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Home My WebLink About12-16-19 BOT Agenda packet WESTLAKE ACADEMY BOARD OF TRUSTEE MEETING AGENDA 1500 SOLANA BLVD, BUILDING 7, SUITE 7100, COUNCIL CHAMBER ? WESTLAKE, TX 76262 DECEMBER 16, 2019 5:00 PM MEETING Vision Statement Westlake Academy inspires college bound students to achieve their highest individual potential in a nurturing environment that fosters the traits found in the IB Learner Profile:Inquirers, Knowledgeable, Thinkers, Communicators, Principled, Open Minded, Caring, Risk-takers, Balanced and Reflective Work Session 1. CALL TO ORDER 2. PLEDGE OF ALLEGIANCE 3. CITIZEN COMMENTS: This is an opportunity for citizens to address the Board on any matter whether or not it is posted on the agenda. Any person desiring to make a public comment must first be recognized by the presiding officer and sign in at the podium with their name and address. Individual citizen comments are normally limited to three (3) minutes; however, time limits can be adjusted by the presiding officer. The presiding officer may ask the citizen to hold their comment on an agenda item if the item is posted as a Public Hearing. The Board cannot by law take action nor have any discussion or deliberations on any presentation made to the Board at this time concerning an item not listed on the agenda. Any item presented may be noticed on a future agenda for deliberation or action. 4. REVIEW OF CONSENT AGENDA ITEMS LISTED ON THE REGULAR MEETING AGENDA. S. DISCUSSION ITEMS a. Presentation and discussion of the FY 2018-2019 annual audit report from Weaver and Tidwell, L.L.P. 6. BOARD RECAP / STAFF DIRECTION Page 1 of 2 Regular Session will begin immediately following the work session 1. CALL TO ORDER 2. CONSENT AGENDA: All items listed below are considered routine by the Board of Trustees and will be enacted with one motion. There will be no separate discussion of items unless a Board member or citizen so requests, in which event the item will be removed from the general order of business and considered in its normal sequence. a. Consider approval of Resolution 19-21, Approving the Fiscal Year 2018-2019 annual audit report from Weaver and Tidwell, L.L.P. b. Consider approval of Resolution 19-22, authorizing the Superintendent to terminate an agreement with North Central Texas Janitorial for janitorial services at the Westlake Academy Campus. 3. FUTURE AGENDA ITEMS: Any Board member may request at a workshop and / or Board meeting, under"Future Agenda Item Requests", an agenda item for a future Board meeting. The Board member making the request will contact the Superintendent with the requested item and the Superintendent will list it on the agenda. At the meeting, the requesting Board member will explain the item, the need for Board discussion of the item, the item's relationship to the Board's strategic priorities, and the amount of estimated staff time necessary to prepare for Board discussion. If the requesting Board member receives a second, the Superintendent will place the item on the Board agenda calendar allowing for adequate time for staff preparation on the agenda item. 4. ADJOURNMENT ANY ITEM ON THIS POSTED AGENDA COULD BE DISCUSSED IN EXECUTIVE SESSION AS LONG AS IT IS WITHIN ONE OF THE PERMITTED CATEGORIES UNDER SECTIONS 551.071 THROUGH 551.076 AND SECTION 551.087 OF THE TEXAS GOVERNMENT CODE. CERTIFICATION I certify that the above notice was posted at the Town Hall of the Town of Westlake, 1500 Solana Blvd., Building 7, Suite 7100, Westlake, TX 76262, on December 13, 2019, by 5:00 p.m. under the Open Meetings Act, Chapter 551 of the Texas Government Code. Tanya Morris, Assistant to the Town Secretary If you plan to attend this public meeting and have a disability that requires special needs or translation services, please advise the Town Secretary 48 hours in advance at 817-490-5710 and reasonable accommodations will be made to assist you. Page 2 of 2 Board of Trustees Item # 2 — Pledge of Allegiance Texas Pledge: "Honor the Texas flag; I pledge allegiance to the, Texas, on state under God, on and indivisible. " Board of Trustees Item # 3 — Citizen Comments CITIZEN COMMENTS: This is an opportunity for citizens to address the Board on any matter whether or not it is posted on the agenda. The Board cannot by law take action nor have any discussion or deliberations on any presentation made to the Board at this time concerning an item not listed on the agenda. Any item presented may be noticed on a future agenda for deliberation or action. Board of Trustees Item # 4 — Review of Consent Agenda Items REVIEW OF CONSENT AGENDA ITEMS a. Consider approval of Resolution 19-21, Approving the Fiscal Year 2018- 2019 annual audit report from Weaver and Tidwell, L.L.P. b. Consider approval of Resolution 19-22, authorizing the Superintendent to terminate an agreement with North Central Texas Janitorial for janitorial services at the Westlake Academy Campus. Board of Trustees Item # 5 — Discussion Items DISCUSSION ITEMS a. Presentation and discussion of the FY 2018-2019 annual audit report from Weaver and Tidwell, L.L.P. V�.)estlake Academy Board of Trustees }} TYPE OF ACTION Workshop -Discussion Item Westlake Board Meeting Monday, December 16, 2019 Topic: Presentation and Discussion of the FY 2018-2019 annual audit report from Weaver and Tidwell, L.L.P. STAFF CONTACT: Debbie Piper Finance Director Strategic Alignment Vision, Value, Mission Perspective Curriculum Outcome Objective Vision:Westlake Academy inspires college bound students to achieve their highest individual Fiscal Stewardship PYP/MYP/DP Improve Financial potential in a nuturing Stewardship environment that fosters the traits found in the IB Learner Profile. Strategic Initiative Outside the Scope of Identified Strategic Initiatives Time Line - Start Date: September 1, 2018 Completion Date: August 31, 2019 Funding Amount: $19,000 Status - Funded Source - General Fund EXECUTIVE SUMMARY(INCLUDING APPLICABLE ORGANIZATIONAL HISTORY) Weaver and Tidwell, L.L.P. has completed the Westlake Academy 2018-2019 annual financial audit report. As in prior years, we again had no "Findings", reportable conditions nor material weaknesses to be reported to TEA. Findings are items required by TEA to be reported regarding TEA compliance, large variances in budget vs. actual balances, etc. TEA doesn't necessarily look upon these as bad(they require an explanation of all "Findings" and review in subsequent years), but it certainly looks good for the Academy not to have any for the current year. The General Fund year-end fund balance is $1,373,837, which is a $268,232 increase over the prior year. The increase is primarily attributable to the addition of 13 students(856 in 2018 to 869 in 2019), and additional donations provided to the Academy through the Westlake Academy Foundation offset by the year-end payroll accrual. This ending fund balance represents 57 days operating days. Following is a summary of the major variances. These totals reflect only the General Fund. REVENUES — The ending revenue balance represents $26,027 more than anticipated primarily due to receiving the equipment sale proceeds for old iPads in August. The revenue was budgeted in FY 19-20. EXPENDITURES — The ending expenditure balance showed the Academy spent $94,024 less than anticipated. Increases in expenditures at the function level included professional development travel (23), additional contract services provided to the Special Education program(31),post-season athletic competitions(36),and repairs and replacements to the fire alarm system and other aging infrastructure (51153), all of which were covered by reduced expenditures in other areas. Please review the Management Discussion and Analysis document included in the audit report for statistical information during the year ended August 31, 2019. RECOMMENDATION Recommend approval of the resolution approving the FY 2018-2019 annual audit as submitted. ATTACHMENTS 1. Presentation presented at meeting 2. Link to audit under regular session Board of Trustees Item # 6 — Board Recap / Staff Direction BOARD RECAP / STAFF DIRECTION Board of Trustees Item # 2 — Consent Agenda CONSENT AGENDA: All items listed below are considered routine by the Board of Trustees and will be enacted with one motion. There will be no separate discussion of items unless a Board member or citizen so requests, in which event the item will be removed from the general order of business and considered in its normal sequence. a. Consider approval of Resolution 19-21, Approving the Fiscal Year 2018-2019 annual audit report from Weaver and Tidwell, L.L.P. b. Consider approval of Resolution 19-22, authorizing the Superintendent to terminate an agreement with North Central Texas Janitorial for janitorial services at the Westlake Academy Campus V�.)estlake Academy Board of Trustees }} TYPE OF ACTION Regular Meeting - Consent Westlake Board Meeting Monday, December 16, 2019 Topic: Consider a Resolution approving the FY 2018-2019 annual audit report from Weaver and Tidwell, L.L.P. STAFF CONTACT: Debbie Piper Finance Director Strategic Alignment Vision, Value, Mission Perspective Curriculum Outcome Objective Vision:Westlake Academy inspires college bound students to achieve their highest individual Fiscal Stewardship PYP/MYP/DP Improve Financial potential in a nuturing Stewardship environment that fosters the traits found in the IB Learner Profile. Strategic Initiative Outside the Scope of Identified Strategic Initiatives Time Line - Start Date: September 1, 2018 Completion Date: August 31, 2019 Funding Amount: $19,000 Status - Funded Source - General Fund EXECUTIVE SUMMARY(INCLUDING APPLICABLE ORGANIZATIONAL HISTORY) Weaver and Tidwell, L.L.P. has completed the Westlake Academy 2018-2019 annual financial audit report. As in prior years, we again had no "Findings", reportable conditions nor material weaknesses to be reported to TEA. Findings are items required by TEA to be reported regarding TEA compliance, large variances in budget vs. actual balances, etc. TEA doesn't necessarily look upon these as bad(they require an explanation of all "Findings" and review in subsequent years), but it certainly looks good for the Academy not to have any for the current year. The General Fund year-end fund balance is $1,373,837, which is a $268,232 increase over the prior year. The increase is primarily attributable to the addition of 13 students(856 in 2018 to 869 in 2019), and additional donations provided to the Academy through the Westlake Academy Foundation offset by the year-end payroll accrual. This ending fund balance represents 57 days operating days. Following is a summary of the major variances. These totals reflect only the General Fund. REVENUES — The ending revenue balance represents $26,027 more than anticipated primarily due to receiving the equipment sale proceeds for old iPads in August. The revenue was budgeted in FY 19-20. EXPENDITURES — The ending expenditure balance showed the Academy spent $94,024 less than anticipated. Increases in expenditures at the function level included professional development travel (23), additional contract services provided to the Special Education program(31),post-season athletic competitions(36),and repairs and replacements to the fire alarm system and other aging infrastructure (51153), all of which were covered by reduced expenditures in other areas. Please review the Management Discussion and Analysis document included in the audit report for statistical information during the year ended August 31, 2019. RECOMMENDATION Recommend approval of the resolution approving the FY 2018-2019 annual audit as submitted. ATTACHMENTS 1. Resolution 19-21 Approving Annual Financial Audit Report Fiscal Year 18-19 2. Audit report for Fiscal Year Ended August 31, 2019 3. Governance Letter AKE ACADEMY International Baccalaureate World School ANNUAL F'i ANCIAL REPORT' FOR THE ••FISG YEA1R ENDED AUGUST 31 , Z019 .4•'r N ,�. • ' IL C a ► til __ _ 1 ANNIVERSARY - •�- .ter � .ii • • • r ,� r'.`r fir-- �, ■ -� * / h► - 'a•'"►� . . 4 . ANNIVERSARY WESTL # ' I INTERNATIONAL + r' ` ■ + �� !r "F Westlake Academy 2600 ❑ttinger Road Westlake, Texas 76262 www.westlakeacademy.org This Page Intentionally Left Blank Westlake Academy (A Component Unit of the Town of Westlake) Annual Financial Report For the Year Ended August 31, 2019 Table of Contents Page Exhibit Introductory Section Certificateof Board .............................................................................................................................ii Financial Section Independent Auditor's Report.......................................................................................................... 