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Page 1: MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Mental Health Mental... · MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY TABLE OF CONTENTS INTRODUCTION SECTION

MENTAL HEALTH MENTAL RETARDATION

AUTHORITY OF BRAZOS VALLEY

ANNUAL FINANCIAL REPORT

YEAR ENDED AUGUST 31, 2016

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY TABLE OF CONTENTS

INTRODUCTION SECTION

Certificate of Board Approval Transmittal Letter Listing of Officials Organizational Chart

FINANCIAL SECTION

Independent Auditor's Report Management's Discussion and Analysis

Basic Financial Statements

Government Wide Financial Statements Statement of Net Position Statement of Activities

Fund Financial Statements Balance Sheet - Governmental Funds Reconciliation ofthe Balance Sheet of Governmental Funds to

the Statement ofNet Position Statement of Revenues, Expenditures and Changes in Fund

Balance - Governmental Funds Reconciliation of the Statement of Revenues, Expenditures and

Changes in Fund Balance of Governmental Funds to the Statement of Activities

Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - General Fund

Statement of Fiduciary Net Position- Fiduciary Fund

Notes to Financial Statements

OTHER SUPPLEMENTARY INFORMATION

Capital Assets Used in the Operation of Governmental Funds Schedule by Source Schedule by Function and Activity Schedule of Changes by Function and Activity

Exhibit No.

A-1 A-2

B-1

B-2

B-3

B-4

B-5 C-1

Page No.

11

iv v

1 3

10 11

12

13

14

15

16 18

19

28 29 30

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY TABLE OF CONTENTS

STATISTICAL SECTION (Unaudited)

Schedule of Revenues and Expenditures by Source of Funds - General Fund Reconciliation of Total Revenues and Expenditures to Fourth

Quarter Financial Report Schedule of Indirect Costs Schedule of Leases in Effect Schedule of Space Occupied in a State-Owned Facility Schedule oflnsurance in Force Schedule of Bond Coverage Schedule of Professional and Consulting Fees Schedule of Legal Services

SINGLE AUDIT 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

Independent Auditor's Report on Compliance on Each Major Program and on Internal Control over Compliance Required by the Uniform Guidance and the State of Texas Single Audit Circular

Schedule of Expenditures of State and Federal Awards Notes to the Schedule ofExpenditures of State and Federal Awards Schedule of Findings and Questioned Costs Schedule ofPrior Year Findings

Page No.

31

32 34 35 36 37 38 39 40

41

43 45 47 48 49

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INTRODUCTION SECTION

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Certificate of Board Approval Year Ended August 31, 2016

I, Judge Dorothy Morgan, Chair of the Board of Trustees of Mental Health Mental Retardation Authority of Brazos

Valley, do hereby certify that this accompanying audit report for fiscal year ended August 31, 2016, from Davis

Kinard & Co, PC was reviewed and approved at a meeting of the Board of Trustees held on the 261h day of January,

2017.

Judge Dorothy Morgan Chairperson, Board of Trustees

Date

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.. .·.' '' (I I -l

MHMRAuthoritY of Brazos yalley . I''·

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For ~ Healthy, Happy Tomqrrow . ., : I

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CENTRAL ADMINISTRATION 1504 S. Texas Avenue

,Bryan, Tex'as 77802- 1015 ~ · (979) 822-MHMR

FAX (979) 361 -9~06

MAILrNG ADDRESS !'.0 . Box 4588 . Bryan, 'l'exas 77805-4588 .· BRAZOS COUNTY MH SERVIC-ES 804 s. Texas Av~.

·Bryan, TX 77803-3946 ·: (979)822-6467 .

DAY HAB SERVICES · Li fe'C hdices Center 623 G:. Mary .Lake Bryan, TX 77801-3424 .. (97;) 36 1-9870

BURLESON COUNTY ,P.O.·Box 615 " 103' E. Hwy. 2 1. caldwell , TX 77836-1 225 ,(979) 567-437,7

GRIMES COUNTY 702 S. LaSalle

' Navasota, TX 77868-3858 (93?) 825-796?

LEON COUNTY P.O. Box 512

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Centervil le, TX·75833-05 12 (903) 536-2180 .

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; ' MADISON COUNTY ' .. P.O. Box 672 · 3438Hwy i l .

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Madisonville, TX 77864-0672 (936) 348-3695

ROBERTSOJ:o! COUNTY: 12 12 W.Brown Heamel TX 77859-3067 :

" \Q1~) 279-5 i 93 .

. WASHINGTON COUNTY ' ,' -·.' P.O. Box 1662 .

:605 E. Blue Bell Road ' • 1 • •• Brenham, TX 77833-24 11 •

.. (979) 830-0008

.·. i• . •

,•

December 28;2016

.· Dear Friends and Supporters,:

r ~ ·~ .. \ ''

Fiscal Year 2016 w'as a significant year for the.MHMR AuthoritY of ·Brazos Valley., We continue·to make' gre~t strides toward providing cost , efficient,' i111prov~d, accessible serVices in the challengin·g behavioral and ·. ' dev.elopinental care enviro'liment that i~ emerging fr.opi. national an.d ' .. ' state initiatives. The most evolutionary change, continues tQ be the ·analysis ~nd trending of Clinical, an,d financial daf~ which c~ntinues to .. help us achieve impr~vements'.in our fiscal stability. i _·.. . ' .. ; ..

The Mobi~e Crisis Outreach Team and_ the Brazos County . S~eriff's Department-continue to improve responsiveness to behavjoral health crisis which lea4s·-to reduceliticarcerations and _more efficient treatment . . Th'is has also been ·enhanced by the Tex~s Il-ealthca·re lran~for·matio.:i: and Quality . .Jmprovement Pr9.gr~m -11'15 W~iver. ·.- -· projects tltat came· online dt~.ring FY 20i4:_. The Mental Health . · Trtra·~.men~ Team continues incorp.orat'ing peer supp·ort services into all · aspects of the. treatptent process for improved r~covery and suc'cess·. We ·

· rec~iv~d. additio'n.al funding -for psychia'tric inp~tieni beds that a~~isis us · · ' ' . ' ' \ ..

in keeping persons locally, rather-than being sent-to Au·s.tin or Houston . for inpatient tre~tment. The C9minunity Living Options Information · Process coritinues_ to ensure that pers.oos living in the St_a~e Supp-orted_ LiviQ.g;Cep.ter in Brenha~ a~e . aw~re of their right'to live in a less·. ~estrictive settinf.f in the co-mmunity ifth~y ~esire. We co~tin'ue to . receive enhance111ents to our· clinical and financial software syste~ . which h~s impr:oved our reporting requirements to our various f'!lndjng , sources .. Fis,<;al Year 2017 should result jn f~rt~er imprpvements In . clinical ~~d fisc~l outcomes and repo~ting. . - /,. -.'i'

' • \ • I ' ....

Dur.ing Fiscal Year 2017, we will m~~e tow.ard .more functional ~linical· · . and fiscal'electronic systems; .continued e-nhancements .of the Texas ~ · .. ·. Resilience and.Recov~ry (TRR) model with improved internal cli~ical

',_. qual~ty oversight and utilizatiQn ·m~nagement processes; increased ­recovery-oriented tr:eatinent, and opportunities for collabor~tioli in the

f' • ', '' ' ' ,' • J ' ' ' ' •I o# I '

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Serving t~te· Brazos Valley for over 40 Yerti~s • } ,I

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·: .

Penny
Text Box
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behavioral health and developmental care arena. I look forward to Fiscal Year 2017 as an exciting year of even greater revolutionary change, new growth, and new challenges, which will hopefully result in even higher quality services to our consumers and to the citizens of the Brazos Valley.

The staff and Board of Trustees of MHMR Authority of Brazos Valley are committed and proactively charging ahead, even in today's clinically and financially uncertain environments. We are excited to accept this challenge and embrace change as a way of life as we continue being the primary community resource for mental health and intellectual developmental disabilities services.

Sincerely,

f3ltt~ Bill Kelly. Executive Director

Penny
Text Box
iii
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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Listing of Officials

Board of Trustees

Judge Dorothy Morgan Tammy Tiner Charles Camarillo Patti Rowley Linda Goolsby Mark Maltsberger Mary Higgs SheriffDonald Sowell Sheriff Gerald Y ezak

Executive Staff

Bill Kelly Dan Monson Ken Danford Robert Reed Jermaine East

August 31, 2016

Chair Vice-Chair Secretary I Treasurer Member Member Member Member Member Member

Executive Director Chief Financial Officer Director of Administrative Services Director Behavioral Health Services Director ofiDD Services

iv

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MHMR Authority of Brazos Valley Organizational Chart

Board of Trustees Dorothy Morgan, Chairperson (Washington Co.)

