HomeMy WebLinkAboutRes 18-14 WA Approving the Westlake Academy Audit Year End 2017-2018 WESTLAKE ACADEMY
RESOLUTION NO. 18-14
A RESOLUTION OF THE WESTLAKE ACADEMY BOARD OF TRUSTEES
APPROVING THE FISCAL YEAR 2017-2018 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 2017-2018 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 18-14
Page 1 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 3rd DAY
OF DECEMBER,2018.
ATTEST: Laura Wheat, President
Ke ly E•t ards, Board Secretary Thomas E. Bryn)-r, :uperiritendent
APPROV' P S TO O' :
J C ubert or . :t. on Lowry,
School Attorney
Resolution 18-14
Page 2 of 2
Westlake Academy
(A Component Unit of the Town of Westlake)
Annual Financial Report
For the Year Ended August 31, 2018
Table of Contents
i
Page Exhibit
Introductory Section
Certificate of Board ................................................................................................................................ ii
Financial Section
Independent Auditor’s Report.............................................................................................................. 2
Management’s Discussion and Analysis ............................................................................................. 5
Basic Financial Statements
Government-Wide Financial Statements
Statement of Net Position .................................................................................................................. 14 A-1
Statement of Activities ....................................................................................................................... 15 B-1
Fund Financial Statements
Balance Sheet ..................................................................................................................................... 16 C-1
Statement of Revenues, Expenditures, and
Changes in Fund Balance ............................................................................................................... 17 C-2
Fiduciary Funds
Statement of Fiduciary Net Position ................................................................................................ 18 D-1
Notes to the Financial Statements ..................................................................................................... 19
Required Supplementary Information
Budgetary Comparison Schedule – General Fund ........................................................................ 41 E-1
Notes to the Budgetary Comparison Schedule .............................................................................. 42
Schedule of Academy’s Proportionate Share of
Net Pension Liability – Teacher Retirement System ...................................................................... 43 E-2
Schedule of Pension Contributions – Teacher Retirement System .............................................. 44 E-3
Schedule of Academy’s Proportionate Share of
Net OPEB Liability – Teacher Retirement System TRS Care Plan ................................................. 45 E-4
Schedule of OPEB Contributions – Teacher Retirement System TRS Care Plan ........................ 46 E-5
Combining Statements
Nonmajor Governmental Funds
Combining Balance Sheet ................................................................................................................ 48 F-1
Combining Statement of Revenues, Expenditures, and
Changes in Fund Balance ............................................................................................................... 50 F-2
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 ................................................................. 53
iii
This Page Intentionally Left Blank
1
Financial Section
Austin | Conroe | Dallas | Fort Worth | Houston Los Angeles | Midland | New York City | San Antonio
Weaver and Tidwell, L.L.P.
2300 North Field Street, Suite 1000 | Dallas, Texas 75201
Main: 972.490.1970 | Fax: 972.702.8321
CPAs AND ADVISORS | WEAVER.COM
Independent Auditor's Report
To the 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, 2018, 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 prepara tion 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 ev aluating 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.
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, 2018, 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.
The Board of Trustees
Westlake Academy
3
Emphasis of Matter
As discussed in Note 16 to the financial statements, the Academy adopted the provisions of GASB
Statement No. 75, Accounting and Financial Reporting for Post -Employment Benefits Other Than
Pensions, during 2018. Beginning net position has been restated to reflect the change in accounting
principle for the implementation of this Statement. Our opinion is not modified with respect to this
matter.
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, schedules of the
Academy’s proportionate share of the net pension and net OPEB liabilities, and schedules of Academy
contributions for pensions and OPEB on pages 5 through 12, 41 through 46, 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 ou r 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 additiona l 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 State s 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.
The Board of Trustees
Westlake Academy
4
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated November
26, 2018, 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 26, 2018
Westlake Academy
(A Component Unit of the Town of Westlake)
Management’s Discussion and Analysis
August 31, 2018
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, 2018. Please
read it in conjunction with the Academy's financial statements, which follow this section.
Financial Highlights
On the government-wide financial statements, the liabilities of the Academy exceeded
assets by $2,823,226 (Net Position). This is an increase of $1,452,296 for the year ended
August 31, 2018 after the adjustment to beginning net position described below .
The Academy’s beginning net position has been adjusted by ($4 ,480,552) to reflect a
change in accounting principle for the reporting of postemployment benefits other than
pensions. An explanation of the change can be found on Note 16 to the financial
statements.
The Academy had $7,172,980 in expenses related to governmental activities, of which
$1,985,891 of these expenses were offset by program-specific charges for services or grants
and contributions. This is a total expense decrease of $2,400,191 from the prior year.
The General Fund reported a fund balance this year of $1,105,605, an increase of $166,334
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 ser vices were financed in
the short term as well as what remains for future spending.
Fiduciary fund statements provid e 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 19) 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 nonmajor 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 informat ion 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.
Westlake Academy
(A Component Unit of the Town of Westlake)
Management’s Discussion and Analysis
August 31, 2018
6
Government-Wide Statements
The government-wide statements beginning on page 14, report information about the Academy
as a whole using accounting m ethods 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.
The Academy's revenue is divided into those provided by outside parties who share the costs of
some programs, such as payments received from extracurri cular 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
Westlake Academy
(A Component Unit of the Town of Westlake)
Management’s Discussion and Analysis
August 31, 2018
7
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 Fou ndation,
a discretely presented component unit. The Foundation was organized exclusively for charitable and
educational purposes and provides funds to help support the Academy. During 2018, the Foundation
contributed $1,173,057 to the Academy to enhance educational opportunities. These contributions are
recorded as operating grants and contributions in the Statement of Activities.
Fund Financial Statements
The fund financial statements begin on page 16 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, 2018.
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 resourc es 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
18. These activities are excluded from the school’s government-wide financial statements
because they cannot use these assets to finance their operations.
Westlake Academy
(A Component Unit of the Town of Westlake)
Management’s Discussion and Analysis
August 31, 2018
8
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 reports a
deficit net position of ($2,823,226) at August 31, 2018.
As noted earlier, net position may serve over time as a useful indicator of a government's financial
position. The Academy's governmental activities during the fiscal year caused the deficit in net position
to decrease from ($4,275,522), reflective of the cumulative effect of the change in accounting principle
of ($4,480,552), in 2017 to ($2,823,226) in 2018.
The governmental activities’ net position increased by 34 percent ($1,452,296). The increase was
primarily due to net effect of the following factors:
(1) Additional state funding received due to an increase in student enrollment as well as additional
funds for career technology educational students/courses. State aide and formula grants
increased by $433,077.
(2) There was a decrease in operating grants and contributions. This decrease was primarily due to
recording the State’s on-behalf portion of the Academy’s OPEB expense which, in turn,
decreased both operating grants and contributions and expenses by $1,546,541.
(3) Expenses were also decreased by the change in net OPEB liability and related deferred inflows
and outflows by $898,693.
