FIRST rating explained
The state rates school districts on financial management through the Financial Integrity Rating System of Texas, or FIRST. FIRST ratings are based on 21 indicators. There are four critical indicators which must be passed or a district will automatically fail.
The indicators analyze district funds, how they are spent and how they are reported. Indicators include assessments such as having sufficient funds, future debts, the ratio of revenues to expenses, student attendance and communication with the public.
DSISD passed the four critical indicators and earned full points on the remaining indicators except Indicator 8, receiving 8 out of 10 possible points. Indicator 8 measures if the district has sufficient short-term assets at the end of the fiscal year to pay off short-term liabilities.
Liabilities for the district included recapture, accrued payroll and accounts payable, DSISD Director of Finance Joseph Riggs said at a board meeting on Oct. 28.
Riggs said that because recapture payments are not due until after the fiscal year is over on June 30th, the district estimates what the final recapture would be. This means the final recapture payment may change as the district is audited.
DSISD made a recapture in advance to reduce the liability, but because the actual amount was unknown at the time, the recapture liability was on the financial books at the end of the year, Riggs said.
The 2024 FIRST rating is based on 2022-2023 financial data.
Dig deeper
Last year, DSISD received an ‘A’ rating, but scored 90 out of 100 points. The new rating for 2024 is 8 points above the previous year.
For the 2023 FIRST rating, DSISD scored 0 out of 10 points on Indicator 18, which evaluates if a district complies with laws related to how it uses funds from grants and other state and federal funds.
In the 2021-2022 FY, DSISD spent around $2 million over the legal limit for sufficient appropriations for general fund expenditures. The district exceeded appropriations in the debt service fund by over $5.2 million, as previously reported by Community Impact.
This year, DSISD received 10 out of 10 points on Indicator 18.
The 2024 FIRST ratings included two new indicators and a returning indicator.
Indicator 5, added this year, measures if a district has sufficient governmental liability assets to cover liabilities at the end of the year. Indicator 21, new to the rating system, measures whether the district has the resources to continue operation indefinitely.
Indicator 14 returned for the first time since 2021 and assesses if there has been a 15% decline in the student to staff ratio. DSISD did not have a decrease and instead saw student growth of about 1,000 new students from 2021 to 2023, Riggs said.
Major takeaways
Riggs said the district will try to receive full points in the future, particularly regarding Indicator 8.
Despite the loss in points, Riggs said the district remains “financially strong.”