Tammy Tiner, Vice-Chair (Brazos Co.) Charles Camarillo, Secretary/Treasurer (Burleson Co.) linda Goolsby (Brazos Co.) Mark Maltsberger (Brazos Co.) I Mary Higgs (Leon Co.) Patti Rowley, (Madison Co.) I Donald Sowell (Grimes Co. ) Gerald Yezak (Robertson Co.) I

I

- _l_- I

-·- - I 'I

I Linda Chandler I

I I I Chair- Citizens/Network ~ i

Advisory Committee I Executive Director I I ..._,_,_,_,_,_,_._ J I

I I

Courtney Morton :

..... ._ I Executive Assistant I

I

I I I I i I

I I I i

Robed Reed i Jermaine East Robert Jones I

Ken Danford D(lniel Mon~Qn Intellectual Behavioral Health I Utilization/Quality I

Administrative ·--·· Chief Financial f·· Operations

f- I Developmental r-··· Management I

Services Director Officer I Disabilities I Director I Services Director

Director

I I I I

Human Resources Financ1a1 Keporting I I

Benefits/Employee Shane De Los Santo§ I Corporate I Grants Management

Assistant Behavioral I Kathervne Warren Compliance j

Relations Pension Management I I Continuity of Services Recruiting Health Director

i Credentialing Crisis Services/MCOT

I

MAC MH Respite I UM Contract Management Screening & Eligibility i Anita Lang Policy & Procedure

Janis Frenzel Intake/Benefit Eligibility I IDD Intake/Eligibility Development

Finance Manager Routine & Rehab Case I IDD Service Provider Relations/

Claims Billing Management I ~etwork Accounts Receivable Rehab Counseling & ! Coordination

Noel Temple!gn IDD Respite Development Information Services Payroll Psychotherapy

I CLOIP Management Manager ACT Team

I CFC Planning Supported Housing & I prant Development

Employment I DQnnie Pennington Joann Jackson I

Facilities/Fleet! Staff Accountant I Kristi McPherson Karlee Anderson I LA HCS Service Maintenance Accounts Payable Mae Brooks

Risk Management TCOOMMI i Coordination OM Cash Receipts Jail Diversion I Enhanced Community Standards General Ledger i Coordination Compliance Audits

.I Fixed Assets I

Je(lnnie ElwQQQ Grants I DVC Audits Clients Rights Child/Adolescent I Sandra Haywogg Staff Development Provider Services I

Marketing Child Rehab Services I HCS Supported Home

I Living

Kimberly Dai[y I HCS Residential

Director of Nursing I ICF/IDD Residential

Susan Winters : TxHml Medication Clinic - I Specialized Therapies

PAP MH Continuity of Care Liaison

I NewGen Meds :

Waitlist Maintenance I

I Elena Cortinas

I Pam Jenkins I i Lawrence Harris I Regina Mitchell & I Maureen Potts I Linda Wilson I IDD Day Habilitation

Medical Records I Benefits Eligibility I IDD Community I i Support I I IDD Supported I I Employment I Dr. Woodrow

1] Katie Holt I CoQQedge ~lit "J:::dtt.f Nurse Manager I Medical Director

Rural Med Clinics .•.... r Physician Services

Rural PAP Pharmacological Approved by: Bill Kelly, Execulive Director

Services Revised: September 1, 2016

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FINANCIAL SECTION

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1

      First Financial Bank Building     400 Pine Street, Ste. 600, Abilene, TX 79601   325.672.4000 / 800.588.2525 / f: 325.672.7049 www.dkcpa.com 

Independent Auditor’s Report The Board of Trustees Mental Health Mental Retardation Authority of Brazos Valley Bryan, Texas 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 Mental Health Mental Retardation Authority of Brazos Valley (the Center), as of and for the year ended August 31, 2016, and the related notes to the financial statements, which collectively comprise the Center’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, the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and the Guidelines for Annual Financial and Compliance Audits of Community Mental Health and Mental Retardation Centers. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Center, as of August 31, 2016, and the respective changes in financial position and the respective budgetary comparison for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America.

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Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 3-9 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Center's basic financial statements. The introductory section, other supplementary information, 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 state and federal awards is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and the State of Texas Single Audit Circular and is also not a required part ofthe basic financial statements.

The schedule of expenditures of state and federal awards and other supplementary information are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of state and federal awards and other supplementary information are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

The introductory and statistical sections 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 13, 2017, on our consideration of the Center's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Center's internal control over financial reporting and compliance.

Abilene, Texas January 13, 2017

l)~ e~ 'if' a, pc_ Certified Public Accountants

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Management Discussion and Analysis

August 31, 2016

As management of Mental Health Mental Retardation Authority of Brazos Valley (the Center), we offer readers of the Center's fmancial statements this narrative overview and analysis of the financial activities of the Center for the fiscal year ended August 31, 2016. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal.

Financial Highlights

• The assets of the Center exceeded its liabilities at the close of the most recent fiscal year by $3,937,635 (net position). This compares to the previous year when assets exceeded liabilities by $3,557,493. The Center's total netposition(government-wide) increased by $380,142.

• As of the close of the current fiscal year, the Center's governmental funds reported combined ending fund balances of$2,058,676, an increase of$400,497.

• At the end of the current fiscal year, unassigned fund balance for the Geneml Fund was $1,961,123 or 14.7% of General Fund expenditures.

Overview of the Financial Statements

This discussion and analysis is intended to serve as an introduction to the Center's basic fmancial statements which have three components: 1) government-wide fmancial statements, 2) fund financial statements, and 3) notes to the fmancial statements. This report also contains other supplementary information in addition to these basic financial statements.

Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the Center's fmances, in a manner similar to a private-sector business.

The statement of net position presents information on all ofthe Center's assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Center is improving or declining.

The statement of activities presents information showing how the Center's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, the accrual basis of accounting is used, which is similar to the accounting used by most private-sector companies. Some revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods. One such example is earned but unused vacation leave, which is expensed at the time it is accrued, but the cash flow occurs at the time the leave is taken.

In the Statement ofNet Position and Statement of Activities, the Center combines its governmental activities. Most of the Center's basic services are reported here, including the Mental Health Adult Program, Mental Health Child and Adolescent Program, Intellectual and Developmental Disabilities Program, and General Administration.

The government-wide fmancial statements are on pages 10 and 11 of this report.

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Management Discussion and Analysis

August 31, 2016

Fund financial statements. The fund financial statements provide detailed information about the most significant funds -not the Center as a whole. A fund is a grouping of related accounts that are used to maintain control over resources that have been segregated for specific activities or objectives. The Center, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with fmance-related legal requirements. The funds of the Center can be divided into two categories: governmental funds and fiduciary funds.

• Governmental funds - Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide fmancial statements. However, unlike the government-wide financial statements, governmental fund fmancial statements focus on how money flows into and out of those funds and the balances left at year-end that are available for spending. These funds are reported using an accounting method called modified accrual accounting, which requires the recognition of revenue when earned, only so long as the funds are collectible within the period or soon enough afterwards to be used to pay liabilities of the current period.

The governmental fund financial statements provide a detailed short-term view of the Center's general government opemtions and the basic services it provides. Governmental fund information helps you determine the amount of fmancial resources that can be spent in the near future to fmance the Center's programs.

We describe the relationship (or differences) between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds in the reconciliations on pages 13 and 15.

Each year the Center adopts a budget for its General Fund. A budgetary comparison schedule has been provided for the General Fund to demonstrate compliance with this budget.

The governmental fund financial statements are on pages 12 through 17 of this report.

• Fiduciary funds- Fiduciary funds are used to account for resources held by the Center for the benefit of consumers. Fiduciary funds are not reflected in the government-wide financial statements because those funds belong to the consumers and are not available to support the Center's operations.

Notes to the financial statements. The notes provide additional information that is essential for a full understanding of the data provided in the government-wide and fund fmancial statements. The notes to the financial statements can be found beginning on page 19 of this report.

Other Information. In addition to the basic financial statements and accompanying notes, this report also presents certain supplementary information that is required by the Texas Health and Human Services Commission's Guidelines for Annual Compliance Audits of Community MHMR Centers. The supplementary information can be found beginning on page 28 of this report.

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Management Discussion and Analysis

August 31,2016

Government-Wide Financial Analysis

As noted earlier, net position may serve over time as a useful indicator of a government's financial position. The Center's assets exceeded liabilities by $3,937,635 at the close of the most recent fiscal year. This is a $380,142 increase over last year's net position of$3,557,493.

The largest portion of the Center's net position (53.9%) represents its net investment in capital assets (e.g., land, buildings, furniture, equipment and software, and vehicles).

The remaining balance of the Center's net position ( 46.1%) represents the unrestricted financial resources available for future operations.

Current and other assets

Capital assets Total assets

Current and other liabilities

Long-term liabilities Total liabilities

Net position: Net investment in capital assets Unrestricted

Total net position

Statement of Net Position Government-wide

$

2016

3,629,359 2,298,401

5,927,760

1,614,681 375,444

1,990,125

2,120,376 1,817,259

$====3,=93=7=,6=35=

5

$

2015

2,408,813 2,408,755

4,817,568

855,681 404,394

1,260,075

2,125,689 1,431,804

$ ====3=,5=5=7=,4=93=

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Management Discussion and Analysis

August 31,2016

Governmental activities increased the Center's net position by $380,142. Key elements of this increase are as follows:

Revenues:

Program revenues

Charges for services

Operating grants and contributions

General revenues

Investment earnings

Gain (Loss) on sale of assets

Other income

Total revenues

Expenses:

Mental Health Adult

Mental Health Child and Adolescent

Intellectual and Developmental Disabilities

Total expenses

Change in net position

Net position- beginning Net position- ending of year

Governmental Fund Financial Analysis

Statement of Activities

Government-wide

$

$

2016 2015

5,390,762 $ 5,794,911

8,196,923 6,380,922

3,237 1,591

18,786 (43,823)

157,973 152,433

13,767,681 12,286,034

7,909,258 6,295,153

1,067,594 1,079,965

4,410,687 4,348,731

13,387,539 11,723,849

380,142 562,185

3,557,493 2,995,308 3,937,635 $ 3,557,493

As noted earlier, the Center uses fund accounting to ensure and demonstrate compliance with fmance--related legal requirements.

Governmental funds: The focus of the Center's governmental funds is to provide information on near-term inflows, outflows, and balances of resources available for spending. Such information is useful in assessing the Center's financing requirements.

