NOTICE
1
Reporting Your School District’s
Financial Accountability Rating
The School FIRST Communications Kit
was updated in September 2018 to
include changes in the Commissioner’s
Rule for School FIRST that were
finalized in August 2018. The most
substantive changes in August 2018 will
be implemented by the Teas Education
Agency beginning with ratings year
2020-2021 based primarily on data from
fiscal year 2020.
During the phase-in period, the new
School FIRST system has separate
worksheets for rating years 2017-2018,
2018-2019, and 2019-2020 as
compared to subsequent years.
Under School FIRST, every school
district in Texas is required to prepare
an annual financial management report
that includes the following:
A. The district’s financial
management performance rating
provided by the Texas Education
Agency (TEA) based on its
comparison with indicators
established by the
Commissioner of Education for
the state’s new Financial
Accountability System.
B. The district's financial
management performance under
each indicator for the current and
previous years' financial
accountability ratings;
C. Additional information required
by the Commissioner of
Education.
Notice: Starting with the 2007
calendar year, the financial
management report that will
be issued at the School FIRST
hearing must contain certain
required disclosures, in
accordance with Title 19 Texas
Administrative Code Chapter
109, Budgeting, Accounting,
and Auditing Subchapter AA,
Commissioner's Rules
Concerning Financial
Accountability Rating System.
Under Chapter 109, the
Commissioner requires certain
disclosures, as follows:
1. A copy of the
superintendent's current
employment contract. The
school district may publish
the superintendent's
employment contract on the
district's Internet site in lieu of
publication in the annual
financial management report.
This must disclose all
compensation and benefits
paid to the superintendent;
2. A summary schedule for the
fiscal year (12-month period)
of total reimbursements
received by the
superintendent and each
board member, including
transactions resulting from
use of the school district's
credit card(s), debit card(s),
store-value card(s) and any
other instruments to cover
expenses incurred by the
superintendent and each
board member. The
summary schedule shall
separately report
reimbursements for meals,
NOTICE
2
lodging, transportation, motor
fuel, and other items (the
summary schedule of total
reimbursements is not to
include reimbursements for
supplies and materials that
were purchased for the
operation of the district);
3. A 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;
4. A summary schedule for the
fiscal year of the total dollar
amount by the executive
officers and board
members 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 school
district's 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 duties, 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
purposes or pleasure
trips). This reporting
requirement excludes an
individual gift or a series of
gifts from a single outside
entity that had an aggregate
economic value of less than
$250 per executive officer or
board member;
5. A summary schedule for the
fiscal year of the dollar
amount 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;
and
6. Additional information that
the district’s board of trustees
deems useful.
Refer to the Commissioner’s Rules
Concerning the Financial Accountability
Rating System (Chapter 109,
Subchapter AA) for more information.
NOTICE
3
Templates for reporting the
disclosures listed above are provided
in the pages preceding the glossary
in this communication resources kit.
Publicizing Your District’s Financial
Report and Rating
Within two months of receiving the final
financial accountability rating school
districts are required to distribute the
financial management report to
attendees at a public hearing for School
FIRST. The board of trustees is to have
the public hearing at a district facility.
The board must give notice of the
hearing to owners of real estate property
in the geographic boundaries of the
school district, open-enrollment charter
school, or charter school operated by a
public IHE and to parents of school
district, open-enrollment charter school,
or charter school operated by a public
IHE students. In addition, notice of the
hearing, including date, time and
location, must be provided to a
newspaper of general circulation in the
geographic boundaries of the school
district, each campus of an open-
enrollment charter school, or each
campus of a charter school operated by
a public IHE in one posting prior to
holding the public meeting, providing the
time and place of the hearing. The
notice in the newspaper may not be
earlier than 30 days or later than 10
days before the date of the hearing. If
no newspaper is published in the county
in which the district's central
administration office is located or within
the geographic boundaries of an open-
enrollment charter school's campus or
campus of a charter school operated by
a public IHE, then the board must
publish the notice in the county nearest
to the county seat of the county in which
the district's central administration office
is located or in which the campus of the
open-enrollment charter school or the
campus of a charter school operated by
a public IHE is located; and
(B) through electronic mail to the mass
communication media serving the
school district, open-enrollment charter
school, or charter school operated by a
public IHE, including, but not limited to,
radio and television.
Sample Notice:
NOTICE OF PUBLIC MEETING
TO DISCUSS YOUR DISTRICT
NAME’S
State Financial Accountability Rating
Your District Name will hold
a public meeting
at TIME, DATE, YEAR,
in the ROOM, BUILDING,
ADDRESS, CITY.
The purpose of this meeting
is to discuss Your District Name’s
rating
on the state’s financial
accountability system.
District staff should have copies of the
report ready to hand out to attendees at
the public hearing and to anyone that
requests a copy after the hearing.
