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HomeMy WebLinkAbout12-04-17 BOT Agenda packetThe Regular Meeting of the Board of Trustees will begin immediately following the conclusion of the Board of Trustees Workshop but not prior to the posted start time. Mission Statement Westlake Academy is an IB World School whose mission is to provide students with an internationally minded education of the highest quality so they are well-balanced and respectful life-long learners. Page 1 of 3 WESTLAKE ACADEMY Vision Statement Westlake Academy inspires students to achieve their highest individual potential in a nurturing environment that fosters the traits found in the IB Learner Profile. Inquirers, Knowledgeable, Thinkers, Communicators, Principled, Open-Minded, Caring, Risk-takers, Balanced and Reflective BOARD OF TRUSTEES MEETING AGENDA December 4, 2017 1500 Solana Boulevard Building 7, Suite 7100 1st FLOOR, COUNCIL CHAMBER WESTLAKE, TX 76262 Workshop Session 5:00 p.m. Regular Session 6:00 p.m. Page 2 of 3 Work Session 1.CALL TO ORDER 2.PLEDGE OF ALLEGIANCE 3.RECOGNIZE THE FALL SPORTS TEAMS. 4.DISCUSSION ITEMS a.Presentation and discussion of the FY 2016-2017 annual audit report from Weaver and Tidwell, L.L.P. b.Presentation and discussion regarding global partnerships and International Mindedness Educators Symposium (IMES). c.Presentation and discussion on the Policy Analysis and recommendations related to Upper PYP Math Instruction. 5.BOARD RECAP / STAFF DIRECTION 6.ADJOURNMENT Regular Session 1.CALL TO ORDER 2.ITEMS OF COMMUNITY INTEREST: President and Trustee Reports on Items of Community Interest pursuant to Texas Government Code Section 551.0415 the Board of Trustees may report on the following items: (1) expression of thanks, congratulations or condolences; (2) information about holiday schedules; (3) recognition of individuals; (4) reminders about upcoming Board of Trustee events; (5) information about community events; and (6) announcements involving imminent threat to public health and safety. 3.CITIZEN COMMENTS: This is an opportunity for citizens to address the Board on any matter whether or not it is posted on the agenda. The Board cannot by law take action nor have any discussion or deliberations on any presentation made to the Board at this time concerning an item not listed on the agenda. Any item presented may be noticed on a future agenda for deliberation or action. 4.CONSENT AGENDA: All items listed below are considered routine by the Board of Trustees and will be enacted with one motion. There will be no separate discussion of items unless a Board member or citizen so requests, in which event the item will be removed from the general order of business and considered in its normal sequence. a.Consider approval of the minutes from the November 6, 2017, meeting. b.Consider approval of Resolution 17-15, Adopting a Head Lice policy. c.Consider approval of Resolution 17-16, Approving the Fiscal Year 2016-2017 annual audit report from Weaver and Tidwell, L.L.P. Page 3 of 3 5. FUTURE AGENDA ITEMS: Any Board member may request at a workshop and / or Board meeting, under “Future Agenda Item Requests”, an agenda item for a future Board meeting. The Board member making the request will contact the Superintendent with the requested item and the Superintendent will list it on the agenda. At the meeting, the requesting Board member will explain the item, the need for Board discussion of the item, the item’s relationship to the Board’s strategic priorities, and the amount of estimated staff time necessary to prepare for Board discussion. If the requesting Board member receives a second, the Superintendent will place the item on the Board agenda calendar allowing for adequate time for staff preparation on the agenda item. 6. ADJOURNMENT ANY ITEM ON THIS POSTED AGENDA COULD BE DISCUSSED IN EXECUTIVE SESSION AS LONG AS IT IS WITHIN ONE OF THE PERMITTED CATEGORIES UNDER SECTIONS 551.071 THROUGH 551.076 AND SECTION 551.087 OF THE TEXAS GOVERNMENT CODE. CERTIFICATION I certify that the above notice was posted at the Town Hall of the Town of Westlake, 1500 Solana Blvd., Building 7, Suite 7100, Westlake, TX 76262, on November 29, 2017, by 5:00 p.m. under the Open Meetings Act, Chapter 551 of the Texas Government Code. _____________________________________ Kelly Edwards, Town Secretary If you plan to attend this public meeting and have a disability that requires special needs, please advise the Town Secretary 48 hours in advance at 817-490-5710 and reasonable accommodations will be made to assist you. Board of Trustees Item # 2 – Pledge of Allegiance Texas Pledge: “Honor the Texas flag; I pledge allegiance to the, Texas, on state under God, on and indivisible.” 3.RECOGNIZE THE FALL SPORTS TEAMS. Board of Trustees Item # 3 – No Supporting Documentation DISCUSSION ITEMS a. Presentation and discussion of the FY 2016-2017 annual audit report from Weaver and Tidwell, L.L.P. b. Presentation and discussion regarding global partnerships and International Mindedness Educators Symposium (IMES). c. Presentation and discussion on the Policy Analysis and recommendations related to Upper PYP Math Instruction. Board of Trustees Item # 4 – Discussion Items estlake Academy Board of Trustees TYPE OF ACTION Workshop - Discussion Item Westlake Board Meeting Monday, December 04, 2017 TOPIC: Presentation and Discussion of the FY 2016-2017 annual audit report from Weaver and Tidwell, L.L.P. STAFF CONTACT: Debbie Piper Finance Director Strategic Alignment Vision, Value, Mission Perspective Curriculum Outcome Objective Vision: Westlake Academy inspires college bound students to achieve their highest individual potential in a nuturing environment that fosters the traits found in the IB Learner Profile. Fiscal Stewardship PYP / MYP / DP Improve Financial Stewardship Strategic Initiative Outside the Scope of Identified Strategic Initiatives Time Line - Start Date: September 1, 2016 Completion Date: August 31, 2017 Funding Amount: $16,690 Status - Funded Source - General Fund EXECUTIVE SUMMARY (INCLUDING APPLICABLE ORGANIZATIONAL HISTORY) Weaver and Tidwell, L.L.P. has completed the Westlake Academy 2016-2017 annual financial audit report. As in prior years, we again had no “Findings”, reportable conditions nor material weaknesses to be reported to TEA. Findings are items required by TEA to be reported regarding TEA compliance, large variances in budget vs. actual balances, etc. TEA doesn’t necessarily look upon these as bad (they require an explanation of all “Findings” and review in subsequent years), but it certainly looks good for the Academy not to have any for the current year. Upon your review of the Governance Letter attached, please note, on the last page, an entry that the auditor’s passed on related to a lease payment. The payment was posted as a prepaid and not expensed to the current year because it wasn’t due until September 1st. One payment had already been made on the lease for the current year. The entry proposed by the auditor would have expensed two lease payments in one year. The audit partner stated that once a debt payment is made, it must be recognized as an expenditure. I disagreed and we continued to debate the validity of the entry. In the end, they passed on proposing this entry. Following is a summary of the variances found on page 36 of the audit. This schedule reflects only the General Fund. REVENUES AND OTHER SOURCES – Under budget by $29,546 • The majority of this variance is due to a budgeted transfer from the Campus Activity Fund to the Transportation Fund in an amount that was larger than needed at year-end. Academy administration made the decision at the beginning of the school year to discontinue allowing parent drivers and car pools for athletic events and field trips due to possible liability issues. The bus rentals were more than the original budget as well as the revenue received in the Transportation Fund. Additional funds were available in the Campus Activity Fund which can be used for any expense of the school as a whole. We had anticipated transferring $57K to the Transportation Fund but only needed $37K at year-end. EXPENDITURES – Over budget by $27K largely due to the following Function overages offset by savings in others: • Function 23 - Due to staffing changes in August, Secondary Principal was no longer split funded between Functions 21 and 23. In addition, G3 teacher was transitioned to PYP Assistant Principal with a stipend throughout the year, then fully funded as Assistant Principal in August. • Function 31- Expenditures included the mid-year hiring of a Secondary Counselor and a part-time Diagnostician which were not budgeted. Please review the Management Discussion and Analysis document included in the audit report for statistical information during the year ended August 31, 2017. RECOMMENDATION Recommend approval of the resolution approving the FY 2016-2017 annual audit as submitted. ATTACHMENTS 1. Presentation presented at meeting 2. Link to audit under regular session estlake Academy Board of Trustees TYPE OF ACTION Workshop - Discussion Item Westlake Board Meeting Monday, December 04, 2017 TOPIC: Presentation and discussion regarding global partnerships and International Mindedness Educators Symposium (IMES). STAFF CONTACT: Dr. Mechelle Bryson, Executive Director Strategic Alignment Vision, Value, Mission Perspective Curriculum Outcome Objective Mission: Westlake Academy is an IB World School whose mission is to provide students with an internationally minded education of the highest quality, so they are well- balanced life-long learners. Citizen, Student & Stakeholder PYP / MYP / DP Strengthen IB Philosophy & Implementation Strategic Initiative Outside the Scope of Identified Strategic Initiatives Time Line - Start Date: August 21, 2017 Completion Date: June 9, 2018 Funding Amount: $12,500 Status - Funded Source - Contributions/Grants EXECUTIVE SUMMARY (INCLUDING APPLICABLE ORGANIZATIONAL HISTORY) One of the cornerstones of the IB mission is international mindedness. The IB has defined three dimensions that work in harmony to create a climate for International Mindedness: • Intercultural understanding; • Global engagement; and • Multilingualism. These dimensions of International Mindedness are enhanced by the realization of the IB Learner Profile. As such, an internationally minded learner is an open-minded thinker who is knowledgeable of the world and able to effectively communicate the human condition in a reflective, caring, and principled manner. Internationally minded learners are risk-takers in their disciplined inquiries of their world, yet are able to balance the complexities of their lives. As an IB World School, our goal is to create opportunities that expand our students’ frame of mind by extending learning beyond the classroom’s walls. Providing opportunities for our students to globally engage with their counterparts in other schools from around the world creates authentic learning experiences while preparing our students to successfully compete in a global 21st century marketplace. As we prepare for our fourth annual International Mindedness Educator Symposium and our third annual Summer Spanish Immersion program, we have redesigned the Academy’s approach. The purpose of this presentation is to provide an overview of our progress in expanding the international mindedness efforts at Westlake Academy. RECOMMENDATION Seeking continued support of International Mindedness initiatives at Westlake Academy. ATTACHMENTS No Attachment estlake Academy Board of Trustees TYPE OF ACTION Workshop - Discussion Item Westlake Board Meeting Monday, December 04, 2017 TOPIC: Presentation and Discussion on the Policy Analysis and Recommendations Related to Upper PYP Math Instruction STAFF CONTACT: Dr. Mechelle Bryson, Executive Director of Westlake Academy Strategic Alignment Vision, Value, Mission Perspective Curriculum Outcome Objective Academic Excellence Academic Operations PYP / MYP / DP Increase the Future Readiness of All Students Strategic Initiative Time Line - Start Date: August 1, 2017 Completion Date: Ongoing Funding Amount: N/A Status - N/A Source - N/A EXECUTIVE SUMMARY (INCLUDING APPLICABLE ORGANIZATIONAL HISTORY) The school board has the overall responsibility to ensure the effective delivery of curriculum through their role of reviewing and approving curriculum policies and of monitoring the overall effectiveness of Westlake Academy in meeting the Academy’s mission, vision and values. Over recent months, questions and concerns have arisen from Academy parents regarding the Academy’s approach to mathematics instruction in the upper PYP. Specifically, questions posed have centered on how to better meet the needs of students who have a high aptitude for mathematics. Over the course of the last few months, the Academy’s administrative team has conducted numerous conversations with stakeholders. These conversations have centered on ability grouping as a means to meet the unique needs of the Academy’s learners. As a result, Superintendent Brymer requested that the issues surrounding these questions and appropriate recommendations be articulated in a position paper. In response, the Academy’s administrative team has re-examined the practice of tracking to determine its place in an IB World School. This position paper is designed to summarize those findings and articulate recommendations. RECOMMENDATION N/A ATTACHMENTS None (Under a separate cover, a Policy Analysis and Recommendation Related to Upper PYP Mathematics Instruction will be sent to the Board of Trustees.) BOARD RECAP / STAFF DIRECTION Board of Trustees Item # 5 – Board Recap / Staff Direction Board of Trustees Item # 6 – Adjournment Work Session ITEMS OF COMMUNITY INTEREST: President and Trustee Reports on Items of Community Interest pursuant to Texas Government Code Section 551.0415 the Board of Trustees may report on the following items: (1) expression of thanks, congratulations or condolences; (2) information about holiday schedules; (3) recognition of individuals; (4) reminders about upcoming Board of Trustee events; (5) information about community events; and (6) announcements involving imminent threat to public health and safety.  Westlake Community Tree Lighting Thursday, November 30, 2018; 6:00 – 8:00 pm Solana Plaza – 1301 Solana Blvd. -Fun-filled hometown event brought back this year with a new location in Solana’s Plaza! Join us as we kick off the holiday season together with carriage rides, reindeer petting zoo, K- LUV radio broadcast, cake-walk, local flavors from area restaurants and returning favorites…cookie decorating, hot cocoa & cider, musical performances, photos with Santa, and other visitors from the North Pole!  