authority to establish and amend basic and optional group insurance coverage for participants. The TRS issues a publicly available financial report that includes financial statements and required supplementary information for TRS-Care. That report may be obtained by visiting the TRS website at www.trs.state.tx.us, by writing to the Communications Department of the Teacher Retirement System of Texas at 1000 Red River Street, Austin, Texas 78701, or by calling 1-800-223-8778.

Funding Policy Contribution requirements are not actuarially determined but are legally established each biennium by

the Texas Legislature. Texas Insurance Code, Sections 1575.202, 203, and 204 establish state, active employee, and public school contributions, respectively. The State of Texas and active public school employee contribution rates were 1.0% and 0.65% of public school payroll, respectively, with school districts contributing a percentage of payroll set at 0.55% for fiscal years 2012, 2011, and 2010. Per Texas Insurance Code, Chapter 1575, the public school contribution may not be less than 0.25% or greater than 0.75% of the salary of each active employee of the public school.

Contributions made by the state, District, and active employees for the years ended August 31, 2012,

2011, and 2010 to TRS-Care are as follows:

State TRS-Care District ActiveContribuitons Required Employees'

Fiscal Made on Behalf Contributions ContributionsYear of the District to TRS-Care to TRS-Care

2010 3,160,388$ 1,945,170$ 2,157,610$ 2011 3,376,823 2,090,397 2,310,8232012 3,132,700 1,920,613 2,134,245


69

NOTE 15 – RETIREMENT PLAN (continued) Retiree Health Plan (continued) Medicare Part D The Medicare Prescription Drug, Improvement, and Modernization Act of 2003, effective January 1,

2006, established prescription drug coverage for Medicare beneficiaries known as Medicare Part D. One of the provisions of Medicare Part D allows for the Texas Public School Retired Employee Group Insurance Program (TRS-Care) to receive retiree drug subsidy payments from the federal government to offset certain prescription drug expenditures for eligible TRS-Care participants. For the fiscal years ended August 31, 2012, 2011, and 2010, the subsidy payments received by TRS-Care on-behalf of the District were $727,912, $913,527, and $825,114, respectively. The contributions made on behalf of the District have been recorded in the financial statements of the District as both revenue and payroll expenditure.

Early Retiree Reinsurance Program The Early Retiree Reinsurance Program (ERRP) is a provision of the Patient Protection and Affordable

Care Act (PPACA) and provides reimbursement to plan sponsors for a portion of the cost of providing health benefits to retirees between the ages of 55-64 and their covered dependents regardless of age. An “early retiree” is defined as a plan participant aged 55-64 who is not eligible for Medicare and is not covered by an active employee of the plan sponsor. TRS has been certified for this program and received subsidy payments of $802,644 in 2012 on behalf of the District. This contribution made on behalf of the District has been recorded in the financial statements of the District as both revenue and payroll expenditure.

Compensated Absences The District pays one-half of the locally accumulated sick leave days up to a maximum of 90

accumulated days to employees who retire with five or more years of continuous employment in the District and who retire from the state Teacher Retirement System. The majority of the payments are administered through Public Agency Retirement Services (PARS). During 2012, $538,456 was disbursed to 48 members. No assets are being held or accumulated for future distribution. The District has accrued $19,516,454 in the Government-wide Financial Statements to pay for compensated absences.

NOTE 16 – RISK MANAGEMENT The District is exposed to various risks related to torts: theft of, damage to and destruction of assets, errors

and omissions, natural disasters, health and welfare of employees for which the District carries commercial insurance or through self-insurance. No settlements have exceeded insurance coverage in the last three years.

Property, Casualty, General Liability and Professional Liability and Unemployment The District purchases commercial insurance for property loss with limits of $750 million, $50 million for

named windstorms. The policy covers up to $25 million per year for flood losses. In addition, the policy covers $1 million for the one property currently in a flood plain. The District purchases an additional $.5 million building and $.5 million contents in flood protection for this facility. Casualty risks are insured with limits of $1 million per occurrence and $3 million aggregate for commercial general liability and a $.5 million combined single limit automobile policy. Professional liability risks are insured with limits of $1 million. Within these policy limits, the District’s exposure is limited to deductibles.


70

NOTE 16 – RISK MANAGEMENT (continued) Property, Casualty, General Liability and Professional Liability and Unemployment (continued) In addition to purchasing commercial insurance for property, casualty, and liability risks, the District is a

member of the Texas Association of School Boards Property/Casualty Joint Account, a public entity risk pool. The District uses the risk pool for its unemployment insurance coverage. The District’s participation in the risk pool is limited to payment premiums for its unemployment coverage. The risk pool is fully funded through annual premiums, and excess loss policies are purchased by the pool as considered necessary. Settled claims have not exceeded insurance coverage in any of the previous three fiscal years.

There has not been any significant reduction in insurance coverage from that of the previous year. Health Insurance Effective January 1, 2004, the District established a self-insurance program for health insurance coverage.

Contributions are paid from all governmental funds to the Health Insurance Internal Service Fund from which all claims and administrative expenses are paid. Claims administration and consulting services are provided to the District through a third party administrator. The District maintains both aggregate and individual stop loss coverage. Individual stop loss coverage is for catastrophic losses exceeding $600,000 per claim. The District is also insured for covered medical claims paid and incurred during the plan year by Aetna under an annual aggregate insurance contract. The coverage provides that the insurer will pay such claims that exceed the annual aggregate attachment point that is determined by a monthly amount per covered employee based on the tier of coverage in which they are enrolled.

An accrual for incurred but not reported claims in the amount of $0.8 million has been recorded in the fund

as of August 31, 2012. Claims payable, including an estimate of claims incurred but not reported, was actuarially determined based on an estimate of the remaining liability of known claims.

At August 31, 2012, the fund had net assets of $915,019. Because of past history and the method of

calculation, the District considers all claims to be current liabilities. Changes in incurred but not paid claims liability for the fiscal years ended August 31, 2012 and 2011 are as follows:

2012 2011

Beginning Accrual 1,889,246$ 3,428,749$ Current Estimates 29,112,458 29,782,709Payments for Claims (30,239,425) (31,322,212)

Ending Accrual 762,279$ 1,889,246$

Health Insurance

Workers’ Compensation The District established a limited risk management program for Workers’ Compensation in 1992 by setting

up the Workers’ Compensation Internal Service Fund to account for its insured and self-insured risk of loss. The Internal Service Fund charges the General Fund and Special Revenue Funds on the basis of payroll

incurred by each fund in order to provide for Workers’ Compensation claims of District employees. The ending retained earnings balance in the Internal Service Fund has been accumulated by the District’s management to reserve for losses which may be incurred under its self-insured plan. The Internal Service Fund services all claims for risk of loss to which the District is exposed.


71

NOTE 16 – RISK MANAGEMENT (continued) Workers’ Compensation (continued) Workers’ Compensation liabilities are reported when it is probable that a loss has occurred and the amount

of that loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred but were not reported until after August 31, 2012. Because of past history, the District considers all claims to be current liabilities. Because actual claims liabilities depend on such complex factors as inflation, changes in legal requirements and impairment benefits, the process used in computing claims liability results in an estimate. Claims liabilities are re-evaluated periodically to take into consideration recently settled claims, the frequency of claims, and other economic and social factors.

Claims liability activity for 2012 compared to 2011 are as follows:

2012 2011

Beginning Accrual 752,387$ 755,324$ Current Estimates 906,702 1,011,723Payments for Claims (881,046) (1,014,660)

Ending Accrual 778,043$ 752,387$

Workers' Compensation

At August 31, 2012, the District had $4.8 million in cash available for payment of Workers’ Compensation

claims. The District has also purchased an excess Workers’ Compensation policy for coverage relating to excessive Workers’ Compensation claims. The District has a $450,000 Self-Insured Retention (SIR) per any one occurrence. The policy has an obligation to pay all costs required by the Texas Workers’ Compensation Act in excess of the District’s SIR for each workers’ compensation occurrence.

NOTE 17 – ARBITRAGE In accordance with the provisions of Section 148(f) of the Internal Revenue Code of 1986, as amended,

bonds must satisfy certain arbitrage rebate requirements. Positive arbitrage is the excess of 1) the amount earned on investments purchased with bond proceeds over 2) the amount that such investments would have earned had such investments been invested at a rate equal to the yield on the bond issue. In order to comply with the arbitrage rebate requirements, positive arbitrage must be paid to the U.S. Treasury at the end of each five year anniversary date of the bond issue. The District has not recorded a liability for arbitrage as of August 31, 2012. In management’s opinion, the arbitrage liability, if any, would be immaterial to the financial statements as of August 31, 2012.


72

NOTE 18 – JOINT VENTURE SHARED SERVICE ARRANGEMENTS The District is the fiscal agent for a Shared Service Arrangement (SSA) which provides services for deaf

students of the District, Bellville ISD, Brazos ISD, Royal ISD and Sealy ISD. All services are provided by the fiscal agent, and funds are received directly by the fiscal agent from the granting agency. According to guidance provided in TEA’s Resource Guide, the District has accounted for the fiscal agent’s activities of the SSA in the appropriate Special Revenue Funds and has accounted for these funds using Model 2 in the SSA section of the Resource Guide. Expenditures as of August 31, 2012 of the SSA are summarized below:

Katy ISD Bellville ISD Brazos ISD Royal ISD Sealy ISD

IDEA-B Discretionary, Deaf 43,995$ 1,158$ 579$ 1,737$ 2,894$ IDEA-B Deaf 15,668 412 206 619 1,031IDEA-B Preschool, Deaf 7,455 196 98 294 491IDEA-C Early Intervention 1,859 49 25 73 122Regional Day School For the Deaf 478,981 12,605 6,302 18,907 31,512Local Share, Deaf 149,598 3,937 1,968 5,905 9,842

697,556$ 18,357$ 9,178$ 27,535$ 45,892$

The District also participates in a Shared Service Arrangement for deaf education services with seven other

school districts. Approximately 4% of the students served by the Shared Service Arrangement are attributable to the District. The District does not account for revenues or expenditures of this program and does not disclose them in these financial statements. The District neither has a joint ownership interest in capital assets purchased by the fiscal agent, Cypress-Fairbanks ISD, nor does the District have a net equity interest in the fiscal agent.

The fiscal agent is neither accumulating significant financial resources nor fiscal contingencies that would

give rise to a future additional benefit or burden to Katy ISD. The fiscal agent manager is responsible for all financial activities of the Shared Services Arrangement. Presented below are the revenues and expenditures as of August 31, 2012 attributable to the District’s participation.

Revenues: Local Revenue 87,461$ State Revenue 62,594

Total Revenues 150,055$

Expenditures: Payroll Costs 146,792$ Contract Services 2,906 Supplies and Materials 4 Other Operating Expenditures 353

Total Expenditures 150,055$

NOTE 19 – LITIGATION AND CONTINGENCIES From time to time, the District is a defendant in legal proceedings relating to its operations as a school

district. In the best judgment of the District’s management, the outcome of any present legal proceedings will not have any adverse material effect on the accompanying financial statements.

73

REQUIRED SUPPLEMENTARY INFORMATION

74

KATY INDEPENDENT SCHOOL DISTRICTSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESORIGINAL BUDGET, AMENDED FINAL, AND ACTUAL - GENERAL FUNDYEAR ENDED AUGUST 31, 2012with comparative actual balances for the Year Ended August 31, 2011

Data Control

Codes Original Final Actual

REVENUES5700 Local, Intermediate, and Out-of-State 238,313,829$ 238,698,049$ 238,968,668$ 5800 State Program Revenues 195,803,842 194,550,153 194,328,9215900 Federal Program Revenues 15,315,081 7,153,184 6,154,9325020 Total Revenues 449,432,752 440,401,386 439,452,521

EXPENDITURESCurrent:

0011 Instruction 285,113,363 266,123,517 260,023,2200012 Instructional Resources and Media Services 5,953,883 5,885,165 5,832,2800013 Curriculum and Staff Development 4,751,541 4,576,158 4,394,3350021 Instructional Leadership 3,650,765 3,510,157 3,391,1650023 School Leadership 26,765,692 26,360,076 26,016,2760031 Guidance, Counseling, and Evaluation Services 16,618,763 16,370,314 16,203,9400033 Health Services 4,165,855 4,068,758 3,887,4080034 Student Transportation 14,350,640 14,621,228 13,967,2560036 Cocurricular/Extracurricular Activities 9,088,162 8,870,753 8,536,3570041 General Administration 10,199,207 9,873,090 9,144,8470051 Plant Maintenance and Operations 43,969,490 44,178,389 42,811,5050052 Security and Monitoring Services 4,929,011 4,991,861 4,826,9340053 Data Processing Services 7,404,161 7,898,992 7,436,6160061 Community Services 561,899 532,672 472,3760081 Capital Outlay: Facilities Acquisition and Construction 275,046 1,860,812 1,847,5340095 Payments to Juvenile Justice Alternative Education

Programs 138,740 82,740 32,9240097 Payments to Tax Increment Reinvestment Zone 2,361,300 2,450,000 2,435,8190099 Other Intergovernmental Charges 2,500,000 2,375,000 2,348,0966030 Total Expenditures 442,797,518 424,629,682 413,608,888

1100 Excess (Deficiency) of Revenues Over Expenditures 6,635,234 15,771,704 25,843,633

3000 OTHER FINANCING SOURCES (USES)7912 Sales of Real and Personal Property 4,192,917 4,235,9477915 Transfers In 500,000 510,000 468,2817919 Extraordinary Item 312,787 312,7878911 Transfers Out (3,237,982) (3,237,982) (3,237,982)7080 Total Other Financing Sources (Uses) (2,737,982) 1,777,722 1,779,0331200 Net Change in Fund Balances 3,897,252 17,549,426 27,622,666

0100 Fund Balances - Beginning 99,283,516 99,283,516 99,283,516

3000 Fund Balances - Ending 103,180,768$ 116,832,942$ 126,906,182$

2012

Budgeted Amounts

75

Exhibit F-1

2011

Variance with Final Budget Actual

Positive (Negative) Amounts

270,619$ 229,809,094$ (221,232) 204,405,555(998,252) 5,530,703(948,865) 439,745,352

6,100,297 266,299,10452,885 6,175,879

181,823 4,924,088118,992 3,611,969343,800 27,573,777166,374 17,175,212181,350 4,523,163653,972 13,587,801334,396 9,319,467728,243 9,555,612

1,366,884 42,947,309164,927 5,128,868462,376 8,203,03460,296 412,77513,278 727,011

49,816 47,89014,181 2,290,43626,904 2,242,299

11,020,794 424,745,694

10,071,929 14,999,658

43,030 24,362(41,719) 567,930

(2,032,733)1,311 (1,440,441)

10,073,240 13,559,217

85,724,299

10,073,240$ 99,283,516$

76


NOTES TO REQUIRED SUPPLEMENTARY INFORMATION

For the Year Ended August 31, 2012

Budgets and Budgetary Accounting Each school district in Texas is required by law to prepare annually a budget of anticipated revenues and expenditures for the General Fund, the Child Nutrition Fund and the Debt Service Fund for the fiscal year beginning September 1. The Texas Education Code requires the budget to be prepared not later than August 20 and adopted by August 31 of each year. The Budgets are prepared on a basis of accounting that is used for reporting in accordance with Generally Accepted Accounting Principles. The District annually adopts legally authorized appropriated budgets for the General, Debt Service, and certain Special Revenue funds. The District’s administration performs budget reviews during the year by which budget requirements are re-evaluated and revisions recommended to the Board. The Board may approve amendments to the budget, which are required when a change is made to any one of the functional expenditure categories or revenue object accounts defined by the TEA. Expenditures may not legally exceed budgeted appropriations, as amended, at the function level by fund. Unexpended appropriations lapse at year-end. The following procedures were followed in establishing the budgetary data reflected in the Fund Financial Statements:

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

2. A meeting of the Board is then called for the purpose of adopting the proposed budget. At least ten

days public notice of the meeting must be given. 3. Prior to September 1, the budget is legally enacted through passage of a resolution by the Board. Once

a budget is approved, it can only be amended at the function and fund level by approval of a majority of the members of the Board. Amendments are presented to the Board at its regular meetings. Each amendment must have Board approval. As required by law, such amendments are made before the fact, are reflected in the official minutes of the Board, and are not made after fiscal year end. Because the District has a policy of careful budgetary control, several amendments were necessary during the year.

4. Each budget is controlled by the budget coordinator at the revenue and expenditure function/object

level. Budgeted amounts are amended by the Board. All budget appropriations lapse at year end.

During the fiscal year ended August 31, 2012 the District did not have any expenditures over appropriations on all required legally adopted budgets.

77

OTHER SUPPLEMENTARY INFORMATION

78


79

COMPARATIVE STATEMENTS, COMBINING STATEMENTS AND BUDGET COMPARISONS

80


81

GENERAL FUND

The General Fund is used to account for all financial transactions not properly included in other funds. The principal sources of revenues include local property taxes, state reimbursement for professional salaries and other operating expenditures, and earnings on investments. Expenditures include all costs associated with the daily operations of the schools.

82

KATY INDEPENDENT SCHOOL DISTRICTCOMPARATIVE BALANCE SHEET Exhibit G-1GENERAL FUNDAUGUST 31, 2012 and 2011

DataControl August 31, August 31,Codes 2012 2011

ASSETS1110 Cash and Temporary Investments at Fair Value 152,359,584$ 97,467,350$

Receivables:1220 Property Taxes - Delinquent 9,692,828 9,631,4861230 Allowance for Uncollectible Taxes (Credit) (2,156,407) (2,204,385)1240 Due from Other Governments 68,168 158,9671260 Due from Other Funds 3,717,795 23,211,6881290 Other Receivables 818,779 1,282,6021300 Inventories, at Cost 1,005,386 892,5571410 Prepaid Expenditures 231,458 528,510

1000 Total Assets 165,737,591$ 130,968,775$


2110 Accounts Payable 8,001,239$ 8,755,640$ 2150 Payroll Withholding Payable 637,229 668,5222160 Accrued Wages Payable 5,182,497 6,092,5242180 Due to Other Governments 16,863,885 8,037,4152200 Accrued Expenditures 409,577 483,6052300 Deferred Revenues 7,736,982 7,647,553

2000 Total Liabilities 38,831,409 31,685,259

FUND BALANCEFund Balances:

3410/30 Nonspendable 1,236,844 1,421,0673540 Committed 5,000,000 5,000,0003580 Assigned 34,873,093 8,940,3583600 Unassigned 85,796,245 83,922,0913000 Total Fund Balance 126,906,182 99,283,516

4000 Total Liabilities and Fund Balances 165,737,591$ 130,968,775$

83

KATY INDEPENDENT SCHOOL DISTRICTSCHEDULE OF REVENUES - BUDGET AND ACTUAL Exhibit G-2GENERAL FUNDYEAR ENDED AUGUST 31, 2012with comparative actual balances for the year ended August 31, 2011

2011 (1)

VariancePositive

Budget Actual (Negative) Actual

Local Sources Real and Personal Property Taxes 230,838,524$ 230,735,719$ (102,805)$ 222,461,917$ Taxes Collected on Tax Increment Zone 1,683,555 1,683,555 1,583,071 Tuition and Fees from Patrons 1,347,750 1,357,487 9,737 1,508,774 Investment Income 555,000 517,358 (37,642) 374,806 Rental Income 1,928,000 2,144,053 216,053 1,670,034 Donations 20,969 25,223 4,254 21,986 Athletics 1,337,178 1,320,056 (17,122) 1,483,573 Other 987,073 1,185,217 198,144 704,933

Revenues - Local Sources 238,698,049 238,968,668 270,619 229,809,094

State Sources Per Capita and Foundation 173,961,234 173,733,371 (227,863) 181,138,640 TRS On-Behalf Benefit 20,588,919 20,580,101 (8,818) 23,182,097 Other State Revenue 15,449 15,449 84,818 Revenues - State Sources 194,550,153 194,328,921 (221,232) 204,405,555

Federal Sources Indirect Costs - Federal Grants 990,236 999,728 9,492 204,375 Federal Grants 1,062,966 62,882 (1,000,084) 1,012,872 SHARS 1,862,000 1,854,340 (7,660) 2,280,723 Build America Bonds Subsidy 3,237,982 3,237,982 2,032,733 Revenues - Federal Sources 7,153,184 6,154,932 (998,252) 5,530,703

Total Revenues 440,401,386$ 439,452,521$ (948,865)$ 439,745,352$

(1) State revenues reduced for State Fiscal Stabilization Funds recorded in Special Revenue Fund.

