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Mercedes Independent School District August 31, 2007

Mercedes Independent School District August 31, 2007. Presentation on the Texas Education Agency School FIRST F inancial I ntegrity R ating S ystem of T exas. Table of Contents. The Mercedes Independent School District earned a “ Superior Achievement ” rating.

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Mercedes Independent School District August 31, 2007

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  1. Mercedes Independent School DistrictAugust 31, 2007 Presentation on the Texas Education Agency School FIRST Financial Integrity Rating System of Texas

  2. Table of Contents

  3. The Mercedes Independent School District earned a “Superior Achievement ” rating.

  4. New FIRST Requirements Title 19 Texas Administrative code Chapter 109, Budgeting, Accounting, and Auditing Subchapter AA require the following: • Prepare and distribute an annual financial management report • Disclose the current Superintendent’s Contract • A summary schedule of total reimbursements received by the superintendent and each board member • A summary schedule for the fiscal year of the dollar amount of outside compensation and/or fees received by the superintendent • A summary schedule of the total dollar amount of gifts received by executive officers and board members • A summary schedule of total dollar amount of business transactions between board members and the school district

  5. School FIRST Background • Senate Bill 218 of the 77th Legislature (2001) authorized the implementation of a financial accountability rating system. • Rating is for MISD’s fiscal year ended August 31, 2007. • The Texas Education Agency rated every school district on twenty-four indicators. • Official results were released Wednesday, August 20, 2008.

  6. School FIRST Rating System Rating is determined by the number of indicators answered “NO”.

  7. Default Indicators Did the District answer NO to indicators 1, 2, 3 or 4? Did the District answer NO to both indicators 5 and 6? If so, the District’s rating is Substandard Achievement.

  8. Indicator #1 Was The Total Fund Balance Less Reserved Fund Balance Greater Than Zero In The General Fund? School Districts must legally have a fund balance to ensure adequate funding for operations. This indicator is designed to ensure that your school district has a positive amount of fund balance cash (savings) that is not designated or “reserved” for a specific purpose. In other words, “Does your district have funds set aside for a rainy day?” Mercedes ISD’s unreserved fund balance at August 31, 2007 was $5,621,599.

  9. Indicator #2 • Was the Total Unrestricted Net Asset Balance (Net of Accretion of Interest on Capital Appreciation Bonds) In the Governmental Activities Column in the Statement of Net Assets Greater than Zero? (If the District's 5 Year % Change in Students was 10% more) • This indicator simply asks “Did the district’s total assets exceed the total amount of liabilities?”.

  10. Indicator #3 Were There No Disclosures In The Annual Financial Report And/Or Other Sources Of Information Concerning Default On Bonded Indebtedness? This indicator seeks to make certain that your district has paid its bills/obligations on bonds issued to pay for construction, etc. Mercedes ISD has not had any instance of default on bonded debtedness obligations.

  11. Indicator #4 Was The Annual Financial Report Filed Within One Month After November27th or January 28th Deadline Depending On The District’s Fiscal Year End Date (June 30th or August 31st)? A simple indicator. Was the district’s Annual Financial Report filed by the deadline? The Mercedes ISD Annual Financial and Compliance Report was submitted before the TEA deadline of January 28th, 2008.

  12. Indicator #5 Was There An Unqualified Opinion In The Annual Financial Report? A “qualification” on the district’s financial report means that the district needs to correct some of its reporting or financial controls. A district’s goal, therefore, is to receive an “unqualified opinion” on Annual Financial Report. This is simple “Yes” or “No” indicator. The Mercedes ISD has received an unqualified opinion on its Annual Financial and Compliance Report for the fiscal year ended August 31, 2007.

  13. Indicator #6 Did The Annual Financial Report Not Disclose Any Instance(s) Of Material Weaknesses In Internal Controls? A clean audit of the district’s Annual Financial Report would state that the district has no material weaknesses in internal controls. Any internal weaknesses create a risk of your district not being able to properly account for its use of public funds, and should be immediately addressed No material weaknesses in internal controls were disclosed in the Mercedes ISD’s Annual Financial and Compliance Report.

  14. Indicator #7 • Did The Districts Academic Rating Exceed Academically Unacceptable?

  15. Indicator #8 Was The Three-Year Average Percent Of Total Tax Collections (Including Delinquent) Greater Than 96%? This indicator measures the district’s success in collecting the taxes owed by the district’s community's businesses and homeowners, placing a 96 percent minimum collections standard. The district must collect 96 percent or more of its taxes, including any delinquent taxes owed from past years. The Mercedes ISD’s tax collection rate at August 31, 2007 was 98.03%. The tax collection rate for the previous year was 97.38%.

  16. Indicator #9 Did The Comparison Of PEIMS Data To Like Information In The Annual Financial Report Result In An Aggregate Variance Of Less Than 3 Percent Of Expenditures Per Fund Type (Data Quality Measure)? This indicator measures the quality of data reported to PEIMS and in the district’s Annual Financial Report to make certain that the data reported in each case “matches up.” If the difference in numbers reported in any fund type is more than 3 percent, the district “fails” this measure.