SAMPLE AGENDA
4
AGENDA
Your SCHOOL DISTRICT
City, Texas
Public Hearing on School FIRST, financial accountability rating system
NOTICE IS HEREBY GIVEN that Your School District will hold a School FIRST public
hearing on the DATE at TIME, in the LOCATION of Your School District, ADDRESS,
City, Texas, for the purpose of:
A. Call to Order
B. Pledge of Allegiance
C. Overview of School FIRST (Financial Integrity Rating System of Texas)
D. Your School District’s rating
E. Public Comments on the Report
F. Adjournment
On this DATE at TIME, a copy of this notice was posted on the bulletin board of the main
entrance foyer at Your School District, a place accessible to the public at all times, and
on the bulletin board of the Administration Building Reception Area, Address, City,
Texas, and distributed to local media representatives as requested.
_______________________________________
Superintendent, Your School District
A PR OPPORTUNITY
5
The release of school district financial
accountability ratings under the new
School FIRST financial accountability
rating system is a public relations
opportunity for your district. After all, the
media and public will receive the
information anyway, so why not make
the most of this news?
This is the 17th year of School FIRST
(Financial Accountability Rating System
of Texas), a financial accountability
system for Texas school districts
developed by the Texas Education
Agency in response to Senate Bill 875
of the 76th Texas Legislature in 1999.
The primary goal of School FIRST is to
achieve quality performance in the
management of school districts’ financial
resources, a goal made more significant
due to the complexity of accounting
associated with Texas’ school finance
system.
The School FIRST accountability rating
system assigns one of four financial
accountability ratings to Texas school
districts, as follows:
A for Superior Achievement
B for Above Standard Achievement
C for Standard Achievement
F for Substandard Achievement
If your district achieves a
high rating for its
financial accountability,
you should take every opportunity
to let your taxpayers know that
you are doing a great job
with their tax dollars.
Districts that receive the “Substandard
Achievement” ratings under School
FIRST must file a corrective action plan
with the Texas Education Agency within
one month after the school district’s or
open-enrollment charter school’s public
hearing.
If your district achieves a high rating for
its financial accountability, you should
take every opportunity to let your
taxpayers know that you are doing a
great job with their tax dollars. If your
rating isn’t quite so high, then control the
story by stating your results, and
emphasizing that this School FIRST
rating will help guide your efforts to do
the best possible job for your
community! Good or bad, get out in front
of the story by being prepared.
Following is a sample news release for
those districts earning of “A” for
Superior Achievement.” We hope that
the example press release will serve as
a starting point as you develop your plan
for telling your community that you do as
well caring for their money as your do
their children.
SAMPLE NEWS RELEASE 1
6
_____________, 2020 For further information,
FOR IMMEDIATE RELEASE contact: ________________
(___) ___-____
_____________________ ISD Earns State’s Highest Fiscal Accountability Rating
____________________ Independent School District officials announced that the district
received a rating of “A” for Superior Achievementunder Texas’ School FIRST financial
accountability rating system. The Superior Achievementrating is the state’s highest,
demonstrating the quality of ________________________ ISD’s financial management
and reporting system.
This is the 17th year of School FIRST (Financial Accountability Rating System of Texas),
a financial accountability system for Texas school districts developed by the Texas
Education Agency in response to Senate Bill 875 of the 76th Texas Legislature in 1999
and amendments under House Bill 5, 83rd Texas Legislature, Regular Session, 2013.
The primary goal of School FIRST is to achieve quality performance in the management
of school districts’ financial resources, a goal made more significant due to the
complexity of accounting associated with Texas’ school finance system.
“We are very pleased with ___________________ ISD’s School FIRST rating,” said
___________________ISD Superintendent _________ __________. This rating shows
that our district is making the most of our taxpayers’ dollars. This rating shows that
____________’s schools are accountable not only for student learning, but also for
achieving these results cost-effectively and efficiently.”
The Texas Education Agency assigned one of four financial accountability ratings to
Texas school districts, with the highest being A” forSuperior Achievement,” followed by
B” for “Above-Standard Achievement,” “C” forStandard Achievement” and “F” for
Substandard Achievement.” Optional sentence to add _____________ ISD has
achieved the highest rating for Insert number prior year(s).
*** Localize for Your District ***
SAMPLE NEWS RELEASE 2
7
_____________, 2020 For further information,
FOR IMMEDIATE RELEASE contact: ________________
(___) ___-____
_____________________ ISD Announces Fiscal Accountability Rating
____________________ Independent School District officials announced that the district
received a rating of “__” for “_________” under Texas’ School FIRST financial
accountability rating system. The rating system measures the quality of a school
district’s financial management and reporting system.
This is the 17th year of School FIRST (Financial Accountability Rating System of Texas),
a financial accountability system for Texas school districts developed by the Texas
Education Agency in response to Senate Bill 875 of the 76th Texas Legislature in 1999
and amendments under House Bill 5, 83rd Texas Legislature, Regular Session, 2013.
The primary goal of School FIRST is to achieve quality performance in the management
of school districts’ financial resources, a goal made more significant due to the
complexity of accounting associated with Texas’ school finance system.
