Azle ISD - Annual Report of Certain Financial and Local ... · Overview of Certain Financial/Bond Ratings (A) On January 30, 2017, Fitch Ratings, Inc. upgraded the underlying credit

Annual Report of Certain Financial and Local Debt Information

Fiscal Year Ended August 31, 2016

This report was posted on the District’s website on Wednesday, March 29, 2017.

Denotes Required Information Pursuant to Local Government Code, Section 140.008

1

Overview: Azle Independent School District (the “District”) has been assigned the following independentfinancial/bond ratings that indicate the relative strength of the District’s financial and debt management:

School Financial Integrity Rating System of Texas (“FIRST”): Pursuant to Subchapter D,Chapter 39 of the Texas Education Code, the State annually deploys a financial accountability ratingsystem to distinguish the level of a school district’s financial performance based upon certain uniformcriteria.

Based on data for year 2014/15, the District was assigned a 2015/16 FIRST Rating of“Superior” and the District’s score was 100 out of a possible 100 points.

Credit Ratings: The District also maintains independent ratings from certain nationally recognizedcredit rating agencies, such as Moody’s Investors Service and Fitch Ratings, Inc., that evaluate theDistrict’s financial strength and its ability to pay its existing bonds.

Moody’s Investors Service: Assigns a “Aa3” credit rating to the District, defined as “Judged tobe of high quality and are subject to very low credit risk.”

Fitch Ratings, Inc.: Assigns a “AA”(A) credit rating to the District, defined as “Very high quality.A “AA” rating denotes expectations of very low default risk and very strong capacity forpayment of financial commitments.”

For comparison purposes, S&P Global Ratings assigns a credit rating of “AA” to the United States ofAmerica.

Overview of Certain Financial/Bond Ratings

(A) On January 30, 2017, Fitch Ratings, Inc. upgraded the underlying credit rating of the District from “AA-” to “AA”.

2

M&O Revenue by Source – Year 2015/16

Local(52.0%)

State(47.3%)

Federal(0.7%)

State Funding System – Where Do the District’s Revenues Come From: Azle ISD is legally requiredto operate pursuant to the requirements of the Texas Education Code. In particular, the Texas EducationCode determines the District’s ability to generate local tax revenues for maintenance & operation purposesand for the repayment of voter-approved bonds. In this regard, the District annually sets two (2) separatetax rates that are levied upon its certified taxable value that is independently determined by the TarrantAppraisal District, Parker County Appraisal District and Wise County Appraisal District: Maintenance & Operations (“M&O”) Tax Rate: To provide funds for the “day to day” operational

expenses of the District, including instructional programs, teacher salaries, instructional supplies,security, student transportation, extracurricular activities, utilities, facility infrastructure/maintenance, etc. The District’s annual funds for maintenance & operation purposes primarily consist of a

combination of State funding and local M&O taxes. In general, the dollar amount of eachcomponent is determined by the District’s “Equalized Wealth per Student” (i.e. taxable value /weighted average daily attendance) as set by the State. For year 2015/16, the District’s sourcesfor M&O revenues are summarized below.

Source: District’s Audited Financial Statements and District records.

Overview of State Funding System

3

Interest & Sinking Fund (“I&S”) Tax Rate: To provide funds to pay the principal and interest onbonds approved by a majority of voters for capital improvements. The District does not receive anyfacilities funding from the State for the payment of bonds. The following summarizes the District’sbond programs approved by voters over the last 15 years:

As of fiscal year ended August 31, 2016, the District had $7,854 within its Capital Projects Fundfor projects currently in progress.

On November 8, 2016, voters approved the District’s $59.5 million bond program. The Districtanticipates the issuance of the entire 2016 Bond Program authorization on or about February2017 to fund the proposed capital projects.

Overview of State Funding System

Source: Texas Bond Review Board, Texas Education Agency - PEIMS, District’s Audited Financial Statements and District records.

District’s Historical Bond Elections Approved By Voters

Election Date PurposeStudent

Enrollment Election Amount

Dollar AmountRemaining

To Be Issued -As of Aug. 31, 2016

Dollar AmountRemaining

To Be Issued -As of Feb. 1, 2017

November 5, 2013 School Building 5,988 $20,000,000 $0 $0November 8, 2016 School Building 6,306 $59,500,000 $0 $59,500,000

Total Dollar Amount Of Authorized But Unissued Bonds: $0 $59,500,000

4

5,774

5,947 5,9305,988

6,1566,242

5,000

5,200

5,400

5,600

5,800

6,000

6,200

6,400

6,600

6,800

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

Stu

den

t E

nro

llmen

tHistorical Student Enrollment

Source: Texas Education Agency - PEIMS and District records.