3 Management's Discussion and Analysis..........................................................................................5 Basic Financial Statements Government-Wide Financial Statements Statementof Net Position............................................................................................................... 14 A-1 Statementof Activities.................................................................................................................... 15 B-1 Fund Financial Statements BalanceSheet.................................................................................................................................. 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......................................................................42 E-1 Notes to the Budgetary Comparison Schedule ...........................................................................43 Schedule of Academy's Proportionate Share of Net Pension Liability-Teacher Retirement System....................................................................44 E-2 Schedule of Pension Contributions-Teacher Retirement System ............................................45 E-3 Schedule of Academy's Proportionate Share of Net OPEB Liability-Teacher Retirement System TRS Care Plan...............................................46 E-4 Schedule of OPEB Contributions-Teacher Retirement System TRS Care Plan.......................47 E-5 Combining Statements Nonmajor Governmental Funds CombiningBalance Sheet............................................................................................................. 50 F-1 Combining Statement of Revenues, Expenditures, and Changesin Fund Balance ........................................................................................................... 52 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 ...............................................................57 i Certificate of Board WESTLAKE ACADEMY TARRANT 220-810 Name of School County Co.-District Number We, the undersigned, certify that the attached annual financial reports of the above-named school were reviewed and (check one) approved disapproved for the year ended August 31, 2019 at a meeting of the Board of Trustees of such school on the day of Assistant to Board Secretary Signature of Board President If the Board of Trustees disapproved of the auditors' report, the reason(s) for disapproving it is(are): (Attach list as necessary) ii Financial Section 1 This Page Intentionally Left Blank 2 "r weave� Austin I Conroe I Dallas I Fort Worth I Houston Los Angeles I Midland I New York City San Antonio Assurance•Tax•Advisory 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, 2019, and the related notes to the financial statements, which collectively comprise the Academy's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America;this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements,whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 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, 2019, 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. Weaver and Tidwell, L.L.P. 2300 North Field Street,Suite 1000 1 Dallas,Texas 75201 Main:972.490.1970 1 Fax:972.702.8321 CPAs AND ADVISORS I WEAVER.COM The Board of Trustees Westlake Academy 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 liability and the net OPEB liability, and schedules of Academy pension and OPEB contributions on pages 5 through 12, and 42 through 47, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Academy's basic financial statements. The nonmajor governmental funds combining statements are presented for the purposes of additional analysis and are not a required part of the basic financial statements. The nonmajor governmental funds combining statements are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the nonmajor governmental funds combining statements are fairly stated in all material respects in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 9, 2019, 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. 4/ it Gr�x�)A4( �,f�f P WEAVER AND TIDWELL, L.L.P. Dallas, Texas December 9, 2019 4 Westlake Academy (A Component Unit of the Town of Westlake) Management's Discussion and Analysis August 31, 2019 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, 2019. 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 $2,906,051 (Net Position). This is a decrease of $82,825 for the year ended August 31, 2019. • The Academy reported $10,306,233 in expenses related to governmental activities, of which $3,343,730 of these expenses were offset by program-specific charges for services or grants and contributions. This is a total expense increase of$3,133,253 from the prior year. • The General Fund reported a fund balance this year of $1,373,837, an increase of $268,232 from the prior year. Overview of the Financial Statements This annual report consists of three parts: management's discussion and analysis (this section), basic financial statements, and required supplementary information. The basic financial statements present different views of Academy: • The first two statements are government-wide financial statements that provide both long-term and short-term information about the Academy's overall financial status. • The remaining statements are fund financial statements that focus on individual parts of the government, reporting the Academy's operations in more detail than the government-wide statements. • The governmental funds statements tell how general government services were financed in the short term as well as what remains for future spending. • Fiduciary fund statements provide information about the financial relationships in which the District acts solely as a trustee or agent for the benefit of others, to whom the resources in question belong. The financial statements also include notes (starting on page 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 information they contain. The remainder of this overview section of management's discussion and analysis explains the structure and contents of each of the statements. 5 Westlake Academy (A Component Unit of the Town of Westlake) Management's Discussion and Analysis August 31, 2019 Government-Wide Statements The government-wide statements beginning on page 14, report information about the Academy as a whole using accounting methods similar to those used by private-sector companies. Its primary objective is to show whether the Academy is better or worse off as a result of the year's activities. The statement of net position includes all of the Academy's assets and liabilities. The facilities used in the Academy's operations are included in the Town of Westlake's financial statements. All of the current year's revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid. The Academy's revenue is divided into those provided by outside parties who share the costs of some programs, such as payments received from extracurricular activities and grants provided by the U.S. Department of Education to assist children with disabilities (program revenue), and general revenue provided by donations from the public or by Texas Education Agency (TEA) in equalization funding processes (general revenue). All the Academy's assets are reported whether they serve the current year or future years. Liabilities are considered regardless of whether they must be paid in the current or future years. Figure A-1 Major features of the Academy's Government-Wide and Fund Financial Statements Type of Statement Government-wide Governmental Funds Fiduciary Funds Entire Instances in which the government(except Activities of the Academy Academy is the trustee or Scope fiduciary funds)and the that are not proprietary or Academy's component fiduciary agent for someone else's resources units Statement of Net Balance Sheet,Statement Statement of Fiduciary Net Required Financial Position,Statement of of Revenues,Expenditures Position,Statement of Statements and Changes in Fund Changes in Fiduciary Net Activities Balances Position Accounting basis Accrual accounting Modified accrual and measurement and economic accounting and current Accrual accounting and economic resources focus focus resources focus financial resources focus Only assets expected to All assets and liabilities Types of All assets and liabilities be used up and liabilities both short-term and long- accountability both financial and that become due during term;the Academy's funds information capital,short-term and the year or soon do not currently include long-term thereafter.No capital capital assets,although assets included. they can. Revenue for which cash is received during or soon Types of All revenues and after the end of the year, All revenues and expenses Inflow/outflow expenses during year, expenditures when goods during year,regardless of Information regardless of when or services have been when cash is received or cash is received or paid received and payment is paid. due during the year or soon thereafter. 6 Westlake Academy (A Component Unit of the Town of Westlake) Management's Discussion and Analysis August 31, 2019 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, respectively. • To assess the overall health of the Academy, one should consider additional non-financial factors such as changes in the Academy's average daily attendance and the condition of the Academy's facilities. The government-wide financial statements of the Academy include the Governmental activities. Most of the Academy's basic services are included here, such as instruction, curriculum and staff development, extracurricular activities, maintenance, health services and general administration. State funds, donations and grants finance most of these activities. Component Unit The government-wide financial statements also present the activity of Westlake Academy Foundation, a discretely presented component unit. The Foundation was organized exclusively for charitable and educational purposes and provides funds to help support the Academy. During 2019, the Foundation contributed $1,219,155 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, 2019. • Governmental funds - Most of the Academy's basic services are included in governmental funds, which focus on (1) how cash and other financial assets that can readily be converted to cash flow in and out and (2) the balances left at year-end that are available for spending. Consequently, the governmental fund statements provide a detailed short-term view that helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the Academy's programs. Because this information does not encompass the additional long-term focus of the government-wide statements, we provide additional information at the bottom of the governmental funds statement, or on the subsequent page, that explain the relationship (or differences) between them. • Fiduciary fund - the Academy maintains a fiduciary fund to account for resources held for student activities in a custodial capacity. These fiduciary activities are reported in a separate statement of fiduciary net position and a statement of changes in fiduciary net position on page 18. These activities are excluded from the school's government-wide financial statements because they cannot use these assets to finance their operations. 7 Westlake Academy (A Component Unit of the Town of Westlake) Management's Discussion and Analysis August 31, 2019 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 reports a deficit net position of ($2,906,051) at August 31, 2019. 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 increase from $2,823,226 in 2018 to $2,906,051 in 2019. The governmental activities' net position decreased by 3 percent ($82,825). The decrease was primarily due to the net effect of the following: (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$227,613. (2) There was an increase in operating grants and contributions of $1,216,325. This increase was primarily due to recording the State's on-behalf portion of the Academy's OPEB expense which, in turn, increased both operating grants and contributions and expenses. (3) Expenses were also increased by the change in net OPEB and pension liability and related deferred inflows and outflows. There was a decrease in fiscal year 2018 of $814,725 and an increase in fiscal year 2019 of $193,055 in net OPEB and pension liability and related deferred inflows and outflows. This increase in net OPEB and pension liability and related deferred inflows and outflows caused fiscal year 2019 expenses to increase $1,007,780. 