The Schools FIRST accountability rating ensures that Texas school districts are
accountable not only for student learning, but also for achieving these results cost-
effectively and efficiently,” said ___________________ISD Superintendent _________
__________. The information provided by the Schools FIRST system will guide us in
our continued efforts to maximize each taxpayer dollar.”
The Texas Education Agency assigned one of four financial accountability ratings to
Texas school districts, with the highest being A” forSuperior Achievement,” followed by
B” for “Above-Standard Achievement,” “C” forStandard Achievement” and “F” for
Substandard Achievement.” Optional sentence to add _____________ ISD has
achieved the highest rating for Insert number prior year(s).
*** Localize for Your District ***
How Ratings are Assessed
8
Rating Worksheet
Preliminary ratings are released by
Texas Education Agency every calendar
year during the summer. The
Commissioner’s Rules for School FIRST
are contained in Title 19, Texas
Administrative Code, Chapter 109,
Subchapter AA, Commissioner's Rules
Concerning Financial Accountability
Rating System.
The School FIRST Communications Kit
was updated in September 2018 to
include changes in the Commissioner’s
Rule for School FIRST that were
finalized in August 2018. The most
substantive changes in August 2018 will
be implemented by the Teas Education
Agency beginning with ratings year
2020-2021 based primarily on data from
fiscal year 2020.
During the phase-in period, the new
School FIRST system has separate
worksheets for rating years 2017-2018,
2018-2019, and 2019-2020 as
compared to subsequent years.
The questions a school district must
address in completing the worksheet
used to assess its financial
management system can be confusing
to non-accountants. The following is a
layman’s explanation of what the
questions meanand what your
district’s answers can mean to its rating.
1.
Was the complete annual
financial report (AFR) and data
submitted to the TEA within 30
days of the November 27 or
January 28 deadline depending on
the school district’s fiscal year
end date of June 30 or August 31,
respectively?
A simple indicator. Was your Annual
Financial Report filed by the deadline?
2.
Review the AFR for an
unmodified opinion and material
weaknesses. The school district
must pass 2.A to pass this
indicator. The school district fails
indicator number 2 if it responds
"No" to indicator 2.A. or to both
indicators 2.A and 2.B.
2.A. Was there an unmodified
opinion in the AFR on the financial
statements as a whole? (The
American Institute of Certified
Public Accountants (AICPA)
defines unmodified opinion. The
external independent auditor
determines if there was an
unmodified opinion.)?
A “modified” version of the auditor’s
opinion in your annual audit report
means that you need to correct some of
your reporting or financial controls. A
district’s goal, therefore, is to receive an
“unmodified opinion” on its Annual
Financial Report. 2.A. is a simple “Yes”
or “No” indicator (see instructions under
“2.” for evaluating performance under
“2.A” and “2.B.” to arrive at the score for
“2.”).
2.B. Did the external independent
auditor report that the AFR was
free of any instance(s) of material
weaknesses in internal controls
over financial reporting and
compliance for local, state, or
federal funds? (The AICPA defines
material weakness.)
A clean audit of your Annual Financial
How Ratings are Assessed
9
Report would state that your 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. 2.B. is a simple “Yes” or
“No” indicator (see instructions under
“2.” for evaluating performance under
“2.A” and “2.B” to arrive at the score for
“2.”).
3.
Was the school district in
compliance with the payment
terms of all debt agreements at
fiscal year end? (If the school
district was in default in a prior
fiscal year, an exemption applies
in following years if the school
district is current on its
forbearance or payment plan with
the lender and the payments are
made on schedule for the fiscal
year being rated. Also exempted
are technical defaults that are not
related to monetary defaults. A
technical default is a failure to
uphold the terms of a debt
covenant, contract, or master
promissory note even though
payments to the lender, trust, or
sinking fund are current. A debt
agreement is a legal agreement
between a debtor (= person,
company, etc. that owes money)
and their creditors, which
includes a plan for paying back
the debt.)
This indicator seeks to make certain that
your district has timely paid all
bills/obligations, including financing
arrangements to pay for school
construction, school buses,
photocopiers, etc.
4.
Did the school district make
timely payments to the Teachers
Retirement System (TRS), Texas
Workforce Commission (TWC),
Internal Revenue Service (IRS),
and other government agencies?
This indicator seeks to make sure the
district fulfilled its obligation to the TRS,
TWC and IRS to transfer payroll
withholdings and to fulfill any additional
payroll-related obligations required to be
paid by the district.
5.
Was the total unrestricted Net
Position balance (Net of the
accretion of interest for capital
appreciation bonds) in the
governmental activities column in
the Statement of Net Positions
greater than zero? (If the school
district's change of students in
membership over 5 years was 7
percent or more, then the school
district passes this indicator.)
This indicator is not being scored this
year due to the impact of accounting
changes implemented by the
Governmental Accounting Standards
Board.
This indicator simply asks, “Did the
district’s total assets exceed the total
amount of liabilities (according to the
very first financial statement in the
annual audit report)?” Fortunately, this
indicator recognizes that high-growth
districts incur large amounts of debt to
fund construction, and that total debt
may exceed the total amount of assets
under certain scenarios.