Over the last 5 years, the number of students within theDistrict has increased by 468 or an increase of 8.11%.

5

467 429 431 445 455 475

4950 53 62 63 62

2727 25

28 26 26

209201 199

198 204 205

751707 708 732 748 768

0

200

400

600

800

1,000

1,200

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

Fu

ll-T

ime

Eq

uiv

alen

t P

erso

nn

el

Teachers & Paraprofessional Staff Support Staff Administrators Auxiliary Staff (i.e. bus drivers, food service, etc.)

Full-Time Equivalent Personnel

Source: Texas Education Agency - PEIMS, Texas Education Agency - AEIS and District records.

Over the last 5 years, the District’s full-time equivalent personnelhas correspondingly increased by 17 to accommodate theadditional 468 students attending schools within the District.

6

0.08090.0722 0.0726 0.0743 0.0739 0.0760

0.0084

0.0084 0.0089 0.0103 0.0103 0.0099

0.0047

0.0045 0.0043 0.0047 0.0042 0.0042

0.0361

0.0337 0.0336 0.0330 0.0331 0.0329

0.1301

0.1188 0.1194 0.1223 0.1215 0.1231

0.0000

0.0200

0.0400

0.0600

0.0800

0.1000

0.1200

0.1400

0.1600

0.1800

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

Fu

ll-T

ime

Eq

uiv

alen

t P

erso

nn

el P

er S

tud

ent

Teachers & Paraprofessional Staff Support Staff Administrators Auxiliary Staff (i.e. bus drivers, food service, etc.)

Full-Time Equivalent Personnel Per Student

Source: Texas Education Agency - PEIMS, Texas Education Agency - AEIS and District records.

For year 2015/16, the District employed 0.1231 full-time equivalentpersonnel per student.

7

$1.04000 $1.04000 $1.04000 $1.04000 $1.04000 $1.04000

$0.15000 $0.15000 $0.15000 $0.15000 $0.16300 $0.16300

$1.19000 $1.19000 $1.19000 $1.19000 $1.20300 $1.20300

$0.00

$0.25

$0.50

$0.75

$1.00

$1.25

$1.50

$1.75

$2.00

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

Pro

per

ty T

ax R

ate

Per

$10

0 V

alu

atio

n

Maintenance & Operations Tax Rate Interest & Sinking Fund Tax Rate

Historical Tax Rates


Over the last 5 years, the District’s total tax rate has increased by 1.3 cents asa result of voters approving the 2013 Bond Program. The District’s tax ratefor Maintenance & Operations has remained unchanged during this time.

8

$1,0

12

$1,0

12

$1,0

12

$1,0

12

$1,0

23

$902

$2,2

02

$2,2

02

$2,2

02

$2,2

02

$2,2

26

$2,1

05

$3,3

92

$3,3

92

$3,3

92

$3,3

92

$3,4

29

$3,3

08

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

An

nual

Pro

per

ty T

axes

$100,000 Appraised Home Value $200,000 Appraised Home Value $300,000 Appraised Home Value

Historical Total Property Taxes For Maintenance and Operations and Voter-Approved Bonds – For Various Appraised Home Values

Note: Taxes are net of the State-mandated residential homestead exemption.

9

$5.01

$2.51$1.67

$1.25

$11.70

$5.85

$3.90

$2.92

$18.38

$9.19

$6.13

$4.59

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

$18.00

$20.00

0-1 Child 2 Children 3 Children 4 Children

Cos

t P

er S

choo

l Day

$100,000 Appraised Home Value $200,000 Appraised Home Value $300,000 Appraised Home Value

Summary of Property Tax Cost Per School Day –For Various Appraised Home Values – Year 2015/16

Note: Taxes are net of the $25,000 State-mandated residential homestead exemption. Assumes a 180 school day year.

In year 2015/16, a homeowner with a $200,000 Appraised Home Valueand 1 or no children attending Azle ISD paid approximately $11.70 ofschool property taxes for each school day.

A homeowner with a $200,000 Appraised Home Value and 2 childrenattending Azle ISD paid approximately $5.85 of school property taxesper child for each school day.

This includes the cost of instructional programs, teacher salaries,instructional supplies, security, student transportation, extracurricularactivities, facilities infrastructure/maintenance and bond payments.

