SOCORRO INDEPENDENT SCHOOL DISTRICT EL PASO, TEXAS

COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2020

PREPARED BY: SISD FINANCIAL SERVICES DEPARTMENT

SOCORRO INDEPENDENT SCHOOL DISTRICT

ANNUAL FINANCIAL AND COMPLIANCE REPORTS FOR THE YEAR ENDED JUNE 30, 2020

TABLE OF CONTENTS

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INTRODUCTORY SECTION (Unaudited) ...... 1

Letter of Transmittal ...... 2 GFOA Certificate of Achievement for Excellence in Financial Reporting ...... 17 ASBO Certificate of Excellence in Financial Reporting ...... 18 Socorro ISD Organizational Chart ...... 19 List of Elected and Appointed Officials (Directory) ...... 20

CERTIFICATE OF BOARD ...... 21

FINANCIAL SECTION ...... 23

Independent Auditor's Report ...... 25

Management’s Discussion and Analysis ...... 29

Basic Financial Statements: ...... 43 Government-wide Financial Statements: Statement of Net Position ...... 44 A-1 Statement of Activities ...... 45 B-1 Governmental Fund Financial Statements: ...... 47 Balance Sheet Governmental Funds ...... 48 C-1 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position ...... 51 C-2 Statement of Revenues, Expenditures, and Changes in Fund Balance Governmental Funds ...... 52 C-3 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, And Changes in Fund Balance to the Statement of Activities ...... 54 C-4 Proprietary Fund Financial Statements: ...... 57 Statement of Net Position ...... 58 D-1 Statement of Revenues, Expenses, and Changes in Fund Net Position ...... 59 D-2 Statement of Cash Flows ...... 60 D-3 Fiduciary Fund Financial Statements: ...... 61 Statement of Fiduciary Net Position ...... 62 E-1 Statement of Changes in Fiduciary Net Position ...... 63 E-2 Notes to the Basic Financial Statements ...... 64

Required Supplementary Information ...... 111 Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual - General Fund ...... 112 G-1 Notes to Required Supplementary Information - Budget and Actual - General Fund ...... 113 SOCORRO INDEPENDENT SCHOOL DISTRICT

TABLE OF CONTENTS (Continued)

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Required Supplementary Information (Continued) Schedule of the District’s Proportionate Share of the Net Pension Liability- Teacher Retirement System of Texas ...... 114 G-2 Schedule of the District’s Contributions for Pensions - Teacher Retirement System of Texas .. 115 G-3 Notes to Required Supplementary Information for Pensions ...... 116 Schedule of the District’s Proportionate Share of the Net OPEB Liability- Teacher Retirement System of Texas ...... 117 G-4 Schedule of the District’s OPEB Contributions - Teacher Retirement System of Texas ...... 118 G-5 Notes to Required Supplementary Information for OPEB ...... 119

Combining and Other Statements ...... 121 Nonmajor Governmental Funds: ...... 122 Combining Balance Sheet ...... 124 H-1 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ...... 130 H-2 Internal Service Funds: ...... 135 Combining Statement of Net Position ...... 136 H-3 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position ...... 137 H-4 Combing Statement of Cash Flows ...... 138 H-5 Agency Funds: ...... 139 Statement of Changes in Assets and Liabilities - Agency Fund ...... 140 H-6

Texas Education Agency Required Schedules ...... 141 Schedule of Delinquent Taxes Receivable ...... 142 J-1 Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual - Child Nutrition Program ...... 144 J-2 Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual - Debt Service Fund ...... 145 J-3

Table Statistical Section ...... 147 Financial Trends ...... 149 Net Position by Component ...... 151 I Expenses, Program Revenues, and Net (Expense)/Revenue ...... 152 II General Revenues and Total Change in Net Position ...... 154 III Fund Balances, Governmental Funds ...... 155 IV Revenue Capacity Information ...... 157 Governmental Funds Revenues ...... 158 V Governmental Funds Expenditures and Debt Service Ratio ...... 159 VI Other Financing Sources and Uses and Net Changes in Fund Balance ...... 160 VII Assessed Value and Actual Value of Taxable Property ...... 161 VIII Direct and Overlapping Property Tax Rates ...... 162 IX Principal Property Taxpayers ...... 163 X Property Tax Levies and Collections ...... 164 XI Debt Capacity Information ...... 165 Outstanding Debt by Type ...... 166 XII Direct and Overlapping Governmental Activities Debt ...... 167 XIII Legal Debt Margin Information ...... 168 XIV SOCORRO INDEPENDENT SCHOOL DISTRICT

TABLE OF CONTENTS (Continued)

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Table Statistical Section (Continued) Demographic and Economic Information ...... 169 Demographic and Economic Statistics ...... 170 XV Principal Employers ...... 171 XVI Operating Information: ...... 173 Full-Time Equivalent Employees by Type ...... 174 XVII Operating Statistics ...... 176 XVIII Building Information ...... 177 XIX

REPORTS ON COMPLIANCE, INTERNAL CONTROL AND FEDERAL AWARDS ...... 179 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 ...... 181 Independent Auditor’s Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by the Uniform Guidance ...... 183 Schedule of Findings and Questioned Costs ...... 185 Schedule of Status of Prior Findings ...... 187 Schedule of Expenditures of Federal Awards ...... 188 K-1 Notes to Schedule of Expenditures of Federal Awards ...... 190

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January 19, 2021

Letter of Transmittal

Dear Governing Board:

We are pleased to present the Socorro Independent School District’s (the District) Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2020. The Texas Education Code requires that all school districts file a complete set of financial statements, approved by the Board of Trustees, with the Texas Education Agency (TEA) within 150 days of the close of the fiscal year. This year, due to the pandemic, TEA allowed school districts to ask for a two-month waiver on this deadline submission of those statements. The district requested and received approval of that waiver. The report is published to fulfill that requirement for the fiscal year ended June 30, 2020.

The independent audit of the financial statements is part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards.

This report consists of management’s representations concerning the finances of the District. Therefore, management assumes full responsibility for the completeness and reliability of all the information presented in this report. In order to provide a reasonable basis for making these representations, management has established a comprehensive internal control framework that is designed to protect the District’s assets from loss, theft or misuse. Additionally, the internal control framework is designed to compile sufficient reliable information for the preparation of the District’s financial statements in conformity with generally accepted accounting principles (GAAP). Because the cost of the internal control framework should not exceed the anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements.

The financial statements of the District have been audited by Gibson, Ruddock, Patterson, LLC (GRP), a firm of licensed certified public accountants. Gibson, Ruddock, Patterson, LLC (GRP) has issued an unmodified (“clean”) opinion based on the audit of the District’s financial statements for the fiscal year ended June 30, 2020. The independent auditor’s report is presented as the first component of the financial section of this report.

Generally accepted accounting principles require that management provide a narrative introduction, overview and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The MD&A is found immediately following the report of the independent auditors.

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Socorro Independent School District

Economic Conditions and Outlook

Socorro Independent School District is in El Paso, TX, which is the largest metro area on the U.S./Mexican border at the furthest western tip of Texas. The district sits on approximately 132 square miles and includes the city of Socorro, Horizon City, the east portion of the City of El Paso, and unincorporated areas of El Paso County. A portion of the Fort Bliss military installation is also located within its boundary. The local economy is driven in part by a significant military and governmental presence, as well as a sizable medical sector and international trade. The Fort Bliss Army complex is currently the Army’s second largest military installation and it has the largest training area in the United States. The area is also known as a key international trade corridor due to its proximity to Juarez, Mexico’s maquiladoras assembly plants. The district’s assessed taxable values are driven primarily by the construction of single-family homes, but with the new construction of the Eastlake Marketplace shopping center, as well a new 625,000 square foot Amazon fulfillment center which will create over 700 new full-time jobs, values are expected to continue to rise and the economic outlook will continue to be bright.

SISD Demographics

With the support of nearly 6,000 full-time and part-time employees, more than 47,600 students are being educated in the district, which is a fast-growing school district in the state of Texas. SISD has earned the reputation of an innovative and successful urban school district through recognition as a leader in the field of education. It continues to outperform the state in the State of Texas Assessments of Academic Readiness (STAAR) exams and has won various prestigious education accolades.

El Paso city population is 681,728. Horizon City population is 19,642. Socorro city population is 34,370.

Many students in SISD come from immigrant and migrant families.

The Ysleta del Sur Pueblo (YDSP) is a U.S. federally recognized Native American tribe and sovereign nation located in Socorro, Texas. The YDSP houses students attending three of our schools.

El Paso also is home to the 1st Armored Division and Fort Bliss, and SISD serves more than 3,700 students from military families. SISD is dedicated to serving its diverse community of families in all socio-economic levels by providing a fair, equitable, and high-quality education to all children no matter their ethnicity, income, or social status.

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Vision

Tomorrow’s Leaders Learning Today

Mission

The mission of the Socorro Independent School District is to optimize our student’s academic, artistic, athletic, and interpersonal skills.

Core Values

1. Our core business is teaching and learning. The Socorro Independent School District will give its core business, teaching and learning priority, priority over all other functions of the organization. 2. Each student can learn at or above grade level and will have the opportunity to do so. We will provide equal access to a quality education regardless of ethnicity, family income, gender, native language, special needs, or area of residence. We will allocate resources to ensure equity for each student to reach his or her full potential. 3. The Socorro Independent School District can achieve higher levels of performance through clearly defined goals that set high expectations for student achievement. We will eliminate achievement gaps between and within student groups. 4. The Socorro Independent School District believes in the value of each employee, in his or her personal growth, and in empowering each one to be accountable to make decisions aligned with the vision of the district. We will treat each employee with fairness, empower each employee to focus on high performance, and hold each employee accountable for results that contribute to student achievement. 5. The Socorro Independent School District believes that the education of all children is the responsibility of the family, the District, and the community. We will include educational outcomes for our students by engaging our parents and community stakeholders.

Governing Body

The Socorro ISD Board of Trustees consists of seven elected citizens who work with community leaders, families, and educators to develop sound educational policies that support student achievement and ensure the solvency of the District. The SISD Board of Trustees was recognized as an H-E-B Excellence in Education finalist in 2019 and twice as a semi-finalist in 2016 and 2017. They also have been named twice as the Region 19 Board of the Year in 2012 and 2015. The SISD Board earned the prestigious title of 2015 Texas Honor Board, being recognized for their commitment to their students and community, a continued focus on student achievement and improvement, and high ethical standards in governing the school district. Together, they are a strong and cohesive team that helps the district continuously set and achieve new levels of excellence. Five of the trustees represent single-member districts and two are elected at-large. Regular board meetings are scheduled every third Tuesday of each month in the SISD District Service Center board room. Special meetings and workshops are scheduled as needed.

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SISD Strategic Plan

SISD’s Strategic Plan guides the day-to-day work of Team SISD to meet the district’s overarching goal of ensuring 100 percent of students graduate from high school prepared for the college and career of their choice. The plan was developed to move the district forward while meeting the needs of SISD’s students, parents and broader community, and serves as the pathways to success while focusing on improving academic achievement of all students. SISD’s Strategic Plan includes five directions:

Direction One Safe and Supportive Learning Environment:

Safety is our top priority at SISD! No stone is left unturned in our efforts to support our schools’ safety, security, climate, student/ staff attendance, and performance. Bond 2011 played a major role in creating and upgrading our facilities to support the teaching/learning process. Bond 2017 is now under way to address continuing growth and improvements to existing facilities in Team SISD.

Direction Two College and Career Readiness:

All SISD students deserve a quality education with rigorous instructional standards that adequately prepare them for the college and career of their choice. Our 100%…No Excuses Vision of Excellence promotes high expectations for our students, staff, parents, and community as a whole. No child will be left behind at SISD without continuous academic growth.

Direction Three Highly Qualified, Effective Faculty and Staff:

Principal and teacher effectiveness greatly impact student achievement. Thus, it is extremely important to have the best educators and campus leaders at SISD. Support staff members at the campus and district level also play a major role in educating our students. Highly qualified, effective faculty and staff can improve student academic performance and ensure all our students graduate college and career ready.

Direction Four Home, School, Community Partnerships:

To ensure the success of all our students, we intend to form partnerships with all our stakeholders. Our students, parents, staff, and community will work together as a team to increase student academic and behavioral achievement.

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Direction Five Accountability For ALL:

All SISD students deserve a quality education that will adequately prepare them to be successful in life. It takes a team to educate a child. Teachers, principals, assistant principals, support personnel, central office administrators, and the superintendent play an important role in the success of every child.

Socorro ISD Demographics *As per 2019-2020 district reports

Students Enrollment 47,629 73.5% are economically disadvantaged 96.2% are minority 25% are English Learners (EL) 48.9% are at-risk 3,726 military connected 2020 total graduates: 3,676 Attendance rate (2018-2019): 95.5% Graduation rate (Class of 2019): 93.5% 73.5% students eligible for free or reduced-price lunch Scholarship and grants earned by graduates (2020): $59.8 million

Employees Total full-time employees: 5,640 Teachers: 2,835 Professional support: 609 Campus administration: 156 Central administration: 51 Educational aides: 455 Auxiliary staff: 1,535 100 % Highly qualified, effective staff

Facilities Campuses: 49 Comprehensive high schools: 6 Middle schools: 10 PK-8 schools: 5 Elementary schools: 25 Specialty campuses: 3 District Service Center Transportation Network and Operations Center SISD Education Center

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Age of School Buildings

Year High Schools Built 1 Americas 1996 2 Eastlake 2010 3 El Dorado 2003 4 Mission Early College 2006 5 Montwood 1990 6 Options 2011 7 Pebble Hills 2010 8 Socorro 1971 Year Alternative Schools Built 9 KEYS Elementary 1986 10 KEYS Academy 2011 Year Middle Schools Built 11 Capt. Walter E. Clarke 1993 12 Col. John O. Ensor 2000 13 Montwood 1997 14 Salvador H. Sanchez 1990 15 Socorro 1990 16 SPC. Rafael Hernando III 2007 17 SSG. Manuel R. Puentes 2013 18 Sun Ridge 2002 19 William D. Slider 1991 Year PK-8 Schools Built 20 Bill Sybert 2002 21 Desert Wind 2003 22 Ernesto Serna 2000 23 Jane A. Hambric 2000 24 John Drugan 2005 25 Paso del Norte 2003

Year Elementary Schools Built 26 Benito Martinez 1991 27 Cactus Trails 2019 28 Campestre 1982 29 Chester E. Jordan 2008

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30 Dr. Sue Shook 2007 31 Elfida P. Chavez 1997 32 Escontrias / ECC 1986/1921 33 H.D. Hilley 1980 34 Helen Ball 1995 35 Horizon Heights 1983 36 Hueco 1983 37 Hurshel Antwine 2005 38 James P. Butler 2013 39 Loma Verde 2002 40 Lujan-Chavez 2001 41 Mission Ridge 2014 42 Myrtle Cooper 1987 43 O'Shea Keleher 1986 44 Purple Heart 2015 45 Robert R. Rojas 1987 46 Sgt. Jose F. Carrasco 2018 47 Sgt. Roberto Ituarte 2006 48 Sierra Vista 1993 49 Vista del Sol 1983 Year Ancillary Buildings Built 50 Aquatic Center 1997 51 District Operations 1993 52 SAC 1992 53 ED Center 1985 54 DSC 2008 55 Transportation 2008 56 Police Services 2002 57 VDS Cottages 1985 58 Sandy Creek Cottages 1985 59 Montwood Wellness 2001

Budgetary Controls

Socorro ISD’s annual operating budgets are adopted on a basis consistent with generally accepted accounting principles for the General Fund, Debt Service Fund, and the Child Nutrition Program Fund.

The District also budgets for federal grants, and capital projects. These budgets are on a project basis and are not part of the annual operating budget.

The following procedures are followed in establishing the budgetary data reflected in the general- purpose financial statements:

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(a) Prior to June 30th of the preceding fiscal year, the District prepares a budget for the next succeeding fiscal year beginning July 1. The operating budget includes proposed expenditures and the means of financing them.

(b) A meeting of the Socorro ISD Board of Trustees is then called for the purpose of adopting the proposed budget. A public notice must be published ten days prior to this meeting.

(c) Prior to July 1, the budget is legally enacted through approval by the Board of Trustees.

(d) The budget for all funds is controlled at the organizational/department level. Once a budget is approved, it can be amended at the fund and function level by approval of district’s Board of Trustees. As necessary, monthly budget amendments are presented to the Board of Trustees at its regular meetings. Such amendments are reflected in the official minutes of the Board. All appropriations lapse on June 30, and outstanding encumbrances are cancelled or appropriately provided for in the subsequent year’s budget.

Budget Operating Budget: $517,041,022 Tax rate: $1.37 per $100

Notable Numbers (Based on 2019 data due to no 2020 TEA accountability ratings because of COVID-19) District Accountability Rating: A (90) Campuses that Met Standard: 47 Campuses that did not meet standard: 0 Number of Distinction Designations for campuses: 163 + District Distinction = 164 Schools that earned Distinction Designations in every category: 2

SISD Bond History

Socorro ISD has maintained pace with increases in enrollment through the redistribution of students through boundary adjustments and the overflow process. While district efforts have helped balance enrollment and ensure the vitality of existing schools, SISD Board of Trustees have issued bonds to address continuing growth and improvements to existing facilities. The district has worked diligently to live up to the expectation of “Promises Made, Promises Kept” with successful completion of the voter-approved bonds on time and under budget. In addition, the responsible management and efficient delivery has allowed for additional district improvements without burdening taxpayers.

1982 Bond: In 1982, SISD passed a bond for $10 million. Major improvements included three new schools, construction of the SISD Education Center and other campus additions.

1985 Bond: In 1985, SISD passed a bond for $30 million. Major improvements included the construction of four new schools, campus additions and the purchasing of the Montwood High School property.

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1988 Bond: In 1988, SISD passed a bond for $50 million. Major improvements included the construction of seven new schools, campus additions and Pre-K renovations.

1994 Bond: In 1994, SISD passed a bond for $70 million. Major improvements included the construction of five new schools and campus additions.

2000 Bond: The 2000 Bond for $120 million, allowed the district to build nine new schools, campus additions as well as other expansions and improvements.

2004 Bond: The 2004 Bond for $189 million, allowed the district to build six new schools, the District Service Center and other campus additions and improvements.

2011 Bond: Bond 2011, for $297.4 million, allowed the district to build four new schools, campus additions, other expansions and improvements.

2017 Bond: SISD voters overwhelmingly passed Bond 2017 in November 2017. The $448.5 million bond is addressing continuing growth and improvements to existing facilities in Team SISD. One new campus in Bond 2017 has been completed and the remaining projects are currently under way.

SISD Major Initiatives

Socorro Independent School District is going above and beyond to ensure all students from Prekindergarten to 12th grade are prepared for college, careers and life. Students at every campus in the district receive rigorous, relevant and well-rounded instruction to give them endless opportunities to excel in and out of the classroom.

WIN Academy – The SISD WIN Academy is offered at 19 campuses across the district to students in grades second through ninth. It provides students, who struggle in a traditional education setting, more instructional time with a digital device and digital curriculum, and a teacher who loops with them for multiple years. SISD designed the WIN Academy for children who are performing below grade level by one or more years in grades kindergarten through 7th grade. The pilot WIN Academy was introduced in 2015-16 at 10 schools for students in grades second through sixth. Since then, the academy has achieved much success in helping students improve their academic performance, discipline, and attendance.

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Dual Language Academy – The SISD Dual Language Academy/Academia de Dos Idiomas launched in 2019 at Myrtle Cooper and Dr. Sue A. Shook Elementary School for kindergarten and first-grade students. Prekindergarten was introduced for the 2020-21 school year. The academy now serves students in prekindergarten, kindergarten, first-grade, second grade, and third grade will be added next school year. The academy uses a 50/50 model of Spanish/English instruction that teaches students to be bilingual and biliterate through rigorous instruction and multicultural experiences. Students in the program learn to develop high levels of language proficiency and literacy in both languages, demonstrate high levels of academic achievement and develop an appreciation and understanding of diverse cultures. The SISD Dual Language Academy serves some 350 students at both elementary schools.

Early College High School Programs – SISD, in collaboration with El Paso Community College, offers the most Early College High School Programs in the region. SISD students can save money and be immersed in post-secondary education as they have the opportunity to earn a free associate degree or 60 college credit hours and a high school diploma in a rigorous and engaging college experience. SISD was the first district in the region to open an early college high school, Mission Early College High School, in 2006. The district opened three more early college programs within a three-year span - Socorro Early College in 2015, Rams Early College in 2016, and Trailblazers Early College in 2017. In 2019-20, SISD opened three more early college high schools making the district the only one in the region and one of few in the state to offer an Early College High School Program in all comprehensive high schools in the district. The three newest early college high school programs in the district are Falcon Early College, Empire Early College and Pebble Hills Early College. In the spring, summer and fall of 2020, SISD celebrated 150 graduates earning associate degrees through the Mission Early College High School, Socorro Early College, Rams Early College and Trailblazers Early College.

Advanced Academics Academies – Every comprehensive high school in SISD offers an Advanced Academics Academy to give real-world experiences and specialized classes and training. Students have a choice of a Business Academy at Pebble Hills High School; School of Advanced Technology Applications (SATA) at Eastlake High School; SYNERGI4 at Montwood High School; International Baccalaureate Diploma Programme and the Aztec Architectural Academy at El Dorado High School; Health Professions Academy at Socorro High School; or Libertas – Law Academy at Americas High School.

Dual credit opportunities are offered at every high school – More Team SISD students are earning college credit while in high school by taking dual credit courses. The rigorous classes challenge students and allow them to get ahead and save money. Courses are available at all SISD high schools. SISD students collectively earned more than 36,400 college credits valued at over $13.2 million in college cost savings in the 2019-2020 school year alone.

Operation College Bound and Operation Future Ready – Operation College Bound ensures every campus embraces a college-bound culture, raising awareness and offering activities on post- secondary education. Students are motivated and guided to reach their college aspirations. In turn, Team SISD develops globally competitive students who graduate from high school prepared for the college and career of their choice. As part of Operation Future Ready, Team SISD continues

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to invest in technology as part of its Digitally Nurturing Academics Program (DNA 1:1 – one student to one laptop). DNA 1:1 started in 2014 and has expanded every year since the launch. For the last seven years through DNA, the SISD technology team has been providing laptops to incoming freshmen for 24/7 access to technology and digital learning during their four years of high school. The DNA program, which started at Socorro High School, has now expanded to every high school in the district and four middle and two K-8 schools. For the 2020-21 school year, some 4,000 laptops were provided to incoming freshmen throughout the district through DNA. In addition, this was the first year that all students in grades ninth through 12th at every SISD high school received a laptop through the DNA program, meeting the 1:1 initiative goal to give all high students a device by 2020-21.

Career and Technical Education – Team SISD’s CTE students earn about 6,000 industry-recognized certifications annually in nationally recognized programs showing proof they are ready with the skills and knowledge to succeed in the workforce. SISD offers 16 career clusters and more than 46 specialized tracks for students to choose from. The district’s Career Awareness Showcase; Job Con; and College, Career, and Job Expo showcases the educational and career opportunities available to students while in high school and after graduation.

Free Pre-Kindergarten, 3-year-old program for ALL – SISD ensures young students receive the support and instruction they need to be successful in Pre-K and beyond with free full-day Pre-K for all 4-year-olds and a free half-day early childhood education program for all 3-year-olds. SISD is expanding opportunities for children across the region by offering for the first time a free full-day pre-k program for all 4-year-olds and a new half day program for 3-year olds. SISD’s early childhood programs provide engaging, hands-on learning to build a solid foundation for students to succeed in their academic journey. The curriculum includes social and emotional development, language development, technology, social studies, math, science, and physical development. New pre-k and kindergarten students may also apply for the Dual Language Academy.

Award-winning fine arts programs – Outstanding fine arts programs give students a comprehensive educational experience to enhance their creativity, coordination, and discipline. The programs feature talented music, theater, color guard, and art students who consistently excel at the highest level of competition.

Championship athletes & teams – Highly competitive and award-winning athletic programs flourish in a well-rounded SISD learning environment. SISD student-athletes excel on the playing field and in the classroom, resulting in dozens of student-athletes earning scholarships to continue playing and learning at the collegiate level year after year.

Keep SISD Safe – Socorro ISD works proactively to Keep SISD Safe by involving students, teachers, staff and community members. The district has established a districtwide culture of school emergency preparedness through training and conducting emergency drills involving key members of schools and the community. Other ongoing safety efforts include maintaining anti- bullying programs at schools to raise bullying awareness and prevention and to achieve better peer relations. As part of Keep SISD Safe efforts, students, staff and the community are reminded that if they “hear something, see something, or know something, to say something.” Bullying issues

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or safety concerns of any type can be reported on the K-12 Anonymous Alerts app or through www.sisd.net.

In 2020, SISD and the rest of the world was faced with the unprecedented COVID-19 pandemic. Team SISD took swift and decisive action to Keep SISD Safe with proactive cleaning/disinfecting measures, maintaining close and constant contact with El Paso health and government authorities, and implementing remote instruction to keep students and staff safe while continuing teaching and learning. Currently, Team SISD is following the TEA-approved Region 19 School System COVID-19 Campus Attendance Plan to guide its safe transition back to in-person learning. Team SISD also has established a comprehensive plan for a safe return to school, including the use of personal protective equipment, social distancing, an in-house developed online health tracker called ESWIPE, transportation, technology, COVID-testing, isolation procedures if needed, guidelines for academics, athletics, fine arts, and much more. The district also developed Keep SISD Safe videos to show students, staff, and community the best actions to take to keep everyone safe and protected when they return to district facilities. SISD leadership remains vigilant in monitoring the health of the local community and in close contact with local authorities and TEA as we progress through the school year.

State-of-the-art facilities – SISD’s successful $297.4 million Bond 2011 was completed on time and under budget, living up to the motto of “Promises Made, Promises Kept.” The Bond 2011 program resulted in the construction of three new elementary schools, one middle school, the completion of Eastlake and Pebble Hills High Schools and improvements throughout the district. Due to great management and a positive construction market, the district saved $37.4 million in Bond 2011. The savings allowed for the modernization of four middle schools and the construction of Sgt. Jose F. Carrasco Elementary School which opened for the 2018-2019 school year in the Pebble Hills area in far east El Paso. Team SISD continues working proactively to manage the rapid growth in the district and planning for the future by maximizing existing facilities to ensure all students are provided high-quality, safe and equitable learning environments.

In November 2017, SISD voters overwhelmingly approved Bond 2017. The $448.5 million bond will address continuing growth and improvements to existing facilities in Team SISD. The new Cactus Trails Elementary School was the first completed project of Bond 2017 and opened for the 2019-20 school year. Other Bond 2017 projects are currently under way, which includes the reconstruction of Socorro High School, improvements at three other high schools, new auxiliary gyms at 16 elementary schools, a new Student Activities Complex, a new elementary/middle combination school, and a support services and technology addition. All Bond 2017 projects are moving forward on time for completion as scheduled.

Grants and Achievements The Socorro Independent School District was the first and only large district in the El Paso region to earn an “A” grade in the 2019 Texas Education Agency accountability ratings. For two consecutive years, SISD was also the only district in the region and one of only three districts in a pool of the largest 50 in the state to earn the distinction for postsecondary readiness at the district level. SISD continues on its path to greatness by becoming the largest school district in the state of Texas and the only district in the region to earn both an “A” grade as well as the coveted postsecondary readiness distinction designation by TEA. The rating shows SISD campuses are doing an excellent job meeting the TEA postsecondary readiness criteria. It also shows students are

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gaining the skills, knowledge and confidence to perform at high levels, which will lead to their success after high school.

In unprecedented success for the Socorro Independent School District and the El Paso region, SISD won the large school district award in the 2019 H-E-B Excellence in Education awards program. The district won for its commitment to providing endless opportunities for every student to succeed (with its Operation College Bound and Operation Future Ready initiatives), supporting highly qualified educators, and engaging parents and the community. Team SISD is the first and only school district from West Texas to win the prestigious award. SISD had been recognized as a district award finalist two times before. In addition, the SISD Board of Trustees was a finalist in the school board/leadership category for outstanding academic progress in the district, identifying and acting on community needs, and using innovative methods for community engagement. The SISD board also had been named a semi-finalist in the H-E-B awards program two times before.

SISD was the first in the El Paso region and among 20 school districts selected in May 2020 as a blended learning demonstration site in the second cohort of Raising Blended Learners. SISD is receiving up to $300,000 in grant funding plus additional in-kind technical assistance to implement a personalized learning program within their district. Team SISD was selected for the highly sought grant based on its successful blended learning strategies that ensure all students are receiving a high-quality education to prepare them for future success in college, careers, and life. Blended learning integrates traditional classroom teaching with online technology and digital learning so that students can excel with personalized instruction and more ownership of their learning.

Superintendent José Espinoza, Ed.D. was named the 2018-2019 Tech Savvy Superintendent by the Texas K12 CTO Council. He was awarded for promoting and supporting innovative uses of technology in Team SISD. He has been a leader in integrating digital learning and the latest technological resources to improve student learning, empower educators, and ensure SISD students are prepared for a technology-based, global society. In addition, through his tireless work to overcome obstacles, boost achievement levels, and raise the standard of excellence for Team SISD, SISD superintendent José Espinoza, Ed.D. earned the prestigious national 2017 $20,000 Escalante-Gradillas Prize for Best in Education. Noted by TheBestSchools.org, “as the 2017 winner of the Escalante-Gradillas Prize for Best in Education, Espinoza models for El Paso’s children, who live in the shadow of the Mexican border, a stellar commitment to academic excellence and achievement. He is also one of the first superintendents in the country and the first superintendent in Texas to earn National Superintendent Certification through AASA, The School Superintendents Association. He also had been named the Region 19 Superintendent of the Year.

Other achievements include:

SISD Fine Arts earned the 2017, 2018, 2019 and 2020 Best Communities for Music Education Award. Numerous SISD counseling programs have received Bronze, Silver and Gold Lone Star Counselor Awards in the last four years. The SISD Public Relations department won the 2019 Texas School Public Relations Association Platinum Award, the 2019 National School Public Relations Association Gold Medallion for its comprehensive, yearlong campaign promoting why Team SISD is the Right Choice for Endless Opportunities and earned more than 30 TSPRA and NSPRA awards in 2020 for outstanding public relations programs, publications, and digital media. An SISD counselor was named the 2019 Texas School Counselor of the Year and a 2020 American school Counselor of the Year finalist; an SISD teacher was named the 2020 Region 19 Elementary Teacher of the Year

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and a 2020 Texas Teacher of the Year finalist, and another SISD teacher was named the 2021 Region 19 Elementary Teacher of the Year; an SISD principal was named the 2018 Texas National Distringuished Principal; the SISD Chief Technology Officer won the 2018 Grace Hopper Award Chief Technology Officer of the Year; and an SISD Community Education teacher won the 2018 Texas Association for Literacy and Adult Education Teacher of the Year award. Mission Early College High School (MECHS) was named a 2018 National Blue-Ribbon School. SISD won the 2017 Consortium for School Networking (CoSN) 2017 Team Achievement Award for our transformative impact on education technology and effective efforts in improving student learning, opportunities, and access to technology. The SISD Board of Trustees were named a two-time Region 19 Board of the Year and a Texas Honor Board. Americas and Eastlake high schools earned bronze and silver awards, respectively, in the 2017 America's Best Urban Schools program.

Awards and Acknowledgements

The Socorro Independent School District received a Certificate of Excellence in Financial Reporting (COE) for its 2019 Comprehensive Annual Financial Report (CAFR) by the Association of School Business Officials International (ASBO). The award signifies high achievement in the district’s commitment to transparent and high-quality financial reporting.

SISD earned three Transparency Stars from the Texas Comptroller of Public Accounts program, which recognizes local governments for going above and beyond in their financial transparency efforts. The stars earned are for traditional finance, debt obligations and contracts and procurement. SISD is one of four school districts in the state that earned the three stars.

Team SISD is committed to maintaining financial integrity, full disclosure and responsibly managing taxpayer funds, and has earned other various recognitions in this realm.

For 11 consecutive years, Socorro ISD has earned an A in the School Financial Integrity Rating System of Texas, the highest possible rating in the system. The rating cites the district as accountable in financial management practices and providing the maximum allocation for instructional purposes.

The district also earned the 2020 Texas Association of School Business Officials Award of Merit for Purchasing & Operations for maintaining professional standards in the acquisition of goods and services. This is the 10th year in a row that the district has won this award.

In addition, the Fitch Rating Agency reaffirmed strong bond ratings for SISD maintaining its underlying financial rating of AA. Factors that support the AA rating include the districts above average revenue growth, revenue raising capacity, strong gap-closing capacity and low fixed costs. Moody’s Investors Service assigned SISD an Aa2 underlying bond rating based on a stable financial outlook and an AAA enhanced rating based on a guarantee from the Texas Permanent School Fund. Moody’s cited the district's robust financial position, large and growing tax base, and manageable pension burden. The district also has a S&P rating of AA-.

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16 Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting

Presented to Socorro Independent School District Texas

For its Comprehensive Annual Financial Report For the Fiscal Year Ended

June 30, 2019

Executive Director/CEO

The Certificate of Excellence in Financial Reporting is presented to

Socorro Independent School District for its Comprehensive Annual Financial Report (CAFR) for the Fiscal Year Ended June 30, 2019.

The CAFR meets the criteria established for ASBO International’s Certificate of Excellence.