6. Was the number of days of cash on
hand and current investments in the
How Ratings are Assessed
10
general fund for the school district
sufficient to cover operating
expenditures (excluding facilities
acquisition and construction)?
This indicator measures how long in
days after the end of the fiscal the
school district could have disbursed
funds for its operating expenditures
without receiving any new revenues. Did
you meet or exceed the target amount in
School FIRST?
7. Was the measure of current assets
to current liabilities ratio for the
school district sufficient to cover
short-term debt?
This indicator measures whether the
school district had sufficient short-term
assets at the end of the fiscal year to
pay off its short-term liabilities. Did you
meet or exceed the target amount in
School FIRST?
8. Was the ratio of long-term
liabilities to total assets for the
school district sufficient to support
long-term solvency? (If the school
district's change of students in
membership over 5 years was 7
percent or more, then the school
district passes this indicator.)
This question is like asking someone if
their mortgage exceeds the market
value of their home. Were you below the
cap for this ratio in School FIRST?
Fortunately, this indicator recognizes
that high-growth districts incur additional
operating costs to open new
instructional campuses.
9. Did the school district’s general
fund revenues equal or exceed
expenditures (excluding facilities
acquisition and construction)? If not,
was the school district’s number of
days of cash on hand greater than or
equal to 60 days?
This indicator simply asks, “Did you
spend more than you earned?” (the
school district will automatically pass
this indicator, if the school district had at
least 60 days cash on hand.)
10. Was the debt service coverage
ratio sufficient to meet the required
debt service?
This indicator asks about the school
district’s ability to make debt principal
and interest payments that will become
due during the year. Did you meet or
exceed the target amount in School
FIRST?
11. Was the school district’s
administrative cost ratio equal to
or less than the threshold ratio?
This indicator measures the percentage
of their budget that Texas school
districts spent on administration. Did you
exceed the cap in School FIRST for
districts of your size?
12. Did the school district not have a
15 percent decline in the students to
staff ratio over 3 years (total
enrollment to total staff)? (If the
student enrollment did not decrease,
the school district will automatically
pass this indicator.)
If the school district had a decline in
students over 3 school years, this
indicator asks if the school district
decreased the number of the staff on
the payroll in proportion to the decline in
students. (The school district
automatically passes this indicator if
How Ratings are Assessed
11
there was no decline in students.)
13. Did the comparison of Public
Education Information Management
System (PEIMS) data to like
information in the school district’s
AFR result in a total variance of less
than 3 percent of all expenditures by
function?
This indicator measures the quality of
data reported to PEIMS and in your
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 3
percent or more, your district “fails” this
measure.
14. Did the external independent
auditor indicate the AFR was free of
any instance(s) of material
noncompliance for grants, contracts,
and laws related to local, state, or
federal funds? (The AICPA defines
material noncompliance.)
A clean audit of your Annual Financial
Report would state that your 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.
15. Did the school district not receive
an adjusted repayment schedule for
more than one fiscal year for an
overallocation of Foundation School
Program (FSP) funds as a result of a
financial hardship?
This indicator asks if the district had to
ask for an easy payment plan to return
monies to TEA after spending the
overpayment from the Foundation
School Program state aid.
DISCLOSURES
12
Reporting requirements for the financial management report for School FIRST public hearing are found in Title 19 Texas
Administrative Code Chapter 109, Budgeting, Accounting, and Auditing, Subchapter AA, Commissioner's Rules
Concerning Financial Accountability Rating System. This rule describes requirements for the six (6) disclosures
explained below that are to be presented as appendices in the School FIRST financial management report.
DISCLOSURES
13
1. Superintendent’s Employment Contract
The school district is to provide a copy of the superintendent's employment contract that is effective on the date of the
School FIRST hearing in calendar year 2020. In lieu of publication in the School FIRST financial management report, the
school district may choose to publish the superintendent's employment contract on the school district's Internet site. If
published on the Internet, the contract is to remain accessible for twelve months.
DISCLOSURES
14
2. Reimbursements Received by the Superintendent and Board Members for Fiscal Year 2019
For the Twelve-month
Period
Ended June 30, or August
31, 2019
Description of
Reimbursements
Superintende
nt
Board
Member
1
Member
Member
Board
Member
4
Board
Member
5
Board
Member
6
Board
Member
7
Meals
$
$
$
$
$
$
Lodging
Transportation
Motor Fuel
Other
Total
$
$
$
$
$
$
NoteThe spirit of the rule is to capture all “reimbursements” for fiscal year 2019, regardless of the manner of payment,
including direct pay, credit card, cash, and purchase order. Reimbursements to be reported per category include:
MealsMeals consumed off of the school district’s premises, and in-district meals at area restaurants (excludes catered
meals for board meetings).
Lodging - Hotel charges.
Transportation - Airfare, car rental (can include fuel on rental), taxis, mileage reimbursements, leased cars, parking and
tolls.