8 Westlake Academy (A Component Unit of the Town of Westlake) Management's Discussion and Analysis August 31, 2019 Table A-1 Westlake Academy's Net Position Governmental Activities Component Unit 2019 2018 2019 2018 Current assets $ 2,496,339 $ 1,576,344 $ 2,380,643 $ 2,558,219 Total assets 2,496,339 1,576,344 2,380,643 2,558,219 Deferred outflows of resources 1,185,191 556,112 - - Current liabilities 1,103,477 131,707 - 387,862 Non-current liabilities 4,440,1 13 3,615,982 - - Totalliabilities 5,543,590 3,747,689 - 387,862 Deferred inflows of resources 1,043,991 1,207,993 - - Net position: Restricted 2,760 4,215 284,163 295,432 Unrestricted (2,908,811) (2,827,441) 2,096,480 1,874,925 Total net position $ (2,906,051) $ (2,823,226) $ 2,380,643 $ 2,170,357 Figure A-2 Westlake Academy Sources of Revenue for Fiscal Year 2019 3.1% ■Charges for Service 68.0 %k ■Operating Grants& Contributions 0 2% Investment Earnings 67.1% ■State Funding Capital Grants & Contributions 9 Westlake Academy (A Component Unit of the Town of Westlake) Management's Discussion and Analysis August 31, 2019 Table A-2 Westlake Academy's Change in Net Position Governmental Activities Component Unit Activities 2019 2018 2019 2018 Revenues Program revenues: Charges for services $ 313,741 $ 238,352 $ - $ Operating grants and contributions 2,210,040 993,715 1,790,216 1,710,577 Capital grants and contributions 819,949 753,824 - - General revenues: State aid and formula grants 6,857,120 6,629,507 - - Investment earnings 22,558 9,878 22,890 170,733 Total revenues 10,223,408 8,625,276 1,813,106 1,881,310 Expenses Instruction 5,977,502 4,099,293 Instructional resources and media services 130,117 90,712 - - Curriculum and staff development 114,011 109,486 -Instructional leadership 169,080 93,937 School leadership 1,040,519 582,608 Guidance,counseling,and evaluation services 517,379 220,264 - - Health services 91,489 58,667 Food service 52,679 51,648 - - Extracurricular activities 442,632 327,254 - - General administration 227,699 320,152 - - Facilities maintenance and operations 1,118,657 973,289 - - Security and monitoring services 35,753 -Data processing services 240,331 152,422 - Community services 144,385 84,363 - - Program/support services 1,602,820 1,666,628 Debt service-interest 4,000 8,885 - - Total expenses 10,306,233 7,172,980 1,602,820 1,666,628 Change in net position (82,825) 1,452,296 210,286 214,682 Beginning net position (2,823,226) 205,030 2,170,357 1,955,675 Cumulative effect of change in accounting principle (4,480,552) - - Ending net position $ (2,906,051) $ (2,823,226) $ 2,380,643 $ 2,170,357 10 Westlake Academy (A Component Unit of the Town of Westlake) Management's Discussion and Analysis August 31, 2019 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 $10,306,233 • Some of the cost was paid by those who directly benefited from the programs, $313,741 and some of the cost was paid through grants and contributions $3,029,989 Table A-3 Total% Total Total Cost of Services Change Net Cost of Services Change 2019 2018 2018-19 2019 2018 2018-19 Instruction $ 5,977,502 $ 4,099,293 46% $ 4,095,998 $ 3,085,808 33% School leadership 1,040,519 582,608 79% 778,292 539,159 44% Instructional leadership 169,080 93,937 80% 126,737 91,792 38% Guidance,counseling and evaluation services 517,379 220,264 135% 391,315 193,951 102% Extracurricular activities 442,632 327,254 35% 99,040 30,998 220% General administration 227,699 320,152 -29% 170,894 229,268 -25% Facilities maintenance and operations 1,118,657 973,289 15% 790,740 654,848 21% Data processing services 240,331 152,422 58% 170,589 122,227 40% General Fund Budgetary Highlights • The General Fund year-end fund balance is $1,373,837, which increased $268,232 over the prior year. The increase is attributable to the addition of 13 students (856 in 2018 to 869 in 2019), and additional donations provided to the Academy through the Westlake Academy Foundation. • The General Fund revenue budget increased by $75,484 due to the fluctuations in Career & Technology Education and student participation, and in the Foundation funding from changes in student enrollment. • During the year, the General Fund expenditure budget was increased by $65,000 to include the cost of year-end payroll accruals not adequately budgeted in prior years. Increases in expenditures at the function level included professional development travel (23), additional contract services provided to the Special Education program (31), post-season athletic competitions (36), and repairs and replacements to the fire alarm system and other aging infrastructure (51/53), all of which were covered by reduced expenditures in other areas. Economic Factors and Next Year's Budget • General Fund revenues are budgeted to increase approximately 8% over the actual revenues realized in FY 2018-2019. This is due to an anticipated increase in enrollment of 41 students, an increased availability of Career and Technology (CTE) course selections and student participation, and the continuation of the TEA Facilities Allotment. 11 Westlake Academy (A Component Unit of the Town of Westlake) Management's Discussion and Analysis August 31, 2019 Appropriations within the General Fund budget are estimated to reach $9,572,502, which is an increase of 9% ($891,394) over actual expenditures in FY 2018-2019. o Payroll & related expenditures: For FY 2019-2020 expected payroll expenditures increased by 10.6% ($708,257). The requirements of House Bill 3 (HB3) passed by the 86t" Legislature were implemented, which included the following: • Required participation in the state's contribution to the Teacher Retirement System on salary paid above the state minimum salary schedule. In previous years, charter schools were exempt from this contribution. • Increased basic allotment per student requires 30% be allocated to compensation, with 75% of this total specifically allocated to teachers, librarians, counselors, and nurses. ■ In addition to H133 changes, new positions were added including a PYP Interventionist, a secondary counselor, two teachers (English and Humanities), a part- time speech pathologist and two in-house custodians. o Professional & contracted services: This category includes expenditures related to services rendered to the Academy by firms, individuals, and other organizations. For 2019-2020, there will be an estimated 8% decrease ($79,252), attributed to modifying custodial and speech pathology services from contracted to in-house. o Materials & supplies: This category includes expenditures associated with consumables used in the classroom and in the general operations of the campus. For 2019-2020, there will be an estimated 7% decrease ($28,397) due to the elimination of required IB exam registration fees and a decrease in furniture and general supply expenditures. o Miscellaneous Operating Costs: These costs are associated with insurance, professional development travel, membership fees and dues, graduation expenses, and other miscellaneous costs. A 3% increase ($13,825) is anticipated due to the change in professional membership dues and in regular athletic and post-season tournaments. o Debt service: These costs are associated with the three-year lease for iPads supporting the one-to-one device initiative. The FY 2019-2020 budget was increased to include the payoff of the FY 2015-2016 iPad lease ($167,068) and the implementation of a new 3-year lease ($182,937). If the FY 2019-2020 budget estimates are realized, the Academy's General Fund's budgetary fund balance is expected to increase by approximately $145,431 by August 31, 2020. Contacting the Academy's Financial Management This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the Academy's finances and to demonstrate the Academy's accountability for the money it receives. If you have questions about this report or need additional financial information, contact the Academy/Town Finance Director, Debbie Piper, at 817-490-5712, or by writing to 1500 Solana Blvd, Building 7, Suite 7200, Westlake, Texas 76262. 12 Basic Financial Statements 13 Westlake Academy Exhibit A-1 (A Component Unit of the Town of Westlake) Statement of Net Position August 31, 2019 Data 1 4 Control Governmental Component Codes Activities Unit ASSETS 1110 Cash and cash equivalents $ 1,848,237 $ 547,114 1120 Current investments 100 1,831,544 1240 Due from other governments 482,553 - 1290 Other receivables 101,422 - 1410 Prepaid expenses 64,027 1,985 1000 Total assets 2,496,339 2,380,643 DEFERRED OUTFLOWS OF RESOURCES 1705 Deferred outflows of resources-pensions 917,823 - 1705 Deferred outflows of resources-OPEB 267,368 - 1700 Total deferred outflows of resource 1,185,191 - LIABILITIES 2110 Accounts payable 54,524 - 2150 Payroll deductions and withholdings 126 - 2160 Accrued wages payable 38,544 - 2180 Due to other governments 1,005,966 - 2200 Other accrued expenses 4,317 - 2540 Net pension liability 1,489,525 - 2540 OPEB liability 2,950,588 2000 Total liabilities 5,543,590 - DEFERRED INFLOWS OF RESOURCES 2605 Deferred inflows of resources-pensions 110,944 - 2605 Deferred inflows of resources-OPEB 933,047 - 2600 Total deferred inflows of resources 1,043,991 - NET POSITION 3890 Restricted for donor stipulations 2,760 284,163 3900 Unrestricted (2,908,811) 2,096,480 3000 Total net position $ (2,906,051) $ 2,380,643 The Notes to the Financial Statements are an integral part of this statement. 14 Westlake Academy Exhibit B-1 (A Component Unit of the Town of Westlake) Statement of Activities For the Year Ended August 31, 2019 Net(Expense)Revenue and Program Revenues Changes in Net Position 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 $ 5,977,502 $ 67,701 $ 1,307,317 $ 506,486 $ (4,095,998) $ 12 Instructional resources and media services 130,117 1,259 21,757 33,347 (73,754) 13 Curriculum and staff development 114,011 1,266 38,966 - (73,779) 21 Instructional leadership 169,080 2,167 40,176 - (126,737) 23 School leadership 1,040,519 13,267 232,560 16,400 (778,292) 31 Guidance,counseling,and evaluation services 517,379 6,725 115,234 4,105 (391,315) 33 Health services 91,489 1,004 18,316 12,795 (59,374) 35 Food service 52,679 7,000 - 52,679 7,000 36 Extracurricular activities 442,632 191,330 108,193 44,069 (99,040) 41 General administration 227,699 2,961 41,885 11,959 (170,894) 51 Facilities maintenance and operations 1,118,657 13,806 196,469 117,642 (790,740) 52 Security and monitoring services 35,753 500 6,837 - (28,416) 53 Data processing services 240,331 2,937 48,884 17,921 (170,589) 61 Community services 144,385 1,818 33,446 2,546 (106,575) 71 Debt service-interest 4,000 - - - (4,000) )TP] Total primary government: $ 10,306,233 $ 313,741 $ 2,210,040 $ 819,949 (6,962,503) COMPONENT UNIT IC Wesflake Academy Foundation $ 1,602,820 $ - $ 1,790,216 $ - 187,396 Data Control Codes General revenues: SF State aid-formula grants 6,857,120 - IE Investment earnings 22,558 22,890 TR Total general revenues 6,879,678 22,890 CN Change in net position (82,825) 210,286 NB Net position,beginning (2,823,226) 2,170,357 NE Net position,ending $ (2,906,051) $ 2,380,643 The Notes to the Financial Statements are an integral part of this statement. 15 Westlake Academy Exhibit C-1 (A Component Unit of the Town of Westlake) Balance Sheet Governmental Funds August 31, 2019 10 98 Data Nonmajor Total Control Governmental Governmental Codes General Funds Funds ASSETS 1110 Cash and cash equivalents $ 1,838,700 $ 9,537 $ 1,848,237 1 120 Current investments 100 - 100 1240 Due from other governments 482,553 482,553 1260 Due from other funds 98,656 - 98,656 1290 Other receivables 26 101,396 101,422 1410 Prepaid expenditures 62,451 1,576 64,027 1000 Total assets $ 2,482,486 $ 112,509 $ 2,594,995 LIABILITIES AND FUND BALANCES LIABILITIES: 2110 Accounts payable $ 54,524 $ - $ 54,524 2150 Payroll deductions and withholdings 126 126 2160 Accrued wages payable 38,544 - 38,544 2170 Due to other funds - 98,656 98,656 2180 Due to other governments 1,005,966 1,005,966 2200 Accrued expenditures 4,317 - 4,317 2000 Total liabilities 1,103,477 98,656 1,202,133 DEFERRED INFLOWS OF RESOURCES: 2601 Unavailable contributions 5,172 - 5,172 2600 Total deferred inflows of resources 5,172 - 5,172 FUND BALANCES: 3430 Nonspendable-prepaid items 62,451 1,576 64,027 3490 Restricted for donor stipulations - 2,760 2,760 3545 Committed for campus activities - 11,093 11,093 3600 Unassigned 1,311,386 (1,576) 1,309,810 3000 Total fund balances 1,373,837 13,853 1,387,690 4000 Total liabilities and fund balances $ 2,482,486 $ 112,509 $ 2,594,995 Total fund balances-governmental funds $ 1,387,690 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. 