10

Composition of Total Assessed Valuation – Year 2015/16

Source: Texas Comptroller of Public Accounts - Property Tax Assistance Division.

Single-Family Residential

(65.4%)Multi-Family Residential(1.1%)

Vacant Lots, Acreage, Farm & Ranch Improvements

(11.0%)

Oil, Gas & Minerals(5.7%)

Business, Commercial, Industrial, Utilities,

Other(16.9%)

For year 2015/16, Single-Family Residential properties comprised 65.4% of the District’stotal assessed valuation and other property categories comprised 34.6%.

11

$2,4

37,8

76,9

48

$2,3

64,6

52,4

81

$2,2

75,9

10,0

85

$2,3

01,7

22,3

79

$2,3

67,1

96,0

54

$2,4

12,3

41,9

96

$422

,216

$397

,621

$383

,796

$384

,389

$384

,535

$386

,469

$300,000

$325,000

$350,000

$375,000

$400,000

$425,000

$450,000

$0

$500 Mil

$1.0 Billion

$1.5 Billion

$2.0 Billion

$2.5 Billion

$3.0 Billion

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

Taxab

le Valu

e Per Stu

den

t En

rollmen

tT

axab

le A

sses

sed

Val

uat

ion

Taxable Assessed Valuation Taxable Value Per Student Enrollment

Historical Taxable Assessed Valuation and Taxable Value Per Student Enrollment

Source: Texas Comptroller of Public Accounts - Property Tax Assistance Division, Texas Education Agency - PEIMS and District records.

The District’s taxable value per student has decreasedfrom $422,216 to $386,469 over the last 5 years.

12

Year 2010/11M&O Revenue by Source

I&S Revenue by Source


________(A) Includes $1,562,557 from the State Fiscal Stabilization Fund, distributed under the Federal American Recovery and Reinvestment Act.(B) Represents payment from State received for lost tax revenues resulting from increase of residential homestead exemption in year 2015/16.

Year 2015/16M&O Revenue by Source

I&S Revenue by Source

Given the State funding system is structured to provide the District with an “equalized” dollar amount perstudent, the decrease of the District’s taxable value per student has increased the percentage of M&Orevenues received from the State from 39.8%(A) to 47.3% over the last 5 years.

The District does not receive any facilities funding from the State for the payment of voter-approvedbonds.

Local(100.0%)

Local(59.5%)

State(A)

(39.8%)

Federal(0.8%)

Local(52.0%)

State(47.3%)

Federal(0.7%)

Local(96.4%)

State(B)

(3.6%)

General Fund and Debt Service Fund – Revenue By Source

13

(A) Includes maintenance and operation expenses and bond payments of voter-approved bonds.

$28,107,344 $27,054,382 $26,166,846 $26,036,266 $27,454,283 $28,001,017

$2,220,775 $2,511,438 $2,422,999 $2,181,398$2,122,226 $2,344,066

$15,658,915 $15,198,781 $15,941,573 $18,987,455$20,812,528

$23,387,346

$5,703,571$5,270,916 $4,682,511

$4,849,684$4,876,947

$5,089,273$51,690,605

$50,035,517 $49,213,929$52,054,803

$55,265,984

$58,821,702

$0

$10 Mil

$20 Mil

$30 Mil

$40 Mil

$50 Mil

$60 Mil

$70 Mil

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

Rev

enue

s

Property Taxes Other Local & Intermediate Sources State Program Revenues Federal Program Revenues

Total Revenues (All Governmental Funds*) By Source

*Excludes Capital Projects Fund. Source: District’s Audited Financial Statements and District records.

Property Taxes(A)

14

(A) Includes maintenance and operation expenses and bond payments of voter-approved bonds.

$4,868 $4,549 $4,413 $4,348 $4,460 $4,486

$385$422 $409 $364 $345 $376

$2,712$2,556 $2,688 $3,171

$3,381$3,747

$988

$886 $790$810

$792$815

$8,952

$8,414 $8,299$8,693

$8,978$9,424

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

Rev

enu

es P

er S

tud

ent

Property Taxes Other Local & Intermediate Sources State Program Revenues Federal Program Revenues

Total Revenues (All Governmental Funds*) Per Student

*Excludes Capital Projects Fund. Source: District’s Audited Financial Statements, Texas Education Agency - PEIMS and District records.