Claire Hertz, SFO David J. Lewis President Executive Director

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Socorro ISD Organizational Chart

SISD Community

Board of Trustees Internal Auditor

Superintendent of Schools

Assistant Assistant Assistant Assistant Assistant Chief Human Chief Chief Academic Chief Financial Chief Operations Chief Technology Superintendent Superintendent Superintendent Superintendent Superintendent Resources Communications Officer Officer Officer Officer of Schools of Schools of Schools Secondary Education Administrative Officer Officer Services Director Bilingual/ Director Elementary Director Facilities/ Senior Team Leader Data Elementary Schools Elementary Schools Middle Schools High Schools Director Budget Director ESL Education Education Construction Communications Communications/ Administrative Specialist Infrastructure/ICS Services Director Fine & Director Guidance Director Special Director Secondary Director Child Advanced Academics PK-8 Schools Director Purchasing Public Relations Performing Arts and Counseling Education Education Nutrition Services PEIMS Coordinator Director Coordinator Transportation Director Career & Director State and Director Business Director Employee Director Director Athletics Technical Education Federal Programs Services Relations Maintenance and System Coordinator Police Services Operations Director Support/ Manager Manager Systems/ Personnel Marketing/Sales Datacenter Administration Administration

Director Employee Team Leader Benefits Technology Support Services

Socorro Independent School District does not discriminate on the basis of race, color, religion, gender, sex, national origin, age, disability, military status, genetic information, or any other basis prohibited by law in its employment practices or in providing education services, activities, and programs, including career and technical education (vocational programs). For additional information regarding Socorro Independent School District’s policy of nondiscrimination contact: (915) 937-0201, 12440 Rojas Dr., El Paso, TX 79928.

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Socorro Independent School District Principal School District Officials and Advisors

Elected Officials – Board of Trustees

Mrs. Cynthia A. Najera President Mr. David O. Morales Vice President Mr. Paul Guerra Secretary Mr. Gary Gandara Trustee Mr. Paul E. Garcia Trustee Mr. Eduardo Mena Trustee Ms. Angelica Rodriguez Trustee

Appointed Officials

Jose Espinoza, Edu. Superintendent of Schools Marivel Macias Assistant Superintendent for Administrative Services Alisa Zapata Assistant Superintendent for Elementary Schools Carmen Crosse Assistant Superintendent for High Schools Cynthia Retana Assistant Superintendent for Middle Schools Melissa Parham Assistant Superintendent Elementary/Prek-8 Schools Lucia Borrego Chief Academic Officer Daniel Escobar Chief Communications Officer Tony Reza Chief Financial Officer Rudy Campoya Chief Human Resources Officer Tom Eyeington Chief Operations Officer Hector Reyna Chief Technology Officer

Administrative Staff

Susan Olson Director for Budget Rene Vargas Director for Business Services Samuel Garcia Director for Purchasing

Consultants and Advisors

Gibson, Ruddock, Patterson, LLC Independent Auditors Blanco, Ordonez, & Wallace, P.C. Legal Counsel Norton, Rose Fulbright US LLP Bond Counsel Hilltop Securities Financial Advisor Wells Fargo Depository Bank

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CERTIFICATE OF BOARD

Socorro Independent School District El Paso County 071-909 Name of School District County Co.-Dist. Number

We, the undersigned, certify that the attached annual financial and compliance reports of the above named School District were reviewed and (check one) V approved disapproved for the year ended June 30, 2020, at a meeting of the Board of Trustees of such School District on the 19th day of January 2021.

Signature of Board Trustee Signature of Board President

If the Board of Trustees disapproved of the auditor's report, the reason(s) for disapproving it is(are):

(attach list as necessary)

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24 600 SUNLAND PARK, 6-300 EL PASO, TX 79912

P 915 356-3700 F 915 356-3779 GRP GIBSON RUDDOCK PATTERSON LLC W GRP-CPA.COM c e r t i f i e d p u b l i c accountants

INDEPENDENT AUDITOR’S REPORT

To the Board of Trustees Socorro Independent School District

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities,each major fund, and the aggregate remaining fund information of Socorro Independent School District as of and for the year ended June 30, 2020, and the related notes to the financial statements, which collectively comprise the Socorro Independent School District’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.

Auditor’s 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 reasonablenessof significant accountingestimates 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.

25 Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Socorro Independent School District, as of June 30, 2020, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, the budgetary comparison information, and pension and other postemployment benefits information on pages 29 through 42 and 111 through 119 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.

Supplementary and Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Socorro Independent School District’s basic financial statements. The introductory section, combining and individual nonmajor fund financial statements, required TEA schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements.

The combining and individual nonmajor fund financial statements and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. 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 combining and individual fund financial statements and the schedule of expenditures of federal awards are fairly stated in all material respects in relation to the basic financial statements as a whole.

26 The introductory section, required TEA schedules, and statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated January 11, 2021, on our consideration of the Socorro Independent School District’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 solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Socorro Independent School District’s 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 Socorro Independent School District’s internal control over financial reporting and compliance.

Gibson Ruddock Patterson, LLC El Paso, Texas January 11, 2021

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Socorro Independent School District June 30, 2020 MANAGEMENT’S DISCUSSION AND ANALYSIS

This section of Socorro Independent School District’s annual financial report presents our discussion and analysis of the District’s financial performance during the fiscal year ended June 30, 2020. Please read it in conjunction with the District’s financial statements, which follow this section.

FINANCIAL HIGHLIGHTS

 On the government-wide financial statements, the assets of the District exceeded liabilities by $107.6 million. Of this amount, ($130.4) million is unrestricted and may be used to meet the District’s ongoing obligations but note that due to the impact of GASBs 68 and 75, it is in a negative position. The total net position of the District increased from $93.8 million in fiscal year 2019 to $107.6 million in fiscal year 2020, an increase of $13.8 million.

 The District’s governmental funds financial statements reported a combined ending fund balance in fiscal year 2020 of $537.7 million. Of this amount, $1.8 million is reserved for inventory, $0.04 million for prepaid items, $6.0 million is restricted for federal or state funds, $349.8 million is restricted for capital acquisitions, $65.1 million is restricted for retirement of long-term debt, $5.2 million is committed for construction, $1.6 million is committed for capital expenditures of equipment, $1.2 million is committed for other purposes, $16.2 million is assigned and $90.5 million (21.9% of operating expenditures) is unassigned in the general fund and is a decrease of $5.6 million from the prior year. The combined ending fund balance of the District increased by $48.5 million.

 During the year, the District’s general fund expenditures were $412.1 million or $10.2 million less than the $422.3 million generated in taxes and other revenues for general fund activities. However, with an overall financing use of $12.4 million for a transfer to the health care fund and to cover the existing fund balance deficit for the 2010 bond program, the overall net change in fund balance for the general fund was a negative $2.2 million.

 The fund balance in the Debt Service Fund is $65.1 million. This is an increase of $9.1 million from the prior year. The District plans to use part of this balance to make the principal and interest debt service payment in August of 2020 (which increased from the prior year) before tax collections and state funding are received. The Interest and Sinking Interest tax rate is $0.40, the same rate as in fiscal year 2019.

 The District’s total long-term liabilities at the end of fiscal year 2020 were $1,244.9 million, to include a net pension liability (District’s share) of $118.2 million, and a net OPEB liability (District’s share) of $149.3 million, an increase of $76.2 million.

 The Print Shop had an operating deficit of $40,507. The total net position for this fund is $310,163 as of the end of the fiscal year.

 The Workers’ Compensation Insurance Fund had an operating loss of $13,177. The ending total net position is $3.1 million.

 The Health Care Insurance Fund had an operating deficit of $4.1 million in fiscal year 2020. The District made a year-end contribution of $9.0 million which resulted in a change in net position of $4.8 million for the year. The ending net position for the Health Care Fund is $13.9 million.

 The District’s Child Nutrition Program reported an ending fund balance in fiscal year 2020 of $6.3 million, a decrease of $1.1 million from the prior year.

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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 include two kinds of statements that present different views of the District:

 The first two statements are government-wide financial statements that provide both long-term and short-term information about the District’s overall financial status.

 The remaining statements are fund financial statements that focus on the individual parts of the governments, reporting the District’s operations in more detail than the government-wide statements.

o The governmental funds statements tell how general government services were financed in the short term as well as what remains for future spending.

o Proprietary fund statements offer short- and long-term financial information about the activities the government operates like businesses, such as the Print Shop.

o 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.

Figure A-1. Required Components of The Districts Annual Financial Report

Management’s Basic Required Discussion Financial Supplementary And Statements Information Analysis

Government-wide Fund Notes Financial Financial to the Statements Statements Financial Statements

SUMMARY DETAIL

The financial statements also include notes 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. Figure A-1 shows how the required parts of this annual report are arranged and related to one another.

Figure A-2 summarizes the major features of the District’s financial statements, including the portion of the District 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.

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Figure A-2. Major Features of the District’s Government-wide and Fund Financial Statements

Fund Statements Type of Statements Government-wide Governmental Funds Proprietary Fiduciary Funds Funds Entire Agency’s government The activities of the district Activities the district Instances in which (except fiduciary funds) and that are not proprietary or operates similar to the district is the Scope the Agency’s component fiduciary private businesses: trustee or agent for units self-insurance someone else’s resources *Statement of net position *Balance sheet *Statement of net *Statement of position fiduciary net position

Required financial *Statement of activities *Statement of revenues *Statement of *Statement of statements expenditures & changes in revenues, expenses changes in fiduciary fund balances and changes in fund fund net position net position *Statement of cash flows

Accounting basis and Accrual accounting and Modified accrual Accrual accounting Accrual accounting measurements focus economic resources focus accounting and current and economic and economic financial resources focus resources focus resources focus All assets and liabilities, both Only assets expected to be All assets and All assets and financial and capital, short- used up and liabilities that liabilities, both liabilities, both short- Types of term and long-term come due during the year financial and capital, term and long-term; asset/liability or soon thereafter; no and short-term and the Agency’s funds capital assets included long-term do not currently information contain capital assets, although they can All revenue and expenses Revenues for which cash is All revenues and All revenues and Type of during year, regardless of received during or soon expenses during year, expenses during year, inflow/outflow when cash is received or paid after the end of the year, regardless of when regardless of when information expenditures when goods cash is received or cash is received or or services have been paid paid received and payments is due during the year or soon thereafter

Government-wide Statements

The government-wide statements report information about the District as a whole using accounting methods similar to those used by private-sector companies. The statement of net position includes all the government’s assets and liabilities. All the current year’s revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid.

The two government-wide statements report the District’s net position and how it has changed. Net position-the difference between the District’s assets and deferred inflows of resources and liabilities and deferred inflows of resources-is one way to measure the District’s financial health or position.

 Over time, increases or decreases in the District’s net position are an indicator of whether its financial health is improving or deteriorating, respectively.

 To assess the overall health of the District, you need to consider additional nonfinancial factors such as changes in the District’s tax base.

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The government-wide financial statements of the District include the Governmental activities. Most of the District’s basic services are included here, such as instruction, extracurricular activities, curriculum and staff development, health services, and general administration. Property taxes and grants finance most of these activities.

Fund Financial Statements

The fund financial statements provide more detailed information about the District’s most significant funds-not the District as a whole. Funds are accounting devices that the District 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.

The District has three kinds of funds:

 Governmental funds-Most of the District’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 District’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.

 Proprietary funds-Services for which the District charges customers a fee are generally reported in proprietary funds. Proprietary funds, like government-wide statements, provide both long and short-term financial information.

o We use internal service funds to report activities that provide supplies and services for the District’s other programs and activities-such as the District’s Self Insurance Fund.

 Fiduciary funds-The District is the trustee, or fiduciary, for certain funds. It is also responsible for other assets that –because of a trust arrangement-can be used only for the trust beneficiaries. The District is responsible for ensuring that the assets reported in these funds are used for their intended purposes. All the District’s fiduciary activities are reported in a separate statement of fiduciary net position and a statement of changes in fiduciary fund net position. We exclude these activities from the District’s government-wide financial statements because the District cannot use these assets to finance its operations.

Notes to the Basic Financial Statements

The notes to the basic financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.

Other Information

In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information that further explains and supports the information in the financial statements. Immediately following the required supplementary information, combining statements are included for the non-major funds, the internal service funds, and the agency funds.

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GOVERNMENT-WIDE FINANCIAL ANALYSIS

Net position. The District’s combined net position for governmental funds and internal service activities were approximately $107.6 million at June 30, 2020 (See Table A-1).

Table A-1 The District’s Net Position (in millions of dollars)

Governmental Percentage Activities Change 2020 2019 Current and Other Assets 612.2 537.8 13.8% Capital and Non-Current Assets 785.8 729.5 7.7% Total Assets 1,398.0 1,267.3 10.3% Deferred Charge for Refunding 22.9 13.5 69.6.% Deferred Outflow Related to OPEB 28.7 21.5 33.4% Deferred Outflow Related to TRS 55.0 64.7 -14.9%

Total Deferred Outflows of 106.6 99.7 6.9% Resources Current Liabilities 64.8 43.9 47.6% Long Term Liabilities 1,244.9 1,168.7 6.5%

Total Liabilities 1,309.7 1,212.6 8.0% Deferred Gain on Refunding 2.5 3.8 -34.2% Deferred Inflow Related to OPEB 64.6 48.9 32.1% Deferred Inflow Related to TRS 20.0 7.9 153.1% Total Deferred Inflows of 87.2 60.6 43.9% Resources Net Investment in Capital Assets 196.4 170.2 15.3% Restricted 41.7 45.3 -7.9% Unrestricted (130.4) (121.7) -7.1%

Total Net Position 107.6 93.8 14.7%

The District’s combined net position increased $13.8 million from the prior year. The District’s net position includes net investments in capital assets, and restrictions for federal and state programs and debt service.

Changes in net position. As illustrated in table A-2, the District’s total revenues were $568.1 million. A major portion (51%) of the District’s revenue comes from State aid formula grants (See table A-2), while twenty-five (25%) percent comes from property taxes, twenty-two (22%) percent comes from operating grants and contributions, and two (2%) percent relates to charges for services, investment earnings and miscellaneous revenue.

The total cost of all programs and services was $554.2 million; eighty-two (82%) percent of these costs are for instructional and student services; ten (10%) percent is for maintenance and security, six (6%) percent is for debt service, and two (2%) percent is for general administration.

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Figure A-3 District Sources of Revenue for Fiscal Year 2020 Governmental Activities

 The pie chart illustrates the distribution of revenue sources for governmental activities.

Operating Grants

State Aid Formula

Property Taxes Property Taxes 25% Charges for Services, Investment Earnings & Other

State Aid Formula Charges for 51% Services, Operating Grants Investment 22% Earnings & Other 2%

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Table A-2 The District’s Revenues, Expenses, and Change in Net Position (in millions of dollars) Governmental Total % Activities Change

2020 2019

Revenues Program Revenues Charges for Services 2.9 4.4 -34.0% Operating Grants and Contributions 119.1 112.1 6.2% General Revenues Property Taxes 146.9 139.8 5.0% State aid – formula 288.6 256.9 12.3% Investment earnings 7.8 7.5 4.0% Other 2.4 0.9 166.6% Total Revenues 568.1 521.6 8.9%

Expenses Instruction and instructional related 320.1 282.9 13.1% Instructional leadership/school administration 37.9 34.5 9.8% Guidance, social work, health, transportation 40.7 38.6 5.4% Food Services 30.2 29.6 2.0% Extracurricular activities 12.4 13.0 -4.6% General Administration 10.8 10.2 5.8% Facilities Maintenance & Operations and Security 58.1 57.5 1.0% Data processing services 7.1 5.9 20.3% Community Services 2.3 2.2 4.5% Debt service 32.2 26.7 20.5% Other Intergovernmental Charges 1.8 1.9 -5.2% Total Expenses 554.2 503.0 10.1%

Change in Net Position 13.8 18.6 -25.8% Prior Period Adjustment 0.0 0.0 Beginning Net Position 93.8 75.2 24.7% Ending Net Position 107.6 93.8 14.7%

The revenues of all governmental and internal service activities this year was $568.1 million.

 An increase in the District’s property values of 4.10% resulted in additional property taxes.  An increase in state funding via the implementation of House Bill 3 which increased the basic allotment by $1,020 to $6,160.

The cost of all governmental and internal service activities this year was $554.2 million.

 The amount that our taxpayers paid for these activities through property taxes was $146.9 million.  Some of the cost was paid by those who were charged for services ($2.9 million) or by grants and contributions ($120.0 million).

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Table A-3 presents the cost of each of the District’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.

Table A-3 Net Cost of Selected District Functions (in millions of dollars)

Total Cost of % Change Net Cost of % Change Services Services 2020 2019 2020 2019 Instruction 320.1 282.9 13.1% 268.1 238.8 12.2% Instructional Leadership 37.9 34.5 9.8% 33.1 30.6 8.1% Facilities Maintenance & Operations 47.8 48.8 -2.0% 45.6 47.0 -2.9% Debt Service – Interest & Fees 32.2 26.7 20.5% 12.3 6.4 92.2%

The total cost of services for instruction increased by 13.1% from the prior year. This is the result of the implementation of House Bill 3, which required a significant salary increase for teachers.

FINANCIAL ANALYSIS OF DISTRICT’S FUNDS

Governmental Funds

The District’s governmental funds are comprised of the General Fund, Debt Service Fund, Capital Projects and Other Funds. At the end of fiscal year 2020, the total assets for governmental funds were $647.4 million, an increase of $64.1 million from the prior year. The total liabilities and deferred inflow of resources amounted to $109.6 million, an increase of $15.4 million and ending reserves totaled $537.7 million, an increase of $48.5 million.

District governmental revenues totaled $549.5 million, an increase of $39.8 million from the previous year. The general fund had an increase in total revenues of approximately $37.1 million due to an increase in state funding from the implementation of House Bill 3, as well as an increase in local tax collections due to an increase in property valuations.

The District’s total governmental expenditures were $599.9 million, compared to $542.4 million in the prior year. This is an increase of $57.5 million and is primarily due to the implementation of House Bill 3, which required school districts to give a significant salary increase to staff, as well in the increase in construction costs for the 2017 bond projects.

Finally, the fund balance in governmental funds was $537.7 million, an increase of $48.5 million. The increase is due to several reasons. First, the District received $98.5 million as part of the last tranche of bonds to be issued from the successful $448.5 million bond election in 2017. Secondly, the District started major construction projects for the 2017 bond program which increased the expenditures in the Capital Projects category.

Proprietary Funds

The District’s Proprietary Funds are those funds, which are primarily self-supporting. The District maintains three Proprietary Funds, which are the Internal Service Funds. These funds are the Print Shop, the Workers’ Compensation Fund, and the Health Care Fund.

The Print Shop Fund ended the year with unrestricted net position of $310,163, a decrease of $40,507 from the prior year. Total revenues were $400,750, a decrease of $132,700 from fiscal year 2019. Total operating expenses incurred were $441,257, a decrease of $30,994 from fiscal year 2019.

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The Workers’ Compensation Fund had a loss before transfers of $7,313. Total revenues were $2,151,131, an increase of $209,643 from the prior year. Total operating expenses incurred were $2,164,308, an increase of $25,840. With additional earnings from investments, the ending total net position for the Workers’ Compensation Fund is $3,129,627.

The Health Care Fund reported a loss before transfers of $4,135,936 for fiscal year 2020. Total revenues were $50,417,567, a decrease of $7,290,402. The decrease was due to an end of year transfer of $9.0 million (made by the District to ensure that the Fund ended up in a strong net position) being illustrated as a transfer in and not part of revenues as was done in fiscal year 2019. Total Health Care expenditures were $54,601,479 for fiscal year 2020, an increase of $3,602,666 from the prior year.

Fiduciary Funds

The District’s Fiduciary Funds (Trust and Agency) are used to account for assets held by a government in a trustee capacity or as an agent for individuals, private organizations, other governmental units, and other funds. The District accounts for student activity funds that are received and held by a campus. The District accounts for student activity funds as agency funds. These funds have no equity and do not include revenues and expenditures for the District. The District also has a Private Purpose Trust Fund for the purpose of awarding student scholarships. The total amount of assets in the Agency Funds was $2,323,442, an increase of $149,482 from the prior year.

General Fund Budgetary Highlights

The Board of the Socorro Independent School District adopted a general fund budget of $422,807,895 as well as the revenues to support it on June 18, 2019. Over the course of the year, the District revised its General Fund budget several times.

 The District rolled over outstanding encumbrances in the amount of $2,692,802.  The District increased the budget in the amount of $7,718,183 for unexpended and unencumbered committed fund balances from the prior year.  The District increased the budget in the amount of $423,533 for the new House Bill 3 School Safety Allotment.  The District increased the budget in the amount of $176,005 to rollover remaining funds for advertising, an academic conference and technology startup funds for Cactus Trails Elementary School.  The District increased the budget in the amount of $2,496,000 for a high school laptop lease.  The District increased the budget in the amount of $500,000 for additional tutoring for at-risk students.  The District increased the budget in the amount of $300,254 to rollover Impact Aid funds as well as for security equipment.  The District increased the budget in the amount of $132,262 for additional instructional support aides for prekindergarten classes.  The District increased the budget in the amount of $15,657,317 for the early education allotment and the college, career, and military readiness (CCMR) program.  The District increased the budget in the amount of $3,000,000 for additional teachers to reduce class sizes for at-risk students.  The District rolled over funds in the amount of $353,800 for various purposes such as security systems, WIFI hotspots and lighting for various buildings.  The District increased the budget in the amount of $110,800 for a new assistant superintendent position.

A review of the final budget to actual expenditures indicated that the District did not exceed the final budget in any function. Actual expenditures were $44.5 million below final budget amounts and actual revenues were $2.0 million below budgeted amounts.

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Table A-4 Budget and Actual – General Fund (in millions of dollars)

Final Budget Actual Variance REVENUES: 5700 Total Local and Intermediate Sources 108.4 106.5 (1.9) 5800 State Program Revenues 309.0 310.1 1.1 5900 Federal Program Revenues 6.8 5.6 (1.1) 5020 Total Revenues 424.3 422.3 (2.0)

EXPENDITURES: Current: 0011 Instruction 263.5 251.9 11.5 0012 Instructional Resources and Media Services 6.3 6.0 0.3 0013 Curriculum and Instructional Staff Development 7.9 2.4 5.4 0021 Instructional Leadership 5.6 5.2 0.4 0023 School Leadership 28.5 27.8 0.7 0031 Guidance, Counseling and Evaluation Services 11.8 11.6 0.2 0032 Social Work Services 1.1 1.0 0.1 0033 Health Services 7.0 5.6 4.4 0034 Student (Pupil) Transportation 19.0 15.3 3.7 0036 Extracurricular Activities 12.4 10.3 2.1 0041 General Administration 10.5 9.7 0.8 0051 Facilities Maintenance and Operations 50.9 42.9 7.9 0052 Security and Monitoring Services 11.9 9.5 2.3 0053 Data Processing Services 8.4 7.2 1.2 0061 Community Services 1.2 0.8 0.4 Debt Service: 0071 Debt Service - Principal on Long Term Debt 2.4 2.3 0.1 0072 Debt Service - Interest on Long Term Debt 0.2 0.2 0.0 Capital Outlay: 0081 Facilities Acquisition and Construction 5.2 0.1 5.1 Intergovernmental: 0099 Other Intergovernmental Charges 2.1 1.8 0.3 6030 Total Expenditures 456.5 412.1 44.4

OTHER FINANCING SOURCES (USES): 7913 Capital Leases 3.2 3.2 0.0 8911 Transfers Out (Use) (2.7) (15.6) (12.9) 7080 Total Other Financing Sources (Uses) 0.5 (12.4) (12.9)

1200 Net Change in Fund Balances (31.7) (2.2) 29.5 0100 Fund Balance - July 1 (Beginning) 118.3 118.3 0.0 3000 Fund Balance - June 30 (Ending) 86.6 116.1 29.5

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District Fund Balance Policy

In fiscal year 2020, the Board of Trustees revised the minimum fund balance policy for the General Fund and Debt Service fund that was originally adopted in 2010. The policy now requires the unassigned fund balance at fiscal year- end to be at least equal to twenty point five-four (20.54) percent, or seventy-five days of general fund expenditures and no more than twenty-eight (28) percent, or one hundred and five days of general fund expenditures. If the unassigned fund balance is higher than one hundred and five days, then steps must be taken to reduce the fund balance. In fiscal year 2015, this policy was revised with respect to minimum fund balance for the debt service fund. The policy now reads that the minimum fund balance must be sufficient to meet the succeeding fiscal year’s August bond payment.

During 2020, the unassigned fund balance in the General Fund was twenty-two (22%) percent of current year expenditures. The Debt Service fund balance was one hundred and thirteen (113%) percent of current year expenditures. The high Debt Service fund balance is necessary because the first (and highest) bond payment is due in August, which is prior to the receipt of our state revenues and tax collections.

CAPITAL ASSETS AND DEBT ADMINISTRATION

Capital Assets

At the end of 2020, the District had invested $785.8 million in a broad range of capital assets, including land, buildings, construction-in-progress, equipment, and vehicles (See Table A-5). This amount represents a net increase (including additions and deductions) of $56.3 million. More detailed information about the District’s capital assets is presented in Notes 1 and 4 to the financial statements.

Table A-5 District’s Capital Assets (in millions of dollars)

Governmental Activities Total % Change 2020 2019 Land 60.4 54.4 11.0% Buildings and improvements 812.3 808.7 0.4% Construction in Progress 69.0 9.9 596.9% Furniture, Equipment & Vehicles 70.9 66.5 6.6% Leased property under capital lease 9.9 6.7 47.7% Total at historical cost 1,022.6 946.2 8.0%

Total accumulated depreciation -236.8 -216.7 9.2% Net Capital Assets 785.8 729.5 7.7%

In fiscal year 2020, the District began various new school and building improvements. As a result, the District’s investment in capital assets increased 7.7% from the prior year.

Long-Term Debt

At year-end, the District had $977.3 million in bonds and leases outstanding as shown in Table A-6. More detailed information about the District’s debt is presented in note IV-G to the Financial Statements.

40

Table A-6 District’s Long-Term Debt (in millions of dollars)

Governmental Activities 2020 2019 Change Bonds Payable 824.1 757.7 8.7% Bonds from Direct Placement 23.4 28.2 -17.0% Accretion Payable 17.8 6.8 161.8% Unamortized Premium/Discount on Debt 106.3 92.0 15.5% Lease Payable 5.6 4.7 19.1% Total bonds and notes payable 977.3 889.5 9.8%

At year-end, the District had a nine-point eight (9.8%) percent increase in total long-term debt. This is primarily due to the District’s new issuances of bonds after the 2017 Bond Authority passed. The District has aggressively managed its debt by competitive bidding to obtain the best interest rates available and by refinancing existing debt for lower rates when in the best interest of the District. These actions have provided an adequate cash flow so that at no time has the District been short of cash when needed, nor has the District been forced to borrow funds to meet cash obligations.

Bond Ratings

The District’s bonds presently carry a “AAA” rating. Underlying ratings are as follows:

Fitch-“AA”, Moody’s-“Aa2”

ECONOMIC FACTORS AND NEXT YEAR BUDGETS AND RATES:

 The appraised net taxable value used for the 2021 budget preparation was increased by $406.3 million, 4.01% from 2020. Actual certified property value increase came in at a 6.57% increase from the prior year.

 Upon the budget’s adoption, the District’s projected 2021 refined average daily attendance is expected to be 44,264, a 1.00% increase from 2020. The current refined average daily attendance, at date of issuance, is 43,035 representing a 1.53% decrease from 2020.

41

For fiscal year 2021, the District adopted a total proposed budget of $544,272,919. This amount was composed of the General Fund ($450,571,317), the Food Service fund ($32,742,145), and the Debt Service fund ($60,959,457). The adopted general fund budget represented an average (5.26%) increase from the 2020 amended budget. Given the district’s history of spending less than what is budgeted because of tight fiscal controls and has a higher unassigned fund balance than is required to board policy; it used $7.7 million of unassigned fund balance, for the purpose of balancing the budget. The budget variables impacting the General Fund budget consisted of funding in staff development for the state mandated reading academies required by House Bill 3. In addition, the District increased the budget for additional salaries for the special education program and to fully implement full day prekindergarten at our elementary campuses. The district also added $1 million for the purpose of purchasing school buses. Finally, the Administration proposed, and the Governing Board accepted, a compensation package of $5.6 million to provide employees with a general pay increase of two percent (2.0%) and a lump sum payment to employees of $1,000, resulting in an additional $6 million being charged to the budget.

For debt service, the remaining $98.5 million of new bonds from the $448.5 million bond election held in November 2017 were issued during the year. The bond proceeds will be used to build two elementary schools and one middle school, reconstruct Socorro High School, build sixteen (16) elementary multi-purpose rooms, build a new student activities complex center (football stadium), structural upgrades at three of our older high schools, and add a new warehouse and technology center. The District intends to construct the proposed projects within a five-year period.

To support the total budget for fiscal year 2021, the Board adopted a total tax rate of $1.34 per $100 of assessed property valuation, a $0.025 decrease from the prior year due to the tax compression requirements of House Bill 3. Of this amount, $0.94 is for maintenance and operations and the remaining $0.40 is for debt service.

CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the District’s finances and to demonstrate the District’s accountability for the money it receives. If you have questions about this report or need additional financial information, contact the District’s Financial Services Department, at the Socorro Independent School District, 12440 Rojas Dr., El Paso, Texas, 79928.

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43

EXHIBIT A-1 SOCORRO INDEPENDENT SCHOOL DISTRICT STATEMENT OF NET POSITION JUNE 30, 2020

Data Primary Government Control Governmental Codes Activities

ASSETS 1110 Cash and Cash Equivalents $ 566,570,935 1220 Property Taxes - Delinquent 8,997,075 1230 Allowance for Uncollectible Taxes (3,351,260) 1240 Receivables from Other Governments 34,261,467 1267 Due from External Parrties 551,847 1290 Other Receivables 3,234,406 1300 Inventories 1,879,403 1410 Prepayments 44,998 Capital Assets: 1510 Land 60,455,068 1520 Buildings, Net 632,470,138 1530 Furniture and Equipment, Net 18,475,413 1550 Leased Property Under Capital Leases, Net 5,411,879 1580 Construction in Progress 69,006,765 1000 Total Assets 1,398,008,134 DEFERRED O UTFLO WS O F RESO URCES 1701 Deferred Charge for Refunding 22,909,781 1705 Deferred Outflow Related to TRS Pension 55,075,432 1706 Deferred Outflow Related to TRS OPEB 28,713,381 1700 Total Deferred Outflows of Resources 106,698,594 LIABILITIES 2110 Accounts Payable 24,624,527 2140 Interest Payable 12,428,204 2150 Payroll Deductions and Withholdings 3,299,605 2160 Accrued Wages Payable 17,360,819 2180 Due to Other Governments 92,480 2200 Accrued Expenses 5,288,306 2300 Unearned Revenue 1,711,953 Noncurrent Liabilities: 2501 Due Within One Year 36,738,525 2502 Due in More Than One Year 940,595,871 2540 Net Pension Liability (District's Share) 118,210,786 2545 Net OPEB Liability (District's Share) 149,392,877 2000 Total Liabilities 1,309,743,953 DEFERRED INFLO WS O F RESO URCES 2602 Deferred Gain on Refunding 2,593,559 2605 Deferred Inflow Related to TRS Pension 20,068,714 2606 Deferred Inflow Related to TRS OPEB 64,629,577 2600 Total Deferred Inflows of Resources 87,291,850 NET PO SITIO N 3200 Net Investment in Capital Assets 196,404,746 3820 Restricted for Federal and State Programs 6,096,924 3850 Restricted for Debt Service 35,609,148 3900 Unrestricted (130,439,893) 3000 Total Net Position $ 107,670,925

The notes to the financial statements are an integral part of this statement. 44 EXHIBIT B-1 SOCORRO INDEPENDENT SCHOOL DISTRICT STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2020 Net (Expense) Revenue and Changes in Net Program Revenues Data Position Control 1 3 4 6 Operating Primary Gov. Codes Charges for Grants and Governmental Expenses Services Contributions Activities Primary Government: GOVERNMENTAL ACTIVITIES: 11 Instruction $ 306,872,952 $ 538,180 $ 47,245,366 $ (259,089,406) 12 Instructional Resources and Media Services 7,072,496 - 885,328 (6,187,168) 13 Curriculum and Instructional Staff Development 6,251,848 - 3,331,295 (2,920,553) 21 Instructional Leadership 7,037,210 - 1,851,804 (5,185,406) 23 School Leadership 30,915,758 - 2,941,016 (27,974,742) 31 Guidance, Counseling and Evaluation Services 17,040,394 - 4,659,063 (12,381,331) 32 Social Work Services 1,724,701 - 738,412 (986,289) 33 Health Services 6,344,512 - 4,318,268 (2,026,244) 34 Student (Pupil) Transportation 15,662,423 - 1,318,122 (14,344,301) 35 Food Services 30,281,852 1,796,854 25,132,827 (3,352,171) 36 Extracurricular Activities 12,465,789 439,921 1,023,609 (11,002,259) 41 General Administration 10,854,607 - 2,001,627 (8,852,980) 51 Facilities Maintenance and Operations 47,832,395 159,891 1,988,103 (45,684,401) 52 Security and Monitoring Services 10,298,426 - 907,042 (9,391,384) 53 Data Processing Services 7,100,951 - 397,350 (6,703,601) 61 Community Services 2,382,437 - 1,391,007 (991,430) 72 Interest and Fees on Long-Term Debt 32,273,191 - 19,020,963 (13,252,228) 99 Other Intergovernmental Charges 1,812,229 - - (1,812,229) [TP] TOTAL PRIMARY GOVERNMENT: $ 554,224,171 $ 2,934,846 $ 119,151,202 (432,138,123) Data Control General Revenues: Codes Taxes: MT Property Taxes, Levied for General Purposes 104,407,344 DT Property Taxes, Levied for Debt Service 42,589,971 SF State Aid - Formula Grants 288,675,966 IE Investment Earnings 7,848,025 MI Miscellaneous Local and Intermediate Revenue 2,478,008 TR Total General Revenues 445,999,314

CN Change in Net Position 13,861,191 NB Net Position - Beginning 93,809,734

NE Net Position - Ending $ 107,670,925

The notes to the financial statements are an integral part of this statement. 45 This page is left blank intentionally.