Westlake Academy
(A Component Unit of the Town of Westlake)
Management’s Discussion and Analysis
August 31, 2018
9
Table A-1
Westlake Academy’s Net Position
2018 2017 2018 2017
Current assets 1,576,344$ 934,452$ 2,558,219$ 1,955,950$
Total assets 1,576,344 934,452 2,558,219 1,955,950
Deferred outflows of resources 556,112 708,979 - -
Current liabilities 131,707 127,386 387,862 275
Non-current liabilities 3,615,982 5,729,925 - -
Total liabilities 3,747,689 5,857,311 387,862 275
Deferred inflows of resources 1,207,993 61,642 - -
Net position:
Restricted 4,215 8,539 295,432 271,809
Unrestricted (2,827,441) (4,284,061) 1,874,925 1,683,866
Total net position (2,823,226)$ (4,275,522)$ 2,170,357$ 1,955,675$
Governmental Activities Component Unit
Figure A-2
Westlake Academy
Sources of Revenue for Fiscal Year 2018
Westlake Academy
(A Component Unit of the Town of Westlake)
Management’s Discussion and Analysis
August 31, 2018
10
Table A-2
Westlake Academy’s Change in Net Position
2018 2017 2018 2017
Revenues
Program revenues:
Charges for services 238,352$ 267,412$ -$ -$
Operating grants and
contributions 993,715 2,261,830 1,710,577 1,715,833
Capital grants and
contributions 753,824 757,261 - -
General revenues:
State aid and
formula grants 6,629,507 6,196,430 - -
Investment earnings 9,878 5,371 170,733 46,433
Total revenues 8,625,276 9,488,304 1,881,310 1,762,266
Expenses
Instruction 4,099,293 5,692,052
Instructional resources and
media services 90,712 116,788 - -
Curriculum and staff
development 109,486 128,717 - -
Instructional leadership 93,937 274,973
School leadership 582,608 944,381
Guidance, counseling, and
evaluation services 220,264 277,877 - -
Health services 58,667 82,900
Food service 51,648 51,674 - -
Extracurricular activities 327,254 380,613 - -
General administration 320,152 318,566 - -
Facilities maintenance and
operations 973,289 967,303 - -
Data processing services 152,422 189,764 - -
Community services 84,363 133,626 - -
Program/support services 1,666,628 1,492,076
Debt service - interest 8,885 13,937 - -
Total expenses 7,172,980 9,573,171 1,666,628 1,492,076
Change in net position 1,452,296 (84,867) 214,682 270,190
Beginning net position 205,030 289,897 1,955,675 1,685,485
Cumulative effect of change
in accounting principle (4,480,552) (4,480,552) - -
Ending net position (2,823,226)$ (4,275,522)$ 2,170,357$ 1,955,675$
Governmental Activities Component Unit Activities
Westlake Academy
(A Component Unit of the Town of Westlake)
Management’s Discussion and Analysis
August 31, 2018
11
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 $7,172,980
• Some of the cost was paid by those who directly benefited from the programs, $238,352 and
some of the cost was paid through grants and contributions $1,747,539
Table A-3
Total %Total %
Change Change
2018 2017 2017-18 2018 2017 2017-18
Instruction 4,099,293$ 5,692,052$ -28%3,085,808$ 3,688,789$ -16%
School leadership 582,608 944,381 -38%539,159 679,592 -21%
Instructional leadership 93,937 274,973 -66%91,792 205,561 -55%
Guidance, counseling
and evaluation services 220,264 277,877 -21%193,951 208,829 -7%
General administration 320,152 318,566 0%229,268 247,740 -7%
Facilities maintenance
and operations 973,289 967,303 1%654,848 716,142 -9%
Data processing services 152,422 189,764 -20%122,227 135,545 -10%
Total Cost of Services Net Cost of Services
General Fund Budgetary Highlights
The General Fund year-end fund balance is $1,105,605, which increased $166,334 over the prior
year. The increase is attributable to the State year-end receivable calculation and additional
donations provided to the Academy through the Westlake Academy Foundation. Instructional
days began August 15, 2018 (13 days) compared to August 17, 2017 (11 days). This difference in
days provided approximately $122,507 in additional State revenue for August 2018 compared to
the prior year.
During the year, the Academy decreased its General Fund revenue budget by $106,455 due to
eliminating $16,000 for miscellaneous fundraising activities, and accounting for fluctuations in the
Career & Technology and Foundation funding due to student enrollment.
During the year, the General Fund expenditure budget was increased by $132,005 due to the
occurrence of employee position changes subsequent to the budget adoption. Other factors
contributing to the increased allocation included additional stipends, a one-time moving
allowance, a 1.08% change in the unemployment rate, increased usage of charter bus services
for athletic events and field trips, and legal fees associated with a parent dispute.
Economic Factors and Next Year’s Budget
General Fund revenues are budgeted to increase approximately 2% over the FY 2017 -2018
actual revenues. This increase is due to additional anticipated revenue from 20 additional
student enrollments, an increased availability of Career and Technology (CTE) course selections
and student participation, and the inclusion of the TEA Facilities Allotment providing $200 per
ADA, or $184,856.
Westlake Academy
(A Component Unit of the Town of Westlake)
Management’s Discussion and Analysis
August 31, 2018
12
Amounts available for appropriation within the General Fund budget are $8,710,132, which is a
3% increase ($228,264) over FY 2017-2018 actual expenditures. This change is tied to a 3% overall
increase in salaries and related expenditures and an increase in supplies and materials.
Payroll & related expenditures: In accordance with the Board’s financial policies regarding
Academy employee compensation, there is an overall increase in salaries and related
expenditures of 3% ($206,905). This increase will bring the Academy to within 0.5% of the
estimated average median of surrounding districts.
Professional & contracted services: This category includes expenditures related to services
rendered to the Academy by firms, individuals and other organizations. For 2018 -2019, there will
be an estimated 1% decrease ($13,038), attributed to cost savings from increased efficiency.
Materials & supplies: This category includes expenditures associated with consumables used in
the classroom and in the general maintenance of the campus. For 2018 -2019, there will be an
estimated 32% increase ($102,791), which will fund additional campus-wide security measures,
enhanced antivirus software, and athletic equipment and supplies.
Miscellaneous Operating Costs: These costs are associated with insurance, professional
development travel, membership fees and dues, graduation expenses, and other miscellaneous
costs. An 8% decrease ($41,598) is anticipated due to the reduced need for outsourced
transportation for athletic events and field trips. In addition, determined efforts are being made
to reduce costs and increase process efficiencies.
Debt service: These costs are associated with the three-year lease for iPads supporting the one-
to-one device initiative. The FY 2016-2017 amount included a payoff for the original iPad lease,
creating a decreased expenditure in FY 2017-2018, which will continue thru FY 2018-2019.