2012

84

KATY INDEPENDENT SCHOOL DISTRICTSCHEDULE OF EXPENDITURES - BUDGET AND ACTUAL Exhibit G-3GENERAL FUND Page 1 of 4YEAR ENDED AUGUST 31, 2012with comparative actual balances for the year ended August 31, 2011

2011 (2)

VariancePositive

Function Budget Actual (Negative) Actual

Instruction and Instruction-Related Services Instruction 6100 Payroll Costs 255,030,734$ 249,511,690$ 5,519,044$ 258,488,039$ 6200 Purchased and Contracted Services 725,955 628,975 96,980 352,494 6300 Supplies and Materials 9,589,755 9,187,760 401,995 6,951,761 6400 Other Operating Expenditures 391,101 311,170 79,931 429,763 6600 Capital Outlay 385,972 383,625 2,347 77,047 Total Instruction 266,123,517 260,023,220 6,100,297 266,299,104

Instructional Resources and Media Services 6100 Payroll Costs 5,135,740 5,095,422 40,318 5,441,470 6200 Purchased and Contracted Services 7,381 6,796 585 7,519 6300 Supplies and Materials 734,541 724,269 10,272 716,232 6400 Other Operating Expenditures 7,503 5,793 1,710 7,442 6600 Capital Outlay 3,216 Total Instructional Resources/Media Svc. 5,885,165 5,832,280 52,885 6,175,879

Curriculum and Instructional Staff Development 6100 Payroll Costs 3,733,992 3,614,277 119,715 4,126,467 6200 Purchased and Contracted Services 109,306 91,288 18,018 81,837 6300 Supplies and Materials 272,488 309,650 (37,162) 311,949 6400 Other Operating Expenditures 460,372 379,120 81,252 403,835 Total Curriculum/Instr. Staff Development 4,576,158 4,394,335 181,823 4,924,088

Total Instruction and Instruction-Related Services 276,584,840 270,249,835 6,335,005 277,399,071

Instruction and School Leadership Instructional Administration 6100 Payroll Costs 3,307,697 3,198,940 108,757 3,403,138 6200 Purchased and Contracted Services 52,037 58,039 (6,002) 51,990 6300 Supplies and Materials 94,387 86,976 7,411 86,735 6400 Other Operating Expenditures 56,036 47,210 8,826 70,106 Total Instructional Administration 3,510,157 3,391,165 118,992 3,611,969

School Administration 6100 Payroll Costs 25,667,362 25,372,744 294,618 26,980,850 6200 Purchased and Contracted Services 10,026 9,988 38 8,214 6300 Supplies and Materials 463,181 452,114 11,067 396,025 6400 Other Operating Expenditures 219,507 181,430 38,077 188,688 Total School Administration 26,360,076 26,016,276 343,800 27,573,777

Total Instruction and School Leadership 29,870,233 29,407,441 462,792 31,185,746

2012 (1)

85


2011 (2)

VariancePositive


Support Services - Student (Pupil) Guidance and Counseling Services 6100 Payroll Costs 15,444,648$ 15,288,445$ 156,203$ 16,207,523$ 6200 Purchased and Contracted Services 197,516 177,084 20,432 252,397 6300 Supplies and Materials 662,132 683,864 (21,732) 658,323 6400 Other Operating Expenditures 66,018 54,547 11,471 56,969 Total Guidance and Counseling Services 16,370,314 16,203,940 166,374 17,175,212

Health Services 6100 Payroll Costs 3,953,110 3,779,521 173,589 4,415,419 6200 Purchased and Contracted Services 1,800 3,360 (1,560) 5,088 6300 Supplies and Materials 98,612 92,264 6,348 90,769 6400 Other Operating Expenditures 15,236 12,263 2,973 11,887 Total Health Services 4,068,758 3,887,408 181,350 4,523,163

Student (Pupil) Transportation 6100 Payroll Costs 10,842,433 10,341,706 500,727 10,882,110 6200 Purchased and Contracted Services 159,000 164,785 (5,785) 155,544 6300 Supplies and Materials 2,725,477 2,567,682 157,795 2,368,462 6400 Other Operating Expenditures 181,933 182,001 (68) 181,685 6600 Capital Outlay 712,385 711,082 1,303 Total Student (Pupil) Transportation 14,621,228 13,967,256 653,972 13,587,801

Cocurricular/Extracurricular Activities 6100 Payroll Costs 5,790,171 5,682,057 108,114 6,085,014 6200 Purchased and Contracted Services 618,401 558,852 59,549 626,280 6300 Supplies and Materials 1,164,139 1,122,616 41,523 1,284,844 6400 Other Operating Expenditures 1,298,042 1,172,832 125,210 1,291,464 6600 Capital Outlay 31,865 Total Cocurricular/Extracurricular Activities 8,870,753 8,536,357 334,396 9,319,467

Total Support Services - Student (Pupil) 43,931,053 42,594,961 1,336,092 44,605,643

2012 (1)

86


2011 (2)

VariancePositive

Budget Actual (Negative) ActualAdministrative Support Services General Administration 6100 Payroll Costs 7,129,464$ 6,847,192$ 282,272$ 7,290,443$ 6200 Purchased and Contracted Services 1,492,436 1,260,400 232,036 1,120,847 6300 Supplies and Materials 370,773 270,273 100,500 355,572 6400 Other Operating Expenditures 850,840 739,100 111,740 788,750 6600 Capital Outlay 29,577 27,882 1,695Total Administrative Support Services 9,873,090 9,144,847 728,243 9,555,612

Support Services - Nonstudent Based Plant Maintenance and Operations 6100 Payroll Costs 20,092,729 19,543,038 549,691 21,660,932 6200 Purchased and Contracted Services 19,066,087 19,016,428 49,659 16,876,442 6300 Supplies and Materials 2,985,817 2,952,480 33,337 3,227,059 6400 Other Operating Expenditures 1,253,799 1,132,593 121,206 1,126,797 6600 Capital Outlay 779,957 166,966 612,991 56,079 Total Plant Maintenance and Operations 44,178,389 42,811,505 1,366,884 42,947,309

Security and Monitoring Services 6100 Payroll Costs 4,565,661 4,431,121 134,540 4,544,924 6200 Purchased and Contracted Services 97,590 93,921 3,669 99,756 6300 Supplies and Materials 167,097 145,284 21,813 191,171 6400 Other Operating Expenditures 47,601 42,696 4,905 38,444 6600 Capital Outlay 113,912 113,912 254,573 Total Security and Monitoring Services 4,991,861 4,826,934 164,927 5,128,868

Data Processing Services 6100 Payroll Costs 5,993,647 5,717,344 276,303 6,608,005 6200 Purchased and Contracted Services 147,530 94,330 53,200 217,061 6300 Supplies and Materials 1,627,451 1,525,025 102,426 1,276,087 6400 Other Operating Expenditures 92,364 84,277 8,087 81,834 6600 Capital Outlay 38,000 15,640 22,360 20,047 Total Data Processing Services 7,898,992 7,436,616 462,376 8,203,034Total Support Services - Nonstudent Based 57,069,242 55,075,055 1,994,187 56,279,211

Ancillary Services Community Services 6100 Payroll Costs 360,178 337,678 22,500 319,068 6200 Purchased and Contracted Services 70,500 54,436 16,064 52,943 6300 Supplies and Materials 96,544 74,156 22,388 35,493 6400 Other Operating Expenditures 5,450 6,106 (656) 5,271Total Ancillary Services 532,672 472,376 60,296 412,775

2012 (1)

87


2011 (2)

VariancePositive


Capital Outlay Facilities Acquisition and Construction 6100 Payroll Costs 607,418$ 594,074$ 13,344$ 598,635$ 6300 Supplies and Materials 3,658 3,186 472 1,931 6400 Other Operating Expenditures 4,660 2,923 1,737 4,831 6600 Capital Outlay 1,245,076 1,247,351 (2,275) 121,614Total Capital Outlay 1,860,812 1,847,534 13,278 727,011

Intergovernmental Charges Payments to Juvenile Justice Alternative Education Program 6200 Purchased and Contracted Services 82,740 32,924 49,816 47,890

Payments to Tax Increment Reinvestment Zone 6400 Other Operating Expenditures 2,450,000 2,435,819 14,181 2,290,436

Other Intergovernmental Charges 6200 Purchased and Contracted Services 2,375,000 2,348,096 26,904 2,242,299Total Intergovernmental Charges 4,907,740 4,816,839 90,901 4,580,625

6030 Total Expenditures 424,629,682$ 413,608,888$ 11,020,794$ 424,745,694$

(1) Expenditures reduced for Education Jobs Fund recorded in Special Revenue Fund.(2) Expenditures reduced for State Fiscal Stabilization Funds recorded in Special Revenue Fund.

2012 (1)

88


89

DEBT SERVICE FUND The Debt Service Fund is used to account for revenues from debt service taxes and earnings on investments which are used for payment of interest and principal on the District’s bonded indebtedness.

90


91

KATY INDEPENDENT SCHOOL DISTRICTCOMPARATIVE BALANCE SHEET Exhibit H-1DEBT SERVICE FUNDAUGUST 31, 2012 and 2011

DataControl August 31, August 31, Codes 2012 2011

ASSETS1110 Cash and Investments at Fair Value 44,573,042$ 41,089,970$

Receivables:1220 Property Taxes-Delinquent 2,966,311 2,826,9961230 Allowance for Uncollectible Taxes (Credit) (632,913) (624,984)1250 Accrued Interest 7,572 7,1601260 Due from Other Funds 222,261 255,731

1000 Total Assets 47,136,273$ 43,554,873$


2110 Accounts Payable 51,329$ 218,958$ 2140 Interest Payable Current 79,347 27,7972180 Due to Other Governments 845,723 1,114,084

2300 Deferred Revenues 2,333,398 2,202,012

2000 Total Liabilities 3,309,797 3,562,851

FUND BALANCERestricted For:

3480 Retirement of Long-term Debt 43,826,476 39,992,022

3000 Total Fund Balance 43,826,476 39,992,022

4000 Total Liabilities and Fund Balance 47,136,273$ 43,554,873$

92


FUND BALANCE-ORIGINAL BUDGET, AMENDED FINAL, AND ACTUAL-DEBT SERVICE FUNDYEAR ENDED AUGUST 31, 2012with comparative actual balances for the year ended August 31, 2011

DataControlCodes Original Final Actual

REVENUES5700 Local, Intermediate, and Out-of-State 82,255,549$ 82,680,478$ 82,719,642$ 5800 State Program Revenues 4,329,808 4,639,979 4,639,729

5020 Total Revenues 86,585,357 87,320,457 87,359,371

EXPENDITURESDebt Service

0071 Principal on Long-Term Debt 35,181,136 35,181,136 35,181,1360072 Interest on Long-Term Debt 52,606,067 50,371,334 50,163,3260073 Bond Issuance Costs and Fees 912,797 3,486,589 3,060,606

6030 Total Expenditures 88,700,000 89,039,059 88,405,0681100 Excess (Deficiency) of Revenues Over (Under)

Expenditures (2,114,643) (1,718,602) (1,045,697)

OTHER FINANCING SOURCES (USES)7901 Refunding Bonds Issued 167,785,000 167,785,0007915 Transfers In 3,477,982 3,538,823 3,613,4337916 Premium on Issuance of Bonds 7,502,404 7,502,4048940 Payment to Bond Refunding Escrow Agent (174,020,686) (174,020,686)

7080 Total Other Financing Sources and Uses 3,477,982 4,805,541 4,880,151

1200 Net Change in Fund Balance 1,363,339 3,086,939 3,834,454

0100 Fund Balances - Beginning 39,992,022 39,992,022 39,992,022

3000 Fund Balances - Ending 41,355,361$ 43,078,961$ 43,826,476$

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN

2012

Budgeted Amounts

93

Exhibit H-2

2011

Variance with Final Budget Actual

Positive (Negative) Amounts

39,164$ 80,534,856$ (250) 4,982,064

38,914 85,516,920

33,038,949208,008 57,116,297425,983 1,452,652

633,991 91,607,898

672,905 (6,090,978)

6,220,00074,610 2,193,443

298,647(6,607,541)

74,610 2,104,549

747,515 (3,986,429)

43,978,451

747,515$ 39,992,022$

94


95

CAPITAL PROJECTS FUND The Capital Projects Fund is used to account for proceeds from the sale of general obligation bonds and the expenditures of these funds for the construction and equipping of new school facilities, to purchase school sites, and the renovation or repair of present facilities.

96

KATY INDEPENDENT SCHOOL DISTRICTCOMPARATIVE BALANCE SHEETCAPITAL PROJECTS FUNDAUGUST 31, 2012 and 2011

Katy DevelopmentKaty Independent Authority

Data School District Multi-PurposeControl Capital Projects Complex for the Codes Fund District

ASSETS1110 Cash and Investments at Fair Value 109,292,744$ $

Receivables:1240 Due from Other Governments 292,7001290 Other Receivables

1000 Total Assets 109,292,744$ 292,700$


2110 Accounts Payable 24,044,243$ $ 2160 Accrued Wages Payable 13,5522170 Due to Other Funds 69,6692180 Due to Other Governments

2000 Total Liabilities 24,127,464

FUND BALANCERestricted For:

3470 Capital Acquisitions and Contracts 85,165,280 292,7003000 Total Fund Balance 85,165,280 292,700

4000 Total Liabilities and Fund Balance 109,292,744$ 292,700$

97

Exhibit I-1

August 31, August 31, 2012 2011

109,292,744$ 160,727,023$

292,700 292,37463,378

109,585,444$ 161,082,775$

24,044,243$ 15,781,713$ 13,55269,669 15,031,877

36

24,127,464 30,813,626

85,457,980 130,269,14985,457,980 130,269,149

109,585,444$ 161,082,775$

Total

98

KATY INDEPENDENT SCHOOL DISTRICTSCHEDULE OF REVENUES, EXPENDITURES,AND CHANGES IN FUND BALANCECAPITAL PROJECTS FUNDYEAR ENDED AUGUST 31, 2012 and 2011

Katy DevelopmentKaty Independent Authority

Data Control Codes

School District Capital Projects

Fund

Multi-purpose Complex for the

District

REVENUES5700 Local, Intermediate, and Out-of-State 375,451$ 326$

5020 Total Revenues 375,451 326

EXPENDITURES0034 Student Transportation

Vehicles Total Student Transportation

0081 Facilities Acquisition and Construction:Land and Improvements 2,225,362Building and Improvements 165,639,860Furniture and Equipment 26,946,273

194,811,495

Total Capital Outlay 194,811,495

0073 Bond Issuance Cost and Other Fees 1,182,418

6030 Total Expenditures 195,993,9131100 Excess (Deficiency) of Revenues Over (Under)

Expenditures (195,618,462) 326

OTHER FINANCING SOURCES (USES)7911 Capital Related Debt Issued 129,370,0007916 Premium on Issuance of Bonds 21,812,4188911 Transfers Out (375,451)

7080 Total Other Financing Sources (Uses) 150,806,967

1200 Net Change in Fund Balance (44,811,495) 326

0100 Fund Balances - Beginning 129,976,775 292,374

3000 Fund Balances - Ending 85,165,280$ 292,700$

Total Facilities Acquisition and Construction

99

Exhibit I-2

August 31, 2012

August 31, 2011

375,777$ 161,148$

375,777 161,148

1,378,6891,378,689

2,225,362 13,208,575165,639,860 52,155,86226,946,273 22,001,907

194,811,495 87,366,344

194,811,495 88,745,033

1,182,418 1,601,235

195,993,913 90,346,268

(195,618,136) (90,185,120)

129,370,000 196,470,00021,812,418 5,131,235

(375,451) (160,710)

150,806,967 201,440,525

(44,811,169) 111,255,405

130,269,149 19,013,744

85,457,980$ 130,269,149$

Total

100


101

NONMAJOR GOVERNMENTAL FUNDS

SPECIAL REVENUE FUNDS Special Revenue Funds are used to account for financial resources restricted to or designated for specific purposes by a grantor. Specifically, this type of fund is used to account for the District’s Food Service program, including local and federal revenue sources for state and federally financed programs (grants) where unused balances are returned to the grantor at the close of specified project periods, and other revenue specific programs.

102

Special Revenue Fund Program Descriptions

Texas McKinney–Vento Program 1 – Funds are for the purpose of identifying children and youth in homeless situations, and developing and implementing educational and related services in order to help them enroll, attend, and succeed in school. Elementary and Secondary Education Act (ESEA) Title I, Part A – Improving Basic Programs - Funds are used on identified campuses to enable schools to provide opportunities for children served to acquire the knowledge and skills contained in the challenging State content standards and to meet the challenging State performance standards developed for all children. Individuals with Disabilities Education Act (IDEA), Part B – Formula - Funds are used to operate educational programs for children with disabilities. This fund also includes capacity building and improvement (sliver) subgrants. Individuals with Disabilities Education Act (IDEA), Part B - Preschool - Funds are used for preschool children with disabilities. Nutrition and Food Services - Funds are used to account for allowable expenditures, as determined under the National School Lunch Act, for the operation and improvement of the Child Nutrition Programs. Vocational Education, Carl Perkins Basic Grant - Funds are used to provide instruction related to career and technology education and to develop new and/or improve career and technology education programs for paid and unpaid employment. Elementary and Secondary Education Act (ESEA) Title II, Part A - Teacher and Principal Training and Recruiting – Funds are used to increase student academic achievement through improving teacher and principal quality and increasing the number of highly qualified teachers in classrooms and highly qualified principals and assistant principals in schools. Elementary and Secondary Education Act (ESEA) Title III, Part A – LEP and Immigrant - Funds are used to improve the education of limited English proficient children by assisting the children to learn English and meet challenging State academic content and student academic achievement standards. Medicaid Administrative Claiming Program – Funds are used for reimbursement of eligible administrative costs for activities attributed to the implementation of the Medicaid state plan. ARRA, Title II, Part D – Funds are used for the implementation and support of a comprehensive system that effectively uses technology in elementary and secondary schools to improve student academic achievement. ARRA, Individuals with Disabilities Education Act (IDEA), Part B, Formula – Funds are used to ensure that children with disabilities have access to a free appropriate public education to meet each child’s unique needs and prepare each child for further education, employment, and independent living.

103

Special Revenue Fund Program Descriptions (continued)

ARRA, Individuals with Disabilities Education Act (IDEA), Part B, Preschool – Funds are used to ensure that children ages three through five with disabilities have access to a free appropriate public education to meet each child’s unique needs and prepare each child for further education, employment, and independent living. ARRA, Elementary and Secondary Education Act (ESEA) Title I, Part A – Funds are used on identified campuses to help improve teaching and learning for students most at risk of failing to meet state academic achievement standards. Education Jobs Fund – Funds are used to save or create jobs. Jobs funded under this program are exclusively for school-level employees that provide educational and related services for early childhood, elementary, and secondary education. Summer School Program for LEP Students in Kindergarten and First Grade – Funds are used for reimbursement of summer school costs for Limited English Proficient Students in Kindergarten and First Grade. Early Childhood Intervention - Funds are used to identify and provide needed intervention services for children from birth to age 3 who are developmentally delayed or appear to be at risk for developmental delay. Individuals with Disabilities Education Act (IDEA), Part B-Discretionary Deaf, SSA - Funds are used to support an education service center basic special education component and also targeted support to LEAs, Regional Day School Programs for the Deaf, private residential placements, priority projects, and other emerging needs. Individuals with Disabilities Education Act (IDEA), Part B-Formula Deaf, SSA - Funds are used to operate educational programs for children with disabilities. This fund also includes capacity building and improvement (sliver) subgrants. Individuals with Disabilities Education Act (IDEA), Part B-Preschool Deaf, SSA - Funds are used for preschool children who are hearing impaired. Individuals with Disabilities Education Act (IDEA), Part C, Early Intervention, SSA - Funds are used to assist local Regional Day School for the Deaf programs and the Texas School for the Deaf in providing direct services to hearing impaired infants to toddlers ages birth through two years of age. The program also provides supplemental and appropriate services to eligible students that are provided by a certified and trained teacher.

State Visually Handicapped - Funds are used to provide educational assistance to visually impaired students. Non-Educational Community-Based Support Services - Funds are used for the provision of non-educational community-based support services to students with disabilities who would remain or have to be placed in residential facilities for educational reasons without the provision of these services. The support services may include transportation, respite for the parents, case management, social work, in-home family support and other items.

104

Special Revenue Fund Program Descriptions (continued) Texas Successful Schools Program - Funds are used for general student purposes except athletics. Awards are given to individual campuses and are based on student achievement and student achievement gains. Advanced Placement Incentive - Funds are awarded to specific campuses based on student scores on Advanced Placement examinations and are to be used for enhancement of academic programs at awarded campuses. Instructional Materials Allotment - Funds are used to provide instructional materials awarded under the textbook allotment. Technology Allotment - Funds are used to provide a technology infrastructure in the district. Read-To-Succeed License Plate Program - Funds are awarded to specific campuses based on the sale of specialty license plates and are to be used to pay for educational materials for the school library. State Funded Special Revenue Funds – Accounts for state funded special revenue that has not been specified above. Regional Day School for the Deaf, SSA - Funds are used for staff and activities of the Regional Day School Program for the Deaf (RDSPD). Local Share Regional Day School for the Deaf, SSA - Funds are used to account for excess costs of services provided to hearing impaired students ages birth through twenty-one. Campus Activity Funds - Funds are used for activities benefiting students and staff. Locally Funded Special Revenue – Locally funded special revenue funds not specified above. Tax Increment Reinvestment Zone - Funds are used to account for tax increment revenues, in excess of bond payments, restricted for expenditures within the reinvestment zone.

