1 Fiscal Years Ended August 31, 2011 and 2010 South Texas College District Comprehensive Annual Financial Report Fiscal Years Ended August 31, 2011 and 2010 Prepared by the Business Office Hidalgo County and Starr County, Texas •3201 W. Pecan, McAllen, TX 78501• 956.872.8311• www.southtexascollege.edu• Introductory Section South Texas College District COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEARS ENDED AUGUST 31, 2011 AND 2010 TABLE OF CONTENTS Page No. INTRODUCTORY SECTION Table of Contents --------------------------------------------------------------------------------- i-iv Transmittal Letter --------------------------------------------------------------------------------- 1-22 Administrative Officers -------------------------------------------------------------------------- 23 Board of Trustees ---------------------------------------------------------------------------------- 24-25 Organizational Chart ----------------------------------------------------------------------------- 26 GFOA Certificate of Achievement ------------------------------------------------------------- 27 FINANCIAL SECTION Independent Auditor’s Report ------------------------------------------------------------------- 29-30 Management’s Discussion and Analysis ------------------------------------------------------- 31-49 Basic Financial Statements: Exhibit 1 Statements of Net Assets ------------------------------------------------------------------------- 50 Exhibit 2 Statements of Revenues, Expenses and Changes in Net Assets ---------------------------- 51 Exhibit 3 Statements of Cash Flows ------------------------------------------------------------------------ 52-54 Notes to the Financial Statements --------------------------------------------------------------- 55-86 i South Texas College District COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEARS ENDED AUGUST 31, 2011 AND 2010 TABLE OF CONTENTS (Continued) Page No. Supplementary Information: Schedule A Schedule of Operating Revenues ---------------------------------------------------------------- 87-88 Schedule B Schedule of Operating Expenses by Object --------------------------------------------------- 89 Schedule C Schedule of Non-Operating Revenues and Expenses ---------------------------------------- 90 Schedule D Schedule of Net Assets by Source and Availability ------------------------------------------ 92-93 Schedule E Schedule of Expenditures of Federal Awards ------------------------------------------------ 94-96 Schedule F Schedule of Expenditures of State Awards --------------------------------------------------- 97-98 STATISTICAL SECTION (UNAUDITED) Statistical Information --------------------------------------------------------------------------- 99 Statistical Supplement 1 Net Assets by Component (Unaudited) ------------------------------------------------------- 100-101 Statistical Supplement 2 Revenues by Source (Unaudited) -------------------------------------------------------------- 102-105 Statistical Supplement 3 Program Expenses by Function (Unaudited) ------------------------------------------------- 106-109 Statistical Supplement 4 Tuition and Fees (Unaudited) ------------------------------------------------------------------- 110 ii South Texas College District COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEARS ENDED AUGUST 31, 2011 AND 2010 TABLE OF CONTENTS (Continued) Page No. Statistical Supplement 5 Assessed Value and Taxable Assessed Value of Property (Unaudited) ------------------ 111 Statistical Supplement 6 State Appropriation Per FTSE and Contact Hour (Unaudited) ---------------------------- 113 Statistical Supplement 7 Principal Taxpayers (Unaudited) ---------------------------------------------------------------- 114-117 Statistical Supplement 8 Property Tax Levies and Collections (Unaudited) ------------------------------------------- 118-119 Statistical Supplement 9 Ratios of Outstanding Debt (Unaudited) ------------------------------------------------------ 120-121 Statistical Supplement 10 Legal Debt Margin Information (Unaudited) ------------------------------------------------- 122-123 Statistical Supplement 11 Pledged Revenue Coverage (Unaudited) ------------------------------------------------------ 125 Statistical Supplement 12 Demographic and Economic Statistics – Taxing District (Unaudited) ------------------- 126-127 Statistical Supplement 13 Principal Employers (Unaudited) -------------------------------------------------------------- 128 Statistical Supplement 14 Faculty, Staff, and Administrators Statistics (Unaudited) ----------------------------------- 129 Statistical Supplement 15 Enrollment Details (Unaudited) ---------------------------------------------------------------- 130-131 Statistical Supplement 16 Student Profile (Unaudited) --------------------------------------------------------------------- 132-133 Statistical Supplement 17 Transfers to Senior Institutions (Unaudited) -------------------------------------------------- 134 iii South Texas College District COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEARS ENDED AUGUST 31, 2011 AND 2010 TABLE OF CONTENTS (Continued) Page No. Statistical Supplement 18 Capital Asset Information (Unaudited) -------------------------------------------------------- 135 Statistical Supplement 19 Changes in Net Assets (Unaudited ) ------------------------------------------------------------ 136-139 Statistical Supplement 20 Ad Valorem Tax Rates Authorized (Unaudited) --------------------------------------------- 141 Statistical Supplement 21 Property Tax Rates – All Direct and Overlapping Governments (Unaudited) ----------- 142-145 Statistical Supplement 22 Computation of Direct and Overlapping Debt (Unaudited) --------------------------------- 146-147 SPECIAL REPORTS SECTION 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 ---------------------------------------- 149-150 Independent Auditor’s Report on Compliance with Requirements that could have a Direct and Material Effect on Each Federal Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 ------------------------------- 151-152 Report on Compliance with Requirements Applicable to Each State Major Program and on Internal Control Over Compliance in Accordance with the State of Texas Single Audit Circular ------------------------------------------------- 153-154 Schedule of Findings and Questioned Costs – Federal and State -------------------------- 155-157 Schedule of Findings and Questioned Costs Status of Prior Year Findings – Federal and State -------------------------------------------- 158 Corrective Action Plan --------------------------------------------------------------------------- 159 iv South Texas College District 3201 West Pecan Blvd. P.O. Box 9701 McAllen, Texas 78502 (956) 872-4646 December 7, 2011 To: President Shirley A. Reed, M.B.A., Ed. D. Members of the Board of Trustees and Citizens of the South Texas College District: The Comprehensive Annual Financial Report (CAFR) of South Texas College District (“the District”), Counties of Hidalgo and Starr, state of Texas, for the years ended August 31, 2011 and 2010, is hereby submitted. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the management of the District. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of the District. All disclosures necessary to enable the reader to gain an understanding of the District’s financial activities, in relation to its mission, have been included. Management of the District is responsible for establishing and maintaining an internal control structure designed to protect the assets of the District, prevent loss from theft or misuse and provide adequate accounting data to allow for the preparation of financial statements in conformity with Generally Accepted Accounting Principles. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. State statutes require every community college to submit audited annual financial reports to the Texas Higher Education Coordinating Board by January 1st of each year. Long Chilton, LLP, Certified Public Accountants, have issued an unqualified opinion on South Texas College District’s financial statements for the year ended August 31, 2011. The independent auditors’ report is included in the financial section of this report. This letter of transmittal complements and should be read in conjunction with Management’s Discussion and Analysis which immediately follows the independent auditor’s report and which provides a narrative introduction, overview and analysis of the basic financial statements. 1 Comprehensive Annual Financial Report The South Texas College District Comprehensive Annual Financial Report (CAFR) for the fiscal year ended August 31, 2011 was prepared by the Business Office. The District’s Financial Statements are in compliance with GASB Statement No. 34, Basic Financial