Week 4 Assignments

Week Four – Part 1

FIRST is the Financial Integrity System of Texas.  According to TEC 109.1001 the purpose of this system is to give a rating to each district in Texas based on a rubric of financial and academic information that provides motivation for districts to improve the management of their financial resources.  The evaluation system is also designed to show the long-term effectiveness of improvement in the Texas public schools financial system. 

The process of this system is laid out in the TEC 109.1001- 109.1101.  Districts must disclose all financial information not just to the state but to parents and taxpayers in the form of an annual report.  External audits may be performed and that information must be submitted as well to the state.  There are processes for appeals, timelines, and explanations of each rating.

Through my research on this system I found several web sites such as the comptroller’s office that give ratings of school districts based on FIRST and AEIS.  I found this web site to be helpful in understanding these systems and how they provide taxpayers and the state with a rating for each district and campus.  The FIRST web site has the information from each district posted and even allows the viewer to click on the forms that the district submitted. This form helped me understand further the rubric of the FIRST.  The questions that the districts must answer are laid our simply and points are awarded based on responses.  At the bottom of the form the determination of rating and the indicators are explained for the public to understand.  These indicators include district size and this is taken into consideration as was discussed in the lecture about the economy of scale. 

The three areas that we felt as a group that were the most important components of FIRST are as follows. 

Reporting

As I was able to find districts submit or report to the state all of this information electronically.  This information must also be reported to the public in the form of an annual financial report.  If any of this data is not reported correctly then the system will give an accurate rating.  Reporting is especially important to give clear and accurate information to the public as a district is always under the watchful eye of the public.

Types of Ratings

The better your FIRST rating the better that a district is being financially responsible.  They are keeping their costs down and utilizing their money efficiently while still maintaining a high level of student success.  This is not our money.  It is taxpayer money and we are obliged to ensure that we are being frugal with this money to educate our students.  There are 5 ratings that the state gives.  After much research most districts fall into the top 2.  Superior and above standard.  The other 3 are standard, substandard, and suspended. 

Financial Solvency

This is important to understand that this evaluation system is used a first warning indicator or early alert for possible financial troubles in the future.  School budgets are forecasted annually but a budget is designed to be a 5-year plan.  If there are problems with their year’s budget FIRST will be able to see that coming so that district officials can plan accordingly.

Week Four- Part 2

Snapshot Week4	District1	District2
TotalOpertationsExpenditures	8,611	8.908
TotalRevenuePerPupil	10,529	10.316
Avg. Teacher Salary	39,771	50,307
Students	830	32,326
Total Teachers	70	2,299
Total Schools	3	45
Econ dis	43%	53%
Revenue	8,823,250	329,638,930

Economy of scale is a fundamental business principal that is indicates that there are cost advantages for expansion or business that are large in size.  The cost for their output is significantly cheaper than other competitors because of their size.  It is like Wal-Mart compared to the local store in town.  Wal-Mart is able to keep their prices “rolling back” because of their purchasing power and bulk discounts.  Small stores are unable to compete with these low prices to stay open therefore they have to charge more for the same item. In Texas, these Wal-Mart school districts have an advantage over small districts because they are able to keep the cost per student down while still maintaining a high level of student success. 

In this comparison District 1 can only afford to spend 54% of their budget on instruction while District 2 is able to spend 62%.  This is due to the revenue generated from their tax base. 

Both District 1 and District 2 have the same needs fundamentally as all districts in Texas.  We all have to maintain a 1:22 class ratio.  We all have to have administrators.  We all have to pay a competitive teacher salary to keep highly qualified successful teachers.  We all have to pay building costs etc.  Where the cost effectiveness comes is with personnel and purchasing power. 

We used to receive a small school allotment that helped our mom and pop district compete financially with Wal-Mart districts but some out of touch lawmakers determined based on inferences made from paper that small districts were too top heavy and did not need these funds.  This generalization does not hold true for all districts and I assure you that I contacted my representative.

Week 4 Part 4

83% of our M&O budget is devoted to salaries.  As such, a 5 % pay increase has not been an option for over 5 years now.  3% in the highest we have been able to give.  We have several administrators that are over paid and some that are being under paid because of when they were hired.  Teachers all feel that they we are obligated to give a raise but in truth we are obligated to the students first.  This is a hard pill to swallow for some teachers.

Week 4 Part 5

I met with our Business Manager to discuss our external audit.  Our auditor was selected because his bid was competitive, he was from a large reputable firm out of Houston, and has been our auditor for 10 years.  Every year we must open it up for bids and the board decides who they would like to use.  Our superintendent makes his recommendation to the board and then is becomes an action item for them to vote.  Our auditor comes and spends about 2 weeks in my office going through all of my files and the files from every campus.  All student activity funds and each budget is analyzed.  Our audit always tells what we can do better but we are always given a great report to give to the board.  Our auditor comes to the board meeting and presents his findings to the board.  All of this information is then put into our annual report for taxpayers.