105


106

KATY INDEPENDENT SCHOOL DISTRICTCOMBINING BALANCE SHEETNONMAJOR GOVERNMENTAL FUNDSAUGUST 31, 2012

206 211 224Data McKinney- ESEA IDEA

Control Vento Title I Part BCodes Homeless Ed. Part A Formula

ASSETS1110 Cash and Cash Equivalents $ $ $

Receivables:1240 Due from Other Governments 24,455 713,027 1,336,8781260 Due from Other Funds1290 Other Receivables1300 Inventories, at Cost1410 Deferred Expenditures1000 Total Assets 24,455$ 713,027$ 1,336,878$


2110 Accounts Payable 170$ 142,894$ 127,150$ 2160 Accrued Wages Payable 29,510 102,7732170 Due to Other Funds 24,285 540,623 1,106,9552180 Due to Other Governments2300 Deferred Revenues2000 Total Liabilities 24,455 713,027 1,336,878


3410/20 Nonspendable3450 Restricted for Food Service Operations3490 Restricted for Tax Increment Zone3490 Restricted for Health Services 3545 Committed for Campus Activity Funds3000 Total Fund Balances

4000 Total Liabilities and Fund Balances 24,455$ 713,027$ 1,336,878$

107

Exhibit J-1Page 1 of 4

225 240 244 255 263 272IDEA Nutrition Voc. Ed. ESEA ESEA MedicaidPart B and Basic Title II Title III Administrative

Preschool Food Services Grant Part A Part A Claiming

$ 9,274,078$ $ $ $ $

26,576 244,891 33,064 438,332 555,754 64,08248,979

154,149 612239,268

4,13126,576$ 9,912,386$ 33,064$ 438,332$ 560,497$ 113,061$

653$ 909,267$ $ 46,779$ 25,138$ $ 731 58,266 150 21,379 2,022

25,192 3,110,948 33,064 391,403 513,980

26,576 4,078,481 33,064 438,332 560,497 2,022

239,2685,594,637

111,039

5,833,905 111,039

26,576$ 9,912,386$ 33,064$ 438,332$ 560,497$ 113,061$

108


279 283 284Data ARRA ARRA ARRA

Control Title II IDEA B IDEA BCodes Part D Formula Preschool


Receivables:1240 Due from Other Governments1260 Due from Other Funds1290 Other Receivables1300 Inventories, at Cost1410 Deferred Expenditures1000 Total Assets $ $ $


2110 Accounts Payable $ $ $ 2160 Accrued Wages Payable2170 Due to Other Funds2180 Due to Other Governments2300 Deferred Revenues2000 Total Liabilities



Total Liabilities and Fund Balances $ $ $

109


285 287 289 289 315 316ARRA Education Early SSA SSATitle I Jobs Summer Childhood IDEA B IDEA BPart A Fund School LEP Intervention Discretionary Deaf

$ $ $ $ $ $

664,524 1,857 23,181 6,245

191,859

66,662 $ 664,524$ $ 260,378$ 23,181$ 6,245$

$ $ $ 14,553$ 5,270$ 5,684$ 51,405 4,242 237

613,119 241,583 17,674 561

664,524 260,378 23,181 6,245

$ 664,524$ $ 260,378$ 23,181$ 6,245$

110


317 340 385Data SSA SSA State

Control IDEA B IDEA C Early VisuallyCodes Preschool Deaf Intervention Handicapped


Receivables:1240 Due from Other Governments 7,834 2711260 Due from Other Funds1290 Other Receivables1300 Inventories, at Cost1410 Deferred Expenditures1000 Total Assets 7,834$ 271$ $


2110 Accounts Payable 1,467$ $ $ 2160 Accrued Wages Payable2170 Due to Other Funds 6,367 2712180 Due to Other Governments2300 Deferred Revenues2000 Total Liabilities 7,834 271



Total Liabilities and Fund Balances 7,834$ 271$ $

111


392 393 397 410 411 427Non-Ed Texas Advanced Instructional Read to Succeed

Community Successful Placement Materials Technology LicenseSupport Schools Incentive Allotment Allotment Plate Program

$ $ $ $ $ $

3,3079,609 248,220 103

3,307$ $ 9,609$ 248,220$ $ 103$

$ $ $ 247,693$ $ $

3,307

9,609 527 1033,307 9,609 248,220 103

3,307$ $ 9,609$ 248,220$ $ 103$

112


429 435 455Data State SSA SSA

Control Funded Regional Deaf DeafCodes Special Revenue CO-OP Local Share


Receivables:1240 Due from Other Governments 48,539 67,728 9,2441260 Due from Other Funds1290 Other Receivables1300 Inventories, at Cost1410 Deferred Expenditures1000 Total Assets 48,539$ 67,728$ 9,244$


2110 Accounts Payable 6,892$ 1,140$ 1,718$ 2160 Accrued Wages Payable 8,285 1,2882170 Due to Other Funds 41,647 58,303 6,2382180 Due to Other Governments2300 Deferred Revenues2000 Total Liabilities 48,539 67,728 9,244



Total Liabilities and Fund Balances 48,539$ 67,728$ 9,244$

113


461 480 495 NonmajorCampus Locally Tax Increment Special NonmajorActivity Funded Reinvestment Revenue GovernmentalFunds Special Revenue Zone Funds Funds

$ $ 4,247,321$ 13,521,399$ 13,521,399$

4,269,789 4,269,7893,066,096 3,373,007 3,373,007

233 346,853 346,853239,268 239,268

70,793 70,7933,066,096$ 233$ 4,247,321$ 21,821,109$ 21,821,109$

255,778$ $ $ 1,792,246$ 1,792,246$ 3,010 283,298 283,298

233 468,281 7,204,034 7,204,034

10,239 10,239258,788 233 468,281 9,289,817 9,289,817

239,268 239,2685,594,637 5,594,637

3,779,040 3,779,040 3,779,040111,039 111,039

2,807,308 2,807,308 2,807,3082,807,308 3,779,040 12,531,292 12,531,292

3,066,096$ 233$ 4,247,321$ 21,821,109$ 21,821,109$

Totals August 31, 2012

114

KATY INDEPENDENT SCHOOL DISTRICTCOMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDSYEAR ENDED AUGUST 31, 2012

206 211 224Data McKinney- ESEA IDEA

Control Vento Title I Part BCodes Homeless Ed. Part A Formula

REVENUES5700 Local, Intermediate, and Out-of-State $ $ $ 5800 State Program Revenues5900 Federal Program Revenues 39,390 4,078,678 5,893,3305020 Total Revenues 39,390 4,078,678 5,893,330

EXPENDITURES0011 Instructional Leadership 35,540 3,619,027 4,026,6940012 Instructional Resources and Media Services0013 Curriculum and Instructional Staff Development 924 221,105 80,9500021 Instructional Leadership 37,480 2,7670023 School Leadership 11,852 1,3650031 Guidance and Counseling Services 1,516,3250033 Health Services 32,3670034 Student Transportation0035 Food Services0036 Cocurricular/Extracurricular Activities0041 General Administration0051 Plant Maintenance and Operations0052 Security and Monitoring Services0061 Community Services 2,926 189,2140081 Capital Outlay0093 Payments to Fiscal Agents 232,8626030 Total Expenditures 39,390 4,078,678 5,893,330

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

7912 Sale of Real and Personal Property8911 Transfers Out1200 Net Change in Fund Balance

0100 Fund Balance - September 1 (Beginning)3000 Fund Balance - August 31 (Ending) $ $ $

115


225 240 244 255 263 272IDEA Nutrition Voc. Ed. ESEA ESEA MedicaidPart B and Basic Title II Title III Administrative

Preschool Food Services Grant Part A Part A Claiming

$ 13,792,496$ $ $ $ $ 157,347

107,049 10,693,140 338,429 834,495 2,588,315 95,261107,049 24,642,983 338,429 834,495 2,588,315 95,261

106,944 171,360 75,083 1,566,905162

105 167,069 738,597 739,716

19,678 10,00040

85,601

23,048,070

935

271,6943,218,223

107,049 26,266,293 338,429 834,495 2,588,315 85,601

(1,623,310) 9,660

23,424

(1,599,886) 9,660

7,433,791 101,379 $ 5,833,905$ $ $ $ 111,039$

116


279 283 284Data ARRA ARRA ARRA

Control Title II IDEA B IDEA BCodes Part D Formula Preschool

REVENUES5700 Local, Intermediate, and Out-of-State $ $ $ 5800 State Program Revenues5900 Federal Program Revenues 12,500 1,200,356 106,4185020 Total Revenues 12,500 1,200,356 106,418

EXPENDITURES0011 Instructional Leadership 957,713 106,3900012 Instructional Resources and Media Services0013 Curriculum and Instructional Staff Development 12,500 121,084 210021 Instructional Leadership 8,8870023 School Leadership0031 Guidance and Counseling Services 112,6720033 Health Services0034 Student Transportation0035 Food Services0036 Cocurricular/Extracurricular Activities0041 General Administration0051 Plant Maintenance and Operations0052 Security and Monitoring Services0061 Community Services 70081 Capital Outlay0093 Payments to Fiscal Agents6030 Total Expenditures 12,500 1,200,356 106,418




117


285 287 289 289 315 316ARRA Education Early SSA SSATitle I Jobs Summer Childhood IDEA B IDEA BPart A Fund School LEP Intervention Discretionary Deaf

$ $ $ 192,237$ $ $ 471,042

268,914 9,613,215 68,807 1,257,109 50,363 17,936268,914 9,613,215 68,807 1,920,388 50,363 17,936

250 9,256,772 68,807 1,549,762 39,943 10,740

875 97 3,403293,809

356,443 3,931 15867,655 10,323 3,635

268,664 4,356

268,914 9,613,215 68,807 1,920,388 50,363 17,936

$ $ $ $ $ $

118


317 340 385Data SSA SSA State

Control IDEA B IDEA C Early VisuallyCodes Preschoo Deaf Intervention Handicapped

REVENUES5700 Local, Intermediate, and Out-of-State $ $ $ 5800 State Program Revenues 20,0005900 Federal Program Revenues 8,534 2,1285020 Total Revenues 8,534 2,128 20,000

EXPENDITURES0011 Instructional Leadership 4,492 2,128 20,0000012 Instructional Resources and Media Services0013 Curriculum and Instructional Staff Development 9500021 Instructional Leadership0023 School Leadership0031 Guidance and Counseling Services 5490033 Health Services 2,5430034 Student Transportation0035 Food Services0036 Cocurricular/Extracurricular Activities0041 General Administration0051 Plant Maintenance and Operations0052 Security and Monitoring Services0061 Community Services0081 Capital Outlay0093 Payments to Fiscal Agents6030 Total Expenditures 8,534 2,128 20,000




119


392 393 397 410 411 427Non-Ed Texas Advanced Instructional Read to Succeed

Community Successful Placement Materials Technology LicenseSupport Schools Incentive Allotment Allotment Plate Program

$ $ $ $ $ $ 87,294 2,317 59,262 2,174,019 34,231 269

87,294 2,317 59,262 2,174,019 34,231 269

2,143 57,220 1,910,252 34,231174 269

2,042 263,767

87,294

87,294 2,317 59,262 2,174,019 34,231 269

$ $ $ $ $ $

120


429 435 455Data State SSA SSA

Control Funded Regional Deaf DeafCodes Special Revenue CO-OP Local Share

REVENUES5700 Local, Intermediate, and Out-of-State $ $ 171,250$ 5800 State Program Revenues 95,593 548,3075900 Federal Program Revenues5020 Total Revenues 95,593 548,307 171,250

EXPENDITURES0011 Instructional Leadership 29,299 512,555 97,7550012 Instructional Resources and Media Services0013 Curriculum and Instructional Staff Development 1,896 1,2000021 Instructional Leadership 2,5300023 School Leadership0031 Guidance and Counseling Services 33,6660033 Health Services 190 69,7650034 Student Transportation0035 Food Services0036 Cocurricular/Extracurricular Activities0041 General Administration0051 Plant Maintenance and Operations 62,2580052 Security and Monitoring Services 4,0360061 Community Services0081 Capital Outlay0093 Payments to Fiscal Agents6030 Total Expenditures 95,593 548,307 171,250




121


461 480 495Campus Locally Tax Increment NonmajorActivity Funded Reinvestment Special GovernmentalFunds Special Revenue Zone Revenue Funds Funds

3,864,848$ 3,361$ 624,107$ 18,648,299$ 18,648,299$ 3,649,681 3,649,681

37,274,367 37,274,3673,864,848 3,361 624,107 59,572,347 59,572,347

1,644,263 1,361 25,907,629 25,907,629689,327 2,000 691,932 691,932148,123 2,504,424 2,504,424

10 345,483 345,483402,977 445,872 445,872

9,211 2,032,995 2,032,995428 272,507 272,507

5,042 5,042 5,04223,048,070 23,048,070

640,063 640,063 640,063935 935

27,583 89,841 89,84116,087 20,123 20,123

4,003 828,158 828,15837,490 3,255,713 3,255,713

232,862 232,8623,624,607 3,361 60,321,649 60,321,649

240,241 624,107 (749,302) (749,302)

23,424 23,424(468,281) (468,281) (468,281)

240,241 155,826 (1,194,159) (1,194,159)

2,567,067 3,623,214 13,725,451 13,725,4512,807,308$ $ 3,779,040$ 12,531,292$ 12,531,292$

Totals August 31, 2012

122

KATY INDEPENDENT SCHOOL DISTRICTSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESORIGINAL BUDGET, AMENDED FINAL, AND ACTUAL - NUTRITION AND FOOD SERVICE AND EDUCATION JOBS FUNDYEAR ENDED AUGUST 31, 2012with comparative actual balances for the year ended August 31, 2011

Data

Variance with Final

BudgetControl Codes Original Final

Actual Amounts

Positive (Negative)

2011 Actuals

REVENUES5700 Local, Intermediate, and Out-of-State 14,682,860$ 14,254,965$ 13,792,496$ (462,469)$ 14,387,392$ 5800 State Program Revenues 150,000 157,347 157,347 149,6765900 Federal Program Revenues 12,124,740 11,234,264 10,693,140 (541,124) 11,182,893

5020 Total Revenues 26,957,600 25,646,576 24,642,983 (1,003,593) 25,719,961

EXPENDITURES0011 Instruction

Payroll Costs Total Instruction

0031 Guidance and Counseling Services Payroll Costs Total Guidance and Counseling

0035 Food Services Payroll Costs 8,566,359 8,078,801 7,834,579 244,222 8,231,734 Professional and Contracted Services 58,000 113,246 122,945 (9,699) 61,058 Supplies and Materials 15,495,258 15,268,001 14,789,424 478,577 14,439,552 Other Operating Expenses 13,000 16,261 16,897 (636) 8,013 Capital Outlay 50,000 553,001 284,225 268,776 Total Food Service 24,182,617 24,029,310 23,048,070 981,240 22,740,357

0051 Plant Maintenance & Operations Payroll Costs 105,299 179,927 Professional and Contracted Services 430,000 443,833 Supplies and Materials 101,876 Total Plant Maint. & Operations 535,299 725,636

0081 Capital Outlay Capital Outlay 3,363,815 3,218,223 145,592 Total Capital Outlay 3,363,815 3,218,223 145,592

6030 Total Expenditures 24,717,916 27,393,125 26,266,293 1,126,832 23,465,993

1100 Excess (Deficiency) of Revenues Over (Under) Expenditures 2,239,684 (1,746,549) (1,623,310) 123,239 2,253,968

7912 Sale of Real and Personal Property 14,980 23,424 8,444 23,403

1200 Net Change in Fund Balance 2,239,684 (1,731,569) (1,599,886) 131,683 2,277,371

0100 Fund Balance - September 1 (Beginning) 7,433,791 7,433,791 7,433,791 5,156,420

3000 Fund Balance - August 31 (Ending) 9,673,475$ 5,702,222$ 5,833,905$ 131,683$ 7,433,791$

2012NUTRITION AND FOOD SERVICE

Budgeted Amounts

123

Exhibit J-3

Variance with Final

Budget

Original Final Actual

AmountsPositive

(Negative)2011

Actuals

$ $ $ $ $

9,613,215 9,613,215

9,613,215 9,613,215

9,256,772 9,256,7729,256,772 9,256,772

356,443 356,443356,443 356,443

9,613,215 9,613,215

$ $ $ $ $

2012

Budgeted Amounts

EDUCATION JOBS FUND

124


125

INTERNAL SERVICE FUNDS The Internal Service Funds are used to account for revenues and expenses related to services provided to organizations inside the District on a cost reimbursement basis.

126

KATY INDEPENDENT SCHOOL DISTRICTCOMBINING STATEMENT OF NET POSITION Exhibit K-1INTERNAL SERVICE FUNDSAUGUST 31, 2012

Data TotalControl Health Workers' Auto Print InternalCodes Insurance Compensation Liability Shop Service Funds

ASSETSCurrent Assets:

1110 Cash and Cash Equivalents 4,052,953$ 4,809,490$ $ 1,838,941$ 10,701,384$ 1290 Other Receivables 14,775 14,7751300 Inventories 88,066 88,0661410 Deferred Expenses 39,360 39,360

Total Current Assets 4,067,728 4,809,490 39,360 1,927,007 10,843,585

Noncurrent Assets:Capital Assets:

1520 Building and Improvements 2,516 2,5161540 Furniture and Equipment 1,999 1,749,480 1,751,4791573 Accumulated Depreciation (1,999) (1,191,274) (1,193,273)

Total Non Current 560,722 560,722

1000 Total Assets 4,067,728 4,809,490 39,360 2,487,729 11,404,307


2110 Accounts Payable 2,390,430 420,953 218,924 3,030,3072170 Due to Other Funds 39,360 39,3602200 Accrued Expenses 762,279 778,043 1,540,3222000 Total Liabilities 3,152,709 1,198,996 39,360 218,924 4,609,989

NET POSITION3200 Investment in Capital Assets 560,722 560,7223900 Unrestricted 915,019 3,610,494 1,708,083 6,233,5963000 Total Net Position 915,019$ 3,610,494$ $ 2,268,805$ 6,794,318$


127

KATY INDEPENDENT SCHOOL DISTRICTCOMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN Exhibit K-2FUND NET POSITIONINTERNAL SERVICE FUNDSFOR THE YEAR ENDED AUGUST 31, 2012

Data TotalControl Health Workers' Auto Print InternalCodes Insurance Compensation Liability Shop Service Funds

OPERATING REVENUES5754 Charges for Services 34,805,577$ 799,984$ 233,143$ 3,192,569$ 39,031,273$

5020 Total Operating Revenues 34,805,577 799,984 233,143 3,192,569 39,031,273

OPERATING EXPENSES6100 Salary and Benefits 42,925 42,9256200 Administrator Fees 6,071,150 101,052 39,360 1,391,342 7,602,9046200 Insurance Premiums 41,216 70,335 111,5516200 Claims Expense 30,081,099 924,546 123,448 31,129,0936200 Repair and Maintenance 21,783 21,7836200 Equipment Rental 110,880 110,8806300 Supplies 1,514,399 1,514,3996400 Miscellaneous Operating Expenses 128 1286400 Depreciation 256 159,955 160,2116030 Total Operating Expenses 36,195,558 1,066,814 233,143 3,198,359 40,693,874

1300 Operating Income (Loss) (1,389,981) (266,830) (5,790) (1,662,601)

NONOPERATING REVENUES (EXPENSES)5742 Investment Income 8,586 22,544 5,790 36,920

Total Nonoperating Revenue (Expense) 8,586 22,544 5,790 36,920

Income (Loss) before Contributions & Transfers (1,381,395) (244,286) (1,625,681)7900 Capital Contributions 237,011 237,011

1300 Change in Net Position (1,381,395) (244,286) 237,011 (1,388,670)0100 Total Net Position September 1 (Beginning) 2,296,414 3,854,780 2,031,794 8,182,988

3000 Total Net Position August 31 (Ending) 915,019$ 3,610,494$ $ 2,268,805$ 6,794,318$


128

KATY INDEPENDENT SCHOOL DISTRICTCOMBINING STATEMENT OF CASH FLOWS Exhibit K-3INTERNAL SERVICE FUNDSFOR THE YEAR ENDED AUGUST 31, 2012

TotalHealth Workers' Auto Print Internal

Insurance Compensation Liability Shop Service Funds

CASH FLOWS FROM OPERATING ACTIVITIES Cash Receipts from Internal Services Provided 33,987,846$ 799,984$ 233,143$ 3,192,568$ 38,213,541$ Cash Payments to Suppliers (128) (70,335) (1,637,273) (1,707,736) Cash Payments to Pay Claims (30,239,425) (881,046) (123,448) (31,243,919) Cash Payments to Contract Administrators (5,859,284) (144,348) (39,360) (1,524,005) (7,566,997) Cash Payments to Employees (42,925) (42,925)

Net Cash Provided (Used) by Operating Activities (2,153,916) (225,410) 31,290 (2,348,036)

CASH FLOWS FROM INVESTING ACTIVITIES Interest Received 8,586 22,544 5,790 36,920

Net Cash Provided by Investing Activities 8,586 22,544 5,790 36,920

Net Increase (Decrease) in Cash and Cash Equivalents (2,145,330) (202,866) 37,080 (2,311,116)Cash and Cash Equivalents at Beginning of Year 6,198,283 5,012,356 1,801,861 13,012,500

Cash and Cash Equivalents at End of Year 4,052,953$ 4,809,490$ $ 1,838,941$ 10,701,384$

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIESOperating Income (Loss) (1,389,981)$ (266,830)$ $ (5,790)$ (1,662,601)$ Adjustments to Reconcile Operating Income to Net CashProvided by Operating Activities: Depreciation 256 159,955 160,211 (Increase) in Inventories (846) (846) Decrease in Receivables 698 698 Increase (Decrease) in Accounts Payable 1,180,507 15,764 (122,029) 1,074,242 (Decrease) in Interfund Payables (818,429) (818,429) Increase (Decrease) in Accrued Expenses (1,126,967) 25,656 (1,101,311)

Net Cash Provided (Used) by Operating Activities (2,153,916)$ (225,410)$ $ 31,290$ (2,348,036)$

Noncash Investing, Capital,and Financing Activities

Contributions of Capital Assets from Government 237,011$ 237,011$ Capital Assets Retired (4,848)$ (4,848)$


129

FIDUCIARY FUNDS

Agency Fund The Agency Fund is used to account for assets held by the District as an agent for employees and various student groups throughout the District.

Student Activity Fund The Agency Fund is used to account for assets held for various student groups throughout the District.