Property Taxes(A)

15

$32,942,719 $32,215,327 $34,052,439 $35,490,265 $36,363,945 $37,831,982

$1,424,941 $1,319,841$1,369,438

$1,665,421 $1,511,977$1,786,373$10,674,815 $10,818,935

$10,931,489$11,176,807 $12,105,643

$12,246,430$3,169,279 $3,162,734$3,055,636

$3,195,108$4,349,894

$3,990,149

$944,348 $835,802

$4,317,453 $963,269$1,558,849

$1,717,543

$49,156,102 $48,352,639

$53,726,455 $52,490,870

$55,890,308$57,572,477

$0

$10 Mil

$20 Mil

$30 Mil

$40 Mil

$50 Mil

$60 Mil

$70 Mil

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

Exp

end

itu

res

Instruction & Instructional Support Central Administration District Operations Debt Service Other

Total Expenditures (All Governmental Funds*) By Source

*Excludes Capital Projects Fund. Source: District’s Audited Financial Statements and District records.

16

$5,705 $5,417 $5,742 $5,927 $5,907 $6,061

$247$222

$231$278 $246 $286

$1,849$1,819

$1,843$1,867 $1,966

$1,962

$549$532

$515$534 $707 $639

$164$141

$728 $161$253 $275$8,513

$8,131

$9,060$8,766

$9,079 $9,223

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

Exp

end

itu

res

Per

Stu

den

t

Instruction & Instructional Support Central Administration District Operations Debt Service Other

Total Expenditures (All Governmental Funds*) Per Student

*Excludes Capital Projects Fund. Source: District’s Audited Financial Statements, Texas Education Agency - PEIMS and District records.

17

29.35%

25.73%

14.28%16.56% 16.66%

18.38%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

50.00%

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

Un

rest

rict

ed G

ener

al O

per

atin

g F

un

d B

alan

ce P

er E

xpen

dit

ure

sUnrestricted General Operating Fund Balance as a Percentage of General Operating Expenditures


Unrestricted General Operating Fund Balance is a reservemaintained to meet future expenses, which equaled approximately2.21 months of the District’s operating expenditures for year 2015/16.

The Texas Education Agency and the bond rating agencies rely upona school district’s General Operating Fund Balance to determinefinancial management ratings.

18

Note: Debt service payments reflect payments from September 1 through August 31.

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

2016

/17

2017

/18

2018

/19

2019

/20

2020

/21

2021

/22

2022

/23

2023

/24

2024

/25

2025

/26

2026

/27

2027

/28

2028

/29

2029

/30

2030

/31

2031

/32

2032

/33

2033

/34

2034

/35

2035

/36

2036

/37

2037

/38

2038

/39

An

nual

Bon

d P

aym

ents

Unlimited Tax Refunding Bonds, Series 1997B Unlimited Tax Refunding Bonds, Taxable Series 2013

Unlimited Tax School Building Bonds, Series 2014

Source: District’s Audited Financial Statements and District records – As of August 31, 2016.

Unlimited Tax Debt Service By Series –Existing Bonds Approved By Voters

19

Note: Debt service payments reflect payments from September 1 through August 31.

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

2016

/17

2017

/18

2018

/19

2019

/20

2020

/21

2021

/22

2022

/23

2023

/24

2024

/25

2025

/26

2026

/27

2027

/28

2028

/29

2029

/30

2030

/31

2031

/32

2032

/33

2033

/34

2034

/35

2035

/36

2036

/37

2037

/38

2038

/39

An

nual

Bon

d P

aym

ents

Principal Interest

Unlimited Tax Debt Service By Principal and Interest –Existing Bonds Approved By Voters

Source: District’s Audited Financial Statements and District records – As of August 31, 2016.

As of August 31, 2016

Principal 32,945,000$ + Interest 20,344,138 = Total 53,289,138$

20

Savings from District’s Recent Bond Refunding Programs to Lower Interest Costs

Azle ISD has implemented 2 bond refunding programs to reduce the cost of voter-approved bonds –Which have generated more than $2.8 million of savings for District taxpayers in recent years.

Source: District records.

Summary of Interest Cost Savings – Bond Refunding Programs

Issue Series Refunded

Principal Amount

Refunded Total Savings

Unlimited Tax Refunding Bonds, Series 2005 1997A, 1997C 26,700,000$ 1,803,107$ Unlimited Tax Refunding Bonds, Taxable Series 2013 2005 13,670,000 1,054,511

Totals --- 40,370,000$ 2,857,618$

21

Summary of Unlimited Tax Debt Outstanding By Series –As of Fiscal Year Ended August 31, 2016

Source: District’s Audited Financial Statements, 2010 U.S. Census (Interpolated) and District records. Per capita figures are based upon an estimated population of 39,468.