5,172 Included in the items related to noncurrent liabilities are the Academy's proportionate share of the TRS Care net OPEB liability($2,950,588),a deferred resource inflow($933,047)and a deferred resource outflow of$267,368.The net effect is a decrease in net position. (3,616,267) Included in the items related to noncurrent liabilities are the Academy's proportionate share of the TRS net pension liability($1,489,525),a deferred resource inflow($110,944)and a deferred resource outflow of$917,823.The net effect is a decrease in net position. (682,646) Net position of governmental activities $ (2,906,051) The Notes to the Financial Statements are an integral part of this statement. 16 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, 2019 10 98 Data Nonmajor Total Control Governmental Governmental Codes General Funds Funds REVENUES 5700 Local and intermediate sources $ 1,645,153 $ 258,572 $ 1,903,725 5800 State program revenues 7,304,187 111,050 7,415,237 5900 Federal program revenues - 110,248 110,248 5020 Total revenues 8,949,340 479,870 9,429,210 EXPENDITURES 0011 Instruction 4,843,246 300,087 5,143,333 0012 Instructional resources and media services 90,039 963 91,002 0013 Curriculum and staff development 92,192 21,819 114,011 0021 Instructional leadership 154,969 3,562 158,531 0023 School leadership 948,814 9,529 958,343 0031 Guidance,counseling,and evaluation services 479,388 4,323 483,711 0033 Health services 71,810 1,268 73,078 0036 Extracurricular activities 256,287 130,752 387,039 0041 General administration 211,992 2,206 214,198 0051 Facilities maintenance and operations 990,511 2,531 993,042 0052 Security and monitoring services 35,753 - 35,753 0053 Data processing services 210,088 2,029 212,117 0061 Community services 130,014 2,541 132,555 0071 Debt service-principal on long-term debt 162,005 - 162,005 0072 Debt service-interest on long-term debt 4,000 - 4,000 6030 Total expenditures 8,681,108 481,610 9,162,718 1100 EXCESS(DEFICIENCY)OF REVENUES OVER(UNDER)EXPENDITURES 268,232 (1,740) 266,492 1200 NET CHANGE IN FUND BALANCES 268,232 (1,740) 266,492 0100 FUND BALANCES,BEGINNING 1,105,605 15,593 1,121,198 3000 FUND BALANCES,ENDING $ 1,373,837 $ 13,853 $ 1,387,690 Net change in fund balances $ 266,492 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. This amount represents the change in deferred inflows between the prior year and current year. (318,267) Current year principal payments on capital leases consume current resources,however, these payments reduce expenses and long-term liabilities in the government-wide financial statements. 162,005 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$46,204.Contributions before the measurement date also caused a decrease in the change in net position of$46,603.The net share of the Academy's amount of deferred inflows and outflows of resources decreased the net position by$34,009.This amount is the net effect. (34,408) 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$100,311.Contributions before the measurement date also caused a decrease in the change in net position of$91,593.The net share of the Academy's amount of deferred inflows and outflows of resources decreased the net position by$167,365.This amount is the net effect. (158,647) Change in net position of governmental activities $ (82,825) The Notes to the Financial Statements are an integral part of this statement. 17 Westlake Academy Exhibit D-1 (A Component Unit of the Town of Westlake) Statement of Fiduciary Net Position Fiduciary Funds August 31, 2019 Agency Fund ASSETS Cash and cash equivalents $ 56,287 Prepaids 5,728 Total assets $ 62,015 LIABILITIES Accounts payable $ 127 Due to student groups 61,888 Total liabilities $ 62,015 The Notes to the Financial Statements are an integral part of this statement. 18 Westlake Academy (A Component Unit of the Town of Westlake) Notes to the Financial Statements Note 1. Summary of Significant Accounting Policies Reporting Entity Westlake Academy (the Academy), a blended component unit of the Town of Westlake (the Town), is a Texas nonprofit corporation under Chapter 12, Subchapter D of the Education Code to provide education. The Board of Trustees (the Board) consists of six trustees and is appointed by the Town's governing body. Currently, all members of the Board are members of the Town's governing body. The Academy prepares its basic financial statements in conformity with generally accepted accounting principles promulgated by the Governmental Accounting Standards Board (the GASB) and other authoritative sources identified in Statement on Auditing Standards No. 69 of the American Institute of Certified Public Accountants; and it complies with the requirements of the appropriate version of Texas Education Agency's Financial Accountability System Resource Guide (the Resource Guide) and the requirements of contracts and grants of agencies from which it receives funds. The Board is appointed by the governing Council of the Town and it has the authority to make decisions, appoint administrators and managers, and significantly influence operations. It also has the primary accountability for fiscal matters. Therefore, the Academy is a financial reporting entity as defined by the GASB in its Statement No.14, "The Financial Reporting Entity", as modified by GASB Statements No. 39 and 61. The Academy's basic financial statements include a separate entity that is controlled by or dependent on the Academy. The determination to include separate entities is based on the criteria of GASB Statement No. 14, 'The Financial Reporting Entity" as amended by GASB Statement No. 39, "Determining Whether Certain Organizations Are Component Units" and GASB Statement No. 61, "The Financial Reporting Entity Omnibus." GASB defines the reporting entity as the primary government and those component units for which the primary government is financially accountable. To be financially accountable, a voting majority of the component unit's ruling body must be appointed by the primary government, and either (a) the primary government must be able to impose its will, or (b) the primary government may potentially benefit financially or be financially responsible for the component unit. The Westlake Academy Foundation (the Foundation) is a 501 (c)(3) nonprofit organization which was established exclusively for the purpose of supporting the Academy. This includes fundraising for and contributing raised funds to the Academy. The Foundation has been discretely presented in the accompanying financial statements and reported in a separate column to emphasize that it is legally separate from the Academy. See Note 12 for additional information relating to the Foundation. Separate audited financial statements of the Foundation are available from the Academy/Town Finance Director's office, 1500 Solana Blvd, Building 7,Suite 7200, Westlake, Texas 76262. Government-wide and Fund Financial Statements The Statement of Net Position and the Statement of Activities are government-wide financial statements. They report information on all of the Academy's nonfiduciary activities with most of the interfund activities removed. Governmental activities include programs supported primarily by state and federal grants, the Foundation, and the Town. The Academy has no business-type activities that rely to a significant extent, on fees and charges for support. Neither fiduciary funds nor component units that are fiduciary in nature are included. 19 Westlake Academy (A Component Unit of the Town of Westlake) Notes to the Financial Statements The Statement of Activities demonstrates how other people or entities that participate in programs the Academy operates have shared in the payment of the direct costs. Direct expenses are those that are clearly identifiable with a specific function or segment. The "charges for services" column includes payments made by parties that purchase, use, or directly benefit from goods or services provided by a given function or segment of the Academy. The primary example is 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, deferred inflows of resources, and fund balances are included on the balance sheet. Operating statements of these funds present net increases and decreases in current assets (i.e. revenues and other financing sources and expenditures and other financing uses). The modified accrual basis of accounting recognizes revenues in the accounting period in which they become both measurable and available and it recognizes expenditures in the accounting period in which the fund liability is incurred, if measurable. The expenditures related to certain compensated absences and claims and judgments are recognized when the obligations are expected to be liquidated with expendable available financial resources. The Academy considers all revenues available if they are collectible within 60 days after year-end. Miscellaneous revenues are recorded as revenue when received in cash because they are generally not measurable until actually received. Investment earnings are recorded as earned, since they are both measurable and available. Grant funds are considered to be earned to the extent of expenditures made under the provisions of the grant. Accordingly, when such funds are received, they are recorded as deferred inflows until related and authorized expenditures have been made. If balances have not been expended by the end of the project period, grantors sometimes require the Academy to refund all or part of the unused amount. 20 Westlake Academy (A Component Unit of the Town of Westlake) Notes to the Financial Statements The fiduciary funds utilize the accrual basis of accounting for purposes of asset and liability recognition. With this basis of accounting, all assets and all liabilities associated with the operation of these funds are included on the Statement of Fiduciary Net Position. Fund Accounting The Academy reports the following major governmental fund: The General Fund is the Academy's primary operating fund. It accounts for all financial resources except those required to be accounted for in another fund. Additionally, the Academy reports the following fund types: Nonmajor Governmental Funds: These nonmajor Special Revenue Funds account for resources restricted to, or committed for, specific purposes by the Academy or a grantor in a Special Revenue Fund. Most federal and some state financial assistance is accounted for in a Special Revenue Fund and sometimes unused balances must be returned to the grantor at the close of specified project period. Fiduciary Funds: Agency Funds account for resources held for others in a custodial capacity. Fiduciary funds are reported in the fiduciary fund financial statements. However, because these assets are not available to support Academy programs, these funds are not included in the government-wide statements. The Academy's Agency Fund is a Student Activity Fund. Other Accounting Policies 1. The State of Texas (the State) has created a state minimum personal leave program consisting of five days per year personal leave with no limit on accumulation and transferability among districts is provided for employees in accordance with 19 TAC §153.1021 (d)(8). Each district's local board is required to establish a personal leave plan. It is the Academy's policy to permit employees to accumulate earned but unused state and local personal leave. There is no liability for unpaid accumulated personal leave since the Academy does not have a policy to pay any amounts when employees separate from service with the Academy. 2. The Data Control Codes refer to the account code structure prescribed by the Texas Education Agency (TEA) in the Financial Accountability System Resource Guide. TEA requires the Academy to display these codes in the financial statements filed with the Agency in order to insure accuracy in building a statewide database for policy development and funding plan. 3. When an expenditure is incurred for purposes for which both restricted or unrestricted fund balance is available, the Academy considers restricted funds to have been spent first. When an expenditure is incurred for which committed, assigned, or unassigned fund balances are available, the Academy considers amounts to have been spent first out of committed funds, then assigned funds, and finally, unassigned funds. 4. The governmental fund financial statements present fund balances based on classifications that comprise a hierarchy that is based primarily on the extent to which the Academy is bound to honor constraints on the specific purposes for which amounts in the respective governmental funds can be spent. The classifications used in the governmental fund financial statements are as follows: • Nonspendable: This classification includes amounts that cannot be spent because they are either (a) not in spendable form or (b) are legally or contractually required to be maintained intact. 