Motor fuelGasoline.
Other - Registration fees, telephone/cell phone, internet service, fax machine, and other reimbursements (or on-behalf of)
to the superintendent and board member not defined above.
DISCLOSURES
15
3. Outside Compensation and/or Fees Received by the Superintendent for Professional Consulting and/or Other
Personal Services in Fiscal Year 2018
For the Twelve-Month
Period
Ended June 30, or August
31, 2019
Name(s) of Entity(ies)
$
Total
$
NoteCompensation does not include business revenues from the superintendent’s livestock or agricultural-based
activities on a ranch or farm. Report gross amount received (do not deduct business expenses from gross revenues).
Revenues generated from a family business that have no relationship to school district business are not to be disclosed.
DISCLOSURES
16
4. Gifts Received by the Executive Officer(s) and Board Members (and First Degree Relatives, if any) in Fiscal
Year 2019
For the Twelve-Month
Period
Ended June 30, or
August 31, 2019
Superintende
nt
Board
Member
1
Board
Member
2
Board
Member
3
Board
Member
4
Board
Member
5
Board
Member
6
Board
Member
7
Summary Amounts
$
$
$
$
$
$
$
$
Note An executive officer is defined as the superintendent, unless the board of trustees or the district administration
names additional staff under this classification. Gifts received by first degree relatives, if any, will be reported under the
applicable school official.
DISCLOSURES
17
5. Business Transactions Between School District and Board Members for Fiscal Year 2019
For the Twelve-Month
Period
Ended June 30, or August
31, 2019
Board
Member
1
Board
Member
2
Board
Member
3
Board
Member
4
Board
Member
5
Board
Member
6
Board
Member
7
Summary Amounts
$
$
$
$
$
$
$
Note - The summary amounts reported under this disclosure are not to duplicate the items reported in the summary
schedule of reimbursements received by board members.
DISCLOSURES
18
6. Any other information the board of trustees of the school district or open-enrollment charter school
determines to be useful.
GLOSSARY
19
Accounting: A standard school fiscal
accounting system must be adopted and
installed by the board of trustees of each school
district. The accounting system must conform to
generally accepted accounting principles. This
accounting system must also meet at least the
minimum requirements prescribed by the state
board of education, subject to review and
comment by the state auditor.
Ad Valorem Property Tax: Literally the term
means "according to value." Ad valorem taxes
are based on a fixed proportion of the value of
the property with respect to which the tax is
assessed. They require an appraisal of the
taxable subject matter's worth. General property
taxes are almost invariably of this type. Ad
valorem property taxes are based on ownership
of the property, and are payable regardless of
whether the property is used or not and whether
it generates income for the owner (although
these factors may affect the assessed value).
Adopted Tax Rate: The tax rate set by the
school district to meet its legally adopted budget
for a specific calendar year.
All Funds: A school district's accounting
system is organized and operated on a fund
basis where each fund is a separate fiscal entity
in the school district much the same as various
corporate subsidiaries are fiscally separate in
private enterprise. All Funds refers to the
combined total of all the funds listed below:
The General Fund
Special Revenue Funds (Federal
Programs, Federally Funded Shared
Services, State Programs, Shared
State/Local Services, Local Programs)
Debt Service Funds
Capital Projects Funds
Enterprise Funds for the National
School Breakfast and Lunch Program
Assessed Valuation: A valuation set upon real
estate or other property by a government as a
basis for levying taxes.
Assigned Fund Balance: The assigned fund
balance represents tentative plans for the future
use of financial resources. Assignments require
executive management (per board policy to
assign this responsibility to executive
management prior to end of fiscal year) action to
earmark fund balance for bona fide purposes
that will be fulfilled within a reasonable period of
time. The assignment and dollar amount for the
assignment may be determined after the end of
the fiscal year when final fund balance is known.
Auditing: Accounting documents and records
must be audited annually by an independent
auditor. Texas Education Agency (TEA) is
charged with review of the independent audit of
the local education agencies.
Beginning Fund Balance: The General Fund
balance on the first day of a new school year.
For most school districts this is equivalent to the
fund balance at the end of the previous school
year.
Budget: The projected financial data for the
current school year. Budget data are collected
for the general fund, food service fund, and debt
service fund.
Budgeting: Not later than August 20 of each
year, the superintendent (or designee) must
prepare a budget for the school district if the
fiscal year begins on September 1. (For those
districts with fiscal years beginning July 1, this
date would be June 20.) The legal requirements
for funds to be budgeted are included in the
Budgeting module of the TEA Resource Guide.
The budget must be adopted before
expenditures can be made, and this adoption
must be prior to the setting of the tax rate for the
budget year. The budget must be itemized in
detail according to classification and purpose of
expenditure, and must be prepared according to
the rules and regulations established by the
state board of education. The adopted budget,
as necessarily amended, shall be filed with TEA
through the Public Education Information
Management System (PEIMS) as of the date
prescribed by TEA.