If the FY 2018-19 budget estimates are realized , the Academy’s General Fund budgetary fund balance
is expected to increase by approximately $137,697 by the close of FY 2019.
Contacting the Academy's Financial Management
This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors
with a general overview of the Academy's finances and to demonstrate the Academy's accountabil ity
for the money it receives. If you have questions about this report or need additional financial
information, contact the Academy/Town Finance Director, Debbie Piper, at 817 -490-5712, or by writing
to 1500 Solana Blvd, Building 7, Suite 7200, Westlake, Texas 76262.
13
Basic Financial Statements
Westlake Academy Exhibit A-1
(A Component Unit of the Town of Westlake)
Statement of Net Position
August 31, 2018
The Notes to the Financial Statements are an integral part of this statement.
14
Data 1 4
Control Governmental Component
Codes Activities Unit
ASSETS
1110 Cash and cash equivalents 728,368$ 752,141$
1120 Current investments 100 1,804,255
1240 Due from other governments 600,427 -
1290 Other receivables 194,368 -
1410 Prepaid expenses 53,081 1,823
1000 Total assets 1,576,344 2,558,219
DEFERRED OUTFLOWS OF RESOURCES
1705 Deferred outflows of resources - pensions 509,509 -
1705 Deferred outflows of resources - OPEB 46,603 -
1700 Total deferred outflows of resource 556,112 -
LIABILITIES
2110 Accounts payable 40,161 -
2123 Other liabilities - 387,862
2150 Payroll deductions and withholdings 7,332 -
2160 Accrued wages payable 82,563 -
2200 Other accrued expenses 1,651 -
Noncurrent liabilities:
2502 Due in more than one year 162,005 -
2540 Net pension liability 895,663 -
2540 OPEB liability 2,558,314
2000 Total liabilities 3,747,689 387,862
DEFERRED INFLOWS OF RESOURCES
2605 Deferred inflows of resources - pensions 137,845 -
2605 Deferred inflows of resources - OPEB 1,070,148 -
2600 Total deferred inflows of resources 1,207,993 -
NET POSITION
3890 Restricted for donor stipulations 4,215 295,432
3900 Unrestricted (2,827,441) 1,874,925
3000 Total net position (2,823,226)$ 2,170,357$
Westlake Academy Exhibit B-1 Exhibit B-1
(A Component Unit of the Town of Westlake)
Statement of Activities
For the Year Ended August 31, 2018
The Notes to the Financial Statements are an integral part of this statement.
15
1 3 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 4,099,293$ 25,748$ 489,486$ 498,251$ (3,085,808)$ -
12 Instructional resources and media services 90,712 450 4,015 33,059 (53,188) -
13 Curriculum and staff development 109,486 439 47,875 - (61,172) -
21 Instructional leadership 93,937 801 1,344 - (91,792) -
23 School leadership 582,608 4,646 22,753 16,050 (539,159) -
31 Guidance, counseling, and evaluation services 220,264 1,627 20,617 4,069 (193,951) -
33 Health services 58,667 378 1,784 12,697 (43,808) -
35 Food service 51,648 7,000 - 51,648 7,000 -
36 Extracurricular activities 327,254 189,003 67,989 39,264 (30,998) -
41 General administration 320,152 1,700 78,897 10,287 (229,268) -
51 Facilities maintenance and operations 973,289 4,872 239,589 73,980 (654,848) -
53 Data processing services 152,422 1,004 17,204 11,987 (122,227) -
61 Community services 84,363 684 2,162 2,532 (78,985) -
71 Debt service - interest 8,885 - - - (8,885) -
[TP] Total primary government:7,172,980$ 238,352$ 993,715$ 753,824$ (5,187,089) -
COMPONENT UNIT
IC Westlake Academy Foundation 1,666,628$ -$ 1,710,577$ -$ - 43,949
Data
Control
Codes
General revenues:
SF State aid-formula grants 6,629,507 -
IE Investment earnings 9,878 170,733
TR Total general revenues 6,639,385 170,733
CN Change in net position 1,452,296 214,682
NB Net position, beginning 205,030 1,955,675
Cumulative effect of change
PA in accounting principle (4,480,552) -
NE Net position, ending (2,823,226)$ 2,170,357$
Net (Expense) Revenue and
Changes in Net PositionProgram Revenues
Westlake Academy Exhibit C-1
(A Component Unit of the Town of Westlake)
Balance Sheet
Governmental Funds
August 31, 2018
The Notes to the Financial Statements are an integral part of this statement.
16
10 484 98
Data Local Nonmajor Total
Control Grant Governmental Governmental
Codes General Fund Funds Funds
1110 Cash and cash equivalents 715,368$ -$ 13,000$ 728,368$
1120 Current investments 100 - - 100
1240 Due from other governments 548,859 - 51,568 600,427
1260 Due from other funds 242,269 - - 242,269
1290 Other receivables - 191,868 2,500 194,368
1410 Prepaid expenditures 51,556 - 1,525 53,081
1000 Total assets 1,558,152$ 191,868$ 68,593$ 1,818,613$
LIABILITIES:
2110 Accounts payable 37,562$ 977$ 1,622$ 40,161$
2150 Payroll deductions and withholdings 7,332 - - 7,332
2160 Accrued wages payable 82,563 - - 82,563
2170 Due to other funds - 186,676 55,593 242,269
2200 Accrued expenditures 1,651 - - 1,651
2000 Total liabilities 129,108 187,653 57,215 373,976
DEFERRED INFLOWS OF RESOURCES:
2601 Unavailable contributions 323,439 - - 323,439
2600 Total deferred inflows of resources 323,439 - - 323,439
FUND BALANCES:
3430 Nonspendable - prepaid items 51,556 - 1,525 53,081
3490 Restricted for donor stipulations - 4,215 - 4,215
3545 Committed for campus activities - - 11,378 11,378
3600 Unassigned 1,054,049 - (1,525) 1,052,524
3000 Total fund balances 1,105,605 4,215 11,378 1,121,198
4000 Total liabilities and fund balances 1,558,152$ 191,868$ 68,593$ 1,818,613$
Total fund balances - governmental funds 1,121,198$
Amounts reported for governmental activities in the statement of net position are different because:
Amounts reported as deferred inflows of resources in the governmental funds financial statements are recognized
as revenue in the government-wide financial statements under the accrual basis of accounting.323,439
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)
Included in the items related to noncurrent liabilities are the Academy's proportionate share of the
TRS Care net OPEB liability ($2,558,314), a deferred resource inflow ($1,070,148) and a deferred
resource outflow of $46,603. The net effect is a decrease in net position. (3,581,859)
Included in the items related to noncurrent liabilities are the Academy's proportionate share
of the TRS net pension liability ($895,663), a deferred resource inflow ($137,845) and a deferred
resource outflow of $509,509. The net effect is a decrease in net position. (523,999)
Net position of governmental activities (2,823,226)$
LIABILITIES AND FUND BALANCES
ASSETS
Westlake Academy Exhibit C-2
(A Component Unit of the Town of Westlake)
Statement of Revenues, Expenditures, and
Changes in Fund Balance
Governmental Funds
For the Year Ended August 31, 2018
The Notes to the Financial Statements are an integral part of this statement.
