For the seventeenth year in a row, Kilgore ISD has earned the highest rank possible in its FIRST rating, the Financial Integrity Ratings System of Texas.
Revard Pfeffer, KISD’s Chief Financial Officer, explained the purpose of the FIRST rating to board trustees and faculty present at Monday’s board meeting.
“It was put in 17 years ago to kind of take a look at how school districts were doing financially, to see if there were any, what we call ‘circling the drain’ issues – districts that are doing things not properly or doing items that could put their community and the school system in jeopardy,’ Pfeffer said.
The most recent rating is based on financial data from the 2017-2018 school year. The report analyzes 15 different indicators of financial health, Pfeffer said, such as whether the school district got a clean financial audit, how the district’s debt ratio works in relation to its assets and other factors.
“All of them give a score per the indicator or a ‘yes’ or ‘no’ whether you met it or not,” Pfeffer said.
In 12 of the past 17 years, including the most recent year, KISD earned a perfect FIRST rating, scoring 100 out of 100 points.
“We’re very proud of that fact, that we’ve been able to do that,” Pfeffer said.
Pfeffer attributed the perfect rating to rigorous attention to detail, a conservative taxation policy and hard work by district employees.
“We’ve had some good folks here doing some good things that we’ve stayed on top of. We’ve stayed on top of our tax collections. We’ve been very frugal with our assets, keeping our tax rate down and doing what we needed to do to keep our financial position.”
The rating also includes assessments of disclosed district financial information, including the superintendent’s salary, travel expenses for board members attending work-related functions and a record of any gifts from district vendors to board members of $100 or more. Pfeffer said, in the 17-year history of the FIRST rating, no board member has received such a gift.
Concluding his report, Pfeffer said FIRST ratings for the past 17 years have been fairly consistent, but the most recent legislative session could bring some changes in the future. New indicators have been added to the original 15 and will be included on next year’s report.
These new indicators will include an assessment of the district’s three-year change in fund balances to assess if the district has “bit off more than they could chew,” Pfeffer said.
The new indicators will also examine the district’s budget compared to actual expenditures to assess if the actual expenditures fall within 10 percent of planned expenses and revenues.
The indicators will also assess the district’s debt ratio and enrollment variances.
“Around January of every year, we have to give TEA (Texas Education Agency) a number telling them what we expect our enrollment to be for the next year so they can start projecting revenue. They’re going to be looking at that to make sure we didn’t miss that enrollment number by a certain percentage,” Pfeffer said.
Another change will be a requirement for Texas school districts to use current property values in their financial assessments going forward. In previous years, the board used two-year-old property values in the assessments.
Superintendent Dr. Andy Baker added on to Pfeffer’s presentation, drawing attention to two of the seven new indicators being added to the FIRST assessment system in the coming year, which he described as “curious”.
He advised board members to keep these changes in mind moving forward as they made financial plans in the coming years.
“This is going to be the first time that TEA has taken a very hard look at enrollment projections that districts are submitting to TEA. Remember, these enrollment projections help TEA figure out what their budgets are going to be as we go into legislative sessions. For the first time, at least in the first report, this could have negative influences if we either under-enroll our projection or over-enroll our projection,” Baker said, citing enrollment figures which fluctuated significantly during the last two school years.
He said a variance of 10 percent on these projections could cause negative ratings from the TEA. Pfeffer said he had looked over enrollment projections for previous years and found KISD had fallen well within the 10 percent variance limit.
Baker also drew attention to the new “budget vs. actual” indicator, which looks at variations of more than 10 percent between a district’s projected budget and the revenues and expenditures it actually makes.
“That’s a big chunk of money but they’re trying to make sure the districts are having the conversations upfront about what you might expect to spend during the year. There will be reasons. If you have HVAC (units) go out unexpectedly and you have to replace those, that could throw your budget versus your actual budget for the year out of whack quickly,” Baker said.