Financial Integrity Rating System of Texas (FIRST Report) 2005 Pharr-San Juan-Alamo Independent School District September 12, 2005

Financial Accountability History Financial Integrity Rating System of Texas Senate Bill 875, 76th Legislative Session Developed by Commissioner with the Comptroller of Public Accounts Proposal presented to Legislature in December 2000 Senate Bill 218, 77th Legislative Session Proposed 21 standards for evaluating district financial condition This is the third year of reporting Standards are proposed to change

Proposed Changes to First for 05-06 Financial Integrity Rating System of Texas Will be 26 indicators – up from 21 Looks at total unreserved net asset balance District’s academic rating must exceed academically unacceptable Assigns points based on operating expenditures per WADA in the General and Special Revenue Funds – must be less then $4,500 or do not receive full 5 points Assigns points based on operating expenditures per WADA in the General Fund – must be less then $4,000 or do not receive full 5 points Assigns 5 points if the district academic rating is recognized or exemplary Looks at three year tax collection average and raises it from 96% to 98% Decreases variance allowed for PEIMS data quality form 4% to 3% Debt related expenditures changes from $770 per student to $250 per student Assigns pints based on the percent of operating expenditures expended for instruction – 5 points assigned if greater than 65% - excludes function 34 and 35 from formula Changes ranges for ratio of total staff to student from 6.6 -14 to 5 -14 Changes investment earnings from $15 per student to $40 per student and excludes debt service and capital projects fund

Goals of FIRST Facilitate Effective and Efficient Use of Resources Financial Integrity Rating System of Texas Facilitate Effective and Efficient Use of Resources Strengthen Fiscal Accountability Use currently collected data being reported and available from PEIMS Annual Audit Report

Objectives of FIRST Assess the quality of Financial Management Financial Integrity Rating System of Texas Assess the quality of Financial Management Publicly Report this assessment Provide analysis tool for school officials Increase the proportion of Resources used in Instructional Activities Identify and Recognize Outstanding Performance Increase Financial Well Being of Public Schools Implement a rating system that fairly and equitably evaluates the quality of management decisions

Additional Objectives for FIRST Financial Integrity Rating System of Texas Additional Objectives for FIRST Simple and understandable Applicable to all districts Based on hard data Allows for self administrations Provides an early warning

How Ratings are Assessed Financial Integrity Rating System of Texas How Ratings are Assessed Based upon 21 indicators Failing to pass 5 CRITICAL indicators will result in automatic failing grade Default on debt payment Deficit fund balance in general fund Annual financial report not filed within one month after 11/27 or 1/28 deadline Qualified opinion on audit and material weaknesses in internal controls

How Ratings are Determined Financial Integrity Rating System of Texas Rating Worksheet – with 21 Questions Based on “NO” Answers Superior Achievement 0-2 Above Standard Achievement 3-4 Standard Achievement 5-6 Substandard Achievement More Than 6 or NO To CRITICAL Indicators Pharr-San Juan-Alamo received a “Superior Achievement” Rating

Pharr-San Juan-Alamo received a “Superior Achievement” Rating Financial Integrity Rating System of Texas Pharr-San Juan-Alamo received a “Superior Achievement” Rating

School FIRST Sanctions Financial Integrity Rating System of Texas School FIRST Sanctions Substandard Achievement rating could result in assignment of financial monitor or master

School FIRST Categories Financial Integrity Rating System of Texas School FIRST Categories Critical Indicators – 5 Fiscal Responsibility indicators - 5 Budget indicators – 4 Personnel Indicators 3 Cash Management Indicators - 4

Financial Integrity Rating System of Texas Critical Indicators Was total fund balance less reserved fund balance greater than zero in the general fund? PSJA – Yes – This assures that the district has a positive amount of fund balance cash (savings that is not designated or reserved for a specific purpose) Were there no disclosures in the Annual Financial Report and/or other sources of information concerning default on bonded indebtedness obligations? PSJA – Yes – there were None

Critical Indicators Continued Financial Integrity Rating System of Texas Critical Indicators Continued Was the Annual Financial Report filed within one month after November 27th or January 28th deadline depending upon the district's fiscal year end date (June 30th or August 31st)? PSJA - Yes Was there an unqualified opinion in Annual Financial Report? PSJA - Yes Did the Annual Financial Report not disclose any instance(s) of material weaknesses in internal controls? PSJA – Yes it did not disclose any