17
10 484 98
Data Local Nonmajor Total
Control Grant Governmental Governmental
Codes General Fund Funds Funds
REVENUES
5700 Local and intermediate sources 1,571,182$ 191,868$ 81,953$ 1,845,003$
5800 State program revenues 7,077,020 - 140,363 7,217,383
5900 Federal program revenues - - 114,797 114,797
5020 Total revenues 8,648,202 191,868 337,113 9,177,183
EXPENDITURES
0011 Instruction 4,924,708 129,213 257,162 5,311,083
0012 Instructional resources and media services 86,094 - - 86,094
0013 Curriculum and staff development 83,902 24,555 1,029 109,486
0021 Instructional leadership 153,295 - - 153,295
0023 School leadership 888,589 - 8,097 896,686
0031 Guidance, counseling, and evaluation services 311,250 - - 311,250
0033 Health services 72,233 - - 72,233
0036 Extracurricular activities 215,236 31,145 80,138 326,519
0041 General administration 324,975 - - 324,975
0051 Facilities maintenance and operations 931,623 8,026 - 939,649
0053 Data processing services 192,034 - - 192,034
0061 Community services 130,862 - - 130,862
0071 Debt service - principal on long-term debt 158,182 - - 158,182
0072 Debt service - interest on long-term debt 8,885 - - 8,885
6030 Total expenditures 8,481,868 192,939 346,426 9,021,233
1100 EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 166,334 (1,071) (9,313) 155,950
1200 NET CHANGE IN FUND BALANCES 166,334 (1,071) (9,313) 155,950
0100 FUND BALANCES, BEGINNING 939,271 5,286 20,691 965,248
3000 FUND BALANCES, ENDING 1,105,605$ 4,215$ 11,378$ 1,121,198$
Net change in fund balances 155,950$
Amounts reported for governmental activities in the Statement of Activities are different because:
Receipts that are considered deferred inflows of resources in the governmental funds financial statements
are recognized as revenue in the government-wide financial statements under the accrual basis of accounting.323,439
Current year prepaid principal payments on capital leases consume current resources, however,
these payments reduce expenses in the government-wide financial statements.158,182
Implementation of GASB 75 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 $46,603. Contributions before the measurement date also caused
a decrease in the change in net position of $36,022. The net share of the Academy's amount
of deferred inflows and outflows of resources increased the net position by $888,112. This
amount is the net effect.898,693
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 $91,593. Contributions before the measurement date also caused
a decrease in the change in net position of $84,783. The net share of the Academy's amount
of deferred inflows and outflows of resources decreased the net position by $90,778. This
amount is the net effect.(83,968)
Change in net position of governmental activities 1,452,296$
Westlake Academy Exhibit D-1
(A Component Unit of the Town of Westlake)
Statement of Fiduciary Net Position
Fiduciary Funds
August 31, 2018
The Notes to the Financial Statements are an integral part of this statement.
18
Agency
Fund
ASSETS
Cash and cash equivalents 37,851$
Total assets 37,851$
LIABILITIES
Accounts payable 1,548$
Due to student groups 36,303
Total liabilities 37,851$
Westlake Academy
(A Component Unit of the Town of Westlake)
Notes to the Financial Statements
19
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 Ed ucation 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 en tity that is controlled by or dependent
on the Academy. The determination to include separate entities is based on the c riteria 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 fi nancially
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/T own
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
(A Component Unit of the Town of Westlake)
Notes to the Financial Statements
20
The Statement of Activities demonstrates how other people or entities that participate in programs the
Academy operates have shared in the payment of the d irect 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 charges for athletic registration
fees. 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 o ther 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 p eriod 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 earnin gs are recorded as earned, since they are
both measurable and available.
Westlake Academy
(A Component Unit of the Town of Westlake)
Notes to the Financial Statements
21
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 deferr ed 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 t hese 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.
The Local Grant Fund is used for activity from donor restrictions that are from Westlake Academy
Foundation and other local sources.
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 avail able 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.
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 t o 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
Westlake Academy
(A Component Unit of the Town of Westlake)
Notes to the Financial Statements
22
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 us ed 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 t he
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 satisf ying
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.
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.
Westlake Academy
(A Component Unit of the Town of Westlake)
Notes to the Financial Statements
23
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 Dep osit
Insurance Corporation (FDIC) insurance.
At August 31, 2018, the carrying amount of the Academy's deposits (cash, certificates of deposit, and
interest-bearing savings accounts included in temporary investments), including $37,851 recorded in the
Agency fund, was $766,219 and the bank balance was $891,058. The carrying amount of the
Foundation’s deposits was $752,141 as of August 31, 2018 and the bank balance was $752,903. The
Academy cash deposits at August 31, 2018 and during the year then ended was entirely covered by
FDIC insurance or the 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 $35,121,279.
c. The highest combined balances of cash, savings, and time deposit accounts amounted to
$31,885,561 ($1,420,671 of which belonged to the Academy) on November 29, 2017.
d. Total amount of FDIC coverage at the time of the highest combined balance was $250,000 .
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 polic y. 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 Ac ademy 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.
Westlake Academy
(A Component Unit of the Town of Westlake)
Notes to the Financial Statements
24
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 fr om
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, 2018, 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 cons istent 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.
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, 2018, 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 .
Westlake Academy
(A Component Unit of the Town of Westlake)
Notes to the Financial Statements
25
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, 2018, 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 1,638,240$ 1,804,255$
August 31, 2018
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 l owest 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
• 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.
Westlake Academy
(A Component Unit of the Town of Westlake)
Notes to the Financial Statements
26
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, 2018.
Level 1 Level 2 Level 3 Total
Marketable equity securities:
Common stock 1,804,249$ -$ -$ 1,804,255$
Assets at Fair Value as of
August 31, 2018
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, 2018, are summarized below.
State
Fund Entitlements Local Total
General fund 543,176$ 5,683$ 548,859$
Nonmajor funds 51,568 - 51,568
Total 594,744$ 5,683$ 600,427$
Note 4. Donated Use of Facilities
The Academy currently operates in facilities that a re 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, $753,824, in the government-wide statement of activities as capital grants
and contributions and as expense allocated to the various functions.
Note 5. Interfund Balances and Activities
Interfund balances at August 31, 2018, consisted of the following individual fund balances:
Due to Fund Due from Fund Amount Purpose
General fund Nonmajor governmental 55,593$ Reimburse program disbursements
General fund Local grant fund 186,676 Reimburse program disbursements
Total 242,269$
The Academy had no interfund transfers during the year ending August 31, 2018.