Revenues and other financing sources for the Center's governmental activities were $13,767,681 while total expenditures were $13,367,184. The change in fund balancewasanincreaseof$400,497.

In particular, unassigned fund balance may serve as a useful measure of the Center's net resources available for spending at the end of the fiscal year.

The General Fund is the chief operating fund of the Center. At the end of the current fiscal year, unassigned fund balance of the General Fund was $1,961,123 while total fund balance was $2,058,676. As a measure of the General Fund's liquidity, it may be useful to compare unassigned fund balance to total fund expenditures. Unassigned fund balance represents 14.7 percent of total General Fund expenditures.

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MENTAL HEALm MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Management Discussion and Analysis

August 31,2016

General Fund Budgetary ffighlights

As presented on pages 16 and 17, actual amounts for revenue and expenditures by their natural description are provided. Actual amounts are compared to the Original/Final Budget with variances reflected. Over the course of the year, the Center revised its General Fund Budget. Significant variances are as follows:

Revenues:

• Patient fees (over budget)- Due to increased crisis activities within local emergency rooms. • Medicaid/Medicare (under budget) - Due to Mental Health Rehabilitation and Intellectual &

Developmental Disabilities Service Coordination budgeted too high based on FY 2015 trends and staff vacancies.

• Home and Community Based Services (over budget) - Due to increased purchases of Adaptive Aids and Dental Services.

• Medicaid 1115 Waiver (over budget) - Due to conservative budgeting on Delivery System Reform Incentive Payment (DSRIP) Category 3 metrics.

Expenses:

• Salaries/Fringe benefits (under budget)- Due to vacancies and conservative budgeting.

Capital Assets and Debt Administration

Capital Assets. The Center's investment in capital assets for its governmental activities as of August 31, 2016 is $2,298,401, net of accumulated depreciation. This investment in capital assets includes land, buildings, furniture, equipment, software, and vehicles. The total decrease in the Center's investment in capital assets for the current fiscal year was $110,354 due to addition of continuing depreciation, acquired assets, and the retirement of obsolete assets.

Land Buildings Furniture, equipment, and software Vehicles

Less: accumulated depreciation

Total capital assets, net

Capital Assets (net of depreciation)

$

$

7

2016

378,103 3,153,593

692,576 828,559

(2, 754,430)

2,298,401

2015

$ 343,669 3,141,276

692,576 798,620

(2,567,386)

$ 2,408,755

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Management Discussion and Analysis

August 31, 2016

Long-term debt. Long-term debt consists of equipment debt, obligations under capital leases, and accrued compensated absences. During the year ended August 31, 2016, the net decrease in long-term debt was $89,999. A summary of outstanding debt at year end follows:

Notes payable Capital leases payable Compensated absences

Total long-term debt

Economic Factors and Next Year

Long-term Debt

$

$

2016 2015

140,063 $ 157,560 37,962 125,506

241,417 226,375

419,442 $ 509,441

The Eighty-fourth Legislature met January 2015 - May 2015. Sunset Commission Review of the Texas Health and Human Services Commission took top priority during the session.

Additionally, the Eighty-fourth Legislature provided the following:

1) Grants were made available for increased inpatient psychiatric beds throughout the State of Texas. MHMR Authority was one of seven Local Mental Health Authorities to receive this funding.

2) The 1115 Transformation and Quality Improvement Program received the green light for renewal/extension request to The Centers for Medicare and Medicaid Services (CMS).

3) Grants continued to be made available for Supported Housing, Crisis Expansion, and Mental Health First Aid. MHMR Authority of Brazos Valley continues to receive funding for all three programs for FY 2016 and FY 2017.

The Eighty-fifth Legislature will meet January 2017 - May 2017. Behavioral health funding is exempt from the required 4% budget cuts ahead of the session. The mental health system will be looked at for sustained funding for psychiatric inpatient beds statewide, reduction of waitlists, and increased access to community-based services, including prevention. The intellectual & developmental disabilities services will be looked at for continued reduction in Home & Community Based Services (HCS) waitlist and enhancement of services for people with complex medical and/or mental health issues.

These factors were considered when preparing and adopting its General Fund budget for the fiscal year ending August 31, 2017. A balanced budget for fiscal year 2017 was adopted. We do anticipate a slight surplus, excluding unexpected decreases in revenues from either the State of Texas or local entities.

8

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Management Discussion and Analysis

August 31, 2016

Request For Information

This financial report is designed to provide a general overview of the Mental Health Mental Retardation Authority of Brazos Valley's finances for all those with an interest in the Authority's finances. Questions concerning any of the information provided in this report or requests for additional fmancial information should be addressed to:

Mental Health Mental Retardation Authority of Brazos Valley Finance Services Department

P. 0. Box 4588 Bryan, Texas 77805

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BASIC FINANCIAL STATEMENTS

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Exhibit A-1

MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Statement ofNet Position

August 31,2016

Governmental Activities

ASSETS Cash and cash equivalents $ 2,020,901

Accounts receivable 82,525

Receivables from other governments 1,428,380

Inventories 3,189

Prepaid items 94,364

Capital assets, net Nondepreciable 378,103

Depreciable 1,920,298

Total Assets 5,927,760

LIABILITIES Accounts payable 392,678

Accrued payroll 394,630 Other accrued liabilities 59,600

Unearned revenue 723,775

Due within one year Notes payable 6,036

Capital leases payable 37,962

Due in more than one year Notes payable 134,027

Accrued compensated absences 241,417

Total Liabilities 1,990,125

NET POSITION Net investment in capital assets 2,120,376 Unrestricted 1,817,259

Total Net Position $ 3,937,635

The accompanying notes are an integral part of these financial statements.

10

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Statement of Activities

Year Ended August 31, 2016

Expenses Expenses after

Administration Allocation of Function I Programs Expenses Allocation Administration

Governmental Activities: Mental Health - Adult $ 6,978,589 $ 930,669 $ 7,909,258 Mental Health - Child and Adolescent 941,972 125,622 1,067,594 Intellectual and Developmental Disabilities 3,891,689 518,998 4,410,687 Administration 1,575,289 (1,575,289)

Total Governmental Activities $ 13,387,539 $ $ 13,387,539

The accompanying notes are an integral part of these financial statements.

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$

$

Charges for Services

2,264,660 $ 274,776

2,851,326

Program Revenues Operating Grants and

Contributions

6,405,132 $ 676,206

1,115,585

Capital Grants and

Contributions

5,390,762 $ 8,196,923 $=======

General Revenues Investment earnings Gain on sale of assets Other local income Total General Revenues

Change in Net Position

Net Position- Beginning

Net Position - Ending

11

$

$

Net (Expense) Revenue and Changes in Net Position

Governmental Activities

Exhibit A-2

760,534 (116,612) (443,776)

200,146

3,237 18,786

157,973 179,996

380,142

3,557,493

3,937,635

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Exhibit B-1

MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Balance Sheet - Governmental Funds

August 31,2016

Total General Governmental

Fund Funds ASSETS Cash and cash equivalents $ 2,020,901 $ 2,020,901 Accounts receivable 82,525 82,525 Receivables from other governments 1,428,380 1,428,380 Inventories 3,189 3,189 Prepaid items 94,364 94,364

Total Assets $ 3,629,359 $ 3,629,359

LIABILITIES AND FUND BALANCES Liabilities:

Accounts payable $ 392,678 $ 392,678 Accrued payroll 394,630 394,630 Other accrued liabilities 59,600 59,600 Unearned revenue 723,775 723,775

Total Liabilities 1,570,683 1,570,683

Fund Balances: Nonspendable:

Inventories 3,189 3,189 Prepaid items 94,364 94,364

Unassigned 1,961,123 1,96 I, 123

Total Fund Balances 2,058,676 2,058,676

Total Liabilities and Fund Balances $ 3,629,359 $ 3,629,359

The accompanying notes are an integral part of these financial statements.

12

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ExhibitB-2 MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Reconciliation of the Balance Sheet of Governmental Funds to the Statement ofNet Position

August 31,2016

Total Fund Balances

Amounts reported for governmental activities in the statement of net position (Exhibit A-1) are different because:

Capital assets used in governmental activities are not current financial resources and therefore are not reported in the governmental funds.

Long-term liabilities, such as notes payable ($140,063), capital leases payable ($37,962), and compensated absences ($241,417) are not due and payable in the current period and therefore are not reported in the funds.

Net position of governmental activities

$ 2,058,676

2,298,401

(419,442)

$ =======3,=93=7=,6=35=

The accompanying notes are an integral part of these financial statements.

13

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Exhibit B-3 MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY

Statement of Revenues, Expenditures, and Changes in Fund Balance- Governmental Funds Year Ended August 31, 20 16

Total General Governmental

Fund Funds REVENUES

Local funds $ 5,150,913 $ 5,150,913 State programs 7,708,417 7,708,417 Federal programs 886,328 886,328 Investment earnings 3,237 3,237

Total Revenues 13,748,895 13,748,895

EXPENDITURES Current:

Mental Health - Adult 6,863,005 6,863,005 Mental Health - Child and Adolescent 934,225 934,225 Intellectual and Developmental Disabilities 3,785,875 3,785,875 Administration 1,542,722 1,542,722

Capital outlay 127,025 127,025 Debt service

Principal 105,041 105,041 Interest 9,291 9,291

Total Expenditures 13,367,184 13,367,184

Excess of revenues over expenditures 381,711 381,711

Other Financing Sources Proceeds from sale of assets 18,786 18,786

Total Other Financing Sources 18,786 18,786

Net change in fund balance 400,497 400,497

Fund balance, September 1 1,658,179 1,658,179

Fund balance, August 31 $ 2,058,676 $ 2,058,676

The accompanying notes are an integral part of these financial statements.