46 GOVERNMENTAL FUND FINANCIAL STATEMENTS

47 SOCORRO INDEPENDENT SCHOOL DISTRICT BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2020

Data Capital Control General Debt Service Projects Codes Fund Fund 2018-2020

ASSETS 1110 Cash and Cash Equivalents $ 103,058,476 $ 72,926,911 $ 368,277,057 1220 Property Taxes - Delinquent 6,787,643 2,209,432 - 1230 Allowance for Uncollectible Taxes (2,374,602) (976,658) - 1240 Receivables from Other Governments 28,367,669 - - 1260 Due from Other Funds 42,256,532 - - 1290 Other Receivables 2,330,019 - - 1300 Inventories 1,526,643 - - 1410 Prepayments 44,998 - - 1000 Total Assets $ 181,997,378 $ 74,159,685 $ 368,277,057 LIABILITIES 2110 Accounts Payable $ 7,612,072 $ - $ 14,762,117 2150 Payroll Deductions and Withholdings Payable 3,299,605 - - 2160 Accrued Wages Payable 16,270,045 - - 2170 Due to Other Funds 34,498,942 7,340,021 3,779,017 2180 Due to Other Governments 92,480 - - 2300 Unearned Revenue 322,574 759,842 - 2000 Total Liabilities 62,095,718 8,099,863 18,541,134 DEFERRED INFLOWS OF RESOURCES 2601 Unavailable Revenue - Property Taxes 3,795,053 968,641 - 2600 Total Deferred Inflows of Resources 3,795,053 968,641 - FUND BALANCES Nonspendable Fund Balance: 3410 Inventories 1,526,643 - - 3430 Prepaid Items 44,998 - - Restricted Fund Balance: 3450 Federal or State Funds Grant Restriction - - - 3470 Capital Acquisition and Contractural Obligation - - 349,735,923 3480 Retirement of Long-Term Debt - 65,091,181 - Committed Fund Balance: 3510 Construction 5,203,706 - - 3530 Capital Expenditures for Equipment 1,589,962 - - 3545 Other Committed Fund Balance 920,226 - - Assigned Fund Balance: 3590 Other Assigned Fund Balance 16,235,127 - - 3600 Unassigned Fund Balance 90,585,945 - - 3000 Total Fund Balances 116,106,607 65,091,181 349,735,923

4000 Total Liabilities, Deferred Inflows & Fund Balances $ 181,997,378 $ 74,159,685 $ 368,277,057

The notes to the financial statements are an integral part of this statement. 48 EXHIBIT C-1

Total Other Governmental Funds Funds

$ 15,951,966 $ 560,214,410 - 8,997,075 - (3,351,260) 5,893,798 34,261,467 785,960 43,042,492 1,924 2,331,943 319,774 1,846,417 - 44,998 $ 22,953,422 $ 647,387,542

$ 1,458,007 $ 23,832,196 - 3,299,605 1,090,774 17,360,819 12,972,618 58,590,598 - 92,480 629,537 1,711,953 16,150,936 104,887,651

- 4,763,694 - 4,763,694

307,870 1,834,513 - 44,998

6,096,924 6,096,924 96,907 349,832,830 - 65,091,181

- 5,203,706 - 1,589,962 300,785 1,221,011

- 16,235,127 - 90,585,945 6,802,486 537,736,197

$ 22,953,422 $ 647,387,542

49 This page is left blank intentionally.

50 SOCORRO INDEPENDENT SCHOOL DISTRICT EXHIBIT C-2 RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION JUNE 30, 2020 Total Fund Balances - Governmental Funds $ 537,736,197

Amounts reported for governmental activities in the Statement of Net Position are different due to the following:

1 Capital assets used in governmental activities are not financial resources and therefore are not reported as 785,819,263 assets in governmental funds. The cost of the assets is $1,022,642,915 and the accumulated depreciation is $236,823,652.

2 Property taxes are not available to pay for the current period's expenditures and therefore are deferred in 4,763,694 the funds.

3 Internal service funds are used by the District's management to charge the costs of workers' compensation, 17,400,958 health insurance, and print shop activities to the funds. The assets and liabilities of the internal service funds are included in governmental activities.

4 Internal service fund noncurrent assets included in the proprietary funds statement of net position. (89,668)

5 Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore (977,334,396) are not reported as liabilities in the funds. Long term liabilities at year-end consisted of: Bonds Payable $847,626,789 Accretion Payable 17,770,827 Net Premiums/Discounts on Bonds Payable 106,338,944 Lease Purchases Payable 5,597,836

6 Deferred gains and losses on the refunding of bonds are not reported in the funds but are considered 20,316,222 deferred inflows and outflows in the statement of net position. At June 30, 2020, the deferred chages for refunding were $22,909,781 and the deferred gain on refunding was $2,593,559.

7 Accrued interest is not due and payable in the current period and therefore is not reported as a liability in (12,428,204) the governmental funds.

8 Included in the items related to debt is the recognition of the District's proportionate share of the pension (83,204,068) liability required by GASB 68: Net Pension Liability ($118,210,786) Deferred Outflow Related to TRS Pension 55,075,432 Deferred Inflow Related to TRS Pension (20,068,714)

9 Included in the items related to debt is the recognition of the District's proportionate share of the OPEB (185,309,073) liability required by GASB 75: Net OPEB Liability ($149,392,877) Deferred Outflow Related to TRS OPEB 28,713,381 Deferred Inflow Related to TRS OPEB (64,629,577)

19 Net Position of Governmental Activities $ 107,670,925

The notes to the financial statements are an integral part of this statement. 51 SOCORRO INDEPENDENT SCHOOL DISTRICT STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2020 Data Capital Control General Debt Service Projects Codes Fund Fund 2018-2020 REVENUES: 5700 Total Local and Intermediate Sources $ 106,505,814 $ 43,551,166 $ 5,674,101 5800 State Program Revenues 310,163,273 19,020,963 - 5900 Federal Program Revenues 5,648,694 - -

5020 Total Revenues 422,317,781 62,572,129 5,674,101 EXPENDITURES: Current: 0011 Instruction 251,973,838 - 595,643 0012 Instructional Resources and Media Services 6,033,653 - 47,866 0013 Curriculum and Instructional Staff Development 2,489,779 - - 0021 Instructional Leadership 5,186,218 - - 0023 School Leadership 27,806,592 - 82,738 0031 Guidance, Counseling, and Evaluation Services 11,628,498 - 19,422 0032 Social Work Services 996,017 - - 0033 Health Services 5,573,834 - 22,706 0034 Student (Pupil) Transportation 15,313,911 - - 0035 Food Services - - - 0036 Extracurricular Activities 10,311,677 - - 0041 General Administration 9,775,110 - - 0051 Facilities Maintenance and Operations 42,960,578 - - 0052 Security and Monitoring Services 9,553,595 - - 0053 Data Processing Services 7,260,442 - - 0061 Community Services 792,397 - - Debt Service: 0071 Principal on Long-Term Debt 2,308,234 20,899,966 - 0072 Interest on Long-Term Debt 215,062 35,252,618 - 0073 Bond Issuance Cost and Fees - 1,267,028 806,850 Capital Outlay: 0081 Facilities Acquisition and Construction 116,005 - 68,896,528 Intergovernmental: 0099 Other Intergovernmental Charges 1,812,229 - -

6030 Total Expenditures 412,107,669 57,419,612 70,471,753 1100 Excess (Deficiency) of Revenues Over (Under) 10,210,112 5,152,517 (64,797,652) Expenditures OTHER FINANCING SOURCES (USES): 7901 Refunding Bonds Issued - 118,119,142 - 7911 Capital Related Debt Issued - - 85,540,000 7912 Sale of Real and Personal Property - - 1,664,367 7913 Capital Leases 3,202,425 - - 7915 Transfers In - - - 7916 Premium or Discount on Issuance of Bonds - 23,076,376 13,766,850 8911 Transfers Out (Use) (15,633,172) - - 8940 Payment to Bond Refunding Escrow Agent (Use) - (137,325,797) -

7080 Total Other Financing Sources (Uses) (12,430,747) 3,869,721 100,971,217 1200 Net Change in Fund Balances (2,220,635) 9,022,238 36,173,565 0100 Fund Balance - July 1 (Beginning) 118,327,242 56,068,943 313,562,358

3000 Fund Balance - June 30 (Ending) $ 116,106,607 $ 65,091,181 $ 349,735,923

The notes to the financial statements are an integral part of this statement. 52 EXHIBIT C-3

Total Other Governmental Funds Funds

$ 2,425,019 $ 158,156,100 6,949,915 336,134,151 49,566,554 55,215,248 58,941,488 549,505,499

20,949,575 273,519,056 276,295 6,357,814 3,166,809 5,656,588 1,359,212 6,545,430 10,903 27,900,233 3,376,344 15,024,264 687,500 1,683,517 201,047 5,797,587 - 15,313,911 28,285,777 28,285,777 132,280 10,443,957 188,404 9,963,514 146,274 43,106,852 5,874 9,559,469 - 7,260,442 1,332,624 2,125,021

- 23,208,200 - 35,467,680 - 2,073,878

(140,630) 68,871,903

- 1,812,229 59,978,288 599,977,322

(1,036,800) (50,471,823)

- 118,119,142 - 85,540,000 - 1,664,367 - 3,202,425 6,633,172 6,633,172 - 36,843,226 - (15,633,172) - (137,325,797) 6,633,172 99,043,363

5,596,372 48,571,540 1,206,114 489,164,657

$ 6,802,486 $ 537,736,197

53 SOCORRO INDEPENDENT SCHOOL DISTRICT EXHIBIT C-4 RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2020 Total Net Change in Fund Balances - Governmental Funds $ 48,571,540

Amounts reported for governmental activities in the Statement of Activities are different due to the following:

Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of 56,274,757 those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period: Facilities Acquisition and Construction $68,871,903 Other Acquisitions and Disposals 7,783,692 Depreciation Expense (excluding internal service fund) (20,380,838)

Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces long-term (87,873,238) liabilities in the statement of net position. Proceeds from the sale of bonds is a source of financing in the governmental funds, but the statement of net position recognizes it as an increase in the long term liabilities. The changes in long term liabilities at year end consisted of the following: Net change in Bonds Payable ($61,629,176) Net change in Accretion Payable (10,996,939) Net change in Premiums/Discounts on Bonds Payable (14,352,932) Net change in Lease Purchase Payable (894,191)

Deferred inflows and outflows of gains and losses on debt refundings are amortized over the term of the bonds 10,561,854 in the statements but are expensed in the year incurred in governmental funds. Net change in Deferred Charge for Refunding $9,375,312 Net change in Deferred Gain on Refunding 1,186,542

Interest on long-term debt in the statement of activities differs from the amount reported in the governmental (591,045) funds because interest is recognized as an expenditure in the funds when it is due, and therefore requires the use of current financial resources. In the statement of activities however, interest expense is recognized as the interest accrues, regardless of when it is due.

Property taxes that will not be collected until after the District's fiscal year end are not considered "available" 809,099 revenues and are deferred in the governmental funds. The change in deferred tax revenues, net of allowance for bad debt, is recognized in the statement of activities.

Internal service funds are used by management to charge the costs of certain activities, such as workers' 4,816,244 compensation, health insurance, and print shop activities, to individual funds. The net income of the internal service funds is reported with governmental activities.

GASB 68 required that certain plan expenditures be de-expended and recorded as deferred resource outflows. (15,525,679) These contributions made after the measurement date of the plan caused the change in ending net position to increase by $7,612,704. Contributions made before the measurement date and during the previous fiscal year were also expended and recorded as a reduction in net pension liability. This caused a decrease in net position totaling ($6,603,907). Finally, the proportionate share of the TRS pension expense on the plan as a whole had to be recorded. The net pension expense decreased the change in net position by ($16,534,476). The net result is a decrease in the change in net position.

The notes to the financial statements are an integral part of this statement. 54 SOCORRO INDEPENDENT SCHOOL DISTRICT EXHIBIT C-4 RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2020 GASB 75 required that certain plan expenditures be de-expended and recorded as deferred resource outflows. (3,182,341) These contributions made after the measurement date of the plan caused the change in ending net position to increase by $1,994,227. Contributions made before the measurement date and during the previous fiscal year were also expended and recorded as a reduction in net OPEB liability. This caused a decrease in net position totaling ($1,860,610). Finally, the proportionate share of the TRS OPEB expense on the plan as a whole had to be recorded. The net OPEB expense decreased the change in net position by ($3,315,958). The net result is a decrease in the change in net position.

Change in Net Position of Governmental Activities $ 13,861,191

The notes to the financial statements are an integral part of this statement. 55 This page is left blank intentionally.

56 PROPRIETARY FUND FINANCIAL STATEMENTS

57 EXHIBIT D-1 SOCORRO INDEPENDENT SCHOOL DISTRICT STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30, 2020

Governmental Activities - Total Internal Service Funds ASSETS Current Assets: Cash and Cash Equivalents $ 6,356,525 Due from Other Funds 16,263,773 Other Receivables 1,454,310 Inventories 32,986 Total Current Assets 24,107,594 Noncurrent Assets: Capital Assets: Furniture and Equipment 492,677 Depreciation on Furniture and Equipment (403,009) Total Noncurrent Assets 89,668

Total Assets 24,197,262 LIABILITIES Current Liabilities: Accounts Payable 792,331 Due to Other Funds 715,667 Accrued Expenses 5,288,306

Total Liabilities 6,796,304 NET POSITION Net Investment in Capital Assets 89,668 Unrestricted Net Position 17,311,290 Total Net Position $ 17,400,958

The notes to the financial statements are an integral part of this statement. 58 EXHIBIT D-2 SOCORRO INDEPENDENT SCHOOL DISTRICT STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2020

Governmental Activities - Total Internal Service Funds OPERATING REVENUES: Local and Intermediate Sources $ 52,969,448 Total Operating Revenues 52,969,448 OPERATING EXPENSES: Payroll Costs 1,239,252 Professional and Contracted Services 55,615,906 Supplies and Materials 324,652 Other Operating Costs 8,145 Depreciation Expense 19,089 Total Operating Expenses 57,207,044

Operating Income (Loss) (4,237,596)

NONOPERATING REVENUES (EXPENSES): Earnings from Temporary Deposits & Investments 53,840 Total Nonoperating Revenues (Expenses) 53,840 Income Before Transfers (4,183,756)

Transfer In 9,000,000

Change in Net Position 4,816,244 Total Net Position - July 1 (Beginning) 12,584,714

Total Net Position - June 30 (Ending) $ 17,400,958

The notes to the financial statements are an integral part of this statement. 59 EXHIBIT D-3 SOCORRO INDEPENDENT SCHOOL DISTRICT STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2020

Governmental Activities - Total Internal Service Funds Cash Flows from Operating Activities: Cash Received from Assessments - Other Funds $ 56,915,269 Cash Payments to Employees for Services (1,011,844) Cash Payments for Insurance Claims (55,671,782) Cash Payments for Suppliers (242,260) Cash Payments for Other Operating Expenses (8,145)

Net Cash Used for Operating Activities (18,762) Cash Flows from Capital & Related Financing Activities: Acquisition of Capital Assets (19,172)

Net Cash Provided by (Used for) Capital & Related Financing Activities (19,172) Cash Flows from Investing Activities: Interest and Dividends on Investments 53,840

Net Cash Provided by Investing Activities 53,840

Net Increase in Cash and Cash Equivalents 15,906 Cash and Cash Equivalents at Beginning of Year 6,340,619

Cash and Cash Equivalents at End of Year $ 6,356,525 Reconciliation of Operating Income (Loss) to Net Cash Used for Operating Activities: $ (4,237,596) Operating Income (Loss):

Adjustments to Reconcile Operating Income to Net Cash Used for Operating Activities: Depreciation 19,089 Effect of Increases and Decreases in Current Assets and Liabilities: Decrease (increase) in Receivables (838,028) Decrease (increase) in Inventories 145 Decrease (increase) in Due From Other Funds 4,887,512 Increase (decrease) in Accounts Payable 437,862 Increase (decrease) in Due To Oher Funds 310,796 Increase (decrease) in Accrued Expenses (598,542)

Net Cash Used for Operating Activities $ (18,762) Noncash Investing, Capital and Financing Activities: Noncapital Financing Activity - Transfer In 9,000,000

The notes to the financial statements are an integral part of this statement. 60 FIDUCIARY FUND FINANCIAL STATEMENTS

61 EXHIBIT E-1 SOCORRO INDEPENDENT SCHOOL DISTRICT STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS JUNE 30, 2020

Private Purpose Agency Trust Fund Fund

ASSETS Cash and Cash Equivalents $ 172,554 $ 2,291,176 Other Receivables - 32,266

Total Assets 172,554 $ 2,323,442

LIABILITIES Accounts Payable - $ 552,239 Due to Other Governments - 108,174 Due to Student Groups - 1,663,029

Total Liabilities - $ 2,323,442

NET POSITION Restricted for Other Purposes 172,554

Total Net Position $ 172,554

The notes to the financial statements are an integral part of this statement. 62 EXHIBIT E-2 SOCORRO INDEPENDENT SCHOOL DISTRICT STATEMENT OF CHANGES IN FIDUCIARY FUND NET POSITION FIDUCIARY FUNDS FOR THE YEAR ENDED JUNE 30, 2020

Private Purpose Trust Fund ADDITIONS: Earnings from Temporary Deposits $ 95 Total Additions 95 DEDUCTIONS: Professional and Contracted Services 3,000 Total Deductions 3,000

Change in Fiduciary Net Position (2,905)

Total Net Position - July 1 (Beginning) 175,459

Total Net Position - June 30 (Ending) $ 172,554

The notes to the financial statements are an integral part of this statement. 63 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Socorro Independent School District (the "District") is a public educational agency operating under the applicable laws and regulations of the State of Texas. It is governed by a seven member Board of Trustees (the "Board") elected by registered voters of the District. The District prepares its basic financial statements in conformity with generally accepted accounting principles (GAAP) promulgated by the Governmental Accounting Standards Board 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.

A. Reporting Entity

The Board of Trustees (the "Board") is elected by the public. It has the authority to make decisions, appoint administrators and managers, and significantly influence operations. It also has the primary accountability for fiscal matters. The District is not included in any other governmental "reporting entity" as defined by the Governmental Accounting Standards Board ("GASB").

In accordance with Governmental Accounting Standards Board, a financial reporting entity consists of the primary government and its component units. Component units are legally separate organizations for which the elected officials of the District are financially accountable, or for which the relationship to the District is such that exclusion would cause the District’s financial statements to be misleading or incomplete. Discretely presented component units are reported in a separate column in the basic financial statements to emphasize they are legally separate from the school district. Blended component units, although legally separate entities, are in substance a part of the District’s operations, and thus the data is combined with data of the primary government.

The criteria used to determine whether an organization is a component unit of the District includes: financial accountability of the District for the component unit, whether the District appoints a voting majority of the entity’s board, the ability to impose the District’s will on the component unit, fiscal dependency criterion, if it is a financial benefit or burden to the District, and whether services are provided entirely or almost entirely to the District.

The above criteria were applied to not-for profit entities W. G. Barber Scholarship Fund and SISD Foundation for Excellence in Education, and the District determined that there are no component units to be included within the reporting entity. Instead these not-for-profit entities are considered related organizations that are administered by separate boards but the District is not financially accountable.

B. Government-Wide and Fund Financial Statements

The Statement of Net Position and the Statement of Activities are government-wide financial statements. They report information on all of the District’s nonfiduciary activities with most of the interfund activities removed. Governmental activities include programs supported primarily by taxes, charges to other school districts for services, state funds, grants and other intergovernmental revenues.

(Continued)

64 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

In addition to assets, the Statement of Net Position reports a separate section for deferred outflows of resources. This separate financial statement category represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until that time. For pensions and OPEB, this outflow results from pension plan and OPEB contributions made after the measurement date of the net pension and OPEB liabilities and the results of differences between expected and actual economic experiences. The deferred outflow of resources related to pensions and OPEB resulting from District contributions subsequent to the measurement date will be recognized as a reduction of the net pension and OPEB liabilities in the next fiscal year. The other pension and OPEB related deferred outflows will be amortized over a systematic and rational method over a closed period.

In addition to liabilities, the Statement of Net Position reports a separate section for deferred inflows of resources. This separate financial statement category represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. For pensions, these deferred inflows result primarily from differences between projected and actual earnings on pension plan investments. For OPEB, these deferred inflows result primarily from differences between expected and actual actuarial experiences as well as changes in actuarial assumptions. These amounts will be amortized over a systematic and rational method over a closed period.

The fiduciary net position of the Teacher Retirement System of Texas (TRS) has been determined using the flow of economic resources measurement focus and full accrual basis of accounting. This includes for purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, pension expense, and information about assets, liabilities and additions to/deductions from TRS’s fiduciary net position. The Plan’s fiduciary net position has been determined on the same basis as that used by the Plan. Benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

The fiduciary net position of the Teacher Retirement System of Texas (TRS) TRS Care Plan has been determined using the flow of economic resources measurement focus and full accrual basis of accounting. This includes for purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to other post-employment benefits, OPEB expense, and information about assets, liabilities and additions to/deductions from TRS Care’s fiduciary net position. Benefit payments are recognized when due and payable in accordance with the benefit terms. There are no investments as this is a pay-as you-go plan and all cash is held in a cash account.

The Statement of Activities demonstrates how other people or entities that participate in programs the District operates have shared in the payment of the direct costs. The “charges for services” column includes payments made by parties that purchase, use, or directly benefit from goods or services provided by a given function or segment of the District. Examples include teacher certification, school lunch charges, staff development, media production, etc. The “grants and contributions” column includes amounts paid by organizations outside the District to help meet the operational or capital requirements of a given function. Examples include grants under the Elementary and Secondary Education Act. If a revenue is not a program revenue, it is a general revenue used to support all of the District’s functions. Taxes are always general revenues.

(Continued)

65 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Interfund activities between governmental funds and between governmental and proprietary funds appear as due to/due from on the Governmental Fund Balance Sheet and Proprietary Fund Statement of Net Position, and as other resources and other uses on the Governmental Fund Statement of Revenues, Expenditures and Changes in Fund Balance and on the Proprietary Fund Statement of Revenues, Expenses and Changes in Fund Net Position. All interfund transactions between governmental funds, and between governmental and internal service funds, are eliminated on the government-wide statements. Interfund activities between governmental funds and fiduciary funds remain as due to/due from external parties on the government-wide Statement of Net Position.

The fund financial statements provide reports on the financial condition and results of operations for three fund categories - governmental, proprietary, and fiduciary. Since the resources in the fiduciary funds cannot be used for District operations, they are not included in the government-wide statements. The District considers some governmental funds as major and reports their financial condition and results of operations in a separate column.

Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues result from providing goods and services in connection with a proprietary fund’s principal ongoing operations; they usually come from exchange or exchange-like transactions. All other revenues and expenses are nonoperating. Operating expenses can be tied specifically to the production of the goods and services, such as materials and labor and direct overhead. Other expenses are nonoperating.

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

The government-wide financial statements use the economic resources measurement focus and the accrual basis of accounting, as do the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.

Governmental fund financial statements use the current financial resources measurement focus and the modified accrual basis of accounting. With this measurement focus, only current assets, deferred outflows of resources, 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, except for unmatured interest and principal on long-term debt, which is recognized when due. The expenditures related to certain compensated absences and claims and judgments are recognized when the obligations are expected to be liquidated with expendable available financial resources. The District considers all revenues, other than property tax revenues, available if they are collectible within one year after year end.

(Continued)

66 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenues from local sources consist primarily of property taxes, fees for services provided to other districts, and investment income. Property tax revenues are recognized under the “susceptible -to- accrual” concept, that is, when they are both measurable and available. The District considers them “available” if they will be collected within 60 days of the end of the year. 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.

Unavailable revenue from property taxes arises only under modified accrual basis of accounting. The governmental funds report this unavailable revenue as a deferred inflow of resources, which is recognized as revenue in the period the amounts become 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 unearned revenues 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 District to refund all or part of the unused amount.

The Proprietary Fund Types and Fiduciary Funds are accounted for on a flow of economic resources measurement focus and utilize the accrual basis of accounting. This basis of accounting recognizes revenues in the accounting period in which they are earned and become measurable and expenses in the accounting period in which they are incurred and become measurable. With this measurement focus, all assets, deferred outflows of resources, liabilities and deferred inflows of resources associated with the operation of these funds are included on the fund Statement of Net Position. The fund equity is segregated into net investment in capital assets net of related debt, restricted net position, and unrestricted net position.

D. Fund Accounting

The District reports the following major governmental funds:

1. The General Fund - The general fund is the District’s primary operating fund. It accounts for all financial resources except those required to be accounted for in another fund.

2. Debt Service Fund - The District accounts for resources accumulated and payments made for principal and interest on long-term general obligation debt and direct placement bonds of governmental activities in a debt service fund.

3. Capital Projects Fund 2018-2020 - The proceeds from Series 2018, 2019, and 2020 long-term debt financing will be used to construct, equip and renovate school buildings in the District and pay any associated costs.

(Continued)

67 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Additionally, the District reports the following fund types:

Governmental Funds:

1. Capital Projects Funds - The proceeds from long-term debt financing will be used to construct, equip and renovate school buildings in the District and pay any associated costs.

2. Special Revenue Funds - The District accounts for resources restricted to, or committed for, specific purposes by the District 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 periods.

3. Permanent Funds - The District has no permanent funds.

Proprietary Funds:

4. Enterprise Funds - The District has no enterprise funds.

5. Internal Service Funds - Revenues and expenses related to services provided to organizations inside the District on a cost-reimbursement basis are accounted for in an internal service fund. The District operates three internal service funds. The District’s internal service funds are the Print Shop, and two insurance funds that cover workers’ compensation and medical claims.

Fiduciary Funds:

6. Private Purpose Trust Funds - The District accounts for donations for which the donor has stipulated that both the principal and the income may be used for purposes that benefit the District’s graduates. The District’s Private Purpose Trust Fund is the Clearwire Scholarship fund.

7. Pension and Other Employee Benefit Trust Funds - The District has no pension or other employee benefit trust funds.

8. Investment Trust Funds - The District has no investment trust funds.

9. Agency Funds - The District accounts for resources held for others in a custodial capacity in agency funds. Assets equal liabilities - this fund does not include measurements or results of operations. The District’s agency fund is the student activity account.

(Continued)

68 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

E. Other Accounting Policies

1. For the purposes of the statement of cash flows for proprietary funds, the District considers highly liquid investments to be cash equivalents if they have a maturity of three months or less when purchased.

2. 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 the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

3. All investments with an original maturity greater than one year from date of purchase are stated at fair value based on quoted market prices as of year end. Investments with an original maturity of less than one year are reported at amortized cost.

4. The funds of the District 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 District’s agent bank in an amount sufficient to protect District 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.

5. 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 District 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, (9) and bid solicitation preferences for certificates of deposit.

Statutes authorize the District 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, (10) and common trust funds. The Act also requires the District to have independent auditors perform test procedures related to investment practices as provided by the Act. Management asserts that the District is in substantial compliance with the requirements of the Act and with local policies.

(Continued)

69 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

6. Additional policies and contractual provisions governing deposits and investments for the District are specified below:

Credit Risk: Deposits - not applicable.

Temporary Investments - To limit the risk that an issuer or other counterparty to an investment will not fulfill its obligations the District limits investments in investment pools to those that have received top ratings issued by nationally recognized statistical rating organizations (NRSROs). As of June 30, 2020, the District’s investments in TexPool, LoneStar and LOGIC and TexasTERM were rated AAAm by Standard & Poor’s. See Note IV for further detail.

Custodial Credit Risk: Deposits - State law requires governmental entities to contract with financial institutions in which funds will be deposited to secure those deposits with insurance or pledged securities with a fair value equaling or exceeding the amount on deposit at the end of each business day. Since the District complies with this law, it has minimal custodial credit risk for deposits.

Temporary Investments - To limit the risk that, in the event of the failure of the counterparty to a transaction, the District will not be able to recover the value of investment or collateral securities that are in possession of an outside party, the District requires counterparties to register the securities in the name of the District and hand them over to the District or its designated agent. This includes securities in securities lending transactions. Investment pools are not exposed to custodial credit risk because their existence is not evidenced by securities that exist in physical or book-entry form.

Concentration of Credit Risk: Deposits - not applicable.

Temporary Investments - To limit the risk of loss attributed to the magnitude of a government’s investment in a single issuer, the District’s policy states that the portfolio must be diversified. Concentration of Credit Risk is not applicable to investment pools since the purpose of these pools is to diversify the District’s investment portfolio.

Interest Rate Risk: Deposits - not applicable.

Temporary Investments - To limit the risk that changes in interest rates will adversely affect the fair value of the investments, the District requires its investment portfolio to have maturities of less than one year on a weighted average maturity (WAM) basis.

(Continued)

70 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Foreign Currency Risk: Deposits - The District attempts to limit the risk that changes in exchange rates will adversely affect a deposit by avoiding deposits denominated in a foreign currency.

Temporary Investments - The District attempts to limit the risk that changes in exchange rates will adversely affect the fair value of an investment by avoiding investment pools or securities which are denominated in a foreign currency.

7. Property taxes are levied by October 1 on the assessed value listed as of the prior January 1 for all real and business personal property located in the District in conformity with Subtitle E, Texas Property Tax Code. Taxes are due on receipt of the tax bill and are delinquent if not paid before February 1 of the year following the year in which imposed. On January 31 of each year, a tax lien attaches to property to secure the payment of all taxes, penalties, and interest ultimately imposed. Property tax revenues are considered available (1) when they become due or past due and receivable within the current period and (2) when they are expected to be collected during a 60-day period after the close of the school fiscal year.

8. Delinquent taxes are prorated between maintenance and debt service based on rates adopted for the year of the levy. Allowances for uncollectible tax receivables within the General and Debt Service Funds are based on historical experience in collecting property taxes. Uncollectible personal property taxes are periodically reviewed and written off, but the District is prohibited from writing off real property taxes without specific statutory authority from the Texas Legislature.

9. The District reports inventories of supplies at weighted average cost including consumable maintenance, instructional, office, athletic, and transportation items. Supplies are recorded as expenditures when they are consumed. Inventories of food commodities which are received at no cost are recorded as revenue and expenditures at market value supplied by the Texas Department of Agriculture when received. At year end, the commodities inventory is recorded to inventory and unearned revenue.

10. Prepaid items on the balance sheet are accounted for using the consumption method and are recognized as expenditures over the periods in which the service is provided.

11. Capital assets, which include land, buildings, furniture and equipment are reported in the applicable governmental activities column in the government-wide financial statements. Capital assets are defined by the District as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated acquisition value at the date of donation.

All individual federally funded assets with a cost of $5,000 or more shall be capitalized in accordance with the aforementioned policies.

(Continued)

71 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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

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

Assets Years Buildings 10 to 70 Improvements 15 to 20 Vehicles 10 Other Equipment 7 to 10 Computer/Software 5 Furniture 20 Portable Structures 25

12. It is the District’s policy to permit some employees to accumulate earned but unused vacation and sick pay benefits. There is no liability for unpaid vacation and accumulated sick leave since the District does not have a policy to pay any amounts when employees separate from service with the District.

13. Net Position on the Statement of Net Position includes the following:

Net Investment in Capital Assets - this component of net position consists of capital assets, net accumulated depreciation, reduced by the outstanding balances of bonds, mortgages, notes or other borrowings that are attributable to the acquisition, construction or improvement of those assets. Deferred outflows of resources and deferred inflows of resources that are attributable to the acquisition, construction, or improvement of those assets or related debt will be included in this component of net position.

Restricted for Federal and State Programs - this component of net position consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets, which are restricted by federal and state granting agencies.

Restricted for Debt Service - this component of net position consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets. The assets arise from bond issuances which have constraints placed on them by the bond covenant(s) for the purpose of future debt service payments.

Unrestricted Net Position - this component of net position is the net amount of assets, deferred outflows of resources, liabilities, and deferred inflows of resources that are not included in the determination of net investment in capital assets or the restricted components of net position.

(Continued)

72 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

14. The District reports the following fund balance categories which describe the nature and relative strength of the spending constraints:

Nonspendable Fund Balance - represents amounts that are in nonspendable form, such as inventory and prepaids, or that are required to be maintained intact.

Restricted Fund Balance - represents amounts constrained to specific purposes by their providers, such as grantors, bondholders, and higher levels of government, through constitutional provisions, or by enabling legislation.

Committed Fund Balance - amounts constrained to specific purposes by the District itself, using its highest level of decision-making authority, i.e., Board of Trustees. To be reported as committed, amounts cannot be used for any other purpose unless the District takes the same highest level action to remove or change the constraint. Resources subject to such self-imposed legal constraints are reflected in this category. To qualify, the constraint must be in place as of the close of the reporting period. Limitations on spending imposed by the annual (or biennial) operating budget naturally lapse with the passage of time and thus do not remain binding indefinitely. Consequently, the passage of the annual operating budget is not sufficient to commit fund balance.

Assigned Fund Balance - amounts the District intends to use for a specific purpose. Intent can be expressed by the Board of Trustees or by an official or body to which the Board of Trustees delegates the authority.

Unassigned Fund Balance - amounts that are available for any purpose. Positive amounts are reported only in the general fund.

The Board of Trustees establishes (and modifies or rescinds) fund balance commitments by passage of a resolution. This is typically done through adoption and amendment of the budget. A fund balance commitment is further indicated in the budget document as an assignment or commitment of the fund (such as for construction projects, capital expenditures, and claims/judgments). An assignment of fund balance does not require the Board of Trustees approval but can be made through the Superintendent or designated District fund managers.