Westlake Academy
(A Component Unit of the Town of Westlake)
Notes to the Financial Statements
27
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:
Local Grant Non-major
General Fund Fund Funds Total
Gifts and bequests 1,399,411$ 191,868$ 5,000$ 1,596,279$
Interest 9,878 - - 9,878
Food sales 7,000 - - 7,000
Campus activities - - 76,953 76,953
Parking/transportation 28,816 - - 28,816
Athletics 82,602 - - 82,602
Miscellaneous 43,475 - - 43,475
Total 1,571,182$ 191,868$ 81,953$ 1,845,003$
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.
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 positio n 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 mem bers 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.
Westlake Academy
(A Component Unit of the Town of Westlake)
Notes to the Financial Statements
28
Early retirement is at age 55 with five 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 les s 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 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 2015 and 2016. The 84th Texas Legislature,
General Appropriations Act (GAA) established the employer contribu tion rates for fiscal years 2017 and
2018.
2017 2018
Member 7.7%7.7%
Non-employer contributing
entity (State)6.8%6.8%
Employers 6.8%6.8%
2018 Employer contributions 91,593$
2018 Member contributions 407,324$
2018 NECE on-behalf
contributions 355,959$
Contribution rates
Contributors to the plan include members, employers and the S tate 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).
Westlake Academy
(A Component Unit of the Town of Westlake)
Notes to the Financial Statements
29
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 th e 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.
Actuarial Assumptions
The total pension liability in the August 31, 2017 actuarial valuation was determined using the following
actuarial assumptions:
Valuation date August 31, 2017
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 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 .
Westlake Academy
(A Component Unit of the Town of Westlake)
Notes to the Financial Statements
30
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 cont ributing 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) ar e 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.
Best estimates of geometric real rates of return for each major asset class included in the Systems target
asset allocation as of August 31, 2017 are summarized below:
Long-term
Expected
Real Return Portfolio
Target Geometric Real Rate of
Asset Class Allocation 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.
Westlake Academy
(A Component Unit of the Town of Westlake)
Notes to the Financial Statements
31
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 2017 Net Pension
Liability.
1% Decrease in Discount 1% Increase in
Discount Rate Rate Discount Rate
(7.0%)(8.0%)(9.0%)
Academy's proportionate share of the
net pension liability 1,509,911$ 895,663$ 384,202$
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 $895,663 for its proportionate share of the TRS’s
net pension liability. This liability reflects a reduction for State pension support provided to the Academy.
The amount recognized by the Academy as its proportionate share of the net pension liability, the
related State support, and the total portion of the net pension liability that was associated with the
Academy were as follows:
Academy's proportionate share of the collective net pension liability 895,663$
State's proportionate share that is associated with Academy 3,480,057
Total 4,375,720$
The net pension liability was measured as of August 31, 2017 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 c ontributions to the
pension plan relative to the contributions of all employers to the plan for the period Septem ber 1, 2016
thru August 31, 2017.
At August 31, 2017, the employer’s proportion of the collective net pension liability was 0.0028012%
which was an increase of 0.000019% from its proportion measured as of August 31, 2016.
Changes since the Prior Actuarial Valuation
There were no changes to the actuarial assumptions or other inputs that affected measurement of the
total pension liability since the prior measurement period.
There were no changes of benefit terms that affected measurement of the total pension liability during
the measurement period.
For the year ended August 31, 2018, the Academy recognized pension expense of $441,006 and
revenue and expense of $265,445 for support provided by the State.
Westlake Academy
(A Component Unit of the Town of Westlake)
Notes to the Financial Statements
32
At August 31, 2018, the Academy reported its proportionate share of the TRS’s deferred outflows of
resources and deferred inflows of resources related to pensions from the following sources:
Deferred Deferred
Outflows Inflows
of Resources of Resources
Differences between expected and actual economic experience 13,104$ 48,302$
Changes in actuarial assumptions 40,799 23,356
Difference between projected and actual investment earnings - 65,274
Changes in proportion and difference between the employer’s
contributions and the proportionate share of contributions 364,013 913
Contributions paid to TRS subsequent to the measurement date 91,593 -
Total 509,509$ 137,845$
The $91,593 reported as a deferred outflow of resources resulting from Academy contributions
subsequent to the measurement date will be recognized as a reduction of the net pension liability in the
year ending August 31, 2019.
Other amounts reported as deferred outflows and inflows of resources related to pensions will be
recognized in pension expense as follows:
Pension
Expense
Year Ended (Income)
August 31, Amount
2019 63,372$
2020 120,544
2021 58,977
2022 36,466
2023 857
Thereafter (145)
Total 280,071$
Note 8. Health Care Coverage
During the period ended August 31, 2018, 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 $351 per month per
employee and $276 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 an y 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
Aetna, and Caremark Health administers the prescription drug plan. The latest fina ncial 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.
Westlake Academy
(A Component Unit of the Town of Westlake)
Notes to the Financial Statements
33
Note 9. Defined Other Post Employment Benefit Plan
Plan Description
The Academy participates in the Texas Public School Retired Employees Group Insurance Program
(TRS-Care). It is a multiple-employer, cost-sharing defined Other Post-Employment Benefit (OPEB) plan
that has a special funding situation. The plan is administered through a trust by the Teacher Retirement
System of Texas (TRS) Board of Trustees. It is established and admini stered in accordance with the Texas
Insurance Code, Chapter 1575.
OPEB Plan Fiduciary Net Position
Detail information about the TRS-Care’s fiduciary net position is available in the separately-issued
TRS Comprehensive Annual Financial Report that incl udes 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-Care provides a basic health insurance coverage (TRS-Care 1), at no cost to all retirees from public
schools, charter schools, regional education service centers and other educational Academys who are
members of the TRS pension plan. Optional dependent coverage is available for an additional fee.
Eligible retirees and their dependents not enrolled in Medicare may pay premiums to participate in
one of two optional insurance plans with more comprehensive benefits (TR S-Care 2 and TRS-Care 3).
Eligible retirees and dependents enrolled in Medicare may elect to participate in one of the
two Medicare health plans for an additional fee. To qualify for TRS -Care coverage, a retiree must have
at least 10 years of service credit in the TRS pension system. The Board of Trustees is granted the authority
to establish basic and optional group insurance coverage for participants as well as to amend benefit
terms as needed under Chapter 1575.052. There are no automatic post -employment benefit changes;
including automatic COLAs.
The premium rates for the optional health insurance are based on years of service of the member. The
schedule below shows the monthly rates for the average retiree with Medicare Parts A&B coverage,
with 20 to 29 years of service for the basic plan and the two optional plans.
