Schools FIRST Financial Integrity Rating System of Texas

1
Schools FIRST Financial Integrity Rating System
of Texas

• Hurst-Euless-Bedford I.S.D.
• 2007

2
The Financial Integrity Rating System

• Fourth year for districts to receive ratings
• Ratings assigned by the Texas Education Agency
• Uses audited financial information for the
  2005-2006 school year (FY 2006)
• Based on 21 indicators

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Indicator 1

• Unreserved Fund Balance greater
• than zero?
• Recommended level is one to two months of
  operating expenditures (8 to 16)
• As of 8/31/2006 HEB had 20.3 million or 16.3

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Indicator 2

• No default on school bonds?
• HEB has never defaulted on bonds
• Statutory limit on bond issuance of 10 of total
  taxable property value
• HEB outstanding bonds total 2.94 of property
  value

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Indicator 3

• Timely filing of financial report?
• Filing deadline is January 28th
• HEB report was approved by Board of Trustees on
  December 12, 2006
• Filed with TEA (electronically) on January 25,
  2007

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Indicator 4

• Unqualified opinion from the
• independent auditors on the
• financial reports?
• No qualifications were noted by the auditors

7
Indicator 5

• Material weaknesses disclosed
• by auditors?
• No material weaknesses in internal controls were
  noted

8
Indicator 6

• Tax collections greater than 96
• percent of total outstanding levy?
• Tax collection rate was 101.01 for 05-06
• Ten year average collection rate is 99.56

9
Indicator 7

• Did PEIMS (Public Education
• Information Management System)
• data vary less than 4 from the
• Annual Financial Report?
• Measures data quality of financial information
• Differences for HEB were limited to rounding
  which were negligible (337)

10
Indicator 8

• Debt-related expenditures less than
• 770 / student?
• No, HEB expense was 938 / student
• 1997 bond authorization for 179 million
• Then---
• Property tax collections exceed
• 100,000 / penny?
• Yes, HEB collected about 736,420/penny

11
Indicator 9

• Material noncompliance reported
• by auditors?
• Reports failure to comply with laws, rules,
  and/or regulations
• No material noncompliance in the 2005-2006 audit

12
Indicator 10

• Full accreditation status for
• financial management practices?
• HEB has never had a TEA-assigned master or
  monitor for financial issues

13
Indicator 11

• Operating expenditures for
• instruction exceed 54?
• Only classroom teachers and classroom supplies
  qualify as instruction
• HEB spent 82.8 million, or 58.62 on instruction
• HEB exceeded standard by 6.6million

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Indicator 11 (Continued)

• Proposed operating expenditures
• for instruction of 65
• For indicator one projecting for 2006-07 with the
  new guidelines, the District would be at
  approximately 63
• For indicator two projecting for 2006-07 with the
  new guidelines, the District would be at
  approximately 70

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Indicator 12

• Did total budgeted expenditures exceed total
  funds available?
• The budgeted available funds exceeded budgeted
  expenditures by 34,283,814
• For 2005-06, actual revenues exceeded actual
  expenditures by 4,229,372

16
Indicator 13

• Over-spent on school buildings or
• other capital projects?
• The district issued bonds to cover construction
  projects
• 1.1 million remained from bond issue to cover
  changes and additional projects or equipment

17
Indicator 14

• Total cash and investments exceed
• deferred revenues (that could be
• owed to TEA)?
• No payment owed to TEA as of 8/31/06
• Cash and investments totaled 48.3 million

18
Indicator 15

• Administrative cost ratio below
• state standard?
• Compares administrative costs to instructional
  costs
• State standard is 11.05 for administrative costs
• HEB cost ratio was 7.03

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Indicator 16

• Ratio of students to teachers
• within state ranges?
• State range for districts with more than 10,000
  students is 13.5 to 22 students per teacher
• HEB ratio is 15.8 students per teacher

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Indicator 17

• Ratio of students to total staff
• within state ranges?
• State range for districts with more than 10,000
  students is 6.6 to 14 students per staff member
• HEB ratio is 8.4 students per staff member

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Indicator 18

• Total Fund Balance more than 50 and
• less than 150 of Optimum Fund
• Balance?
• Optimum Fund Balance for HEB was calculated at
  43.2 million
• HEBs actual fund balance was 39.4 million or
  91 of the Optimum Balance

22
Indicator 19

• Decrease in Undesignated Fund
• Balance was less than 20 over two
• prior years?
• HEBs Undesignated Fund Balance actually
  increased over two prior years by 22
• The District does not budget items with recurring
  costs, i.e. salaries/raises to be funded from
  General Fund Balance

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Indicator 20

• Total Cash and Investments in the
• General Fund more than 0?
• Total cash and investments was 48.3 million at
  the end of 05-06

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Indicator 21

• Investment earnings more than
• 15 per student?
• HEB earnings were 161 per student for 2005-2006

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HEB Rating

• Indicators answered NO
• Superior Achievement 0 - 2
• Above Standard Achievement 3 - 4
• Standard Achievement 5 - 6
• Substandard Achievement 7
• HEB Score Yes 21 No 0
• Superior Achievement