When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available, the District considers restricted funds to have been spent first. When an expenditure is incurred for which committed, assigned, or unassigned fund balances are available, the District considers amounts to have been spent first out of committed funds, then assigned funds, and finally unassigned funds, as needed, unless the Board of Trustees, the Superintendent or the District fund managers have provided otherwise in their commitment or assignment actions.

When the District incurs an expense for which it may use either restricted or unrestricted assets, it uses the restricted assets first whenever they will have to be returned if not used.

(Continued)

73 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

In fiscal year 2020, the Board of Trustees revised the minimum fund balance policy for the general fund. The policy requires the unassigned general fund balance at fiscal year-end to be not less than 75 days of operating expenditures. The Board shall ensure that the general fund balance does not exceed 105 days of operating expenditures. If this amount is exceeded, steps shall be taken to achieve compliance with this policy. In addition, the fund balance for the debt service fund shall be sufficient to meet the succeeding fiscal year’s August bond payment.

15. Since internal service funds support the operations of governmental funds, they are consolidated with the governmental funds in the government-wide financial statements. The expenditures of governmental funds that create the revenues of internal service funds are eliminated to avoid “grossing up” the revenues and expenses of the District as a whole.

16. The District sponsors self-insurance plans to provide health care benefits to employees and their dependents, and worker’s compensation benefits to employees. Revenues of Internal Service Funds are received from the General Fund, Special Revenue Funds, and other Internal Service Funds as well as from interest on investments and premiums charged to employees. Expenses are comprised of claims incurred during the fiscal year, professional and contracted services and other miscellaneous expenses. The General Fund is contingently liable for liabilities of these funds.

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

18. The District receives substantial amounts of funding from special revenue sources. The majority of this money is cost reimbursement to the District by the federal government or Texas Education Agency. The portion of revenue allowable for indirect cost is reported as revenue in the General Fund and as a reduction to revenue in the Special Revenue Fund, as appropriate. These indirect costs are then fully allocated to function 41, General Administration.

19. In accordance with the Resource Guide, the District has adopted and installed an accounting system which meets as least the minimum requirements prescribed by the Texas State Board of Education and approved by the State Auditor. Specifically, the District’s accounting system uses codes and the code structure presented in the Resource Guide. Mandatory codes are recorded in the order provided in the Resource Guide.

20. In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, or proprietary fund type Statement of Net Position. Premiums and discounts are presented as a component of liabilities while deferred charges on refundings are presented as deferred outflows of resources. Both items are deferred and amortized over the life of the related debt using the straight line method. Long-term debt is reported net of the applicable premium or discount.

(Continued)

74 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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

F. The District implemented GASB Statement No. 95 Postponement of the Effective Dates of Certain Authoritative Guidance, which provides temporary relief to governments and other stakeholders in light of the COVID 19 pandemic. The objective is accomplished by postponing the effective dates of certain provisions in Statements and Implementation Guides that first became effective or are scheduled to become effective for periods beginning after June 15, 2018 and later.

II. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS

A. Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the Government- Wide Statement of Net Position

Exhibit C-2 provides the reconciliation between the fund balance for total governmental funds on the governmental fund balance sheet and the net position for governmental activities as reported in the government-wide statement of net position. One element of that reconciliation explains that capital assets are not financial resources and are therefore not reported in governmental funds. In addition, long-term liabilities, including bonds payable, and the District’s proportionate share of the net pension and OPEB liabilities are not due and payable in the current period and are not reported as liabilities in the funds.

B. Explanation of Certain Differences Between the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances and the Government-wide Statement of Activities

Exhibit C-4 provides a reconciliation between the net changes in fund balance as shown on the governmental fund statement of revenues, expenditures, and changes in fund balances and the changes in net position of governmental activities as reported on the government-wide statement of activities. One element of that reconciliation explains that current year capital outlays and debt principal payments are expenditures in the fund financial statements, but should be shown as increases in capital assets and decreases in long-term debt in the government-wide statements. This adjustment affects both the net position balance and the change in net position.

Other elements of the reconciliation on Exhibit C-4 include recognizing property tax revenue considered available, recognizing accruals of interest on long-term debt and recognizing internal service fund activity. In addition, certain pension and OPEB expenditures were de-expended and the District recorded its proportionate share of the pension and OPEB expense. These adjustments are necessary to convert from the modified accrual basis of accounting to the full accrual basis of accounting.

(Continued)

75 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

III. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY

A. Budgetary Data

The Board of Trustees adopts an "appropriated budget" for the General Fund, Debt Service Fund and the Child Nutrition Program (which is included in the special revenue funds). The District is required to present the adopted and final amended budgeted revenues and expenditures for each of these funds. The District compares the final amended budget to actual revenues and expenditures. The General Fund Budget Schedule is presented in Exhibit G-1. The Child Nutrition Program and the Debt Service Budget Schedule are presented in Exhibits J-2 and J-3, respectively. The Board does not adopt a budget for special revenue funds since the budgets are designated by the grantor.

The following procedures are followed in establishing the budgetary data reflected in the financial statements:

1. The budget is prepared prior to June 19 for the next succeeding fiscal year beginning July 1. The operating budget includes proposed expenditures and the means of financing them.

2. A meeting of the Board is then called for the purpose of adopting the proposed budget. At least ten days' public notice of the meeting must be given.

3. On June 18, 2019, the budget was legally enacted through passage of a resolution by the Board. Once a budget is approved, it can only be amended at the function and fund level by approval of a majority of the members of the Board. Amendments are presented to the Board at its regular meetings. Each amendment must have Board approval. As required by law, such amendments are made before the fact, are reflected in the official minutes of the Board, and are not made after fiscal year end. Because the District has a policy of careful budgetary control, several amendments were necessary during the year.

4. Each budget is controlled by the budget coordinator at the revenue and expenditure function/object level. Budgeted amounts are as amended by the Board. All budget appropriations lapse at year end.

(Continued)

76 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS

A. Deposits and Investments

At June 30, 2020, the carrying amount of the District’s deposits (cash and interest-bearing savings and sweep accounts, including internal service funds cash and fiduciary funds cash) was $15,196,213, of which $172,554 and $2,291,176 are presented in the fiduciary funds and are not included in the government-wide statements, and the bank balance was $17,974,878. The District’s cash deposits at June 30, 2020 were fully covered by federal depository insurance (FDIC) or pledged collateral held by the District’s agent bank in the District’s name.

In addition, the following is disclosed regarding coverage of combined balances on the date of highest deposit, not including the sweep account, which is separately collateralized by pledged securities:

a. Depository: Wells Fargo - El Paso, Texas.

b. The market value of bonds and securities pledged, and depository bond insurance, as of the date of the highest combined balance on deposit was $10,101,355.

c. The highest combined balances of cash and savings accounts amounted to $10,134,802 and occurred during the month of March 2020.

d. Total amount of FDIC coverage at the time of the largest combined balance was $640,196.

Additionally, at June 30, 2020, the District maintained a non-interest bearing cash account with a carrying amount of $1,492,210 and a bank balance of $2,105,109 with J.P. Morgan Chase Bank N.A. to provide funds for health insurance claims. These funds were covered by FDIC in the amount of $250,000. The remaining balance was collateralized by securities the pledging financial institution held in the District’s name.

Due to the immediate availability of these funds, the temporary investments are included in cash and cash equivalents and are shown below at either amortized cost or fair value, which approximates the value of the pool shares. The District’s temporary investments as of June 30, 2020 were as follows:

Name Amortized Cost WAM (in days) Rating

Tex Pool Investment Pool $ 89,736,939 33 AAAm (S&P) Lone Star - Government Overnight Fund 138,500,164 35 AAAm (S&P) Texas TERM Investment Pool 193,226,952 67 AAAm (S&P)

Total valued at amortized cost $ 421,464,055

Name Fair Value WAM (in days) Rating

LOGIC $ 130,882,187 43 AAAm (S&P)

Total at fair value $ 130,882,187

(Continued)

77 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

During the year ended June 30, 2020, the District also invested in repurchase agreements. These operating funds were invested overnight and available for use the following day, thus they were considered cash and cash equivalents.

TexPool is a local government investment pool in the State of Texas. The State Comptroller of Public Accounts oversees TexPool. There is also a TexPool Advisory Board, composed of participants ,which advises on TexPool’s Investment policy and approves fee increases. The Lone Star Investment Pool is a member owned, member-governed public funds investment pool. It is managed by an eleven member Board of Trustees and the Board is authorized to adopt and maintain bylaws. LOGIC (Local Government Investment Cooperative) is a local government investment pool administered by First Southwest Asset Management, Inc and JPMorgan Chase. TexasTERM Local Government Investment Pool is owned and operated by the Pool’s investors. The Pool’s investors elect Advisory Board Members who are responsible for overall management of the Pool, including formulation and implementation of investment and operating policies. For pools measured at amortized cost, management is not aware of the presence of any limitations or restrictions on withdrawals such as redemption notice periods, maximum transaction amounts, and the qualifying external investment pool’s authority to impose liquidity fees or redemption gates.

B. Receivables from Other Governments

The District participates in a variety of federal and state programs from which it receives grants to partially or fully finance certain activities. In addition, the District receives entitlements from the State through the School Foundation and Per Capita Programs. A majority of the federal grants are passed through TEA. Amounts due from federal and state governments as of June 30, 2020, are summarized below.

Nonmajor Governmental General Fund Funds Total Federal Grants $ 178,778 $ 5,841,674 $ 6,020,452 SHARS 306,525 - 306,525 State Grants 2,117 52,124 54,241 State Support 27,880,249 - 27,880,249 Total $ 28,367,669 $ 5,893,798 $ 34,261,467

(Continued)

78 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

C. Other Receivables

Other Receivables at June 30, 2020 consisted of the following:

Nonmajor Internal Governmental Service Total General Fund Fund Funds E-Rate $ 1,394,909 $ - $ - $ 1,394,909 External Student Activity Clubs 551,847 - - 551,847 Pharmacy Rebate - - 1,454,310 1,454,310 Miscellaneous 383,263 1,924 - 385,187 Total $ 2,330,019 $ 1,924 $ 1,454,310 $ 3,786,253

Management believes an allowance for doubtful accounts is not necessary for fair presentation.

D. Interfund Balances and Transfers

During the normal course of operations, transactions occur that generate a balance between funds and consist of operating receivables and payables. These balances are cleared out periodically. Management intends to pay out these balances within one year. Interfund balances at June 30, 2020 consisted of the following amounts:

Due from Due to Other Funds Other Funds General Fund: General Fund $ 17,449,209 $ 17,449,209 Debt Service Fund 7,340,021 - Capital Projects 2018 - 2020 Fund 3,779,017 - Nonmajor Governmental Funds 12,972,618 785,960 Internal Service Funds 715,667 16,263,773 Total General Fund 42,256,532 34,498,942 Debt Service Fund: General Fund - 7,340,021 Capital Projects 2018 - 2020 Fund: General Fund - 3,779,017 Nonmajor Governmental Funds: General Fund 785,960 12,972,618

(Continued)

79 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

Due from Due to Other Funds Other Funds Internal Service Funds: General Fund 16,263,773 715,667 Total $ 59,306,265 $ 59,306,265

During the year ended June 30, 2020, the District transferred amounts out of the general fund for the following purposes: (1) supplementing the District’s self insurance health program accounted for in an internal services fund; (2) eliminating the deficit in a capital projects fund which resulted from construction expenses for a new campus exceeding the remaining 2011 bond funds; and (3) covering uncollectible balances in the Child Nutrition program.

Interfund transfers for the year ended June 30, 2020 consisted of the following amounts:

Transfers Out Transfers In General Fund: Nonmajor Governmental Funds $ 6,633,172 $ - Internal Service Funds 9,000,000 - Total General Fund 15,633,172 - Nonmajor Governmental Funds: General Fund - 6,633,172 Internal Service Funds: General Fund - 9,000,000 Total $ 15,633,172 $ 15,633,172

E. Capital Asset Activity

Capital asset activity for the District for the year ended June 30, 2020, was as follows:

Primary Government Deletion, Beginning Reclassification Ending Balance Additions and Adjustment Balance Non-depreciable assets: Land $ 54,418,515 $ 6,691,323 $ (654,770) $ 60,455,068 Construction in progress 9,949,717 59,078,508 (21,460) 69,006,765

Total non-depreciable assets 64,368,232 65,769,831 (676,230) 129,461,833

(Continued)

80 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

Primary Government Deletion, Beginning Reclassification Ending Balance Additions and Adjustment Balance

Depreciable assets: Buildings and improvements 808,740,650 3,591,685 21,460 812,353,795 Furniture and equipment 66,533,488 4,773,091 (344,757) 70,961,822 Capital leases - equipment 6,663,040 3,202,425 - 9,865,465

Total depreciable assets 881,937,178 11,567,201 (323,297) 893,181,082

Less accumulated depreciation for: Buildings and improvements 164,952,411 14,931,246 - 179,883,657 Furniture and equipment 49,328,083 3,495,588 (337,262) 52,486,409 Capital leases - equipment 2,480,493 1,973,093 - 4,453,586

Total accumulated depreciation 216,760,987 20,399,927 (337,262) 236,823,652

Total net capital assets $ 729,544,423 $ 56,937,105 $ (662,265) $ 785,819,263

Depreciation expense was charged to governmental functions as follows:

11 Instruction $ 9,991,458 12 Instructional Resources and Media Services 177,474 21 Instructional Leadership 8,599 23 School Leadership 268,375 31 Guidance, Counseling and Evaluation Services 74,692 33 Health Services 71,030 34 Student (Pupil) Transportation 1,445,902 35 Food Services 702,927 36 Extracurricular Activities 1,286,841 41 General Administration 172,238 51 Facilities Maintenance and Operations 4,867,192 52 Security and Monitoring Services 141,234 53 Data Processing Services 1,170,499 61 Community Services 2,377 Total governmental funds depreciation expense 20,380,838 Depreciation on capital assets held by the District’s internal service funds. 19,089 Total governmental activities depreciation expense $ 20,399,927

(Continued)

81 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

F. Deferred Outflows and Inflows of Resources on Refunding of Bonds

Deferred losses on refunding of bonds for the year ended June 30, 2020, presented as deferred outflows of resources, were as follows: Deferred Beginning Losses on New Amortization Ending Balance Description Balance Issues Recognized

Series 2012 $ 1,136,207 $ - $ 112,423 $ 1,023,784 Series 2013A 1,606,349 - 144,666 1,461,683 Series 2014 1,270,751 - 308,623 962,128 Series 2014A 2,692,692 - 222,517 2,470,175 Series 2015A 3,253 - 248 3,005 Series 2017A 2,681,975 - 177,810 2,504,165 Series 2017B 4,132,421 - 228,521 3,903,900 Series 2018 10,821 - 1,644 9,177 Series 2020A - 68,854 355 68,499 Series 2020B - 10,557,686 54,421 10,503,265 $ 13,534,469 $ 10,626,540 $ 1,251,228 $ 22,909,781

Deferred gain on refunding of bonds for the year ended June 30, 2020, presented as deferred inflows of resources, was as follows:

Deferred Beginning Gain on New Amortization Ending Balance Description Balance Issues Recognized Series 2015B $ 377,746 $ - $ 41,468 $ 336,278 Series 2016 3,402,355 - 1,601,108 1,801,247 Series 2019 - 499,466 43,432 456,034

$ 3,780,101 $ 499,466 $ 1,686,008 $ 2,593,559

(Continued)

82 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

G. Changes in Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2020 was as follows:

Beginning Ending Due Within Funded by: Balance Additions Reductions Balance One Year

Governmental Activities: General Obligation Bonds Payable Debt Service $ 757,747,613 $ 203,659,142 $ 137,234,966 $ 824,171,789 $ 20,824,104 Bond Payable from Direct Placement Debt Service 28,250,000 - 4,795,000 23,455,000 4,990,000 Accretion Payable Debt Service 6,773,888 12,221,973 1,225,034 17,770,827 1,610,896 Unamortized Premiums/ Discounts on Debt Debt Service 91,986,012 25,017,903 10,664,971 106,338,944 7,046,368

884,757,513 240,899,018 153,919,971 971,736,560 34,471,368

Other Liabilities: Capital Leases General Fund 4,703,645 3,202,425 2,308,234 5,597,836 2,267,157

Total Other Liabilities 4,703,645 3,202,425 2,308,234 5,597,836 2,267,157

Total Governmental Long-term Liabilities $ 889,461,158 $ 244,101,443 $ 156,228,205 $ 977,334,396 $ 36,738,525

H. General Long-Term Debt

General Obligation Bonds activity for the year ended June 30, 2020 was as follows:

Interest Due Rate and Original Beginning Ending Within Description Maturity Date Issue Balance Issued Retired Balance One Year

Refunding Bonds 1998 4.25 - 5.25 Capital appreciation bonds 8-15-2021 $ 1,754,235 $ 447,628 $ - $ 194,966 $ 252,662 $ 177,528 Bond Series 2000 5.00 - 6.00 Capital Appreciation Bonds 2-15-2024 159,985 159,985 - - 159,985 - Unlimited Tax Building and Refunding Bond Series 2001 3.00 - 5.375 Capital Appreciation Bonds 8-15-2022 150,000 150,000 - - 150,000 - Unlimited Tax Refunding Bond Series 2010 2.00 - 4.00 Current Interest Bonds 8-15-2020 15,215,000 14,520,000 - 14,455,000 65,000 65,000 Unlimited Tax Building and Refunding Bond Series 2011 2.00 - 5.00 Current Interest Bonds 8-15-2020 50,345,000 12,865,000 - 12,465,000 400,000 400,000 Unlimited Tax Refunding Bond Series 2012 3.00 - 5.00 Current Interest Bonds 8-15-2029 16,840,000 13,945,000 - 1,035,000 12,910,000 1,075,000 Unlimited Tax School Building Bonds Series 2013 5.00 Current Interest Bonds 8-15-2023 41,175,000 41,175,000 - 40,275,000 900,000 - Term Bonds 54,115,000 54,115,000 - 54,115,000 - - Unlimited Tax Refunding Bonds Series 2013A 1.50 - 5.00 Current Interest Bonds 8-15-2030 55,670,000 46,870,000 - 2,970,000 43,900,000 3,115,000

83 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

Interest Due Rate and Original Beginning Ending Within Description Maturity Date Issue Balance Issued Retired Balance One Year

Unlimited Tax Refunding Bonds Series 2014A 0.08 - 5.00 Current Interest Bonds 8-15-2031 49,220,000 43,675,000 - 2,340,000 41,335,000 2,455,000 Unlimited Tax Refunding Bonds Series 2015A 0.00 - 4.00 Current Interest Bonds 8-15-2032 11,200,000 11,200,000 - - 11,200,000 - Capital Appreciation Bonds 8-15-2015 104,999 - - - - - Unlimited Tax Refunding Bonds Series 2015B 2.00 - 5.00 Current Interest Bonds 8-15-2028 17,525,000 17,185,000 - - 17,185,000 - Unlimited Tax Refunding Bonds Series 2016 2.00 - 4.00 Current Interest Bonds 8-15-2021 25,140,000 24,675,000 - 8,950,000 15,725,000 8,830,000 Unlimited Tax Refunding Bonds Series 2017A 2.00 - 5.00 Current Interest Bonds 8-15-2034 35,735,000 34,985,000 - - 34,985,000 - Unlimited Tax Refunding Bonds Series 2017B 2.00 - 5.00 Current Interest Bonds 8-15-2037 125,945,000 125,570,000 - 375,000 125,195,000 375,000 Capital Appreciation Bonds 8-15-2017 2,712,339 - - - - - Unlimited Tax Refunding Bonds Series 2018 2.00 - 5.00 Current Interest Bonds 2-15-2026 8,005,000 7,795,000 - 60,000 7,735,000 - Unlimited Tax School Building Bonds Series 2018 4.00 - 5.00 Current Interest Bonds 8-15-2043 173,030,000 173,030,000 - - 173,030,000 - Unlimited Tax School Building Bonds Series 2019 4.00 - 5.00 Current Interest Bonds 8-15-2040 68,430,000 68,430,000 - - 68,430,000 2,500,000 Term Bonds 8-15-2044 66,955,000 66,955,000 - - 66,955,000 - Unlimited Tax Refunding Bonds Series 2019 5.00 Current Interest Bonds 8-15-26 12,915,000 - 12,915,000 - 12,915,000 125,000 Unlimited Tax School Building Bonds Series 2020 4.00 Current Interest Bonds 8-15-2040 22,860,000 - 22,860,000 - 22,860,000 - Term Bonds 8-15-2045 62,680,000 - 62,680,000 - 62,680,000 - Unlimited Tax Refunding Bonds Series 2020A 3.00 - 4,00 Current Interest Bonds 8-15-2036 10,815,000 - 10,815,000 - 10,815,000 195,000 Unlimited Tax Refunding Bonds Taxable Series 2020B 2.125 - 5.00 Current Interest Bonds 8-15-2038 92,155,000 - 92,155,000 - 92,155,000 - Capital Appreciation Bonds 8-15-2027 2,234,142 - 2,234,142 - 2,234,142 1,511,576

Total 1,023,085,700 757,747,613 203,659,142 137,234,966 824,171,789 20,824,104

(Continued)

84 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

Activity for the Bond from Direct Placement for the year ended June 30, 2020 was as follows:

Interest Due Rate and Original Beginning Ending Within Description Maturity Date Issue Balance Issued Retired Balance One Year

Unlimited Tax Refunding Bonds Series 2014 4.09 - 4.78 Current Interest Bonds 8-15-2023 $ 44,850,000 $ 28,250,000 $ - $ 4,795,000 $ 23,455,000 $ 4,990,000

The total interest paid on bonds and for accretion during the year ended June 30, 2020 was $35,252,618.

Accretion Payable for the year ended June 30, 2020 was as follows:

Accretion Beginning Outstanding Due Within Description Balance Additions Reductions 06/30/20 One Year

Refunding Bonds 1998 $ 2,887,028 $ 116,796 $ 1,225,034 $ 1,778,790 $ 1,242,472 Series 2000 Building Bonds 1,513,026 106,426 - 1,619,452 - Unlimited Tax Building & Refunding Bonds 2001 2,373,834 143,579 - 2,517,413 - Unlimited Tax Refunding Bonds Taxable 2020B - 11,855,172 - 11,855,172 368,424

$ 6,773,888 $ 12,221,973 $ 1,225,034 $ 17,770,827 $ 1,610,896

Unamortized premiums/discounts on debt for the year ended June 30, 2020 are as follows:

Premiums and Net Due Beginning Discounts on Amortization Outstanding Within Description Balance New Issues Recognized 06/30/20 One Year

Series 2010 $ 606,760 $ - $ 604,032 $ 2,728 $ 2,728 Series 2011 186,393 - 185,456 937 937 Series 2012 1,406,206 - 139,138 1,267,068 138,758 Series 2013 3,823,269 - 3,788,952 34,317 10,987 Series 2013A 5,052,080 - 454,986 4,597,094 453,742 Series 2014 2,013,138 - 488,924 1,524,214 487,588 Series 2014A 6,499,260 - 537,081 5,962,179 535,613 Series 2015A 291,039 - 22,215 268,824 22,154 Series 2015B 1,639,433 - 179,974 1,459,459 179,482 Series 2016 1,170,655 - 551,428 619,227 549,922 Series 2017A 5,109,747 - 338,492 4,771,255 337,567 Series 2017B 19,331,917 - 1,068,641 18,263,276 1,065,723 Series 2018 1,078,728 - 163,012 915,716 162,566 Series 2018 26,817,363 - 1,113,840 25,703,523 1,110,796 Series 2019 16,960,024 - 676,331 16,283,693 674,483 Series 2019 - 1,911,208 162,589 1,748,619 285,313

(Continued)

85 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

Premiums and Net Due Beginning Discounts on Amortization Outstanding Within Description Balance New Issues Recognized 06/30/20 One Year

Series 2020 - 16,382,051 169,597 16,212,454 644,824 Series 2020A - 1,987,303 6,725 1,980,578 122,735 Series 2020B - 4,737,341 13,558 4,723,783 260,450

Total $ 91,986,012 $ 25,017,903 $ 10,664,971 $ 106,338,944 $ 7,046,368

Debt service requirements are as follows:

GENERAL OBLIGATION BONDS Total Year Ending June 30, Principal Interest Requirements 2021 $ 20,824,104 $ 35,663,714 $ 56,487,818 2022 18,686,901 37,342,919 56,029,820 2023 13,064,190 38,016,530 51,080,720 2024 17,199,020 34,492,925 51,691,945 2025 21,157,768 34,866,803 56,024,571 2026 - 2030 123,469,806 152,167,794 275,637,600 2031 - 2035 163,055,000 112,467,513 275,522,513 2036 - 2040 192,430,000 77,768,251 270,198,251 2041 - 2045 221,780,000 31,020,575 252,800,575 2046 32,505,000 650,100 33,155,100 Total $ 824,171,789 $ 554,457,124 $ 1,378,628,913

BOND FROM DIRECT PLACEMENT Total Year Ending June 30, Principal Interest Requirements 2021 $ 4,990,000 $ 858,981 $ 5,848,981 2022 5,955,000 634,350 6,589,350 2023 7,140,000 365,950 7,505,950 2024 5,370,000 109,843 5,479,843 Total $ 23,455,000 $ 1,969,124 $ 25,424,124

(Continued)

86 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

On July 13, 2017, the District issued $35,735,000 in Unlimited Tax Refunding Bonds, Series 2017A. The bonds are payable August 15 of each year commencing August 15, 2017 and ending on August 15, 2034. The bonds were issued to refund portions of the Unlimited Tax School Building and Refunding Bonds, Series 2011 and to pay the costs associated with the issuance and sale of the Bonds. As a result of the refunding, the amount of $36,650,000 of the 2011 Series bonds was considered defeased and is not presented in these financial statements. As of June 30, 2020, the amount of defeased bonds still outstanding was $36,650,000 and the related escrow balance was $37,321,313.

On July 13, 2017, the District issued $128,657,339 in Unlimited Tax Refunding Bonds, Series 2017B. The bonds are payable August 15 of each year commencing August 15, 2017 and ending on August 15, 2037. The bonds were issued to refund the Unlimited Tax Building Bonds Series 2012 and to pay the cost associated with the issuance and sale of the Bonds. As a result of the refunding, the amount of $129,370,000 of the 2012 Series bonds was considered defeased and is not presented in these financial statements. As of June 30, 2020, the amount of defeased bonds still outstanding was $129,370,000 and the related escrow balance was $137,494,741.

On December 5, 2019, the District issued Unlimited Tax Refunding Bonds, Series 2019, in the amount of $12,915,000 at a premium and with an interest rate of 5.00%. Interest is payable on February 15 and August 15 of each year, commencing February 15, 2020 and principal payments are due on August 15 of each year, commencing August 15, 2020 and ending August 15, 2026. The bonds were issued to refund portions of the Unlimited Tax School Building and Refunding Bonds, Series 2010, and to pay the costs associated with the issuance and sale of the bonds. As a result of the refunding, the amount of $14,395,000 of the 2010 Series bonds was considered defeased and is not presented in these financial statements. As of June 30, 2020, there was no amount of defeased bonds still outstanding. The current refunding resulted in a difference between the reacquisition price and the net carrying amount of the old debt of $499,466. This difference, reported in the accompanying financial statement in the deferred outflows category as a deferred gain on refunding, is amortized over the life of the new bond utilizing the straight-line method. The District completed the refunding to reduce total debt service payments over 7 years by $1,265,263, resulting in an economic gain of $1,221,927.

On March 26, 2020, the District issued Unlimited Tax School Building Bonds, Series 2020, in the amount of $85,540,000 at a premium and with an interest rate of 4.00%. Interest is payable on February 15 and August 15 of each year, commencing February 15, 2021 and principal payments are due on August 15 of each year, commencing August 15, 2032 and ending August 15, 2045. Proceeds from the sale of the Bonds will be used to construct, equip, acquire and renovate school buildings in the District, purchase necessary sites for school facilities, and to pay the costs associated with the issuance of the bonds.

On June 10, 2020, the District issued Unlimited Tax Refunding Bonds, Series 2020A, in the amount of $10,815,000 at a premium and with interest rates ranging from 2.125% to 5.00%. Interest is payable on February 15 and August 15 of each year, commencing August 15, 2020 and principal payments are due on August 15 in the years 2020, 2021, 2035, and 2036. The bonds were issued to refund portions of the Unlimited Tax School Building and Refunding Bonds, Series 2011 and to pay the costs associated with the issuance and sale of the Bonds. As a result of the refunding, the amount of $12,345,000 of the 2011 Series bonds was considered defeased and is not presented in these financial statements. As of June 30, 2020, the

(Continued)

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FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

amount of defeased bonds still outstanding was $12,345,000 and the related escrow balance was $12,619,802. The current refunding resulted in a difference between the reacquisition price and the net carrying amount of the old debt of $68,854. This difference is reported in the accompanying financial statement in the deferred inflows category as a deferred charge on refunding and is amortized over the life of the new bond utilizing the straight-line method. The District completed the refunding to reduce total debt service payments over 17 years by $3,466,356, resulting in an economic gain of $2,689,465.

On June 11, 2020, the District issued Unlimited Tax Refunding Bonds, Taxable Series 2020B, in the amount of $94,389,142 at a premium and with interest rates ranging from 3.00 to 4.00% and are issued in part as premium capital appreciation bonds. Interest is payable on February 15 and August 15 of each year, commencing August 15, 2020 and principal payments are due on August 15 of each year, commencing August 15, 2020 and ending August 15, 2038. The bonds were issued to refund portions of the Unlimited Tax School Building and Refunding Bonds, Series 2013 and to pay the costs associated with the issuance and sale of the Bonds. As a result of the refunding, the amount of $94,390,000 of the 2013 Series bonds was considered defeased and is not presented in these financial statements. As of June 30, 2020, the amount of defeased bonds still outstanding was $94,390,000 and the related escrow balance was $110,015,879. The advance refunding resulted in a difference between the reacquisition price and the net carrying amount of the old debt of $10,557,686. This difference is reported in the accompanying financial statement in the deferred inflows category as a deferred charge on refunding and is amortized over the life of the new bond utilizing the straight-line method. The District completed the refunding to reduce total debt service payments over 19 years by $15,677,189, resulting in an economic gain of $13,276,703.

The District has a number of capital appreciation bonds outstanding that were issued at deep discounts. These discounts are being accreted over the life of the bonds. In the year ended June 30, 2020, $12,221,973 was accreted, which includes a new issuance in the current year, and the accumulated accreted balance is presented within long-term liabilities.

There are a number of limitations and restrictions contained in the general obligation bond indenture. Management has indicated that the District is in compliance with all significant limitations and restrictions at June 30, 2020.

I. Commitments under Leases

Capital Leases

The District has several lease agreements related to the purchase of technology equipment. The lease terms range from 36 to 60 months with interest rates ranging from 0.00% to 5.51%. The gross amount of the assets acquired through these capital leases, major assets class, and the related depreciation are reflected in the capital asset activity disclosure above.

Total interest paid during the fiscal year ending June 30, 2020 was $215,062.

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FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

Capital lease future payments are as follows:

Total Year Ending June 30, Principal Interest Requirements 2021 $ 2,267,157 $ 256,139 $ 2,523,296 2022 2,249,222 151,327 2,400,549 2023 978,169 45,717 1,023,886 2024 103,288 - 103,288 Total $ 5,597,836 $ 453,183 $ 6,051,019

Operating Leases

The District is obligated under various operating lease agreements for office equipment. Operating leases with a term of more than one year provide for minimum future rental payments as of June 30, 2020 as follows:

Year Ending June 30, 2021 $ 407,722 2022 222,484 2023 51,049 2024 5,708 Total future minimum rental payments $ 686,963

Rental expenditures for the year ended June 30, 2020 totaled $1,110,320.

Lease Revenue

The District as lessor leases out various sites under the terms of tower lease agreements as well as land under a separate lease agreement. The lease activity is accounted for under the operating method of accounting for leases. Minimum future rentals to be received on non-cancelable leases as of June 30, 2020 for each of the next five years and for the remaining years in the aggregate are:

Year Ending June 30, Amount 2021 $ 138,823 2022 63,677 2023 59,540 2024 43,183 2025-2027 76,313 Total Minimum Future Rentals $ 381,536

(Continued)

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FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

J. Accumulated Unpaid Vacation and Sick Leave Benefits

Upon termination of employment, employees are not paid for any accrued sick leave or vacation leave. As such, no accrual is recorded in these financial statements.

K. Defined Benefit Pension Plan

Plan Description: The District 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). It is a defined benefit pension plan 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 5 years of service credit or earlier than 55 with 30 years of service credit. There are additional provisions for early retirement if the sum of the member’s age and years of service credit total at least 80, but the member is less than age 60 or 62 depending on date of employment, or if the member was grandfathered in under a previous rule. There are no automatic post-employment benefit changes; including automatic COLAs. Ad hoc post-employment benefit changes, including ad hoc COLAs can be granted by the Texas Legislature as noted in the Plan description above.

In May 2019, the 86th Texas Legislature approved the TRS Pension Reform Bill (Senate Bill 12) that provides for gradual contribution increases from the state, participating employers and active employees to make the pension fund actuarially sound. This action causing the pension fund to be actuarially sound, allowed the legislature to approve funding for a 13th check in September 2019. All eligible members retired as of December 31, 2018 received an extra annuity check in either the matching amount of their monthly annuity or $2,000, whichever was less.

(Continued)

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FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

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. Actuarial implications of the funding provided in this manner are determined by the System’s actuary.

Employee contribution rates are set in state statute, Texas Government Code 825.402. The TRS Pension Reform Bill (Senate Bill 12) of the 86th Texas Legislature amended Texas Government Code 825.402 for member contributions and established employee and employer contribution rates for fiscal years 2020 through 2025.