Capital Outlay: This term is used as both a
Function and an Object. Expenditures for land,
buildings, and equipment are covered under
Object 6600. The amount spent on acquisitions,
construction, or major renovation of school
GLOSSARY
20
district facilities are reported under Function 80.
Capital Project Funds: Fund type used to
account for financial resources to be used for
the acquisition or construction of major capital
facilities (other than those financed by
proprietary funds and trust funds.)
Cash: The term, as used in connection with
cash flows reporting, includes not only currency
on hand, but also demand deposits with banks
or other financial institutions. Cash also includes
deposits in other kinds of accounts or cash
management pools that have the general
characteristics of demand deposit accounts in
that the governmental enterprise may deposit
additional cash at any time and also effectively
may withdraw cash at any time without prior
notice or penalty.
Chapter 41: A key "equity" chapter in the Texas
Education Code (TEC) is Chapter 41. This
chapter is devoted to wealth equalization
through the mechanism of recapture, the
recovery of financial resources from districts
defined by the state as high property wealth.
Resources are recovered for the purpose of
sharing them with low-wealth districts. Districts
that are subject to the provisions of Chapter 41
must make a choice among several options in
order to reduce their property wealth and share
financial resources.
Committed Fund Balance: The committed fund
balance represents constraints made by the
board of trustees for planned future use of
financial resources through a resolution by the
board, for various specified purposes including
commitments of fund balance earned through
campus activity fund activities. Commitments
are to be made as to purpose prior to the end of
the fiscal year. The dollar amount for the
commitment may be determined after the end of
the fiscal year when final fund balance is known.
Comptroller Certified Property Value: The
district's total taxable property value as certified
by the Comptroller's Property Tax Division
(Comptroller Valuation).
Days of Cash on Hand: The number of days
the school district can disburse funds for its
operating expenditures without receiving any
new revenues.
Debt Service Fund: Governmental fund type
used to account for the accumulation of
resources for, and the payment of, general long-
term debt principal and interest.
Debt Services: Two function areas (70 and 71)
and one Object (6500) are identified using this
terminology "debt services." Function 70 is a
major functional area that is used for
expenditures that are used for the payment of
debt principal and interest including Function 71.
Expenditures that are for the retirement of
recurring bond, capital lease principal, and other
debt, related debt service fees, and for all debt
interest fall under Function 71. Object 6500
covers all expenditures for debt service.
Debt Service Coverage Ratio: This ratio
measures an organization’s ability to make debt
principal and interest payments that will become
due during the year.
Deferred Revenue: Resource inflows that do
not yet meet the criteria for revenue recognition.
Unearned amounts are always reported as
deferred revenue. In governmental funds,
earned amounts also are reported as deferred
revenue until they are available to liquidate
liabilities of the current period.
Effective Tax Rate: Provides the unit with
approximately the same amount of revenue it
had the year before on properties taxes in both
years. A comparison of the effective tax rate to
the taxing unit's proposed tax rate shows if there
will be a tax increase.
Ending Fund Balance: The amount of
unencumbered surplus fund balance reported by
the district at the end of the specified school
year. For most school districts this will be
equivalent to the fund balance at the beginning
of the next school year.
Excess (Deficiency): Represents receivables
due (excess) or owed (deficiency) at the end of
the school year. This amount is recorded as
Asset Object 1200.
GLOSSARY
21
Existing Debt Allotment (EDA): Is the amount
of state funds to be allocated to the district for
assistance with existing debt.
Federal Revenues: Revenues paid either
directly to the district or indirectly though a local
or state government entity for Federally-
subsidized programs including the School
Breakfast Program, National School Lunch
Program, and School Health and Related
Services Program. This amount is recorded as
Revenue Object 5900.
Fiscal Year: A period of 12 consecutive months
legislatively selected as a basis for annual
financial reporting, planning, and budgeting. The
fiscal year may run September 1 through August
31 or July 1 through June 30.
Foundation School Program (FSP) Status:
The Foundation School Program (FSP) is the
shared financial arrangement between the state
and the school district, where property taxes are
blended with revenues from the state to cover
the cost of basic and mandated programs. The
nature of this arrangement falls in one of the
following status categories: Regular, Special
Statutory, State Administered, Education
Service Center, or Open Enrollment Charter
School District.
FTE: Full-Time Equivalent measures the
extent to which one individual or student
occupies a full-time position or provides
instruction, e.g., a person who works four hours
a day or a student that attends a half of a day
represents a .5 FTE.
Function: Function codes identify the
expenditures of an operational area or a group
of related activities. For example, in order to
provide the appropriate atmosphere for learning,
school districts transport students to school,
teach students, feed students and provide health
services. Each of these activities is a function.
The major functional areas are:
Instruction and Instructional-Related
Services
Instructional and School Leadership
Support Services - Student
Administrative Support Services
Support Services; Non-Student Based
Ancillary Services
Debt Service
Capital Outlay
90 Intergovernmental Charges
Fund Balance: The difference between assets
and liabilities reported in a governmental fund.