14

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Exhibit B-4 MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance of

Governmental Funds to the Statement of Activities Year Ended August 31, 2016

Net change in fund balances- total governmental funds

Amounts reported for governmental activities in the statement of activities are different because:

Repayment of principal on long-term debt is an expenditure in the governmental funds, but the payment reduces long-term liabilities in the statement of net position. Thus, net position is increased by the amount of principal repayments.

Repayment of long-term liabilities is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position. This is the net increase in compensated absences payable.

Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated and depreciated over their useful lives. Thus, net position is decreased by the amount in which depreciation ($237,379) exceeds capital outlays ($127,025) in the current period.

Change in net position of governmental activities

$ 400,497

105,041

(15,042)

(110,354)

$ 380,142 ========

The accompanying notes are an integral part of these financial statements.

15

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ExhibitB-5 MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY

Statement of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - General Fund

Year Ended August 31, 2016

Variance Budgeted Amounts Actual with Final

Original Final Amounts Budget LOCAL REVENUES

City and county governments $ 97,700 $ 97,700 $ 99,300 $ 1,600 Patient fees 491,000 491,000 635,691 144,691 Intermediate Care Facilities 350,000 350,000 381,686 31,686 Medicaid/Medicare 2,318,485 2,318,485 1,673,159 (645,326) Horne and Community Based Services 1,260,000 1,260,000 1,429,103 169,103 Texas-Home Living Waiver 195,000 195,000 264,892 69,892 Medicaid 1115 Waiver 596,000 471,000 638,898 167,898 YES Waiver 1,824 1,824 Donations 25,000 25,000 35 (24,965) Miscellaneous income 30,500 30,500 26,325 {4,175}

Total Local Revenues 5,363,685 5,238,685 5,150,913 {87,772)

STATE PROGRAM REVENUES General Revenue - MH Adult 2,912,679 3,476,904 3,501,459 24,555 General Revenue - MH Child 310,784 485,605 486,385 780 General Revenue- IDD 1,115,585 1,115,585 1,115,585 Private Psychiatric Beds 1,187,010 1,297,725 110,715 Psychiatric Emergency Service Center 304,969 304,969 304,969 Crisis Services 468,774 468,774 468,774 Veteran's Services 70,000 70,000 70,000 Supportive Housing 182,087 182,087 182,087 Mental Health First Aid 42,000 32,700 (9,300) TCOOMMI 281,000 281,000 248,733 {32,267}

Total State Program Revenues 5,645,878 7,613,934 7,708,417 94,483

FEDERAL PROGRAM REVENUES Mental Health Block Grant 351,440 351,440 351,440 Social Services Block Grant 64,939 64,939 64,939 TANF to Title XX 93,967 93,967 93,967 Medicaid Administrative Claiming 330,000 330,000 343,267 13,267 Community Development Block Grant 32,715 32,715 32,715

Total Federal Program Revenues 873,061 873,061 886,328 13,267

Investment Earnings 2,000 2,000 3,237 1,237

Total Revenues $ 11,884,624 $ 13,727,680 $ 13,748,895 $ 21,215

The accompanying notes are an integral part of these financial statements.

16

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Exhibit B-5

MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Statement of Revenues, Expenditures and Changes in Fund Balance

Budget and Actual - General Fund Year Ended August 31, 20 16

Variance Budgeted Amounts Actual with Final

Original Final Amounts Budget

EXPENDITURES Current

Salaries $ 5,861,564 $ 6,281,418 $ 6,103,839 $ 177,579 Fringe benefits 1,632,000 1,733,325 1,659,031 74,294 Travel 207,000 212,880 200,552 12,328 Drugs and medications 456,000 484,296 524,768 (40,472) Other consumable items 144,000 144,400 126,618 17,782 Rent and operating costs 136,000 146,000 135,092 10,908 Repairs and maintenance 330,500 335,000 331,755 3,245 Vehicle operations 180,000 180,000 145,819 34,181 Consultants and professionals 1,989,000 3,155,801 3,083,094 72,707 Utilities and telephone 340,000 340,000 333,284 6,716 Client costs 283,087 283,087 257,216 25,871 Insurance 101,266 101,266 103,945 (2,679) Training and dues 50,000 50,000 52,130 (2,130) Miscellaneous 29,500 45,500 68,684 {23,184}

Total Current Expenditures 11,739,917 13,492,973 13,125,827 367,146

Capital outlay 135,507 225,507 127,025 98,482 Debt service

Principal 840 840 105,041 (104,201) Interest 9,360 9,360 9,291 69

Total Expenditures 11,885,624 13,728,680 13,367,184 361,496

Excess of Revenues Over Expenditures (1,000) (1,000) 381,711 382,711

Other Financing Sources Proceeds from sale of assets 1,000 1,000 18,786 17,786

Total Other Financing Sources 1,000 1,000 18,786 17,786

Net Change in Fund Balance 400,497 400,497

Fund Balance, September 1 1,658,179 1,658,179 1,658,179

Fund Balance, August 31 $ 1,658,179 $ 1,658,179 $ 2,058,676 $ 400,497

The accompanying notes are an integral part of these financial statements.

17

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Exhibit C-1 MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY

Statement of Net Position- Fiduciary Funds August 31, 2016

Client Agency Fund

ASSETS

Cash and cash equivalents $ 13,105

Total Assets 13,105

LIABILITIES

Due to clients 13,105

Total Liabilities $ 13,105

The accompanying notes are an integral part of these financial statements.

18

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Notes to the Financial Statements

Year Ended August 3 1, 2016

Note 1: Reporting Entity

Mental Health Mental Retardation Authority of Brazos Valley (the "Center") is a public entity established under the Texas Mental Health and Mental Retardation Act of 1965 and organized under Chapter 534, Title 7 of the Texas Health and Safety Code. The Act provided for the creation of local community mental health and mental retardation centers to develop and implement community-based mental health, mental retardation, and addiction services. The Center is governed by an independent board; has the authority to make decisions; appoint administrators and managers, significantly influence operations; and has the primary financial accountability for fiscal matters. The Center is not included in any other governmental reporting entity as defined in Section 2100, Codification of Governmental Accounting and Financial Reporting Standards.

In determining the financial reporting entity, the Center complies with the provisions of Government Accounting Standards Board Statement No. 14, "The Financial Reporting Entity," which requires inclusion of all component units of which the Center appoints a voting majority of the units' board and the Center is either able to impose its will on the unit, or a financial benefit-relationship or burden-relationship exists. There are no component units or entities for which the Center is considered to be financially accountable.

Note 2: Government-Wide and Fund Financial Statements

The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the primary government. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support to external users. The Center does not have any business­type activities.

The statement of activities demonstrates the degree to which the direct expenses of a given function or segments are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to consumers or responsible third parties who purchase, use, or directly benefit from services or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Other items not properly included among program revenues are reported instead as general revenues. Administrative expenses are allocated among the Center's programs, based on each program's proportionate share of total expenses.

Separate financial statements are provided for governmental and fiduciary funds, even though the latter are excluded from the government-wide financial statements.

Note 3: Measurement Focus, Basis of Accounting and Financial Statement Presentation

The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Notes to the Financial Statements

Year Ended August 31, 2016

Note 3: Measurement Focus, Basis of Accounting and Financial Statement Presentation- continued

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenue to be available if they are collected within 150 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to claims and judgments, are recorded only when payment is due.

Grant revenues are recognized only as grant expenditures are incurred to the extent that the expenditures are allowable and eligible for reimbursement. Grant revenue, patient fees and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenue of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the Center.

The Center allocates indirect expenses primarily comprised of administrative services to operating functions and programs benefiting from those services. Administrative services include overall management, centralized budgetary formulation and oversight, accounting, financial reporting, payroll, procurement contracting and oversight, investing and cash management, personnel services, and other central administrative services. Allocations are charged to programs based on use of central services determined by various allocation methodologies.

The Center reports the following major governmental fund:

The genera/fund is the Center's primary operating fund and accounts for all financial resources of the general government, except those required to be accounted for in another fund.

Additionally, the Center reports the following fund type:

The client agency fund is a fiduciary fund type used to account for assets held for clients of the Center. The fund is purely custodial (assets equal liabilities) and does not involve the measurement of the results of operations.

When both restricted and unrestricted resources are available for use, it is the Center's policy to use restricted resources first, then unrestricted resources as they are needed. Additionally, the Center would first use committed, then assigned, and lastly unassigned amounts of unrestricted fund balance when expenditures are made.

Note 4: Assets, Liabilities and Net Position

Cash and cash equivalents - The Center considers cash on hand, demand deposits and short term investments with original maturities of three months or less from date of acquisition to be cash equivalents.

Accounts Receivable - Accounts receivable from patients and insurance companies for services rendered are reduced by the amount of such billings deemed by management to be ultimately uncollectible. Consumers pay their portion at the time the service is rendered.

Inventories - Drug inventory is valued at the lower of cost or market, on a first in, first out basis. The drugs are expended at cost as they are consumed throughout the year. Inventories are equally offset by nonspendable fund balance in the governmental funds balance sheet, which indicates that it does not constitute available spendable resources even though they are components of net current assets.

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Notes to the Financial Statements

Year Ended August 31, 2016

Note 4: Assets, Liabilities and Net Position- continued

Prepaid Items - Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and governmental fund financial statements. Prepaid assets are equally offset by nonspendable fund balance in the governmental funds balance sheet, which indicates that it does not constitute available spendable resources even though they are components of net current assets.