Contribution Rates Plan Fiscal Year 2019 2020 Member 7.7% 7.7% Non-Employer Contributing Entity (State) 6.8% 7.5% Employers 6.8% 7.5%

Contributions Required and Made FY 2020 Employer Contributions $ 8,714,309 FY 2020 Member Contributions 22,020,054 2019 Plan Year NECE On-Behalf Contributions (State) 13,250,588

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:

(Continued)

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FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

• 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 percent of the state contribution rate for certain instructional or administrative employees; and 100 percent of the state contribution rate for all other employees. • When the employing district is a public or charter school, the employer shall contribute 1.5 percent of covered payroll to the pension fund beginning in fiscal year 2020. This contribution rate called the Public Education Employer Contribution will replace the Non-OASDI surcharge that was in effect in fiscal year 2019.

Included in the employer contributions amount listed above for fiscal year 2020, the District paid $11,486 in retiree surcharges and $3,502,490 for non-OASDI employees. These two additional surcharges an employer is subject to are summarized as follows:

• When employing a retiree of the Teacher Retirement System the employer shall pay both the member contribution and the state contribution as an employment after retirement surcharge. • When a school district or charter school does not contribute to the Federal Old-Age, Survivors and Disability Insurance (OASDI) Program for certain employees, they must contribute 1.5 percent of the state contribution rate for certain instructional or administrative employees; and 100 percent of the state contribution rate for all other employees. This surcharge was in effect through fiscal year 2019 and was replaced with the Public Education Employer Contribution explained above.

Actuarial Assumptions: The actuarial valuation was performed as of August 31, 2018. Update procedures were used to roll forward the total pension liability to August 31, 2019. The actuarial methods and assumption used in the determination of the total pension liability are the same assumptions used in the actuarial valuation as of August 31, 2018. The total pension liability is determined by an annual actuarial valuation. The actuarial methods and assumptions were selected by the Board of Trustees based upon analysis and recommendations by the System’s actuary. The Board of Trustees has sole authority to determine the actuarial assumptions used for the Plan. The actuarial methods and assumptions were primarily based on a study of actual experience for the three year period ending August 31, 2018 and were adopted in July 2018. The following table discloses the assumptions that were applied to this measurement period:

(Continued)

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FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

Valuation Date August 31, 2018 rolled forward to August 31, 2019 Actuarial Cost Method Individual Entry Age Normal Asset Valuation Method Market Value Single Discount Rate 7.25% Mortality Assumption The active mortality rates were based on 90 percent of RP 2014 Employee Mortality Tables for males and females with full generational mortality. 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 projection scale U-MP. Long-term expected Investment Rate of Return 7.25% Municipal Bond Rate as of August 2019 2.63%. Source for the rate is the Fixed Income Market Data/Yield Curve/ Data Municipal 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 Projection Period (100 years) 2116 Inflation 2.30% Salary Increases 3.50% to 9.05% including inflation Ad hoc post-employment benefit changes None

Discount Rate: The single discount rate used to measure the total pension liability was 7.25 percent. The single discount rate was based on the expected rate of return on pension plan investments of 7.25 percent. The projection of cash flows used to determine the discount rate assumed that contributions from active members, employers and the non-employer contributing entity will be made at the rates set by the Legislature during the 2019 legislative session. It is assumed that future employer and state contributions will be 8.50 percent of payroll in fiscal year 2020 gradually increasing to 9.55 percent of payroll over the next several years. This includes all employer and State contributions for active and rehired retirees. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. The long-term expected rate of return on pension plan investments is 7.25 percent and 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. Best estimates of geometric real rates of return for each major asset class included in the Systems target asset allocation as of August 31, 2019 are summarized below:

(Continued)

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FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

Long-Term Expected FY 2019 Target New Target Geometric Real Asset Class Allocation* Allocation** Rate of Return*** Global Equity U.S. 18.0% 18.0% 6.4% Non-U.S. Developed 13.0% 13.0% 6.3% Emerging Markets 9.0% 9.0% 7.3% Directional Hedge Funds 4.0% - - Private Equity 13.0% 14.0% 8.4% Stable Value U.S. Treasuries**** 11.0% 16.0% 3.1% Stable Value Hedge Funds 4.0% 5.0% 4.5% Absolute Return 0.0% 0.0% 0.0% Real Return Global Inflation Linked Bonds**** 3.0% - - Real Estate 14.0% 15.0% 8.5% Energy, Natural Resources and Infrastructure 5.0% 6.0% 7.3% Commodities 0.0% 0.0% 0.0% Risk Parity Risk Parity 5.0% 8.0% 5.8%/6.5%***** Leverage Cash 1.0% 2.0% 2.5% Asset Allocation Leverage - -6.0% 2.7%

Expected Return 100% 100.0% 7.23%

*Target allocations are based on the Strategic Asset Allocation as of FY2019 **New allocations are based on the Strategic Asset Allocation to be implemented FY 2020 ***10-Year annualized geometric nominal returns include the real rate of return and inflation of 2.1% ****New Target Allocation groups Government Bonds within the stable value allocation. This includes global sovereign nominal and inflation-linked bonds *****5.8 (6.5%) return expectation corresponds to Risk Parity with a 10%(12%) target volatility

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 (7.25%) in measuring the Net Pension Liability:

Current Single 1% Decrease Discount 1% Increase 6.25% Rate 7.25% 8.25% District’s proportionate share of the net pension liability $ 181,707,151 $ 118,210,786 $ 66,766,475

(Continued)

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FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions: At June 30, 2020, the District reported a liability of $118,210,786 for its proportionate share of the TRS’s net pension liability. This liability reflects a reduction for State pension support provided to the District. The amount recognized by the District 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 District were as follows:

The District’s proportionate share of the collective net pension liability $ 118,210,786 State’s proportionate share that is associated with the District 196,803,536 Total $ 315,014,322

The net pension liability was measured as of August 31, 2018 and rolled forward to August 31, 2019 and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The District’s proportion of the net pension liability was based on the District’s contributions to the pension plan relative to the contributions of all employers to the plan for the period September 1, 2018 through August 31, 2019.

At August 31, 2019, the employer’s proportion of the collective net pension liability was 0.2274022265 % which was an increase of 0.0012128754% from its proportion measured as of August 31, 2018.

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 single discount rate as of August 31, 2018 was a blended rate of 6.907 percent and that has changed to the long-term rate of return of 7.25 percent as of August 31, 2019. • With the enactment of SB 3 by the 2019 Texas Legislature, an assumption has been made about how this would impact future salaries. It is assumed that eligible active members will each receive a $2,700 increase in fiscal year 2020. This is in addition to the salary increase expected in the actuarial assumptions. • The Texas legislature approved funding for a 13th check. All eligible members retired as of December 31, 2018 will receive an extra annuity check in September 2019 in either the matching amount of their monthly annuity payment or $2,000, whichever is less.

There were no changes of benefit terms that affected measurement of the total pension liability during the measurement period.

For the year ended June 30, 2020, the District recognized pension expense of $30,915,063 and revenue of $30,915,063 for support provided by the State.

The amount of pension expense recognized by the District in the reporting period was $55,155,051.

(Continued)

95 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

At June 30, 2020, the District 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 of Inflows of Resources Resources Differences between expected and actual economic experience $ 496,591 $ 4,104,466 Changes in actuarial assumptions 36,674,791 15,155,759 Net difference between projected and actual investment earnings 1,186,973 - Changes in proportion and difference between District’s contributions and proportionate share of contributions 9,104,373 808,489 District contributions to TRS subsequent to the measurement date 7,612,704 - Total $ 55,075,432 $ 20,068,714

The $7,612,704 reported as deferred outflows of resources related to pensions resulting from District contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending June 30, 2021.

The net amounts of the employer’s balances of deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows:

Year Ended June 30 Amount 2021 $ 7,067,113 2022 5,664,914 2023 6,783,811 2024 6,683,577 2025 2,257,168 Thereafter (1,062,569) $ 27,394,014

Changes in Net Pension Liability:

Beginning Ending Balance Additions Reductions Balance Net Pension Liability $ 124,500,108 $ 1,670,030 $ 7,959,352 $ 118,210,786

Pension Payable: At June 30, 2020, the District reported a payable of $2,619,001 to the pension plan for the outstanding amount of contractually required contributions related to past service costs. Member contributions included in this payable were $1,902,065.

(Continued)

96 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

L. Defined Other Post-Employment Benefit Plan

Plan Description: The District 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 health insurance coverage to retirees from public schools, charter schools, regional education service centers and other educational districts who are members of the TRS pension plan. Optional dependent coverage is available for an additional fee.

Eligible non-Medicare retirees and their dependents may enroll in TRS-Care Standard, a high deductible health plan. Eligible Medicare retirees and their dependents may enroll in the TRS-Care Medicare Advantage medical plan and the TRS-Care Medicare Rx prescription drug plan. 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 retirees are reflected in the following table:

TRS-Care Monthly Plan Premium Rates Medicare Non-Medicare Retiree or Surviving Spouse $ 135 $ 200 Retiree and Spouse 529 689 Retiree or Surviving Spouse and Children 468 408 Retiree and Family 1,020 999

Contributions: Contribution rates for the TRS-Care plan are established in state statute by the Texas Legislature, and there is no continuing obligation to provide benefits beyond each fiscal year. The TRS-Care plan is currently funded on a pay-as-you-go basis and is subject to change based on available funding. Funding for TRS-Care is provided by retiree premium contributions and contributions from the state, active employees, and school districts based upon public school district payroll. The TRS Board of Trustees does not have the authority to set or amend contribution rates.

(Continued)

97 SOCORRO INDEPENDENT SCHOOL DISTRICT

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FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

Texas Insurance Code, section 1575.202 establishes the state’s contribution rate which is 1.25 percent of the employee’s salary. Section 1575.203 establishes the active employee’s rate which is 0.65 percent 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 school. The actual employer contribution rate is prescribed by the Legislature in the General Appropriations Act, which is 0.75 percent of each active employee’s pay. The following table shows contributions to the TRS-Care plan by type of contributor.

Contributions Rates 2019 2020 Active Employee 0.65% 0.65% Non-Employer Contributing Entity (State) 1.25% 1.25% Employers 0.75% 0.75% Federal/Private Funding remitted by Employers 1.25% 1.25%

FY 2020 Employer Contributions $ 2,343,413 FY 2020 Member Contributions 1,852,342 2019 Plan Year NECE On-behalf Contributions (State) 2,978,956

Included in 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. During the year ended June 30, 2020, the District paid $803 in retiree surcharges.

TRS-Care received supplemental appropriations from the State of Texas as the Non-Employer Contributing Entity in the amount of $73.6 million in fiscal year 2019.

House Bill 1, 86th Texas Legislature, Regular Session, 2019 was passed to provide an additional $230 million to continue to support the program. The District’s proportionate share of this amount totaled $607,467, representing the 10 months TRS received payments from September 1, 2019 through June 30, 2020. The remaining two months will be recognized in the following fiscal year.

Actuarial Assumptions: The total OPEB liability (TOL) in the August 31, 2018 actuarial valuation was rolled forward to August 31, 2019. 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 rates of retirement, termination, and disability, and most of the economic assumptions, including general inflation and salary increases, used in the OPEB valuation were identical to those used in the respective TRS pension valuation. The demographic assumptions were developed in the experience study performed for TRS for the period ending August 31, 2017.

The total OPEB liability in the August 31, 2019 actuarial valuation was determined using the actuarial assumptions below. Those assumptions and other inputs used for members of TRS-Care are identical to the assumptions used in the August 31, 2019 TRS pension actuarial valuation:

(Continued)

98 SOCORRO INDEPENDENT SCHOOL DISTRICT

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FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

Rates of Mortality General Inflation Rates of Retirement Wage Inflation Rates of Termination Salary Increases Rates of Disability Incidence

Additional Actuarial Methods and Assumptions:

Valuation Date August 31, 2018 rolled forward to August 31, 2019 Actuarial Cost Method Individual Entry Age Normal Inflation 2.30% Single Discount Rate 2.63% as of August 31, 2019 Salary Increases 3.05% to 9.05%, including inflation Demographic Assumptions The rates of mortality, retirement, termination and disability incidence are identical to the assumptions used to value the pension liabilities of TRS. The demographic assumptions were developed in the experience study performed for TRS for the period ending August 31, 2017. Mortality Assumption The active mortality rates were based on 90 percent of the RP-2014 Employee Mortality Tables for males and females, with full generational mortality using Scale BB. The post- retirement mortality rates for healthy lives 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). Health Care Trend Rates Initial medical trend rates of 10.25 percent for Medicare retirees and 7.5 percent for non-Medicare retirees. Initial prescription drug trend rate of 10.25 percent for all retirees. Initial trend rates decrease to an ultimate trend rate of 4.50 percent over a period of 13 years. Election Rates Normal Retirement: 65 percent participation prior to age 65 and 50 percent participation after age 65. Aging Factors Based on plan specific experience. Expenses Third-party administrative expenses related to the delivery of health care benefits are included in the age-adjusted claims costs. Other Information Ad hoc post-employment benefit changes None Notes Assumption changes include a discount rate change from 3.69% as of August 31, 2018 to 2.63% as of August 31, 2019, lower participation rates, and updates to the health care trend assumptions.

(Continued)

99 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

The impact of the Cadillac Tax that was expected to return in the plan’s fiscal year 2023 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 2.30 percent • 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 the 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. On December 20, 2019, the President signed into law a full repeal of the Cadillac Tax.

Discount Rate: A single discount rate of 2.63 percent was used to measure the total OPEB liability. There was a decrease of 1.06 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 in measuring the Net OPEB Liability. 1% Decrease in Current Single 1% Increase in Discount Rate Discount Rate Discount Rate 1.63% 2.63% 3.63% District’s proportionate share of the Net OPEB Liability: $ 180,365,137 $ 149,392,877 $ 125,163,247

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 health-care cost trend rate: Current Healthcare Trend 1% Decrease Rate 1% Increase District’s proportionate share of the Net OPEB Liability: $ 121,869,467 $ 149,392,877 $ 186,261,604

(Continued)

100 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEBs: At June 30, 2020, the District reported a liability of $149,392,877 for its proportionate share of the TRS’s Net OPEB Liability. This liability reflects a reduction for State OPEB support provided to the District. The amount recognized by the District 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 District were as follows:

The District’s proportionate share of the collective Net OPEB Liability $ 149,392,877 State’s proportionate share that is associated with the District 198,509,716 Total $ 347,902,593

The Net OPEB Liability was measured as of August 31, 2018 and rolled forward to August 31, 2019 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, 2018 through August 31, 2019.

At August 31, 2019, the employer’s proportion of the collective Net OPEB Liability was 0.3158997803%, which was an increase of 0.0060595106% from its proportion measured as of August 31, 2018.

Changes Since the Prior Actuarial Valuation: The following were changes to the actuarial assumptions or other inputs that affected measurement of the Total OPEB Liability since the prior measurement period:

• The discount rate changed from 3.69 percent as of August 31, 2018 to 2.63 percent as of August 31, 2019. This change increased the total OPEB liability.

• The health care trend rates were reset to better reflect the plan’s anticipated experience. This change increased the total OPEB liability.

• The participation rate for pre-65 retirees was lowered from 70 percent to 65 percent. The participation rate for post-65 retirees was lowered from 75 percent to 50 percent. 25 percent of pre-65 retirees are assumed to discontinue their coverage at age 65. There was no lapse assumption in the prior valuation. These changes decreased the total OPEB liability.

• The percentage of retirees who are assumed to have two-person coverage was lowered from 20 percent to 15 percent. In addition, the participation assumptions for the surviving spouses of employees that die while actively employed was lowered from 20 percent to 10 percent. These changes decreased the total OPEB liability.

There were no changes to benefit terms that affected measurement of the Total OPEB Liability during the measurement period.

(Continued)

101 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

For the year ended June 30, 2020, the District recognized OPEB expense of $5,231,901 and revenue of $5,231,901 for support provided by the State.

The amount of OPEB expense recognized by the District in the reporting period was $10,757,655.

At June 30, 2020, the District reported its proportionate share of the TRS’s deferred outflows of resources and deferred inflows of resources related to other post-employment benefits (OPEB) from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual economic experience $ 7,328,990 $ 24,446,560 Changes in actuarial assumptions 8,297,609 40,183,017 Difference between projected and actual investment earnings 16,117 - Changes in proportion and difference between the District’s contributions and the proportionate share of contributions 11,076,438 - Contributions paid to TRS subsequent to the measurement date 1,994,227 - Total $ 28,713,381 $ 64,629,577

The $1,994,227 reported as deferred outflows of resources related to OPEB resulting from District contributions subsequent to the measurement date will be recognized as a reduction of the net OPEB liability in the year ended June 30, 2021. The net amounts of the employer’s balances of deferred outflows and inflows of resources related to OPEB will be recognized in OPEB expense as follows:

OPEB Expense Year Ended June 30: Amount 2021 $ (6,728,216) 2022 (6,728,216) 2023 (6,733,433) 2024 (6,736,416) 2025 (6,735,600) Thereafter (4,248,542) $ (37,910,423)

(Continued)

102 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

Changes in Net OPEB Liability:

Beginning Ending Balance Additions Reductions Balance Net OPEB Liability $ 154,706,083 $ - $ 5,313,206 $ 149,392,877

Payable to the OPEB Plan: At June 30, 2020, the District reported a payable of $333,427 to the OPEB plan for the outstanding amount of contractually required contributions related to past service costs. Member contributions included in this payable were $151,258.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003, which was effective January 1, 2006, established prescription drug coverage for Medicare beneficiaries known as Medicare Part D. One of the provisions of Medicare Part D allows for the Texas Public School Retired Employee Group Insurance Program (TRS-Care) to receive retiree drug subsidy payments from the federal government to offset certain prescription drug expenditures for eligible TRS-Care participants. Medicare Part D contributions made on behalf of the District’s employees for the year ended June 30, 2020, 2019 and 2018 were $1,393,686, $999,431, and $772,105, respectively. These amounts are recorded as equal revenues and expenditures in the governmental fund financial statements of the District.

M. Healthcare Coverage

Beginning September 1, 2000, the District established a health self-insurance plan (the “plan”). The District contributes $575 per month for each full-time employee and for certain grandfathered employees to the plan, and the employees, at their option, authorize payroll withholdings to pay premiums for dependents’ health insurance coverage. A third party administrator acting on behalf of the District processes health claim payments.

Claims incurred after September 1, 2002 are subject to an individual stop-loss of $400,000 per participant annually. Individual employee health claims are self-insured by the District up to $400,000 annually and Cigna Employee Benefits provides stop-loss benefits above $400,000. At June 30, 2020, the District recorded current health claims of $2,962,526 in accrued expenses in the Health Insurance Fund, an Internal Service Fund, representing claims reported but not paid and claims incurred but not reported (IBNR).

These liabilities are based on requirements of the Governmental Accounting Standards Board, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred as of the date of the financial statements and the amount of loss can be reasonably estimated.

The latest financial statements available for Cigna Employee Benefits are filed with the Texas State Board of Insurance, Austin, Texas, and are public records. The District does not provide any post-retirement health benefits to its employees other than participation in TRS-Care.

(Continued)

103 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

Changes in the medical claims liability amounts as of June 30, 2020, 2019 and 2018 are presented below:

Current-Year Beginning of Claims and Balance Fiscal-Year Changes in Claim at Fiscal Liability Estimates Payments Year-End

2018 - Medical $ 3,825,101 $ 52,041,985 $ 51,136,901 $ 4,730,185 2019 - Medical $ 4,730,185 $ 48,802,380 $ 50,194,460 $ 3,338,105 2020 - Medical $ 3,338,105 $ 51,858,708 $ 52,234,287 $ 2,962,526

N. Self-Insured Workers’ Compensation

The District sponsored a modified self-insurance plan with respect to workers’ compensation claims through June 30, 2020. Effective October 1, 1999, the District obtained workers’ compensation insurance from a third party provider, Claims Administrative Services. All claims active after the effective date of the change will continue to be paid from the District’s self funded workers’ compensation program. The District has accrued $2,325,780 to cover these claims. Claims incurred are subject to a stop-loss of $1,544,491for the 2019-2020 plan year. The third party provider has performed an actuarial study.

This liability reported in the fund at June 30, 2020, is based on the requirements of the Governmental Accounting Standards Board. The Standards require that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred as of the date of the financial statements, and the amount of loss can be reasonably estimated. Because actual claim liabilities depend on such complex factors as inflation, changes in legal doctrines, and damage awards, the process used in computing the liability does not necessarily result in an exact amount.

Changes in the workers’ compensation claims liability amounts as of June 30, 2020, 2019 and 2018 are presented below:

Current-Year Beginning of Claims and Other Costs Balance Fiscal-Year Changes in Claim Billed to the at Fiscal Liability Estimates Payments Program Year-End

2018 - Workers’ Compensation $ 2,702,200 $ 1,531,723 $ 1,402,468 $ - $ 2,831,455 2019 - Workers’ Compensation $ 2,831,455 $ 1,406,058 $ 1,688,770 $ - $ 2,548,743 2020 - Workers’ Compensation $ 2,548,743 $ 1,441,712 $ 1,664,675 $ - $ 2,325,780

(Continued)

104 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

O. Unearned Revenue

Unearned revenue at year end consisted of the following:

Nonmajor Debt Service Governmental General Fund Fund Funds Total State Support $ - $ 759,842 $ - $ 759,842 State Grants - - 196,029 196,029 Federal Grants 321,273 - 12,458 333,731 Local Grants 1,301 - 421,050 422,351 Total Unearned Revenue $ 322,574 $ 759,842 $ 629,537 $ 1,711,953

P. Revenue from Local and Intermediate Sources

During the current year, revenues from local and intermediate sources consisted of the following:

Capital Nonmajor Total Internal Debt Projects 2019- Governmental Governmental Service General Fund Service Fund 2020 Funds Funds Funds

Property Taxes $ 103,612,684 $ 42,575,533 $ - $ - $ 146,188,217 $ - Penalties and Interest on Taxes 643,137 217,211 - - 860,348 - Tuition and Fees 50,110 - - - 50,110 - Investment Earnings 1,050,169 758,328 5,674,101 311,587 7,794,185 - Rent 169,410 - - 8,247 177,657 - Insurance Recovery 35,005 - - - 35,005 - Food Service Activity - - - 1,756,660 1,756,660 - Athletic Activities 268,928 - - 7,196 276,124 - Extracurricular 51,648 - - 48,447 100,095 - Other Local Sources 624,723 94 - 292,882 917,699 - Print Shop - - - - - 400,750 Workers’ Compensation - - - - - 2,151,131 Health Care Insurance - - - - - 50,417,567

Total $ 106,505,814 $ 43,551,166 $ 5,674,101 $ 2,425,019 $ 158,156,100 $ 52,969,448

(Continued)

105 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

Q. Fund Balances

As of June 30, 2020, fund balances are comprised of the following:

Capital Nonmajor Total Debt Projects Governmental Governmental General Fund Service Fund 2019-2020 Funds Funds Nonspendable: Inventories $ 1,526,643 $ - $ - $ 307,870 $ 1,834,513 Prepaid Items 44,998 - - - 44,998 Restricted: Federal or State Funds Grants Restriction - - - 6,096,924 6,096,924 Capital Acquisition and Contractual Obligation - - 349,735,923 96,907 349,832,830 Retirement of Long-Term Debt - 65,091,181 - - 65,091,181 Other Restricted - - - - - Committed: Construction 5,203,706 - - - 5,203,706 Capital Expenditures for Equipment 1,589,962 - - - 1,589,962 Other 920,226 - - 300,785 1,221,011 Assigned: E-Rate Projects 3,260,947 - - - 3,260,947 Laptops 9,240,742 - - 9,240,742 Other Assigned 3,733,438 - - - 3,733,438 Unassigned Fund Balance 90,585,945 - - - 90,585,945

Total $ 116,106,607 $ 65,091,181 $ 349,735,923 $ 6,802,486 $ 537,736,197

R. Encumbrances

Encumbrance accounting is employed as an extension of formal budgetary integration for the general fund, special revenue funds, and capital projects funds. At June 30, 2020, certain amounts which were previously restricted, committed, or assigned for specific purposes have been encumbered in the governmental funds. Significant encumbrances included in governmental fund balances are as follows:

Encumbrances included in: Other Other Restricted Committed Assigned Fund Balance Fund Balance Fund Balance Total General Fund $ - $ - $ 12,974,180 $ 12,974,180 Nonmajor Governmental Funds 146,812 187,500 - 334,312 Capital Projects 2018-2020 Fund 133,742,376 - - 133,742,376 Total $ 133,889,188 $ 187,500 $ 12,974,180 $ 147,050,868

(Continued)

106 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

S. Litigation

The District is the defendant in a number of lawsuits arising principally in the normal course of operations. In the opinion of the administration, the outcome of these lawsuits will not have a material effect on the accompanying basic financial statements and accordingly, no provision has been accrued.

T. Construction and Other Significant Commitments and Contingencies

Construction Commitments The District had ongoing construction projects under non-cancelable contracts at June 30, 2020. Construction commitments as of June 30, 2020 were as follows:

Remaining Project Name Spent To Date Commitment Cactus Trails Elementary School $ 31,194,216 $ 1,478,964 New Combo School - Eastlake Area 5,739,219 1,535,100 New Student Activities Complex 6,297,437 3,043,952 Technology Building 4,051,184 5,111,999 Socorro High School Reconstruction 31,926,120 86,055,599 Montwood High School Improvement 12,655,880 3,343,338 Americas High School Improvement 3,877,331 19,333,094 El Dorado High School Improvement 9,827,769 5,395,605 Multi-Purpose Rooms 5,151,093 8,444,338 Total $ 110,720,249 $ 133,741,989

Federal and State Funding

The District participates in numerous state and federal grant programs which are governed by various rules and regulations of the grantor agencies; therefore, to the extent that the District has not complied with the rules and regulations governing the grants, refunds of any money received may be required and the collectibility of any related receivable at June 30, 2020 may be impaired. In the opinion of administration, 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.

Rebatable Arbitrage - The Tax Reform Act of 1986 instituted certain arbitrage restrictions with respect to the issuance of tax-exempt bonds after August 31, 1986. Arbitrage regulations deal with the investment of all tax-exempt bond proceeds at an interest yield greater than the interest yield paid to bondholders. Generally, all interest paid to bondholders can be retroactively rendered taxable if applicable rebates are not reported and paid to the Internal Revenue Service (IRS) at least every five years. Arbitrage is evaluated and estimated on an annual basis by a third party arbitrage rebate service company. The company has estimated a liability of $34 for the District as of June 30, 2020.

(Continued)

107 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

U. Risk Management

The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The Board maintains insurance policies acquired from independent insurance carriers and from participation in a risk pool covering all structural property, automobiles, dishonesty, errors and omissions, boiler and machinery, personal property, and general liability.

The District is a member of the Texas Political Subdivisions Joint Self-Insurance Fund ("TPS"). TPS is governed by a nine-member Board of Trustees and is comprised of school districts, counties, cities and other political subdivisions throughout Texas. The District participates in the Property Casualty Self-Insurance Fund and coverage is through a guaranteed-cost plan. Members of this plan, who are non-assessable, combine their contributions to cover pooled losses and expenses. The required contribution for each guaranteed-cost member is based upon the rated manual contribution affected by a factor for individual loss experience, and the member's share of expenses. As required by interlocal agreement, TPS obtains specific excess of loss coverage over and above the self-insured retention stated in the interlocal agreement, so that members will not have joint and several liability beyond their required contribution. TPS is fully funded for losses, loss development and incurred but not reported losses (IBNR). There have been no significant reductions in insurance coverage from prior years and settlements have not exceeded insurance coverage in any of the previous three years.

For the year ended June 30, 2020, the District carried property insurance with a $600,000,000 limit with a $500,000 wind and hail deductible and a $100,000 deductible for all other losses. Automobile liability is limited to $100,000 per person and $300,000 per occurrence with a $10,000 deductible per occurrence. Automobile physical damage is limited to actual cash value with a $1,000 deductible per claim.

V. Related Party Transactions

From time to time, the District may enter into transactions with related parties through the normal course of business. If a Board member has a conflict of interest, proper documentation is completed and he/she is required to abstain from any discussion or voting regarding the matter. Management is not aware of any material related party transactions that occurred during the year ended June 30, 2020.

(Continued)

108 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

W. Related Organizations

The W. G. Barber Scholarship Fund (the "Fund"), a not-for-profit entity which was organized to provide scholarship funds, is a "related organization" of the District as defined by Governmental Accounting Standards Board Statement. The members of the board of the Fund are appointed by an outside taxpayer group. The Fund’s financial condition and results of operations are not included in the District’s financial statements.

The SISD Foundation for Excellence in Education (the “Foundation”), a not-for-profit entity which was organized to perform charitable, scientific and educational activities, is a “related organization” of the District as defined by Governmental Accounting Standards Board Statement. The members of the board of the Foundation are appointed by an outside taxpayer group. The Foundation’s financial condition and results of operations are not included in the District’s financial statements.

X. Budget Variance

The District transferred amounts out of the general fund to supplement the District’s self insurance health program and to eliminate a significant deficit in a nonmajor governmental fund for a capital project. The Board of Directors discussed the transfers but did not formally approve a budget amendment. As a result, the general fund budget to actual comparison in Exhibit G-1 reflects a significant negative variance in the transfers out line item.

Y. Subsequent Events

In July 2020, the District issued Unlimited Tax Refunding Bonds, Taxable Series 2020C in the amount of $34,675.000 to advance refund $8,340,000 and $26,785,000 of Unlimited Tax Refunding Bonds, Series 2012 and Series 2013A, respectively. Additionally, in October 2020, the District issued Unlimited Tax Refunding Bonds, Taxable Series 2020D in the amount of $26,564,993 to advance refund $26,565,000 of Unlimited Tax Refunding Bonds, Series 2014A.

The District started the 2020-2021 school year with virtual classes due to the continued coronavirus pandemic. Although the District has taken measures to meet the challenges related to this change, the full impact the pandemic will have on the District and its state allotments is not known at this time. The District is closely monitoring its budget and cash flows to address the needs of its students and personnel. The District is committed to continue fulfilling its mission to optimize its students’ academic, artistic, athletic, and interpersonal skills and its overarching goal of ensuring 100 percent of students graduate from high school prepared for the college and career of their choice.

(Continued)

109 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020

IV. DETAILED NOTES ON ALL FUNDS (Continued)

Z. New Accounting Pronouncements

The District has not completed the process of evaluating the impact on its financial position that will result from adopting the following Governmental Accounting Standards Board (GASB) Statements:

• GASB No. 84, Fiduciary Activities, effective for fiscal years beginning after December 15, 2019. GASB No. 84 establishes criteria for identifying fiduciary activities of all state and local governments.

• GASB No. 87, Leases, effective for fiscal years beginning after June 15, 2021. GASB No. 87 requires recognition of certain lease assets and liabilities for leases that previously were classified as operating leases.

• GASB No. 89, Accounting for Interest Cost incurred before the End of a Construction Period, effective for periods beginning after December 15, 2020. GASB No. 89 requires that interest costs incurred during a construction period be recognized as an expense for business-type activity.

• GASB No. 90, Majority Equity Interests - an Amendment of GASB Statements No. 14 and No. 61, effective for periods beginning after December 15, 2019. GASB No. 90 amends the method of reporting majority equity interest.

• GASB No. 91, Conduit Debt Obligations, effective for periods beginning after December 15, 2021. GASB No. 91 requires issuers to disclose information about their conduit debt obligations.

• GASB No. 94, Public-Private and Public-Public Partnerships and Availability Arrangements, effective for periods beginning after June 15, 2022. GASB No. 94 improves financial reporting by addressing issues related to public-private and public-public partnership arrangements as well as availability payment arrangements.

110

111

EXHIBIT G-1 SOCORRO INDEPENDENT SCHOOL DISTRICT SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2020

Data Actual Amounts Variance With (GAAP BASIS) Final Budget Control Budgeted Amounts Positive or Codes Original Final (Negative) REVENUES: 5700 Total Local and Intermediate Sources $ 106,570,544 $ 108,450,082 $ 106,505,814 $ (1,944,268) 5800 State Program Revenues 295,255,115 309,056,433 310,163,273 1,106,840 5900 Federal Program Revenues 6,295,850 6,846,906 5,648,694 (1,198,212) 5020 Total Revenues 408,121,509 424,353,421 422,317,781 (2,035,640) EXPENDITURES: Current: 0011 Instruction 252,523,928 263,525,947 251,973,838 11,552,109 0012 Instructional Resources and Media Services 6,208,930 6,344,493 6,033,653 310,840 0013 Curriculum and Instructional Staff Development 3,325,114 7,908,903 2,489,779 5,419,124 0021 Instructional Leadership 4,960,969 5,645,920 5,186,218 459,702 0023 School Leadership 27,861,127 28,512,522 27,806,592 705,930 0031 Guidance, Counseling, and Evaluation Services 12,406,906 11,873,431 11,628,498 244,933 0032 Social Work Services 1,978,554 1,146,506 996,017 150,489 0033 Health Services 5,415,154 7,007,839 5,573,834 1,434,005 0034 Student (Pupil) Transportation 17,720,982 19,036,461 15,313,911 3,722,550 0035 Food Services - 15,000 - 15,000 0036 Extracurricular Activities 11,609,805 12,428,548 10,311,677 2,116,871 0041 General Administration 9,836,110 10,554,715 9,775,110 779,605 0051 Facilities Maintenance and Operations 48,062,598 50,927,875 42,960,578 7,967,297 0052 Security and Monitoring Services 9,257,016 11,932,414 9,553,595 2,378,819 0053 Data Processing Services 5,207,652 8,451,747 7,260,442 1,191,305 0061 Community Services 1,187,778 1,210,741 792,397 418,344 Debt Service: 0071 Principal on Long-Term Debt 2,427,202 2,418,071 2,308,234 109,837 0072 Interest on Long-Term Debt 215,070 215,070 215,062 8 Capital Outlay: 0081 Facilities Acquisition and Construction 420,000 5,246,924 116,005 5,130,919 Intergovernmental: 0099 Other Intergovernmental Charges 2,183,000 2,183,000 1,812,229 370,771 6030 Total Expenditures 422,807,895 456,586,127 412,107,669 44,478,458

1100 Excess (Deficiency) of Revenues Over (Under) (14,686,386) (32,232,706) 10,210,112 42,442,818 Expenditures OTHER FINANCING SOURCES (USES): 7913 Capital Leases - 3,202,425 3,202,425 - 8911 Transfers Out (Use) - (2,688,769) (15,633,172) (12,944,403) 7080 Total Other Financing Sources (Uses) - 513,656 (12,430,747) (12,944,403) 1200 Net Change in Fund Balances (14,686,386) (31,719,050) (2,220,635) 29,498,415 0100 Fund Balance - July 1 (Beginning) 118,327,242 118,327,242 118,327,242 -

3000 Fund Balance - June 30 (Ending) $ 103,640,856 $ 86,608,192 $ 116,106,607 $ 29,498,415

112 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO REQUIRED SUPPLEMENTARY INFORMATION BUDGET AND ACTUAL - GENERAL FUND

FOR THE YEAR ENDED JUNE 30, 2020

Budgets and Budgetary Accounting

Each school district in Texas is required by law to prepare annually a budget of anticipated revenues and expenditures for the General fund, Child Nutrition Program, and Debt Service fund before the beginning of the fiscal year. The General Fund budget schedule is presented in Exhibit G-1. The Child Nutrition Program Special Revenue fund and the Debt Service fund budget schedules are presented in Exhibits J-2 and J-3, respectively.