No. Issue Description Purpose

OriginalPrincipalAmount

OutstandingPrincipal

Total OutstandingDebt Service

OutstandingPrincipal

Per Capita

OutstandingDebt ServicePer Capita

FinalMaturity

Date

TotalProceedsReceived

SpentProceeds

UnspentProceeds

1 Unlimited Tax Refunding Bonds, Series 1997B Refunding at a lower interest rate, etc.

$5,325,000.00 $1,290,000.00 $5,100,000.00 $32.68 $129.22 02/15/2022 $5,521,592.75 $5,521,592.75 $0.00

2 Unlimited Tax Refunding Bonds, Taxable Series 2013 Refunding at a lower interest rate, etc.

$13,490,000.00 $11,655,000.00 $13,107,900.00 $295.30 $332.11 02/15/2022 $14,815,130.93 $14,815,130.93 $0.00

3 Unlimited Tax School Building Bonds, Series 2014 Capital Improvements $20,000,000.00 $20,000,000.00 $35,081,237.50 $506.74 $888.85 02/15/2039 $21,776,370.60 $21,768,516.60 $7,854.00

22

Note: The District has no outstanding debt payable from M&O taxes.

$22,460,000$20,715,000

$18,750,000

$36,775,000$34,895,000

$32,945,000

0.92%0.88%

0.82%

1.60%

1.47%

1.37%

0.00%

0.25%

0.50%

0.75%

1.00%

1.25%

1.50%

1.75%

$0

$10 Mil

$20 Mil

$30 Mil

$40 Mil

$50 Mil

$60 Mil

$70 Mil

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

Bon

d P

rincip

al Per T

axable A

ssessed V

aluation

Bon

d P

rin

cip

al O

uts

tan

din

g A

t F

isca

l Yea

r E

nd

M&O-Supported Debt I&S-Supported Debt

Source: District’s Audited Financial Statements, Texas Comptroller of Public Accounts - Property Tax Assistance Division and District records.

Tax-Supported Debt Obligations At Fiscal Year End and As a Percentage of Taxable Assessed Valuation

23

Note: The District has no outstanding debt payable from M&O taxes.

Source: District’s Audited Financial Statements, 2010 U.S. Census (Interpolated), Bureau of Labor Statistics and District records.

$652$575

$515

$983$906

$835

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

Bon

d P

rin

cip

al P

er C

apit

a

Inflation-Adjusted M&O-Supported Debt Per Capita Inflation-Adjusted I&S-Supported Debt Per Capita

Reflects an estimate of District’s principal amount of tax-supporteddebt outstanding per capita, with years 2010/11 - 2014/15 adjustedby rate of inflation portrayed by the Consumer Price Index.

Inflation-Adjusted Tax-Supported Debt Per Capita

24

Note: Debt payments represent District’s voter-approved bonds payable from a levy of its I&S tax rate.

Source: District’s Audited Financial Statements, 2010 U.S. Census (Interpolated), Bureau of Labor Statistics and District records.

Inflation-Adjusted Tax-Supported Debt Cost Per Capita –Principal and Interest In Each of the Last 5 Years

$103$95

$90 $88

$96 $96

$0

$20

$40

$60

$80

$100

$120

$140

$160

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

Loc

al T

axpa

yer

Cos

t Per

Cap

ita

-T

ax-S

uppo

rted

Deb

t Pay

men

ts

On a per capita basis, reflects an estimate of local property taxes used to fundthe District’s annual principal and interest requirements of its tax-supporteddebt, with years 2010/11 - 2014/15 adjusted by rate of inflation portrayed bythe Consumer Price Index.

25

Main Office Contact Information:

Physical and Mailing Address:300 Roe StreetAzle, Texas 76020

Phone: (817) 444-3235Fax: (817) 444-6866

For additional information regarding this report, please contact:

Ms. Monica MillerDirector of FinancePhone: (817) 444-0805Email: [email protected]

Links to Additional Resources:

https://www.comptroller.texas.gov/transparency/local/debt/isds.php

http://www.brb.state.tx.us/local_debt_search.aspx

Contact Information and Links to Additional Resources

Documents

Azle ISD - Annual Report of Certain Financial and Local ... · Overview of Certain Financial/Bond Ratings (A) On January 30, 2017, Fitch Ratings, Inc. upgraded the underlying credit