General Administration: The amount spent on
managing or governing the school district as an
overall entity. Expenditures associated with this
functional area are reported under Function 41.
General Fund: This fund finances the
fundamental operations of the district in
partnership with the community. All revenues
and expenditures not accounted for by other
funds are included. This is a budgeted fund and
any fund balances are considered resources
available for current operations.
I&S Tax Rate: The tax rate calculated to
provide the revenues needed to cover Interest
and Sinking (I&S) (also referred to as Debt
Service). I&S includes the interest and principal
on bonds and other debt secured by property tax
revenues.
Incremental Costs: The amount spent by a
school district with excess wealth per WADA on
the purchase of attendance credits either from
the state or from other school district(s).
Expenditures associated with this functional
area are reported under Function 92.
Instruction: The amount spent on direct
classroom instruction and other activities that
deliver, enhance or direct the delivery of learning
situations to students regardless of location or
medium. Expenditures associated with this
functional area are reported under Function 11.
Instructional Facilities Allotment (IFA):
(State Aid) Provides assistance to school
districts in making debt service payments on
qualifying bonds and lease-purchase
agreements. Proceeds must be used for the
construction or renovation of an instructional
facility.
Intergovernmental Charges:
"Intergovernmental" is a classification used
GLOSSARY
22
when one governmental unit transfers resources
to another. In particular, when a Revenue
Sharing District purchases WADA or where one
school district pays another school district to
educate transfer students. Expenditures
associated with this functional area are reported
under Function 90.
Investments in Capital Assets, Net of Related
Debt: One of three components of Net Position
that must be reported in both government-wide
and proprietary fund financial statements.
Related debt, for this purpose, includes the
outstanding balances of any bonds, mortgages,
notes, or other borrowings that are attributable
to the acquisition, construction, or improvement
of capital assets of the government.
Local & Intermediate Revenues: All revenues
from local taxes and other local and intermediate
revenues. For specifics, see the definitions for
Local Tax and Other Local & Intermediate
Revenues. This amount is recorded under
Object 5700.
Local Tax: This is all revenues from local real
and personal property taxes, including
recaptured funds from 1) Contracted
Instructional Services Between Public Schools
(Function 91) and
2) Incremental Costs associated with Chapter 41
of the Texas Education Code (Function 92).
M&O Tax Rate: The tax rate calculated to
provide the revenues needed to cover
Maintenance & Operations (M&O). M&O
includes such things as salaries, utilities, and
day-to-day operations.
Modified Opinion: Term used in connection
with financial auditing. A modification of the
independent auditor's report means there exists
one or more specific exceptions to the auditor's
general assertion that the district’s financial
statements present fairly the financial
information contained therein according to
generally accepted accounting principles.
Nonspendable Fund Balance: The portion of
fund balance that is in non-liquid form, including
inventories, prepaid items, deferred
expenditures, long-term receivables and
encumbrances (if significant). Nonspendable
fund balance may also be in the form of an
endowment fund balance that is required to
remain intact.
Object: An object is the highest level of
accounting classification used to identify either
the transaction posted or the source to which the
associated monies are related. Each object is
assigned a code that identifies in which of the
following eight major object groupings it belongs:
1000 Assets
2000 Liabilities
3000 Fund Balances
5000 Revenue
6000 Expenditures/Expenses
7000 Other Resources/NonOperating
Revenue/Residual Equity Transfers In
8000 Other Uses/NonOperating
Revenue/Residual Equity Transfers Out
Operating Expenditures: A wide variety of
expenditures necessary to a district’s operations
fall into this category with the largest portion
going to payroll and related employee benefits
and the purchase of goods and services.
Operating Expenditures/Student: Total
Operating Expenditures divided by the total
number of enrolled students.
Operating Revenues and Expenses: Term
used in connection with the proprietary fund
statement of revenues, expenses, and changes
in Net Position. The term is not defined as such
in the authoritative accounting and financial
reporting standards, although financial
statement preparers are advised to consider the
definition of operating activities for cash flows
reporting in establishing their own definition.
Other Local & Intermediate Revenues: All
local and intermediate revenues NOT from local
real and personal property taxes including:
Revenues Realized as a Result of
Services Rendered to Other School
Districts
Tuition and Fees
Rental payments, interest, investment
income
GLOSSARY
23
Sale of food and revenues from athletic
and extra/co-curricular activities
Revenues from counties, municipalities,
utility districts, etc.
Other Operating Costs: Expenditures
necessary for the operation of the school district
that are NOT covered by Payroll Costs,
Professional and Contracted Services, Supplies
and Materials, Debt Services, and Capital Outlay
fall into this category and include travel,
Insurance and bonding costs, election costs,
and depreciation. This amount is recorded as
Expenditure/Expense Object 6400.
Other Resources: This amount is credited to
total actual other resources or non-operating
revenues received or residual equity transfers in.
This amount is recorded under Object 7020.