For fiscal years beginning July 1, the Texas Education Code requires the budget to be prepared not later than June 20 and adopted by June 30 of each year. The District’s administration determines budgetary funding priorities and the budgets are prepared on the same basis of accounting that is used for reporting in accordance with generally accepted accounting principles. Final budget allocations are determined by the Board, which subsequently establishes a tax rate sufficient to support the approved budget in the General and Debt Service funds. The Child Nutrition Program appropriations are derived from the estimated meals expected to be served at the federal reimbursement rates plus anticipated program income. If the District has excess fund balance, appropriate measures are included in the adopted budget to spend down the fund balance to comply with fund balance requirements. The annual budgets, which are prepared on the modified accrual basis of accounting, must be adopted by the Board at a scheduled meeting after giving ten days public notice of the meeting. The District annually adopts legally authorized appropriated budgets for the General Fund, Child Nutrition Program, and Debt Service Fund. On June 18, 2019, the 2019-2020 budget was legally adopted by the Board.

The District’s administration performs budget reviews during the year in which budget requirements are re- evaluated and revisions are recommended to the Board. The Board must approve amendments to the budget at the fund and functional expenditure categories or revenue object accounts as defined by the TEA. Each amendment must have Board approval. As required by law, such amendments are made before the fact, are reflected in the official minutes of the Board, and are not made after fiscal year end.

Expenditures may not legally exceed budgeted appropriations, as amended, at the function level by fund. Unexpended appropriations lapse at year-end. The final amended budget is filed with the Texas Education Agency (TEA) through inclusion in the annual financial and compliance report.

Expenditures in Excess of Appropriations

During the fiscal year ended June 30, 2020, the District did not have any expenditures in excess of appropriations on all required legally adopted budgets.

However, as disclosed in Note X, the board discussed but did not formally approve all transfers out of the general fund, resulting in a significant negative variance in the transfers out line item.

113 EXHIBIT G-2 SOCORRO INDEPENDENT SCHOOL DISTRICT SCHEDULE OF THE DISTRICT'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TEACHER RETIREMENT SYSTEM OF TEXAS FOR THE YEAR ENDED JUNE 30, 2020

Measurement Year Ended August 31, 2019 2018 2017 2016 2015 2014

District's Proportion of the Net Pension Liability 0.2274022265% 0.2261893511% 0.2191102402% 0.2130511367% 0.2293804000% 0.1495030000%

District's Proportionate Share of Net Pension Liability $ 118,210,786 $ 124,500,108 $ 70,059,651 $ 80,508,857 $ 81,082,918 $ 39,934,319

States Proportionate Share of the Net Pension Liability 196,803,536 209,596,820 123,892,071 144,238,668 134,701,990 117,132,304 associated with the District

Total $ 315,014,322 $ 334,096,928 $ 193,951,722 $ 224,747,525 $ 215,784,908 $ 157,066,623

District's Covered Payroll $ 269,377,466 $ 258,158,763 $ 247,294,292 $ 233,095,586 $ 215,784,908 $ 157,066,623

District's Proportionate Share of the Net Pension Liability 43.88% 48.23% 28.33% 34.54% 37.58% 25.43% as a percentage of its Covered Payroll

Plan Fiduciary Net Position as a percentage of the Total Pension Liability 75.24% 73.74% 82.17% 78.00% 78.43% 83.25%

Note: GASB 68, paragraph 81 requires that the information in this schedule is presented for the Plan's measurement year (September 1st to August 31) as opposed to the District's fiscal year.

Note: Only six 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."

114 EXHIBIT G-3 SOCORRO INDEPENDENT SCHOOL DISTRICT SCHEDULE OF THE DISTRICT'S CONTRIBUTIONS FOR PENSIONS TEACHER RETIREMENT SYSTEM OF TEXAS FOR THE YEAR ENDED JUNE 30, 2020

Fiscal Year Ended June 30, 2020 2019 2018 2017 2016 2015

Contractually Required Contribution $ 8,714,309 $ 7,836,997 $ 7,727,004 $ 7,160,699 $ 6,724,910 $ 6,417,978

Contribution in Relation to the Contractually Required Contribution (8,714,309) (7,836,997) (7,727,004) (7,160,699) (6,724,910) (6,417,978)

Contribution Deficiency (Excess) $ - $ - $ - $ - $ - $ -

District's Covered Payroll $ 286,065,723 $ 267,371,895 $ 256,882,702 $ 244,483,007 $ 231,983,663 $ 223,231,017

Contributions as a percentage of Covered Payroll 3.05% 2.93% 3.01% 2.93% 2.90% 2.88%

Note: GASB 68, paragraph 81 requires that the information in this schedule is presented for the District's fiscal year as opposed to the Plan's measurement year.

Note: Only six 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."

115 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO REQUIRED SUPPLEMENTARY INFORMATION FOR PENSIONS

FOR THE YEAR ENDED JUNE 30, 2020

Changes of Benefit Terms

There were no changes of benefit terms that affected measurement of the total pension liability during the measurement period.

Changes of Assumptions

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 single discount rate as of August 31, 2018 was a blended rate of 6.907 percent and that has changed to the long-term rate of return of 7.25 percent as of August 31, 2019.

• With the enactment of SB 3 by the 2019 Texas Legislature, an assumption has been made about how this would impact future salaries. It is assumed that eligible active members will each receive a $2,700 increase in fiscal year 2020. This is in addition to the salary increase expected in the actuarial assumptions.

• The Texas legislature approved funding for a 13th check. All eligible members retired as of December 31, 2018 will receive an extra annuity check in September 2019 in either the matching amount of their monthly annuity payment or $2,000, whichever is less.

116 EXHIBIT G-4 SOCORRO INDEPENDENT SCHOOL DISTRICT SCHEDULE OF THE DISTRICT'S PROPORTIONATE SHARE OF THE NET OPEB LIABILITY TEACHER RETIREMENT SYSTEM OF TEXAS FOR THE YEAR ENDED JUNE 30, 2020

Measurement Year Ended August 31, 2019 2018 2017

District's Proportion of the Net OPEB Liability 0.3158997803% 0.3098402697% 0.2937479744%

District's Proportionate Share of the Net OPEB Liability $ 149,392,877 $ 154,706,083 $ 127,739,975

State's Proportionate Share of the Net OPEB Liability associated with the District 198,509,716 219,429,133 191,146,500

Total $ 347,902,593 $ 374,135,216 $ 318,886,475

District's Covered Payroll $ 269,337,379 $ 258,158,763 $ 247,294,292

District's Proportionate Share of the Net OPEB Liability 55.47% 59.93% 51.66% as a percentage of its Covered Payroll

Plan Fiduciary Net Position as a percentage of the Total OPEB Liability 2.66% 1.57% 0.91%

Note: GASB 75, paragraph 97 requires that the information in this schedule be presented for the Plan's measurement year (September 1st - August 31st) as opposed to the District's fiscal year.

Note: Only three years of data is presented in accordance with GASB 75, paragraph 245. "The information for all fiscal years 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."

117 EXHIBIT G-5 SOCORRO INDEPENDENT SCHOOL DISTRICT SCHEDULE OF THE DISTRICT'S OPEB CONTRIBUTIONS TEACHER RETIREMENT SYSTEM OF TEXAS FOR THE YEAR ENDED JUNE 30, 2020

Fiscal Year Ended June 30, 2020 2019 2018

Contractually Required Contribution $ 2,343,413 $ 2,212,300 $ 2,061,151

Contribution in Relation to the Contractually Required Contribution (2,343,413) (2,212,300) (2,061,151)

Contribution Deficiency (Excess) $ - $ - $ -

District's Covered Payroll $ 285,984,465 $ 267,402,206 $ 256,379,566

Contributions as a percentage of Covered Payroll 0.82% 0.83% 0.80%

Note: GASB 75, paragraph 97 requires that the information in this schedule be presented for the District's fiscal year as opposed to the Plan's measurement year.

Note: Only three years of data is presented in accordance with GASB 75, paragraph 245. "The information for all fiscal years 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."

118 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO REQUIRED SUPPLEMENTARY INFORMATION FOR OPEB

FOR THE YEAR ENDED JUNE 30, 2020

Changes of Benefit Terms Since the Prior Measurement Period

There were no changes of benefit terms that affected measurement of the total OPEB liability during the measurement period.

Changes Since the Prior Actuarial Valuation

The following were changes to the actuarial assumptions or other inputs that affected measurement of the Total OPEB liability since the prior measurement period:

• The discount rate changed from 3.69 percent as of August 31, 2018 to 2.63 percent as of August 31, 2019. This change increased the total OPEB liability.

• The health care trend rates were reset to better reflect the plan’s anticipated experience. This change increased the total OPEB liability.

• The participation rate for pre-65 retirees was lowered from 70 percent to 65 percent. The participation rate for post-65 retirees was lowered from 75 percent to 50 percent. 25 percent of pre-65 retirees are assumed to discontinue their coverage at age 65. There was no lapse assumption in the prior valuation. These changes decreased the total OPEB liability.

• The percentage of retirees who are assumed to have two-person coverage was lowered from 20 percent to 15 percent. In addition, the participation assumptions for the surviving spouses of employees that die while actively employed was lowered from 20 percent to 10 percent. These changes decreased the total OPEB liability.

119 This page is left blank intentionally.

120

121

NONMAJOR GOVERNMENTAL FUNDS

Special Revenue and Capital Projects Funds Description

Elementary and Secondary Education Act (ESEA) Title X, Part C - Homeless Funds are used to provide supplemental academic and related assistance to facilitate the academic success of students who are in homeless situations.

Elementary and Secondary Education Act (ESEA) Title I, Part A - Improving Basic Programs Funds are used to improve the teaching and learning of children who are at risk of not meeting challenging academic standards and who reside in areas with high concentrations of children from low-income families.

Elementary and Secondary Education Act (ESEA) Title I, Part C - Migrant Education Funds are used to support high quality education programs for migratory children.

Adult Education Federal Funds are used to provide adult education and literacy services.

Temporary Assistance for Needy Families (TANF) Funds are used to provide assistance to needy families with their children and end dependence of needy parents on government benefits.

Individuals with Disabilities Education Act (IDEA), Part B - Formula Funds are used to operate educational programs for children with disabilities.

Individuals with Disabilities Education Act (IDEA), Part B - Preschool Funds are used for preschool children with disabilities.

Child Nutrition Program Funds are used to provide nutritional meals to children within the District.

Career and Technical - Basic Grant Funds are used to promote advanced skills for competitive wages in high-demand careers.

Elementary and Secondary Education Act (ESEA) Title II, Part A - Supporting Effective Instruction Funds are used to increase academic achievement of all students by helping schools and school districts to improve teacher, principal, and other school leader quality.

Elementary and Secondary Education Act (ESEA) Title III, Part A English Language Acquisition Funds are used to improve the education of limited English proficient children by assisting the children to learn English and meet challenging State academic content and student academic achievement standards.

21st Century Community Learning Centers Funds are used to support the creation of community learning centers that provide academic enrichment opportunities during non-school hours for children, particularly students who attend high-poverty and low- performing schools.

Medicaid Administrative Claiming Program Funds are used for reimbursement of eligible administrative costs for activities attributed to the implementation of the Medicaid state plan.

PCS Grant Funds are used to provide academic support to military-connected students.

122 NONMAJOR GOVERNMENTAL FUNDS

Other Federal Special Revenue Funds Funds include the ESEA, Title IV, Part A grant to improve student’s academic achievement, the Summer School Limited English Proficiency (LEP) grant to fund summer school costs for limited English proficient students, and the Texas Hurricane Homeless Children & Youth Program to benefit students displaced by Hurricane Harvey.

Adult Basic Education State Funds are used to provide adult education and literacy services.

Advanced Placement Incentives Funds are awarded to specific campuses based on student scores on Advanced Placement examinations and are to be used for enhancement of academic programs at awarded campuses.

State Instructional Materials Fund Funds are used to provide instructional materials awarded under the textbook allotment.

Other State Special Revenue Funds Funds include the Summer Career and Technical Education Grant to promote practices and strategies that prepare students for college and career readiness, Math Achievement Stipends for teachers who participate in the Math Achievement Academy, and the Read to Succeed license plate program.

Campus Activity Funds Funds are used for activities benefitting students and staff and are not subject to recall by the Board of Trustees.

Project Lead the Way Funds are used to support the implementation of the Gateway Introduction to computer science units. This includes training expenses and purchasing computers and routers for the qualifying middle schools.

W.K. Kellogg Foundation Funds are used for the District's WIN Academy.

Dick’s Sporting Goods Foundation Funds are used to support athletic programming for grades 6-8.

Capital Projects Bonds 2011 - 2013 Funds are used to construct, equip and renovate school buildings in the District and pay any associated costs.

Capital Projects Bond Series 2006 Funds are used to construct, equip and renovate school buildings in the District and pay any associated costs.

123

SOCORRO INDEPENDENT SCHOOL DISTRICT COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2020 206 211 212 220 Data ESEA ESEA I, A ESEA Title I Adult Control Title X, Pt.C Improving Part C Education Codes Homeless Basic Program Migrant Federal

ASSETS 1110 Cash and Cash Equivalents $ - $ - $ - $ - 1240 Receivables from Other Governments 2,302 1,491,008 6,998 47,533 1260 Due from Other Funds - - - - 1290 Other Receivables - - - - 1300 Inventories - - - - 1000 Total Assets $ 2,302 $ 1,491,008 $ 6,998 $ 47,533

LIABILITIES 2110 Accounts Payable $ - $ 249,716 $ - $ 723 2160 Accrued Wages Payable - 301,814 1,631 12,176 2170 Due to Other Funds 2,302 939,478 5,367 34,634 2300 Unearned Revenue - - - - 2000 Total Liabilities 2,302 1,491,008 6,998 47,533

FUND BALANCES Nonspendable Fund Balance: 3410 Inventories - - - - Restricted Fund Balance: 3450 Federal or State Funds Grant Restriction - - - - 3470 Capital Acquisition and Contractural Obligation - - - - Committed Fund Balance: 3545 Other Committed Fund Balance - - - - 3000 Total Fund Balances - - - -

4000 Total Liabilities and Fund Balances $ 2,302 $ 1,491,008 $ 6,998 $ 47,533

124 EXHIBIT H-1 (Cont'd)

223 224 225 240 244 255 263 265 Child Career and ESEA II,A Title III, A 21st Century IDEA - Part B IDEA - Part B Nutrition Technical - Effective English Lang. Community TANF Formula Preschool Program Basic Grant Instruction Acquisition Learning

$ - $ - $ - $ 15,120,663 $ 512,129 $ - $ - $ - - 2,328,496 27,566 771,348 212,965 236,367 120,455 366,002 ------319,774 - - - - $ - $ 2,328,496 $ 27,566 $ 16,211,785 $ 725,094 $ 236,367 $ 120,455 $ 366,002

$ - $ 103,689 $ 414 $ 603,314 $ 20,950 $ - $ 26,781 $ 234,039 - 270,642 2,705 386,999 8,774 45,167 23,525 - - 1,953,814 24,244 8,619,866 695,370 191,200 70,149 131,963 - 351 203 239,715 - - - - - 2,328,496 27,566 9,849,894 725,094 236,367 120,455 366,002

- - - 307,870 - - - -

- - - 6,054,021 ------

------6,361,891 - - - -

$ - $ 2,328,496 $ 27,566 $ 16,211,785 $ 725,094 $ 236,367 $ 120,455 $ 366,002

125

SOCORRO INDEPENDENT SCHOOL DISTRICT COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2020 272 288 289 381 Data Medicaid Other Federal Adult Basic Control Admin. Claim Special Education Codes MAC PCS Grant Revenue Funds State

ASSETS 1110 Cash and Cash Equivalents $ - $ - $ - $ - 1240 Receivables from Other Governments 109,538 14,638 106,458 4,074 1260 Due from Other Funds - - - - 1290 Other Receivables - - - - 1300 Inventories - - - - 1000 Total Assets $ 109,538 $ 14,638 $ 106,458 $ 4,074

LIABILITIES 2110 Accounts Payable $ 15,668 $ - $ 89,823 $ - 2160 Accrued Wages Payable - - - 1,488 2170 Due to Other Funds 93,870 14,638 16,635 2,586 2300 Unearned Revenue - - - - 2000 Total Liabilities 109,538 14,638 106,458 4,074

FUND BALANCES Nonspendable Fund Balance: 3410 Inventories - - - - Restricted Fund Balance: 3450 Federal or State Funds Grant Restriction - - - - 3470 Capital Acquisition and Contractural Obligation - - - - Committed Fund Balance: 3545 Other Committed Fund Balance - - - - 3000 Total Fund Balances - - - -

4000 Total Liabilities and Fund Balances $ 109,538 $ 14,638 $ 106,458 $ 4,074

126 EXHIBIT H-1 (Cont'd)

397 410 429 461 481 482 483 Total Advanced State Other State Campus Dick's Nonmajor Placement Instructional Special Activity Project W. K. Kellog Sporting Good Special Incentives Materials Revenue Funds Funds Lead the Way Foundation Foundation Revenue Funds

$ 72,245 $ - $ 70,427 $ - $ - $ - $ - $ 15,775,464 - - 48,050 - - - - 5,893,798 - 55,584 28,479 411,751 5,967 37,272 150,000 689,053 - - - 1,924 - - - 1,924 ------319,774 $ 72,245 $ 55,584 $ 146,956 $ 413,675 $ 5,967 $ 37,272 $ 150,000 $ 22,680,013

$ - $ - $ - $ 112,890 $ - $ - $ - $ 1,458,007 9,516 - 26,337 - - - - 1,090,774 ------12,796,116 62,729 12,681 120,619 - 5,967 37,272 150,000 629,537 72,245 12,681 146,956 112,890 5,967 37,272 150,000 15,974,434

------307,870

- 42,903 - - - - - 6,096,924 ------

- - - 300,785 - - - 300,785 - 42,903 - 300,785 - - - 6,705,579

$ 72,245 $ 55,584 $ 146,956 $ 413,675 $ 5,967 $ 37,272 $ 150,000 $ 22,680,013

127 EXHIBIT H-1 SOCORRO INDEPENDENT SCHOOL DISTRICT COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2020 691 696 Total Total Data Capital Capital Nonmajor Nonmajor Control Projects Bond Projects Bond Capital Governmental Codes 2011-2013 Series 2006 Project Funds Funds

ASSETS 1110 Cash and Cash Equivalents $ 176,502 $ - $ 176,502 $ 15,951,966 1240 Receivables from Other Governments - - - 5,893,798 1260 Due from Other Funds - 96,907 96,907 785,960 1290 Other Receivables - - - 1,924 1300 Inventories - - - 319,774 1000 Total Assets $ 176,502 $ 96,907 $ 273,409 $ 22,953,422

LIABILITIES 2110 Accounts Payable $ - $ - $ - $ 1,458,007 2160 Accrued Wages Payable - - - 1,090,774 2170 Due to Other Funds 176,502 - 176,502 12,972,618 2300 Unearned Revenue - - - 629,537 2000 Total Liabilities 176,502 - 176,502 16,150,936

FUND BALANCES Nonspendable Fund Balance: 3410 Inventories - - - 307,870 Restricted Fund Balance: 3450 Federal or State Funds Grant Restriction - - - 6,096,924 3470 Capital Acquisition and Contractural Obligation - 96,907 96,907 96,907 Committed Fund Balance: 3545 Other Committed Fund Balance - - - 300,785 3000 Total Fund Balances - 96,907 96,907 6,802,486

4000 Total Liabilities and Fund Balances $ 176,502 $ 96,907 $ 273,409 $ 22,953,422

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129

SOCORRO INDEPENDENT SCHOOL DISTRICT COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2020

206 211 212 220 Data ESEA ESEA I, A ESEA Title I Adult Control Title X, Pt.C Improving Part C Education Codes Homeless Basic Program Migrant Federal REVENUES: 5700 Total Local and Intermediate Sources $ - $ - $ - $ - 5800 State Program Revenues - - - - 5900 Federal Program Revenues 44,449 10,869,928 88,015 659,887 5020 Total Revenues 44,449 10,869,928 88,015 659,887 EXPENDITURES: Current: 0011 Instruction 44,449 7,729,122 45,754 374,429 0012 Instructional Resources and Media Services - 267,532 - - 0013 Curriculum and Instructional Staff Development - 1,009,406 255 26,064 0021 Instructional Leadership - 46,717 39,667 - 0023 School Leadership - 8,941 - - 0031 Guidance, Counseling, and Evaluation Services - 5,881 - - 0032 Social Work Services - 687,500 - - 0033 Health Services - - - - 0035 Food Services - - - - 0036 Extracurricular Activities - - - - 0041 General Administration - 161,404 - - 0051 Facilities Maintenance and Operations - - 659 - 0052 Security and Monitoring Services - 102 - - 0061 Community Services - 953,323 1,680 259,394 Capital Outlay: 0081 Facilities Acquisition and Construction - - - - 6030 Total Expenditures 44,449 10,869,928 88,015 659,887

1100 Excess (Deficiency) of Revenues Over (Under) - - - - Expenditures OTHER FINANCING SOURCES (USES): 7915 Transfers In - - - - 1200 Net Change in Fund Balance - - - - 0100 Fund Balance - July 1 (Beginning) - - - -

3000 Fund Balance - June 30 (Ending) $ - $ - $ - $ -

130 EXHIBIT H-2 (Cont'd)

223 224 225 240 244 255 263 265 Child Career and ESEA II,A Title III, A 21st Century IDEA - Part B IDEA - Part B Nutrition Technical - Effective English Lang. Community TANF Formula Preschool Program Basic Grant Instruction Acquisition Learning

$ - $ - $ - $ 2,025,815 $ - $ - $ - $ - - - - 126,908 - - - - 75,630 7,804,335 80,576 25,005,919 544,630 1,357,823 950,521 1,309,613 75,630 7,804,335 80,576 27,158,642 544,630 1,357,823 950,521 1,309,613

75,630 3,794,057 80,576 - 438,366 - 937,950 256,710 ------8,763 - - 469,425 - - - 1,303,729 1,858 - - 247,940 - - - 54,094 - 921,032 ------3,236,391 - - 106,264 ------43,805 ------28,285,777 ------42,925 ------27,000 ------12,717 - - - - 1,950 61,946

------75,630 7,804,335 80,576 28,285,777 544,630 1,357,823 950,521 1,309,613

- - - (1,127,135) - - - -

- - - 9,072 ------(1,118,063) ------7,479,954 - - - -

$ - $ - $ - $ 6,361,891 $ - $ - $ - $ -

131

SOCORRO INDEPENDENT SCHOOL DISTRICT COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2020

272 288 289 381 Data Medicaid Other Federal Adult Basic Control Admin. Claim Special Education Codes MAC PCS Grant Revenue Funds State REVENUES: 5700 Total Local and Intermediate Sources $ - $ - $ - $ - 5800 State Program Revenues - - - 100,803 5900 Federal Program Revenues 157,242 169,495 448,491 - 5020 Total Revenues 157,242 169,495 448,491 100,803 EXPENDITURES: Current: 0011 Instruction - 92,855 241,545 63,692 0012 Instructional Resources and Media Services - - - - 0013 Curriculum and Instructional Staff Development - 32,302 168,986 - 0021 Instructional Leadership - 34,610 10,152 - 0023 School Leadership - - - - 0031 Guidance, Counseling, and Evaluation Services - - 27,808 - 0032 Social Work Services - - - - 0033 Health Services 157,242 - - - 0035 Food Services - - - - 0036 Extracurricular Activities - 9,728 - - 0041 General Administration - - - - 0051 Facilities Maintenance and Operations - - - - 0052 Security and Monitoring Services - - - - 0061 Community Services - - - 37,111 Capital Outlay: 0081 Facilities Acquisition and Construction - - - - 6030 Total Expenditures 157,242 169,495 448,491 100,803

1100 Excess (Deficiency) of Revenues Over (Under) - - - - Expenditures OTHER FINANCING SOURCES (USES): 7915 Transfers In - - - - 1200 Net Change in Fund Balance - - - - 0100 Fund Balance - July 1 (Beginning) - - - -

3000 Fund Balance - June 30 (Ending) $ - $ - $ - $ -

132 EXHIBIT H-2 (Cont'd)

397 410 429 461 481 482 483 Total Advanced State Other State Campus Dick's Nonmajor Placement Instructional Special Activity Project W. K. Kellog Sporting Good Special Incentives Materials Revenue Funds Funds Lead the Way Foundation Foundation Revenue Funds

$ - $ - $ - $ 63,889 $ 1,472 $ 251,088 $ - $ 2,342,264 16,122 6,607,798 98,284 - - - - 6,949,915 ------49,566,554 16,122 6,607,798 98,284 63,889 1,472 251,088 - 58,858,733

43 6,607,798 48,050 - - 115,529 - 20,946,555 ------276,295 16,079 - 50,234 - 1,472 86,999 - 3,166,809 - - - - - 5,000 - 1,359,212 ------8,941 ------3,376,344 ------687,500 ------201,047 ------28,285,777 - - - 36,067 - 43,560 - 132,280 ------188,404 - - - 145,615 - - - 146,274 - - - 5,772 - - - 5,874 - - - 4,503 - - - 1,332,624

------16,122 6,607,798 98,284 191,957 1,472 251,088 - 60,113,936

- - - (128,068) - - - (1,255,203)

------9,072 - - - (128,068) - - - (1,246,131) - 42,903 - 428,853 - - - 7,951,710

$ - $ 42,903 $ - $ 300,785 $ - $ - $ - $ 6,705,579

133 EXHIBIT H-2 SOCORRO INDEPENDENT SCHOOL DISTRICT COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2020

691 696 Total Total Data Capital Capital Nonmajor Nonmajor Control Projects Bond Projects Bond Capital Governmental Codes 2011-2013 Series 2006 Project Funds Funds REVENUES: 5700 Total Local and Intermediate Sources $ 82,753 $ 2 $ 82,755 $ 2,425,019 5800 State Program Revenues - - - 6,949,915 5900 Federal Program Revenues - - - 49,566,554 5020 Total Revenues 82,753 2 82,755 58,941,488 EXPENDITURES: Current: 0011 Instruction 3,020 - 3,020 20,949,575 0012 Instructional Resources and Media Services - - - 276,295 0013 Curriculum and Instructional Staff Development - - - 3,166,809 0021 Instructional Leadership - - - 1,359,212 0023 School Leadership 1,962 - 1,962 10,903 0031 Guidance, Counseling, and Evaluation Services - - - 3,376,344 0032 Social Work Services - - - 687,500 0033 Health Services - - - 201,047 0035 Food Services - - - 28,285,777 0036 Extracurricular Activities - - - 132,280 0041 General Administration - - - 188,404 0051 Facilities Maintenance and Operations - - - 146,274 0052 Security and Monitoring Services - - - 5,874 0061 Community Services - - - 1,332,624 Capital Outlay: 0081 Facilities Acquisition and Construction (140,630) - (140,630) (140,630) 6030 Total Expenditures (135,648) - (135,648) 59,978,288 1100 Excess (Deficiency) of Revenues Over (Under) 218,401 2 218,403 (1,036,800) Expenditures OTHER FINANCING SOURCES (USES): 7915 Transfers In 6,624,100 - 6,624,100 6,633,172 1200 Net Change in Fund Balance 6,842,501 2 6,842,503 5,596,372 0100 Fund Balance - July 1 (Beginning) (6,842,501) 96,905 (6,745,596) 1,206,114

3000 Fund Balance - June 30 (Ending) $ - $ 96,907 $ 96,907 $ 6,802,486

134 INTERNAL SERVICE FUNDS

Print Shop Fund The Print Shop Fund is used to account for the operations of the District's print shop. Revenues of the fund are derived by providing services to other departments within the District. Expenses include the day to day cost of operations of the print shop as well as depreciation of capital assets.

Workers' Compensation Fund The Workers' Compensation Fund is used to account for the operations of the District's workers' compensation insurance plan. Expenses of the plan include plan benefit payments to injured employees and charges incurred in administering the plan.

Health Care Insurance Fund The Health Care Insurance Fund is used to account for the operations of the District's employee health insurance plan, which is supported principally by employer and employee contributions. Expenses include plan benefit payments to medical providers and employees and charges incurred in administering the plan.

135 EXHIBIT H-3 SOCORRO INDEPENDENT SCHOOL DISTRICT COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS JUNE 30, 2020

752 753 754 Workers' Health Care Total Compensation Insurance Internal Print Shop Fund Fund Service Funds ASSETS Current Assets: Cash and Cash Equivalents $ 930,872 $ 546,760 $ 4,878,893 $ 6,356,525 Due from Other Funds - 4,908,647 11,355,126 16,263,773 Other Receivables - - 1,454,310 1,454,310 Inventories 32,986 - - 32,986 Total Current Assets 963,858 5,455,407 17,688,329 24,107,594 Noncurrent Assets: Capital Assets: Furniture and Equipment 473,505 - 19,172 492,677 Depreciation on Furniture and Equipment (401,386) - (1,623) (403,009) Total Noncurrent Assets 72,119 - 17,549 89,668

Total Assets 1,035,977 5,455,407 17,705,878 24,197,262 LIABILITIES Current Liabilities: Accounts Payable 10,147 - 782,184 792,331 Due to Other Funds 715,667 - - 715,667 Accrued Expenses - 2,325,780 2,962,526 5,288,306

Total Liabilities 725,814 2,325,780 3,744,710 6,796,304 NET POSITION Net Investment in Capital Assets 72,119 - 17,549 89,668 Unrestricted Net Position 238,044 3,129,627 13,943,619 17,311,290 Total Net Position $ 310,163 $ 3,129,627 $ 13,961,168 $ 17,400,958

136 EXHIBIT H-4 SOCORRO INDEPENDENT SCHOOL DISTRICT COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2020 752 753 754 Workers' Health Care Total Compensation Insurance Internal Print Shop Fund Fund Service Funds OPERATING REVENUES: Local and Intermediate Sources $ 400,750 $ 2,151,131 $ 50,417,567 $ 52,969,448 Total Operating Revenues 400,750 2,151,131 50,417,567 52,969,448 OPERATING EXPENSES: Payroll Costs 227,408 188,104 823,740 1,239,252 Professional and Contracted Services 113,991 1,976,204 53,525,711 55,615,906 Supplies and Materials 82,392 - 242,260 324,652 Other Operating Costs - - 8,145 8,145 Depreciation Expense 17,466 - 1,623 19,089 Total Operating Expenses 441,257 2,164,308 54,601,479 57,207,044

Operating Income (Loss) (40,507) (13,177) (4,183,912) (4,237,596)

NONOPERATING REVENUES (EXPENSES): Earnings from Temporary Deposits & Investments - 5,864 47,976 53,840 Total Nonoperating Revenues (Expenses) - 5,864 47,976 53,840 Income (Loss) Before Transfers (40,507) (7,313) (4,135,936) (4,183,756)

Transfer In - - 9,000,000 9,000,000

Change in Net Position (40,507) (7,313) 4,864,064 4,816,244 Total Net Position - July 1 (Beginning) 350,670 3,136,940 9,097,104 12,584,714

Total Net Position June 30 (Ending) $ 310,163 $ 3,129,627 $ 13,961,168 $ 17,400,958

137 EXHIBIT H-5 SOCORRO INDEPENDENT SCHOOL DISTRICT COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2020

752 753 754 Workers' Health Care Total Compensation Insurance Internal Print Shop Fund Fund Service Funds

Cash Flows from Operating Activities: Cash Received from Assessments - Other Funds $ 297,087 $ 2,470,846 $ 54,147,336 $ 56,915,269 Cash Payments to Employees for Services - (188,104) (823,740) (1,011,844) Cash Payments for Insurance Claims - (2,199,167) (53,472,615) (55,671,782) Cash Payments for Suppliers - - (242,260) (242,260) Cash Payments for Other Operating Expenses - - (8,145) (8,145) Net Cash Provided by (Used for) Operating Activities 297,087 83,575 (399,424) (18,762) Cash Flows from Capital & Related Financing Activities: Acquisition of Capital Assets - - (19,172) (19,172) Cash Flows from Investing Activities: Interest and Dividends on Investments - 5,864 47,976 53,840

Net Increase (Decrease) in Cash and Cash Equivalents 297,087 89,439 (370,620) 15,906 Cash and Cash Equivalents at Beginning of Year 633,785 457,321 5,249,513 6,340,619

Cash and Cash Equivalents at End of Year $ 930,872 $ 546,760 $ 4,878,893 $ 6,356,525

Reconciliation of Operating Income (Loss) to Net Cash Provided by (Used for) Operating Activities: Operating Income (Loss): $ (40,507) $ (13,177) $ (4,183,912) $ (4,237,596)

Adjustments to Reconcile Operating Income to Net Cash Provided by (Used For) Operating Activities: Depreciation 17,466 - 1,623 19,089 Effect of Increases and Decreases in Current Assets and Liabilities: Decrease (increase) in Receivables - - (838,028) (838,028) Decrease (increase) in Inventories 145 - - 145 Decrease (increase) in Due From Other Funds - 319,715 4,567,797 4,887,512 Increase (decrease) in Accounts Payable 9,187 - 428,675 437,862 Increase (decrease) in Due To Oher Funds 310,796 - - 310,796 Increase (decrease) in Accrued Expenses - (222,963) (375,579) (598,542) Net Cash Provided by (Used for) Operating Activities $ 297,087 $ 83,575 $ (399,424) $ (18,762)

Noncash Investing, Capital and Financing Activities: Noncapital Financing Activity - Transfer In - - 9,000,000 9,000,000

138 AGENCY FUNDS

Student Activity Fund Accounts for assets held for various student groups throughout the District.

