Fill - Free fillable NOTICE hearing must contain certain Administrative Code Chapter PDF form

NOTICE

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

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

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

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

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

_____________, 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 Achievement” under Texas’ School FIRST financial

accountability rating system. The “Superior Achievement” rating 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” for “Superior Achievement,” followed by

“B” for “Above-Standard Achievement,” “C” for “Standard 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

_____________, 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” for “Superior Achievement,” followed by

“B” for “Above-Standard Achievement,” “C” for “Standard 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

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 mean—and what your

district’s answers can mean to its rating.

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?

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

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.”).

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.

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.

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

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

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

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

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

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

Board

Member

Board

Member

Board

Member

Board

Member

Board

Member

Board

Member

Board

Member

Meals

Lodging

Transportation

Motor Fuel

Other

Total

Note – The 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:

Meals – Meals 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 fuel – Gasoline.

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

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

Note – Compensation 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

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

Board

Member

Board

Member

Board

Member

Board

Member

Board

Member

Board

Member

Board

Member

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

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

Board

Member

Board

Member

Board

Member

Board

Member

Board

Member

Board

Member

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

6. Any other information the board of trustees of the school district or open-enrollment charter school

determines to be useful.

GLOSSARY

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

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

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

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

• 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

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

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