Capital Assets -Capital assets, which include property, plant and equipment, are reported in the government-wide financial statements. Capital assets are defined by the Center as assets with an initial, individual cost of more than $2,500 and an estimated useful life in excess of two years. Such assets are recorded at historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Capital assets also include the cost of capitalized leases. Amortization of capital leases is included in depreciation expense. Property, plant, and equipment of the primary government are depreciated using the straight line method over the following estimated useful lives:

Building and improvements Furniture, equipment, and software Vehicles

10- 50 years 3- 10 years 3 years

Compensated Absences - The Center provides compensated absence benefits to its employees. All regular full-time and regular part-time employees of the Center will be entitled to accrue vacation leave on a monthly basis. Full-time employees shall accrue vacation time based on length of service. Regular part-time employees who work 20 or more hours per week will accrue leave at the same ratio as time worked, and the hours accrued will be based on the same schedule as full-time employees. The maximum carryover each year ranges from 80 hours to 160 hours based on years of service. Upon termination, an employee with more than six months' service with the Center will be paid a lump sum payment for the balance of the accrued vacation leave up to the maximum carryover.

Compensated absences are accrued in the government-wide financial statements. Governmental funds accrue only the compensated absences expected to be paid with available resources at year-end.

Long-term Obligations- In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities. The governmental fund financial statements recognize the proceeds of debt as other financing sources of the current period and debt retirements are reported as debt service expenditures.

The Center maintains two $1,000,000 open lines of credit, secured by real property and accounts receivable. The lines of credit mature on September 1, 2018, and carry interest rates of 3% and 3 .5%. As of August 31, 2016, the Center has not utilized either line of credit.

Fund Balance - In the fund financial statements, governmental funds reported the following classifications of fund balance:

Nonspendable- includes amounts that cannot be spent because they are either not spendable in form or are legally or contractually required to be maintained intact. All amounts reported as Nonspendable at August 31, 2016 are nonspendable in form. The Center has not reported any amounts that are legally or contractually required to be maintained intact.

Assigned - includes general fund amounts constrained for a specific purpose by a governing board or by an official that has been delegated authority to assign amounts.

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Notes to the Financial Statements

Year Ended August 31,2016

Note 4: Assets, Liabilities and Net Position- continued

Unassigned - includes amounts that have not been assigned to other funds or restricted, committed or assigned to a specific purpose within the General Fund.

Minimum fund balance policy The Board of Trustees directs that fiscal policies should achieve and maintain a minimum balance in the General Fund with sufficient working capital and a margin of safety to address local and regional emergencies without borrowing.

Source of Funds- Some funds from federal and other state sources represent fee for service reimbursements, as well as project grants. The funds that are specifically for the individual patient service reimbursements are reported as local funds.

Tax-Exempt Status -The Internal Revenue Service has issued a determination letter dated July 1, 197 4, stating that the Center qualifies as an organization described in Section 501(c)(3) of the Internal Revenue Code and, accordingly, is exempt from Federal income taxes.

Use of Estimates- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Note 5: Stewardship, Compliance, and Accountability

The Executive Director is responsible for the preparation of the Center's budget with the assistance of the Chief Financial Officer (CFO) and program staff. An estimate of revenue and compilation of requested departmental expenditures by program category are prepared and submitted to the Board of Trustees. The Board of Trustees then may increase or decrease the amounts submitted in the budget before it is submitted to the Commission for approval. The Commission schedules a budget hearing usually between June 15 and October 15, at which time the budget is approved or the Center is directed to make necessary changes and resubmit the budget. The final budget is thus approved by the Commission generally before November 15.

Budgeted expenditures for current operating funds cannot exceed the available cash balances in such funds at September 1 plus the CFO's estimate of revenue for the budgeted fiscal year. The Center may transfer existing surpluses between budget categories during the year and increase the budget according to budgeting and expenditure guidelines of Health and Human Services Commission and report such budget amendments in the required Quarterly Community Center Financial Report.

The budget for the General Fund is prepared using the current financial resources measurement focus and the modified accrual basis of accounting consistent with generally accepted accounting principles for a governmental fund.

Note 6: Deposits and Investments

Cash and time deposits

Custodial credit risk- deposits. The Center's cash deposits were fully secured at August 31, 2016 by federal deposit insurance and by pledged securities held by the Center's agent in the Center's name. Such total collateralization and insurance coverage is required by the Rules of the Commissioner of the Health and Human Services Commission (HHSC) and the Board of Trustees ofthe Center.

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Notes to the Financial Statements

Year Ended August 31, 2016

Note 6: Deposits and Investments- continued

Investments

The Center's investment policies and types of investments are governed by the Public Funds Investment Act (PFIA). These policies authorize the Center to invest in 1) obligations of the U.S. or its agencies and instrumentalities; 2) fully insured or collateralized certificates of deposits from a bank doing business in the State of Texas; 3) interest or non­interest bearing checking or savings accounts; 4) repurchase agreements; and 5) mutual fund money market accounts.

During the year ended August 31, 2016, the Center did not own any investments other than funds kept in interest bearing checking or savings accounts.

Interest rate risk - This is the risk that changes in interest rates will adversely affect the fair value of an investment. In accordance with its investment policy, the Center manages its exposure to declines in fair values by limiting the maximum allowable stated maturity of any individual investment owned by the Center to two years unless approved by the Board of Trustees.

Credit risk - This is the risk that an issuer or other counterparty to an investment will not fulfill its obligation. State law limits investments in public funds investment pools to those rated no lower than AAA or AAAm or an equivalent rating by at least one nationally recognized rating service. At August 31, 2016, the Center was not exposed to credit risk.

Concentration of credit risk - This is the risk of loss attributed to the magnitude of the Center's investment in a single issuer. At a minimum, diversification standards by security type and issuer shall be:

Investment Type Maximum Maturity Maximum% Treasury Instruments One year 50% Agencies/Similar Instruments Two years 20% Certificates of Deposit One year 50% Constant Dollar Pools N/A 100% Money Market Mutual Funds N/A 50% Interest & Non-Interest Bearing Bank Accounts N/A 100% Repurchase Agreements N/A 50%

The Center categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. The Center has no recurring fair value measurements as of August 31, 2016 as the Center has no investments measured at fair value.

23

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Notes to the Financial Statements

Year Ended August 31, 2016

Note 7: Receivables from Other Governments

Receivables from other governments are for reimbursement of expenditures and fees for service provided under various programs and grants. All amounts are expected to be collected within the next year. A summary of these receivables as of August 31, 2016 are as follows:

Local funds Home and Community Based Services Medicaid and Medicare Intermediate Care Facilities YES Waiver Medicaid 1115 Waiver

State Awards DSHS Outcome TCOOMMI

Federal Awards Medicaid Administrative Claiming Community Development Block Grant Total

Note 8: Capital Assets

$ Amount

141,257 183,035 34,196

1,251 502,095

317,864 39,993

208,186 503

$ 1,428,380 =========

A summary of changes in capital asset balances for the year ended August 31, 2016, is as follows:

Balance Balance Governmental Activities: September 1, 2015 Additions Retirements August 31,2016 Nondepreciable assets:

Land $ 343,669 $ 34,434 $ $ 378,103

Total nondepreciable assets 343,669 34,434 378,103

Depreciable assets: Buildings and improvements 3,141,276 12,317 3,153,593 Furniture, equipment, and software 692,576 692,576 Vehicles 798,620 80,274 (50,335) 828,559

Total depreciable assets 4,632,472 92,591 (50,335) 4,674,728

Accumulated depreciation: Buildings and improvements 1,297,933 82,862 1,380,795 Furniture, equipment, and software 498,516 120,938 619,454

Vehicles 770,937 33,579 (50,335) 754,181

Total accumulated depreciation 2,567,386 237,379 (50,335) 2,754,430

Total capital assets, net $ 2,408,755 $ (110,354) $ $ 2,298,401

24

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Notes to the Financial Statements

Year Ended August 31, 20 16

Note 8: Capital Assets- continued

In the government-wide financial statements, depreciation expense of $237,379 was charged to the Center's programs as follows:

Governmental Activities: Mental Health - Adult Mental Health - Child Intellectual and Developmental Disabilities Administration

Total Depreciation Expense

Note 9: Long-Term Obligations

$ 105,679 6,407

95,186 30,107

$===2=3=7,=3=79=

The following is a summary of changes in long-term liabilities of the Center for the year ended August 31, 2016:

Balance Balance Amount Due September 1, August 31, Within One

Governmental activities: 2015 Additions Retirements 2016 Year

Notes payable $ 157,560 $ $ (17,497) $ 140,063 $ 6,036 Capital leases payable 125,506 (87,544) 37,962 37,962 Compensated absences 226,375 15,042 241,417

$ 509,441 $ 15,042 $ (105,041) $ 419,442 $ 43,998

A note with Citizens State Bank was executed with Citizens State Bank in fiscal year 2011, with monthly installments of $1,730 and matures in March 2016. The note carries an interest rate of 4.25% and is collateralized by various vehicles. During fiscal year 2014, the Center executed a note for the purchase of a building with monthly payments of $846, an interest rate of 3 .0%, maturing in July 2034, and secured by the building at 3320 Bluebonnet Blvd., Brenham, TX.