139 EXHIBIT H-6 SOCORRO INDEPENDENT SCHOOL DISTRICT COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES ALL AGENCY FUNDS JUNE 30, 2020 BALANCE BALANCE JULY 1 JUNE 30 2019 ADDITIONS DEDUCTIONS 2020 STUDENT ACTIVITY FUND Assets: Cash and Temporary Investments $ 2,168,465 $ 122,711 $ - $ 2,291,176 Other Receivables 5,495 26,771 - 32,266 Total Assets $ 2,173,960 $ 149,482 $ - $ 2,323,442 Liabilities: Accounts Payable $ 595,057 $ - $ 42,818 $ 552,239 Due to Other Governments 113,981 - 5,807 108,174 Due to Student Groups 1,464,922 198,107 - 1,663,029 Total Liabilities $ 2,173,960 $ 198,107 $ 48,625 $ 2,323,442

140

141

SOCORRO INDEPENDENT SCHOOL DISTRICT SCHEDULE OF DELINQUENT TAXES RECEIVABLE FISCAL YEAR ENDED JUNE 30, 2020

(1) (2) (3) Assessed/Appraised Last 10 Years Ended Tax Rates Value for School Maintenance Debt Service Tax Purposes

2011 and prior years Various Various $ Various

2012 0.946140 0.263654 7,375,023,946

2013 0.976140 0.298654 7,785,663,642

2014 0.976140 0.298654 8,152,485,351

2015 0.976140 0.298654 8,547,469,999

2016 0.976140 0.298654 8,556,307,818

2017 0.976140 0.298654 8,968,184,649

2018 0.981640 0.293154 9,418,863,748

2019 0.981640 0.398954 10,224,248,408

2020 (School year under audit) 0.970000 0.398954 10,842,993,887

1000 TOTALS

142 EXHIBIT J-1

(10) (20) (31) (32) (40) (50) Beginning Current Entire Ending Balance Year's Maintenance Debt Service Year's Balance 7/1/2019 Total Levy Collections Collections Adjustments 6/30/2020

$ 2,059,056 $ - $ 39,449 $ 9,170 $ (69,969) $ 1,940,468

275,601 - 11,787 3,284 - 260,530

301,016 - 16,722 5,116 (293) 278,885

373,854 - 31,331 9,585 1,075 334,013

421,098 - 54,705 16,737 19,413 369,069

439,020 - 70,529 21,579 30,726 377,638

564,114 - 6,839 2,092 (88,559) 466,624

817,576 - (183,673) (54,853) (454,716) 601,386

2,942,524 - 464,509 188,782 (1,011,589) 1,277,644

- 148,435,599 102,986,981 42,357,800 - 3,090,818

$ 8,193,859 $ 148,435,599 $ 103,499,179 $ 42,559,292 $ (1,573,912) $ 8,997,075

143 EXHIBIT J-2 SOCORRO INDEPENDENT SCHOOL DISTRICT SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - CHILD NUTRITION PROGRAM FOR THE YEAR ENDED JUNE 30, 2020

Data Actual Amounts Variance With (GAAP BASIS) Final Budget Control Budgeted Amounts Positive or Codes Original Final (Negative) REVENUES: 5700 Total Local and Intermediate Sources $ 3,872,639 $ 3,872,639 $ 2,025,815 $ (1,846,824) 5800 State Program Revenues 131,742 131,742 126,908 (4,834) 5900 Federal Program Revenues 27,971,507 27,971,507 25,005,919 (2,965,588)

5020 Total Revenues 31,975,888 31,975,888 27,158,642 (4,817,246) EXPENDITURES: Current: 0035 Food Services 32,707,377 33,520,523 28,285,777 5,234,746 Capital Outlay: 0081 Facilities Acquisition and Construction - 146,812 - 146,812

6030 Total Expenditures 32,707,377 33,667,335 28,285,777 5,381,558

1100 Excess (Deficiency) of Revenues Over (Under) (731,489) (1,691,447) (1,127,135) 564,312 Expenditures OTHER FINANCING SOURCES (USES): 7915 Transfers In - - 9,072 9,072 1200 Net Change in Fund Balances (731,489) (1,691,447) (1,118,063) 573,384 0100 Fund Balance - July 1 (Beginning) 7,479,954 7,479,954 7,479,954 -

3000 Fund Balance - June 30 (Ending) $ 6,748,465 $ 5,788,507 $ 6,361,891 $ 573,384

144 EXHIBIT J-3 SOCORRO INDEPENDENT SCHOOL DISTRICT SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - DEBT SERVICE FUND FOR THE YEAR ENDED JUNE 30, 2020

Data Actual Amounts Variance With (GAAP BASIS) Final Budget Control Budgeted Amounts Positive or Codes Original Final (Negative) REVENUES: 5700 Total Local and Intermediate Sources $ 42,016,750 $ 42,016,750 $ 43,551,166 $ 1,534,416 5800 State Program Revenues 19,569,895 19,569,895 19,020,963 (548,932)

5020 Total Revenues 61,586,645 61,586,645 62,572,129 985,484 EXPENDITURES: Debt Service: 0071 Principal on Long-Term Debt 20,350,360 20,900,360 20,899,966 394 0072 Interest on Long-Term Debt 41,149,640 43,213,041 35,252,618 7,960,423 0073 Bond Issuance Cost and Fees 25,750 1,282,069 1,267,028 15,041

6030 Total Expenditures 61,525,750 65,395,470 57,419,612 7,975,858

1100 Excess (Deficiency) of Revenues Over (Under) 60,895 (3,808,825) 5,152,517 8,961,342 Expenditures OTHER FINANCING SOURCES (USES): 7901 Refunding Bonds Issued - 118,119,142 118,119,142 - 7916 Premium or Discount on Issuance of Bonds - 23,076,376 23,076,376 - 8940 Payment to Bond Refunding Escrow Agent (Use) - (137,325,797) (137,325,797) -

7080 Total Other Financing Sources (Uses) - 3,869,721 3,869,721 -

1200 Net Change in Fund Balances 60,895 60,896 9,022,238 8,961,342 0100 Fund Balance - July 1 (Beginning) 56,068,943 56,068,943 56,068,943 -

3000 Fund Balance - June 30 (Ending) $ 56,129,838 $ 56,129,839 $ 65,091,181 $ 8,961,342

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146

147

STATISTICAL SECTION (Unaudited)

The statistical section of the Socorro Independent School District’s Comprehensive Annual Financial Report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the District’s economic condition and overall financial health. To assist financial statement users, the information contained within this section is categorized as follows:

Page

Financial Trends 149 These schedules contain trend information to assist users in understanding how the District’s financial position has changed over time.

Revenue Capacity Information 157 These schedules contain information to assist users in understanding the factors affecting the District’s ability to generate its own-source revenues.

Debt Capacity Information 165 These schedules contain information to assist users in understanding and assessing the District’s debt burden and its ability to issue additional debt in the future.

Demographic and Economic Information 169 These schedules contain information to assist users in understanding the socioeconomic environment in which the District operates and to provide information that facilitates comparisons of financial statement information over time with other school districts.

Operating Information 173 These schedules contain information intended to provide contextual information about the District’s operations and resources to assist readers in using the financial statement information to understand and assess the District’s economic condition.

148 FINANCIAL TRENDS

149 This page is left blank intentionally.

150 Socorro Independent School District TABLE I Net Position by Component, Last Ten Fiscal Years - Governmentwide (Accrual basis of accounting) (Unaudited)

Fiscal Year

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Governmental activities Net investment in capital assets $ 78,283,290 $ 85,389,737 $ 96,415,958 $ 93,106,812 $ 103,814,373 $ 121,775,112 $ 128,596,076 $ 142,171,685 $ 170,270,784 $ 196,404,746 Restricted 43,002,988 75,633,238 117,111,398 57,078,692 44,740,430 43,333,842 43,514,529 40,822,878 45,316,605 41,706,072 Unrestricted 83,817,178 70,495,600 43,047,812 119,379,823 92,145,593 83,591,596 74,046,529 (107,820,507) (121,777,655) (130,439,893)

Total primary government net position $ 205,103,456 $ 231,518,575 $ 256,575,168 $ 269,565,327 $ 240,700,396 $ 248,700,550 $ 246,157,134 $ 75,174,056 $ 93,809,734 $ 107,670,925

Source: Socorro ISD Comprehensive Annual Financial Report - Exhibit A-1

151 Socorro Independent School District Expenses, Program Revenues, and Net (Expense)/Revenue - Governmentwide Last Ten Fiscal Years (Accrual basis of accounting) (Unaudited) Fiscal Year

2011 2012 2013 2014 2015 2016 Expenses Governmental Activities: 11 Instruction $ 172,691,734 $ 191,359,973 $ 189,575,371 $ 208,093,646 $ 215,047,420 $ 236,823,093 12 Instructional Resources and Media Services 4,281,714 4,692,096 4,980,460 5,540,411 5,948,677 5,785,662 13 Curriculum and Staff Development 4,366,431 4,450,904 3,992,242 5,223,546 6,041,629 5,796,955 21 Instructional Leadership 3,540,445 4,008,255 4,055,919 3,881,917 3,826,227 4,459,986 23 School Leadership 16,807,102 20,491,052 20,903,839 22,627,177 22,629,086 24,880,919 31 Guidance, Counseling and Evaluation Services 9,690,305 11,036,181 10,436,157 11,254,017 11,836,587 13,305,337 32 Social Work Services 1,367,044 1,754,274 1,839,832 2,115,636 2,202,739 2,228,182 33 Health Services 3,140,228 3,689,483 3,736,256 3,961,742 4,280,637 4,337,961 34 Student (Pupil) Transportation 9,012,330 10,408,184 10,482,364 10,707,403 10,811,115 12,051,482 35 Food Services 14,415,965 20,153,383 21,706,584 24,887,768 26,166,748 29,019,198 36 Extracurricular Activities 8,528,740 9,827,656 10,256,576 10,590,171 10,244,767 11,826,722 41 General Administration 5,736,942 7,287,201 7,003,700 7,736,784 7,966,388 8,629,054 51 Plant Maintenance and Operations 27,977,960 34,167,377 34,141,536 38,318,907 40,924,894 42,755,862 52 Security and Monitoring Services 4,952,023 5,545,398 5,468,649 6,479,803 6,638,584 8,021,323 53 Data Processing Services 2,804,134 5,186,587 4,248,684 4,550,792 4,832,359 6,070,364 61 Community Services 1,801,828 1,759,981 1,890,681 1,825,968 1,982,052 2,005,244 72 Debt Service - Interest on Long Term Debt 12,565,982 16,483,403 21,710,443 23,736,581 21,956,976 22,480,958 73 Debt Service- Bond Issuance Cost 4,802,090 855,041 314,084 1,070,535 1,013,466 313,685 81 Capital Outlay ------99 Other Intergovernmental Charges 1,095,690 1,278,526 1,281,559 1,448,210 1,444,682 1,496,015 Total Governmental Activities 309,578,687 354,434,955 358,024,936 394,051,014 405,795,033 442,288,002

Business Type Activities 01 Other Miscellaneous Activities ------02 Community Education ------03 Community Education TX WCP ------Total Business Type Activities ------

Total Primary Government 309,578,687 354,434,955 358,024,936 394,051,014 405,795,033 442,288,002

Program Revenues Charges for Services: 11 Instruction 74,084 233,872 269,956 636,181 537,054 663,213 12 Instructional Resources and Media Services ------13 Curriculum and Staff Development - 131,915 - - - - 21 Instructional Leadership ------23 School Leadership ------31 Guidance, Counseling and Evaluation Services ------32 Social Work Services ------33 Health Services 3,884 - 11,398 - - - 34 Student (Pupil) Transportation ------35 Food Services 3,462,723 3,622,965 3,713,617 3,622,585 3,668,330 3,436,136 36 Extracurricular Activities 265,985 455,785 405,419 449,561 428,471 383,192 41 General Administration - - 157,751 - - - 51 Plant Maintenance and Operations 167,597 164,415 56,989 222,037 222,329 203,863 52 Security and Monitoring Services ------53 Data Processing Services - 103,238 102,580 - - - 61 Community Services - 10,194 3,400 5,630 3,063 302 72 Debt Service - Interest on Long Term Debt - - 51,290 - 12,343 - 73 Debt Service- Bond Issuance Cost ------81 Capital Outlay ------99 Other Intergovernmental Charges ------Operating Grants and Contributions 85,133,540 85,463,445 71,645,081 85,051,072 87,450,696 98,267,509 Total Primary Government Revenues 89,107,813 90,185,829 76,417,481 89,987,066 92,322,286 102,954,215

Business Type Activities 01 Other Miscellaneous Activities ------02 Community Education ------03 Community Education TX WCP ------Total Business Type Activities ------

Net (Expense)/Revenue Total Primary Government Net Expense $ (220,470,874) $ (264,249,126) $ (281,607,455) $ (304,063,948) $ (313,472,747) $ (339,333,787) Source: Socorro ISD Comprehensive Annual Financial Report - Exhibit B-1

152 TABLE II

Fiscal Year

2017 2018 2019 2020

$ 245,136,536 $ 174,409,612 $ 270,143,800 $ 306,872,952 5,876,447 4,350,202 6,483,261 7,072,496 5,929,543 4,320,718 6,319,533 6,251,848 4,502,281 3,276,090 6,500,459 7,037,210 25,223,450 17,702,641 28,017,491 30,915,758 13,958,934 8,917,503 15,651,712 17,040,394 2,318,241 2,022,349 1,755,081 1,724,701 4,372,548 3,359,353 5,616,729 6,344,512 13,509,962 11,589,330 15,615,405 15,662,423 29,519,564 23,651,209 29,583,694 30,281,852 12,293,967 9,514,841 13,006,217 12,465,789 9,104,144 7,136,455 10,173,836 10,854,607 47,850,714 41,818,067 48,808,502 47,832,395 8,121,656 6,465,555 8,748,755 10,298,426 6,578,889 4,527,601 5,863,503 7,100,951 2,248,658 1,387,447 2,191,672 2,382,437 20,450,117 17,716,885 25,462,816 30,199,313 14,376 2,883,608 1,188,528 2,073,878 - - - - 1,616,428 1,728,325 1,898,718 1,812,229 458,626,455 346,777,791 503,029,712 554,224,171

------

458,626,455 346,777,791 503,029,712 554,224,171

301,572 569,129 738,931 538,180 ------3,355,392 3,310,461 2,959,243 1,796,854 364,932 563,024 526,796 439,921 - - - - 199,024 189,014 190,405 159,891 ------94,820,149 19,585,455 112,147,661 119,151,202 99,041,069 24,217,083 116,563,036 122,086,048

------

$ (359,585,386) $ (322,560,708) $ (386,466,676) $ (432,138,123)

153 Socorro Independent School District TABLE III General Revenues and Total Change in Net Position - Governmentwide Last Ten Fiscal Years (Accrual basis of accounting) (Unaudited)

Fiscal Year

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Net (Expense)/Revenue Total primary government net expense $ (220,470,874) $ (264,249,126) $ (281,607,455) $ (304,063,948) $ (313,472,747) $ (339,333,787) $ (359,585,386) $ (322,560,708) $ (386,466,676) $ (432,138,123)

General Revenues and Other Changes in Net Position Governmental activities: Taxes: Property Taxes, Levied for General Purposes 69,162,187 69,542,757 76,131,859 78,160,576 82,078,565 81,748,268 86,050,715 91,868,210 99,453,161 104,407,344 Property Taxes, Levied for Debt Service 16,350,024 19,187,858 22,905,035 23,795,343 25,065,282 25,078,716 26,264,873 27,195,198 40,311,625 42,589,971 State Aid - Formula Grants 175,385,472 201,152,507 204,860,507 217,548,797 221,382,302 238,770,425 240,545,526 250,561,366 256,934,195 288,675,966 Grants and Contibutions not restricted - - - 111,928 ------Investment Earnings 121,711 184,516 328,978 180,086 160,981 359,782 1,535,383 3,701,599 7,494,500 7,848,025 Miscellaneous Local and Intermediate Revenue 2,069,441 979,017 1,093,382 1,838,904 1,797,266 1,376,750 2,744,104 2,481,902 908,873 2,478,008 Special Item - Insurance and Capital Assets - - 1,344,287 - - - - - Special Item - Gain on Sale of Assets ------81,369 - Total Primary Government 263,088,835 291,046,655 306,664,048 321,635,634 330,484,396 347,333,941 357,221,970 375,808,275 405,102,354 445,999,314

Change in Net Position Total Primary Government $ 42,617,961 $ 26,797,529 $ 25,056,593 $ 17,571,686 $ 17,011,649 $ 8,000,154 $ (2,363,416) $ 53,247,567 $ 18,635,678 $ 13,861,191

Source: Socorro ISD Comprehensive Annual Financial Report - Exhibit B-1

154 Socorro Independent School District TABLE IV Fund Balances, Governmental Funds Last Ten Fiscal Years (Modified accrual basis of accounting) (Unaudited)

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

General Fund Nonspendable $ 1,062,850 $ 1,262,694 $ 1,209,764 $ 1,209,764 $ 1,427,574 $ 1,177,593 $ 1,466,574 $ 1,636,975 $ 1,612,422 $ 1,571,641 Assigned - - 4,579,388 4,978,495 4,832,740 7,521,633 6,789,877 5,021,747 5,953,749 16,235,127 Committed - 4,508,334 1,758,902 857,418 10,600,000 18,956,651 8,815,062 8,021,768 7,718,184 7,713,894 Unassigned 64,189,872 69,303,239 78,317,217 94,906,327 96,484,324 100,594,592 104,228,513 104,603,944 103,042,887 90,585,945 Restricted ------302,843 150,256 - - Unreserved ------

Total General Fund $ 65,252,722 $ 75,074,267 $ 85,865,271 $ 101,952,004 $ 113,344,638 $ 128,250,469 $ 121,602,869 $ 119,434,690 $ 118,327,242 $ 116,106,607

All Other Governmental Funds Nonspendable $ 342,253 $ 356,974 $ 278,934 $ 360,223 $ 340,915 $ 468,303 $ 375,860 $ 330,168 $ 381,146 $ 307,870 Assigned ------Committed - - 877,017 919,321 906,991 930,453 508,485 463,033 428,853 300,785 Unassigned ------(6,842,501) - Restricted 42,660,735 75,276,264 115,955,447 155,639,397 98,615,697 79,341,077 77,586,026 248,352,665 376,869,917 421,020,935 Unreserved ------

Total All Other Governmental Funds $ 43,002,988 $ 75,633,238 $ 117,111,398 $ 156,918,941 $ 99,863,603 $ 80,739,833 $ 78,470,371 $ 249,145,866 $ 370,837,415 $ 421,629,590

Total Governmental Funds $ 108,255,710 $ 150,707,505 $ 202,976,669 $ 258,870,945 $ 213,208,241 $ 208,990,302 $ 200,073,240 $ 368,580,556 $ 489,164,657 $ 537,736,197

Source: Socorro ISD Comprehensive Annual Financial Report - Exhibit C-1

Note: The District adopted the provisions of GASB 54 in 2011. Therefore, the fund balances beginning in 2011 conform with GASB 54.

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156 REVENUE CAPACITY INFORMATION

157 Socorro Independent School District TABLE V Governmental Funds Revenues Last Ten Fiscal Years (Modified accrual basis of accounting) (Unaudited)

Fiscal Year

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Local and Intermediate Services $ 88,638,815 $ 94,715,826 $ 106,340,512 $ 108,943,949 $ 113,884,836 $ 113,427,978 $ 121,163,131 $ 129,649,011 $ 152,715,747 $ 158,156,100

State Revenues 207,841,727 233,749,888 234,363,737 257,911,653 261,557,162 280,535,135 281,094,039 287,870,728 298,696,331 336,134,151

Federal Revenues 52,677,285 52,863,064 42,141,851 44,800,144 47,275,836 49,350,215 51,623,851 52,716,601 58,286,681 55,215,248

Total Revenues $ 349,157,827 $ 381,328,778 $ 382,846,100 $ 411,655,746 $ 422,717,834 $ 443,313,328 $ 453,881,021 $ 470,236,340 $ 509,698,759 $ 549,505,499

Source: Socorro ISD Comprehensive Annual Financial Report - Exhibit C-3

158 Socorro Independent School District TABLE VI Governmental Funds Expenditures and Debt Service Ratio Last Ten Fiscal Years (Modified accrual basis of accounting) (Unaudited)

Fiscal Year

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Instruction $ 172,854,372 $ 188,667,098 $ 187,851,938 $ 199,808,360 $ 205,130,807 $ 214,250,154 $ 228,511,931 $ 244,574,936 $ 249,000,607 $ 273,519,056 Instructional Resources and Media Services 4,158,311 4,510,586 4,794,052 5,199,858 5,254,045 5,302,985 5,540,287 5,877,131 6,098,050 6,357,814 Curriculum and Instructional Staff Development 4,416,049 4,473,386 4,056,946 5,179,257 6,071,778 5,491,328 5,728,872 5,648,706 6,003,439 5,656,588 Instructional Leadership 3,599,911 4,019,704 4,074,150 3,778,169 3,764,601 4,167,995 4,348,422 4,670,014 6,250,763 6,545,430 School Leadership 16,921,918 20,421,519 20,931,163 21,941,334 22,135,619 23,041,127 24,107,849 25,821,392 26,561,555 27,900,233 Guidance, Counseling and Evaluation Services 9,822,389 11,070,129 10,508,170 10,963,471 11,523,246 12,204,917 13,231,032 14,085,627 14,611,615 15,024,264 Social Work Services 1,389,904 1,771,972 1,862,136 2,094,230 2,180,686 2,151,290 2,282,642 2,365,274 1,710,298 1,683,517 Health Services 3,142,956 3,653,945 3,757,202 3,807,730 3,981,457 4,031,123 4,172,151 4,682,941 5,374,942 5,797,587 Student (Pupil) Transportation 8,114,178 9,529,090 10,213,194 10,745,278 13,520,001 10,294,997 14,084,520 14,473,768 15,050,589 15,313,911 Food Services 14,169,657 19,482,675 21,371,190 24,626,256 25,922,584 27,516,693 28,078,049 28,049,972 28,363,350 28,285,777 Extracurricular Activities 7,630,642 8,644,616 8,946,796 8,890,695 9,780,455 10,395,406 10,806,089 10,703,940 11,369,371 10,443,957 General Administration 5,668,229 7,153,320 6,907,200 7,456,041 7,701,220 8,008,901 8,678,122 9,173,618 9,694,331 9,963,514 Facilities Maintenance and Operations 27,745,722 33,625,397 34,420,301 35,551,342 38,155,276 39,192,705 45,017,212 42,336,432 44,181,215 43,106,852 Security and Monitoring Services 5,050,701 5,537,274 5,537,874 6,398,715 6,779,117 7,879,372 7,857,065 8,472,730 8,367,412 9,559,469 Data Processing Services 2,831,390 8,528,819 4,135,009 3,700,847 4,616,314 5,203,117 6,378,434 6,476,580 5,892,157 7,260,442 Community Services 1,833,616 1,779,512 1,942,930 1,799,213 1,980,773 1,868,549 2,147,840 1,992,428 2,058,177 2,125,021 Debt Service: Principal on Long Term 3,270,026 11,916,830 12,743,323 14,174,943 14,824,053 12,398,341 13,129,588 15,926,317 14,728,577 23,208,200 Interest on Long Term 12,311,388 20,829,614 21,121,132 23,429,061 33,772,605 34,726,662 32,805,155 29,151,432 40,022,050 35,467,680 Bond Issuance Cost and Fees 14,218 629,223 1,532,796 1,070,535 2,063,466 313,685 14,376 2,883,608 1,188,528 2,073,878 Capital Outlay: Facilities Acquisition and Construction 10,923,121 21,981,635 111,156,061 65,112,176 51,610,709 18,573,511 4,082,019 30,653,103 44,049,182 68,871,903 Intergovernmental: Other governmental charges 1,095,690 1,278,526 1,281,559 1,448,210 1,444,682 1,496,015 1,616,428 1,728,325 1,898,718 1,812,229

Total Expenditures $ 316,964,388 $ 389,504,870 $ 479,145,122 $ 457,175,721 $ 472,213,494 $ 448,508,873 $ 462,618,083 $ 509,748,274 $ 542,474,926 $ 599,977,322

Debt Service as a Percentage of Noncapital Expenditures 5.09% 8.91% 9.20% 9.59% 11.55% 10.96% 10.02% 9.41% 10.98% 11.05%

Source: Socorro ISD Comprehensive Annual Financial Report - Exhibit C-3

159 Socorro Independent School District TABLE VII Other Financing Sources and Uses and Net Change in Fund Balances Governmental Funds Last Ten Fiscal Years (Modified accrual basis of accounting) (Unaudited)

Fiscal Year

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Excess of Revenues Over $ 32,193,439 $ (8,176,092) $ (96,299,022) $ (45,519,975) $ (49,495,660) $ (5,195,545) $ (8,737,062) $ (39,511,934) $ (32,776,167) $ (50,471,823) (Under) Expenditures

Other Financing Sources (Uses) Capital Leases - - - - 2,859,000 - - 5,131,987 957,960 3,202,425 Capital Related Debt Issue - 50,345,000 $ 147,164,990 195,810,000 78,049,999 - - 173,030,000 135,385,000 85,540,000 General Long-term Debt Issued ------Refunding Bonds Issued - - - - - 25,140,000 - 172,397,339 - 118,119,142 Sale of Real or Personal Property - - 55,117 ------1,664,367 Transfers In ------10,420 - 6,633,172 Premium or Discount on Issuance of Bonds - 2,586,261 21,218,009 17,671,894 11,983,834 2,862,606 - 56,863,109 17,017,308 36,843,226 Prepaid Interest ------Lease of Mineral Rights ------Other Resources ------Transfers Out ------(10,420) - (15,633,172) Payment to Bond Refunding Escrow Agent - - - - - (27,025,000) - (199,403,185) - (137,325,797) Other (Uses) - (1,920,964) (19,869,930) (112,067,643) (89,059,877) - - - - - Total Other Financing Sources (Uses) - 51,010,297 148,568,186 101,414,251 3,832,956 977,606 - 208,019,250 153,360,268 99,043,363

Net Change in Fund Balances $ 32,193,439 $ 42,834,205 $ 52,269,164 $ 55,894,276 $ (45,662,704) $ (4,217,939) $ (8,737,062) $ 168,507,316 $ 120,584,101 $ 48,571,540

Source: Socorro ISD Comprehensive Annual Financial Report - Exhibit C-3

160 Socorro Independent School District TABLE VIII Assessed Value and Actual Value of Taxable Property Last Ten Fiscal Years (Unaudited)

Total Estimated Taxable Assessed Assessed Value Less: Total Taxable Direct Actual Value as a Fiscal Real Personal Tax-Exempt Assesseda Tax Taxablec Percentage of Year Property Property Property Value Rateb Value Actual Taxable Value

2011 7,648,635,587 984,307,979 1,788,064,375 7,059,956,800 1.1797 8,632,943,566 81.78% 2012 7,909,685,536 1,367,205,429 2,185,801,169 7,375,023,946 1.2098 9,276,890,965 79.50% 2013 8,254,984,648 1,570,585,037 2,377,524,975 7,785,663,642 1.2748 9,825,569,685 79.24% 2014 8,741,759,502 1,401,016,977 2,287,850,156 8,152,485,351 1.2748 10,142,776,479 80.38% 2015 9,093,560,658 1,516,667,007 2,440,390,273 8,547,469,999 1.2748 10,610,227,665 80.56% 2016 9,604,557,085 1,413,869,038 2,463,584,011 8,556,307,818 1.2748 11,018,426,123 77.65% 2017 10,637,221,410 1,526,205,875 3,137,847,579 8,968,184,649 1.2748 12,163,427,285 73.73% 2018 11,488,243,398 1,487,284,853 3,223,849,234 9,418,863,748 1.2748 12,975,528,251 72.59% 2019 12,085,198,840 1,724,096,263 3,656,581,022 10,224,248,408 1.3806 13,809,295,103 74.04% 2020 12,867,976,552 1,831,109,810 3,898,162,430 10,842,993,887 1.3690 14,699,086,362 73.77%

Sources: El Paso Central Appraisal District Socorro ISD Comprehensive Annual Financial Report - Exhibit J-1

Notes: aMarket value less exemptions bPer $100 of assessed valuation cMarket value

161 TABLE IX Direct and Overlapping Property Tax Rates Last Ten Fiscal Years (Rate per $100 of assessed value) (Unaudited)

District Direct Rates Overlapping Ratesa

El Paso County El Paso Town of Horizon Fiscal Debt Hospital Community City of El Horizon Regional Lower Valley Year Operating Service Total El Paso County District College Paso City MUD Water District

2011 0.946140 0.233550 1.17969 0.36340 0.18212 0.10730 0.65370 0.30442 0.46870 0.20849 2012 0.946140 0.263654 1.20979 0.36120 0.19236 0.11544 0.65840 0.31125 0.46870 0.20439 2013 0.976140 0.298654 1.27479 0.40887 0.19236 0.11409 0.65840 0.32279 0.46870 0.20157 2014 0.976140 0.298654 1.27479 0.43313 0.22068 0.12812 0.69978 0.31729 0.49000 0.19930 2015 0.976140 0.298654 1.27479 0.45269 0.22100 0.12800 0.70000 0.42800 0.49500 0.19687 2016 0.976140 0.298654 1.27479 0.45269 0.22068 0.13381 0.72973 0.45272 0.49565 0.19329 2017 0.976140 0.298654 1.27479 0.45269 0.23446 0.13491 0.75966 0.49176 0.50286 0.18947 2018 0.981640 0.293154 1.27479 0.45269 0.23446 0.13491 0.75966 0.49176 0.50286 0.18947 2019 0.981640 0.398954 1.38059 0.44782 0.25194 0.14027 0.84333 0.49176 0.55436 0.16117 2020 0.970000 0.398954 1.36895 0.48900 0.26775 0.14117 0.90730 0.59534 0.57527 0.15347 Overlapping Ratesa

Paseo Del Paseo Del Paseo Del Paseo Del Paseo Del Fiscal Paseo Del Este Este MUD Este MUD Este MUD Este Este City of Year District Direct Rates MUD #2 #3 #5 #8 MUD #10 MUD #11 Socorro

2011 0.946140 0.233550 1.17969 0.75000 0.75000 0.75000 0.75000 0.49676 2012 0.946140 0.263654 1.20979 0.75000 0.75000 0.75000 0.75000 0.75000 0.49676 2013 0.976140 0.298654 1.27479 0.75000 0.75000 0.75000 0.75000 0.75000 0.75000 0.56581 2014 0.976140 0.298654 1.27479 0.75000 0.75000 0.75000 0.75000 0.75000 0.75000 0.57785 2015 0.976140 0.298654 1.27479 0.75000 0.75000 0.75000 0.75000 0.75000 0.75000 0.68856 2016 0.976140 0.298654 1.27479 0.75000 0.75000 0.75000 0.75000 0.75000 0.75000 0.72756 2017 0.976140 0.298654 1.27479 0.75000 0.75000 0.75000 0.75000 0.75000 0.75000 0.72756 2018 0.981640 0.293154 1.27479 0.75000 0.75000 0.75000 0.75000 0.75000 0.75000 0.72756 2019 0.981640 0.398954 1.38059 0.75000 0.75000 0.75000 0.75000 0.75000 0.75000 0.75246 2020 0.970000 0.398954 1.36895 0.75000 0.75000 0.75000 0.75000 0.75000 0.75000 0.83750

Source: El Paso City Tax Office

Note: aIncludes levies for operating and debt service costs

162 Socorro Independent School District TABLE X Principal Property Taxpayers Current Year and Nine Years Ago (Unaudited)

2020 2011 Percentage Percentage Taxable of Taxable of Taxable Taxable Taxpayer Assessed Value Rank Value Assessed Value Rank Value

El Paso Electric Co. $ 298,915,696 1 2.76% $ 32,716,131 4 0.46% River Oaks Properties 123,985,852 2 1.14% 109,365,394 1 1.55% Sierra Providence Physical Rehab Hospital 110,000,000 3 1.01% 103,930,121 2 1.47% Wal-Mart Stores Inc. 96,214,782 4 0.89% 23,004,553 8 0.33% Texas Gas Services 53,747,100 5 0.50% 27,954,010 5 0.40% Magellan Pipeline Co LP 48,808,191 6 0.45% ICON 10/375 Industrial Owner Pool 6 Dallas, LLC 27,382,763 7 0.25% F-Star Socorro Holding Co. LLC 25,800,000 8 0.24% 22,200,416 9 0.31% PW Fund B LP 25,546,524 9 0.24% Hueco Valley Residential Partners LTD 24,200,000 10 0.22% 25,592,200 7 0.36% Magellan Asset Services LP 44,527,629 3 0.63% Industrial Portfolio LTD Partnership 26,917,247 6 0.38% BRE/TX Industrial Properties 21,736,903 10 0.31%

Subtotal $ 834,600,908 7.70% $ 437,944,604 6.20%

All other taxpayers $ 10,008,392,979 92.30% $ 6,622,012,196 93.80%

$ 10,842,993,887 100.00% $ 7,059,956,800 100.00%

Source: El Paso Central Appraisal District

163 Socorro Independent School District TABLE XI Property Tax Levies and Collections Last Ten Fiscal Years Collected within the (Unaudited) Fiscal Year of the Levy Total Collections to Date Percentage Collected Percentage of in of Fiscal Tax Net Tax Subsequent Net Tax Year Year Original Levy Adjustments Adjusted Levy Amount Levy Period Amount Levy 2011 2010 83,285,604 - 83,285,604 81,406,455 97.74% 940,415 82,346,870 98.87% 2012 2011 89,710,231 (487,635) 89,222,596 87,075,744 97.59% 1,027,383 88,103,127 98.75% 2013 2012 99,536,836 (285,663) 99,251,173 96,651,382 97.38% 962,535 97,613,917 98.35% 2014 2013 104,863,472 (936,078) 103,927,394 101,665,421 97.82% 615,804 102,281,225 98.42% 2015 2014 109,524,588 (561,953) 108,962,635 106,956,637 98.16% 646,307 107,602,944 98.75% 2016 2015 109,952,163 (876,865) 109,075,298 107,158,246 98.24% 573,073 107,731,319 98.77% 2017 2016 115,029,528 (703,648) 114,325,880 112,277,948 98.21% 544,833 112,822,781 98.69% 2018 2017 121,147,995 (1,076,885) 120,071,110 118,169,095 98.42% 438,217 118,607,312 98.78% 2019 2018 142,404,721 (1,249,360) 141,155,361 138,212,836 97.92% $ 653,291 138,866,127 98.38% 2020 2019 $ 149,906,528 $ (1,470,929) $ 148,435,599 $ 145,344,781 97.92% $ - $ 145,344,781 97.92%

Sources: El Paso County Tax Office Socorro ISD Comprehensive Annual Financial Report - Exhibit J-1

Notes: This schedule includes operating and debt service tax revenues.