130

KATY INDEPENDENT SCHOOL DISTRICTSTATEMENT OF CHANGES IN FIDUCIARY ASSETS AND LIABILITIES Exhibit L-1AGENCY FUNDSYEAR ENDED AUGUST 31, 2012

Balance BalanceSeptember 1, August 31,

2011 Additions Deductions 2012

STUDENT ACTIVITIES

ASSETSCash 4,001,657$ 495,668$ 177,255$ 4,320,070$ Due From Other Funds 7,761,118 7,761,118Sundry Receivables 3,547 3,547

Total Assets 4,005,204$ 8,256,786$ 7,941,920$ 4,320,070$

LIABILITIESAccounts Payable 216,365$ 7,184,065$ 7,141,955$ 258,475$ Accrued Wages 2,391 1,276 2,391 1,276Due to Student Groups 3,760,627 7,824,427 7,524,735 4,060,319Deferred Revenue 25,821 25,821

Total Liabilities 4,005,204$ 15,009,768$ 14,694,902$ 4,320,070$

131

KATY INDEPENDENT SCHOOL DISTRICTSCHEDULE OF CHANGES IN DUE TO STUDENT GROUPS Exhibit L-2AGENCY FUNDS Page 1 of 2YEAR ENDED AUGUST 31, 2012


School / Activity 2011 Additions Deductions 2012

Student Activities

Due to Student GroupsHigh Schools:

Katy 169,040$ 209,879$ 214,481$ 164,438$ Taylor 413,882 674,282 703,551 384,613Mayde Creek 162,386 266,573 295,272 133,687Cinco Ranch 434,785 668,973 686,250 417,508Morton Ranch 105,701 424,277 442,949 87,029Seven Lakes 324,386 926,412 809,533 441,265Raines 658 73 585Opportunity Awareness Center 61 61

24,688 82,996 79,030 28,654

Junior High Schools:Katy 78,318 106,782 92,701 92,399West Memorial 34,179 101,100 89,915 45,364Mayde Creek 1,944 64,824 64,372 2,396Memorial Parkway 89,987 94,410 96,338 88,059McDonald 48,460 52,942 58,356 43,046Beck 101,959 213,966 216,519 99,406McMeans 139,134 141,032 151,286 128,880Cinco Ranch 77,814 239,806 224,930 92,690Morton Ranch 55,270 47,707 63,401 39,576Beckendorff 112,913 362,572 358,514 116,971Cardiff 25,793 82,247 90,177 17,863Wood Creek 39,536 307,982 291,201 56,317Seven Lakes 24,590 11,841 12,749

Elementary Schools:Wolfe 2,005 1,846 2,954 897Katy 10,328 11,685 4,852 17,161West Memorial 6,870 13,130 11,951 8,049Memorial Parkway 4,894 9,244 10,154 3,984Hutsell 3,537 7,917 8,407 3,047Bear Creek 3,791 17,524 18,618 2,697Cimarron 8,700 21,592 22,839 7,453Winborn 14,784 12,867 11,346 16,305Nottingham Country 4,657 20,054 18,694 6,017Sundown 5,630 6,166 8,153 3,643Mayde Creek 2,530 7,647 6,065 4,112

Miller Career & Technology Center

132

KATY INDEPENDENT SCHOOL DISTRICTSCHEDULE OF CHANGES IN DUE TO STUDENT GROUPS Exhibit L-2AGENCY FUNDS Page 2 of 2YEAR ENDED AUGUST 31, 2012


School / Activity 2011 Additions Deductions 2012

Elementary Schools: (continued)Pattison 7,520$ 22,562$ 25,735$ 4,347$ Golbow 5,289 25,519 25,943 4,865Fielder 11,565 30,530 31,689 10,406Hayes 10,689 17,221 17,783 10,127McRoberts 5,745 16,713 10,354 12,104Alexander 298 12,032 9,078 3,252Williams 19,882 32,644 32,728 19,798Creech 12,369 11,801 9,117 15,053King 5,016 14,267 5,750 13,533Schmalz 11,549 16,843 23,529 4,863Kilpatrick 21,829 41,153 38,583 24,399Rylander 7,666 16,236 14,552 9,350Exley 25,869 47,691 35,646 37,914Rhoads 52,268 24,477 58,178 18,567Franz 8,152 8,025 7,148 9,029Griffin 15,816 34,849 25,840 24,825Stephens 7,030 19,491 18,612 7,909Woodcreek 6,872 46,861 47,770 5,963Morton Ranch 1,050 13,149 11,916 2,283Holland 11,287 26,345 25,957 11,675Stanley 5,523 31,219 29,225 7,517Wilson 526 201 325Wolman 1,551 81 1,470Shafer 501 501 Total All Schools 2,761,185 5,735,949 5,670,138 2,826,996

Non-School ActivitiesAthletics 61,649 185,714 70,806 176,557Central Administration 269,821 189,705 145,037 314,489Vocational Administration 234,879 1,383,712 1,370,081 248,510Music Department 329,001 220,093 221,327 327,767Other 104,092 109,254 47,346 166,000

Total Non-School Activities 999,442 2,088,478 1,854,597 1,233,323

Total Due to Student Groups 3,760,627$ 7,824,427$ 7,524,735$ 4,060,319$

133

CAPITAL ASSETS USED IN THE

OPERATIONS OF GOVERNMENTAL FUNDS

Capital assets purchased or constructed by the District are shown at original cost. Donated assets are valued at the fair market value on the date donated. Costs incurred for the purchase or construction of general capital assets are recorded as expenditures in the General Fund, Special Revenue Fund, and Capital Projects Fund and are capitalized as capital assets used in the operations of Governmental Funds. The capital assets consist principally of school buildings and related equipment.

134

KATY INDEPENDENT SCHOOL DISTRICTCAPITAL ASSETS USED IN THE OPERATIONS OF GOVERNMENTAL FUNDS Exhibit M-1COMPARATIVE SCHEDULE BY SOURCEAS OF AUGUST 31, 2012 and 2011

2012 2011Governmental Fund Capital Assets

Land 71,402,749$ 70,658,230$ Land Improvements 51,097,019 49,437,573 Buildings and Improvements 1,114,454,641 999,479,636 Furniture and Equipment 143,658,606 131,034,965 Capital Leases 24,039,425 24,033,197 Vehicles 41,524,534 37,871,170 Construction in Progress 89,672,665 40,505,653

Total Governmental Fund Capital Assets 1,535,849,639$ 1,353,020,424$

Investment in Governmental Funds Capital Assets by Source

Investment in property acquired prior to September 1, 1977 16,243,454$ 16,243,454$ Investment in property acquired after September 1, 1977 from: General Fund 25,043,877 22,610,022 Special Revenue Fund 17,367,721 13,090,734 Capital Projects Fund 1,477,120,405 1,301,030,990 Agency Fund 74,182 45,224

Total Governmental Fund Capital Assets 1,535,849,639$ 1,353,020,424$

135

KATY INDEPENDENT SCHOOL DISTRICTCAPITAL ASSETS USED IN THE OPERATIONS OF GOVERNMENTAL FUNDS Exhibit M-2SCHEDULE BY FUNCTION AND ACTIVITY Page 1 of 3AS OF AUGUST 31, 2012

Furniture,Land & Buildings & Construction- Equipment &

Improvements Improvements In-Progress Vehicles Total

Instructional and Related

High Schools:Katy 5,864,910$ 52,174,498$ 12,531,143$ 3,897,681$ 74,468,232$ Taylor 8,005,389 51,537,037 18,538,977 3,416,776 81,498,179Mayde Creek 3,992,042 67,598,619 19,562 4,389,483 75,999,706Cinco Ranch 11,703,233 59,400,770 19,562 6,587,307 77,710,872Morton Ranch 5,678,586 72,594,659 6,253,336 84,526,581Seven Lakes 7,344,963 63,454,420 6,696,618 77,496,001High School #7 2,097,244 58,563,421 60,660,665High School #8 5,773,343 5,773,343

Total 50,459,710 366,760,003 89,672,665 31,241,201 538,133,579

Junior High Schools:Katy 537,312 12,580,950 1,512,197 14,630,459West Memorial 357,779 24,591,678 1,327,765 26,277,222Mayde Creek 868,845 27,561,389 1,767,568 30,197,802Memorial Parkway 1,435,575 11,466,949 1,253,816 14,156,340McDonald 873,276 10,223,778 1,682,717 12,779,771Beck 841,191 11,102,047 1,673,594 13,616,832McMeans 1,308,285 14,260,850 1,823,897 17,393,032Cinco Ranch 252,412 15,012,544 1,962,433 17,227,389Morton Ranch 342,232 18,946,869 1,973,724 21,262,825Beckendorff 1,905,834 17,048,828 2,030,913 20,985,575Cardiff 2,336,559 25,010,125 2,151,772 29,498,456Wood Creek 1,824,346 25,749,749 2,170,264 29,744,359Seven Lakes 169,816 23,731,495 1,621,831 25,523,142 Total 13,053,462 237,287,251 22,952,491 273,293,204

Elementary Schools:Wolfe 313,237 15,808,347 971,822 17,093,406Katy 101,312 7,068,613 700,817 7,870,742West Memorial 148,165 12,027,531 1,035,675 13,211,371Memorial Parkway 276,282 7,994,722 914,368 9,185,372Hutsell 252,286 10,548,849 1,152,927 11,954,062

Location

136




Elementary Schools (continued):Bear Creek 365,064$ 10,640,927$ $ 830,822$ 11,836,813$ Cimarron 407,222 8,238,352 780,253 9,425,827Winborn 591,044 12,203,380 707,047 13,501,471Nottingham Country 230,385 13,162,667 956,164 14,349,216Sundown 359,378 14,184,757 899,925 15,444,060Mayde Creek 166,813 14,457,150 836,992 15,460,955Pattison 668,799 8,870,501 810,951 10,350,251Golbow 420,767 6,219,491 800,454 7,440,712Fielder 224,442 7,795,416 735,059 8,754,917Hayes 220,014 6,868,414 914,760 8,003,188McRoberts 271,007 6,614,330 1,209,123 8,094,460Alexander 385,202 7,950,478 1,156,212 9,491,892Williams 558,436 8,470,549 1,175,743 10,204,728Creech 582,664 8,749,890 1,115,143 10,447,697King 507,762 10,451,465 1,264,290 12,223,517Schmalz 972,173 10,297,717 1,323,341 12,593,231Kilpatrick 1,295,400 10,438,185 1,106,035 12,839,620Rylander 1,237,535 11,564,560 1,262,576 14,064,671Exley 474,901 10,238,594 1,193,456 11,906,951Rhoads 921,263 10,345,078 1,407,795 12,674,136Franz 718,949 10,388,962 1,394,308 12,502,219Griffin 732,447 11,592,645 1,319,741 13,644,833Stephens 1,798,548 13,785,316 1,418,342 17,002,206Wood Creek 776,568 13,880,640 1,425,373 16,082,581Morton Ranch 1,125,834 15,428,109 1,393,944 17,947,887Holland 1,092,367 14,296,770 1,201,763 16,590,900Stanley 947,839 16,610,871 1,358,837 18,917,547Wilson 1,469,943 14,284,905 1,291,401 17,046,249Wolman 816,214 14,164,530 1,270,205 16,250,949Shafer 1,337,070 13,733,407 1,357,318 16,427,795

22,767,332 389,376,118 38,692,982 450,836,432

Location

137




Instructional Leadership Administration Annex 3,191,471$ 1,376,638$ $ 891,449$ 5,459,558$

Transportation Transportation Centers 2,110,292 15,013,822 42,131,910 59,256,024

Rhodes Stadium 3,563,297 8,035,850 820,988 12,420,135 Rodeo Arena 7,968 1,477,114 20,661 1,505,743 Multi-Purpose Center 155,538 21,740,989 637,155 22,533,682 Total Cocurricular/Extracurricular 3,726,803 31,253,953 1,478,804 36,459,560

Administration Administration Building 2,280,040 22,808,331 40,130,300 65,218,671

Maintenance and Operations Support Services Complex 191,702 29,093,708 1,649,154 30,934,564

Other Alternative Learning Ctr/Raines 405,862 19,582,364 1,686,017 21,674,243 Miller Career & Technology Center 357,384 20,371,202 1,873,582 22,602,168 Outdoor Learning Center 449,352 508,991 21,420 979,763 Land Sites 23,581,764 23,581,764 Other 88,100 4,240,363 3,091,646 7,420,109 Total Other 24,882,462 44,702,920 6,672,665 76,258,047

Total Capital Assets 122,663,274$ 1,137,672,744$ 89,672,665$ 185,840,956$ 1,535,849,639$

Location

Cocurricular/Extracurricular Activities

138

KATY INDEPENDENT SCHOOL DISTRICTCAPITAL ASSETS USED IN THE OPERATIONS OF GOVERNMENTAL FUNDS Exhibit M-3SCHEDULE OF CHANGES BY FUNCTION AND ACTIVITY Page 1 of 3YEAR ENDED AUGUST 31, 2012

Governmental GovernmentalFunds Capital Assets Funds Capital Assets

September 1, Net Retirements August 31,2011 Additions & Transfers 2012

Instructional and Related

High Schools:Katy 62,880,301$ 12,940,629$ 1,352,698$ 74,468,232$ Taylor 63,805,480 17,928,356 235,657 81,498,179Mayde Creek 74,523,439 1,731,865 255,598 75,999,706Cinco Ranch 77,544,920 355,699 189,747 77,710,872Morton Ranch 84,815,628 385,101 674,148 84,526,581Seven Lakes 77,058,282 1,672,978 1,235,259 77,496,001High School #7 14,568,329 46,568,101 475,765 60,660,665High School #8 5,769,009 4,334 5,773,343

Total High School 460,965,388 81,587,063 4,418,872 538,133,579

Junior High SchoolsKaty 14,465,938 192,692 28,171 14,630,459West Memorial 10,763,641 15,567,929 54,348 26,277,222Mayde Creek 15,960,323 14,306,527 69,048 30,197,802Memorial Parkway 14,005,303 236,585 85,548 14,156,340McDonald 12,524,930 623,116 368,275 12,779,771Beck 13,245,765 436,879 65,812 13,616,832McMeans 17,020,597 420,276 47,841 17,393,032Cinco Ranch 17,113,218 585,429 471,258 17,227,389Morton Ranch 21,305,503 35,268 77,946 21,262,825Beckendorff 20,932,676 78,757 25,858 20,985,575Cardiff 29,470,132 62,947 34,623 29,498,456Wood Creek 29,722,922 66,503 45,066 29,744,359Seven Lakes 10,328,014 15,195,913 785 25,523,142

Total Junior High 226,858,962 47,808,821 1,374,579 273,293,204

Elementary SchoolsWolfe 4,453,814 13,377,283 737,691 17,093,406Katy 7,688,841 214,451 32,550 7,870,742West Memorial 13,092,586 364,968 246,183 13,211,371Memorial Parkway 9,084,610 144,843 44,081 9,185,372Hutsell 11,406,518 603,551 56,007 11,954,062Bear Creek 11,395,465 767,573 326,225 11,836,813Cimarron 9,452,022 71,380 97,575 9,425,827Winborn 13,519,500 37,224 55,253 13,501,471

Location

139

KATY INDEPENDENT SCHOOL DISTRICT Exhibit M-3CAPITAL ASSETS USED IN THE OPERATIONS OF GOVERNMENTAL FUNDS Page 2 of 3SCHEDULE OF CHANGES BY FUNCTION AND ACTIVITYYEAR ENDED AUGUST 31, 2012



Elementary Schools (continued):Nottingham Country 14,238,457$ 417,148$ 306,389$ 14,349,216$ Sundown 15,514,371 9,309 79,620 15,444,060Mayde Creek 15,448,873 35,773 23,691 15,460,955Pattison 10,176,648 210,773 37,170 10,350,251Golbow 7,399,115 67,723 26,126 7,440,712Fielder 8,551,855 232,488 29,426 8,754,917Hayes 7,878,553 157,776 33,141 8,003,188McRoberts 8,064,080 101,706 71,326 8,094,460Alexander 9,450,596 87,729 46,433 9,491,892Williams 10,081,585 149,355 26,212 10,204,728Creech 10,152,490 356,492 61,285 10,447,697King 11,980,614 563,889 320,986 12,223,517Schmalz 12,496,298 474,067 377,134 12,593,231Kilpatrick 12,868,064 37,856 66,300 12,839,620Rylander 14,028,686 60,149 24,164 14,064,671Exley 11,961,326 17,074 71,449 11,906,951Rhoads 12,733,018 28,047 86,929 12,674,136Franz 12,528,919 32,668 59,368 12,502,219Griffin 14,260,492 13,168 628,827 13,644,833Stephens 17,107,299 25,288 130,381 17,002,206Woodcreek 16,144,341 22,559 84,319 16,082,581Morton Ranch 17,958,726 9,796 20,635 17,947,887Holland 16,621,018 23,323 53,441 16,590,900Stanley 18,895,516 52,184 30,153 18,917,547Wilson 6,180,647 10,866,387 785 17,046,249Wolman 5,176,913 11,074,821 785 16,250,949Shafer 5,009,744 11,418,886 835 16,427,795 Total Elementary 403,001,600 52,127,707 4,292,875 450,836,432

Instructional Leadership

Administration Annex 5,368,593 134,551 43,586 5,459,558

Transportation

Transportation Centers 55,297,360 4,939,231 980,567 59,256,024

Cocurricular/Extracurricular Activities

Rhodes Stadium 12,388,828 31,307 12,420,135Rodeo Arena 1,505,743 1,505,743Multi-Purpose Center 22,527,454 7,088 860 22,533,682

Total Cocurricular/Extracurricular 36,422,025 38,395 860 36,459,560

Location

140

KATY INDEPENDENT SCHOOL DISTRICT Exhibit M-3CAPITAL ASSETS USED IN THE OPERATIONS OF GOVERNMENTAL FUNDS Page 3 of 3SCHEDULE OF CHANGES BY FUNCTION AND ACTIVITYYEAR ENDED AUGUST 31, 2012



Administration

Administration Building 61,855,656$ 4,701,472$ 1,338,457$ 65,218,671$

Maintenance and Operations

Support Services Complex 30,755,852 250,532 71,820 30,934,564

OtherAlternative Learning Center 21,010,690 701,542 37,989 21,674,243Miller Career Center 22,585,946 69,341 53,119 22,602,168Outdoor Learning Center 970,434 9,329 979,763Land Sites 22,307,997 1,273,767 23,581,764Other 5,619,921 1,946,354 146,166 7,420,109

Total Other 72,494,988 4,000,333 237,274 76,258,047

Total Capital Assets 1,353,020,424$ 195,588,105$ 12,758,890$ 1,535,849,639$

Location

141

GENERAL LONG-TERM DEBT ON

GOVERNMENTAL FUNDS The purpose of the Long-Term Debt Accounts is to record and present the liability of the District for long-term debt until the debt is retired. The long-term debt of the District consists of bonds issued for the purposes of constructing and equipping new facilities, renovation of existing facilities, and obligations related to compensated absences.