Coffee & Conversation with the Mayor/Board President Monday, December 4, 2017; 8:00 – 9:30 am Marriott Solana Hotel – Great Room  Board of Trustees Workshop/Meeting Monday, December 4, 2017*; 5:00/6:00 pm Westlake Council Chambers, Solana Terrace, Bldg. 7-Suite 7100, First Floor  Danish & Dialogue with Westlake Academy Leaders Thursday, December 7, 2017; 8:00 – 9:00 am WA Campus-Lee Fieldhouse Classroom -This month’s topic: State Accountability Date Dive  Town Council Workshop/Meeting Monday, December 11, 2017*; 5:00/6:30 pm Westlake Council Chambers, Solana Terrace, Bldg. 7-Suite 7100, First Floor  Public Art Competition Advisory Committee Meeting Monday, December 18, 2017; 11:00 – 1:00 pm Westlake Council Chambers, Solana Terrace, Bldg. 7-Suite 7100, First Floor  Westlake Academy closed for Winter Break (Early release days, Dec. 18-20) Thursday, December 21 – Friday, January 5, 2018 -Teachers return Jan. 5 for Professional Development Day; Students return Monday, Jan. 8  Westlake Municipal Offices will be closed for the holidays as follows: @Christmas: Friday, December 22 – Monday, December 25, 2017 @New Year’s Day: Monday, January 1, 2018 -Trash & recycling services delayed one day the week of Christmas; Collections will take place on Saturday, Dec. 30, instead of regular Friday schedule. This one-day delay will also occur the week of New Year’s Day – collections on Sat., January 6, 2018.  Coffee & Conversation with the Mayor/Board President Monday, January 8, 2017; 8:00 – 9:30 am Marriott Solana Hotel – Great Room  Board of Trustees Workshop/Meeting & Special Town Council Meeting (to call election) Monday, January 8, 2017*; 5:00/6:00 pm Westlake Council Chambers, Solana Terrace, Bldg. 7-Suite 7100, First Floor  WA 2017 Alumni Reunion & IB Diploma Programme Ceremony Wednesday, January 10, 2018; 1:45 pm WA Campus – Gym (Alumni & DP Staff luncheon in Performance Hall- 12:00 - 1:30 pm) *For meeting agendas and details on WA calendar events or Municipal calendar events, please visit the Westlake Academy website or the Town of Westlake website for further assistance. Board of Trustees Item # 2 – Items of Community Interest CITIZEN COMMENTS: This is an opportunity for citizens to address the Board on any matter whether or not it is posted on the agenda. The Board cannot by law take action nor have any discussion or deliberations on any presentation made to the Board at this time concerning an item not listed on the agenda. Any item presented may be noticed on a future agenda for deliberation or action. Board of Trustees Item # 3 – Citizen Comments CONSENT AGENDA: All items listed below are considered routine by the Board of Trustees and will be enacted with one motion. There will be no separate discussion of items unless a Board member or citizen so requests, in which event the item will be removed from the general order of business and considered in its normal sequence. a. Consider approval of the minutes from the November 6, 2017, meeting. b. Consider approval of Resolution 17-15, Adopting a Head Lice policy. c. Consider approval of Resolution 17-16, Approving the Fiscal Year 2016- 2017 annual audit report from Weaver and Tidwell, L.L.P. Board of Trustees Item # 4 – Consent Agenda BOT Minutes 11/06/17 Page 1 of 4 WESTLAKE ACADEMY BOARD OF TRUSTEES MEETING November 6, 2017 PRESENT: President Laura Wheat, Trustees: Carol Langdon, Rick Rennhack, and Wayne Stoltenberg. Michael Barrett arrived at 5:09 p.m. ABSENT: Alesa Belvedere OTHERS PRESENT: Superintendent Tom Brymer, Assistant to the Superintendent Amanda DeGan, Board Secretary Kelly Edwards, PYP Assistant Principal Beckie Paquin, Secondary Principal Stacy Stoyanoff, Secondary Asst. Principal Jennifer Furnish, College Counselor Carl Tippen, IT Coordinator Ray Workman, Director of Communications Ginger Awtry, Communications Manager Jon Sasser, and Director of Information Technology Jason Power. Work Session 1. CALL TO ORDER President Wheat called the work session to order at 5:07 p.m. 2. PLEDGE OF ALLEGIANCE President Wheat led the Pledge of Allegiance to the United States and Texas flags. BOT Minutes 11/06/17 Page 2 of 4 3. RECOGNIZE THE NATIONAL MERIT SCHOLARS. Mr. Tippen recognized the follow National Merit Scholars: Hunter Cochran, Jon L. Miller, Tyler Simpson, and Anand Singh. Mr. Tippen provided an overview of the National Merit Scholars competition. 4. REPORTS a. TAPR (Texas Academic Performance Report) Comparison Data. Discussion ensued regarding inclusion of students on Individualized Educational Plan (IEP), total number of students, comparison with surrounding districts, scores in Reading and Writing, and the number of employees within the district. b. Report regarding the International Baccalaureate professional development opportunities at Westlake Academy. Discussion ensued regarding the Levels of training, any training that is not currently being provided, scheduling training, training provided during the school year, implementing IB practices through training for new teachers, and communicating this to parents. 5. DISCUSSION ITEMS a. Presentation and discussion regarding the outcome of Westlake Academy Foundation’s participation in 2017 Giving Day and status of 2017-18 Blacksmith Annual Fund. Dr. Myers provided the following report regarding the Foundation’s gift activity to date: Since the start of the 2017-18 school year, the Foundation has received $1,293,200 in total gifts through various fundraising initiatives. Blacksmith donations currently stand at $988,925.00 from 74% of the parent body; 70% of the 86 new WA families have participated in the Blacksmith campaign to date. Discussion ensued regarding adding tangible items to the Blacksmith campaigns that may have been removed from the budget, the number of operating days, targeting initiative messaging, and covering credit card fees. b. Presentation and discussion regarding the features and professional development opportunities of the recently purchased ‘Swivl’ camera. Mrs. Paquin and Mr. Workman provided a presentation and overview of the item. Discussion ensued regarding the education benefits, classroom capabilities, multi- function applications, and the cost. BOT Minutes 11/06/17 Page 3 of 4 c. Presentation and discussion regarding Anti-Bullying protocols. Mrs. Furnish and Mrs. Paquin provided a presentation and overview of the item. Discussion ensued regarding Keller Police Officer Initia visiting and discussion with students regarding health choices, creating campaigns, creating an anonymous tip line, reporting options provided by surrounding districts, procedures of the incident report, and how to manage incidents outside of school. 6. BOARD RECAP / STAFF DIRECTION Provide the surrounding district’s TAPR (Texas Academic Performance Report) as comparison data. Focusing on the Reading and Writing scores. Highlighting and communicating to parents regarding the IB on-going training. 7. ADJOURNMENT President Wheat adjourned the work session at 6:42 p.m. Regular Session 1. CALL TO ORDER President Wheat called the regular session to order at 6:43 p.m. 2. ITEMS OF COMMUNITY INTEREST Ms. Awtry provided an update regarding the upcoming events. Mr. Paquin announced the Veteran’s Day events. 3. CITIZEN COMMENTS No one addressed the Board. BOT Minutes 11/06/17 Page 4 of 4 4. CONSENT AGENDA a. Consider approval of the minutes from the September 11, 2017, meeting. b. Consider approval of the minutes from the October 2, 2017, meeting. MOTION: Trustee Rennhack made a motion to approve the consent agenda. Trustee Langdon seconded the motion. The motion carried by a vote of 4-0. 5. FUTURE AGENDA ITEMS No future agenda items. 6. ADJOURNMENT There being no further business before the Board, President Wheat asked for a motion to adjourn the meeting. MOTION: Trustee Langdon made a motion to adjourn the regular session. Trustee Barrett seconded the motion. The motion carried by a vote of 4-0. President Wheat adjourned the regular session at 6:48 p.m. APPROVED BY THE BOARD OF TRUSTEES ON DECEMBER 4, 2017. ATTEST: ____________________________ Laura Wheat, President _____________________________ Kelly Edwards, Board Secretary estlake Academy Board of Trustees TYPE OF ACTION Regular Meeting - Consent Westlake Board Meeting Monday, December 04, 2017 TOPIC: Consider Approval of a Resolution adopting a Head Lice Policy STAFF CONTACT: Beckie Paquin, Primary Assistant Principal Strategic Alignment Vision, Value, Mission Perspective Curriculum Outcome Objective Personal Responsibility Citizen, Student & Stakeholder PYP / MYP / DP Improve the Efficiences of Operational Systems Strategic Initiative Outside the Scope of Identified Strategic Initiatives Time Line - Start Date: December 4, 2017 Completion Date: N/A Funding Amount: N/A Status - N/A Source - N/A EXECUTIVE SUMMARY (INCLUDING APPLICABLE ORGANIZATIONAL HISTORY) As a result of the last legislative session and in accordance with Texas Education Code Section 38.03, Westlake Academy shall adopt procedures for the school nurse to provide notice as required by law if the nurse determines or becomes aware that a student enrolled in the Academy has lice. Staff have drafted the associated policy in conjunction with our school attorney for Board review. RECOMMENDATION Staff recommends approval of this policy. ATTACHMENTS Resolution and Policy Resolution 17-15 Page 1 of 3 WESTLAKE ACADEMY RESOLUTION 17-15 A RESOLUTION OF THE WESTLAKE ACADEMY BOARD OF TRUSTEES HEAD LICE POLICY PURSUANT TO THE TEXAS EDUCATION AGENCY. WHEREAS, the Texas Education Agency requires notice as required by law if the nurse determines or becomes aware that a student enrolled in the Academy has lice in accordance with Texas Education Code Section 38.031 in the 82nd Legislative Session of the Texas Legislature and, WHEREAS, Westlake Academy is required by the Texas Education Agency to adopt the lice policy; and, WHEREAS, the Board of Trustees finds that the passage of this Resolution is in the best interest of the citizens of Westlake as well as the students, their parents, and faculty of Westlake Academy. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF TRUSTEES OF WESTLAKE ACADEMY: SECTION 1: That, all matters stated in the recitals hereinabove are found to be true and correct and are incorporated herein by reference as if copied in their entirety. SECTION 2: That, the Board of Trustees Westlake Academy, hereby approves the lice policy for Westlake Academy attached to this resolution as Exhibit “A”. SECTION 3: If any portion of this resolution shall, for any reason, be declared invalid by any court of competent jurisdiction, such invalidity shall not affect the remaining provisions hereof and the Council hereby determines that it would have adopted this Resolution without the invalid provision. Resolution 17-15 Page 2 of 3 SECTION 4: That this resolution shall become effective from and after its date of passage. PASSED AND APPROVED ON THIS 11th DAY OF SEPTEMBER 2017. ___________________________________ Laura Wheat, President ATTEST: ________________________________ ___________________________________ Kelly Edwards, Board Secretary Thomas E. Brymer, Superintendent APPROVED AS TO FORM: ________________________________ Janet S. Bubert or L. Stanton Lowry, School Attorney Resolution 17-15 Page 3 of 3 Exhibit A TOWN OF WESTLAKE WESTLAKE ACADEMY BOARD OF TRUSTEES POLICY Policy No.: Date Board Adopted: December 4, 2017 Effective Date: December 4, 2017 Policy Category: Student Services Policy Name: Lice Policy Policy Goal: Create a healthy learning environment Policy Description: Westlake Academy shall adopt procedures for the Academy’s nurse to provide notice as required by law if the nurse determines or becomes aware that a student enrolled in the Academy has lice. In accordance with Texas Education Code Section 38.031, notice shall be provided by the Academy in writing or electronically as follows: (1) Notice to the parent of the child with lice as soon as practicable, but not later than 48 hours after the nurse determines or becomes aware of that fact. (2) Notice to the parent of each child assigned to the same classroom as the child with lice not later than the fifth school day after the date on which the nurse determines or becomes aware of that fact. (3) All notices provided under this policy shall include the recommendations of the Centers for Disease Control and Prevention for the treatment and prevention of lice. (4) Any notice to a parent of another child in the same classroom may not identify the child with lice and must otherwise comply with any applicable student privacy laws and policies. estlake Academy Board of Trustees TYPE OF ACTION Regular Meeting - Consent Westlake Board Meeting Monday, December 04, 2017 TOPIC: Consider a Resolution approving the FY 2016-2017 annual audit report from Weaver and Tidwell, L.L.P. STAFF CONTACT: Debbie Piper Finance Director Strategic Alignment Vision, Value, Mission Perspective Curriculum Outcome Objective Vision: Westlake Academy inspires college bound students to achieve their highest individual potential in a nuturing environment that fosters the traits found in the IB Learner Profile. Fiscal Stewardship PYP / MYP / DP Improve Financial Stewardship Strategic Initiative Outside the Scope of Identified Strategic Initiatives Time Line - Start Date: September 1, 2016 Completion Date: August 31, 2017 Funding Amount: $16,690 Status - Funded Source - General Fund EXECUTIVE SUMMARY (INCLUDING APPLICABLE ORGANIZATIONAL HISTORY) Weaver and Tidwell, L.L.P. has completed the Westlake Academy 2016-2017 annual financial audit report. As in prior years, we again had no “Findings”, reportable conditions nor material weaknesses to be reported to TEA. Findings are items required by TEA to be reported regarding TEA compliance, large variances in budget vs. actual balances, etc. TEA doesn’t necessarily look upon these as bad (they require an explanation of all “Findings” and review in subsequent years), but it certainly looks good for the Academy not to have any for the current year. Upon your review of the Governance Letter attached, please note, on the last page, an entry that the auditor’s passed on related to a lease payment. The payment was posted as a prepaid and not expensed to the current year because it wasn’t due until September 1st. One payment had already been made on the lease for the current year. The entry proposed by the auditor would have expensed two lease payments in one year. The audit partner stated that once a debt payment is made, it must be recognized as an expenditure. I disagreed and we continued to debate the validity of the entry. In the end, they passed on proposing this entry. Following is a summary of the variances found on page 36 of the audit. This schedule reflects only the General Fund. REVENUES AND OTHER SOURCES – Under budget by $29,546 • The majority of this variance is due to a budgeted transfer from the Campus Activity Fund to the Transportation Fund in an amount that was larger than needed at year-end. Academy administration made the decision at the beginning of the school year to discontinue allowing parent drivers and car pools for athletic events and field trips due to possible liability issues. The bus rentals were more than the original budget as well as the revenue received in the Transportation Fund. Additional funds were available in the Campus Activity Fund which can be used for any expense of the school as a whole. We had anticipated transferring $57K to the Transportation Fund but only needed $37K at year-end. EXPENDITURES – Over budget by $27K largely due to the following Function overages offset by savings in others: • Function 23 - Due to staffing changes in August, Secondary Principal was no longer split funded between Functions 21 and 23. In addition, G3 teacher was transitioned to PYP Assistant Principal with a stipend throughout the year, then fully funded as Assistant Principal in August. • Function 31- Expenditures included the mid-year hiring of a Secondary Counselor and a part-time Diagnostician which were not budgeted. Please review the Management Discussion and Analysis document included in the audit report for statistical information during the year ended August 31, 2017. RECOMMENDATION Recommend approval of the resolution approving the FY 2016-2017 annual audit as submitted. ATTACHMENTS 1. Resolution 2. Audit report for fiscal year ended August 31, 2017 3. Governance Letter Resolution 17-16 Page 1 of 2 WESTLAKE ACADEMY RESOLUTION NO. 17-16 A RESOLUTION OF THE WESTLAKE ACADEMY BOARD OF TRUSTEES APPROVING THE FISCAL YEAR 2016-2017 ANNUAL AUDIT REPORT FROM WEAVER AND TIDWELL, L.L.P. WHEREAS, Section 7.3.6 of the Data Collection & Reporting section of the Financial Accountability System Resource Guide Update 11.0 requires that the annual financial and compliance report be audited by an independent auditor, and WHEREAS, Section 7.3.6 of the Data Collection & Reporting section of the Financial Accountability System Resource Guide Update 11.0 requires the audit report be submitted to the Division of School Financial Audits of TEA no later than 150 days after the close of the fiscal year, and WHEREAS, the audit report must be approved by the Board of Trustees. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF TRUSTEES OF WESTLAKE ACADEMY: SECTION 1: The above findings are hereby found to be true and correct and are incorporated herein in its entirety. SECTION 2: That the Board of Trustees of Westlake Academy hereby approves the fiscal year 2016-2017 annual audit report from Weaver and Tidwell, L.L.P. attached as Exhibit “A”, SECTION 3: If any portion of this resolution shall, for any reason, be declared invalid by any court of competent jurisdiction, such invalidity shall not affect the remaining provisions hereof and the Board hereby determines that it would have adopted this Resolution without the invalid provision. Resolution 17-16 Page 2 of 2 SECTION 4: That this resolution shall become effective from and after its date of passage. PASSED AND APPROVED BY THE BOARD OF TRUSTEES OF WESTLAKE ACADEMY, A CHARTER SCHOOL OF THE STATE OF TEXAS, ON THE 4th DAY OF DECEMBER, 2017. _____________________________ ATTEST: Laura Wheat, President _____________________________ ______________________________ Kelly Edwards, Board Secretary Thomas E. Brymer, Superintendent APPROVED AS TO FORM: ____________________________ Janet S. Bubert or L. Stanton Lowry, School Attorney WESTLAKE ACADEMY (A COMPONENT UNIT OF THE TOWN OF WESTLAKE) ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED AUGUST 31, 2017 Exhibit Page Certificate of Board 1 Independent Auditor's Report 2 Management's Discussion and Analysis 5 Basic Financial Statements Government Wide Statements: A-1 Statement of Net Position 12 B-1 Statement of Activities 13 Governmental Fund Financial Statements: C-1 Balance Sheet 14 C-2 Statement of Revenues, Expenditures, and Changes in Fund Balance 15 Fiduciary Funds: D-1 Statement of Fiduciary Net Position 16 Notes to the Basic Financial Statements 17 Required Supplementary Information E-1 Budgetary Comparison Schedule - General Fund 36 Notes to Budgetary Comparison Schedule 37 E-2 Schedule of Academy's Proportionate Share of Net Pension Liability - Teacher Retirement System 38 E-3 Schedule of Contributions - Teacher Retirement System 39 Combining Statements Nonmajor Governmental Funds: F-1 Combining Balance Sheet 40 F-2 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 42 Internal Control Report Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 44 TABLE OF CONTENTS 1 CERTIFICATE OF BOARD WESTLAKE ACADEMY TARRANT 220-810 Name of School County Co.-District Number We, the undersigned, certify that the attached annual financial reports of the above-named school were reviewed and (check one) approved disapproved for the year ended August 31, 2017 at a meeting of the Board of Trustees of such school on the 4 day of December, 2017. Signature of Board Secretary Signature of Board President If the Board of Trustees disapproved of the auditors' report, the reason(s) for disapproving it is(are): (attach list as necessary) FINANCIAL SECTION AN INDEPENDENT MEMBER OF BAKER TILLY INTERNATIONAL WEAVER AND TIDWELL, L.L.P. CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS 12221 MERIT DRIVE, SUITE 1400, DALLAS, TX 75251 P: 972.490.1970 F: 972.702.8321 INDEPENDENT AUDITOR'S REPORT Board of Trustees Westlake Academy Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of Westlake Academy (the Academy), a component unit of the Town of Westlake, as of and for the year ended August 31, 2017, and the related notes to the financial statements, which collectively comprise the Academy's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Westlake Academy Page 3 Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of Westlake Academy, as of August 31, 2017, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, budgetary comparison information, and TRS pension schedules on pages 5 through 11, 36 and 37, 38 and 39, respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Academy's basic financial statements. The nonmajor governmental funds combining statements are presented for the purposes of additional analysis and are not a required part of the basic financial statements. The nonmajor governmental funds combining statements are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the nonmajor governmental funds combining statements are fairly stated in all material respects in relation to the basic financial statements as a whole. Westlake Academy Page 4 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 28, 2017, on our consideration of the Academy's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, 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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Academy's internal control over financial reporting and compliance. WEAVER AND TIDWELL, L.L.P. Dallas, Texas November 28, 2017 WESTLAKE ACADEMY (A COMPONENT UNIT OF THE TOWN OF WESTLAKE) MANAGEMENT’S DISCUSSION AND ANALYSIS AUGUST 31, 2017 5 This section of Westlake Academy's (the Academy) annual financial report presents our discussion and analysis of the Academy's financial performance during the fiscal year ended August 31, 2017. Please read it in conjunction with the Academy's financial statements, which follow this section. FINANCIAL HIGHLIGHTS  On the government-wide financial statements, the assets of the Academy exceeded liabilities by $205,030 (Net Position). This is a decrease of $84,867 for the year ended August 31, 2017.  The Academy had $9,573,171 in expenses related to governmental activities, of which $3,286,503 of these expenses were offset by program-specific charges for services or grants and contributions. This is a total expense decrease of $702,190 from the prior year.  The General Fund reported a fund balance this year of $939,271, a decrease of $131,765 from the prior year. OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists of three parts: management’s discussion and analysis (this section), basic financial statements, and required supplementary information. The basic financial statements present different views of Academy:  The first two statements are government-wide financial statements that provide both long-term and short-term information about the Academy's overall financial status.  The remaining statements are fund financial statements that focus on individual parts of the government, reporting the Academy’s operations in more detail than the government-wide statements.  The governmental funds statements tell how general government services were financed in the short term as well as what remains for future spending.  Fiduciary fund statements provide information about the financial relationships in which the District acts solely as a trustee or agent for the benefit of others, to whom the resources in question belong. The financial statements also include notes (starting on page 17) that explain some of the information in the financial statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the information in the financial statements. The combining statements for nonmajor funds contain even more information about the Academy's individual funds. Figure A-1 summarizes the major features of the Academy's financial statements, including the portion of the Academy government they cover and the types of information they contain. The remainder of this overview section of managem ent's discussion and analysis explains the structure and contents of each of the statements. Government-wide Statements The government-wide statements beginning on page 12, report information about the Academy as a whole using accounting methods similar to those used by private-sector companies. Its primary objective is to show whether the Academy is better or worse off as a result of the year's activities. The statement of net position includes all of the Academy's assets and liabilities. The facilities used in the Academy’s operations are included in the Town of Westlake’s financial statements. All of the current year's revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid. WESTLAKE ACADEMY (A COMPONENT UNIT OF THE TOWN OF WESTLAKE) MANAGEMENT’S DISCUSSION AND ANALYSIS AUGUST 31, 2017 6 The Academy's revenue is divided into those provided by outside parties who share the costs of some programs, such as payments received from extracurricular activities and grants provided by the U.S. Department of Education to assist children with disabilities (program revenue), and general revenue provided by donations from the public or by Texas Education Agency (TEA) in equalization funding processes (general revenue). All the Academy's assets are reported whether they serve the current year or future years. Liabilities are considered regardless of whether they must be paid in the current or future years. Scope Entire government(except fiduciary funds) and the academy's component units Activities of the Academy that are not proprietary or fiduciary Instances in which the Academy is the trustee or agent for someone else's resources Required Financial Statements Statement of Net Position, Statement of Activities Balance Sheet, Statement of Revenues, Expenditures and Changes in Fund Balances Statement of Fiduciary Net Position, Statement of Changes in Fiduciary Net Position 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 Types of accountability information All assets and liabilities both financial and capital, short-term and long-term Only assets expected to be used up and liabilities that become due during the year or soon thereafter. No capital assets included. All assets and liabilities both short-term and long- term; the Academy's funds do not currently include capital assets, although they can. Types of Inflow/outflow Information All revenues and expenses during year, regardless of when cash is received or paid Revenue 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. All revenues and expenses during year, regardless of when cash is received or paid. Type of Statement Government-wide Governmental Funds Fiduciary Funds Figure A-1 Major features of the Academy's Government-wide and Fund Financial Statements The two government-wide statements report the Academy's net position and how it has changed. Net position-the difference between the Academy's assets, deferred outflows of resources, and liabilities and deferred inflows of resources-is one way to measure the Academy’s financial health or position.  Over time, increases or decreases in the Academy's net position are an indicator of whether its financial health is improving or deteriorating, respectivel y.  To assess the overall health of the Academy, one should consider additional non-financial factors such as changes in the Academy’s average daily attendance and the condition of the Academy’s facilities. The government-wide financial statements of the Academy include the Governmental activities. Most of the Academy's basic services are included here, such as instruction, curriculum and staff development, extracurricular activities, maintenance, health services and general administration. State funds, donations and grants finance most of these activities. Component Unit The government-wide financial statements also present the activity of Westlake Academy Foundation, a discretely presented component unit. The Foundation was organized exclusively for charitable and educational purposes and provides funds to help support the Academy. During 2017, the Foundation contributed $1,146,465 to the Academy to enhance educational opportunities. These contributions are recorded as operating grants and contributions in the Statement of Activities. WESTLAKE ACADEMY (A COMPONENT UNIT OF THE TOWN OF WESTLAKE) MANAGEMENT’S DISCUSSION AND ANALYSIS AUGUST 31, 2017 7 Fund Financial Statements The fund financial statements begin on page 14 and provide more detailed information about the Academy's most significant funds, not the Academy as a whole. Funds are accounting devices that the Academy uses to keep track of specific sources of funding and spending for particular purposes. • Some funds are required by State law and by bond covenants. • The Board of Trustees establishes other funds to control and manage money for particular purposes or to show that it is properly using certain taxes and grants. Below are the three types of funds. The Academy had only "Governmental Funds" and "Fiduciary Funds" for the year ended August 31, 2017.  Governmental funds – Most of the Academy's basic services 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 left at year-end that are available for spending. Consequently, the governmental fund statements provide a detailed short-term view that helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the Academy's programs. Because this information does not encompass the additional long-term focus of the government-wide statements, we provide additional information at the bottom of the governmental funds statement, or on the subsequent page, that explain the relationship (or differences) between them.  Fiduciary fund – the Academy maintains a fiduciary fund to account for resources held for student activities in a custodial capacity. These fiduciary activities are reported in a separate statement of fiduciary net position and a statement of changes in fiduciary net position on page 16. These activities are excluded from the school’s government-wide financial statements because they cannot use these assets to finance their operations.  