21 Westlake Academy (A Component Unit of the Town of Westlake) Notes to the Financial Statements • Restricted: This classification includes amounts for which constraints have been placed on the use of the resources either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments, or (b) imposed by law through constitutional provisions or enabling legislation. • Committed: This classification includes amounts that can be used only for specific purposes pursuant to constraints imposed by board resolution of the School Board, the Academy's highest level of decision making authority. These amounts cannot be used for any other purpose unless the School Board removes or changes the specified use by taking the same type of action that was employed when the funds were initially committed. This classification also includes contractual obligations to the extent that existing resources have been specifically committed for use in satisfying those contractual requirements. • Assigned: This classification includes amounts that are constrained by the Academy's intent to be used for a specific purpose but are neither restricted nor committed. This intent can be expressed by the Finance Director and Superintendent. • Unassigned: This classification includes the residual fund balance for the General Fund. The unassigned classification also includes negative residual fund balance of any other governmental fund that cannot be eliminated by offsetting of assigned fund balance amounts. 5. Net position represents the difference between assets and deferred outflows of resources and liabilities and deferred inflows of resources. Net position is reported as restricted when there are limitations imposed on its use either through 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. Note 2. Cash and Investments The funds of the Academy must be deposited and invested under the terms of a contract, contents of which are set out in the Depository Contract Law. The depository bank places approved pledged securities for safekeeping and trust with the Academy's agent bank in an amount sufficient to protect Academy funds on a day-to-day basis during the period of the contract. The pledge of approved securities is waived only to the extent of the depository bank's dollar amount of Federal Deposit Insurance Corporation (FDIC) insurance. 22 Westlake Academy (A Component Unit of the Town of Westlake) Notes to the Financial Statements At August 31, 2019, the carrying amount of the Academy's deposits (cash, certificates of deposit, and interest-bearing savings accounts included in temporary investments), including $56,287 recorded in the Agency fund, was $1,904,524 and the bank balance was $2,125,214. The carrying amount of the Foundation's deposits was $547,114 as of August 31, 2019 and the bank balance was $549,096. The Academy cash deposits at August 31, 2019 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 $30,881,048. c. The highest combined balances of cash, savings, and time deposit accounts amounted to $28,899,866 ($2,136,917 of which belonged to the Academy) on February 8, 2019. 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 policy. That policy must address the following areas: (1) safety of principal and liquidity, (2) portfolio diversification, (3) allowable investments, (4) acceptable risk levels, (5) expected rates of return, (6) maximum allowable stated maturity of portfolio investments, (7) maximum average dollar-weighted maturity allowed based on the stated maturity date for the portfolio, (8) investment staff quality and capabilities, and (9) bid solicitation preferences for certificates of deposit. Statutes authorize the Academy to invest in (1) obligations of the U. S. Treasury, certain U. S. agencies, and the State of Texas; (2) certificates of deposit, (3) certain municipal securities, (4) money market savings accounts, (5) repurchase agreements, (6) bankers acceptances, (7) mutual funds, (8) investment pools, (9) guaranteed investment contracts, and (10) common trust funds. The Act also requires the Academy to have independent auditors perform test procedures related to investment practices as provided by the Act. The Academy is in substantial compliance with the requirements of the Act and with local policies. The Academy categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. GASB Statement No. 72, Fair Value Measurement and Application provides a framework for measuring fair value which establishes a three-level fair value hierarchy that describes the inputs that are used to measure assets and liabilities. • Level 1 inputs are quoted prices (unadjusted) for identical assets or liabilities in active markets that a government can access at the measurement date. • Level 2 inputs are inputs-other than quoted prices included within Level 1 -that are observable for an asset or liability, either directly or indirectly. • Level 3 inputs are unobservable inputs for an asset or liability. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. If a price for an identical asset or liability is not observable, a government should measure fair value using another valuation technique that maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs. If the fair value of an asset or a liability is measured using inputs from more than one level of the fair value hierarchy, the measurement is considered to be based on the lowest priority level input that is significant to the entire measurement. 23 Westlake Academy (A Component Unit of the Town of Westlake) Notes to the Financial Statements 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, 2019, was $100 which was deposited in TexPool (a Texas Local Government Investment Pool). Local government investment pools operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. Local government investment pools use amortized cost rather than market value to report net assets to compute share prices. Accordingly, the fair value of the position of these pools is the same as the value of the shares in each pool. TexPool is organized in conformity with the Interlocal Cooperation Act, Chapter 791 of the Texas Government Code, and the Public Funds Investment Act. Chapter 2256 of the Texas Government Code. The Texas Comptroller of Public Accounts is the sole officer, director and shareholder of the Texas Treasury Safekeeping Trust Company, which is authorized to operate TexPool. In addition, the TexPool Advisory Board advises on TexPool's Investment Policy. This Board is composed equally of participants in TexPool and other persons who do not have a business relationship with TexPool who are qualified to advise TexPool. TexPool is subject to annual review by an independent auditor consistent with the Public Funds Investment Act. In addition, TexPool is subject to review by the State Auditor's office and by the Internal Auditor of the Comptroller's office. 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, 2019, the Academy's deposits with financial institutions in excess of federal depository insurance were fully collateralized by FDIC insurance and pledged collateral held by the Academy's agent bank in the Town of Westlake's name. 2. Custodial Credit Risk-Investments: This is the risk that, in the event of the failure of the counterparty, the Academy will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. Investments are subject to custodial credit risk only if they are evidenced by securities that exist in physical or book entry form. Thus positions in external investment pools are not subject to custodial credit risk because they are not evidenced by securities that exist in physical or book entry form. 3. Other Credit Risk: There is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. To minimize credit risk, TexPool invests only in investments authorized under the Public Funds Investment Act. As of August 31, 2019, 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: August 31,2019 Investment Type Cost Basis Fair Value Marketable equity securities: Common stock $ 1,820,484 $ 1,831,544 24 Westlake Academy (A Component Unit of the Town of Westlake) Notes to the Financial Statements FASB ASC 820, Fair Value Measurements and Disclosures, establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under FASB ASC 820 are described as follows: Level 1 inputs: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Foundation has the ability to access. Level 2 inputs: Inputs to the valuation methodology include: • Quoted market prices for similar assets or liabilities in active markets; • Quoted prices for identical assets or liabilities in inactive markets; • Inputs other than quoted prices that are observable for the asset or liability; and • Inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full-term of the asset or liability. Level 3 inputs: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The asset or liability's fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The following is a description of the valuation methodologies used for assets measured at fair value. Marketable Equity Securities Marketable equity securities reported as level 1 are determined by reference to quoted market prices for investments listed on an exchange or over-the-counter market. The following table sets forth by level, within the fair value hierarchy, the Foundation's assets at fair value as of August 31, 2019. Assets at Fair Value as of August 31, 2019 Level Level Level Total Marketable equity securities: Common stock $ 1,831,544 $ - $ $ 1,831,544 25 Westlake Academy (A Component Unit of the Town of Westlake) Notes to the Financial Statements 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, 2019, are summarized below. State Fund Entitlements Local Total General fund $ 474,221 $ 8,332 $ 482,553 Note 4. Donated Use of Facilities The Academy currently operates in facilities that are capital assets of the Town. The Academy is not required by the Town to pay rent for the use of those facilities; however, the Academy recognizes the value of the use received, $819,949, 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, 2019, consisted of the following individual fund balances: Due to Fund Due from Fund Amount Purpose General fund Nonmajor governmental $ 98,656 Reimburse program disbursements Total $ 98,656 The Academy had no interfund transfers during the year ending August 31, 2019. Note 6. Revenue from Local and Intermediate Sources During the current year, revenues from local and intermediate sources as reported on Exhibit C-2 of the fund statements consisted of the following: Non-major General Fund Funds Total Gifts and bequests $ 1,388,354 $ 178,578 $ 1,566,932 Interest 22,558 - 22,558 Food sales 7,000 - 7,000 Campus activities - 79,994 79,994 Parking/transportation 35,727 - 35,727 Athletics 72,519 - 72,519 Miscellaneous 118,995 - 118,995 Total $ 1,645,153 $ 258,572 $ 1,903,725 26 Westlake Academy (A Component Unit of the Town of Westlake) Notes to the Financial Statements 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 position is available in a separately-issued Comprehensive Annual Financial Report that includes financial statements and required supplementary information. That report may be obtained on the Internet at http://www.trs.state.tx.us/about/documents/cafr.pdf#CAFR; by writing to TRS at 1000 Red River Street, Austin,TX, 78701-2698; or by calling (512) 542-6592. Benefits Provided TRS provides service and disability retirement, as well as death and survivor benefits, to eligible employees (and their beneficiaries) of public and higher education in Texas. The pension formula is calculated using 2.3 percent (multiplier) times the average of the five highest annual creditable salaries times years of credited service to arrive at the annual standard annuity except for members who are grandfathered, the three highest annual salaries are used. The normal service retirement is at age 65 with 5 years of credited service or when the sum of the member's age and years of credited service equals 80 or more years. Early retirement is at age 55 with 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 less than age 60 or 62 depending on date of employment, or if the member was grandfathered in under a previous rule. There are no automatic post-employment benefit changes; including automatic COLAs. Ad hoc post-employment benefit changes, including ad hoc COLAs can be granted by the Texas Legislature as noted in the Plan description 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. 