The following are debt service requirements for notes payable to maturity:

Year Ending August 31, Principal Interest Total

2017 $ 6,036 $ 4,115 $ 10,151 2018 6,220 3,931 10,151 2019 6,409 3,742 10,151 2020 6,604 3,547 10,151 2021 6,805 3,346 10,151

2022-2026 37,259 13,497 50,756 2027-2031 43,280 7,476 50,756 2032-2034 27,399 1,200 28,599

$ 140,012 $ 40,854 $ 180,866

25

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Notes to the Financial Statements

Year Ended August 31, 2016

Note 9: Long-Term Obligations- continued

The Center leases their phone system that is classified as capital leases and will expire in 2017, respectively. Such assets totaled $494,487 and are included in depreciable assets. Related amortization expense is included in depreciation expense. Future minimum lease payments under capital leases are as follows:

Year Ending August 31, 2017

Total minimum lease payments Less amount representing interest

Present value of minimum lease payments

Note 10: Operating Lease Obligations

$ ___ 3....;;8,_50_1_ 38,501

(539)

$ ==3=7=,9=62=

The Center leases certain equipment which is utilized in its operations under short-term leases. Some of these leases have renewal options. Rent expense for the year ended August 31, 2016, was $135,092. The future minimum lease payments under operating leases as of August 31, 2016 are as follows:

Year Ended August 31 Amount 2017 $ ___ 5....;;3,;_98_8_

$ 53,988

Note 11: Pension Plan

The Center sponsors a defined contribution pension plan that covers all regularly scheduled employees working twenty or more hours per week. Employer match begins after six months of employment. Employees who participate must contribute 5.0% of earnings and have the option of contributing an additional amount capped by IRS regulations. The Center contributed an amount equal to 5.0% of eligible employee's base salary for the year ending August 31, 2016. In fiscal year 2017, the Center will increase the Employer match from the 5.0% to 6.0%.

Employer contributions for each employee (and earnings allocated to the employee's account) are fully vested after 5 years of continuous service (20% for each year of service). Center contributions and earnings on accounts forfeited by employees who leave employment before five years of service are used to reduce the Center's contribution requirements. The amount of the contribution made by the Center for the fiscal year ended August 31, 2016 was $174,799.

Note 12: Risk Management

The Center is exposed to various risks of loss related to general liability, torts, theft of, damage to and destruction of assets, errors and omissions, injuries to employees, doctors' malpractice and natural disasters. The Center's workers compensation, property, liability and automobile physical damage losses are covered under a partially self-funded insurance pool managed by the Texas Council Risk Management Fund. Under these policies, the Center could be assessed for additional premiums if losses exceed specified amounts. Center management believes that the financial statements contain reasonable estimates for any liability related to such claims. There were no significant reductions in coverage in the past fiscal year, and there were no settlements exceeding the maximum amounts to be paid by the pool in any of the past three fiscal years.

26

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Notes to the Financial Statements

Year Ended August 31, 2016

Note 13: Concentrations of Credit Risk

A substantial portion of the Center's revenues are in the form of performance contracts with the Texas Department of State Health Services and the Texas Department of Aging and Disability Services (State). As a result, the Center's overall exposure to credit risk is contingent upon future funding by the State. Historically, the Center's uncollectible accounts receivable have been immaterial. The Center does not require collateral for its receivables.

Note 14: Commitments and Contingencies

The Center has participated in a number of federal and state assisted grant programs. These programs are subject to financial and compliance audits by the grantors or their representatives and regulatory authorities. The purpose of these audits is to ensure compliance with conditions relating to the granting of funds and other reimbursement regulations. The Center's management believes that any liability for reimbursement which may arise as a result of these audits is not believed to be material to the financial position of the Center. The Center is subject to certain penalties in the event that performance targets are not met.

For fiscal year 2011, the Center funded 50% of workers' compensation premiums up front (assessed by TCRMF based on the standard contribution for that year). Based on actual claims for that year, TCRMF can later assess up to 110% of that year's standard contribution. For fiscal years 2012 through 2016, the Center funded 80% and TCRMF can later assess up to 100% of that year's standard contribution. Thus, the Center has contingencies relating to previous years' workers' compensation claims for plan years that have not been declared closed. The maximum exposure for such open plan years (excluding 2016, which is not known at this time) is $198,984, which represents the difference between contributions paid in and the maximum contribution for those plan years. Due to low reported losses to date for the open plan years, the Center has not accrued any liability for such contingencies in the accompanying financial statements.

Note 15: Patient Assistance Program

Consumers periodically receive prescription medications through a program known as the Patient Assistance Program (PAP). These prescriptions are provided at no cost to the consumer. These items do not meet the criteria for recognition on the Center's financial statements; however, they do provide significant assistance to the consumers the Center serves. Management estimates that consumers received prescription medications through this program valued at approximately $693,000 during the year ending August 31, 2016.

Note 16: Medicaid 1115 Waiver

The State of Texas has been approved for a five-year Medicaid demonstration waiver (through September 30, 2016) that will enable hospitals and other providers to earn up to $11.4 billion in funds for Delivery System Reform Incentive Payment (DSRIP) projects. The 1115 Transformation Waiver received a fifteen month extension to start October 2016 and end December 2017. DSRIP projects are designed to improve Texas' health care delivery system, including access to care, quality of care, and health outcomes. Texas has allocated a minimum of 10% of the DSRIP funds to the community mental health centers that serve mentally ill Medicaid and indigent patients throughout the state.

The Center reports twice a year on milestone and outcome achievement in order to earn DSRIP funds. The revenue is recognized as the milestones are achieved and after review and approval by CMS. As a result, and since the DSRIP funds are not expenditure-reimbursement type funds, at times the Center's cumulative expenditures related to DSRIP projects may exceed the revenues recognized to date.

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OTHER SUPPLEMENTARY INFORMATION

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Capital Assets Used in the Operation of Governmental Funds

Schedule by Source

August 31, 2016

Total

Governmental Funds Capital Assets

Land $ 378,103

Buildings and improvements 3,153,593

Furniture, equipment, and software 692,576

Vehicles 828,559

Total Governmental Funds Capital Assets $ 5,052,831

Investment in Governmental Funds Capital Assets by Source

General Fund $ 5,052,831

Total Investment in Governmental Funds Capital Assets $ 5,052,831

28

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Capital Assets Used in the Operation of Governmental Funds

Schedule of Function and Activity August 31, 2016

Buildings Furniture, and Equipment,

Function Land Improvements and Software Vehicles Total

Mental Health Adult $ 98,657 $ 1,287,065 $ 317,709 $ 348,658 $ 2,052,089

Intellectual and Developmental Disabilities 161,027 1,138,013 237,873 379,815 1,916,728

Mental Health Child 22,581 287,916 46,511 75,104 432,112

Administrative 95,838 440,599 90,483 24,982 651,902

Total Governmental Funds Capital Assets $ 378,103 $ 3,153,593 $ 692,576 $ 828,559 $ 5,052,831

29

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Capital Assets Used in the Operation of Governmental Funds

Schedule of Changes by Function and Activity Year Ended August 31, 2016

September 1, Transfers and August 31, Function 2015 Additions Retirements 2016

Mental Health Adult $ 2,027,787 $ 19,220 $ 5,082 $ 2,052,089

Intellectual and Developmental Disabilities 1,838,525 100,386 (22, 183) 1,916,728

Mental Health Child 432,112 432,112

Administrative 677,717 7,419 (33,234) 651,902

Total Governmental Funds Capital Assets $ 4,976,141 $ 127,025 $ {50,3352 $ 5,052,831

30

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STATISTICAL SECTION (UNAUDITED)

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Schedule of Revenue and Expenditures by Source of Funds

General Fund Year Ended August 31, 2016

Total Mental Health

Total Mental Child and

Total Health Adult Adolescent

Fund Source Revenue Expenditures Expenditures

Objects of Expense: Personnel $ 5,091,934 $ 2,082,265 $ 513,738

Employee benefits 1,379,880 532,868 133,138

Professional and consultant services 3,047,850 669,301 149,146

Training and travel 205,549 92,124 28,379

Capital outlay 100,386

Non-capitalized equipment 69,623 27,478 10,684

Pharmaceutical expense 524,768 519,443

Pharmaceutical expense-PAP 693,127 693,127

Other operating expense 1,254,480 587,275 78,048

Allocation of General and Administration to Strategies 1,414,148 535,998 113,548

Allocation of Authority Administration to Strategies 278,566 79,304 25,428

Total Expenditures $ 14,060,311 $ 5,819,183 $ 1,052,109

Method of Finance: General Revenue - MH $ 3,987,844 $ 3,256,350 $ 731,494

General Revenue- IDD 817,193

Mental Health Block Grant 351,440 260,644 90,796

T ANF to Title XX 93,967 93,967

PASRR/OBRA Funds 4,491 3,761

Supported Housing Grant 182,087 182,087

Crisis Services - MH 468,774

Crisis Services - PESC 304,969 Social Services Block Grant 64,939 64,939

Permanency Planning 19,024

TCOOMMI 248,734 248,734

Project Private Beds 1,297,725

Veteran's Services 70,000 70,000

CLOIP Funds 279,368 HCS/TxHMLIICFMR 2,028,356 Medicaid/Medicare (Includes State Match) 1,673,161 283,113 101,328

Medicaid Administrative Claiming 343,267 343,267

PAP Contributions 693,127 693,127

Other State Funds 34,524 34,524

Required Local Match 478,536 413,161

Additional Local Funds and Other 1,019,284

Total Expended Sources $ 14,460,810 $ 5,819,183 $ 1,052,109

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Total Total Intellectual and Excess (Deficit)

Mental Health Developmental Total Other Total Revenue Crisis Disabilities Services Center over