TRS-Care 1 TRS-Care 2 TRS-Care 3
Basic Plan Optional Plan Optional Plan
Retiree*-$ 70$ 100$
Retiree and spouse 20 175 255
Retiree* and children 41 132 182
Retiree and family 61 237 337
Surviving children only 28 62 82
* or surviving spouse
TRS-Care Plan Premium Rates
Effective September 1, 2016 - December 31, 2017
Westlake Academy
(A Component Unit of the Town of Westlake)
Notes to the Financial Statements
34
Contributions
Contribution rates for the TRS-Care plan are established in state statute by the Texas Legislature, and
there is no continuing obligation to provide benefits beyond each fiscal year. The TRS -Care plan is
currently funded on a pay-as-you-go basis and is subject to change based on available funding.
Funding for TRS-Care is provided by retiree premium contributions and contributions from the state,
active employees, and school Academys based upon public school Academy payroll. The TRS Board of
trustees does not have the authority to set or amend contribution rates.
Texas Insurance Code, section 1575.202 establishes the state’s contribution rate which is 1.0% of the
employee’s salary. Section 1575.203 establishes the active employee’s rate which is .65% of pay. Section
1575.204 establishes an employer contribution rate of not less than 0.25 percent or not more than
0.75 percent of the salary of each active employee of the public. The actual employer contributi on rate
is prescribed by the Legislature in the General Appropriations Act. The following table shows
contributions to the TRS-Care plan by type of contributor.
2018 2017
Active employee 0.65%0.65%
Non-employer contribution entity (state)1.25%1.00%
Employers/District 0.75%0.55%
Federal/private funding remitted by Employers 1.25%1.00%
The contribution amounts for the Academy’s fiscal year 2018 are as follows:
2018 Employer contributions 46,204$
2018 Member contributions 407,324$
2018 NECE on-behalf
contributions 52,680$
In addition to the employer contributions listed above, there is an additional surcharge all TRS employers
are subject to (regardless of whether or not they participate in the TRS Care OPEB program ). When
employers hire a TRS retiree, they are required to pay to TRS Care, a monthly surcharge of $535 per
retiree.
TRS-Care received supplemental appropriations from the State of Texas as the Non-Employer
Contributing Entity in the amount of $15.6 million in fiscal year 2017 and $182.6 million in fiscal year 2018.
Westlake Academy
(A Component Unit of the Town of Westlake)
Notes to the Financial Statements
35
Actuarial Assumptions
The total OPEB liability in the August 31, 2017 actuarial valuation was determined using the following
actuarial assumptions:
Rates of mortality General inflation
Rates of retirement Wage inflation
Rates of termination Expected payroll growth
Rates of disability incidence
Additional Actuarial Methods and Assumptions:
Valuation date August 31, 2017
Actuarial cost method Individual entry age normal
Inflation 2.50%
Discount rate* 3.42%*
Aging factors Based on plan specific experience
Expenses third-party administrative expenses
related to the delivery of health care
benefits are included in the
age- adjusted claims costs.
Payroll growth rate 2.50%
Projected salary increases** 3.50% to 9.50%**
Healthcare trend rates*** 4.50% to 12.00%***
Election Rates Normal retirement: 70% participation
prior to age 65 and 75% participation
after age 65
Ad hoc post-employment benefit changes None
*Source: Fixed income municipal bonds with 20 years to maturity that include only federal
tax-exempt municipal bonds as reported in Fidelity Index’s “20-Year Municipal GO AA Index” as of August 31,
2017.
**Includes inflation at 2.50%
***Initial trend rates are 7.00% for non-Medicare retiree; 10.00% for Medicare retirees and 12.00% for prescriptions
for all retirees. Initial trend rates decrease to an ultimate trend rate of 4.50% over a period of 10 years.
Other information - There was a significant plan change adopted in fiscal year ending August 31, 2017.
Effective January 1, 2018, only one health plan option will be offered and all retirees will be required to
contribute monthly premiums for coverage. Assumption changes made for the August 31, 2017 valuation
include a change to the assumption regarding the phase-out of the Medicare Part D subsidies and a
change to the discount rate from 2.98% as of August 31, 2016 to 3.42% as of August 31, 2017.
Discount Rate
A single discount rate of 3.42% was used to measure the total OPEB liability. There was a change of
.44 percent in the discount rate since the previous year. Because the plan is essentially a
“pay-as-you-go” plan, the single discount rate is equal to the prevailing municipal bond rate. The
projection of cash flows used to determine the discount rate assumed that contributions from active
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 OPEB plan’s fiduciary net position was
projected to not be able to make all future benefit payments of current plan members. Therefore, the
municipal bond rate was applied to all periods of projected benefit payments to determine the total
OPEB liability.
Westlake Academy
(A Component Unit of the Town of Westlake)
Notes to the Financial Statements
36
Discount Rate Sensitivity Analysis. The following schedule shows the impact of the Net OPEB Liability if
the discount rate used was 1% less than and 1% greater than the discount rate that was used (3.42%) in
measuring the Net OPEB Liability.
1% Decrease in Discount 1% Increase in
Discount Rate Rate Discount Rate
(2.42%)(3.42%)(4.42%)
Academy's proportionate share of the
net OPEB liability 3,019,446$ 2,558,314$ 2,187,668$
Healthcare Cost Trend Rates Sensitivity Analysis. The following presents the net OPEB liability of the plan
using the assumed healthcare cost trend rate, as well as what the net OPEB liability would be if it were
calculated using a trend rate that is one-percentage point lower or one-percentage point higher than
the assumed healthcare cost trend rate.
1% Decrease in Discount 1% Increase in
Discount Rate Rate Discount Rate
Academy's proportionate share of the
net OPEB liability 2,130,052$ 2,558,314$ 3,120,248$
OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources
Related to OPEBs
At August 31, 2018, the Academy reported a liability of $2,558,314 for its proportionate share of the TRS’s
Net OPEB Liability. This liability reflects a reduction for State OPEB support provided to the Academy. The
amount recognized by the Academy as its proportionate share of the net OPEB liability, the related
State support, and the total portion of the net OPEB liability that was associated with the Academy
were as follows:
Academy's proportionate share of the collective net pension liability 2,558,314$
State's proportionate share that is associate with Academy 4,406,333
Total 6,964,647$
The Net OPEB Liability was measured as of August 31, 2017 and the Total OPEB Liability used to calculate
the Net OPEB Liability was determined by an actuarial valuation as of that date. The employer’s
proportion of the Net OPEB Liability was based on the employer’s contributions to the OPEB plan relative
to the contributions of all employers to the plan for the period September 1, 2016 thru August 31, 2017.
At August 31, 2017 the employer’s proportion of the collec tive Net OPEB Liability was .00588304% which
was the same proportion measured as of August 31, 2016.
Changes Since the Prior Actuarial Valuation. The following were changes to the actuarial assumptions
or other inputs that affected measurement of the Total OPEB liability since the prior measurement
period.
The following assumptions and other inputs which are specific to TRS -Care were updated during the
year ended August 31, 2017:
1. Effective January 1, 2018, only one health plan option will exist (instead of three), and all retirees
will be required to contribute monthly premiums for coverage. The health plan changes
triggered changes to several of the assumptions, including participation rates, retirement rates,
and spousal participation rates.