142

KATY INDEPENDENT SCHOOL DISTRICTBOND SCHEDULEFISCAL YEAR ENDED AUGUST 31, 2012

Interest Amounts Amounts Issued RetiredDate of Rate Original Outstanding Current CurrentIssue Description Payable Issue 09/01/11 Year Year

08-15-92 Series 1992 Limited 5.40% 12,349,639$ 66,136$ $ 66,136$ Tax Refunding Bonds 6.40%

12-03-96 Series 1996-A 4.75% 25,000,000 3,100,000Limited Tax School Building 6.40%Bonds

11-08-00 Series 2000 Variable Rate 2.08% 50,000,000 37,800,000 37,800,000Unlimited Tax School 3.97%Building Bonds

11-01-02 Series 2002 Limited Tax 2.50% 13,449,981 1,495,000 1,495,000Refunding Bonds 3.00%

11-01-02 Series 2002-A Unlimited Tax 2.50% 159,360,000 4,490,000 4,490,000School Building Bonds 5.25%



05-25-04 Series 2004-B Limited Tax 2.00% 6,029,997 820,001 340,000Refunding Bonds 4.00%

07-28-04 Series 2004-C Unlimited Tax 3.92% 115,000,000 115,000,000 115,000,000School Building Bonds

02-23-05 Series 2005-A Unlimited Tax 3.00% 23,055,000 21,950,000 185,000Refunding Bonds 5.25%

02-23-05 Series 2005-B Unlimited Tax 3.00% 29,685,000 27,100,000 475,000Refunding Bonds 5.25%

09-28-06 Series 2006 Unlimited Tax 4.00% 29,995,000 27,975,000School Building Bonds 5.00%

03-21-07 Series 2007-A Unlimited Tax 4.25% 65,000,000 59,810,000School Building Bonds 5.00%

04-24-07 Series 2007-B Unlimited Tax 4.00% 167,944,959 165,159,960 580,000Refunding Bonds 5.00%

143

Exhibit N-1Page 1 of 2

Amounts Interest Requirements 09/01/14Outstanding Current Year Ending 8/31/13 Year Ending 8/31/14 To Maturity

08/31/12 Year Principal Interest Principal Interest Interest

$ 753,864$ $ $ $ $ $

3,100,000 198,400 198,400 198,400 496,000

68,877

29,900

117,862

8,065,000 1,011,553 8,065,000 201,625

59,000

480,001 27,240 20,440 60,000 19,240 56,837

4,185,878

21,765,000 1,074,194 190,000 1,067,631 195,000 1,060,772 15,420,151

26,625,000 1,307,362 495,000 1,290,387 500,000 1,272,662 12,973,137

27,975,000 1,321,875 1,321,875 1,321,874 23,988,687

59,810,000 2,671,131 2,671,131 2,671,131 33,380,966

164,579,960 7,559,325 605,000 7,532,600 97,444 9,405,031 91,085,072

144

KATY INDEPENDENT SCHOOL DISTRICTBOND SCHEDULEFISCAL YEAR ENDED AUGUST 31, 2012

Interest Amounts Amounts Issued RetiredDate of Rate Original Outstanding Current CurrentIssue Description Payable Issue 09/01/11 Year Year

04-24-07 Series 2007-C Limited Tax 4.00% 61,395,000$ 59,425,000$ $ 3,520,000$ Refunding Bonds 5.63%

09-24-07 Series 2007-D Unlimited Tax 4.25% 80,000,000 60,375,000 3,575,000School Building Bonds 5.63%


01-14-08 Series 2008-B Limited Tax 3.75% 38,235,000 34,540,000 795,000Refunding Bonds 4.38%

06-11-08 Series 2008-C Unlimited Tax 2.75% 97,700,000 87,600,000 2,660,000School Building Bonds 5.00%

03-12-09 Series 2009 Unlimited Tax 2.00% 24,315,000 23,165,000 505,000Refunding Bonds 5.00%


04-08-10 Series 2010-B Limited Tax 3.00% 11,625,000 11,460,000 1,410,000Refunding Bonds 5.00%

12-29-10 Series 2010-C Unlimited Tax 4.00% 41,470,000 41,470,000 5,280,000School Building Bonds 5.00%

12-29-10 Series 2010-D Unlimited Tax 4.50% 155,000,000 155,000,000School Building Bonds 5.30%Build America Bonds

12-29-10 Series 2010-E Limited Tax 2.00% 6,220,000 6,220,000 1,500,000Refunding Bonds 5.00%

06-19-12 Series 2012-A Unlimited Tax 4.00% 147,680,000 147,680,000School Building and 5.00%Refunding Bonds

07-17-12 Series 2012-B Variable Rate 4.00% 34,475,000 34,475,000Unlimited Tax School 5.00%Buildling and Refunding Bonds

07-17-12 Series 2012-C Variable Rate 4.50% 115,000,000 115,000,000Unlimited Tax 5.30%Refunding Bonds

1000 Totals 1,703,509,534$ 1,077,256,097$ 297,155,000$ 209,311,136$

6594-Other Debt Service Expense 803,513$

145

Exhibit N-1Page 2 of 2

Amounts Interest Requirements 09/01/14Outstanding Current Year Ending 8/31/13 Year Ending 8/31/14 To Maturity

08/31/12 Year Principal Interest Principal Interest Interest

55,905,000$ 2,893,475$ 1,280,000$ 2,791,075$ 3,675,000$ 2,655,716$ 11,928,528$

56,800,000 2,825,550 1,505,000 2,717,600 1,475,000 2,654,275 27,136,347

27,895,000 1,105,863 2,975,000 1,042,769 2,705,000 936,269 2,659,725

33,745,000 1,347,663 3,295,000 1,270,975 2,975,000 1,153,413 3,444,152

84,940,000 4,066,002 2,505,000 3,988,527 2,780,000 3,906,472 49,071,266

22,660,000 1,027,513 560,000 1,011,538 525,000 997,888 14,599,705

67,640,000 3,191,700 5,460,000 3,074,500 11,795,000 2,670,425 9,738,925

10,050,000 439,000 2,510,000 360,600 1,135,000 293,375 1,454,675

36,190,000 1,887,000 5,235,000 1,624,125 5,500,000 1,355,750 3,506,775

155,000,000 9,251,378 9,251,378 9,251,378 163,549,468

4,720,000 167,537 575,000 131,787 1,485,000 96,338 78,094

147,680,000 1,116,772 7,179,250 7,179,250 106,898,975

34,475,000 1,381,442 1,281,750 21,530,125

115,000,000 457,412 5,463,651 5,255,500 81,704,410

1,165,099,961$ 50,163,326$ 35,255,000$ 55,593,306$ 34,902,444$ 55,636,909$ 674,702,020$

Note: The amounts in the interest columns include accreted interest on the capital appreciation bonds.

146


147

COMPLIANCE SCHEDULES

148

KATY INDEPENDENT SCHOOL DISTRICTSCHEDULE OF DELINQUENT TAXES RECEIVABLEFISCAL YEAR ENDED AUGUST 31, 2012

Assessed/Appraised BeginningFiscal Value For School BalanceYear Maintenance Debt Service Total Tax Purposes September 1

2003 Various Various Various Various 991,256$ and prior

2004 1.6000$ 0.3700$ 1.9700$ 10,817,988,156$ 329,775

2005 1.6300 0.3700 2.0000 11,730,058,506 388,550

2006 1.6300 0.3700 2.0000 12,688,512,035 415,519

2007 1.4850 0.3300 1.8150 14,003,603,902 454,963

2008 1.1266 0.4000 1.5266 16,171,736,868 583,589

2009 1.1266 0.4000 1.5266 18,673,124,451 851,562

2010 1.1266 0.4000 1.5266 19,517,648,879 1,239,157

2011 1.1266 0.4000 1.5266 19,819,925,666 2,774,987

2012 1.1266 0.4000 1.5266 20,727,521,751

1000 Totals 8,029,358$

9000 - Portion of Row 1000 for Taxes Paidinto Tax Increment Zone Under Chapter 311, Tax Code 149,436,760$ $

Note: Tax rates are per $100 valuation.

Tax Rates

149

Exhibit O-1

Current Maintenance Interest and Entire EndingYear's and Operations Sinking Fund Total Year's Balance

Total Levy Collections Collections Collections Adjustments August 31

$ 27,222$ 6,283$ 33,505$ (468,881)$ 488,870$

8,855 2,048 10,903 (5,697) 313,175

13,530 3,071 16,601 (4,057) 367,892

37,977 8,621 46,598 11,718 380,639

156,686 34,819 191,505 159,669 423,127

229,617 81,526 311,143 305,491 577,937

290,417 103,113 393,530 300,338 758,370

395,567 140,446 536,013 235,476 938,620

720,922 255,964 976,886 (405,101) 1,393,000

312,869,011 228,963,618 81,293,667 310,257,285 2,611,726

312,869,011$ 230,844,411$ 81,929,558$ 312,773,969$ 128,956$ 8,253,356$

1,683,555$ 1,683,555$ $ 1,683,555$ $ $

150

KATY INDEPENDENT SCHOOL DISTRICTSCHEDULE OF EXPENDITURES FOR COMPUTATIONS OF INDIRECT COST FOR 2013-2014 Exhibit O-2GENERAL AND SPECIAL REVENUE FUNDSYEAR ENDED AUGUST 31, 2012

Function 41 and Related Function 53-General Administration , 99 Appraisal Distric t Cost1 2 3 4 5 6 7

(702) (703) (701) (750) (720) (Other)

Account Account School Tax Supt's Indirec t Direc tNumber Name Board Collec tion Office Cost Cost Miscellaneous Total

611X-6146 Payroll Costs 69,310$ 354,893$ 337,457$ 6,085,532$ $ $ 6,847,192$

6149

Fringe Benefits (Unused Leave for Separating Employees in Function 41 and Related 53)

6149

Fringe Benefits (Unused Leave for Separating Employees in all Functions except Function 41 and Related 53)

6211 Legal Services 692,145 692,1456212 Audit Services 84,500 84,500

6213

Tax Appraisal and Collec tion (Appraisal Distric t Costs only from Func tion 99) 2,348,096 2,348,096

6214 Lobbying621X Other Professional Services 3,093 9,071 1,676 180,198 194,0386220 Tuition and Transfer Payments6230 Education Service Centers6240 Maintenance and Repairs 13,397 13,3976250 Utilities6260 Rentals 10,825 10,8256290 Miscellaneous Contrac ted Services 143,220 40,000 82,275 265,4956320 Textbooks and Reading 30 2,353 10,048 12,4316330 Testing Materials63XX Other Supplies and Materials 893 34,679 2,342 220,862 258,7766410 Travel, Subsistence, Stipends 17,791 357 13,236 68,495 99,8796420 Insurance and Bonding Costs 346,718 346,7186430 Elec tion Costs 98,026 98,0266490 Miscellaneous Operating 15,596 748 43,721 134,413 194,4786500 Debt Service6600 Capital Outlay 27,882 27,8826000 Total 1,040,104$ 2,747,844$ 440,785$ 7,223,866$ 13,397$ 27,882$ 11,493,878$

Total expenditures for General and Spec ial Revenue Funds 473,930,537$

LESS: Deductions of unallow able Costs

Total Capital Outlay (6600) 10 6,943,445Total Debt & Lease (6500) 11Plant Maintenance (Function 51, 6100-6400) 12 42,734,381Food (Function 35, 6341 and 6499) 13 12,290,321Stipends (6413) 14Column 4 (above) - Total Indirec t Cost 7,223,866

Subtotal 69,192,013Net Allow ed Direc t Cost 404,738,524$

Total Cost of Buildings Before Deprec iation 15 1,114,457,157$ Historical Cost of Buildings Over 50 Years Old 16 810,467$ Amount of Federal Money in Building Cost (Net of Above) 17 $ Total Cost of Furniture & Equipment Before Deprec iation 18 186,934,619$ Historical Cost of Furniture & Equipment Over 16 Years Old 19 5,954,614$ Amount of Federal Money in Furniture & Equipment (Net of Above) 20 17,367,721$

(8) Note A - No Function 53 expenditures are inc luded in this report on administrative costs. $2,348,096 in Function 99 expenditures for appraisal distric t costs are inc luded in the report in administrative costs.

151

KATY INDEPENDENT SCHOOL DISTRICT Exhibit O-3SCHEDULE OF REQUIRED RESPONSES TO SELECTED L1 WorksheetSCHOOL FIRST INDICATORSYEAR ENDED AUGUST 31, 2012

SF2Where there any disclosures in the Annual Financial Report and/or other sources of information concerning default on bonded indebtedness obligations? No

SF4Did the district receive a clean audit? - Was there an unqualified opinion in the Annual Financial Report? Yes

SF5Did the Annual Financial Report disclose any instances of material weaknesses in internal controls? No

SF9 Was there any disclosure in the Annual Financial Report of material noncompliance? No

SF10Total accumulated accretion on capital appreciation bonds included in government-wide financial statements at fiscal year-end 9,409,109$

152


153

STATISTICAL SECTION (UNAUDITED)

The statistical section of the Katy Independent School District’s Comprehensive Annual Financial Report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the District’s economic condition and overall financial health. To assist financial statement users, the information contained within this section is categorized as follows: Financial Trends Information These schedules contain trend information to show how the District’s financial performance

and position have changed over time. Revenue Capacity Information These schedules contain information to help assess the factors affecting the District’s most

significant local revenue source, the property tax. Debt Capacity Information These schedules present information to help assess the affordability of the District’s current

debt burden and its ability to issue additional debt in the future. Demographic and Economic Information These schedules provide demographic and economic indicators to help in understanding the

environment in which the District operates and to facilitate in comparisons over time. Operating Information These schedules provide information about the District’s operations and resources to assist in

using the financial statement information to better understand and assess the District’s economic condition.

154


155

FINANCIAL TRENDS INFORMATION These schedules contain trend information to assist users in understanding how the District’s financial position has changed over time.

156

KATY INDEPENDENT SCHOOL DISTRICTNET POSITION BY COMPONENTLAST TEN FISCAL YEARS(accrual basis of accounting)

2003 2004 2005 2006

Governmental Activities: Net Investment in Capital Assets 34,182,483$ 29,058,657$ 27,463,891$ 24,997,611$ Restricted 27,168,123 32,258,699 31,626,616 32,500,836 Unrestricted 31,441,249 21,894,511 19,073,280 23,325,590 Total Governmental Activities Net Position 92,791,855$ 83,211,867$ 78,163,787$ 80,824,037$

Business-type Activities: Net Investment in Capital Assets Restricted UnrestrictedTotal Business-type Activities Net Position $ $ $ $

Primary Government: Net Investment in Capital Assets 34,182,483$ 29,058,657$ 27,463,891$ 24,997,611$ Restricted 27,168,123 32,258,699 31,626,616 32,500,836 Unrestricted 31,441,249 21,894,511 19,073,280 23,325,590 Total Primary Government Net Position 92,791,855$ 83,211,867$ 78,163,787$ 80,824,037$

Source: District Financial Statements

157

Exhibit I

2007 2008 2009 2010 2011 2012

20,411,149$ 23,580,292$ 20,218,827$ 8,212,302$ 21,482,594$ 17,995,023$ 38,775,885 39,551,272 45,930,809 55,025,421 53,397,875 56,177,142 44,163,519 54,974,366 70,842,091 76,101,294 89,003,969 114,349,856

103,350,553$ 118,105,930$ 136,991,727$ 139,339,017$ 163,884,438$ 188,522,021$

$ $ $ $ $ $

20,411,149$ 23,580,292$ 20,218,827$ 8,212,302$ 21,482,594$ 17,995,023$ 38,775,885 39,551,272 45,930,809 55,025,421 53,397,875 56,177,142 44,163,519 54,974,366 70,842,091 76,101,294 89,003,969 114,349,856

103,350,553$ 118,105,930$ 136,991,727$ 139,339,017$ 163,884,438$ 188,522,021$

158

KATY INDEPENDENT SCHOOL DISTRICTCHANGES IN NET POSITIONLAST TEN FISCAL YEARS(accrual basis of accounting)

Expenses 2003 2004 2005 2006 Governmental Activities: Instruction 176,122,467$ 190,642,259$ 199,736,287$ 221,648,273$ Instructional Resources and Media Services 4,460,071 5,160,756 5,606,088 5,787,639 Curriculum and Instructional Staff Development 4,487,688 4,660,034 5,493,203 6,658,297 Instructional Leadership 3,316,718 3,042,934 2,762,674 3,161,367 School Leadership 15,886,458 18,895,920 19,857,658 20,575,869 Guidance, Counseling, and Evaluation Services 11,131,436 12,298,300 12,949,023 13,037,708 Social Work Services 96,064 105,340 66,285 60,253 Health Services 2,527,144 2,929,451 3,450,632 3,713,445 Student Transportation 8,615,856 10,202,993 10,717,877 12,058,695 Food Services 12,512,889 13,479,137 15,521,553 17,211,008 Cocurricular/Extracurricular Activities 4,964,783 5,865,535 6,363,179 7,695,834 General Administration 7,607,189 7,382,986 8,207,955 8,578,280 Plant Maintenance and Operations 24,230,707 28,487,575 32,440,001 35,695,475 Security and Monitoring Services 2,416,444 2,931,282 3,176,345 3,703,420 Data Processing Services 2,366,959 6,979,195 7,310,229 7,928,236 Community Services 795,238 937,873 989,942 1,165,140 Interest on Long-term Debt 33,371,074 35,709,269 39,079,447 38,845,376 Bond Issuance Costs and Fees 80,570 184,200 1,027,060 792,223 Facilities Acquisition and Construction 1,196,004 2,052,446 2,321,283 1,117,766 Payments Related to Shared Service Arrangements 158,616 151,175 192,823 257,893 Payments to Juvenile Justice Alternative Ed. Prog. 60,900 32,101 15,408 17,409 Payments to Tax Increment Reinvestment Zone 369,700 604,804 683,219 712,987 Payments to Appraisal DistrictsTotal Primary Government Expenses 316,774,975 352,735,565 377,968,171 410,422,593

Program Revenues Governmental Activities: Charges for Services Instruction 876,608 1,014,411 1,016,392 1,036,035 Food Services 7,937,777 8,513,645 9,182,558 9,751,677 Cocurricular/Extracurricular Activities 547,668 653,492 692,431 745,497 Plant Maintenance and Operations 284,212 458,187 512,962 1,154,693 Community Services 430,104 461,260 436,276 425,448 Facilities Acquisition and Construction Other Activities 252,196 237,830 257,370 529,342 Operating Grants and Contributions 30,033,096 28,883,019 45,851,257 57,260,855 Total Primary Government Program Revenues 40,361,661 40,221,844 57,949,246 70,903,547

Net (Expense)/RevenueTotal Primary Government Net Expense (276,413,314)$ (312,513,721)$ (320,018,925)$ (339,519,046)$

General Revenues and Other Changes in Net Position Governmental Activities: Property Taxes, Levied for General Purposes 155,819,443$ 171,611,930$ 188,508,552$ 204,609,341$ Property Taxes, Levied for Debt Service 33,099,347 39,460,323 43,186,971 46,597,555 State Aid - Formula Grants 82,715,317 88,227,999 75,728,794 80,619,011 Investment Earnings 3,522,301 2,613,507 6,289,107 9,573,370 Miscellaneous 4,938,955 1,019,974 1,257,421 780,019 Total Primary Government General Revenues 280,095,363 302,933,733 314,970,845 342,179,296

Change in Net PositionTotal Primary Government 3,682,049$ (9,579,988)$ (5,048,080)$ 2,660,250$


159

Exhibit II

2007 2008 2009 2010 2011 2012

235,089,402$ 268,533,006$ 291,929,894$ 318,792,587$ 321,361,278$ 311,062,572$ 5,894,688 6,672,377 7,931,519 8,776,073 8,694,209 8,525,841 7,551,674 7,157,010 7,050,425 7,910,924 8,323,619 6,942,069 3,529,192 3,757,887 3,881,692 3,925,420 4,078,594 3,798,441

23,492,823 25,360,780 27,312,712 28,700,116 29,459,540 28,339,372 15,335,023 16,855,291 17,815,255 19,331,101 19,932,124 19,103,538

3,890,489 4,303,590 4,589,089 5,374,766 5,410,272 4,932,619 13,123,010 15,233,885 12,883,372 15,870,638 16,776,762 16,917,348 18,156,902 21,354,474 23,056,332 25,659,045 25,802,502 26,234,107

8,142,192 9,928,317 9,968,040 10,309,076 12,465,039 11,808,768 9,426,367 8,472,898 9,213,660 9,536,158 10,142,271 9,799,768

38,456,713 43,420,624 46,881,345 47,824,859 48,326,942 45,314,890 4,117,254 4,215,405 4,710,876 5,114,765 5,162,174 4,893,473

10,703,118 11,422,292 11,041,079 11,759,319 11,894,172 11,368,931 1,258,994 1,329,072 1,209,595 1,205,834 1,159,882 1,278,824

38,070,152 40,795,508 43,947,372 45,691,858 40,902,519 45,525,829 713,967 785,918 958,143 955,270 303,997 4,857,364

1,137,675 1,540,284 1,162,184 1,845,948 623,871 2,103,510 324,704 359,539 448,412 305,166 300,087 232,862

72,534 66,347 76,926 69,917 47,890 32,924 889,382 955,208 1,072,644 510,997 306,098 452,731

1,652,904 2,019,174 2,134,824 2,242,299 2,348,096 439,376,255 494,172,616 529,159,740 571,604,661 573,716,141 565,873,877

1,079,165 1,055,369 1,044,537 1,065,708 1,043,362 907,065 10,457,908 12,340,206 12,792,926 13,032,422 14,375,772 10,456,147

818,778 1,014,173 1,480,755 1,765,252 2,023,554 1,952,969 1,163,221 1,389,066 1,613,579 1,729,204 1,876,929 2,426,812

456,521 457,242 482,679 200,650 174,218 149,276 3,325,766

523,222 559,189 244,137 593,306 156,749 370,651 57,195,921 63,253,951 69,097,773 84,775,106 92,971,578 79,970,734 71,694,736 80,069,196 86,756,386 103,161,648 112,622,162 99,559,420

(367,681,519)$ (414,103,420)$ (442,403,354)$ (468,443,013)$ (461,093,979)$ (466,314,457)$

207,061,154$ 179,739,418$ 209,445,201$ 219,043,580$ 223,109,407$ 232,528,594$ 46,065,028 63,556,260 74,282,810 77,572,287 79,267,758 82,571,766

123,643,052 174,912,493 171,839,753 166,306,187 181,203,466 173,734,050 12,554,200 9,548,757 2,484,905 6,792,995 1,275,513 1,171,162

884,601 1,101,869 1,110,668 1,075,254 783,256 946,468 390,208,035 428,858,797 459,163,337 470,790,303 485,639,400 490,952,040

22,526,516$ 14,755,377$ 16,759,983$ 2,347,290$ 24,545,421$ 24,637,583$

160


FUND BALANCES OF GOVERNMENTAL FUNDSLAST TEN FISCAL YEARS(modified accrual basis of accounting)

Fiscal Year Ended 08/31: 2003 2004 2005 2006

General Fund

Non-spendable 1,842,796$ 1,202,349$ 1,105,561$ 1,363,980$ Committed 5,200,000 4,400,000 6,100,000 4,200,000 Assigned 13,212,625 4,188,413 1,622,383 3,089,885 Unassigned 24,032,290 33,731,432 38,441,226 39,188,541 Total General Fund 44,287,711$ 43,522,194$ 47,269,170$ 47,842,406$

All Other Governmental Funds

Non-spendable 203,856$ 134,944$ 101,225$ 180,427$ Restricted (1) 185,138,977 174,591,227 103,013,750 68,158,526 CommittedTotal All Other Governmental Funds 185,342,833$ 174,726,171$ 103,114,975$ 68,338,953$

(1) Changes in Restricted Fund Balances due to the timing of annual bond sales and related construction expenditures.