Expenditures Expenditures Expenditures Expenditures Expenditures

$ 517,887 $ 1,978,044 $ $ 5,091,934 $ 110,170 603,704 1,379,880

1,633,669 595,734 3,047,850 29,600 55,446 205,549

100,386 100,386 31,461 69,623

5,325 524,768 693,127

82,036 507,121 1,254,480 295,794 468,808 1,414,148 66,242 107,592 278,566

$ 2,740,723 $ 4,448,296 $ $ 14,060,311 $

$ $ $ $ 3,987,844 $ 817,193 817,193

351,440 93,967

730 4,491 182,087

468,774 468,774 304,969 304,969

64,939 19,024 19,024

248,734 1,297,725 1,297,725

70,000 279,368 279,368

2,028,356 2,028,356 50,353 837,868 1,272,662 400,499

343,267 693,127

34,524 65,375 478,536

618,902 400,382 1,019,284

$ 2,740,723 $ 4,448,296 $ $ 14,060,311 $ 400,499

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Reconciliation of Total Revenues to Fourth Quarter Financial Report

Year Ended August 31, 2016

Revenues Audited

Care Financial Report III Additions Deletions Statements

LOCAL REVENUES City and county governments $ 99,300 $ $ $ 99,300 Patient fees 635,398 293 b 635,691 Intermediate Care Facilities 381,686 381,686 Medicaid/Medicare 1,673,161 (2) b 1,673,159 Home and Community Based Services 1,429,103 1,429,103 Texas-Home Living Waiver 264,892 264,892 Medicaid 1115 waiver 638,898 638,898 YES Waiver 1,824 b 1,824 Donations 35 35 Miscellaneous income and interest 29,855 (293) b 29,562

Total Local Revenues 5,152,328 2,117 {295) 5,154,150

STATE PROGRAM REVENUES General Revenue - MH Adult 3,501,459 3,501,459 General Revenue - MH Child 520,909 (34,524) b 486,385 General Revenue - IDD 1,115,585 1,115,585 Private Psychiatric Beds 1,297,725 1,297,725 Crisis Services - MH 468,774 468,774 Crisis Services - PESC 304,969 304,969 Veteran's Services 70,000 70,000 Supported Housing 182,087 182,087 Mental Health First Aid 32,700 b 32,700 TCOOMMI 248,733 248,733

Total State Program Revenues 7,710,241 32,700 (34,524} 7,708,417

FEDERAL PROGRAM REVENUES Mental Health Block Grant 351,440 351,440 Social Services Block Grant 64,939 64,939 TANF to Title XX 93,967 93,967 Medicaid Administrative Claiming 343,267 343,267 Community Development Block Grant 32,715 32,715

Total Federal Program Revenues 886,328 886,328

Other Financing Sources Proceeds from sale of assets 18,786 18,786 PAP contributions 693,127 (693,127) a

Total Other Financing Sources 711,913 (693,127) 18,786

Total Revenues $ 14,460,810 $ 34,817 $ (727,946) $ 13,767,681

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Reconciliation of Total Expenditures to Fourth Quarter Financial Report

Year Ended August 31, 2016

Expenditures Audited

Care Financial Function Report III Additions Deletions Statements

Personnel $ 6,103,839 $ $ $ 6,103,839

Employee Benefits 1,659,031 1,659,031

Professional and Consultant Services 3,083,094 3,083,094

Training and Travel 227,477 25,205 b 252,682

Capital Outlay 127,025 127,025

Non-Capitalized Equipment 73,204 73,204

Pharmaceutical Expense 524,768 524,768

Pharmaceutical Expense (PAP only) 693,127 (693,127) a

Other Operating Expense 1,568,746 (25,205) b 1,543,541

Total Expenditures $ 14,060,311 $ 25,205 $ (718,332) $ 13,367,184

a- Free medicine used b - Reclass of funds and rounding

33

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Schedule of Indirect Costs

Year Ended August 31, 2016

Non- Total Total allowable Adjusted Direct Costs Costs Depreciation Costs Costs

Personnel $ 6,103,839 $ $ $ 6,103,839 $ 5,091,934 $ Fringe benefits 1,659,031 1,659,031 1,379,880 Drugs and medications 524,768 524,768 524,768 Contracted direct services:

External providers 3,083,094 3,083,094 3,047,850 Capital outlay 127,025 (127,025) Debt service - principal 105,041 (105,041) Debt service - interest 9,291 9,291 9,291 Depreciation 237,379 237,379 207,272 Other operating expenses 1,755,095 (61,028) 1,694,067 1,370,834

Total expenses $ 13,367,184 $ (293,094) $ 237,379 $ 13,311,469$11,631,829$

Indirect costs Direct costs

Indirect cost rate

34

Indirect Costs

1,011,905 279,151

35,244

30,107 323,233

1,679,640

1,679,640 11,631,829

14.44%

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Schedule of Leases in Effect Year Ended August 31,2016

Monthly Lessor Location Termination Amount

Leon County, Texas 529 Lassitor St., Centerville Monthly $ 500

AAHodde 609 E. Blue Bell Rd., Brenham 09/15- 08/16 3,099

Pablo Arriola (Group Home) 702 Kerr St, Brenham 09/15 - 08/16 1,400

Dell Financial Services Agency Wide - Computers 09/15- 08/16 257 Agency Wide - Computers 05/16-9/16 788

GE Capital 1504 S. Texas Ave, Bryan 09/15- 05/16 15,769

Wells Fargo Financial Capital 1504 S. Texas Ave, Bryan 6/16- 8/16 15,769

35

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None

MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY

Schedule of Space Occupied in a State-Owned Facility

Location

Year Ended August 31, 2016

Building Utilization

36

Cost Monthly Annual

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Schedule of Insurance in Force Year Ended August 31, 2016

Insurer Policy Period Coverage

Texas Council Risk Management Fund 9-1-15 to 8-31-16 Workers' Compensation

Texas Council Risk Management Fund 9-1-15 to 8-3 1-16 Automobile Liability

Texas Council Risk Management Fund 9-1-15 to 8-31-16 General Liability

Texas Council Risk Management Fund 9-1-15 to 8-31-16 Prof Liab - per claim Prof Liab - Annual aggr

Texas Council Risk Management Fund 9-1-15 to 8-31-16 Errors and Omissions

Texas Council Risk Management Fund 9-1-15 to 8-3 1-16 Property Coverages Buildings Contents Other

Texas Council Risk Management Fund 9-1-15 to 8-31-16 Expanded Employ Prac Expanded Employ Aggr

Texas Council Risk Management Fund 9-1-15 to 8-31-16 Automobile Physical

Texas Council Risk Management Fund 9-1-15 to 8-31-16 Sexual Misconduct -liab Sexual Misconduct -aggr

Texas Council Risk Management Fund 9-1-15 to 8-3 1-16 Prof Defense Endorsements

Prof Defense Aggregate

37

$

Limits or Amounts

Statutory

1,000,000

1,000,000

1,000,000 3,000,000

1,000,000

6,712,458

1,229,824 871,842

50,000 100,000

Blue book value

100,000 300,000

25,000 50,000

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Schedule of Bond Coverage Year Ended August 31, 2016

Bond Title Surety Company Scope of Coverage Amount

Bill Kelly JI Special Risks Insurance Agency Pension Plan $ 500,000

Dan Monson JI Special Risks Insurance Agency Pension Plan 500,000

Donna Talent Anco Insurance Notary Public 10,000

Courtney Morton Anco Insurance Notary Public 10,000

Linda Brooks Anco Insurance Notary Public 10,000

38

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Schedule of Professional and Consulting Fees

Year Ended August 31, 2016

Name City Type of Service

Thomas Baca Bryan Veterans Counseling $ The Broadleaf Group Alexandra, La. VOIP Support Carlos Taboada Houston Audit Services Cedar Crest Hospital Belton Crisis Respite Clinical Pathology Laboratories Bryan Lab Work Davis Kinard Abilene Audit Services East Texas Behavioral Health Lufkin Utilization Management Gayla Banks College Station In-Patient Services Heritage Residential Bryan Residential Services Iron Mountain Records Management Bryan Record Storage Junction Five-0-Five College Station Supported Employment Lonestar Behavioral Health Cypress In-Patient Services MHMRA Harris County Houston Hot Line Services NAMI College Station First Aid Training Nurse on Call/Lenora Robinson Uhlund Nursing Services Sign Language Interpreting Serv College Station Sign Language Services Spherion Dallas Employment Services Angela Sullivan Bryan Discharge Summaries Helen Swanson Bryan Fiscal Services Strategic Behavioral Health College Station Crisis Inpatient T AMU Eligibility Evaluation College Station Psychiatric Admissions TAMU Student Work-Study College Station Student Workers Texas Cypress Creek Hospital Houston Crisis Respite The Broadleaf Group Houston VOIP Support Tri-County Behavioral Health Conroe Prescription Services Viva Transcription Bryan Transcription Services

39

Amount

66,500 4,484 5,450

28,600 9,108

20,930 4,336 1,800

58,560 29,119 11,679 80,850 46,080 32,170 12,000 4,099 3,728 3,180 3,086

1,338,160 3,622 6,318

52,250 4,484 3,332

14,622

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None

MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Schedule of Legal Services

Year Ended August 31, 2016

Name City Type of Service Amount

40

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SINGLE AUDIT SECTION

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      First Financial Bank Building     400 Pine Street, Ste. 600, Abilene, TX 79601   325.672.4000 / 800.588.2525 / f: 325.672.7049 www.dkcpa.com 

Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements

Performed in Accordance with Government Auditing Standards The Board of Trustees Mental Health Mental Retardation Authority of Brazos Valley:

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Mental Health Mental Retardation Authority of Brazos Valley (the Center), as of and for the year ended August 31, 2016, and the related notes to the financial statements, which collectively comprise the Center’s basic financial statements, and have issued our report thereon dated January 13, 2017.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered the Center’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Center’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Center’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Center’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 determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no

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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.