Proprietary funds - Services for which the Academy would charge customers a fee are generally reported in proprietary funds. Proprietary funds, like the government- wide statements, provide both long and short-term financial information. The Academy presently has no proprietary funds. Government-wide Financial Analysis The following analysis focuses on the net position (Table A-1), sources of revenue (Figure A-2), and changes in net position (Table A-2) of the Academy's governmental activities. The Academy's net position was $205,030 at August 31, 2017. As noted earlier, net position may serve over time as a useful indicator of a government's financial position. Net position of the Academy's governmental activities decreased from $289,897 to $205,030. $196,491 of net position was considered unrestricted and can be used to finance day-to-day operations without constraints established by debt covenants, enabling legislation, or other legal requirements. The governmental activities’ net position decreased by 29 percent ($84,867). The decrease was primarily due to net effect of the following factors: (1) General Revenues increase of $188,491, consisting primarily of the additional state funding received due to an increase in student enrollment as well as additional funds for career technology educational students/courses. (2) Program Revenues of $3,286,503 representing a total increase of $90,867 mainly due to an increase in Operating Grants and Contributions related to the Blacksmith program contributions of roughly $120,000 which was offset by a reduction in state funding for the material allotment funds which is a bi-annual grant with the majority of the reimbursement of expenditures being made in the prior year. WESTLAKE ACADEMY (A COMPONENT UNIT OF THE TOWN OF WESTLAKE) MANAGEMENT’S DISCUSSION AND ANALYSIS AUGUST 31, 2017 8 (3) Total expenses decreased by $702,190 which is attributed to the following decreases:  Reduction in supplies due to the accounting entries made in the prior year to recognize a capital lease in the amount of $475K (offset with lease proceeds) which was not capitalized.  Additional technology being purchased in the prior year with designated fund balance.  Reduction in Curriculum and staff development in direct correlation with the local grant funds received specifically for training.  Decrease in marketing efforts because a video and website services were provided in the prior year. Table A-1 Westlake Academy’s Net Position 2017 2016 2017 2016 Current assets 934,452$ 1,386,808$ 1,955,950$ 1,695,889$ Total assets 934,452 1,386,808 1,955,950 1,695,889 Deferred outflows of resources 672,957 869,371 - - Current liabilities 127,386 228,046 275 10,404 Non-current liabilities 1,213,351 1,656,910 - - Total liabilities 1,340,737 1,884,956 275 10,404 Deferred inflows of resources 61,642 81,326 - - Net position: Restricted 8,539 24,017 271,809 86,740 Unrestricted 196,491 265,880 1,683,866 1,598,745 Total net position 205,030$ 289,897$ 1,955,675$ 1,685,485$ Governmental Activities Component Unit Figure A-2 Westlake Academy Sources of Revenue for Fiscal Year 2017 WESTLAKE ACADEMY (A COMPONENT UNIT OF THE TOWN OF WESTLAKE) MANAGEMENT’S DISCUSSION AND ANALYSIS AUGUST 31, 2017 9 Table A-2 Westlake Academy’s Change in Net Position 2017 2016 2017 2016 Revenues Program revenues: Charges for services 267,412$ 271,788$ -$ -$ Operating grants and contributions 2,261,830 2,164,774 1,715,833 1,390,413 Capital grants and contributions 757,261 759,074 - - General revenues: State aid and formula grants 6,196,430 6,010,184 - - Investment earnings 5,371 3,126 46,433 51,584 Total revenues 9,488,304 9,208,946 1,762,266 1,441,997 Expenses Instruction and Instructional related 5,937,557 6,816,094 - - Instructional leadership/ school leadership 1,219,354 1,169,690 - - Guidance, social work, health, transportation 360,777 338,683 - - Food services 51,674 51,834 - - Extracurricular activities 380,613 221,400 - - General administration 318,566 385,100 - - Facilities maintenance and operations 967,303 976,963 - - Data processing services 189,764 183,320 - - Community services 133,626 126,813 - - Program/support services 1,492,076 1,337,969 Debt service - interest 13,937 5,464 Total expenses 9,573,171 10,275,361 1,492,076 1,337,969 Change in net position (84,867) (1,066,415) 270,190 104,028 Beginning net position 289,897 1,356,312 1,685,485 1,581,457 Ending net position 205,030$ 289,897$ 1,955,675$ 1,685,485$ Governmental Activities Component Unit Activities WESTLAKE ACADEMY (A COMPONENT UNIT OF THE TOWN OF WESTLAKE) MANAGEMENT’S DISCUSSION AND ANALYSIS AUGUST 31, 2017 10 Table A-3 (below) presents the cost of each of the Academy's largest functions as well as each function's net cost (total cost less fees generated by the activities and intergovernmental aid). The net cost reflects what was funded by state revenues as well as local tax dollars. • The cost of governmental activities this year was $9,573,171 • Some of the cost was paid by those who directly benefited from the programs, $267,412 and some of the cost was paid through grants and contributions $3,019,091 Table A-3 Total % Total % Change Change 2017 2016 2016-17 2017 2016 2016-17 Instruction 5,692,052$ 6,517,509$ -13% 3,688,789$ 4,593,281$ -20% School leadership 944,381 948,246 0% 679,592 718,472 -5% Instructional leadership 274,973 221,444 24% 205,561 167,832 22% Guidance, counseling and evaluation services 277,877 260,596 7% 208,829 203,543 3% General administration 318,566 385,100 -17% 247,740 313,647 -21% Facilities Maintenance and operations 967,303 976,963 -1% 716,142 753,759 -5% Data processing services 189,764 183,320 4% 135,545 133,844 1% Total Cost of Services Net Cost of Services General Fund Budgetary Highlights  The General Fund year-end fund balance was $939,271 which was a $131,765 decrease from the prior year  Over the course of the year, the Academy revised its budget by decreasing revenues by $171,210 due to the anticipated student enrollment being smaller than originally budgeted. The final budgeted expenditures were decreased also in the amount of $37,274. Economic Factors and Next Year’s Budget General Fund revenues are budgeted to increase approximately 7% over FY 2016-2017 actual revenues. This increase is primarily due to the anticipated addition of 26 students and the increase of Career and Technology (CTE) courses and students. This additional program was implemented in the prior year. Amounts available for appropriation in the General Fund budget are $8,322,199, a decrease of 1% ($65,073) from the final FY 2016-2017 expenditures of $8,387,272.  Due to changes in administration and the realignment of faculty positions maximizing current available efficiencies, there is an overall decrease of $11K in salaries and related expenditures, reducing the FY 17/18 FTEs by 1.96. Faculty and staff received a 2% increase, which keeps the salary scale within 2.5% of surrounding school districts and remains consistent with previous years.  Professional services category includes expenditures related to professional and contracted services rendered to the Academy by firms, individuals and other organizations. The increase of $18K is mainly due to the increase in the cost for services to maintain the facilities, as well as increased costs required to change the Strings Program from in-house instruction to contract. WESTLAKE ACADEMY (A COMPONENT UNIT OF THE TOWN OF WESTLAKE) MANAGEMENT’S DISCUSSION AND ANALYSIS AUGUST 31, 2017 11  Other operating costs are associated with insurance, professional development, travel, membership fees and dues, graduation expenses, and miscellaneous costs. Cost savings in this category were due to a determined effort to reduce costs.  Debt service costs are associated with the 3-year lease for iPads to support the one-to-one device initiative. The reduction from the prior year includes the payoff for the original iPad lease, creating a decreased expenditure for FY 17/18. If the FY 2017-18 budget estimates are realized the Academy’s General Fund’s budgetary fund balance is expected to increase an estimated $337,319 by the close of FY 2018. CONTACTING THE ACADEMY'S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the Academy's finances and to demonstrate the Academy's accountability for the money it receives. If you have questions about this report or need additional financial information, contact the Academy/Town Finance Director, Debbie Piper, at 817-490-5712, or by writing to 1500 Solana Blvd, Building 7, Suite 7200, Westlake, Texas 76262. BASIC FINANCIAL STATEMENTS EXHIBIT A-1 WESTLAKE ACADEMY STATEMENT OF NET POSITION AUGUST 31, 2017 The Notes to Financial Statements are an integral part of this statement. 12 Data Control Codes 1 4 Governmental Component Activities Unit ASSETS 1110 Cash and cash equivalents 410,704$ 340,662$ 1120 Current investments 100 1,610,288 1240 Due from other governments 440,841 - 1290 Other receivables 5,450 - 1410 Prepaid expenses 77,357 5,000 1000 Total assets 934,452 1,955,950 DEFERRED OUTFLOWS OF RESOURCES 1705 Deferred outflows of resources - pensions 672,957 - 1700 Total deferred outflows of resources 672,957 - LIABILITIES 2110 Accounts payable 34,376 275 2150 Payroll deductions and withholdings 46,653 - 2160 Accrued wages payable 44,928 - 2200 Other accrued expenses 899 - 2300 Unearned revenue 530 - Noncurrent liabilities: 2502 Due in more than one year 162,005 - 2540 Net pension liability 1,051,346 - 2000 Total liabilities 1,340,737 275 DEFERRED INFLOWS OF RESOURCES 2605 Deferred inflows of resources - pensions 61,642 - 2600 Total deferred inflows of resources 61,642 - NET POSITION 3890 Restricted for donor stipulations 8,539 271,809 3900 Unrestricted 196,491 1,683,866 3000 Total net position 205,030$ 1,955,675$ EXHIBIT B-1 WESTLAKE ACADEMY STATEMENT OF ACTIVITIES FOR THE YEAR ENDED AUGUST 31, 2017 The Notes to Financial Statements are an integral part of this statement. 13 13 4 5 6 9 Primary Data Operating Capital Government Control Charges for Grants and Grants and Governmental Component Codes Expenses Services Contributions Contributions Activities Unit PRIMARY GOVERNMENT: Governmental Activities: 11 Instruction 5,692,052$ 49,435$ 1,455,149$ 498,679$ (3,688,789)$ 12 Instructional resources and media services 116,788 845 19,872 33,076 (62,995) 13 Curriculum and staff development 128,717 899 58,803 - (69,015) 21 Instructional leadership 274,973 2,769 66,643 - (205,561) 23 School leadership 944,381 9,110 239,620 16,059 (679,592) 31 Guidance, counseling, and evaluation services 277,877 2,776 62,201 4,071 (208,829) 33 Health services 82,900 702 16,766 12,704 (52,728) 35 Food service 51,674 7,000 - 51,674 7,000 36 Extracurricular activities 380,613 178,388 48,102 39,453 (114,670) 41 General administration 318,566 3,183 57,352 10,291 (247,740) 51 Facilities maintenance and operations 967,303 9,185 165,244 76,732 (716,142) 53 Data processing services 189,764 1,802 40,428 11,989 (135,545) 61 Community services 133,626 1,318 31,650 2,533 (98,125) 71 Debt service - interest 13,937 - - - (13,937) [TP] Total primary government:9,573,171$ 267,412$ 2,261,830$ 757,261$ (6,286,668) - COMPONENT UNIT IC Westlake Academy Foundation 1,492,076$ -$ 1,715,833$ -$ - 223,757 Data Control Codes General Revenues: SF State aid-formula grants 6,196,430 - IE Investment earnings 5,371 46,433 TR Total general revenues 6,201,801 46,433 CN Change in net position (84,867) 270,190 NB Net position, beginning 289,897 1,685,485 NE Net position, ending 205,030$ 1,955,675$ Net (Expense) Revenue and Changes in Net PositionProgram Revenues EXHIBIT C-1 WESTLAKE ACADEMY BALANCE SHEET GOVERNMENTAL FUNDS AUGUST 31, 2017 The Notes to Financial Statements are an integral part of this statement. 14 10 98 Data Nonmajor Total Control Governmental Governmental Codes General Funds Funds ASSETS 1110 Cash and cash equivalents 393,860$ 16,844$ 410,704$ 1120 Current investments 100 - 100 1240 Due from other governments 437,489 3,352 440,841 1260 Due from other funds 3,352 - 3,352 1290 Other receivables - 5,450 5,450 1410 Prepaid expenditures 231,399 4,140 235,539 1000 Total assets 1,066,200$ 29,786$ 1,095,986$ LIABILITIES AND FUND BALANCES LIABILITIES: 2110 Accounts payable 33,919$ 457$ 34,376$ 2150 Payroll deductions and withholdings 46,653 - 46,653 2160 Accrued wages payable 44,928 - 44,928 2170 Due to other funds - 3,352 3,352 2200 Accrued expenditures 899 - 899 2300 Unearned revenue 530 - 530 2000 Total liabilities 126,929 3,809 130,738 FUND BALANCES: 3430 Nonspendable - prepaid items 231,399 4,140 235,539 3490 Restricted for donor stipulations - 8,539 8,539 3545 Committed for campus activities - 13,298 13,298 3600 Unassigned 707,872 - 707,872 3000 Total fund balances 939,271 25,977 965,248 4000 Total liabilities and fund balances 1,066,200$ 29,786$ 1,095,986$ Total fund balances - governmental funds 965,248$ Amounts reported for governmental activities in the statement of net position are different because: Capital leases payable are not due and payable in the current period and, therefore, are not reported in the governmental funds financial statements. (162,005) Prepayment of long-term liabilities reduces the liability and therefore is not recorded as a prepaid item in the government-wide financial statements. (158,182) Included in the items related to debt is the Academy's proportionate share of the TRS net pension liability ($1,051,346), a deferred resource inflow ($61,642) and a deferred resource outflow of $672,957. The net effect is a decrease in net position. (440,031) Net position of governmental activities 205,030$ EXHIBIT C-2 WESTLAKE ACADEMY STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS FOR THE YEAR ENDED AUGUST 31, 2017 The Notes to Financial Statements are an integral part of this statement. 15 10 98 Data Nonmajor Total Control Governmental Governmental Codes General Funds Funds REVENUES 5700 Local and intermediate sources 1,626,401$ 269,700$ 1,896,101$ 5800 State program revenues 6,592,016 11,342 6,603,358 5900 Federal program revenues - 140,152 140,152 5020 Total revenues 8,218,417 421,194 8,639,611 EXPENDITURES 0011 Instruction 4,749,555 284,546 5,034,101 0012 Instructional resources and media services 81,227 - 81,227 0013 Curriculum and staff development 86,871 41,846 128,717 0021 Instructional leadership 266,090 - 266,090 0023 School leadership 875,439 23,204 898,643 0031 Guidance, counseling, and evaluation services 267,033 - 267,033 0033 Health services 67,489 - 67,489 0036 Extracurricular activities 242,560 96,257 338,817 0041 General administration 307,304 - 307,304 0051 Facilities maintenance and operations 886,943 - 886,943 0053 Data processing services 173,352 - 173,352 0061 Community services 126,614 - 126,614 0071 Debt service - principal on long-term debt 242,844 - 242,844 0072 Debt service - interest on long-term debt 13,951 - 13,951 6030 Total expenditures 8,387,272 445,853 8,833,125 1100 DEFICIENCY OF REVENUES UNDER EXPENDITURES (168,855) (24,659) (193,514) OTHER FINANCING SOURCES 7915 Transfers in 37,090 - 37,090 8911 Transfers out - (37,090) (37,090) Total other financing sources 37,090 (37,090) - 1200 NET CHANGE IN FUND BALANCES (131,765) (61,749) (193,514) 0100 FUND BALANCES, BEGINNING 1,071,036 87,726 1,158,762 3000 FUND BALANCES, ENDING 939,271$ 25,977$ 965,248$ Net change in fund balances (193,514)$ Amounts reported for governmental activities in the Statement of Activities are different because: Current year principal payments on capital leases consume current resources, however, these payments reduce liabilities in the government-wide financial statements. 