27 Westlake Academy (A Component Unit of the Town of Westlake) Notes to the Financial Statements Employee contribution rates are set in state statute, Texas Government Code 825.402. Senate Bill 1458 of the 83rd Texas Legislature amended Texas Government Code 825.402 for member contributions and established employee contribution rates for fiscal years 2014 thru 2017. The 85th Texas Legislature, General Appropriations Act (GAA) established the employer contribution rates for fiscal years 2018 and 2019. Rates for such plan fiscal years are as follows: Contribution rates 2018 2019 Member 7.7% 7.7% Non-employer contributing entity (State) 6.8% 6.8% Employers 6.8% 6.8% 2019 Employer contributions $ 100,311 2019 Member contributions $ 425,039 2019 NECE on-behalf contributions $ 340,785 Contributors to the plan include members, employers and the State of Texas as the only non-employer contributing entity. The State is the employer for senior colleges, medical schools and state agencies including TRS. In each respective role, the State contributes to the plan in accordance with state statutes and the General Appropriations Act (GAA). As the non-employer contributing entity for public education and junior colleges, the State of Texas contributes to the retirement system an amount equal to the current employer contribution rate times the aggregate annual compensation of all participating members of the pension trust fund during that fiscal year reduced by the amounts described below which are paid by the employers. Employers (public school, junior college, other entities or the State of Texas as the employer for senior universities and medical schools) are required to pay the employer contribution rate in the following instances: • On the portion of the member's salary that exceeds the statutory minimum for members entitled to the statutory minimum under Section 21.402 of the Texas Education Code. • During a new member's first 90 days of employment. • When any part or all of an employee's salary is paid by federal funding sources, a privately sponsored source, from non-educational and general, or local funds. • When the employing district is a public junior college or junior college district, the employer shall contribute to the retirement system an amount equal to 50% of the state contribution rate for certain instructional or administrative employees; and 100% of the state contribution rate for all other employees. In addition to the employer contributions listed above, there are two additional surcharges an employer is subject to: • When employing a retiree of the Teacher Retirement System the employer shall pay both the member contribution and the state contribution as an employment after retirement surcharge. 28 Westlake Academy (A Component Unit of the Town of Westlake) Notes to the Financial Statements • 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, 2018 actuarial valuation was determined using the following actuarial assumptions: Valuation date August 31,2017 rolled forward to August 2018 Actuarial cost method Individual entry age normal Asset valuation method Market value Single discount rate 6.907% Long-term expected investment rate of return 7.25% Municipal bond rate as of August 2018 3.69%.Source for the rate is the Fixed Income Market Data/Yield Curve/DateMunicipal Bonds with 20 Years to maturity that include Only federally tax-exempt Municipal bonds as reported In Fidelity Index's "20- Year Municipal GO AA Index Last year ending August 31,in 2017 to 2116 projection period (100 years) 2116 Inflation 2.30% Salary increases including inflation 3.50%to 9.50%includes inflation 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, 2017 and adopted on September 24, 2018. Discount Rate The single discount rate used to measure the total pension liability was 6.907%. The single discount rate was based on the expected rate of return on pension plan investments of 7.25% and a municipal bond rate of 3.69%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and those of the contributing employers and the non-employer contributing entity are made at the statutorily required rates. Based on those assumptions, the pension plan's fiduciary net position was sufficient to finance the benefit payments until the year 2069. As a result, the long-term expected rate of return on pension plan investments was applied to projected benefit payments through the year 2069, and the municipal bond rate was applied to all benefit payments after that date. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best estimates ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. 29 Westlake Academy (A Component Unit of the Town of Westlake) Notes to the Financial Statements Best estimates of geometric real rates of return for each major asset class included in the Systems target asset allocation as of August 31, 2018 are summarized below: Long-term Expected Real Return Portfolio Target Geometric Real Rate of Asset Class Allocation Basis Return Global Equity U.S. 18% 5.7% 1.0% Non-U.S.Developed 13% 6.9% 0.9% Emerging Markets 9% 9.0% 0.8% Directional Hedge Funds 4% 3.5% 0.1% Private Equity 13% 10.2% 1.3% Stable Value U.S.Treasuries 1 1% 1.1% 0.1% Absolute Return 0% 0.0% 0.0% Stable Value Hedge Funds 4% 3.1% 0.1% Cash 1% -0.3% 0.0% Real Return Global Inflation Linked Bonds 3% 0.7% 0.0% Real Assets 14% 5.2% 0.7% Energy and Natural Resources 5% 7.5% 0.4% Commodities 0% 0.0% 0.0% Risk Parity Risk Parity 5% 3.7% 0.2% Inflation Expectation 2.3% Alpha -0.8% Total 100.0% 7.3% *The Expected Contribution to Returns incorporates the volatility drag resulting from the conversion between Arithmetic and Geometric mean returns. Discount Rate Sensitivity Analysis The following schedule shows the impact of the Net Pension Liability if the discount rate used was 1%less than and 1% greater than the discount rate that was used (6.907%) in measuring the 2018 Net Pension Liability. 1%Decrease in Discount 1%Increase in Discount Rate Rate Discount Rate (5.907%) (6.907%) (7.907%) Academy's proportionate share of the net pension liability $ 2,248,050 $ 1,489,525 $ 875,454 30 Westlake Academy (A Component Unit of the Town of Westlake) Notes to the Financial Statements Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At August 31, 2019, the Academy reported a liability of $1,489,525 for its proportionate share of the TRS's net pension liability. This liability reflects a reduction for State pension support provided to the Academy. The amount recognized by the Academy as its proportionate share of the net pension liability, the related State support, and the total portion of the net pension liability that was associated with the Academy were as follows: Academy's proportionate share of the collective net pension liability $ 1,489,525 State's proportionate share that is associated with Academy 5,571,598 Total $ 7,061,123 The net pension liability was measured as of August 31, 2017 and rolled forward to August 31, 2018 and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as August 31, 2017 rolled forward to August 31, 2018. The Academy's proportion of the net pension liability was based on the Academy's contributions to the pension plan relative to the contributions of all employers to the plan for the period September 1, 2017 thru August 31, 2018. At August 31, 2018, the employer's proportion of the collective net pension liability was 0.002706 1 39 7% which was a decrease of 0.0000950301%from its proportion measured as of August 31, 2017. Changes since the Prior Actuarial Valuation The following were changes to the actuarial assumptions or other inputs that affected measurement of the total pension liability since the prior measurement period. • The total pension liability as of August 31, 2018 was developed using a roll-forward method from the August 31, 2017 valuation. • Demographic assumptions including post-retirement mortality, termination rates, and rates of retirement were updated based on the experience study performed for TRS for the period ending August 31, 2017. • Economic assumptions including rates of salary increase for individual participants was updated based on the same experience study. • The discount rate changed from 8.0% as of August 31, 2017 to 6.907% as of August 31, 2018. • The long-term assumed rate of return changed from 8.0%to 7.25%. • The change in the long-term assumed rate of return combined with the change in the single discount rate was the primary reason for the increase in the net pension liability. For the year ended August 31, 2019, the Academy recognized pension expense of $810,398 and revenue and expense of $551,440 for support provided by the State. 31 Westlake Academy (A Component Unit of the Town of Westlake) Notes to the Financial Statements At August 31, 2019, 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 $ 9,284 $ 36,547 Changes in actuarial assumptions 537,045 16,783 Difference between projected and actual investment earnings - 28,262 Changes in proportion and difference between the employer's contributions and the proportionate share of contributions 271,183 29,352 Contributions paid to TRS subsequent to the measurement date 100,311 - Total $ 917,823 $ 110,944 The $100,311 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, 2020. 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 2020 $ 206,504 2021 147,024 2022 124,978 2023 87,761 2024 84,707 Thereafter 55,594 Total $ 706,568 Note 8. Health Care Coverage During the period ended August 31, 2019, 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 $367 per month per employee and $292 per month when the employee works less than 30 hours per week if eligible to enroll in TRS Active Care. Employees, at their option, pay premiums for any coverage above these amounts as well as for dependent coverage. The Teacher Retirement System (TRS) manages TRS Active Care. The medical plan is administered by Aetna, and Caremark Health administers the prescription drug plan. The latest financial information on the state-wide plan may be obtained by writing to the TRS Communications Department, 1000 Red River Street, Austin, Texas 78701, by calling the TRS Communications Department at 1-800-223-8778, or by downloading the report from the TRS Internet website, www.trs.state.tx.us, under the TRS Publications heading. 32 Westlake Academy (A Component Unit of the Town of Westlake) Notes to the Financial Statements 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 administered 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 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-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 (TRS-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 a retiree with and without Medicare coverage. TRS-Care Plan Premium Rates Effective September 1,2018-December 31,2018 Medicare Non-medicare Retiree* $ 135 $ 200 Retiree and spouse 529 689 Retiree*and children 468 408 Retiree and family 1,020 999 *or surviving spouse 33 Westlake Academy (A Component Unit of the Town of Westlake) Notes to the Financial Statements 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 schools based upon school 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 contribution 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. 2019 2018 Active employee 0.65% 0.65% Non-employer contribution entity (state) 1.25% 1.25% Employers/District 0.75% 0.75% Federal/private funding remitted by Employers 1.25% 1.25% The contribution amounts for the Academy's fiscal year 2019 are as follows: 2018 Employer contributions $ 46,703 2018 Member contributions $ 425,039 2018 NECE on-behalf contributions $ 64,776 In addition, the State of Texas contributed $63,877, $72,065 and $49,659 in 2019, 2018, and 2017, respectively, for on-behalf payments for Medicare Part D. 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 $182.6 million in fiscal year 2018. The 85th Texas Legislature, House Bill 30 provided an additional $212 million in one-time, supplemental funding for the fiscal year 2018-19 biennium to continue to support the program. This was also received in fiscal year 2018 bringing the total appropriations received in fiscal year 2018 to $394.6 million. Actuarial Assumptions A change was made in the measurement date of the total OPEB liability for this fiscal year. The actuarial valuation was performed as of August 31, 2017. Update procedures were used to roll forward the total OPEB liability to August 31, 2018.This is the first year using the roll forward procedures. 