Abilene, Texas January 13, 2017

l)~ ~~ f1' Cl,, PC Certified Public Accountants

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      First Financial Bank Building     400 Pine Street, Ste. 600, Abilene, TX 79601   325.672.4000 / 800.588.2525 / f: 325.672.7049 www.dkcpa.com 

Independent Auditor’s Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by

the Uniform Guidance and the State of Texas Single Audit Cingular

The Board of Trustees Mental Health Mental Retardation Authority of Brazos Valley:

Report on Compliance for Each Major Federal and State Program

We have audited Mental Health Mental Retardation Authority of Brazos Valley’s (the Center) compliance with the types of compliance requirements described in the OMB Compliance Supplement, State of Texas Single Audit Circular (TSAC) and Guidelines for Annual Financial and Compliance Audits of Community Mental Health and Mental Retardation Centers that could have a direct and material effect on each of the Center’s major federal and state programs for the year ended August 31, 2016. The Center’s major federal and state 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 and state awards applicable to its federal and state programs.

Auditor’s Responsibility

Our responsibility is to express an opinion on compliance for each of the Center’s major federal and state 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); State of Texas Single Audit Circular and Guidelines for Annual Financial and Compliance Audits of Community Mental Health and Mental Retardation Centers. Those standards, the Uniform Guidance, TSAC, and the Audit Guidelines 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 or state program occurred. An audit includes examining, on a test basis, evidence about the Center’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 and state program. However, our audit does not provide a legal determination of the Center’s compliance.

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Opinion on Each Major Federal and State Program

In our opinion, the Center 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 and state programs for the year ended August 31, 2016.

Report on Internal Control Over Compliance

Management of the Center 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 the Center's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal and state 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 and state program and to test and report on internal control over compliance in accordance with the Uniform Guidance and TSAC, 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 Center'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 or state 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 or state 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 or state 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 and TSAC. Accordingly, this report is not suitable for any other purpose.

Abilene, Texas January 13, 2017

l)~~~~a,Pc Certified Public Accountants

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Schedule ofExpenditures of State and Federal Awards

Year Ended August 31, 2016

Pass-through Entity Identifying

Number

STATE AWARDS

Texas Department of State Health Services (DSHS) General Revenue - MH Adult 537-16-0124-00021 $

General Revenue- MH Child and Adolescent 537-16-0124-00021 Veterans Services 537-16-0124-00021 Supportive Housing 537-16-0124-00021 Psychiatric Emergency Service Center and Associated Projects 537-16-0124-00021 Crisis Services 537-16-0124-00021 Mental Health First Aid 537-16-0124-00021 Private Psychiatric Beds 537-16-0124-00021

Total DSHS

Texas Department of Aging and Disability Services (DADS) General Revenue - IDD 2016-001 Community Living Options Information Process (CLOIP) 2016-001 Permanency Planning 2016-001

Total DADS

Total State Awards $

See the accompanying notes to the Schedule of Expenditures of State and Federal Awards.

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Expenditures

3,501,459 486,385

70,000 182,087 304,969 468,774

32,700 1,297,725

6,344,099

817,193 279,368

19,024

1,115,585

7,459,684

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Schedule of Expenditures of State and Federal Awards

Year Ended August 31, 2016

Federal Pass-through CFDA Entity Identifying

Number Number

FEDERAL A WARDS

U.S. Department of Health and Human Services Passed through Texas Health and Human Services Commission

Medical Assistance Program (Medicaid; Title XIX) 93.778 N/A $

Passed through DSHS Mental Health Block Grant 93.958 537-16-0124-00021 Social Services Block Grant 93.667 537-16-0124-00021 T ANF to Title XX 93.558 537-16-0124-00021

Total U.S. Department of Health and Human Services

U.S. Department of Housing and Urban Development Passed through the City of College Station, TX

Community Development Block Grants 14.218 N/A

Total U.S. Department of Housing and Urban Development

Total Federal Awards

Total State and Federal Awards $

See the accompanying notes to the Schedule ofExpenditures of State and Federal Awards.

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Expenditures

343,267

351,440 64,939 93,967

853,613

32,715

32,715

886,328

8,346,012

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Note 1:

MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Notes to the Schedule of Expenditures of State and Federal Awards

Year Ended August 31, 2016

General

The Schedule of Expenditures of State and Federal Awards presents the activity of all applicable state and federal awards of Mental Health Mental Retardation Authority of Brazos Valley (the Center). The Center's reporting entity is defined in Note 1 of the basic financial statements. State and federal awards received directly from federal and state agencies, as well as federal and state awards passed through other governmental agencies, are included on the Schedule ofExpenditures of State and Federal Awards.

The information in the Schedule of Expenditures of State and Federal A wards 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 of Expenditures of State and Federal Awards present only a selected portion of the operations of the Center, it is not intended to and does not present the financial position, changes in financial position, or cash flows of the Center.

Note 2: Basis of Accounting

The Schedule of Expenditures of State and Federal Awards is prepared on the modified accrual basis of accounting. The modified accrual basis of accounting is described in Note 3 of the basic financial statements. Such expenditures are recognized following the cost principles contained in the Uniform Guidance or State of Texas Uniform Grant Management Standards, wherein certain types of expenditures are not allowable or are limited as to reimbursement. State and federal grant funds are considered to be earned to the extent of expenditures made under the provisions of the grant, and, accordingly, when such funds are received, they are recorded as unearned revenues until earned.

Note 3: Relationship to Basic Financial Statements

Certain state and federal programs have been excluded from the Schedule of Expenditures of State and Federal Awards, including monies received under vendor contract for Title XIX ICF/MR and Title XIX HCS/MR, and other Medicaid/Medicare funding earned from providing patient services. The state and federal monies excluded from the Schedule of Expenditures of State and Federal Awards are not considered financial assistance as defined in the Uniform Guidance and are included in total local revenues in the basic financial statements.

Texas Correctional Office on Offenders with Medical or Mental Impairments (TCOOMMI) and PASRR have been excluded from the Schedule of Expenditures of State and Federal Awards as these monies are considered contracts, not state or federal awards.

Note 4: State Award Guidelines

State awards are subject to HHSC's Guidelines for Annual Financial and Compliance Audits of Community MHMR Centers (21st Revision) as well as the Office of the Governor's State of Texas Single Audit Circular. Such guidelines are consistent with those required under the Single Audit Act of 1996, the Uniform Guidance and Government Auditing Standards, issued by the Comptroller General of the United States.

Note 5: Indirect Costs

The Center is not eligible to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance because the Center has previously received a negotiated indirect cost rate for its federal awards.

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Schedule of Findings and Questioned Costs

Year Ended August 31, 2016

A. Summary of Auditor's Results

1. The auditor's report expresses an unmodified opinion on the basic financial statements of Mental Health Mental Retardation Authority of Brazos Valley.

2. No significant deficiencies relating to the audit of the financial statements are reported.

3. No instances of noncompliance material to the financial statements of Mental Health Mental Retardation Authority of Brazos Valley were disclosed during the audit.

4. No significant deficiencies relating to the audit of major federal and state award programs are reported.

5. The auditor's report on compliance for the major federal and state award programs for Mental Health Mental Retardation Authority of Brazos Valley expresses an unmodified opinion.

6. There were no audit findings relative to major federal or state award programs required to be reported in accordance with the Uniform Guidance and the State of Texas Single Audit Circular.

7. The programs tested as major federal and state award programs were: State - General Revenue - Mental Health Adult State - Private Psychiatric Beds State - General Revenue - Intellectual and Developmental Disabilities Federal- CFDA #93.958 Mental Health Block Grant

8. The threshold for distinguishing Types A and B programs was $750,000 for federal award programs and $300,000 for state award programs.

9. Mental Health Mental Retardation Authority of Brazos Valley did qualify as a low risk auditee.

B. Findings Required to be Reported in Accordance with Government Auditing Standards None.

C. Findings and Questioned Costs- Major Federal and State Award Programs None.

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MENTAL HEALTH MENTAL RETARDATION AUTHORITY OF BRAZOS VALLEY Schedule of Prior Audit Findings

Year Ended August 31, 2016

There were no findings or questioned costs in the prior year.

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      First Financial Bank Building     400 Pine Street, Ste. 600, Abilene, TX 79601   325.672.4000 / 800.588.2525 / f: 325.672.7049 www.dkcpa.com 

To the Board of Trustees and Management Mental Health Mental Retardation Authority of Brazos Valley: In planning and performing our audit of the governmental activities, each major fund, and the aggregate remaining fund information of Mental Health Mental Retardation Authority of Brazos Valley (the “Center”) as of and for the year ended August 31, 2016, in accordance with auditing standards generally accepted in the United States of America, we considered the Center’s internal control over financial reporting (internal control) as a basis for designing our auditing procedures 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 Center’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Center’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 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. Our consideration of internal control was for the limited purpose described in the first paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses. In addition, because of inherent limitations in internal control, including the possibility of management override of controls, misstatements due to error or fraud may occur and not be detected by such controls. 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. This communication is intended solely for the information and use of management, the Board of Trustees, and others within the organization, and is not intended to be and should not be used by anyone other than these specified parties.

Certified Public Accountants Abilene, Texas January 13, 2017


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