Presentation on the Texas Education Agency

School FIRST

Financial

Integrity

Rating

System of

Texas

1

2

The School FIRST Communications Kit was updated in August 2016 to include

changes in the Commissioner’s Rule for School FIRST that were

finalized in August 2016. Changes in August 2016 served to clarify major changes

that were implemented in August 2015, in accordance with Section 49 of House Bill

5 enacted by the 83rd Texas Legislature, Regular Session,

2013. House Bill 5 amended Section 39.082 Texas Education Code to require

the commissioner of education to include processes in the financial

accountability rating system for anticipating the future financial solvency

of each school district and open enrollment charter school. Changes to the School

FIRST system implemented by the Texas Education Agency in August 2015 have

been phased-in over the years.

3

Changes to the School FIRST implemented by the Texas Education Agency in

August 2015 are being phased-in over several years. During the initial phase-in

period, the new School First system has separate worksheets for rating years 2014-

2015, 2015-2016 and 2016-2017 and subsequent years. The worksheet for rating

year 2014-2015 contained only 7 indicators, while the worksheets for rating years

2015-2016 , 2016-2017, 2017-2018 and subsequent years contain 15 indicators.

THE RATING SYSTEM IS BASED ON THE FOLLOWING:

A. Did The District Answer ‘Yes or No” to Indicators number 1 thru 5 B. For indicators number 6 thru 15, by a scoring system of a max of 10

points. Determine Rating By Applicable Range For Summation of the Indicator Scores (Indicators 6-15)

4

Passing Score 60

District Score 86

Progreso Independent

School District for 2018-2019

Received a “Passed and an Above Standard“ rating

Based on 2017-2018 data.

5

Was the complete Annual Financial Report (AFR) and data submitted to the TEA within 30 days of 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?

District Result - Progreso ISD submitted the 2017-2018 Audit Report in a timely manner. Received by TEA on January 26, 2018

6

FY 17-18

FY 16-17

YES YES

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. This is a Simple “Yes” or “No” indicator.

District Result –District received an Unmodified Opinion

FY 17-18 FY 16-17

YES YES

7

Did the external independent auditor report that the AFB was free of any instance(s) of material weaknesses in internal control over financial reporting and compliance for local, state or federal funds? (the AICPA defines material weakness.)

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. This is a Simple “Yes” or “No” indicator.

District Result – Weak Internal Controls were indicated

FY 17-18 FY 16-17

YES YES

8

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 sinking fund are current. A debt agreement is a legal agreement between a debtor (person, company, et. That owes money and their creditors, which includes a plan for paying back debt.) This indicator seeks to make certain that your district has paid your bills/obligations on financing arrangements to pay for school construction, school buses, photocopiers, etc. The district made all bond payments. Progreso ISD has not had any instance of default on any obligations. District Result – No Default Disclosures indicated.

9

FY 17-18 FY 16-17

YES YES

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. District Result – The District made timely payments to the TRS, TWC, IRS and other Government agencies.

10

FY 17-18 FY 16-17

YES YES

Was the total unrestricted net asset balance (net of the accretion of interest for capital appreciation bonds) in the governmental activities column in the Statement of Net Assets greater than zero? (If the school district’s change of students in membership over 5 years was 10 per cent of more. Then the school district passes this indicator District Result – Met threshold for Five Year Percent Change in Students

11

FY 17-18 FY 16-17

Not scored 17-18

YES

Was the number of days of cash on hand and current investments in the general fund for the school district sufficient to cover operating expenditures (excluding facilities acquisition and construction)? See ranges below

District Result – District had less than 90 days of cash on hand to cover operating expenses. The District had 80.6838 days of cash on hand to cover operating expenses.

12

FY 17-18 FY 16-17

8 PTS 10 PTS

Was the measure of current assets to current liabilities ratio for the school district sufficient to cover short-term debt? (see range below) District Result – Earned 4 points of max of 10 points available Mathematical Breakdown 1.8122 = 4 points Current Assets $6,722.431 / Current Liabilities $3,709,471

13

FY 17-18 FY 16-17

4 pts 4 pts

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. The District threshold was 7 %. District Results – Five Year percent Change in Students exceeded threshold ratio. District earned 10 points Max points = 10

14

FY 17-18 FY 16-17

10 pts 10 pts

Did the school district’s general fund revenues equal or exceed expenditures (excluding facilities acquisitions and construction)? If not, was the school districts number of days of cash on hand greater than or equal to 60 days? Yes, the District’s was greater than 60 days. District Results – The District’s Debt Service coverage ratio was sufficient to meet the required debt service. Max Points = 10

15

FY 17-18 FY 16-17

10 pts 10 pts

Was the debt service coverage ratio sufficient to meet the required debt service ( see ranges below) District Results – District coverage ration was 1.0654 and as a result the District earned 4 Points.

16

FY 17-18 FY 16-17

4 pts 8 pts

Was the district’s administrative cost ratio equal to or less than the threshold ratio ? (see ranges below) Yes District Result - District ratio 0.0944 and earned 10 points Max Points = 10

17

FY 17-18 FY 16-17

10 pts 10 pts

Did the school district not have a 15 percent decline in the student 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) District Results – The District did not have at 15 percent decline in student enrollment/staff ratio over 3 years. Max Points = 10 District earned10 points

18

FY 17-18 FY 16-17

10 pts 10 pts

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? District Results – District PEIMS data resulted in a variance of less than 3 percent of expenditures by function. Max Points = 10 District earned10 points

19

FY 17-18 FY 16-17

10 pts 10 pts

Did the external independent auditor indicate the AFR was free of any instances of material noncompliance for grants, contracts, and laws related to local state or federal funds (the AICPA defines material noncompliance) District Results – The District’s external independent auditor did indicate the Annual Financial Report was free on any instances of material noncompliance. Max Points = 10 District earned 10 points

20

FY 17-18 FY 16-17

10 pts 10 pts

Did the school district no receive an adjusted repayment schedule for more than one fiscal year for an over allocation of Foundation School Program (FSP) funds as a result of a financial hardship? District Results – The District did not received an adjusted repayment schedule for more than on fiscal year for an over allocation of Foundation School Program (FSP) funds as a result of a financial hardship. Max Points = 10 District earned 10 points

21

FY 17-18 FY 16-17

10 pts 10 pts

Current Superintendent’s Contract is posted on the Progreso Independent

School District website:

www.progreso.schooldesk.net

22

23

Summary Schedule of Outside Compensation Received by

Superintendent for Professional

24

25

26

27

None