  17. Indicator #10 Were Debt Related Expenditures (Net Of IFA And/Or EDA) < $250.00 Per Student? (If The District’s Five-Year Percent Change In Students = Or > 7%, Or If Property Collected Per Penny Of Tax Effort > $200,000 Per Student, Then Answer This Indicator YES) This indicator shows the legislature’s intent for school districts to spend money on education, rather than fancy buildings, by limiting the amount of money districts can spend on debt to $250 per student. Fortunately, the legislature did allow for fast growing school to exceed this cap. Mercedes ISD’s debt expenditures (net of IFA/EDA allotments) per student were $140.67. Debt related expenditures per student for the previous year were $157.

  18. Indicator #11 Was There No Disclosure In The Annual Audit Report Of Material Noncompliance? A “No” disclosure means the Annual Audit Report includes no disclosure indicating that the school district failed to comply with laws, rules, and regulations for a government entity. The Mercedes ISD Annual Financial and Compliance Report at August 31, 2007 did not have any disclosure of material noncompliance.

  19. Indicator #12 Did The District Have Full Accreditation Status In Relation To Financial Management Practices? (e.g. No Conservator Or Monitor Assigned) Did TEA take over control of your district due t financial issues such as fraud or having a negative fund balance? If not, the district passed this indicator. The Mercedes ISD had full accreditation status at August 31, 2007.

  20. Indicator #13 Was The Percent Of Operating Expenditures Expended For Instruction More Than 65%?(Functions 11,36,93 & 95) (Phased in over three years, 55% for 2006-2007; 60% for 2007-2008; and 65% for 2008-2009). This indicator shows the district’s ability to focus the majority of its fundings that it directly pays for student instruction. Only items such as salaries for classroom teachers and classroom supplies qualify as “instruction” expenditures in this calculation (Function 11). For the year ended August, 2007, the Mercedes ISD’s percentage of operating expenditures for instruction were 54.96%. For FY 05-06, the percentage was 53.13%

  21. Indicator #14 • Was The Percent Of Operating Expenditures Expended For Instruction More Than or equal to 65%?(Functions 11,12,31,33,36,93 & 95) • This indicator provides another perspective on your district’s ability to focus the majority of its funding so that it directly pays for student instruction. • For the year ended August, 2007, the Mercedes ISD’s percentage of operating expenditures for instruction were 54.96%.

  22. Indicator #15 Was The Aggregate Of Budgeted Expenditures And Other Uses Less Than The Aggregate Of Total Revenues, Other Resources And Fund Balance In General Fund? Did the district overspend its budget? The district will a receive a negative rating on this measure if its total expenditures and other uses for fiscal year exceeded its total funds available. Mercedes ISD’s total revenues, other sources and fund balance in the general fund exceeded total expenditures and other uses by $5,927,453.

  23. Indicator #16 If The District’s Aggregate Fund Balance In The General Fund And Capital Projects Fund Was Less Than Zero, Were Construction Projects Adequately Financed? (To Avoid Creating Or Adding To The Fund Balance Situation) Did the district overspend on school buildings or other capital projects? This indicator measures the district’s ability to construct facilities without damaging its fund balance. Fund balance in the General Fund was $6,984,277 and $28,501,770 in the Capital Project Funds. These amounts indicate that the District has not overspent on construction projects.

  24. Indicator #17 Was The Ratio Of Cash And Investments To Deferred Revenues (Excluding Amount Equal To Net Delinquent Taxes Receivable) In The General Fund = Or > 1:1? (If Deferred Revenues < Net Delinquent Taxes Receivable) This indicator measures whether or not the district has sufficient cash and investments to balance fund balance monies such as TEA overpayments (deferred revenues). In other words, the district should have fund balance monies of its own that are at least equal to those dollars that are there due to overpayments from TEA, and it should not be spending “next year’s” monies this year. Total cash and investments were $7,609,471 while deferred revenues (excluding net delinquent taxes receivable) were $1,045,499, resulting a ratio of 7.3:1.

  25. Indicator #18 Was The Administrative Cost Ratio Less Than The Threshold Ratio? TEA and state law sets a cap on the percentage of their budget that Texas school districts can spend on administration. Did you exceed the cap for districts of the district’s size? TEA’s administrative cost ration is 14.01%, whereas, the Mercedes ISD’s administrative cost ratio was 10.57% at August 31, 2007.

  26. Indicator #19 Was The Ratio Of Students To Teachers Within The Ranges Shown Below According To District Size? This indicator measure your pupil-teacher ration to ensure that is within TEA recommended ranges for district’s of the local district’s size. For example, districts with a student population between 500 and 1,000 should have no more than 22 students per teacher and no fewer than 10 students per teacher. School districts comparable to Mercedes ISD should have no more than 22 students per teacher and no fewer than 13 students per teacher. Mercedes ISD student/teacher ratio was 14.7842 at August 31, 2007.