Fiscal Responsibility Indicators Financial Integrity Rating System of Texas Tax collections Was the percent of total tax collections (including delinquent) greater than 96%? Yes, PSJA’s percent of total tax collection was at 99.71% Data Quality Did the comparison of PEIMS data to like information in Annual Financial Report result in an aggregate variance of less than 4 % of expenditures per fund type? PSJA – Yes – our variance was .00002%

Fiscal Responsibility Indicators - Continued Financial Integrity Rating System of Texas Debt Management Were debt related expenditures (net of IFA and/or EDA allotment) less than $770 per student? (If student growth exceed 2% over five school years or tax collections per penny > $100,000, then answer this Indicator Yes) PSJA – Yes – our debt, net of IFA/EDA is $362 Compliance With Rules and Regulations Was there no disclosure in the Annual Audit Report of material noncompliance? PSJA - Yes

Fiscal Responsibility Indicators - Continued Financial Integrity Rating System of Texas Overall Business Management Did the district have full accreditation status in relation to financial management practices? PSJA - Yes

Budgeting Indicators Financial allocations Budgetary Planning Financial Integrity Rating System of Texas Financial allocations Was the percent of operating expenditures expended for instruction more than 54%? Yes, PSJA expended more than 54%. We were at 56.06% Budgetary Planning Was the aggregate of budgeted expenditures and other uses less than the aggregate of budgeted total revenues and other resources plus beginning fund balance in general fund? PSJA - Yes

Budgeting Indicators - Continued Financial Integrity Rating System of Texas Facilities Acquisition and Construction Management If the district's aggregate fund balance in the general fund and capital projects fund was less than zero, were construction projects adequately financed? PSJA – Yes Cash Management Was the ratio of cash and investments to deferred revenues (excluding amount equal to net delinquent taxes receivable) in the general fund greater than or equal to 1:1? PSJA - Yes

Personnel Indicators Administrative Cost Management Financial Integrity Rating System of Texas Personnel Indicators Administrative Cost Management Was the administrative cost ratio less than the standard in state law? PSJA – Yes, Our Ratio was at .08202, the acceptable ratio is .1105 – The district is meeting TEA’s and state law’s cap on the percentage spent on administration

Personnel Indicators - Continued Financial Integrity Rating System of Texas Personnel Indicators - Continued Personnel Management Was the ratio of students to teachers within the ranges shown on the worksheet according to district size? PSJA – Yes, Our Ratio was at 16.7418, based on our size, we had to fall between 13.5 and 22 Was the ratio of students to total staff within the ranges shown on the worksheet according to district size? PSJA – Yes, Our Ratio was at 7.4629, based on our size, we had to fall between 6.6 and 14.0

Cash Management Indicators Financial Integrity Rating System of Texas Cash Management Indicators Financial Strength Was the total fund balance in the general fund more than 50% and less than 150% of optimum according to the fund balance and cash flow calculation worksheet in the Annual Financial Report? PSJA – Yes – Another measure of “adequate” fund balance

Cash Management Indicators Continued Financial Integrity Rating System of Texas Operating Cost Management Was the decrease in undesignated unreserved fund balance less than 20% over two fiscal years? (If 1.5 times optimum fund balance is less than total fund balance in general fund, or if total revenues exceeded operating expenditures in the general fund, then answer this Indicator Yes) PSJA – Yes – The test here is to determine are we using too much of fund balance to pay for operating expenditures.

Cash Management Indicators Continued Financial Integrity Rating System of Texas Cash Management Was the aggregate total of cash and investments in the general fund more than $0? PSJA – Yes, $68,110,620 Were investment earnings in all funds more than $15 per student? PSJA – Yes, $45

21 Indicators answered Yes Financial Integrity Rating System of Texas PSJA RATING SUPERIOR ACHIEVEMENT 21 Indicators answered Yes

Appreciation To PSJA School Board Arturo Guajardo - Superintendent Financial Integrity Rating System of Texas PSJA School Board J. Fernando Lopez – President G. Jaime Santa Maria – Vice President Vangie Garcia-DeLeon – Secretary-Treasurer Raul “Roy” Navarro – Asst. Secretary-Treasurer Pete Garcia – Member Reymundo Gonzalez – Member Roy Rodriguez – Member Arturo Guajardo - Superintendent