161

Exhibit III

2007 2008 2009 2010 2011 2012

1,354,871$ 1,873,623$ 1,391,967$ 2,157,515$ 1,421,067$ 1,236,844$ 2,700,000 2,600,000 4,600,000 5,500,000 5,000,000 5,000,000 9,105,587 1,840,860 180,621 334,402 8,940,358 34,873,093

51,542,427 64,643,540 73,692,155 77,732,382 83,922,091 85,796,245 64,702,885$ 70,958,023$ 79,864,743$ 85,724,299$ 99,283,516$ 126,906,182$

191,582$ 132,669$ 179,606$ 251,330$ 218,906$ 239,268$ 101,056,547 91,648,933 79,766,603 71,624,798 181,202,286 138,769,172

2,352,818 2,565,430 2,807,308 101,248,129$ 91,781,602$ 79,946,209$ 74,228,946$ 183,986,622$ 141,815,748$

162

KATY INDEPENDENT SCHOOL DISTRICTCHANGES IN FUND BALANCESGOVERNMENTAL FUNDSLAST TEN FISCAL YEARS(modified accrual basis of accounting)

2003 2004 2005 2006REVENUES Local, Intermediate, and Out-of-State 203,095,095$ 225,434,989$ 251,579,743$ 274,487,539$ State Programs 102,190,520 104,250,459 106,992,248 114,612,387 Federal Programs 10,298,972 12,563,189 14,183,010 22,662,809 Total Revenues 315,584,587 342,248,637 372,755,001 411,762,735

EXPENDITURES Current: Instruction 166,561,516 171,212,408 183,307,319 207,056,719 Instructional Resources and Media Services 3,710,457 3,874,739 4,332,612 4,577,636 Curriculum and Instructional Staff Development 4,472,197 4,464,563 5,496,733 6,668,900 Instructional Leadership 3,279,311 2,878,560 2,677,167 3,118,127 School Leadership 15,201,966 17,153,470 18,574,966 19,630,197 Guidance, Counseling, and Evaluation Services 10,825,772 11,447,352 12,360,173 12,623,208 Social Work Services 95,686 103,632 65,995 60,232 Health Services 2,240,886 2,410,384 2,962,348 3,262,193 Student Transportation 7,694,551 8,024,220 9,143,923 11,252,902 Food Services 11,293,492 11,327,681 13,182,893 15,023,843 Cocurricular/Extracurricular Activities 4,212,930 4,635,538 5,077,980 5,753,247 General Administration 7,346,313 6,960,872 7,373,660 7,918,102 Plant Maintenance and Operations 23,303,025 26,682,331 30,696,561 34,036,947 Security and Monitoring Services 2,375,727 2,811,394 3,102,896 3,743,425 Data Processing Services 2,062,328 5,619,515 5,156,563 4,840,349 Community Services 793,850 919,868 984,453 1,166,604 Debt Service: Principal on Long-term Debt 19,123,635 21,000,000 24,418,715 27,280,290 Interest on Long-term Debt 25,577,480 36,183,470 38,070,729 38,137,850 Bond Issuance Costs and Fees 2,379,339 1,229,078 796,239 549,710 Capital Outlay: Facilities Acquisition and Construction 148,320,124 156,135,935 71,549,002 36,334,257 Intergovernmental: Payments Related to Shared Service Arrangements 158,616 151,175 192,823 257,893 Payments to Juvenile Justice Alternative Education Programs 60,900 32,101 15,408 17,409 Payments to Tax Increment Reinvestment Zone 2,447,357 2,587,822 2,667,763 2,695,281 Payments to Appraisal Districts Total Expenditures 463,537,458 497,846,108 442,206,921 446,005,321

Excess (Deficiency) of Revenues Over (Under) Expenditures (147,952,871) (155,597,471) (69,451,920) (34,242,586) OTHER FINANCING SOURCES (USES)Refunding Bonds Issued 23,454,980 6,029,997 55,043,735 Issuance of Capital Related Debt (General Obligation Bonds) 224,034,958 144,090,000 Sale of Real and Personal Property 2,166 38,261 500,181 39,800 Proceeds from Capital Leases 25,590,000 Transfers In 2,495,350 1,923,662 3,076,491 3,306,741 Premium/Discount from Issuance of Bonds 13,005,604 2,544,413 2,193,487 Prepaid Interest on Bond Sales 1,660,551 Extraordinary ItemOther Resources 96,171 Transfers Out (2,495,350) (4,223,662) (3,076,491) (3,306,741) Payment to Bond Refunding Escrow Agent (24,159,471) (6,187,379) (56,149,703) Total Other Financing Sources (Uses) 263,684,959 144,215,292 1,587,700 39,800

Net Change in Fund Balances 115,732,088$ (11,382,179)$ (67,864,220)$ (34,202,786)$

Debt Service as a Percentage of Noncapital Expenditures (1) 14.17% 16.66% 16.82% 15.99%


(1) In calculating the ratio of total debt service expenditures to noncapital expenditures, governmental fund expenditures for the acquisition and construction of assets that are classified as capital assets for reporting in the government-wide financial statements are subtracted from the total governmental fund expenditures.

Total Expenditures 463,537,458$ 497,846,108$ 442,206,921$ 446,005,321$ Less: Capital Expenditures 147,999,721 154,600,784 70,725,762 36,910,199 Total Non-Capital Expenditures 315,537,737$ 343,245,324$ 371,481,159$ 409,095,122$

163

Exhibit IV

2007 2008 2009 2010 2011 2012

280,831,045$ 270,977,481$ 303,580,951$ 327,094,361$ 329,823,325$ 340,712,386$ 162,763,562 216,105,399 210,251,108 196,102,519 213,715,690 202,618,331

17,436,262 21,393,828 26,219,083 49,137,229 57,953,778 43,429,299 461,030,869 508,476,708 540,051,142 572,334,109 601,492,793 586,760,016

219,194,081 251,354,793 269,537,620 291,917,938 301,529,674 285,930,849 4,617,025 5,273,769 5,757,651 6,747,428 6,942,900 6,524,212 7,482,979 7,143,582 6,864,451 7,845,233 8,324,803 6,898,759 3,442,456 3,711,127 3,770,034 3,843,553 4,057,656 3,736,648

22,300,714 24,160,937 25,462,905 26,716,508 27,969,423 26,462,148 14,803,455 16,343,264 17,069,072 18,445,897 19,276,983 18,236,935

3,389,637 3,772,423 4,058,489 4,591,317 4,746,316 4,159,915 11,338,150 16,293,597 13,486,474 12,530,374 17,673,359 13,972,298 15,971,493 19,675,576 20,578,180 22,196,554 22,740,357 23,048,070 6,304,803 7,898,546 7,302,397 7,709,668 9,969,462 9,176,420 8,788,291 7,803,126 8,531,368 8,816,940 9,556,448 9,145,782

37,308,819 41,647,853 45,135,795 45,736,061 46,003,543 42,901,346 4,193,896 4,094,284 4,571,848 4,957,056 5,309,484 4,847,057 7,316,165 7,824,710 7,308,873 7,676,070 8,203,034 7,436,616 1,256,604 1,330,580 1,205,533 1,207,373 1,160,407 1,300,534

23,996,448 33,424,703 30,310,140 32,443,017 33,038,949 35,181,136 41,562,419 44,944,261 50,352,037 47,218,663 57,116,297 50,163,326 2,980,150 2,226,613 812,816 2,628,369 3,053,887 4,243,024

70,036,213 188,034,286 40,056,710 16,170,704 88,182,312 199,914,742

324,704 359,540 448,412 305,166 300,087 232,862 72,534 66,347 76,926 69,917 47,890 32,924

2,871,182 2,938,733 3,054,869 2,493,628 2,290,436 2,435,819 1,652,904 2,019,174 2,134,824 2,242,299 2,348,096

509,552,218 691,975,554 567,771,774 574,402,258 679,736,006 758,329,518

(48,521,349) (183,498,846) (27,720,632) (2,068,149) (78,243,213) (171,569,502)

229,339,959 69,085,000 80,535,000 6,220,000 167,785,000 94,995,000 177,700,000 24,315,000 196,470,000 129,370,000

216,524 319,733 43,402 42,371 47,765 4,259,371

8,913,808 4,516,274 1,155,775 663,483 2,761,373 4,081,714 12,770,037 5,383,879 433,557 10,038,986 5,429,882 29,314,822

312,787 782,629

(9,014,739) (4,516,275) (1,155,775) (663,483) (2,761,373) (4,081,714) (239,712,215) (72,201,154) (90,611,898) (6,607,541) (174,020,686)

98,291,003 180,287,457 24,791,959 4,459 201,560,106 157,021,294

49,769,654$ (3,211,389)$ (2,928,673)$ (2,063,690)$ 123,316,893$ (14,548,208)$

14.91% 15.65% 15.33% 14.27% 15.38% 15.29%

509,552,218$ 691,975,554$ 567,771,774$ 574,402,258$ 679,736,006$ 758,329,518$ 69,961,671 191,177,412 41,572,647 16,035,610 93,728,031 200,034,542

439,590,547$ 500,798,142$ 526,199,127$ 558,366,648$ 586,007,975$ 558,294,976$

164

REVENUE CAPACITY INFORMATION These schedules contain information to assist users in understanding and assessing the factors affecting the District’s ability to generate its own-source revenues.

165

KATY INDEPENDENT SCHOOL DISTRICT Exhibit V

ASSESSED VALUE AND ACTUAL VALUE OF TAXABLE PROPERTY

LAST TEN FISCAL YEARS

Total Total

Fiscal Year Real Property Personal Property Less: Assessed Direct

Ended 8/31: Value Value Exemptions Value Rate (1)

2003 9,852,002,492$ 956,156,220$ 937,237,088$ 9,870,921,624$ 1.9400$

2004 10,898,053,770 949,028,146 1,029,093,760 10,817,988,156 1.9700

2005 11,778,302,108 980,587,813 1,028,831,865 11,730,058,056 2.0000

2006 12,825,551,903 974,582,387 1,111,622,255 12,688,512,035 2.0000

2007 14,060,942,854 1,154,143,934 1,212,022,886 14,003,063,902 1.8150

2008 16,201,823,216 1,369,573,976 1,399,660,324 16,171,736,868 1.5266

2009 18,833,828,151 1,361,731,826 1,522,435,526 18,673,124,451 1.5266

2010 19,725,666,186 1,550,337,245 1,758,354,552 19,517,648,879 1.5266

2011 20,257,175,648 1,472,806,187 1,910,056,169 19,819,925,666 1.5266

2012 20,942,369,248 1,505,118,344 1,719,965,841 20,727,521,751 1.5266

(1) Tax Rates are per $100 of assessed value.

Source: County Appraisal Districts

Actual Value

166

KATY INDEPENDENT SCHOOL DISTRICTPROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS(PER $100 OF ASSESSED VALUE)LAST TEN FISCAL YEARS

Taxing Authority 2003 2004 2005 2006

District Direct Rates: Maintenance & Operations $ 1.6000 $ 1.6000 $ 1.6300 $ 1.6300 Debt Service 0.3400 0.3700 0.3700 0.3700Total District Direct Rates $ 1.9400 $ 1.9700 $ 2.0000 $ 2.0000

Overlapping Rates:Addicks UD $ 0.6600 $ 0.6300 $ 0.6300 $ 0.6100Baker Road MUD 0.9700 0.9100 0.7700 0.6900Castlewood MUD 1.3500 1.3500 1.3500 1.1500Cimarron MUD 0.7000 0.7000 0.7000 0.6800Cinco MUD #1 1.0800 1.0200 1.0200 1.0000Cinco MUD #2 0.6800 0.6011 0.5800 0.5650Cinco MUD #3 0.7980 0.6200 0.5750 0.5400Cinco MUD #5 0.8600 0.7100 0.6500 0.5950Cinco MUD #6 0.7800 0.7200 0.6900 0.6400Cinco MUD #7 0.7250 0.7000 0.6650 0.6100Cinco MUD #8 0.9500 0.9400 0.9400 0.9100Cinco MUD #9 0.7600 0.7600 0.7600 0.7400Cinco MUD #10 1.0200 0.8700 0.7100 0.6700Cinco MUD #12 0.7800 0.6900 0.6400 0.5900Cinco MUD #14 1.0800 1.0200 1.0200 1.0000Cinco SW MUD #1 *N/A *N/A *N/A *N/ACinco SW MUD #2 *N/A *N/A *N/A *N/ACinco SW MUD #3 *N/A *N/A *N/A *N/ACinco SW MUD #4 *N/A *N/A *N/A *N/ACornerstone MUD 0.5300 0.5000 0.5000 0.4900Fort Bend Co. 0.5387 0.5237 0.5237 0.5167Fort Bend Co. LID #12 0.5000 0.5000 0.5000 0.5000Fort Bend Co. MUD #34 1.0700 1.0500 0.9500 0.8400Fort Bend Co. MUD #35 *N/A 1.2500 1.2500 1.2500Fort Bend Co. MUD #37 0.6300 0.6300 0.6300 0.6300Fort Bend Co. MUD #57 *N/A *N/A *N/A 1.5000Fort Bend Co. MUD #58 *N/A *N/A *N/A 1.5000Fort Bend Co. MUD #124 1.1500 1.2000 1.2000 1.1500Fort Bend Co. MUD #130 0.8000 0.8000 0.8000 0.8000Fort Bend Co. MUD #142 *N/A *N/A 1.3900 1.3900Fort Bend Co. MUD #151 *N/A *N/A *N/A 1.3000Fort Bend Co. MUD #171 *N/A *N/A *N/A *N/AFort Bend Co. MUD #185 *N/A *N/A *N/A *N/AFort Bend Co. MUD #199 *N/A *N/A *N/A *N/AFry Road MUD 0.6600 0.6200 0.6200 0.5600Grand Lakes MUD #1 1.2500 1.2500 1.2500 1.1500Grand Lakes MUD #2 1.2700 1.2200 1.1000 0.9700Grand Lakes MUD #4 0.9800 0.9000 0.8700 0.8200Grand Lakes WC & ID 0.2100 0.1700 0.1500 0.1050Green Trails MUD 0.4400 0.4400 0.4400 0.4400Harris Co. 0.3881 0.3880 0.3999 0.3999Harris Co. Dept. of Education 0.0063 0.0063 0.0063 0.0063Harris Co. Flood Contr. Dist. 0.0417 0.0417 0.0332 0.0332Harris Co. MUD #61 0.6650 0.6900 0.6900 0.6300Harris Co. MUD #62 0.6980 0.6700 0.6700 0.6600

*N/A Political entity not in existence or taxes not yet levied.


167

Exhibit VIPage 1 of 2

2007 2008 2009 2010 2011 2012

$ 1.4850 $ 1.1266 $ 1.1266 $ 1.1266 $ 1.1266 $ 1.1266 0.3300 0.4000 0.4000 0.4000 0.4000 0.4000$ 1.8150 $ 1.5266 $ 1.5266 $ 1.5266 $ 1.5266 $ 1.5266

$ 0.6100 $ 0.6100 $ 0.6000 $ 0.6300 $ 0.6550 $ 0.6550 0.6800 0.6600 0.6300 0.5450 0.5650 0.5650 1.0900 0.9500 0.8900 0.8900 0.8700 0.8500 0.6400 0.6000 0.5800 0.5700 0.5700 0.5700 1.5000 0.8800 0.8800 0.6750 0.6450 0.5950 0.5500 0.5200 0.5000 0.4750 0.4750 0.4750 0.5200 0.5100 0.5100 0.4700 0.4700 0.4800 0.5900 0.5750 0.5750 0.5000 0.4950 0.4950 0.5900 0.5900 0.5900 0.4800 0.4800 0.4800 0.5900 0.5750 0.5750 0.5250 0.5200 0.4900 0.9000 0.8900 0.8900 0.8400 0.8500 0.5950 0.6750 0.6500 0.3700 0.6100 0.5950 0.5950 0.6600 0.6500 0.6500 0.6000 0.6100 0.5900 0.5600 0.5300 0.5300 0.4700 0.4300 0.4300 0.9000 0.7900 0.7900 0.6600 0.6350 0.5950

*N/A *N/A 1.5000 1.5000 1.5000 1.5000 1.5000 1.5000 1.5000 1.5000 1.5000 1.5000

*N/A *N/A 1.5000 1.5000 1.5000 1.5000*N/A *N/A 1.5000 1.5000 1.5000 1.5000

0.4900 0.4300 0.3800 0.3700 0.3700 0.3600 0.5167 0.5167 0.4998 0.4998 0.4998 0.4998 0.3500 0.2500 0.1900 0.1500 0.1400 0.1300 0.7500 0.7200 0.7100 0.7100 0.6900 0.6800 1.2000 1.0500 0.8900 0.7400 0.6900 0.6300 0.5900 0.5900 0.5900 0.5600 0.5200 0.5200 1.5000 1.5000 1.5000 1.5000 1.5000 1.4500 1.5000 1.5000 1.5000 1.5000 1.5000 1.5000 1.0900 0.9900 0.9200 0.9200 0.9200 0.9900 0.8000 0.7900 0.7700 0.7600 0.7600 0.7500 1.3900 1.3200 1.3200 1.3200 1.3200 1.3200 1.3000 1.3000 1.3000 1.3000 1.2700 1.2600

*N/A *N/A 1.2940 1.2940 1.2950 1.2950*N/A *N/A 1.2500 1.2500 1.2500 1.2500*N/A *N/A *N/A *N/A *N/A 0.6000

0.5400 0.5000 0.4650 0.4650 0.5000 0.5000 1.0300 0.7900 0.7900 0.6500 0.6300 0.5400 0.8600 0.7000 0.7000 0.4650 0.4550 0.4450 0.8200 0.8200 0.8200 0.7900 0.7900 0.7700 0.1000 0.0950 0.0950 0.0875 0.0825 0.0825 0.3500 0.2700 0.3000 0.3600 0.4400 0.4000 0.4024 0.3924 0.3892 0.3922 0.3881 0.3912 0.0063 0.0059 0.0058 0.0061 0.0066 0.0066 0.0324 0.0311 0.0309 0.0292 0.0292 0.0281 0.5900 0.5900 0.5900 0.5900 0.5900 0.5900 0.6100 0.6100 0.6200 0.6500 0.6500 0.6500

168

KATY INDEPENDENT SCHOOL DISTRICTPROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS(PER $100 OF ASSESSED VALUE)LAST TEN FISCAL YEARS

Taxing Authority 2003 2004 2005 2006

Overlapping Rates:Harris Co. MUD #63 *N/A *N/A *N/A *N/AHarris Co. MUD #64 $ 0.7100 $ 0.7000 $ 0.7000 $ 0.7000Harris Co. MUD #65 0.8260 0.8260 0.8260 0.8260Harris Co. MUD #71 1.1780 1.1780 1.1700 1.1700Harris Co. MUD #81 0.5300 0.5000 0.4500 0.4000Harris Co. MUD #105 1.1000 1.1000 1.0500 1.0000Harris Co. MUD #216 1.2500 1.2500 1.2500 1.2500Harris Co. MUD #238 0.8350 0.8200 0.8100 0.7800Harris Co. MUD #287 *N/A *N/A *N/A *N/AHarris Co. MUD #345 0.4250 0.4000 0.3950 0.3950Harris Co. MUD #346 0.8300 0.8300 0.7100 0.5500Harris Co. MUD #432 *N/A *N/A *N/A *N/AHarris Co. UD #6 0.2500 0.2400 0.2400 0.2400Harris-Fort Bend Cos. MUD #1 1.1458 1.1000 1.0500 1.0000Harris-Fort Bend Cos. MUD #3 *N/A *N/A *N/A *N/AHarris-Fort Bend Cos. MUD #4 0.5000 0.6000 0.8700 0.9500Harris-Fort Bend Cos. MUD #5 1.0600 0.9700 0.9200 0.8600Houston, City of 0.6550 0.6550 0.6500 0.6475Interstate MUD 1.0200 0.9500 0.9300 0.7400Jackrabbit Road PUD 0.4400 0.4100 0.4100 0.4100Katy, City of 0.6147 0.6147 0.6147 0.6147Longhorn Town UD 0.8600 0.8500 0.8300 0.8100Mason Creek UD 0.3250 0.3250 0.3250 0.3250Mayde Creek MUD 0.9800 0.8200 0.8150 0.8000Memorial MUD 0.9300 0.8400 0.7800 0.7000Morton Road MUD 0.9700 0.8900 0.8400 0.8100Northwest Harris Co. MUD #12 1.1000 1.1000 1.0500 1.0000Nottingham Country MUD 0.5500 0.5300 0.5300 0.5300Port of Houston Authority 0.0199 0.0200 0.0167 0.0147Ricewood MUD 0.7600 0.6900 0.6750 0.6600Rolling Creek UD *N/A *N/A *N/A *N/AWaller County 0.6234 0.6562 0.6675 0.6999Waller County RID #1 *N/A *N/A *N/A *N/AWaller-Harris ESD 2000 *N/A *N/A 0.0975 0.1000West Harris Co. MUD #2 0.4000 0.3800 0.4000 0.4200West Harris Co. MUD #5 *N/A *N/A *N/A *N/AWest Harris Co. MUD #7 1.1700 1.1500 1.1300 1.0900West Harris Co. MUD #17 0.7700 0.7400 0.7400 0.7200Westlake MUD #1 0.6000 0.6000 0.6000 0.6000West Memorial MUD 0.2930 0.2930 0.2930 0.3000Weston MUD 0.8000 0.7500 0.7000 0.6400Westpark MUD 0.7500 0.6500 0.6200 0.6200Willow Creek Farms MUD *N/A *N/A *N/A *N/AWillow Fork DD 0.3500 0.3000 0.2700 0.2600Woodcreek Reserve MUD *N/A 0.6000 0.6000 0.6600

UD - Utility DistrictMUD - Municipal Utility DistrictPUD - Public Utility DistrictLID - Land Improvement DistrictRID - Road Improvement DistrictDD - Development DistrictESD - Emergency Services DistrictWC & ID - Water Control & Improvement District

169

Exhibit VIPage 2 of 2

2007 2008 2009 2010 2011 2012

*N/A *N/A $ 0.8500 $ 0.8500 $ 0.8500 $ 0.8500$ 0.7000 $ 0.7000 0.7100 0.7100 0.7100 0.7100

0.8260 0.8260 0.8260 0.8260 0.8460 0.8960 1.1300 1.0900 1.0200 1.1000 1.1000 1.1000 0.3800 0.3700 0.3500 0.3500 0.3700 0.3700 0.9500 0.9300 0.9300 0.9300 0.9300 0.9300 1.2500 1.2500 1.2500 1.2200 1.1600 1.1000 0.7500 0.7300 0.7300 0.7200 0.7200 0.7150