  27. Indicator #20 Was The Ratio Of Students To Total Staff Within The Ranges Shown Below According To District Size? This indicator measures your pupil-staff ration to ensure that it is within TEA recommended ranges for districts of the local district’s student population. For example, districts with a student population between 500 and 1, 000 should have no more than 14 students per staff member and no fewer than 5.5 students per district employee. School districts comparable to Mercedes ISD should have no less than 6.3 or no more than 14 students per total staff. Mercedes ISD ratio of students per total staff was 6.5235at August 31, 2007.

  28. Indicator #21 Was The Total Fund Balance In The General Fund More Than 50% And Less Than 150% Of Optimum According To The Fund Balance And Cash Flow Calculation Worksheet In The Annual Financial Report? Exhibit A in the district’s Annual Financial Report provides an optimum General Fund “fund balance” . The district should have no less than one-half and no more than one and one-half this amount in the district’s actual fund balance, counting both reserved and unreserved fund balances. Exhibit J-3 in the District’s Annual Financial and Compliance Report provides an optimum fund balance ($5,758,236) for the General Fund. The District should have no less than one-half and no more than one and one-half timed this amount in its General Fund “fund balance”. Optimum Fund Balance * 0.5 = $ 2,879,118 Optimum Fund Balance * 1.5 = $ 8,637,354 MISD General Fund “fund balance” = $ 6,984,277

  29. Indicator #22 Was The Decrease In Undesignated Unreserved Fund Balance < 20% Over Two Fiscal Years? (If 1.5 Times Optimum Fund Balance < Total Fund Balance In General Fund Or If Total Revenues > Operating Expenditures In The General Fund) Is the district “feeding off of the district’s fund balance” to pay for salaries or other district operating expenses? This indicator notes rapid decreases in a district’s undesignated fund balance (those dollars not designated for future uses, such as purchase of land, construction, etc.).

  30. Indicator #23 Was The Aggregate Total Of Cash And Investments In The General Fund More Than $0? Does your district have cash in the bank and/or investments? This indicator simply confirms that the school district has cash in the bank or in investments. At August 31, 2007 the Mercedes ISD General Fund had $7,609,471 in cash and investments.

  31. Indicator #24 Were Investment Earnings In All Funds (Excluding Debt Servcie Fund and Capital Projects Fund) More Than $20 Per Student? Is the district using it’s cash or fund balance wisely? This indicator verifies that the District is investing its money wisely and getting a good return on its investments. The investment earnings per student was $128.59 per student, well above the TEA standard of $20.00 per student.

  32. School FIRST Rating System Indicator #19 Ratio

  33. School FIRST Rating System Indicator #20 Ratio

  34. Texas Administrative CodeChapter 109 DisclosuresDisclosure A Current Superintendent’s Contract

  35. Texas Administrative CodeChapter 109 DisclosuresDisclosure B Summary schedule for the fiscal year (12-month period) of total reimbursements received by the superintendent and each board member. The summary schedule reports reimbursements for meals, lodging, transportation, motor fuel, and other items separately. It does not include reimbursements for supplies and materials that were purchased for the operation of the school district.

  36. Summary of Total Reimbursements received by Superintendents and Board Members For the Year Ended August 31, 2007

  37. Texas Administrative CodeChapter 109 DisclosuresDisclosure C Reportable Superintendent’s Compensation Summary Schedule for the fiscal year of the dollar amount of compensation and/or fees received by the superintendent from another school district or any other outside entity in exchange for professional consulting and/or other personal services. The schedule shall separately report the amount received from each entity. None reported

  38. Texas Administrative CodeChapter 109 DisclosuresDisclosure D Reportable Gifts A summary schedule for the fiscal year of the dollar amount of gifts that had an economic value of $250 or more in the aggregate in the fiscal year. This reporting requirement only applies to gifts received by the executive officers and board members (and their immediate family as described by Government Code, Chapter 573, Subchapter B, as a person related to another person within the first degree by consanguinity or affinity) from an outside entity that received payments from the school district in the prior fiscal year, and gifts from competing vendors that were not awarded contracts in the prior fiscal year. This reporting requirement does not apply to reimbursement of travel-related expenses by an outside entity when the purpose of the travel is to investigate or explore matters directly related to the duties of an executive officer or board member, or matters related to attendance at education-related conferences and seminars whose primary purpose is to provide continuing education (this exclusion does not apply to trips for entertainment related purpose or pleasure trips). This reporting requirement excludes an individual gift or a series fo gifts from a single outside entity that had an aggregate economic value of less than $250 per executive officer or board member. None reported

  39. Texas Administrative CodeChapter 109 DisclosuresDisclosure E Business Transactions with District A summary schedule for the fiscal year of the dollar amount received by board members for the aggregate amount of business transactions with the school district. This reporting requirement is not to duplicate the items disclosed in the summary schedule of reimbursements received by board members. None reported

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