242,858 Implementation of GASB 68 required certain expenditures be de-expended and recorded as deferred resource inflows. Contributions made after the measurement date caused the change in net position to increase by $84,783. Contributions before the measurement date also caused a decrease in the change in net position of $88,399. The net share of the Academy's amount of deferred inflows and outflows of resources decreased the net position by $130,595. This amount is the net effect.(134,211) Change in net position of governmental activities (84,867)$ EXHIBIT D-1 WESTLAKE ACADEMY STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS AUGUST 31, 2017 The Notes to Financial Statements are an integral part of this statement. 16 Agency Fund ASSETS Cash and cash equivalents 50,475$ Total assets 50,475$ LIABILITIES Due to student groups 50,475$ Total liabilities 50,475$ WESTLAKE ACADEMY NOTES TO THE FINANCIAL STATEMENTS 17 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reporting Entity Westlake Academy (the Academy), a blended component unit of the Town of Westlake (the Town), is a Texas nonprofit Corporation under Chapter 12, Subchapter D of the Education Code to provide education. The Board of Trustees (the Board) consists of six trustees and is appointed by the Town's governing body. Currently, all members of the Board are members of the Town's governing body. The Academy prepares its basic financial statements in conformity with generally accepted accounting principles promulgated by the Governmental Accounting Standards Board (the 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 Texas Education Agency's Financial Accountability System Resource Guide (the Resource Guide) and the requirements of contracts and grants of agencies from which it receives funds. The Board is appointed by the governing Council of the Town and it has the authority to make decisions, appoint administrators and managers, and significantly influence operations. It also has the primary accountability for fiscal matters. Therefore, the Academy is a financial reporting entity as defined by the GASB in its Statement No.14, "The Financial Reporting Entity" as modified by GASB Statements No. 39 and 61. The Academy's basic financial statements include a separate entity that is controlled by or dependent on the Academy. The determination to include separate entities is based on the criteria of GASB Statement No. 14, 'The Financial Reporting Entity" as amended by GASB Statement No. 39, "Determining Whether Certain Organizations Are Component Units" and GASB Statement No. 61, "The Financial Reporting Entity Omnibus." GASB defines the reporting entity as the primary government and those component units for which the primary government is financially accountable. To be financially accountable, a voting majority of the component unit's ruling body must be appointed by the primary government, and either (a) the primary government must be able to impose its will, or (b) the primary government may potentially benefit financially or be financially responsible for the component unit. The Westlake Academy Foundation (the Foundation) is a 501(c)(3) nonprofit organization which was established exclusively for the purpose of supporting the Academy. This includes fundraising for and contributing raised funds to the Academy. The Foundation has been discretely presented in the accompanying financial statements and reported in a separate column to emphasize that it is legally separate from the Academy. See Note 12 for additional information relating to the Foundation. Separate audited financial statements of the Foundation are available from the Academy/Town Finance Director's office, 1500 Solana Blvd, Building 7, Suite 7200, Westlake, Texas 76262. 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 Academy's nonfiduciary activities with most of the interfund activities removed. Governmental activities include programs supported primarily by state and federal grants, the Foundation, and the Town. The Academy has no business-type activities that rely to a significant extent, on fees and charges for support. Neither fiduciary funds nor component units that are fiduciary in nature are included. WESTLAKE ACADEMY NOTES TO THE FINANCIAL STATEMENTS 18 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Government-wide and Fund Financial Statements – Continued The Statement of Activities demonstrates how other people or entities that participate in programs the Academy operates have shared in the payment of the direct costs. Direct expenses are those that are clearly identifiable with a specific function or segment. 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 Academy. The primary example is school lunch charges. The "grants and contributions" column includes amounts paid by organizations outside the Academy to help meet the operational or capital requirements of a given function. Examples include grants under the Elementary and Secondary Education Act. If revenue is not program revenue, it is general revenue used to support all of the Academy's functions. Interfund activities between governmental funds appear as due to/ due from on the Governmental Fund Balance Sheet and as other resources and other uses on the Governmental Fund Statement of Revenues, Expenditures and Changes in Fund Balance. All interfund transactions between governmental funds are eliminated on the government-wide statements. 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 Academy operations, they are not included in the government- wide statements. The Academy considers some governmental funds major and reports their financial condition and results of operations in a separate column. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenue is recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. 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 it recognizes expenditures in the accounting period in which the fund liability is incurred, if measurable. 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 Academy considers all revenues available if they are collectible within 60 days after year-end. 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. WESTLAKE ACADEMY NOTES TO THE FINANCIAL STATEMENTS 19 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Measurement Focus, Basis of Accounting and Financial Statement Presentation – Continued 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 inflows until related and authorized expenditures have been made. If balances have not been expended by the end of the project period, grantors sometimes require the Academy to refund all or part of the unused amount. The fiduciary funds utilize the accrual basis of accounting for purposes of asset and liability recognition. With this basis of accounting, all assets and all liabilities associated with the operation of these funds are included on the Statement of Fiduciary Net Position. Fund Accounting The Academy reports the following major governmental funds: The General Fund is the Academy's primary operating fund. It accounts for all financial resources except those required to be accounted for in another fund. Additionally, the Academy reports the following fund types: Nonmajor Governmental Funds: These nonmajor Special Revenue Funds account for resources restricted to, or committed for, specific purposes by the Academy or a grantor in a Special Revenue Fund. Most federal and some state financial assistance is accounted for in a Special Revenue Fund and sometimes unused balances must be returned to the grantor at the close of specified project period. Fiduciary Funds: Agency Funds account for resources held for others in a custodial capacity. Fiduciary funds are reported in the fiduciary fund financial statements. However, because these assets are not available to support Academy programs, these funds are not included in the government- wide statements. The Academy's Agency Fund is a Student Activity Fund. Other Accounting Policies 1. The State of Texas (the State) has created a state minimum personal leave program consisting of five days per year personal leave with no limit on accumulation and transferability among districts is provided for employees in accordance with 19 TAC §153.1021(d)(8). Each District's local Board is required to establish a personal leave plan. It is the Academy's policy to permit employees to accumulate earned but unused state and local personal leave. There is no liability for unpaid accumulated personal leave since the Academy does not have a policy to pay any amounts when employees separate from service with the Academy. WESTLAKE ACADEMY NOTES TO THE FINANCIAL STATEMENTS 20 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Other Accounting Policies – Continued 2. The Data Control Codes refer to the account code structure prescribed by the Texas Education Agency (TEA) in the Financial Accountability System Resource Guide. TEA requires the Academy 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 plan. 3. When an expenditure is incurred for purposes for which both restricted or unrestricted fund balance is available, the Academy considers restricted funds to have been spent first. When an expenditure is incurred for which committed, assigned, or unassigned fund balances are available, the Academy considers amounts to have been spent first out of committed funds, then assigned funds, and finally unassigned funds. 4. The governmental fund financial statements present fund balances based on classifications that comprise a hierarchy that is based primarily on the extent to which the Academy is bound to honor constraints on the specific purposes for which amounts in the respective governmental funds can be spent. The classifications used in the governmental fund financial statements are as follows: • Nonspendable: This classification includes amounts that cannot be spent because they are either (a) not in spendable form or (b) are legally or contractually required to be maintained intact. • Restricted: This classification includes amounts for which constraints have been placed on the use of the resources either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments, or (b) imposed by law through constitutional provisions or enabling legislation. • Committed: This classification includes amounts that can be used only for specific purposes pursuant to constraints imposed by board resolution of the School Board, the Academy's highest level of decision making authority. These amounts cannot be used for any other purpose unless the School Board removes or changes the specified use by taking the same type of action that was employed when the funds were initially committed. This classification also includes contractual obligations to the extent that existing resources have been specifically committed for use in satisfying those contractual requirements. • Assigned: This classification includes amounts that are constrained by the Academy's intent to be used for a specific purpose but are neither restricted nor committed. This intent can be expressed by the Finance Director and Superintendent. • Unassigned: This classification includes the residual fund balance for the General Fund. The unassigned classification also includes negative residual fund balance of any other governmental fund that cannot be eliminated by offsetting of assigned fund balance amounts. 5. Net position represents the difference between assets and deferred outflows of resources and liabilities and deferred inflows of resources. Net position is reported as restricted when there are limitations imposed on its use either though the enabling legislations adopted by the Academy or through external restrictions imposed by creditors, grantors of laws or regulations of other governments. WESTLAKE ACADEMY NOTES TO THE FINANCIAL STATEMENTS 21 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Other Accounting Policies – Continued 6. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. 7. Sometimes the Academy will fund outlays for a particular purpose from both restricted (e.g. grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted net position and unrestricted net position in the government-wide financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the Academy's policy to consider restricted net position to have been depleted before unrestricted net position is applied. NOTE 2. CASH AND INVESTMENTS The funds of the Academy must be deposited and invested under the terms of a contract, contents of which are set out in the Depository Contract Law. The depository bank places approved pledged securities for safekeeping and trust with the Academy's agent bank in an amount sufficient to protect Academy funds on a day-to-day basis during the period of the contract. The pledge of approved securities is waived only to the extent of the depository bank's dollar amount of Federal Deposit Insurance Corporation (FDIC) insurance. At August 31, 2017, the carrying amount of the Academy's deposits (cash, certificates of deposit, and interest-bearing savings accounts included in temporary investments), including $50,475 recorded in the Agency fund, was $461,179 and the bank balance was $540,871. The carrying amount of the Foundation’s deposits was $340,662 as of August 31, 2017 and the bank balance was $340,878. The Academy cash deposits at August 31, 2017 and during the year then ended was entirely covered by FDIC insurance or by pledged collateral held by the Academy’s agent bank in the Town of Westlake’s name. The following is disclosed regarding the combined balances on the date of highest deposit: a. Depository: First Financial Bank b. The market value of securities pledged to the Town (inclusive of the Academy) as of the date of the highest combined balance on deposit was $28,907,405. c. The highest combined balances of cash, savings, and time deposit accounts amounted to $28,174,574 ($1,705,806 of which belonged to the Academy) on January 25, 2017. d. Total amount of FDIC coverage at the time of the highest combined balance was $250,000. WESTLAKE ACADEMY NOTES TO THE FINANCIAL STATEMENTS 22 NOTE 2. CASH AND INVESTMENTS – CONTINUED The Public Funds Investment Act (Government Code Chapter 2256) contains specific provisions in the areas of investment practices, management reports and establishment of appropriate policies. Among other things, it requires the Academy to adopt, implement, and publicize an investment policy. That policy must address the following areas: (1) safety of principal and liquidity, (2) portfolio diversification, (3) allowable investments, (4) acceptable risk levels, (5) expected rates of return, (6) maximum allowable stated maturity of portfolio investments, (7) maximum average dollar-weighted maturity allowed based on the stated maturity date for the portfolio, (8) investment staff quality and capabilities, and (9) bid solicitation preferences for certificates of deposit. Statutes authorize the Academy to invest in (1) obligations of the U. S. Treasury, certain U. S. agencies, and the State of Texas; (2) certificates of deposit, (3) certain municipal securities, (4) money market savings accounts, (5) repurchase agreements, (6) bankers acceptances, (7) mutual funds, (8) investment pools, (9) guaranteed investment contracts, and (10) common trust funds. The Act also requires the Academy to have independent auditors perform test procedures related to investment practices as provided by the Act. The Academy is in substantial compliance with the requirements of the Act and with local policies. The Academy categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. GASB Statement No. 72, Fair Value Measurement and Application provides a framework for measuring fair value which establishes a three-level fair value hierarchy that describes the inputs that are used to measure assets and liabilities. • Level 1 inputs are quoted prices (unadjusted) for identical assets or liabilities in active markets that a government can access at the measurement date. • Level 2 inputs are inputs—other than quoted prices included within Level 1—that are observable for an asset or liability, either directly or indirectly. • Level 3 inputs are unobservable inputs for an asset or liability. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. If a price for an identical asset or liability is not observable, a government should measure fair value using another valuation technique that maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs. If the fair value of an asset or a liability is measured using inputs from more than one level of the fair value hierarchy, the measurement is considered to be based on the lowest priority level input that is significant to the entire measurement. The Academy presently has no recurring fair value measurements. Investment Pools are measured at amortized cost and are exempt for fair value reporting. The carrying value of the Academy’s investments at August 31, 2017, was $100, which was deposited in TexPool (a Texas Local Government Investment Pool). Local government investment pools operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. Local government investment pools use amortized cost rather than market value to report net assets to compute share prices. Accordingly, the fair value of the position of these pools is the same as the value of the shares in each pool. TexPool is organized in conformity with the Interlocal Cooperation Act, Chapter 791 of the Texas Government Code, and the Public Funds Investment Act. Chapter 2256 of the Texas Government Code. The Texas Comptroller of Public Accounts is the sole officer, director and shareholder of the Texas Treasury Safekeeping Trust Company, which is authorized to operate TexPool. In addition, the TexPool Advisory Board advises on TexPool’s Investment Policy. This Board is composed equally of participants in TexPool and other persons who do not have a business relationship with TexPool who are qualified to advise TexPool. TexPool is subject to annual review by an independent auditor consistent with the Public Funds Investment Act. In addition, TexPool is subject to review by the State Auditor's office and by the Internal Auditor of the Comptroller's office. WESTLAKE ACADEMY NOTES TO THE FINANCIAL STATEMENTS 23 NOTE 2. CASH AND INVESTMENTS – CONTINUED In compliance with the Public Funds Investment Act, the Academy has adopted a deposit and investment policy. That policy does address the following risks: 1 Custodial Credit Risk-Deposits: This is the risk that in the event of bank failure, the Academy's deposits may not be returned to it. As of August 31, 2017, the Academy’s deposits with financial institutions in excess of federal depository insurance were fully collateralized by FDIC insurance and pledged collateral held by the Academy’s agent bank in the Town of Westlake’s name. 2. Custodial Credit Risk-Investments: This is the risk that, in the event of the failure of the counterparty, the Academy will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. Investments are subject to custodial credit risk only if they are evidenced by securities that exist in physical or book entry form. Thus positions in external investment pools are not subject to custodial credit risk because they are not evidenced by securities that exist in physical or book entry form. 3. Other Credit Risk: There is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. To minimize credit risk, TexPool invests only in investments authorized under the Public Funds Investment Act. As of August 31, 2017, TexPool’s investments credit quality rating was AAAm (Standard & Poor's). Foundation – Investments The Foundation’s investments in marketable securities are valued at their estimated fair values in the statement of financial position. Unrealized gains and losses are included in the statement of activities. All other investments are carried at cost. Investments at the end of the year consist of the following: Investment Type Cost Basis Market Value Marketable equity securities: Common stock 1,568,358$ 1,610,288$ August 31, 2017 FASB ASC 820, Fair Value Measurements and Disclosures, establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under FASB ASC 820 are described as follows: Level 1 inputs: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Foundation has the ability to access. Level 2 inputs: Inputs to the valuation methodology include: • Quoted market prices for similar assets or liabilities in active markets; • Quoted prices for identical assets or liabilities in inactive markets; • Inputs other than quoted prices that are observable for the asset or liability; and WESTLAKE ACADEMY NOTES TO THE FINANCIAL STATEMENTS 24 NOTE 2. CASH AND INVESTMENTS – CONTINUED Foundation – Investments – Continued • Inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full-term of the asset or liability. Level 3 inputs: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The asset or liability's fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The following is a description of the valuation methodologies used for assets measured at fair value. Marketable Equity Securities Marketable equity securities reported as level 1 are determined by reference to quoted market prices for investments listed on an exchange or over-the-counter market. The following table sets forth by level, within the fair value hierarchy, the Foundation's assets at fair value as of August 31, 2017. Level 1 Level 2 Level 3 Total Marketable equity securities: Common stock 1,610,288$ -$ -$ 1,610,288$ Assets at Fair Value as of August 31, 2017 NOTE 3. DUE FROM OTHER GOVERNMENTS The Academy participates in a variety of state and local programs from which it receives grants to partially or fully finance certain activities. Amounts due from federal and local governments as of August 31, 2017, are summarized below. State Fund Entitlements Local Total General 434,026$ 3,463$ 437,489$ Nonmajor funds 3,352 - 3,352 Total 437,378$ 3,463$ 440,841$ WESTLAKE ACADEMY NOTES TO THE FINANCIAL STATEMENTS 25 NOTE 4. DONATED USE OF FACILITIES The Academy currently operates in facilities that are capital assets of the Town. The Academy is not required by the Town to pay rent for the use of those facilities; however, the Academy recognizes the value of the use received, $757,261, in the government-wide statement of activities as capital grants and contributions and as expense allocated to the various functions. NOTE 5. INTERFUND BALANCES AND ACTIVITIES Interfund balances at August 31, 2017, consisted of the following individual fund balances: Due to Fund Due from Fund Amount Purpose General fund Nonmajor governmental 3,352$ Reimburse program disbursements Total 3,352$ The Academy had interfund transfers of $37,090 from the nonmajor governmental funds into the general fund for reimbursement of campus activity expenditures for the year ending August 31, 2017. NOTE 6. REVENUE FROM LOCAL AND INTERMEDIATE SOURCES During the current year, revenues from local and intermediate sources as reported on Exhibit C-2 of the fund statements consisted of the following: Non-major General Fund Funds Total Gifts and bequests 1,435,669$ 187,649$ 1,623,318$ Interest 5,371 - 5,371 Food sales 7,000 - 7,000 Campus activities - 82,051 82,051 Parking/transportation 17,097 - 17,097 Athletics 76,726 - 76,726 Miscellaneous 84,538 - 84,538 Total 1,626,401$ 269,700$ 1,896,101$ NOTE 7. DEFINED BENEFIT PENSION PLAN Plan Description The Academy participates in a cost-sharing multiple-employer defined benefit pension that has a special funding situation. The plan is administered by the Teacher Retirement System of Texas (TRS). TRS’s defined benefit pension plan is established and administered in accordance with the Texas Constitution, Article XVI, Section 67 and Texas Government Code, Title 8, Subtitle C. The pension trust fund is a qualified pension trust under Section 401(a) of the Internal Revenue Code. The Texas Legislature establishes benefits and contribution rates within the guidelines of the Texas Constitution. The pension’s Board of Trustees does not have the authority to establish or amend benefit terms. WESTLAKE ACADEMY NOTES TO THE FINANCIAL STATEMENTS 26 NOTE 7. DEFINED BENEFIT PENSION PLAN – CONTINUED Plan Description – Continued All employees of public, state-supported educational institutions in Texas who are employed for one-half or more of the standard work load and who are not exempted from membership under Texas Government Code, Title 8, Section 822.002 are covered by the system. Pension Plan Fiduciary Net Position Detailed information about the Teacher Retirement System’s fiduciary net position is available in a separately-issued Comprehensive Annual Financial Report that includes financial statements and required supplementary information. That report may be obtained on the Internet at http://www.trs.state.tx.us/about/documents/cafr.pdf#CAFR; by writing to TRS at 1000 Red River Street, Austin, TX, 78701-2698; or by calling (512) 542-6592. Benefits Provided TRS provides service and disability retirement, as well as death and survivor benefits, to eligible employees (and their beneficiaries) of public and higher education in Texas. The pension formula is calculated using 2.3 percent (multiplier) times the average of the five highest annual creditable salaries times years of credited service to arrive at the annual standard annuity except for members who are grandfathered, the three highest annual salaries are used. The normal service retirement is at age 65 with 5 years of credited service or when the sum of the member’s age and years of credited service equals 80 or more years. Early retirement is at age 55 with 5 years of service credit or earlier than 55 with 30 years of service credit. There are additional provisions for early retirement if the sum of the member’s age and years of service credit total at least 80, but the member is less than age 60 or 62 depending on date of employment, or if the member was grandfathered in under a previous rule. There are no automatic post-employment benefit changes; including automatic COLAs. Ad hoc post- employment benefit changes, including ad hoc COLAs can be granted by the Texas Legislature as noted in the Plan description in (A) above. Contributions Contribution requirements are established or amended pursuant to Article 16, section 67 of the Texas Constitution which requires the Texas legislature to establish a member contribution rate of not less than 6% of the member’s annual compensation and a state contribution rate of not less than 6% and not more than 10% of the aggregate annual compensation paid to members of the system during the fiscal year. Texas Government Code section 821.006 prohibits benefit improvements, if as a result of the particular action, the time required to amortize TRS’ unfunded actuarial liabilities would be increased to a period that exceeds 31 years, or, if the amortization period already exceeds 31 years, the period would be increased by such action. Employee contribution rates are set in state statute, Texas Government Code 825.402. Senate Bill 1458 of the 83rd Texas Legislature amended Texas Government Code 825.402 for member contributions and established employee contribution rates for fiscal years 2014 thru 2017. The 83rd Texas Legislature, General Appropriations Act (GAA) established the employer contribution rates for fiscal years 2016 and 2017. WESTLAKE ACADEMY NOTES TO THE FINANCIAL STATEMENTS 27 NOTE 7. DEFINED BENEFIT PENSION PLAN – CONTINUED Contributions – Continued The 84th Texas Legislature, General Appropriations Act (GAA) established the employer contribution rates for fiscal years 2016 and 2017. Contribution Rates 2016 2017 Member 7.2% 7.2% Non-Employer Contributing Entity (State) 6.8% 6.8% Employers 6.8% 6.8% 2017 Employer Contributions $ 84,783 2017 Member Contributions $ 382,298 2017 NECE On-behalf Contributions $ 340,001 Contributors to the plan include members, employers and the State of Texas as the only non- employer contributing entity. The State is the employer for senior colleges, medical schools and state agencies including TRS. In each respective role, the State contributes to the plan in accordance with state statutes and the General Appropriations Act (GAA). As the non-employer contributing entity for public education and junior colleges, the State of Texas contributes to the retirement system an amount equal to the current employer contribution rate times the aggregate annual compensation of all participating members of the pension trust fund during that fiscal year reduced by the amounts described below which are paid by the employers. Employers (public school, junior college, other entities or the State of Texas as the employer for senior universities and medical schools) are required to pay the employer contribution rate in the following instances:  On the portion of the member's salary that exceeds the statutory minimum for members entitled to the statutory minimum under Section 21.402 of the Texas Education Code.  During a new member’s first 90 days of employment.  When any part or all of an employee’s salary is paid by federal funding sources, a privately sponsored source, from non-educational and general, or local funds.  