Payments for Shared Services
Arrangements: Payments made either from a
member district to a fiscal agent or payments
from a fiscal agent to a member district as part
of a Shared Services Arrangement (SSA). The
most common types of SSAs relate to special
education services, adult education services,
and activities funded by the Elementary and
Secondary Education Act (ESEA). Expenditures
associated with this functional area are reported
under Function 93.
Payroll: Payroll costs include the gross salaries
or wages and benefit costs for services or tasks
performed by employees at the general direction
of the school district. This amount is recorded as
Expenditure/Expense Object 6100. (NOTE:
Payroll amounts do not include salaries for
contract workers, e.g., for food service and
maintenance. Therefore, this figure will vary
significantly between districts and campuses
that use contract workers and those that do not.)
PEIMS: A state-wide data management
system for public education information
in the State of Texas. One of the basic
goals of PEIMS, as adopted by the
State Board of Education in 1986, is to
improve education practices of local
school districts. PEIMS is a major
improvement over previous information
sources gathered from aggregated data
available on paper reports. School
districts submit their data via
standardized computer files. These are
defined in a yearly publication, the
PEIMS Data Standards
.
Plant Maintenance & Operations: The amount
spent on the maintenance and operation of the
physical plant and grounds and for warehousing
and receiving services. Expenditures associated
with this functional area are reported under
Function 51.
Property /Refined ADA: The district's
Comptroller Certified Property Value divided by
its total Refined ADA.
Property/WADA: The district's Comptroller
Certified Property Value divided by its total
WADA.
Refined ADA: Refined Average Daily
Attendance (also called RADA) is based on the
number of days of instruction in the school year.
The aggregate eligible days attendance is
divided by the number of days of instruction to
compute the refined average daily attendance.
Restricted Fund Balance: This is the portion of
fund balance that has externally enforceable
constraints made by outside parties.
Revenues: Any increase in a school district's
financial resources from property taxes,
foundation fund entitlements, user charges,
grants, and other sources. Revenues fall into the
three broad sources of revenues: Local &
Intermediate; State; and Federal.
Robin Hood Funds: See Wealth Equalization
Transfer.
Rollback Tax Rate: Provides governments
other than school districts with approximately the
same amount of tax revenue it spent the
previous year for day-to-day operations plus an
extra 8 percent cushion, and sufficient funds to
pay its debts in the coming year. For school
districts, the M&O portion of the rollback tax rate
allows school districts to add four cents ($0.04)
GLOSSARY
24
to the lesser of the prior tax year compressed
operating tax rate or the effective M&O rate to
generate operating funds. School districts will
get to add to the compressed operating rate any
additional cents approved by voters at a 2006 or
subsequent rollback election, not 8 percent. The
rollback rate is the highest rate that the taxing
unit may adopt before voters can petition for an
election to roll back the adopted rate to the
rollback rate. For school districts, no petition is
required; it's an automatic election if the adopted
rate exceeds the rollback rate.
School Year: The twelve months beginning
September 1 of one year and ending August 31
of the following year or beginning July 1 and
ending June 30. Districts now have two options.
Special Revenue Fund: A governmental fund
type used to account for the proceeds of specific
revenue sources (other than for major capital
projects) that are legally restricted to
expenditures for specified purposes.
State Revenues: Revenues realized from the
Texas Education Agency, other state agencies,
shared services arrangements, or allocated on
the basis of state laws relating to the Foundation
School Program Act. This amount is recorded as
Revenue Object 5800.
Unassigned Fund Balances: Available
expendable financial resources in a
governmental fund that are not the object of
tentative management plans (i.e., committed or
assigned). One primary criterion of rating
agencies for school bonds is the relative amount
of unassigned fund balance. Bond rating
agencies view unassigned fund balances as a
reflection of the financial strength of school
districts and show concern when district fund
balances decrease.
Unmodified Opinion: Term used in connection
with financial auditing. An unmodified
independent auditor's opinion means there are
no stated exceptions to the auditor's general
assertion that the district’s financial statements
present fairly the financial information contained
according to generally accepted accounting
principles.
Unrestricted Net Position Balance: The term
Net Position refers to the amount of total assets
less total liabilities. Unrestricted Net Position
balance refers to the portion of total Net Position
that is neither invested in capital assets nor
restricted.
WADA: A Weighted Average Daily Attendance
(WADA) is used to measure the extent students
are participating in special programs. The
concept of WADA in effect converts all of a
school district's students with their different
weights to a calculated number of regular
students required to raise the same amount of
revenue. The greater the number of students
eligible for special entitlements, the greater a
school district's WADA will be.
Wealth Equalization Transfer: The
amount budgeted by districts for the cost of
reducing their property wealth to the required
equalized wealth level (Function 91). Sometimes
referred to as Robin Hood Funds.
DISCLAIMER
All of the information provided is believed to
be accurate and reliable; however, TASBO
and TSPRA assume no responsibility for any
errors, appearing in this information or
otherwise. Further, TASBO and TSPRA
assume no responsibility for the use of the
information provided.
Revised August 2020
Chrome Web Store
It looks like you haven't installed the Fill Chrome Extension Add to Chrome