*N/A 1.3500 1.3500 1.3500 1.3500 1.3500 0.3900 0.3700 0.3700 0.3700 0.3900 0.4200 0.5000 0.4900 0.4700 0.4400 0.4050 0.2800

*N/A *N/A *N/A *N/A 1.5000 1.5000 0.2400 0.2400 0.2400 0.2400 0.2400 0.2400 0.9500 0.8800 0.8000 0.7700 0.7500 0.7300

*N/A *N/A 1.2500 1.2500 1.2500 1.2400 0.9600 0.9600 0.9600 0.9600 0.9500 0.9500 0.8500 0.8200 0.7500 0.7500 0.7300 0.7100 0.6450 0.6438 0.6388 0.6388 0.6388 0.6388 0.6500 0.5500 0.4400 0.4350 0.4350 0.4250 0.3450 0.3450 0.3450 0.3450 0.3450 0.3450 0.6054 0.6054 0.5937 0.5937 0.5937 0.5937 0.7700 0.7000 0.7000 0.6700 0.6500 0.6500 0.3250 0.3240 0.3240 0.3240 0.3460 0.3460 0.7550 0.7550 0.7550 0.8370 0.8960 0.8960 0.6600 0.5800 0.5200 0.5400 0.5550 0.5500 0.8100 0.7900 0.7900 0.7900 0.8200 0.8400 0.9800 0.9600 0.9600 0.9600 1.0100 1.0600 0.5000 0.4300 0.4100 0.3950 0.3950 0.3950 0.0130 0.0144 0.0177 0.0164 0.0205 0.0186 0.6200 0.5600 0.5600 0.5600 0.5800 0.5800

*N/A *N/A *N/A 0.9900 0.9800 0.9700 0.6660 0.6288 0.6425 0.6246 0.6484 0.6598

*N/A *N/A 1.2500 1.2500 1.2500 1.2500 0.1000 0.0906 0.0930 0.0970 0.0944 0.0944 0.4200 0.4200 0.4200 0.4700 0.4600 0.5000 1.2000 1.2000 1.2000 1.2000 1.2000 1.2000 0.9900 0.9700 0.9300 0.9200 0.9000 0.9000 0.8200 0.8200 0.9300 0.9700 1.0100 1.2500 0.6000 0.6000 0.6000 0.6000 0.6000 0.6400 0.3200 0.3200 0.3200 0.3800 0.4500 0.4500 0.6200 0.6200 0.6200 0.6200 0.6200 0.6100 0.6500 0.6500 0.6500 0.4800 0.6500 0.7500

*N/A 1.2500 1.2500 1.2500 1.2500 1.2500 0.2400 0.2000 0.1900 0.1900 0.1900 0.1900 0.5100 0.6000 0.5100 0.5500 0.6000 0.6000

170

KATY INDEPENDENT SCHOOL DISTRICT Exhibit VII

PRINCIPAL TAXPAYERS

CURRENT YEAR AND NINE YEARS AGO

2012 2003

Percentage of Percentage of

Assessed Total Assessed Assessed Total Assessed

Taxpayer Value (1) Rank Value (2) Value (1) Rank Value (3)

BP Amoco 384,651,333$ 1 1.85% 137,243,283$ 2 1.39%

Westlake Four Owner Corp 165,439,692 2 0.80 112,081,500 3 1.14

Shell Oil Co. 151,280,957 3 0.73 70,816,970 7 0.72

I-10 EC Corridor 123,181,427 4 0.59

Conoco Phillips Co. 118,890,439 5 0.57 90,291,490 4 0.91

Centerpoint Energy (4) 103,396,813 6 0.50

Katy Mills LP 103,247,113 7 0.50 163,442,250 1 1.66

Academy Ltd. 87,064,484 8 0.42 62,778,250 10 0.64

Wal-Mart 76,959,548 9 0.37

Sercel, Inc. 73,286,859 10 0.35

Albertson's 74,367,780 5 0.75

Reliant Energy (4) 71,702,490 6 0.73

ExxonMobil Corporation 68,022,410 8 0.69

Aquila Storage & Transport 64,113,600 9 0.65

TOTALS 1,387,398,665$ 6.69% 914,860,023$ 9.27%

(1) Assessed (taxable) value equals appraised value after exemptions.

(2) Total assessed value equals: 20,727,521,751$

(3) Total assessed value equals: 9,870,921,624$

(4) Centerpoint Energy was formerly Reliant Energy.


171

KATY INDEPENDENT SCHOOL DISTRICT Exhibit VIIIPROPERTY TAX LEVIES AND COLLECTIONSLAST TEN FISCAL YEARS

Collected within theFiscal Year of the Levy Total Collections to Date

Collections Fiscal Year Adjusted Percentage in Subsequent PercentageEnded 8/31: Tax Levy Amount of Levy Years Amount of Levy

2003 187,557,969$ 184,422,965$ 98.33% 2,854,380$ 187,277,345$ 99.85%

2004 208,952,918 205,466,339 98.33 3,173,404 208,639,743 99.85

2005 231,263,763 227,014,603 98.16 3,881,268 230,895,871 99.84

2006 249,047,698 244,492,055 98.17 4,175,003 248,667,058 99.85

2007 250,563,007 246,717,803 98.47 3,422,077 250,139,880 99.83

2008 241,510,763 237,881,768 98.50 3,051,058 240,932,826 99.76

2009 282,427,908 276,744,032 97.99 4,925,506 281,669,538 99.73

2010 294,325,467 290,752,880 98.79 2,633,967 293,386,847 99.68

2011 298,536,338 296,166,452 99.21 976,886 297,143,338 99.53

2012 312,869,011 310,257,285 99.17 310,257,285 99.17

172


173

DEBT CAPACITY INFORMATION These schedules contain information to assist users in understanding and assessing the District’s debt burden and its ability to issue additional debt in the future.

174

KATY INDEPENDENT SCHOOL DISTRICT Exhibit IXRATIOS OF OUTSTANDING DEBT BY TYPELAST TEN FISCAL YEARS

General Accretion on Total Ratio ofFiscal Year Obligation & Capital Capital Primary Debt to DebtEnded 8/31: Refunding Bonds Appreciation Bonds Leases Government Assessed Value (1) per ADA (2)

2003 671,548,405$ 32,389,404$ 25,190,000$ 729,127,809$ 7.39% 19,315$

2004 794,638,402 36,751,031 24,585,000 855,974,433 7.91 21,419

2005 770,219,688 39,709,448 23,960,000 833,889,136 7.11 19,697

2006 742,939,398 39,283,519 23,315,000 805,537,917 6.35 17,667

2007 811,472,908 39,442,081 22,645,000 873,559,989 6.24 18,033

2008 955,748,205 34,876,364 21,945,000 1,012,569,569 6.26 19,785

2009 949,753,065 27,568,558 21,215,000 998,536,623 5.35 18,614

2010 914,060,048 26,425,732 20,450,000 960,935,780 4.92 17,312

2011 1,077,256,097 9,711,419 19,645,000 1,106,612,516 5.58 19,186

2012 1,165,099,961 9,409,109 17,360,000 1,191,869,070 5.75 20,116

(1) See Exhibit V for assessed value data.(2) See Exhibit XV for student Average Daily Attendance (ADA) data.

Source: District Records

Governmental Actvities

175

KATY INDEPENDENT SCHOOL DISTRICT Exhibit XRATIOS OF NET GENERAL OBLIGATION BONDED DEBT OUTSTANDINGLAST TEN FISCAL YEARS

Primary Ratio of NetGeneral Less Reserve Government Bonded

Fiscal Year Obligation for Retirement Net Bonded Debt to Net Bonded DebtEnded 8/31: Bonds of Bonded Debt Debt Assessed Value (1) per ADA (2)

2003 671,548,405$ 25,380,194$ 646,168,211$ 6.55% 17,117$

2004 794,638,402 28,679,465 765,958,937 7.08 19,166

2005 770,219,688 26,643,218 743,576,470 6.34 17,564

2006 742,939,398 25,987,669 716,951,729 5.65 15,724

2007 811,472,908 30,894,113 780,578,795 5.57 16,113

2008 955,748,205 31,341,477 924,406,728 5.72 18,062

2009 949,753,065 35,715,443 914,037,622 4.89 17,039

2010 914,060,048 43,788,671 870,271,377 4.46 15,678

2011 1,077,256,097 39,672,424 1,037,583,673 5.24 17,989

2012 1,165,099,961 43,645,850 1,121,454,111 5.41 18,927

(1) See Exhibit V for assessed value data.(2) See Exhibit XV for student Average Daily Attendance data.

Source: Distric t Records


176

KATY INDEPENDENT SCHOOL DISTRICT DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT AUGUST 31, 2012

AmountPercent Overlapping

Taxing Authority Amount As Of Overlapping (1) Gross Debt

Direct:Katy Independent School District 1,234,842,654$ 8/31/2012 100.00% 1,234,842,654$

Overlapping:Addicks UD 12,745,000 10/31/2012 100.00 12,745,000 Baker Road MUD 4,250,000 10/31/2012 100.00 4,250,000 Castlewood MUD 8,720,000 10/31/2012 100.00 8,720,000 Cimarron MUD 27,150,000 10/31/2012 100.00 27,150,000 Cinco MUD #1 69,314,500 10/31/2012 100.00 69,314,500 Cinco MUD #2 12,184,100 10/31/2012 100.00 12,184,100 Cinco MUD #3 6,380,900 10/31/2012 100.00 6,380,900 Cinco MUD #5 8,105,900 10/31/2012 100.00 8,105,900 Cinco MUD #6 7,862,500 10/31/2012 100.00 7,862,500 Cinco MUD #7 13,275,200 10/31/2012 100.00 13,275,200 Cinco MUD #8 13,795,600 10/31/2012 100.00 13,795,600 Cinco MUD #9 8,209,400 10/31/2012 100.00 8,209,400 Cinco MUD #10 10,902,000 10/31/2012 100.00 10,902,000 Cinco MUD #12 5,870,400 10/31/2012 100.00 5,870,400 Cinco MUD #14 23,084,500 10/31/2012 100.00 23,084,500 Cinco Southwest MUD #2 88,879,600 10/31/2012 100.00 88,879,600 Cinco Southwest MUD #3 28,900,949 10/31/2012 100.00 28,900,949 Cinco Southwest MUD #4 67,169,451 10/31/2012 100.00 67,169,451 Cornerstone MUD 3,695,000 10/31/2012 100.00 3,695,000 Fort Bend Co. 485,890,000 10/31/2012 17.03 82,747,067 Fort Bend Co. LID #12 15,125,000 10/31/2012 6.40 968,000 Fort Bend Co. MUD #34 18,380,000 10/31/2012 100.00 18,380,000 Fort Bend Co. MUD #35 41,730,000 10/31/2012 100.00 41,730,000 Fort Bend Co. MUD #57 22,240,000 10/31/2012 100.00 22,240,000 Fort Bend Co. MUD #58 11,475,000 10/31/2012 100.00 11,475,000 Fort Bend Co. MUD #124 11,970,000 10/31/2012 100.00 11,970,000 Fort Bend Co. MUD #130 12,235,000 10/31/2012 100.00 12,235,000 Fort Bend Co. MUD #142 51,090,000 10/31/2012 52.64 26,893,776 Fort Bend Co. MUD #151 37,200,000 10/31/2012 26.17 9,735,240 Fort Bend Co. MUD #171 40,067,901 10/31/2012 100.00 40,067,901 Fort Bend Co. MUD #185 6,685,000 10/31/2012 100.00 6,685,000 Fort Bend Co. MUD #199 2,055,000 10/31/2012 100.00 2,055,000 Fry Road MUD 1,700,000 10/31/2012 100.00 1,700,000 Grand Lakes MUD #1 14,095,000 10/31/2012 100.00 14,095,000 Grand Lakes MUD #2 12,485,000 10/31/2012 100.00 12,485,000 Grand Lakes MUD #4 19,380,000 10/31/2012 100.00 19,380,000 Grand Lakes WC & ID 5,280,000 10/31/2012 100.00 5,280,000 Green Trails MUD 2,100,000 10/31/2012 100.00 2,100,000 Harris Co. 2,365,577,190 10/31/2012 3.91 92,494,068 Harris Co. Dept. of Education 7,795,000 10/31/2012 3.91 304,785 Harris Co. Flood Contr. Dist. 96,470,000 10/31/2012 3.91 3,771,977 Harris Co. MUD #61 4,650,000 10/31/2012 100.00 4,650,000 Harris Co. MUD #62 780,000 10/31/2012 100.00 780,000 Harris Co. MUD #63 12,215,000 10/31/2012 100.00 12,215,000 Harris Co. MUD #64 13,360,000 10/31/2012 100.00 13,360,000 Harris Co. MUD #65 15,520,000 10/31/2012 100.00 15,520,000 Harris Co. MUD #71 44,755,000 10/31/2012 100.00 44,755,000 Harris Co. MUD #81 8,815,000 10/31/2012 100.00 8,815,000 Harris Co. MUD #105 24,435,000 10/31/2012 4.60 1,124,010 Harris Co. MUD #216 8,145,000 10/31/2012 100.00 8,145,000 Harris Co. MUD #238 24,590,000 10/31/2012 100.00 24,590,000

Gross Debt Outstanding

177

Exhibit XI

AmountPercent Overlapping

Taxing Authority Amount As Of Overlapping (1) Gross DebtOverlapping:Harris Co. MUD #287 5,980,000$ 10/31/2012 100.00% 5,980,000$ Harris Co. MUD #345 4,190,000 10/31/2012 100.00 4,190,000 Harris Co. MUD #432 1,800,000 10/31/2012 100.00 1,800,000 Harris Co. Toll Road 479,630,000 10/31/2012 3.91 18,753,533 Harris Co. UD #6 3,310,000 10/31/2012 100.00 3,310,000 Harris-Fort Bend Cos. MUD #1 15,225,000 10/31/2012 100.00 15,225,000 Harris-Fort Bend Cos. MUD #3 15,015,000 10/31/2012 100.00 15,015,000 Harris-Fort Bend Cos. MUD #4 15,905,000 10/31/2012 100.00 15,905,000 Harris-Fort Bend Cos. MUD #5 13,715,000 10/31/2012 100.00 13,715,000 Houston, City of 3,207,460,000 10/31/2012 1.47 47,149,662 Interstate MUD 12,315,000 10/31/2012 100.00 12,315,000 Katy, City of 10,615,000 10/31/2012 100.00 10,615,000 Longhorn Town UD 5,380,000 10/31/2012 100.00 5,380,000 Mason Creek UD 2,265,000 10/31/2012 100.00 2,265,000 Mayde Creek MUD 13,835,000 10/31/2012 100.00 13,835,000 Memorial MUD 11,115,000 10/31/2012 100.00 11,115,000 Morton Road MUD 7,165,000 10/31/2012 100.00 7,165,000 Northwest Harris Co. MUD #12 8,155,000 10/31/2012 0.55 44,853 Nottingham Country MUD 8,615,000 10/31/2012 100.00 8,615,000 Port of Houston Authority 731,969,397 10/31/2012 3.91 28,620,003 Ricewood MUD 7,940,000 10/31/2012 100.00 7,940,000 Rolling Creek UD 11,575,000 10/31/2012 13.97 1,617,028 Waller County 705,000 10/31/2012 12.56 88,548 West Harris Co. MUD #2 2,840,000 10/31/2012 100.00 2,840,000 West Harris Co. MUD #5 5,945,000 10/31/2012 100.00 5,945,000 West Harris Co. MUD #7 11,515,000 10/31/2012 100.00 11,515,000 West Harris Co. MUD #17 9,165,000 10/31/2012 100.00 9,165,000 Westlake MUD #1 5,650,000 10/31/2012 100.00 5,650,000 West Memorial MUD 4,495,000 10/31/2012 100.00 4,495,000 West Park MUD 15,555,000 10/31/2012 100.00 15,555,000 Weston MUD 16,190,000 10/31/2012 100.00 16,190,000 Willow Creek Farms MUD 5,270,000 10/31/2012 97.57 5,141,939 Willow Fork DD 30,625,000 10/31/2012 100.00 30,625,000 Woodcreek Reserve MUD 5,555,000 10/31/2012 100.00 5,555,000 Subtotal, Overlapping Debt 1,356,577,389

TOTAL DIRECT AND OVERLAPPING DEBT 2,591,420,043$

UD - Utility DistrictMUD - Municipal Utility DistrictPUD - Public Utility DistrictLID - Land Improvement DistrictDD - Development DistrictWC & ID - Water Control & Improvement District

(1) The percentage of overlapping debt is estimated using taxable assessed property values. Percentages were estimated bydetermining the portion of the overlapping taxing authority's taxable assessed value that is within the District's boundaries and dividing it by the overlapping taxing authority's total taxable assessed value.

Source: Texas Municipal Reports compiled and published by the Municipal Advisory Council of Texas

Gross Debt Outstanding

178


179

DEMOGRAPHIC AND ECONOMIC INFORMATION These schedules contain information to assist users in understanding the socioeconomic environment in which the District operates and to provide information that facilitates comparisons of financial statement information over time and with other school districts.

180

KATY INDEPENDENT SCHOOL DISTRICT Exhibit XIIDEMOGRAPHIC AND ECONOMIC STATISTICSLAST TEN FISCAL YEARS

Total AverageAssessed AssessedValue of Value Per Average

Fiscal Year Residential Residential Residential Daily UnemploymentEnded 08/31: Units (1) Units (1) Unit Attendance (2) Population (3) Rate (4)

2003 48,911 6,579,426,676$ 134,518$ 37,750 165,000 2.83%

2004 52,373 7,411,604,567 141,516 39,964 182,000 2.79

2005 54,713 8,169,441,828 149,314 42,336 196,000 2.78

2006 58,948 8,873,495,383 150,531 45,596 211,000 2.76

2007 63,687 9,658,273,966 151,652 48,443 225,000 2.79

2008 64,307 11,083,214,223 172,348 51,179 237,000 2.86

2009 67,095 11,964,914,716 178,328 53,644 252,000 2.95

2010 71,236 12,981,238,080 182,229 55,508 260,000 2.83

2011 73,679 13,660,293,039 185,403 57,679 268,000 4.80

2012 74,967 14,326,714,983 191,107 59,250 270,000 4.90

(1) Source: County Appraisal Districts. Includes Single Family Residential Units.(2) Source: District Records(3) Source: Municipal Advisory Council of Texas.(4) Source: Katy Area Economic Development Council and Katy Area Chamber of Commerce.

Due to the District's boundaries falling within three separate counties, total personal income data for geographic area is not available for the ten year period presented.

181

KATY INDEPENDENT SCHOOL DISTRICT Exhibit XIII

PRINCIPAL EMPLOYERSCURRENT YEAR AND NINE YEARS AGO

2012 2003Percentage Percentage

of Total of TotalEmployer Employees Rank Employment (1) Employees Rank Employment (2)

Katy ISD 7,821 1 5.66% 5,306 1

BP Amoco 7,500 2 5.42 5,000 2

Mustang Engineering/Wood Group 3,500 3 2.53 2,000 4

Shell Oil 3,000 4 2.17 500 7

Academy Sports and Outdoors 2,500 5 1.81

ConocoPhillips 2,000 6 1.45 3,500 3

Foster Wheeler 1,200 7 0.87

Walmart 1,000 8 0.72

Sercel 700 9 0.51

Worley Parsons 700 10 0.51

ExxonMobil Corporation 1,400 5

Star Furniture 800 6

Albertson's 450 8

City of Katy 400 9

Memorial Hermann Katy Hospital 400 10

TOTALS 29,921 21.65% 19,756 n/a

(1) Total employment for 2012: 138,270(2) Total employment data not available for 2003.

Source: Katy Chamber of Commerce (2003) and Katy Area Economic Development Council (2012) through Info USA

and direct interviews.

182


183

OPERATING INFORMATION These schedules contain information intended to provide contextual information about the District’s operations and resources to assist readers in using financial statement information to understand assess the District’s economic condition.