When the employing district is a public junior college or junior college district, the employer shall contribute to the retirement system an amount equal to 50% of the state contribution rate for certain instructional or administrative employees; and 100% of the state contribution rate for all other employees. In addition to the employer contributions listed above, there are two additional surcharges an employer is subject to:  When employing a retiree of the Teacher Retirement System the employer shall pay both the member contribution and the state contribution as an employment after retirement surcharge.  When a school district or charter school does not contribute to the Federal Old-Age, Survivors and Disability Insurance (OASDI) Program for certain employees, they must contribute 1.5% of the state contribution rate for certain instructional or administrative employees; and 100% of the state contribution rate for all other employees. WESTLAKE ACADEMY NOTES TO THE FINANCIAL STATEMENTS 28 NOTE 7. DEFINED BENEFIT PENSION PLAN – CONTINUED Actuarial Assumptions The total pension liability in the August 31, 2016 actuarial valuation was determined using the following actuarial assumptions: Valuation Date August 31, 2016 Actuarial Cost Method Individual Entry Age Normal Asset Valuation Method Market Value Single Discount Rate 8.00% Long-term expected Investment Rate of Return* 8.00% Inflation 2.50% Salary Increases including inflation 3.50% to 9.50% Payroll Growth Rate 2.50% Benefit Changes during the year None Ad hoc post-employment benefit changes None The actuarial methods and assumptions are primarily based on a study of actual experience for the four year period ending August 31, 2014 and adopted on September 24, 2015. Discount Rate The discount rate used to measure the total pension liability was 8.0%. There was no change in the discount rate since the previous year. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and those of the contributing employers and the non-employer contributing entity are made at the statutorily required rates. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. The long-term rate of return on pension plan investments is 8%. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimates ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. WESTLAKE ACADEMY NOTES TO THE FINANCIAL STATEMENTS 29 NOTE 7. DEFINED BENEFIT PENSION PLAN – CONTINUED Discount Rate – Continued Best estimates of geometric real rates of return for each major asset class included in the Systems target asset allocation as of August 31, 2016 are summarized below: Long-term Expected Portfolio Target Real Return Real Rate of Asset Class Allocation Geometric Basis Return* Global Equity U.S. 18% 4.6% 1.0% Non-U.S. Developed 13% 5.1% 0.8% Emerging Markets 9% 5.9% 0.7% Directional Hedge Funds 4% 3.2% 0.1% Private Equity 13% 7.0% 1.1% Stable Value U.S. Treasuries 11% 0.7% 0.1% Absolute Return 0% 1.8% 0.0% Stable Value Hedge Funds 4% 3.0% 0.1% Cash 1% -0.2% 0.0% Real Return Global Inflation Linked Bonds 3% 0.9% 0.0% Real Assets 16% 5.1% 1.1% Energy and Natural Resources 3% 6.6% 0.2% Commodities 0% 1.2% 0.0% Risk Parity Risk Parity 5% 6.7% 0.3% Inflation Expectation 2.2% Alpha 1.0% Total 100.0% 8.7% * The Expected Contribution to Returns incorporates the volatility drag resulting from the conversion between Arithmetic and Geometric mean returns. Discount Rate Sensitivity Analysis The following schedule shows the impact of the Net Pension Liability if the discount rate used was 1% less than and 1% greater than the discount rate that was used (8%) in measuring the 2016 Net Pension Liability. 1% Decrease in Discount Rate (7.0%) Discount Rate (8.0%) 1% Increase in Discount Rate (9.0%) Academy’s proportionate share of the net pension liability $1,627,129 $1,051,346 $562,965 WESTLAKE ACADEMY NOTES TO THE FINANCIAL STATEMENTS 30 NOTE 7. DEFINED BENEFIT PENSION PLAN – CONTINUED Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At August 31, 2017, the Academy reported a liability of $1,051,346 for its proportionate share of the TRS’s net pension liability. This liability reflects a reduction for State pension support provided to the Academy. The amount recognized by the Academy as its proportionate share of the net pension liability, the related State support, and the total portion of the net pension liability that was associated with the Academy were as follows: Academy’s Proportionate share of the collective net pension liability $ 1,051,346 State’s proportionate share that is associated with Academy 4,035,754 Total $ 5,087,100 The net pension liability was measured as of August 31, 2016 and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The employer’s proportion of the net pension liability was based on the employer’s contributions to the pension plan relative to the contributions of all employers to the plan for the period September 1, 2015 thru August 31, 2016. At August 31, 2016 the employer’s proportion of the collective net pension liability was 0.0027822% which was a decrease of 0.0003123% from its proportion measured as of August 31, 2015. Changes Since the Prior Actuarial Valuation There were no changes of benefit terms that affected measurement of the total pension liability during the measurement period. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended August 31, 2017, the Academy recognized pension expense of $418,815 and revenue of $418,815 for support provided by the State. At August 31, 2017, the Academy reported its proportionate share of the TRS’s deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual economic experience $ 16,485 $ 31,393 Changes in actuarial assumptions $ 32,043 $ 29,142 Difference between projected and actual investment earnings $ 89,026 $ - Changes in proportion and difference between the employer’s contributions and the proportionate share of contributions $ 450,620 $ 1,107 Contributions paid to TRS subsequent to the measurement date $ 84,783 $ - Total $ 672,957 $ 61,642 WESTLAKE ACADEMY NOTES TO THE FINANCIAL STATEMENTS 31 NOTE 7. DEFINED BENEFIT PENSION PLAN – CONTINUED Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions – Continued The net amounts of the employer’s balances of deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: NOTE 8. HEALTH CARE COVERAGE During the period ended August 31, 2017, employees of the Academy who met minimum eligibility requirements were covered by a state-wide health care plan, TRS Active Care. The Academy's participation in this plan is renewed annually. The Academy paid into the Plan $341 per month per employee and $266 per month when the employee works less than 30 hours per week if eligible to enroll in TRS Active Care. Employees, at their option, pay premiums for any coverage above these amounts as well as for dependent coverage. The Teacher Retirement System (TRS) manages TRS Active Care. The medical plan is administered by Caremark Health administers the prescription drug plan. The latest financial information on the state-wide plan 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. NOTE 9. RETIREE HEALTH PLAN Plan Description Westlake Academy 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 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 Teacher Retirement System of Texas 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 Web site at www.trs.state.tx.us under the TRS Publications heading, by calling the TRS Communications Department at 1-800-223-8778, or by writing to the Communications Department of the Teacher Retirement System of Texas, 1000 Red River Street, Austin, Texas 78701. Year ended August 31: Pension Expense (Income) Amount 2018 $ 99,970 2019 99,970 2020 156,755 2021 95,606 2022 73,187 Thereafter 1,044 Total $ 526,532 WESTLAKE ACADEMY NOTES TO THE FINANCIAL STATEMENTS 32 NOTE 9. RETIREE HEALTH PLAN – CONTINUED 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. Funding for free basic coverage is provided by the program based upon public school district payroll. 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. Funding for optional coverage is provided by those participants selecting the optional coverage. Contribution rates and amounts are shown in the table below for fiscal years 2015 – 2017. Year Rate Amount Rate Amount Rate Amount 2017 0.65% 32,279$ 1.00% 49,659$ 0.55% 27,313$ 2016 0.65% 33,115$ 1.00% 50,946$ 0.55% 28,020$ 2015 0.65% 31,100$ 1.00% 43,124$ 0.55% 26,314$ Active Member State School District Contribution Rates Medicare, Part D - On-behalf Payments The Medicare Prescription Drug, Improvement, and Modernization Act of 2003, which was 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. These on-behalf payments of $15,365, $18,453, and $18,231 were recognized for the years ended August 31, 2017, 2016 and 2015, respectively, as equal revenues and expenditures. NOTE 10. RISK MANAGEMENT The Academy is exposed to various risk of loss related to torts, theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters for which the Academy carries commercial insurance. There were no settlements exceeding insurance coverage in the current fiscal year. Litigation and Contingencies The Academy is a party to various legal actions none of which is believed by administration to have a material effect on the financial condition of the Academy. Accordingly, no provision for losses has been recorded in the accompanying combined financial statements for such contingencies. The Academy participates in state and federal grant programs which are governed by various rules and regulations of the grantor agencies. Costs charged to the respective grant programs are subject to audit and adjustment by the grantor agencies; therefore, to the extent that the Academy has not complied with the rules and regulations governing the grants, if any, refunds of any money received may be required and the collectability of any related receivable at August 31, 2017 may be impaired. In the opinion of the Academy, there are no significant contingent liabilities relating to compliance with the rules and regulations governing the respective grants; therefore, no provision has been recorded in the accompanying combined financial statements for such contingencies. WESTLAKE ACADEMY NOTES TO THE FINANCIAL STATEMENTS 33 NOTE 11. CAPITAL LEASES The Academy has entered into lease agreements as lessee for financing the acquisition of computer equipment and software. The lease agreements qualify as capital leases for accounting purposes, and therefore, have been recorded at the present value of the future minimum lease payments as of the inception date. Equipment and software with a historical cost of $491,040 was under capital lease at August 31, 2017. Because the cost of the individual items was below the Academy’s capitalization threshold, the entire cost was recorded as expense. The following schedule shows the future minimum lease payments under the capitalized lease together with the present value of the net minimum lease payments as of August 31, 2017: Annual Lease Payments 166,039$ Total minimum lease payments 166,039 Less: Amounts representing interest (4,034) Present value of net minimum lease payments 162,005$ Year Ending August 31, 2019 NOTE 12. RELATED PARTY TRANSACTIONS The Westlake Academy Foundation contributed $1,146,465 to the Academy during the fiscal year ended August 31, 2017. In addition to the use of facilities discussed in Note 4, the Town of Westlake contributed $315,000 to the Academy during the year. NOTE 13. EVALUATION OF SUBSEQUENT EVENTS The Academy has evaluated subsequent events through November 28, 2017, the date which the financial statements were available to be issued. NOTE 14. NEW ACCOUNTING PRONOUNCEMENTS The GASB issued Statement No. 81, Irrevocable Split-Interest Agreements, which will be effective for periods beginning after December 15, 2016. The objective of this Statement is to improve accounting and financial reporting for irrevocable split-interest agreements by providing recognition and measurement guidance for situations in which a government is a beneficiary of the agreement. This Statement applies to all state and governmental entities. This standard becomes effective for the Academy in fiscal year 2018. The Academy will evaluate the impact of this statement and take the necessary steps to implement it. WESTLAKE ACADEMY NOTES TO THE FINANCIAL STATEMENTS 34 NOTE 14. NEW ACCOUNTING PRONOUNCEMENTS – CONTINUED The GASB issued Statement No. 82, Pension Issues- an amendment of GASB Statements No. 67, No. 68, and No. 73, which will be effective for periods beginning after June 15, 2017. The objective of this Statement is to address certain issues that have been raised with respect to Statements No. 67, Financial Reporting for Pension Plans, No. 68, Accounting and Financial Reporting for Pensions, and No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68. Specifically, this Statement addresses issues regarding (1) the presentation of payroll-related measures in required supplementary information, (2) the selection of assumptions and the treatment of deviations from the guidance in an Actuarial Standard of Practice for financial reporting purposes, and (3) the classification of payments made by employers to satisfy employee (plan member) contribution requirements. This Statement applies to all state and governmental entities. This standard becomes effective for the Academy in fiscal year 2018. The Academy will evaluate the impact of this statement and take the necessary steps to implement it. The GASB issued Statement No. 86, Omnibus 2017, which will be effective for periods beginning after June 15, 2017. The primary objective of this Statement is to improve consistency in accounting and financial reporting for in-substance defeasance of debt by providing guidance for transactions in which cash and other monetary assets acquired with only existing resources—resources other than the proceeds of refunding debt—are placed in an irrevocable trust for the sole purpose of extinguishing debt. This Statement applies to all state and governmental entities. This standard becomes effective for the Academy in fiscal year 2018. The Academy will evaluate the impact of this statement and take the necessary steps to implement it. NOTE 15. EXPENDITURES IN EXCESS OF APPROPRIATIONS For the year ending August 31, 2017, expenditures exceeded appropriations in the following functions: Curriculum and Staff Development ($248); School Leadership ($21,504); Guidance, Counseling and Evaluation Services ($38,083); General Administration ($178); and Community Services ($4,594). In addition, expenditures exceeded appropriations for the general fund as a whole by $26,801. These over-expenditures will be addressed through future appropriations. REQUIRED SUPPLEMENTARY INFORMATION WESTLAKE ACADEMY EXHIBIT E-1 BUDGETARY COMPARISON SCHEDULE – GENERAL FUND FOR THE YEAR ENDED AUGUST 31, 2017 36 Actual Variance With Data Amounts Final Budget Control GAAP BASIS Positive or Codes Original Final (Negative) REVENUES 5700 Local and intermediate sources 1,677,862$ 1,644,592$ 1,626,401$ (18,191)$ 5800 State program revenues 6,721,311 6,583,371 6,592,016 8,645 5020 Total revenues 8,399,173 8,227,963 8,218,417 (9,546) EXPENDITURES CURRENT: 0011 Instruction 4,788,354 4,759,616 4,749,555 10,061 0012 Instructional resources and media services 84,089 82,639 81,227 1,412 0013 Curriculum and staff development 127,802 86,623 86,871 (248) 0021 Instructional leadershp 276,548 278,148 266,090 12,058 0023 School leadership 851,510 853,935 875,439 (21,504) 0031 Guidance, counseling, and evaluation services 236,600 228,950 267,033 (38,083) 0033 Health services 68,024 68,024 67,489 535 0036 Extracurricular activities 175,826 246,013 242,560 3,453 0041 General administration 276,495 307,126 307,304 (178) 0051 Facilities maintenance and operations 940,838 893,738 886,943 6,795 0053 Data processing services 192,401 176,401 173,352 3,049 0061 Community services 122,020 122,020 126,614 (4,594) 0072 Debt service 257,238 257,238 256,795 443 6030 Total expenditures 8,397,745 8,360,471 8,387,272 (26,801) 1100 Excess (deficiency) of revenues over (under) expenditures 1,428 (132,508) (168,855) (36,347) OTHER FINANCING SOURCES 7913 Transfers in - 57,090 37,090 (20,000) Total other financing sources - 57,090 37,090 (20,000) 1200 Net change in fund balances 1,428 (75,418) (131,765) (56,347) 0100 Fund balances--beginning 1,071,036 1,071,036 1,071,036 - 3000 Fund balances--ending 1,072,464$ 995,618$ 939,271$ (56,347)$ Budgeted Amounts WESTLAKE ACADEMY NOTES TO BUDGETARY COMPARISON SCHEDULE FOR THE YEAR ENDED AUGUST 31, 2017 37 Budgetary Information The Board of Trustees adopts an “appropriated budget” on a GAAP basis for the General Fund. The Academy is required to present the adopted and final amended budgeted revenues and expenditures for this fund. The General Fund budget appears in Exhibit E-1. The following procedures are followed in establishing the budgetary data: 1. Prior to August 25 of the preceding fiscal year, the Academy 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 of Trustees is then called for the purpose of adopting the proposed budget. 