164 DEBT CAPACITY INFORMATION

165 Socorro Independent School District TABLE XII Outstanding Debt by Type Last Ten Fiscal Years (Unaudited)

Governmental Activities

Ratio of Net Bonded Debt Accretion on to Estimated General Bond Payable Capital Bond Unamortized Percentage of Actual Fiscal Obligation from Direct Apppreciation Issuance Premium Capital Other Total Primary Personal Estimated Per Property Year Bonds Placement Bonds Premiums on Bonds Leases Liabilities Government Incomea Population Capitaa Valueb 2011 320,473,573 44,368,485 27,850,249 - 742,677 5,272 393,440,256 1.63% 820,015 480 3.71 2012 357,354,637 41,827,109 27,622,931 - 375,141 5,554 427,185,372 1.69% 831,864 514 3.85 2013 474,356,445 43,541,992 45,295,152 (1,809,208) - 6,212 561,390,593 2.27% 832,457 674 4.83 2014 553,636,502 45,841,579 - 55,690,767 - 6,514 655,175,362 2.52% 835,545 784 5.46 2015 534,260,096 39,426,761 - 59,407,866 2,146,353 - 635,241,076 2.33% 835,593 760 5.04 2016 520,659,724 31,802,686 - 49,047,976 1,463,384 - 602,973,770 2.18% 837,918 720 4.73 2017 508,211,938 24,183,341 - 45,317,240 781,582 - 578,494,101 1.99% 840,410 688 4.18 2018 663,606,129 15,486,944 - 80,542,292 5,480,745 - 765,116,110 2.54% 840,758 910 5.11 2019 757,747,613 28,250,000 6,773,888 - 91,986,012 4,703,645 - 889,461,158 - 839,238 1,060 5.49 2020 $ 824,171,789 $ 23,455,000 $ 17,770,827 $ - $ 106,338,944 $ 5,597,836 $ - $ 977,334,396 - - - 5.61

Source: Socorro ISD Comprehensive Annual Financial Report - Note IV.G - Changes in Long-term Liabilities

Notes: *Other Liabilities includes Arbitrage and Workers' Compensation Claim Liability aSee Schedule XV for personal income, per capita and population data. bSee Schedule VIII for estimated actual property value.

166 Socorro Independent School District TABLE XIII Direct and Overlapping Governmental Activities Debt As of June 30, 2020

Estimated Share Total Tax Estimated of Direct and Supported Debt Percentage Overlapping Governmental Unit as of 6/11/2020 Applicableb Debt

El Paso County $ 164,273,484 25.10% $ 41,232,644 El Paso County Hospital District 333,985,000 25.10% 83,830,235 City of El Paso 1,292,860,000 21.05% 272,147,030 Town of Horizon City 25,595,000 29.41% 7,527,490 Horizon Regional MUD 75,629,985 38.24% 28,920,906 Lower Valley Water District 1,330,000 66.44% 883,652 Paseo del Este MUD #2 5,850,000 100.00% 5,850,000 Paseo del Este MUD #3 8,945,000 100.00% 8,945,000 Paseo del Este MUD #5 8,100,000 100.00% 8,100,000 Paseo del Este MUD #8 8,995,000 100.00% 8,995,000 Paseo del Este MUD#10 6,960,000 100.00% 6,960,000 Paseo del Este MUD#11 3,520,000 100.00% 3,520,000 City of Socorro $ 29,825,000 96.97% $ 28,921,303

Subtotal, Overlapping Debt $ 505,833,260

District Direct Debt $ 847,626,789 Capital Leases 5,597,836 Accretion Payable 17,770,827 Net Premiums/Discounts on Bonds Payable 106,338,944 Total District Direct Debt including Long-term Liabilities $ 977,334,396

Total Direct and Overlapping Debt $ 1,483,167,656

Ratio of Total Direct and Overlapping Debt to Assessed Valuation 13.68%

Per Capita Overlapping Debt $ 7,306

Source: Series 2020C Refunding Bonds Official Statement

Notes: aSee Schedule XII for district direct debt.

Method of calculation: The percentage of each of the governmental units listed above that falls within the borders of the school district is applied to the total tax-supported debt of that entity to determine the overlapping debt of the Socorro Independent School District.

167 Socorro Independent School District TABLE XIV Legal Debt Margin Information Last Ten Fiscal Years (Unaudited)

Fiscal Year

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Assessed value a $ 7,059,956,800 $ 7,375,023,946 $ 7,785,663,642 $ 8,152,485,351 $ 8,547,469,999 $ 8,556,307,818 $ 8,968,184,649 $ 9,418,863,748 $ 10,224,248,408 $ 10,842,993,887

Debt Limit b 705,995,680 737,502,395 778,566,364 815,248,535 854,747,000 855,630,782 896,818,465 941,886,375 1,022,424,841 1,084,299,389

Amount of debt applicable to debt limit: Total bonded debt 320,473,573 357,354,637 474,356,445 553,636,502 534,260,096 520,659,724 508,211,938 663,606,129 785,997,613 847,626,789 Less: Reserve for debt service 31,057,205 34,566,126 40,113,444 47,318,149 36,965,232 37,293,100 38,236,424 35,005,081 38,174,894 36,524,557 Total net debt applicable to limit 289,416,368 322,788,511 434,243,001 506,318,353 497,294,864 483,366,624 469,975,514 628,601,048 747,822,719 811,102,232

Legal debt margin $ 416,579,312 $ 414,713,884 $ 344,323,363 $ 308,930,182 $ 357,452,136 $ 372,264,158 $ 426,842,951 $ 313,285,327 $ 274,602,122 $ 273,197,157

Total net debt applicable to the limit as a percentage of debt limit. 40.99% 43.77% 55.77% 62.11% 58.18% 56.49% 52.40% 66.74% 73.14% 74.80%

Notes: aMarket value less exemptions bThis percentage is in accordance with the recommendations of the Texas Education Agency as stated in the Texas Education Code, Bulletin 721, Sec. 20.04.

168 DEMOGRAPHIC AND ECONOMIC INFORMATION

169 Socorro Independent School District TABLE XV Demographic and Economic Statistics El Paso County Last Ten Fiscal Years (Unaudited)

Per Capita Calendar Estimated Personal Incomeb Personal Unemployment Year Populationª (in thousands) Income Ratec 2011 820,015 $ 24,083,067 $ 29,369 10.3% 2012 831,864 25,211,252 30,307 8.5% 2013 832,457 24,741,189 29,721 7.9% 2014 835,545 25,978,051 31,091 6.4% 2015 835,593 27,251,966 32,614 5.2% 2016 837,918 27,612,562 32,954 4.9% 2017 840,410 29,062,655 34,582 4.6% 2018 840,758 30,145,813 35,856 4.2% 2019 839,238 N/A N/A 3.8% 2020 N/A N/A N/A 6.8%

Notes: All information above is for the El Paso metropolitan area.

Sources:

ªUnited States Census Bureau, information for 2020 is not yet available bU.S. Department of Commerce, Bureau Of Economic Analysis, information for 2019 and 2020 is not yet available cCity of El Paso & Bureau of Labor Statistics

170 Socorro Independent School District TABLE XVI El Paso County Principal Employers Current Year and Nine Years Ago (Unaudited)

2020 2011 Percentage of Percentage of Total Total Employer Employees Rank Employment Employees Rank Employment

Fort Bliss (civilian employees) 12,648 1 3.76% El Paso Independent School District 7,875 2 2.34% Socorro Independent School District 7,195 3 2.14% City of El Paso 6,840 4 2.03% Ysleta Independent School District 6,022 5 1.79% County of El Paso 3,387 6 1.01% The Hospitals of Providence/Tenet Healthcare 3,300 7 0.98% 3,053 2 0.98% University Medical Center (UMC) 2,619 8 0.78% 2,310 3 0.74% GC Services 2,250 9 0.67% 1,791 5 0.57% Del Sol Medical Center 2,184 10 0.65% 1,100 8 0.35% T&T Staff Management LP 4,687 1 1.50% Dish Network 1,830 4 0.59% RM Personnel 1,371 6 0.44% Texas Tech University Health Science Center 1,235 7 0.40% Automatic Data Processing Center (ADP) 1,000 9 0.32% El Paso Electric Corporation 961 10 0.31%

54,320 16% 19,338 6%

Sources: City of El Paso Office of Economic Development Bureau of Labor Statistics-Employment Numbers 2011 Information obtained from the County of El Paso 2011 CAFR

171 This page is left blank intentionally.

172 OPERATING INFORMATION

173 Socorro Independent School District Full-Time-Equivalent District Employees by Type All Funds Last Ten Fiscal Years (Unaudited)

Role FTE 2011 2012 2013 2014 2015 2016 2017

Teachers Teacher 2,463 2,412 2,285 2,377 2,431 2,468 2,571 Substitute Teacher 1 3 3 6 8 24 20 Total Teacher 2,464 2,415 2,288 2,383 2,439 2,492 2,590

Professional Support Audiologist 2 2 2 3 - 1 - Counselor 100 96 91 92 96 110 112 Educational Diagnostician 31 31 31 29 28 28 32 Librarian 43 39 42 41 46 48 48 Music Therapist 1 1 1 2 1 1 1 Occupational Therapist 9 8 8 8 9 9 8 Physical Therapist 6 6 6 6 5 6 6 School Nurse 47 45 47 50 46 51 50 LSSP/Psychologist 2 2 2 3 4 3 4 Social Worker 6 6 5 4 5 5 5 Speech Therapist/Speech-Language Pathologist 38 41 39 41 42 42 40 Truant Officer/Visiting Teacher 5 6 5 4 - - - Work-Based Learning Site Coordinator 3 3 2 1 4 3 2 Teacher Facilitator 60 53 89 82 116 120 119 Department Head 10 11 11 17 16 26 19 Athletic Trainer 1 2 1 2 1 1 3 Campus Professional Personnel 63 35 18 12 5 6 5 Other Non-Instructional District Professional Personnel 109 99 96 103 117 116 124 Total Professional Support 535 484 496 501 538 573 578

Campus Administration Assistant Principal 89 88 94 95 98 95 103 Instructional Officer ------Principal 42 40 40 45 42 45 45 Teacher Supervisor 15 14 12 - - - - Athletic Director 1 2 2 - - - - Total Campus Administration 147 143 148 140 140 140 148

Central Administration Assistant /Assoc/Deputy Super 6 6 6 6 6 6 6 District Officer/Instructional Program Director or Executive Director 11 10 9 11 10 10 10 Superintendent/Chief Administrative Officer/CEO/President 1 1 1 1 1 1 1 Teacher Supervisor 28 21 18 19 2 10 11 Athletic 2 2 2 3 3 3 2 Business Manager 1 1 1 1 1 1 1 Communications Professional Component/Department Director Security Director of Personnel/HR 3 3 4 3 5 5 6 Total Central Administration 51 44 41 44 28 36 37

Educational Aides Educational Aide 311 306 282 331 306 303 334 Total Educational Aides 311 306 282 331 306 303 334

Auxiliary Staff 1,387 1,298 1,306 1,287 1,916 2,007 1,851 Total Auxilary 1,387 1,298 1,306 1,287 1,916 2,007 1,851

Total FTE 4,894 4,689 4,560 4,686 5,368 5,550 5,538

174 TABLE XVII

Percentage 2018 2019 2020 Change

2,656 2,717 2,765 12% 38 87 70 5742% 2,693 2,804 2,835 15%

- - - -100% 117 119 123 23% 34 35 38 23% 44 44 51 19% - - - -100% 8 8 9 5% 6 6 6 0% 50 50 54 15% 5 5 6 190% 5 5 4 -33%

41 44 46 20% - - - -100% 1 0 - -100% 116 110 125 109% 20 13 20 99% 1 0 1 -36% - - - -100%

117 117 127 16% 564 556 609 14%

102 104 110 24% - - 46 45 45 7% - -100% 1 1 1 -29% 149 150 156 6%

7 9 10 67%

9 8 9 -14%

1 1 1 0% 3 15 14 -49% 2 1 - -100% 1 4 1 0% 1 8 8 - 9 - 9 3 3 - 4 5 5 67% 46 54 51 0%

350 439 455 46% 350 439 455 46%

1,993 1,662 1,535 11% 1,993 1,662 1,535 11%

5,794 5,666 5,640 15%

175 Socorro Independent School District TABLE XVIII Operating Statistics, Last Ten Fiscal Years (Unaudited)

Percentage of Students Pupil- Receiving Free Fiscal Operating Cost per Teaching Teacher or Reduced- Year Enrollment Expenditures Pupil Staff Ratio Price Meals 2011 42,569 286,580,395 6,732 2,464 17.3 74.35% 2012 43,672 326,060,477 7,466 2,414 18.1 72.12% 2013 44,259 325,078,328 7,345 2,288 19.3 71.87% 2014 44,517 345,293,879 7,756 2,383 18.7 72.07% 2015 44,561 358,643,635 8,048 2,438 18.3 71.00% 2016 45,269 376,671,538 8,321 2,492 18.2 70.72% 2017 45,927 406,240,908 8,845 2,590 17.7 71.15% 2018 46,545 428,659,199 9,210 2,661 17.5 71.33% 2019 46,941 440,486,221 9,384 2,804 16.7 75.60% 2020 47,629 467,770,075 9,821 2,835 16.8 72.65%

Note: Expenditures for computing per pupil cost are a total of actual expenditures as prescribed by the Texas Education Agency's Financial Accountability System Resource Guide. These include the General and Special Revenue Funds, excluding functions of Debt Service, Capital Outlay and Intergovernmental Charges.

Source: Nonfinancial information from district records. Operating Expenditures obtained from Socorro ISD Comprehensive Annual Financial Report - Exhibit C-3 and H-2

176 Socorro Independent School District TABLE XIX Operating Statistics, Last Ten Fiscal Years (Unaudited)

FISCAL YEAR 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Schools Elementary Buildings 21 21 21 22 23 24 24 24 25 25 Square feet 1,630,452 1,630,452 1,630,452 1,720,040 1,829,440 1,957,440 1,957,440 1,957,440 2,067,159 2,067,159 Capacity 19,543 19,693 19,743 20,931 21,693 22,593 22,793 22,793 23,778 23,778 Enrollment 79.61% 81.83% 83.08% 79.20% 81.14% 77.94% 76.38% 76.98% 75.98% 77.23% Intermediate/Middle Buildings 8 8 8 9 9 9 9 9 9 9 Square feet 911,653 911,653 911,653 1,035,575 1,035,575 1,035,575 1,035,575 1,035,575 1,035,575 1,035,575 Capacity 7,950 7,600 7,900 8,550 8,600 8,600 8,950 8,950 8,950 8,950 Enrollment 85.40% 90.11% 89.47% 84.13% 84.28% 85.27% 86.27% 84.18% 86.02% 87.99% Combo Schools* Buildings 7 7 7 7 7 7 7 7 7 7 Square feet 654,566 654,566 654,566 654,566 654,566 654,566 654,566 654,566 654,566 654,566 Capacity 7,554 7,554 7,254 7,054 7,054 7,304 7,554 7,554 7,604 7,604 Enrollment 88.84% 90.89% 95.49% 97.14% 93.49% 91.18% 86.19% 83.70% 82.51% 77.49% High Buildings 8 8 8 8 8 8 8 8 8 8 Square feet 2,245,571 2,245,571 2,478,640 2,478,640 2,774,354 2,774,354 2,774,354 2,774,354 2,774,354 2,774,354 Capacity 17,400 17,200 18,500 18,220 19,095 19,270 19,220 19,220 18,495 18,495 Enrollment 70.91% 74.08% 71.76% 74.84% 75.37% 72.73% 74.18% 75.56% 78.85% 80.03%

Administrative Buildings 9 9 9 9 9 9 9 9 9 9 Square feet 802,895 802,895 802,895 802,895 802,895 802,895 1,003,719 1,003,719 1,003,719 1,003,719

Athletics

Stadiums 1 1 1 1 1 1 1 1 1 1 Natatorium 1 1 1 1 1 1 1 1 1 1

*Combo Schools contain a combination of Elementary and Middle Schools.

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180 600 SUNLAND PARK, 6-300 EL PASO, TX 79912

P 915 356-3700 F 915 356-3779 GRP GIBSON RUDDOCK PATTERSON LLC W GRP-CPA.COM c e r t i f i e d p u b l i c accountants

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 Socorro Independent School District

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 bythe Comptroller General of the United States, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Socorro Independent School District as of and for the year ended June 30, 2020, and the related notes to the financial statements, which collectively comprise the Socorro Independent School District’s basic financial statements, and have issued our report thereon dated January 11, 2021.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered the Socorro Independent School District’s internal control over financial reporting (internal control) as a basis for designing 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 Socorro Independent School District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Socorro Independent School District’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.

181 Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Socorro Independent School District’s financial statements are free from 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 financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Gibson Ruddock Patterson, LLC El Paso, Texas January 11, 2021

182 600 SUNLAND PARK, 6-300 EL PASO, TX 79912

P 915 356-3700 F 915 356-3779 GRPGIBSON RUDDOCK PATTERSON LLC W GRP-CPA.COM c e r t i f i e d p u b l i c accountants

INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE

To the Board of Trustees Socorro Independent School District

Report on Compliance for Each Major Federal Program

We have audited Socorro Independent School District’s compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of Socorro Independent School District’s major federal programs for the year ended June 30, 2020. Socorro Independent School District’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.

Management’s Responsibility

Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.

Auditor’s Responsibility

Our responsibility is to express an opinion on compliance for each of Socorro Independent School District’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Socorro Independent School District’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of Socorro Independent School District’s compliance.

Opinion of Each Major Federal Program

In our opinion, the Socorro Independent School District, complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2020.

183 Report on Internal Control Over Compliance

Management of the Socorro Independent School District, is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Socorro Independent School District’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Socorro Independent School District’s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

Gibson Ruddock Patterson, LLC El Paso, Texas January 11, 2021

184 SOCORRO INDEPENDENT SCHOOL DISTRICT

SCHEDULE OF FINDINGS AND QUESTIONED COSTS

FOR THE YEAR ENDED JUNE 30, 2020

SUMMARY OF AUDITOR’S RESULTS Financial Statements Type of Auditor’s Report issued on whether the financial statements audited were prepared in accordance with GAAP: Unmodified Internal control over financial reporting: Were significant deficiencies in internal control disclosed? None reported Were material weaknesses in internal control disclosed? No

Was any noncompliance disclosed that is material to the financial statements of the auditee, which would be required to be reported in accordance with Government Auditing Standards? No Federal Awards Internal control over major federal award programs: Were significant deficiencies in internal control over major programs disclosed? None reported Were material weaknesses in internal control over major programs disclosed? No Type of auditor’s report issued on compliance for the major federal programs: Unmodified Were there any audit findings that the auditor is required to disclose under Title 2 CFR 200.516 Audit findings paragraph (a)? No Major Programs: Child Nutrition Cluster: CFDA 10.553 School Breakfast Program CFDA 10.555 National School Lunch Program Dollar threshold used to distinguish between Type A and Type B programs: $1,547,417 Did auditee qualify as a low-risk auditee under the 2 Yes CFR 200.520 Criteria for a low risk auditee?

185 SOCORRO INDEPENDENT SCHOOL DISTRICT

SCHEDULE OF FINDINGS AND QUESTIONED COSTS

FOR THE YEAR ENDED JUNE 30, 2020

FINANCIAL STATEMENTS FINDINGS There are no current year findings.

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS There are no current year findings or questioned costs.

186 SOCORRO INDEPENDENT SCHOOL DISTRICT

SCHEDULE OF STATUS OF PRIOR FINDINGS

FOR THE YEAR ENDED JUNE 30, 2020

FINANCIAL STATEMENT FINDINGS There were no prior year findings.

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS There were no prior year findings or questioned costs.

187 EXHIBIT K-1 (Cont'd) SOCORRO INDEPENDENT SCHOOL DISTRICT SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2020 (1) (2) (3) (4) FEDERAL GRANTOR/ Federal Pass-Through PASS-THROUGH GRANTOR/ CFDA Entity Identifying Federal PROGRAM or CLUSTER TITLE Number Number Expenditures U.S. DEPARTMENT OF DEFENSE Direct Programs PCS Grant 12.556 HE1254-16-1-0043 $ 169,495 Total Direct Programs 169,495 Passed Through the Department of the Army Army Youth Program in Your Neighborhood 12.000 NAFBA1-13-C-0056 51,411 Total Passed Through the Department of the Army 51,411 Passed Through the Department of the Navy Naval Junior Officers Training Corp 12.000 JROTC19S 221,096 Total Passed Through the Department of the Navy 221,096 TOTAL U.S. DEPARTMENT OF DEFENSE 442,002

U.S. DEPARTMENT OF EDUCATION Direct Programs Impact Aid 84.041B S041B-2020-5132 725,170 Impact Aid 84.041B S041B-2019-5132 72,215 Total CFDA Number 84.041B 797,385 Total Direct Programs 797,385 Passed Through Ysleta Independent School District Adult Education and Family Literacy Act 84.002A 1018ALA000 549,829 English Literacy & Civics Education Grant 84.002A 1018ALA000 93,294 Texas Adult Ed & Literacy Workforce Integration 84.002A 1018ALA000 23,552 Professional Development 84.002A 1018ALA000 20,287 Total CFDA Number 84.002A 686,962 Total Passed Through Ysleta Independent School District 686,962 Passed Through State Department of Education ESEA, Title X, Part C -Homeless Children 84.196A 204600057110066 44,050 ESEA, Title X, Part C -Homeless Children 84.196A 194600057110066 2,223 Total CFDA Number 84.196A 46,273 ESEA, Title I, Part A - Improving Basic Programs 84.010A 19610101071909 (3,525) ESEA, Title I, Part A - Improving Basic Programs 84.010A 20610101071909 11,282,561 ESEA, Title I, Part A - 1003(A) Priority and Focus 84.010A 20610141071909 36,885 Total CFDA Number 84.010A 11,315,921 ESEA, Title I, Part C - Migratory Children 84.011A 20615001071909 91,626 *IDEA - Part B, Formula 84.027A 206600010719096600 6,900,256 *IDEA - Part B, Formula 84.027A 196600010719096600 1,204,755 *IDEA - Part B, Formula 84.027A 186600010719096600 18,766 Total CFDA Number 84.027A 8,123,777 *IDEA - Part B, Preschool 84.173A 206610010719096610 70,846 *IDEA - Part B, Preschool 84.173A 196610010719096610 13,035 Total CFDA Number 84.173A 83,881 Total Special Education Cluster (IDEA) 8,207,658 Career and Technical - Basic Grant 84.048A 20420006071909 559,630 21st Century Community Learning Centers 84.287C 206950267110045 1,237,983 21st Century Community Learning Centers 84.287C 196950267110045 84,566

188 EXHIBIT K-1 SOCORRO INDEPENDENT SCHOOL DISTRICT SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2020 (1) (2) (3) (4) FEDERAL GRANTOR/ Federal Pass-Through PASS-THROUGH GRANTOR/ CFDA Entity Identifying Federal PROGRAM or CLUSTER TITLE Number Number Expenditures Total CFDA Number 84.287C 1,322,549 Title III, Part A - English Language Acquisition 84.365A 20671001071909 989,521 Title II, Part A -Supporting Effective Instruction 84.367A 20694501071909 1,403,205 Principal Residency 84.367A 206945677110011 9,923 Total CFDA Number 84.367A 1,413,128 Summer School LEP 84.369A 69551902 21,371 ESEA, Title IV, Part A - Student Support 84.424A 20680101071909 436,716 TX Hurricane Homeless Children & Youth Program 84.938B 19513701071909 7,929 Total Passed Through State Department of Education 24,412,322 TOTAL U.S. DEPARTMENT OF EDUCATION 25,896,669

U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES Passed Through Ysleta Independent School District Temporary Assistance for Needy Families (TANF) 93.558 1018ALA000 78,733 Total Passed Through Ysleta Independent School District 78,733 Passed Through TX Health and Human Svcs Commission Medicaid Administrative Claiming Program - MAC 93.778 529-07-0157-00035 157,242 Total Passed Through TX Health and Human Svcs Commission 157,242 TOTAL U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 235,975

U.S. DEPARTMENT OF AGRICULTURE Passed Through the State Department of Agriculture **School Breakfast Program 10.553 71402001 8,176,769 **National School Lunch Program - Cash Assistance 10.555 71302001 14,379,057 **National School Lunch Prog.- Non-Cash Assistance 10.555 71302001 1,884,380 Total CFDA Number 10.555 16,263,437 Total Child Nutrition Cluster 24,440,206 Child & Adult Care Food Program - Cash Assistance 10.558 00353 565,713 Total Passed Through the State Department of Agriculture 25,005,919 TOTAL U.S. DEPARTMENT OF AGRICULTURE 25,005,919

TOTAL EXPENDITURES OF FEDERAL AWARDS $ 51,580,565 * and ** Clustered Programs

See Accompanying Notes to the Schedule of Expenditures of Federal Awards 189 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

YEAR ENDED JUNE 30, 2020

1. BASIS OF ACCOUNTING

The District accounts for all awards under federal programs in the general fund or a special revenue fund in accordance with the Texas Education Agency’s Financial Accountability System Resource Guide. Special revenue funds are used to account for resources restricted to, or committed for specific purposes by a grantor. Federal and state financial assistance is generally accounted for in a special revenue fund. If balances have not been expended by the end of the project period, grantors sometimes require the District to refund all or part of the unused amount. For the year ended June 30, 2020, the District predominately accounted for federal grant funds in special revenue funds, with the exception of those noted in the reconciliation within Note 4, which were accounted for in the general fund.

These programs are accounted for using a current financial measurement focus. With this measurement focus, only current assets, deferred outflow of resources, current liabilities, and deferred inflow of resources generally are included on the balance sheet. Operating statements of these funds present increases (i.e. revenues and other financing sources) and decreases (i.e. expenditures and other financing uses) in fund balance.

The modified accrual basis of accounting is used for these funds. This basis of accounting recognizes revenues in the accounting period in which they become susceptible to accrual, i.e., both measurable and available, and expenditures in the accounting period in which the fund liability is incurred, if measurable, except for unmatured interest on long-term debt, which is recognized when due, and certain compensated absences, which are recognized when the obligations are expected to be liquidated with expendable available financial resources. Expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited to reimbursement. Pass- through entity identifying numbers are presented where available.

Federal grant funds are considered to be earned to the extent of expenditures made under the provisions of the grant. When grant funds are received before expenditures are made, they are recorded as unearned revenues until earned. Due to the nature of the reporting process for the SHARS program, the District recognizes SHARS revenue upon receipt of the reimbursement notice from the federal government.

2. BASIS OF PRESENTATION

The accompanying schedule of expenditures of federal awards (the “schedule”) includes the federal activity of the District under programs of the federal government for the year ended June 30, 2020. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the schedule presents only a selected portion of the operations of the District, it is not intended to and does not present the financial position, changes in net position, or cash flows of the District.

Period of Performance - The period of performance for federal grant funds for the purpose of liquidation of outstanding obligations made on or before the ending date of the federal project period extended 90 days beyond the federal project period ending date, in accordance with provisions in Section H, Period of Performance of Federal Funds, Part 3, OMB Compliance Supplement - August 2020.

(Continued)

190 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

YEAR ENDED JUNE 30, 2020

2. BASIS OF PRESENTATION (Continued)

Matching - Matching contributions were not required for any of the federal awards.

Program Income - The Child Nutrition Cluster generated program income in the amount of $2,025,815 for the year ended June 30, 2020.

Commodities - Commodity assistance is reported by the CFDA number of the programs under which USDA donated commodities.

3. INDIRECT COST RATE

The District did not elect to use the 10% de minimis indirect cost rate but used the indirect cost rate assigned by the Texas Education Agency.

The District accounted for federally funded indirect costs in the General Fund as follows:

Federal CFDA Program Title Number Amount Adult Education & Family Literacy Act 84.002A $ 21,670 English Literacy & Civics Education Grant 84.002A 3,677 Adult Education & Literacy Workforce Integration 84.002A 928 Professional Development Funds 84.002A 800 ESEA, Title I, Part A - Improving Basic Programs 84.010A 444,539 ESEA, Title I, Part A - 1003(A) Priority and Focus 84.010A 1,454 ESEA, Title I, Part C - Migratory Children 84.011A 3,611 IDEA - Part B, Formula 84.027A 319,442 IDEA - Part B, Preschool 84.173A 3,305 Carl D. Perkins Basic Formula 84.048A 15,000 ESEA, Title X, Part C - Homeless Children 84.196A 1,824 21st Century Community Learning Centers 84.287C 12,937 Title III, Part A - English Language Acquisition 84.365A 39,000 ESEA, Title II, Part A, Supporting Effective Instruction 84.367A 55,304 Title IV, Part A - Student Support 84.424A 17,212 TX Hurricane Homeless Children & Youth Program 84.938B 313 Temporary Assistance for Needy Families (TANF) 93.558 3,103 Total Indirect Costs $ 944,119

(Continued)

191 SOCORRO INDEPENDENT SCHOOL DISTRICT

NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

YEAR ENDED JUNE 30, 2020

4. RECONCILIATIONS

Of the federal expenditures presented in Exhibit K-1, the District accounted for certain funds in the General Fund as follows:

Federal CFDA Program Title Number Amount Army Youth Program in Your Neighborhood 12.000 $ 51,411 Naval Junior Reserve Officer Training Corp 12.000 221,096 Impact Aid (Title VIII of ESEA) 84.041B 797,385 Indirect Costs Various 944,119 Other Federal Revenue (not included on Exhibit K-1) N/A 1,469 SHARS (not included on Exhibit K-1) N/A 3,633,214 Total General Fund Federal Revenue per Exhibit C-3 $ 5,648,694

The total federal revenue presented on Exhibit K-1 can be reconciled to Exhibit C-3 as follows:

Expenditures of federal awards per Exhibit K-1 $ 51,580,565 Other Federal Revenue 1,469 School Health and Related Services (SHARS) reimbursements 3,633,214

Total Federal Revenue per Exhibit C-3 $ 55,215,248

192 SCHOOLS FIRST QUESTIONNAIRE

Socorro Independent School District Fiscal Year 2020

SF1 Was there an unmodified opinion in the Annual Financial Report on the financial statements as a whole? Yes

SF2 Were there any disclosures in the Annual Financial Report and/or other sources of information concerning nonpayment of any terms of any debt agreement? No

SF3 Did the school district make timely payments to the Teachers Retirement System (TRS), Texas Workforce Commission (TWC), Internal Revenue Service (IRS), and other government Yes agencies? (If there was a warrant hold not cleared in 30 days, then not timely.)

SF4 Was the school district issued a warrant hold? (Yes even if cleared within 30 days.) No

SF5 Did the Annual Financial Report disclose any instances of material weaknesses in internal controls over financial reporting and compliance for local, state or federal funds? No

SF6 Was there any disclosure in the Annual Financial Report of material noncompliance for grants, contracts, and laws related to local, state, or federal funds? No

SF7 Did the school district post the required financial information on its website in accordance with Government Code, Local Govenment Code, Texas Education Code, Texas Yes Administrative Code and other statutes, laws and rules in effect at the fiscal year end?

SF8 Did the school board members discuss the school district's property values at a board meeting within 120 days before the school district adopted its budget? Yes

SF9 Total accumulated accretion on CABs included in government-wide financial statements at fiscal year end. 17770827