Westlake Academy
(A Component Unit of the Town of Westlake)
Notes to the Financial Statements
37
2. The August 31, 2016 valuation had assumed that the savings related to the Medicare Part D
reimbursements would phase out by 2022. This assumption was removed for the August 31, 2017
valuation. Although there is uncertainty regarding these federal subsidies, the new assumption
better reflects the current substantive plan. This change was unrelated to the plan amendment,
and its impact was included as an assumption change in the reconciliation of t he total OPEB
liability. This change significantly lowered the OPEB liability.
3. The discount rate changed from 2.98 percent as of August 31, 2016 to 3.42 percent as of
August 31, 2017. This change lowered the total OPEB liability.
For the year ended August 31, 2018, the Academy recognized OPEB expense of ($2,326,965) and
revenue of ($1,474,476) for support provided by the State.
At August 31, 2018, the Academy reported its proportionate share of the TRS’s deferred outflows of
resources and deferred inflows of resources related to other post-employment benefits from the
following sources:
Deferred Deferred
Outflows Inflows
of Resources of Resources
Differences between expected and actual economic experience -$ 53,407$
Changes in actuarial assumptions - 1,016,741
Difference between projected and actual investment earnings 389 -
Changes in proportion and difference between the employer’s
contributions and the proportionate share of contributions 10 -
Contributions paid to TRS subsequent to the measurement date 46,204 -
Total 46,603$ 1,070,148$
The $46,204 deferred outflow of resources resulting from Academy contributions subsequent to the
measurement date will be recognized as a reduction of the net OPEB liability in the year ende d August
31, 2019. The net amounts of the remaining balances of deferred outflows and inflows of resources
related to OPEB will be recognized in OPEB expense as follows:
Pension
Expense
Year Ended (Income)
August 31, Amount
2019 (141,154)$
2020 (141,154)
2021 (141,154)
2022 (141,154)
2023 (141,251)
Thereafter (363,882)
Total (1,069,749)$
Note 10. Risk Management
The Academy is exposed to various risk of loss related to torts, theft of, damage to and d estruction 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.
Westlake Academy
(A Component Unit of the Town of Westlake)
Notes to the Financial Statements
38
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, 2 018 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.
Note 11. Capital Leases
The Academy has entered into lease agreements as lessee for financing the acquisition of computer
equipment and software. The lease agreement s 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 $491,040 was under capital lease at August 31, 2018.
Because the cost of the individual items was below the Academy’s capitalization threshold, the entire
cost was recorded as expense.
The following schedule shows the future minimum lease payments under the ca pitalized lease together
with the present value of the net minimum lease payments as of August 31, 2018:
Annual
Lease Payments
166,039$
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 $1,173,057 to the Academy during the fiscal year
ended August 31, 2018. In addition to the use of facilities discussed in Note 4 , the Town of Westlake
contributed $315,000 to the Academy during the year.
As of August 31, 2018, the Westlake Academy Foundation owed the Academy $194,368. This amount is
included in the Academy’s other receivables balance and in the Westlake Academy’s Foundation’s
other payables balances.
39
Westlake Academy
(A Component Unit of the Town of Westlake)
Notes to the Financial Statements
Note 13. Evaluation of Subsequent Events
The Academy has evaluated subsequent events through November 26, 2018, the date which the
financial statements were available to be issued.
Note 14. New Accounting Pronouncements
In June 2018 the GASB released GASB statement No. 87, Leases. This statement was issued to increase
the usefulness of governmental entities’ financial statements by requiring recognition of certain
lease assets and liabilities that were previously accounted for as operating leases. It establishes a single
model for lease accounting based on the principle that leases are a financing of the right to use an
underlying asset. Under this statement a lessee is required to recognize a lease liability and an intangible
right-to-use asset and a lessor is required to recognize a lease receivable and a deferred inflow of
resources. This statement is effective for the Academy for the year ended June 30, 2021 and the
Academy is currently evaluating the impact of this standard on its financial statements.
Note 15. Expenditures in Excess of Appropriations
For the year ending August 31, 2018, expenditures exceeded appropriations in the following functions:
Instruction ($85,106); Guidance, Counseling and Evaluation Services ($3,586); Health Services ($1,087)
and General Administration ($5,887). In addition, expenditures exceeded appropriations for the
general fund as a whole by $26,797. These over-expenditures will be addressed through future
appropriations.
Note 16. Cumulative Effect of Change in Accounting Principles
As a result of implementation of GASB Statement No. 75, “Accounting and Financial Reporting for Post-
employment Benefits Other than Pensions”, an adjustment has been made to record the Academy’s
net OPEB liability as of August 31, 2016. As a result, beginning net position of the governmental activities
has been decreased by $4,480,552, the net effect of the beginning net OPEB liability of $4,516,574 and
employer contributions made prior to the beginning of the measurement period in the amount of
$36,022.
40
Required Supplementary Information
Westlake Academy Exhibit E-1
(A Component Unit of the Town of Westlake)
Budgetary Comparison Schedule – General Fund
For the Year Ended August 31, 2018
The Notes to the Budgetary Comparison Schedule are an integral part of this statement.
41
Variance with
Data Actual Final Budget
Control Amounts Positive or
Codes Original Final GAAP Basis (Negative)
REVENUES
5700 Local and intermediate sources 1,582,400$ 1,573,300$ 1,571,182$ (2,118)$
5800 State program revenues 7,001,700 6,904,345 7,077,020 172,675
5020 Total revenues 8,584,100 8,477,645 8,648,202 170,557
EXPENDITURES
CURRENT:
0011 Instruction 4,975,270 4,839,602 4,924,708 (85,106)
0012 Instructional resources and media services 82,639 87,379 86,094 1,285
0013 Curriculum and staff development 84,545 86,200 83,902 2,298
0021 Instructional leadership 206,623 161,919 153,295 8,624
0023 School leadership 757,692 896,747 888,589 8,158
0031 Guidance, counseling, and evaluation services 223,973 307,664 311,250 (3,586)
0033 Health services 66,024 71,146 72,233 (1,087)
0036 Extracurricular activities 218,358 237,474 215,236 22,238
0041 General administration 260,167 319,088 324,975 (5,887)
0051 Facilities maintenance and operations 960,743 947,615 931,623 15,992
0053 Data processing services 195,505 199,407 192,034 7,373
0061 Community services 124,460 133,763 130,862 2,901
DEBT SERVICE:
0071 Debt service - principal on long-term debt 158,182 158,182 158,182 -
0072 Debt service - interest on long-term debt 8,885 8,885 8,885 -
6030 Total expenditures 8,323,066 8,455,071 8,481,868 (26,797)
1100 Excess of revenues over
expenditures 261,034 22,574 166,334 143,760
1200 Net change in fund balance 261,034 22,574 166,334 143,760
0100 Fund balances--beginning 939,271 939,271 939,271 -
3000 Fund balances - ending 1,200,305$ 961,845$ 1,105,605$ 143,760$
Budgeted Amounts
Westlake Academy
(A Component Unit of the Town of Westlake)
Notes to the Budgetary Comparison Schedule
For the Year Ended August 31, 2018
42
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 th rough 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
(A Component Unit of the Town of Westlake)
Schedule of Academy’s Proportionate Share of Net Pension Liability –
Teacher Retirement System
For the Last Ten Plan Years
43
2017 2016 2015 2014
Academy's proportion of the net pension liability 0.0028012%0.0027822%0.0030945%0.0007190%
Academy's proportionate share of net pension liability 895,663$ 1,051,346$ 1,093,865$ 192,056$
State's proportionate share of net pension liability
associated with the Westlake Academy 3,480,057 4,035,754 3,667,893 2,965,583
Total 4,375,720$ 5,087,100$ 4,761,758$ 3,157,639$
Academy's covered payroll 5,391,515$ 5,094,571$ 4,784,695$ 4,300,931$
Academy's proportionate share of net pension liability
as a percentage of its covered payroll 16.61%20.64%22.86%4.47%
Plan fiduciary net position as a
percentage of total pension liability 82.17%78.00%78.43%83.25% Note: Only four 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 s hould
not include information that is not measured in accordance with the requirements of this Statement."