34 Westlake Academy (A Component Unit of the Town of Westlake) Notes to the Financial Statements The actuarial valuation of TRS-Care is similar to the actuarial valuations performed for the pension plan, except that the OPEB valuation is more complex. All of the demographic assumptions, including mortality and most of the economic assumptions used in this OPEB valuation were identical to those used in the respective TRS pension valuation. The active mortality rates were based on 90% of the RP-2014 Employee Mortality Tables for males and females, with full generational mortality using Scale BB. The Post-retirement mortality rates were based on the 2018 TRS of Texas Healthy Pensioner Mortality Tables, with full generational projection using the ultimate improvement rates from the most recently published scale (U-MP). The total OPEB liability in the August 31, 2017 actuarial valuation rolled forward to August 31, 2018 was determined using the following actuarial assumptions: Valuation date August 31,2017,rolled forward to August 31,2018 Actuarial cost method Individual entry age normal Inflation 2.30% Discount Rate 3.69%.Source from fixed income municipal bonds with 20 years to 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 31,2018 Aging factors Based on plan specific experience Election rates Normal Retirement; 70%participation prior to age 65 and 75%after age 65. Expenses Third-party administrative expenses related to the delivery of health care benefits are included in the age-adjusted claims costs. Projected salary increases 3.05%to 9.50%,including inflation Healthcare trend rates Initial medical trend rates of 107.74 percent and 9.00 percent for Medicare retirees and an initial medical trend rate of 6.75 percent for Non- medicare retirees. Initial prescription drug trend rate of 11.00 percent for all retirees.The first year trend increase for Medicare Advantage (medical) premiums reflects the anticipated return of the Health Insurer Fee (HIF) in 2020. Ad-hoc employment benefit changes None In this valuation, the impact of the Cadillac Tax has been calculated as a portion of the trend assumption. Assumptions and methods used to determine the impact of the Cadillac Tax include: • 2018 thresholds of$850/$2,292 were indexed annually by 2.50%. • Premium data submitted was not adjusted for permissible exclusions to the Cadillac Tax. • There were no special adjustments to the dollar limit other than those permissible for non-Medicare retirees over 55. Results indicate that the value of the excise tax would be reasonably represented by a 25 basis point addition to the long-term trend rate assumption. 35 Westlake Academy (A Component Unit of the Town of Westlake) Notes to the Financial Statements Discount Rate A single discount rate of 3.69% was used to measure the total OPEB liability. There was a change of.27 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. 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 (3.69%) in measuring the Net OPEB Liability. 1%Decrease in Discount 1%Increase in Discount Rate Rate Discount Rate (2.69%) (3.69%) (4.69%) Academy's proportionate share of the net OPEB liability $ 3,512,213 $ 2,950,588 $ 2,506,306 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 Trend 1%Increase in Trend Rate Rate Trend Rate Academy's proportionate share of the net OPEB liability $ 2,450,511 $ 2,950,588 $ 3,609,199 OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEBs At August 31, 2019, the Academy reported a liability of $2,950,588 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 $ 2,950,588 State's proportionate share that is associate with Academy 4,695,104 Total $ 7,645,692 The Net OPEB Liability was measured as of August 31, 2017 and rolled forward to August 31, 2018 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, 2017 thru August 31, 2018. At August 31, 2018 the employer's proportion of the collective Net OPEB Liability was .0059093400% which was an increase of .0000262982%the same proportion measured as of August 31, 2017. 36 Westlake Academy (A Component Unit of the Town of Westlake) Notes to the Financial Statements 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. • Adjustments were made for retirees that were known to have discontinued their health care coverage in fiscal year 2018. This change increased the total OPEB liability. • The health care trend rate assumption was updated to reflect the anticipated return of the Health Insurer Fee (HIF) in 2020. This change increased the total OPEB liability. • Demographic and economic assumptions were updated based on the experience study performed for TRS for the period ending August 31, 2017. This changed increased the total OPEB liability. • The discount rate was changed from 3.42% as of August 31, 2017 to 3.69% as of August 31, 2018. This change lowered the total OPEB liability$2.3 billion. • Change of benefit terms since the prior measurement date made effective September 1. 2017 by the 85th Texas Legislature. For the year ended August 31, 2019, the Academy recognized OPEB expense of $251,891 and revenue of$170,780 for support provided by the State. At August 31, 2019, 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 $ 156,577 $ 46,565 Changes in actuarial assumptions 49,237 886,482 Difference between projected and actual investment earnings 516 - Changes in proportion and difference between the employer's contributions and the proportionate share of contributions 14,335 - Contributions paid to TRS subsequent to the measurement date 46,703 - Total $ 267,368 $ 933,047 The $46,703 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 ended August 31, 2020. 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: OPEB Expense Year Ended (Income) August 31, Amount 2020 $ (114,343) 2021 (114,343) 2022 (114,343) 2023 (114,441) 2024 (114,499) Thereafter (140,413) Total $ (712,382) 37 Westlake Academy (A Component Unit of the Town of Westlake) Notes to the Financial Statements Note 10. Risk Management The Academy is exposed to various risk of loss related to torts, theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters for which the Academy carries commercial insurance. There were no settlements exceeding insurance coverage in the current fiscal year. Litigation and Contingencies The Academy is a party to various legal actions none of which is believed by administration to have a material effect on the financial condition of the Academy. Accordingly, no provision for losses has been recorded in the accompanying combined financial statements for such contingencies. The Academy participates in state and federal grant programs which are governed by various rules and regulations of the grantor agencies. Costs charged to the respective grant programs are subject to audit and adjustment by the grantor agencies; therefore, to the extent that the Academy has not complied with the rules and regulations governing the grants, if any, refunds of any money received may be required and the collectability of any related receivable at August 31, 2019 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 agreements qualify as capital leases for accounting purposes, and therefore, have been recorded at the present value of the future minimum lease payments as of the inception date. The final payment of the capital lease was paid with a principal payment of $162,005 and interest payment of $4,000. There is no remaining capital lease obligation at the end of the fiscal year. Note 12. Related Party Transactions The Westlake Academy Foundation contributed $1,219,155 to the Academy during the fiscal year ended August 31, 2019. In addition to the use of facilities discussed in Note 4, the Town of Westlake contributed $224,806 to the Academy during the year. Note 13. Evaluation of Subsequent Events The Academy has entered into a three-year capital lease agreement for technology to support the one-to-one device initiative. Lease payments and use of technology begin in September 2019 with an overall price of$585,683 in addition to interest at 2.42%. 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. 38 Westlake Academy (A Component Unit of the Town of Westlake) Notes to the Financial Statements 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. In January 2017 the GASB released GASB statement No. 84, Fiduciary Activities. This statement was issued to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how fiduciary activities should be reported. The requirements of this statement will enhance consistency and comparability by (1) establishing specific criteria for identifying activities that should be reported as fiduciary activities and (2) clarifying whether and how business-type activities should report their fiduciary activities. Greater consistency and comparability enhances the value provided by the information reported in financial statements for assessing government accountability and stewardship. This statement is effective for the Academy for the year ended June 30, 2020 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, 2019, expenditures exceeded appropriations in the following functions: Instructional resources and media services ($364); Curriculum and staff development ($8,647); Health Services ($180) and Facilities maintenance and operations ($24,752). 39 This Page Intentionally Left Blank 40 Required Supplementary Information 41 Westlake Academy Exhibit E-1 (A Component Unit of the Town of Westlake) Budgetary Comparison Schedule - General Fund For the Year Ended August 31, 2019 Variance with Data Actual Final Budget Control Budgeted Amounts Amounts Positive or Codes Original Final GAAP Basis (Negative) REVENUES 5700 Local and intermediate sources $ 1,567,834 $ 1,528,640 $ 1,645,153 $ 116,513 5800 State program revenues 7,279,995 7,394,673 7,304,187 (90,486) 5020 Total revenues 8,847,829 8,923,313 8,949,340 26,027 EXPENDITURES CURRENT: 0011 Instruction 5,008,974 4,897,434 4,843,246 54,188 0012 Instructional resources and media services 90,935 89,675 90,039 (364) 0013 Curriculum and staff development 84,545 83,545 92,192 (8,647) 0021 Instructional leadership 170,216 161,610 154,969 6,641 0023 School leadership 924,198 953,591 948,814 4,777 0031 Guidance,counseling,and evaluation services 321,467 489,522 479,388 10,134 0033 Health services 72,919 71,630 71,810 (180) 0036 Extracurricular activities 219,169 277,024 256,287 20,737 0041 General administration 308,772 224,928 211,992 12,936 0051 Facilities maintenance and operations 947,445 965,759 990,511 (24,752) 0052 Security and monitoring services 40,000 40,000 35,753 4,247 0053 Data processing services 216,103 219,198 210,088 9,110 0061 Community services 138,322 134,148 130,014 4,134 DEBT SERVICE: 0071 Debt service-principal on long-term debt 163,067 163,068 162,005 1,063 0072 Debt service-interest on long-term debt 4,000 4,000 4,000 - 6030 Total expenditures 8,710,132 8,775,132 8,681,108 94,024 1100 Excess of revenues over expenditures 137,697 148,181 268,232 120,051 1200 Net change in fund balance 137,697 148,181 268,232 120,051 0100 Fund balances--beginning 1,105,605 1,105,605 1,105,605 - 3000 Fundbalances-ending $ 1,243,302 $ 1,253,786 $ 1,373,837 $ 120,051 The Notes to the Budgetary Comparison Schedule are an integral part of this statement. 42 Westlake Academy (A Component Unit of the Town of Westlake) Notes to the Budgetary Comparison Schedule For the Year Ended August 31, 2019 Budgetary Information The Board of Trustees adopts an "appropriated budget" on a GAAP basis for the General Fund. The Academy is required to present the adopted and final amended budgeted revenues and expenditures for this fund. The General Fund budget appears in Exhibit E-1. The following procedures are followed in establishing the budgetary data: 1. Prior to August 25 of the preceding fiscal year, the Academy prepares a budget for the next succeeding fiscal year beginning September 1. The operating budget includes proposed expenditures and the means of financing them. 2. A meeting of the Board of Trustees is then called for the purpose of adopting the proposed budget. 