3. Prior to September 1, the budget is legally enacted through resolution by the Board. Once a budget is approved, it can only be amended at the object, 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 made before the fact, is reflected in the official minutes of the Board, and is not made after fiscal year end. 4. Budgeted amounts are amended by the Board. All budget appropriations lapse at year end. WESTLAKE ACADEMY EXHIBIT E-2 SCHEDULE OF ACADEMY’S PROPORTIONATE SHARE OF NET PENSION LIABILITY – TEACHER RETIREMENT SYSTEM FOR THE LAST TEN PLAN YEARS 38 2016 2015 2014 Academy's proportion of the net pension liability 0.0027822% 0.0030945% 0.0007190% Academy's proportionate share of net pension liability 1,051,346$ 1,093,865$ 192,056$ State's proportionate share of net pension liability associated with the Westlake Academy 4,035,754 3,667,893 2,965,583 Total 5,087,100$ 4,761,758$ 3,157,639$ Academy's covered payroll 5,094,571$ 4,784,695$ 4,300,931$ Academy's proportionate share of net pension liability as a percentage of its covered payroll 20.64% 22.86% 4.47% Plan fiduciary net position as a percentage of total pension liability 78.00% 78.43% 83.25% Note: Only three years of data is presented in accordance with GASB #68, paragraph 138. "The information for all periods for the 10-year schedules that are required to be presented as required supplementary information may not be available initially. In these cases, during the transition period, that information should be presented for as many years as are available. The schedules should not include information that is not measured in accordance with the requirements of this Statement." WESTLAKE ACADEMY EXHIBIT E-3 SCHEDULE OF CONTRIBUTIONS – TEACHER RETIREMENT SYSTEM FOR THE LAST TEN FISCAL YEARS 39 2017 2016 2015 Statutorially required contributions 131,436$ 88,399$ 92,325$ Actual contributions in relation to statutorially required contributions 131,436 88,399 92,325 Contribution deficiency (excess) -$ -$ -$ Academy's covered payroll 4,965,944$ 5,094,571$ 4,784,694$ Contributions as a percentage of Academy's covered payroll 2.65% 1.74% 1.93% Note: GASB 68, Paragraph 81.2.b requires that the data in this schedule be presented as of the Academy's current fiscal year as opposed to the time period covered by the measurement date. Note: Only three years of data is presented in accordance with GASB #68, paragraph 138. "The information for all periods for the 10-year schedules that are required to be presented as required supplementary information may not be available initially. In these cases, during the transition period, that information should be presented for as many years as are available. The schedules should not include information that is not measured in accordance with the requirements of this Statement." COMBINING STATEMENTS WESTLAKE ACADEMY COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS AUGUST 31, 2017 40 224 315 410 461 Data Control Codes IDEA Part B Formula SSA IDEA Part B Discretionary State Textbook Fund Campus Activity Funds ASSETS 1110 Cash and cash equivalents -$ -$ -$ 7,848$ 1240 Due from other governments - - 3,352 - 1290 Other receivables - - - 5,450 1410 Prepaid expenditures - - - - 1000 Total assets -$ -$ 3,352$ 13,298$ LIABILITIES AND FUND BALANCES Liabilities: 2110 Accounts payable -$ -$ -$ -$ 2170 Due to other funds - - 3,352 - Total liabilities - - 3,352 - Fund balances: Nonspendable for: 3430 Prepaid items - - - - Restricted for: 3490 Donor stipulations - - - - Committed for: 3545 Campus activities - - - 13,298 3000 Total fund balances - - - 13,298 4000 Total liabilities and fund balances -$ -$ 3,352$ 13,298$ EXHIBIT F-1 – CONCLUDED 41 480 482 484 496 497 498 Hudson - Mentor Discretionary WAF Fund 100 Grant Foundation- Local Grants Hudson- Support Overall Programming Foundation- Student Scholarships International Mindedness Education Symposium Total Nonmajor Governmental Funds -$ 3,894$ 1,146$ -$ -$ 3,956$ 16,844$ - - - - - - 3,352 - - - - - - 5,450 - - 4,140 - - - 4,140 -$ 3,894$ 5,286$ -$ -$ 3,956$ 29,786$ -$ 457$ -$ -$ -$ -$ 457$ - - - - - - 3,352 - 457 - - - - 3,809 - - 4,140 - - - 4,140 - 3,437 1,146 - - 3,956 8,539 - - - - - - 13,298 - 3,437 5,286 - - 3,956 25,977 -$ 3,894$ 5,286$ -$ -$ 3,956$ 29,786$ WESTLAKE ACADEMY COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED AUGUST 31, 2017 42 224 315 410 461 Data Control Codes IDEA Part B Formula SSA IDEA Part B Discretionary State Textbook Fund Campus Activity Funds REVENUES 5700 Local and intermediate sources -$ -$ -$ 82,051$ 5800 State program revenues - - 8,223 885 5900 Federal program revenues 104,937 35,215 - - 5020 Total revenues 104,937 35,215 8,223 82,936 EXPENDITURES Current: 0011 Instruction 104,937 35,215 8,223 - 0013 Curriculum and instructional staff development - - - - 0023 School leadership - - - - 0036 Extracurricular activities - - - 96,257 6030 Total expenditures 104,937 35,215 8,223 96,257 1100 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES - - - (13,321) OTHER FINANCING SOURCES 8911 Transfers out - - - (37,090) 1200 NET CHANGE IN FUND BALANCES - - - (50,411) 0100 FUND BALANCES, BEGINNING - - - 63,709 3000 FUND BALANCES, ENDING -$ -$ -$ 13,298$ EXHIBIT F-2 - CONCLUDED 43 480 482 484 496 497 498 Hudson - Mentor Discretionary WAF Fund 100 Grant Foundation- Local Grants Hudson- Support Overall Programming Foundation- Student Scholarships International Mindedness Education Symposium Total Nonmajor Governmental Funds -$ 92,118$ 91,474$ -$ 2,500$ 1,557$ 269,700$ 54 767 1,413 - - - 11,342 - - - - - - 140,152 54 92,885 92,887 - 2,500 1,557 421,194 1,133 50,646 65,805 16,087 2,500 - 284,546 - 20,000 21,846 - - - 41,846 2,325 18,802 - 879 - 1,198 23,204 - - - - - - 96,257 3,458 89,448 87,651 16,966 2,500 1,198 445,853 (3,404) 3,437 5,236 (16,966) - 359 (24,659) - - - - - - (37,090) (3,404) 3,437 5,236 (16,966) - 359 (61,749) 3,404 - 50 16,966 - 3,597 87,726 -$ 3,437$ 5,286$ -$ -$ 3,956$ 25,977$ INTERNAL CONTROL REPORT INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 44 AN INDEPENDENT MEMBER OF BAKER TILLY INTERNATIONAL WEAVER AND TIDWELL, L.L.P. CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS 12221 MERIT DRIVE, SUITE 1400, DALLAS, TX 75251 P: 972.490.1970 F: 972.702.8321 To the Board of Trustees Westlake Academy We have audited, in accordance with the 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, the financial statements of the governmental activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of Westlake Academy (the Academy) as of and for the year ended August 31, 2017, and the related notes to the financial statements, which collectively comprise the Academy's basic financial statements and have issued our report thereon dated November 28, 2017. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Academy's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Academy's internal control. Accordingly, we do not express an opinion on the effectiveness of the Academy's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Academy's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. Westlake Academy Page 2 45 However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. WEAVER AND TIDWELL, L.L.P. Dallas, Texas November 28, 2017 AN INDEPENDENT MEMBER OF BAKER TILLY INTERNATIONAL WEAVER AND TIDWELL, L.L.P. CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS 12221 MERIT DRIVE, SUITE 1400, DALLAS, TX 75251 P: 972.490.1970 F: 972.702.8321 November 28, 2017 Board of Trustees Westlake Academy 1500 Solana Blvd, Bldg 7, Suite 7200 Westlake, Texas 76262 We have audited the financial statements of Westlake Academy (the Academy) as of and for the year ended August 31, 2017, and have issued our report thereon dated November 28, 2017. Professional standards require that we advise you of the following matters relating to our audit. Our Responsibility in Relation to the Financial Statement Audit As communicated in our engagement letter dated June 22, 2017, our responsibility, as described by professional standards, is to form and express an opinion(s) about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of your respective responsibilities. Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, as part of our audit, we considered the internal control of the Academy solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you. Planned Scope and Timing of the Audit We conducted our audit consistent with the planned scope and timing we previously communicated to you. Compliance with All Ethics Requirements Regarding Independence The engagement team, others in our firm, as appropriate, our firm, and our network firms have complied with all relevant ethical requirements regarding independence. Qualitative Aspects of the Entity’s Significant Accounting Practices Significant Accounting Policies Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by the Academy is included in Note 1 to the financial statements. There have been no initial selection of accounting policies and no changes in significant Westlake Academy November 28, 2017 Page 2 accounting policies or their application during 2017. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. Significant Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s current judgments. Those judgments are normally based on knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ markedly from management’s current judgments. The most sensitive accounting estimates affecting the financial statements are state foundation revenue and the net pension liability. We evaluated the key factors and assumptions used to develop the estimates and determined that they are reasonable in relation to the basic financial statements taken as a whole and in relation to the applicable opinion units. Financial Statement Disclosures Certain financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting the Academy’s financial statements relate to: state foundation revenue and the net pension liability. Significant Difficulties Encountered during the Audit We encountered no significant difficulties in dealing with management relating to the performance of the audit. Uncorrected and Corrected Misstatements For purposes of this communication, professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communicate the effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures, and the financial statements as a whole and each applicable opinion unit. The attached schedule summarizes uncorrected financial statement misstatements whose effects in the current and prior periods, as determined by management, are immaterial, both individually and in the aggregate, to the financial statements taken as a whole and each applicable opinion unit. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or Westlake Academy November 28, 2017 Page 3 auditing matter, which could be significant to Westlake Academy’s financial statements or the auditor’s report. No such disagreements arose during the course of the audit. Representations Requested from Management We have requested certain written representations from management, which are included in the attached letter dated November 28, 2017. Management’s Consultations with Other Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters. Other Significant Matters, Findings, or Issues In the normal course of our professional association with the Academy, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, operating and regulatory conditions affecting the entity, and operational plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as the Academy’s auditors. This report is intended solely for the information and use of the Board of Trustees, and management of Westlake Academy and is not intended to be and should not be used by anyone other than these specified parties. WEAVER AND TIDWELL, L.L.P. Dallas, Texas Westlake Academy November 28, 2017 Page 4 Passed Adjusting Journal Entries: Proposed JE # 3001 199716512 Capital Lease Principal 162,005.00 199716522 Capital Lease Interest/Debt Service 4,000.00 199001410 Prepayments/ 166,005.00 Total 166,005.00 166,005.00 To record prepayments as an expenditure for debt service. FUTURE AGENDA ITEMS: Any Board member may request at a workshop and / or Board meeting, under “Future Agenda Item Requests”, an agenda item for a future Board meeting. The Board member making the request will contact the Superintendent with the requested item and the Superintendent will list it on the agenda. At the meeting, the requesting Board member will explain the item, the need for Board discussion of the item, the item’s relationship to the Board’s strategic priorities, and the amount of estimated staff time necessary to prepare for Board discussion. If the requesting Board member receives a second, the Superintendent will place the item on the Board agenda calendar allowing for adequate time for staff preparation on the agenda item. None Board of Trustees Item # 5 – Future Agenda Items Board of Trustees Item # 6 – Adjournment Regular Session