Westlake Academy Exhibit E-3
Schedule of Pension Contributions – Teacher Retirement System
For the Last Ten Fiscal Years
44
2018 2017 2016 2015
Statutorily required contributions 91,593$ 131,436$ 88,399$ 92,325$
Actual contributions in relation to
statutorily required contributions 91,593 131,436 88,399 92,325
Contribution deficiency (excess)-$ -$ -$ -$
Academy's covered payroll 5,289,916$ 5,391,515$ 5,094,571$ 4,784,694$
Contributions as a percentage
of Academy's covered payroll 1.73%2.44%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 four 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 the se
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-4
(A Component Unit of the Town of Westlake)
Schedule of Academy’s Proportionate Share of Net OPEB Liability –
Teacher Retirement System TRS Care Plan
For the Last Ten Plan Years
45
2017
Academy's proportion of the net OPEB liability 0.0058830418%
Academy's proportionate share of net OPEB liability 2,558,314$
State's proportionate share of net OPEB liability
associated with the Westlake Academy 4,406,333
Total 6,964,647$
Academy's covered payroll 5,391,515$
Academy's proportionate share of net OPEB liability
as a percentage of its covered payroll 47.45%
Plan fiduciary net position as a
percentage of total OPEB liability 0.91%
Note: Only one year of data is presented in accordance with GASB #75. "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-5
Schedule of OPEB Contributions – Teacher Retirement System TRS Care Plan
For the Last Ten Fiscal Years
46
2018
Statutorily required contributions 46,204$
Actual contributions in relation to
statutorily required contributions 46,204
Contribution deficiency (excess)-$
Academy's covered payroll 5,289,916$
Contributions as a percentage
of Academy's covered payroll 0.87%
Note: GASB 75 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 one year of data is presented in accordance with GASB #75. "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.”
"
47
Combining Statements
Westlake Academy
(A Component Unit of the Town of Westlake)
Combining Balance Sheet
Nonmajor Governmental Funds
August 31, 2018
48
224 410 461
Data
Control
Codes
IDEA Part B
Formula
State
Textbook
Fund
Campus
Activity Funds
1110 Cash and cash equivalents -$ -$ 13,000$
1240 Due from other governments - 51,568 -
1410 Prepaid expenditures - 1,525 -
1000 Total assets -$ 53,093$ 13,000$
LIABILITIES:
2110 Accounts payable -$ -$ 1,622$
2170 Due to other funds - 53,093 -
Total liabilities - 53,093 1,622
FUND BALANCES:
Nonspendable for:
3430 Prepaid items - 1,525 -
Committed for:
3545 Campus activities - - 11,378
3600 Unassigned - (1,525) -
3000 Total fund balances - - 11,378
4000 Total liabilities and fund balances -$ 53,093$ 13,000$
LIABILITIES AND FUND BALANCES
ASSETS
Exhibit F-1
49
482 497 498
Hudson
Grant
Foundation-
Student
Scholarships
International
Mindedness
Education
Symposium
Total Nonmajor
Governmental
Funds
-$ -$ -$ 13,000$
- 2,500 - 54,068
- - - 1,525
-$ 2,500$ -$ 68,593$
-$ -$ -$ 1,622$
- 2,500 - 55,593
- 2,500 - 57,215
- - - 1,525
- - - 11,378
- - - (1,525)
- - - 11,378
-$ 2,500$ -$ 68,593$
Westlake Academy
(A Component Unit of the Town of Westlake)
Combining Statement of Revenues, Expenditures, and Changes in
Fund Balances – Nonmajor Governmental Funds
For the Year Ended August 31, 2018
50
224 410 461
Data
Control
Codes
IDEA Part B
Formula
State Textbook
Fund
Campus
Activity Funds
REVENUES
5700 Local and intermediate sources -$ -$ 76,953$
5800 State program revenues - 139,098 1,265
5900 Federal program revenues 114,797 - -
5020 Total revenues 114,797 139,098 78,218
EXPENDITURES
Current:
0011 Instruction 114,797 139,098 -
0013 Curriculum and instructional
staff development - - -
0023 School leadership - - -
0036 Extracurricular activities - - 80,138
6030 Total expenditures 114,797 139,098 80,138
1100 EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES - - (1,920)
1200 NET CHANGE IN FUND BALANCES - - (1,920)
0100 FUND BALANCES, BEGINNING - - 13,298
3000 FUND BALANCES, ENDING -$ -$ 11,378$
Exhibit F-2
51
482 497 498
Hudson
Grant
Foundation-
Student
Scholarships
International
Mindedness
Education
Symposium
Total Nonmajor
Governmental
Funds
-$ 2,500$ 2,500$ 81,953$
- - - 140,363
- - - 114,797
- 2,500 2,500 337,113
767 2,500 - 257,162
- - 1,029 1,029
2,670 - 5,427 8,097
- - - 80,138
3,437 2,500 6,456 346,426
(3,437) - (3,956) (9,313)
(3,437) - (3,956) (9,313)
3,437 - 3,956 20,691
-$ -$ -$ 11,378$
52
Internal Control Report
Austin | Conroe | Dallas | Fort Worth | Houston Los Angeles | Midland | New York City | San Antonio
Weaver and Tidwell, L.L.P.
2300 North Field Street, Suite 1000 | Dallas, Texas 75201
Main: 972.490.1970 | Fax: 972.702.8321
CPAs AND ADVISORS | WEAVER.COM
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
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, 2018, 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 26, 2018.
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 opini ons 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 iden tify 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.
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.
The Board of Trustees
Westlake Academy
54
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 26, 2018