3. Prior to September 1, the budget is legally enacted through resolution by the Board. Once a budget is approved, it can only be amended at the object by the staff, function and fund level must be amended 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. Westlake Academy employees can amend the budget within each function as long as the total function expenditure remains the same as adopted budget. If the total budgeted function expenditure is amended and different from adopted budget, the Board must approve the amendment. All budget appropriations lapse at year end. 43 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 Five Plan Years 2018 2017 2016 2015 2014 Academy's proportion of the net pension liability 0.0027061% 0.0028012% 0.0027822% 0.0030945% 0.0007190% Academy's proportionate share of net pension liability $ 1,489,525 $ 895,663 $ 1,051,346 $ 1,093,865 $ 192,056 State's proportionate share of net pension liability associated with the Westlake Academy 5,571,598 3,480,057 4,035,754 3,667,893 2,965,583 Total $ 7,061,123 $ 4,375,720 $ 5,087,100 $ 4,761,758 $ 3,157,639 Academy's covered payroll $ 5,289,916 $ 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 28.16% 16.61% 20.64% 22.86% 4.47% Plan fiduciary net position as a percentage of total pension liability 73.74% 82.17% 78.00% 78.43% 83.25% Note:Only five years of data is presented in accordance with GASB#68,paragraph 138."The information for all periods for the 10- year schedules that are required to be presented as required supplementary information may not be available initially. In these cases,during the transition period,that information should be presented for as many years as are available.The schedules should not include information that is not measured in accordance with the requirements of this Statement:' 44 Westlake Academy Exhibit E-3 Schedule of Pension Contributions -Teacher Retirement System For the Last Five Fiscal Years 2019 2018 2017 2016 2015 Statutorily required contributions $ 100,311 $ 91,593 $ 131,436 $ 88,399 $ 92,325 Actual contributions in relation to statutorily required contributions 100,311 91,593 131,436 88,399 92,325 Contribution deficiency(excess) $ - $ - $ - $ - $ - Academy's covered payroll $ 5,534,431 $ 5,289,916 $ 5,391,515 $ 5,094,571 $ 4,784,694 Contributions as a percentage of Academy's covered payroll 1.81% 1.73% 2.44% 1.74% 1.93% Note: GASB 68, Paragraph 81.2.1b 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 five years of data is presented in accordance with GASB#68,paragraph 138."The information for all periods for the 10- year schedules that are required to be presented as required supplementary information may not be available initially. In these cases,during the transition period,that information should be presented for as many years as are available.The schedules should not include information that is not measured in accordance with the requirements of this Statement. 45 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 Two Plan Years 2018 2017 Academy's proportion of the net OPEB liability 0.005909340% 0.0058830418% Academy's proportionate share of net OPEB liability $ 2,950,588 $ 2,558,314 State's proportionate share of net OPEB liability associated with the Westlake Academy 4,695,104 4,406,333 Total $ 7,645,692 $ 6,964,647 Academy's covered payroll $ 5,289,916 $ 5,391,515 Academy's proportionate share of net OPEB liability as a percentage of its covered payroll 55.78% 47.45% Plan fiduciary net position as a percentage of total OPEB liability 1.57% 0.91% Note:Only two years 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:' 46 Westlake Academy Exhibit E-5 Schedule of OPEB Contributions -Teacher Retirement System TRS Care Plan For the Last Two Fiscal Years 2019 2018 Statutorily required contributions $ 46,703 $ 46,204 Actual contributions in relation to statutorily required contributions 46,703 46,204 Contribution deficiency(excess) $ - $ - Academy's covered payroll $ 5,534,431 $ 5,289,916 Contributions as a percentage of Academy's covered payroll 0.84% 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 two years 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 This Page Intentionally Left Blank 48 Combining Statements 49 Westlake Academy (A Component Unit of the Town of Westlake) Combining Balance Sheet Nonmajor Governmental Funds August 31, 2019 224 397 410 461 Data Advanced State Control IDEA Part B Placement Textbook Campus Codes Formula Initiatives Fund Activity Funds ASSETS 1110 Cash and cash equivalents $ $ $ - $ 9,537 1290 Other receivables - 90,149 1,556 1410 Prepaid expenditures - 1,576 - 1000 Total assets $ $ $ 91,725 $ 11,093 LIABILITIES AND FUND BALANCES LIABILITIES: 2170 Due to other funds $ - $ $ 91,725 $ Total liabilities - 91,725 FUND BALANCES: Nonspendable for: 3430 Prepaid items - 1,576 Restricted for: 3490 Donor stipulations - - - Committed for: 3545 Campus activities - 11,093 3600 Unassigned (1,576) - 3000 Total fund balances - 11,093 4000 Total liabilities and fund balances $ - $ $ 91,725 $ 11,093 50 Exhibit F-1 484 497 498 International Foundation- Mindedness Total Nonmajor Student Education Governmental Local Grant Scholarships Symposium Funds $ - $ - $ - $ 9,537 9,691 - - 101,396 - - - 1,576 $ 9,691 $ - $ - $ 112,509 $ 6,931 $ - $ - $ 98,656 6,931 - - 98,656 - - - 1,576 2,760 - 2,760 - - 11,093 - - (1,576) 2,760 - 13,853 $ 9,691 $ $ - $ 112,509 51 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, 2019 224 397 410 461 Data Advanced Control IDEA Part B Placement State Textbook Campus Codes Formula Initiatives Fund Activity Funds REVENUES 5700 Local and intermediate sources $ $ - $ - $ 83,600 5800 State program revenues 336 110,654 60 5900 Federal program revenues 110,248 - - - 5020 Total revenues 110,248 336 110,654 83,660 EXPENDITURES Current: 0011 Instruction 110,248 336 110,654 - 0012 Instructional resources and media - - - - 0013 Curriculum and instructional staff development - - 0021 Instructional leadership - - 0023 School leadership - - 0031 Guidance, counseling and evaluation services - - 0033 Health services - - 0036 Extracurricular activities - 82,119 0041 General administration - 1,826 0051 Facilities maintenance and operations 0053 Data processing services 0061 Community services - - - - 6030 Total expenditures 110,248 336 110,654 83,945 1 100 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES - - - (285) 1200 NET CHANGE IN FUND BALANCES - (285) 0100 FUND BALANCES, BEGINNING - 11,378 3000 FUND BALANCES, ENDING $ $ $ - $ 11,093 52 Exhibit F-2 484 497 498 International Foundation- Mindedness Total Nonmajor Student Education Governmental Local Grant Scholarships Symposium Funds $ 171,472 $ 2,500 $ 1,000 $ 258,572 - - - 111,050 - - - 110,248 171,472 2,500 1,000 479,870 76,349 2,500 - 300,087 963 - - 963 20,819 - 1,000 21,819 3,562 - - 3,562 9,529 - - 9,529 4,323 - - 4,323 1,268 - - 1,268 48,633 - - 130,752 380 - - 2,206 2,531 2,531 2,029 2,029 2,541 - - 2,541 172,927 2,500 1,000 481,610 (1,455) - - (1,740) (1,455) - (1,740) 4,215 - - 15,593 $ 2,760 $ $ - $ 13,853 53 This Page Intentionally Left Blank 54 Internal Control Report 55 This Page Intentionally Left Blank 56 weaver.o Austin Conroe I Dallas I Fort Worth I Houston Los Angeles Midland I New York City San Antonio Assurance•Tax•Advisory 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, 2019, and the related notes to the financial statements, which collectively comprise the Academy's basic financial statements and have issued our report thereon dated December 9, 2019. Internal Control over Financial Reporting In planning and performing our audit of the financial statements,we considered the Academy's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Academy's internal control.Accordingly, we do not express an opinion on the effectiveness of the Academy's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Academy's financial statements are free of material misstatement,we performed tests of its compliance with certain provisions of laws,regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. 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. Weaver and Tidwell, L.L.P. 2300 North Field Street,Suite 1000 1 Dallas,Texas 75201 Main:972.490.1970 1 Fax:972.702.8321 CPAs AND ADVISORS I WEAVER.COM The Board of Trustees Westlake Academy 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 December 9, 2019 58 WESTLAKE ACADEMY RESOLUTION NO. 19-21 A RESOLUTION OF THE WESTLAKE ACADEMY BOARD OF TRUSTEES APPROVING THE FISCAL YEAR 2018-2019 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 2018-2019 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. WA Resolution 19-21 Page 1 of 2 SECTION 4: That this resolution shall become effective from and after its date of passage. PASSED AND APPROVED ON THIS 16th DAY OF DECEMBER 2019. Laura Wheat, President ATTEST: Tanya Morris, Assistant to the Town Secretary Amanda DeGan, Superintendent APPROVED AS TO FORM: Janet S. Bubert or L. Stanton Lowry, School Attorney WA Resolution 19-21 Page 2 of 2 V�.)estlake Academy Board of Trustees }} TYPE OF ACTION Regular Meeting - Consent Westlake Board Meeting Monday, December 16, 2019 Topic: Consider a Resolution authorizing the Superintendent to terminate an Agreement with North Central Texas Janitorial for janitorial services at the Westlake Academy Campus. STAFF CONTACT: Troy J. Meyer, Director of Facilities & Public Works Rosie Miller, Facilities Manager Strategic Alignment Vision,Value,Mission Perspective Curriculum Outcome Ob'ective Planned/Responsible People,Facilities,& Improve Technology, Development Technology PYP/MYP/DP Facilities& Equipment Strategic Initiative Outside the Scope of Identified Strategic Initiatives Time Line - Start Date: December 1, 2019 Completion Date: January 1, 2019 Funding Amount: N/A Status - Funded Source- General Fund EXECUTIVE SUMMARY(INCLUDING APPLICABLE ORGANIZATIONAL HISTORY) Staff recommends the Board of Trustees approve the termination of the Agreement with North Central Texas Janitorial for janitorial service on the Westlake Academy Campus. Additionally, staff recommends the Board of Trustees authorize the Superintendent to terminate the Agreement in compliance with 2018 Agreement by sending a letter providing a thirty (30) days' notice of termination immediately. Staff will recommend to the Town council to enter into an Agreement with Best Facility to provide the "Best Value" in janitorial services for the Westlake Academy campus. The annual cost is $98,265.89 and the monthly rate is $11,228,48 which includes the Day Porter position. RECOMMENDATION Approve a Resolution authorizing the Superintendent to terminate an Agreement with North Central Texas Janitorial for janitorial services and authorize the Superintendent to send the termination notice. ATTACHMENTS Resolution 19-22 WESTLAKE ACADEMY RESOLUTION NO. 19-22 A RESOLUTION OF THE WESTLAKE ACADEMY BOARD OF TRUSTEES AUTHORIZING THE SUPERINTENDENT TO TERMINATE AN AGREEMENT WITH NORTH CENTRAL TEXAS JANITORIAL FOR JANITORIAL SERVICES AT THE WESTLAKE ACADEMY CAMPUS. WHEREAS,the staff has discussed and documented the quality of service performed over the past three (3)months with North Central Texas Janitorial; and WHEREAS, the Board of Trustees now elects to exercise the right to terminate the Agreement with North Central Texas Janitorial as stated on the executed Agreement, by sending a thirty(30) day notice of termination letter; and WHEREAS, the janitorial services costs have been included in the adopted 2019-2020 Westlake Academy budget; and WHEREAS, the Board of Trustees finds that the passage of this Resolution is in the best interest of the citizens of Westlake as well as the students, their parents, and faculty of Westlake Academy. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF TRUSTEES OF WESTLAKE ACADEMY: SECTION 1: 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 to terminate the Agreement with North Central Texas Janitorial at the Westlake Academy Campus and further authorizes the Superintendent to execute said 2018 Agreement,by sending a thirty(30) day notice of termination immediately upon approval by the Board of Trustee. 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 of Trustee hereby determines that it would have adopted this Resolution without the invalid provision. Resolution WA 19-22 Page 1 of 2 SECTION 4: That this resolution shall become effective from and after its date of passage. PASSED AND APPROVED ON THIS 16th DAY OF DECEMBER 2019. ATTEST: Laura Wheat, President Tanya Morris, Assistant to the Town Secretary Amanda DeGan, Superintendent APPROVED AS TO FORM: Janet S. Bubert or L. Stanton Lowry, School Attorney Resolution WA 19-22 Page 2 of 2 Board of Trustees Item # 3 — Future Agenda Items FUTURE AGENDA ITEMS: Any Board member may request at a workshop and / or Board meeting, under "Future Agenda Item Requests", an agenda item for a future Board meeting. The Board member making the request will contact the Superintendent with the requested item and the Superintendent will list it on the agenda. At the meeting, the requesting Board member will explain the item, the need for Board discussion of the item, the item's relationship to the Board's strategic priorities, and the amount of estimated staff time necessary to prepare for Board discussion. If the requesting Board member receives a second, the Superintendent will place the item on the Board agenda calendar allowing for adequate time for staff preparation on the agenda item. Board of Trustees Item #4 — Adjournment Regular Session