184

KATY INDEPENDENT SCHOOL DISTRICTFULL-TIME EQUIVALENT DISTRICT EMPLOYEES BY POSITIONLAST TEN FISCAL YEARS

POSITION: 2003 2004 2005 2006

Instruction 3,130.5 3,194.1 3,452.3 3,674.8 Instructional Resources and Media Services 71.2 78.0 77.0 88.0 Curriculum and Instructional Staff Developmen 44.2 37.0 51.2 62.9 Instructional Leadership 57.0 51.0 41.2 49.0 School Leadership 323.5 325.9 379.6 384.7 Guidance, Counseling, and Evaluation Services 160.8 168.5 186.0 199.4 Social Work Services 2.0 3.0 3.0 1.0 Health Services 44.9 47.8 53.9 64.9 Student Transportation 381.0 406.0 415.7 435.3 Food Services 348.0 364.0 388.0 411.0 Cocurricular/Extracurricular Activities 4.0 4.0 4.0 5.0 General Administration 116.0 92.0 90.0 107.0 Plant Maintenance and Operations 508.0 525.0 573.0 649.0 Security and Monitoring Services 68.8 63.0 73.0 76.0 Data Processing Services 38.0 64.0 75.0 72.0 Community Services 1.0 1.0 2.2 4.2 Facilities Acquisition and Construction 7.0 5.0 7.0 6.0

Total Employees 5,305.9 5,429.3 5,872.1 6,290.2


185

Exhibit XIV

2007 2008 2009 2010 2011 2012

4,091.7 4,484.0 4,817.5 5,070.0 5,329.0 4,926.585.0 102.0 109.0 111.0 116.0 106.060.0 64.6 63.3 65.8 65.0 41.544.9 59.9 62.2 59.7 61.0 56.0

378.7 438.0 465.0 474.0 488.0 464.0203.0 243.5 265.0 268.5 286.5 261.5

1.0 0.0 0.0 0.0 0.0 0.068.9 81.0 90.0 97.0 108.0 104.0

453.4 476.7 533.0 527.0 485.0 490.0400.0 476.0 511.0 517.0 513.0 493.0

5.0 7.0 9.0 9.0 16.0 16.0110.7 104.5 109.4 103.4 112.4 100.4582.2 583.0 656.0 660.0 660.0 566.078.0 90.0 94.0 93.0 96.0 93.057.0 74.0 88.0 95.0 105.0 92.05.3 5.3 6.8 19.6 4.6 4.66.0 6.0 6.0 6.0 6.0 6.0

6,630.8 7,295.5 7,885.2 8,176.0 8,451.5 7,820.5

186

KATY INDEPENDENT SCHOOL DISTRICTOPERATING STATISTICSLAST TEN FISCAL YEARS

Average CostFiscal Year Daily Operating Per PercentageEnded 8/31: Attendance Expenditures (1) ADA Change

2003 37,750 268,457,283$ 7,111$ 0.23%

2004 39,964 284,832,776 7,127 0.21

2005 42,336 308,195,476 7,280 2.14

2006 45,596 343,127,272 7,525 0.34

2007 48,443 371,051,530 7,660 1.78

2008 51,179 420,202,565 8,210 7.19

2009 53,644 444,724,134 8,290 0.97

2010 55,508 476,076,599 8,577 3.46

2011 57,679 492,798,842 8,544 (0.38)

2012 59,250 468,707,490 7,911 (7.41)

(1) Operating expenditures are total expenditures less debt service and capital outlay (to the extent capitalized for the government-wide statement of net assets) and expenditures for capitalized assets included within the functional expenditures categories.

Source: Academic Excellence Indicator System of Texas (AEIS) and District records.

187

Exhibit XV

Percentage ofGovernment Cost Student to Students in

Wide Per Percentage Teaching Teacher Free/ReducedExpenses ADA Change Staff Ratio Lunch Program

316,774,975$ 8,391 $ 5.20% 2,692 14.02 15.00%

352,735,565 8,826 5.18 2,796 14.29 17.30

377,968,171 8,928 1.15 2,910 14.55 20.30

410,422,593 9,001 0.82 3,199 14.25 23.30

439,376,255 9,070 0.76 3,423 14.15 24.10

494,172,616 9,656 6.46 3,670 13.95 25.00

529,159,740 9,864 2.16 3,914 13.71 27.90

571,604,661 10,298 4.39 4,120 13.47 29.10

573,716,141 9,947 (3.41) 4,125 13.98 30.20

565,873,877 9,551 (3.98) 3,860 15.35 31.30

188

KATY INDEPENDENT SCHOOL DISTRICT Exhibit XVITEACHER BASE SALARIESLAST TEN FISCAL YEARS

KISD Region IV StatewideFiscal Year Minimum Maximum Average Average Average

Ended 08/31: Salary (1) Salary (1) Salary (2) Salary (2) Salary (2)

2003 35,000$ 63,700$ 42,713$ 41,964$ 39,974$

2004 35,600 64,444 43,982 42,531 40,478

2005 36,500 65,237 43,733 43,107 41,011

2006 38,100 67,084 44,808 43,852 41,744

2007 41,000 69,584 47,646 46,675 44,897

2008 42,130 72,517 48,385 48,053 46,179

2009 43,300 71,624 49,263 49,186 47,159

2010 44,000 76,205 50,374 50,129 48,263

2011 45,000 77,073 50,799 50,616 48,638

2012 45,000 77,073 51,145 50,383 48,375

(1) Source: District records(2) Source: Academic Excellence Indicator System of Texas (AEIS).

189


190

KATY INDEPENDENT SCHOOL DISTRICTSCHOOL BUILDING INFORMATIONLAST TEN FISCAL YEARS

Building: 2003 2004 2005 2006

HIGH SCHOOLSCinco Ranch (1999) Square Footage 581,934 581,934 581,934 581,934 Capacity 3,000 3,000 3,000 3,000 Enrollment 2,812 3,207 3,604 3,252 Katy (1947) Square Footage 589,196 589,196 589,196 589,196 Capacity 3,000 3,000 3,000 3,000 Enrollment 2,978 3,056 2,780 2,642 Mayde Creek (1984) Square Footage 581,821 581,821 581,821 581,821 Capacity 3,000 3,000 3,000 3,000 Enrollment 3,014 3,209 2,760 2,527 Morton Ranch (2004) Square Footage 482,996 482,996 Capacity 2,400 2,400 Enrollment 1,191 1,882 Raines (2008) Square Footage Capacity EnrollmentSeven Lakes (2005) Square Footage 599,005 Capacity 3,000 Enrollment 837 Taylor (1979) Square Footage 542,192 542,192 542,192 542,192 Capacity 3,000 3,000 3,000 3,000 Enrollment 2,521 2,605 2,769 2,748

JUNIOR HIGH SCHOOLSBeck (1996) Square Footage 129,328 137,569 137,569 137,569 Capacity 1,232 1,232 1,232 1,232 Enrollment 1,443 1,542 1,103 1,148 Beckendorff (2004) Square Footage 184,398 184,398 Capacity 1,403 1,403 Enrollment 707 986 Cardiff (2008) Square Footage Capacity EnrollmentCinco Ranch (2001) Square Footage 154,637 154,637 154,637 154,637 Capacity 1,400 1,400 1,400 1,400 Enrollment 1,027 1,103 1,013 1,096

191

Exhibit XVIIPage 1 of 5

2007 2008 2009 2010 2011 2012

581,934 581,934 581,934 581,934 581,934 581,934 3,000 3,000 3,000 3,000 3,000 3,000 3,016 2,748 2,765 2,819 2,905 2,970

589,196 589,196 589,196 589,196 589,196 589,196 3,000 3,000 3,000 3,000 3,000 3,000 2,542 2,521 2,569 2,574 2,632 2,697

581,821 581,821 603,141 603,141 603,141 603,141 3,000 3,000 3,000 3,000 3,000 3,000 2,417 2,518 2,528 2,627 2,569 2,560

482,996 482,996 583,628 583,628 583,628 583,628 2,400 2,400 3,000 3,000 3,000 3,000 2,576 2,753 2,817 2,864 2,919 3,043

21,916 21,916 21,916 21,916 331 331 331 331 160 185 214 203

599,005 599,005 599,005 599,005 599,005 599,005 3,000 3,000 3,000 3,000 3,000 3,000 1,515 2,346 2,787 3,128 3,374 3,635

542,192 542,192 542,192 542,192 542,192 542,192 3,000 3,000 3,000 3,000 3,000 3,000 2,673 2,627 2,544 2,465 2,629 2,689

137,569 137,569 137,569 137,569 137,569 137,569 1,232 1,232 1,232 1,232 1,232 1,232 1,141 1,160 1,179 1,153 1,151 1,149

184,398 184,398 184,398 184,398 184,398 184,398 1,403 1,403 1,403 1,403 1,403 1,403 1,296 1,765 1,382 1,514 1,531 1,632

188,602 188,602 188,602 188,602 1,403 1,403 1,403 1,403 1,015 1,076 1,063 1,042

154,637 154,637 154,637 154,637 154,637 154,637 1,400 1,400 1,400 1,400 1,400 1,400 1,163 1,248 1,082 1,089 1,112 1,168

192


Building: 2003 2004 2005 2006

JUNIOR HIGH SCHOOLS (cont.)Katy (1995) Square Footage 129,328 137,569 137,569 137,569 Capacity 1,231 1,231 1,231 1,231 Enrollment 1,460 1,119 1,104 1,155 Mayde Creek (1980) Square Footage 167,000 169,172 169,172 169,172 Capacity 1,414 1,414 1,414 1,414 Enrollment 1,380 1,229 1,276 1,355 McDonald (1991) Square Footage 129,328 137,569 137,569 137,569 Capacity 1,220 1,220 1,220 1,220 Enrollment 1,362 886 1,081 1,213 McMeans (2000) Square Footage 154,637 154,637 154,637 154,637 Capacity 1,400 1,400 1,400 1,400 Enrollment 1,127 1,125 1,195 1,169 Memorial Parkway (1982) Square Footage 148,627 148,627 148,627 148,627 Capacity 1,133 1,133 1,133 1,133 Enrollment 1,102 1,086 1,042 1,033 Morton Ranch (2003) Square Footage 180,290 180,290 180,290 Capacity 1,403 1,403 1,403 Enrollment 1,182 1,216 1,249 West Memorial (1976) Square Footage 159,000 163,906 163,906 163,906 Capacity 998 998 998 998 Enrollment 767 746 745 801 WoodCreek (2008) Square Footage Capacity Enrollment

ELEMENTARY SCHOOLSAlexander (1998) Square Footage 106,134 106,134 106,134 106,134 Capacity 935 935 935 935 Enrollment 1,036 1,079 862 993 Bear Creek (1978) Square Footage 101,269 101,269 101,269 101,269 Capacity 799 799 799 799 Enrollment 704 682 655 653 Cimarron (1980) Square Footage 93,823 93,823 93,823 93,823 Capacity 861 861 861 861 Enrollment 921 901 836 822

193


2007 2008 2009 2010 2011 2012

137,569 137,569 137,569 137,569 137,569 137,569 1,231 1,231 1,231 1,231 1,231 1,231 1,228 1,224 1,243 1,218 1,231 1,315

169,172 169,172 169,172 169,172 169,172 169,172 1,414 1,414 1,414 1,414 1,414 1,414 1,387 1,386 1,078 1,118 1,164 1,158

137,569 137,569 137,569 137,569 137,569 137,569 1,220 1,220 1,220 1,220 1,220 1,220 1,299 1,275 871 906 958 943

154,637 154,637 154,637 154,637 154,637 154,637 1,400 1,400 1,400 1,400 1,400 1,400 1,209 1,218 1,212 1,220 1,168 1,177

148,627 148,627 148,627 148,627 148,627 148,6271,133 1,133 1,133 1,133 1,133 1,1331,022 963 975 965 936 925

180,290 180,290 180,290 180,290 180,290 180,2901,403 1,403 1,403 1,403 1,403 1,4031,248 1,316 1,296 1,245 1,254 1,215

163,906 163,906 163,906 163,906 163,906 163,906998 998 998 998 998 998775 794 777 800 788 780

188,602 188,602 188,602 188,6021,403 1,403 1,403 1,403

987 1,303 1,604 1,957

106,134 106,134 106,134 106,134 106,134 106,134 935 935 935 935 935 935

1,092 1,184 1,227 1,202 1,169 1,110

101,269 101,269 101,269 101,269 101,269 101,269 799 799 799 799 799 799 620 784 784 753 793 774

93,823 93,823 93,823 93,823 93,823 93,823 861 861 861 861 861 861 798 747 740 733 693 686

194


Building: 2003 2004 2005 2006

ELEMENTARY SCHOOLS (cont.)Creech (2000) Square Footage 111,734 111,734 111,734 111,734 Capacity 935 935 935 935 Enrollment 1,073 1,110 882 918 Exley (2004) Square Footage 121,638 121,638 Capacity 1,030 1,030 Enrollment 891 979 Fielder (1993) Square Footage 106,117 106,117 106,117 106,117 Capacity 907 907 907 907 Enrollment 752 715 830 795 Franz (2004) Square Footage 121,638 121,638 Capacity 1,030 1,030 Enrollment 637 1,038 Golbow (1989) Square Footage 95,709 95,709 95,709 95,709 Capacity 867 867 867 867 Enrollment 1,177 1,266 790 858 Griffin (2006) Square Footage Capacity EnrollmentHayes (1995) Square Footage 106,117 106,117 106,117 106,117 Capacity 907 907 907 907 Enrollment 994 1,082 853 901 Holland (2008) Square Footage Capacity EnrollmentHutsell (1978) Square Footage 115,086 115,086 115,086 115,086 Capacity 983 983 983 983 Enrollment 849 854 859 867 Katy (1965) Square Footage 86,825 86,825 86,825 86,825 Capacity 643 643 643 643 Enrollment 722 689 521 564 Kilpatrick (2003) Square Footage 121,638 121,638 121,638 Capacity 1,030 1,030 1,030 Enrollment 689 1,032 1,557

195


2007 2008 2009 2010 2011 2012

111,734 111,734 111,734 111,734 111,734 111,734 935 935 935 935 935 935 951 942 911 892 930 857

121,638 121,638 121,638 121,638 121,638 121,638 1,030 1,030 1,030 1,030 1,030 1,030 1,012 1,055 1,115 1,111 1,080 989

106,117 106,117 106,117 106,117 106,117 106,117 907 907 907 907 907 907 915 940 1,001 1,000 1,034 1,090

121,638 121,638 121,638 121,638 121,638 121,638 1,030 1,030 1,030 1,030 1,030 1,030 1,268 1,159 937 936 961 901

95,709 95,709 95,709 95,709 95,709 95,709 867 867 867 867 867 867 859 828 847 769 790 775

121,638 121,638 121,638 121,638 121,638 121,638 1,030 1,030 1,030 1,030 1,030 1,030

959 1,387 1,014 856 1,191 1,339

106,117 106,117 106,117 106,117 106,117 106,117 907 907 907 907 907 907 881 823 837 803 749 708

123,843 123,843 123,843 123,8431,030 1,030 1,030 1,030

881 981 1,021 1,051

115,086 115,086 115,086 115,086 115,086 115,086 983 983 983 983 983 983 839 811 775 759 781 790

86,825 86,825 86,825 86,825 86,825 86,825 643 643 643 643 643 643 640 638 601 576 563 571

121,638 121,638 121,638 121,638 121,638 121,638 1,030 1,030 1,030 1,030 1,030 1,030 1,199 1,078 1,146 1,240 1,301 1,334

196


Building: 2003 2004 2005 2006

ELEMENTARY SCHOOLS (cont.)King (2001) Square Footage 121,164 121,164 121,164 121,164 Capacity 1,030 1,030 1,030 1,030 Enrollment 866 921 820 834 Mayde Creek (1983) Square Footage 95,709 95,709 95,709 95,709 Capacity 868 868 868 868 Enrollment 896 1,000 970 1,030 McRoberts (1997) Square Footage 106,134 106,134 106,134 106,134 Capacity 935 935 935 935 Enrollment 927 1,128 954 1,071 Memorial Parkway (1978) Square Footage 103,658 103,658 103,658 103,658 Capacity 742 742 742 742 Enrollment 621 571 550 592 Morton Ranch (2008) Square Footage Capacity EnrollmentNottingham Country (1981) Square Footage 101,427 101,427 101,427 101,427 Capacity 1,035 1,053 1,053 1,053 Enrollment 988 936 821 786 Pattison (1989) Square Footage 112,156 112,156 112,156 112,156 Capacity 1,052 1,052 1,052 1,052 Enrollment 915 939 889 862Rhoads (2004) Square Footage 121,638 121,638 Capacity 1,030 1,030 Enrollment 717 867Rylander (2004) Square Footage 121,638 121,638 Capacity 1,030 1,030 Enrollment 663 842Schmalz (2001) Square Footage 121,164 121,164 121,164 121,164 Capacity 1,030 1,030 1,030 1,030 Enrollment 1,019 1,078 977 1,076Stanley (2009) Square Footage Capacity EnrollmentStephens (2007) Square Footage Capacity Enrollment

197


2007 2008 2009 2010 2011 2012

121,164 121,164 121,164 121,164 121,164 121,164 1,030 1,030 1,030 1,030 1,030 1,030

914 980 866 885 943 1,087

95,709 95,709 112,913 112,913 112,913 112,913 868 868 968 968 968 968

1,036 769 784 865 843 820

106,134 106,134 106,134 106,134 106,134 106,134 935 935 935 935 935 935

1,248 951 975 844 887 859

103,658 103,658 103,658 103,658 103,658 103,658 742 742 742 742 742 742 701 756 749 751 773 804

123,843 123,843 123,843 123,8431,030 1,030 1,030 1,030

528 614 669 711

101,427 101,427 101,427 101,427 101,427 101,427 1,053 1,053 1,053 1,053 1,053 1,053

748 734 667 681 645 628

112,156 112,156 112,156 112,156 112,156 112,1561,052 1,052 1,052 1,052 1,052 1,052

863 822 813 826 871 831

121,638 121,638 121,638 121,638 121,638 121,6381,030 1,030 1,030 1,030 1,030 1,030

899 873 933 1,194 1,147 1,117

121,638 121,638 121,638 121,638 121,638 121,6381,030 1,030 1,030 1,030 1,030 1,0301,079 1,139 1,182 1,224 1,230 1,273

121,164 121,164 121,164 121,164 121,164 121,1641,030 1,030 1,030 1,030 1,030 1,0301,195 1,194 1,221 1,068 1,146 1,173

126,897 126,897 126,8971,030 1,030 1,030

897 1,191 1,539

123,249 123,249 123,249 123,249 123,2491,030 1,030 1,030 1,030 1,030

872 817 827 801 770

198


Building: 2003 2004 2005 2006

ELEMENTARY SCHOOLS (cont.)Sundown (1982) Square Footage 95,608 95,608 95,608 95,608 Capacity 868 868 868 868 Enrollment 918 914 945 777West Memorial (1974) Square Footage 89,742 89,742 89,742 89,742 Capacity 683 683 683 683 Enrollment 693 735 610 643Williams (2000) Square Footage 111,734 111,734 111,734 111,734 Capacity 935 935 935 935 Enrollment 1,145 1,060 991 993Winborn (1981) Square Footage 94,596 94,596 94,596 94,596 Capacity 848 848 848 848 Enrollment 851 849 848 935Wolfe (1968) Square Footage 73,219 73,219 73,219 73,219 Capacity 405 405 405 405 Enrollment 486 504 472 480WoodCreek (2007) Square Footage Capacity Enrollment

OTHER INSTRUCTIONAL FACILITIESMiller Career & Technology Center (1982) Square Footage 23,147 23,147 23,147 23,147 Capacity 160 160 160 160 Enrollment (1)Opportunity Awareness Center (1981) Square Footage 30,712 30,712 30,712 30,712 Capacity 150 150 150 150 Enrollment (2) 83 107

Portable Buildings (3) Number Utilized 156 148 157 183 Classrooms Provided 312 296 314 366


(1) Enrollment numbers included in home campus totals.(2) Enrollment numbers included in home campus totals from 2005-2012.(3) Used at schools where enrollment exceeded building capacity.

199


2007 2008 2009 2010 2011 2012

95,608 95,608 112,913 112,913 112,913 112,913868 868 968 968 968 968790 783 904 886 876 891

89,742 89,742 89,742 89,742 89,742 89,742683 683 683 683 683 683641 667 705 757 758 778

111,734 111,734 111,734 111,734 111,734 111,734935 935 935 935 935 935987 978 954 912 832 801

94,596 94,596 94,596 94,596 94,596 94,596848 848 848 848 848 848906 890 843 818 831 795

73,219 73,219 73,219 73,219 73,219 73,219405 405 405 405 405 405411 407 436 402 410 399

123,249 123,249 123,249 123,249 123,2491,030 1,030 1,030 1,030 1,030

741 1,053 1,082 1,373 1,601

23,147 23,147 132,951 132,951 132,951 132,951 160 160 907 907 907 907

30,712 30,712 87,015 87,015 87,015 87,015 150 150 677 677 677 677

208 219 219 227 241 270 416 349 360 396 404 459

200

KATY INDEPENDENT SCHOOL DISTRICT Exhibit XVIIIFUND BALANCE AND CASH FLOW CALCULATION WORKSHEETGENERAL FUNDAUGUST 31, 2012(Unaudited)

DataControlCode Explanation Amount

1 Total General Fund Balance 8/31/12 (Exhibit C-1 object 3000 for the General Fund Only) 126,906,182$

2 Total Non-Spendable Fund Balance (from Exhibit C-1 - total of object341X-344X for the General Fund only) 1,236,844

3 Total Restricted Fund Balance (from Exhibit C-1 - total of object345X-349X for the General Fund only)

4 Total Committed Fund Balance (from Exhibit C-1 - total of object351X-354X for the General Fund only) 5,000,000

5 Total Assigned Fund Balance (from Exhibit C-1 - total of object355X-359X for the General Fund only) 34,873,093

6 Estimated amount needed to cover fall cash flow deficits in General Fund (net of borrowed funds and funds representingdeferred revenues) 20,928,669

7 Estimate of two month's average cash disbursements during the fiscal year 76,264,203

8 Estimate of delayed payments from state sources (58XX)

9 Estimate of underpayment from state sources equal to variancebetween Legislative Payment Estimate (LPE) and District Planning Estimate (DPE) or District's calculated earned stateaid amount

10 Estimate of delayed payments from federal sources (59XX) 4,911,706

11 Estimate of expenditures to be reimbursed to General Fund fromCapital Projects Fund (uses of General Fund cash after bond referendum and prior to issuance of bonds)

12 Optimum Fund Balance and Cash Flow (2 + 3 + 4 + 5 + 6 + 7 + 8 + 9+10+11) 143,214,515

13 Excess/(Deficit) Unassigned General Fund balance (1 - 12) (16,308,333)$

201

Documents

For the Fiscal Year Ended August 31, 2012 - Scanned Retina · for the fiscal year ended August 31, 2012 is presented herein. The CAFR is management’s report of the financial operations