In a nutshell
The Texas Education Agency looks at 21 indicators when rating public school districts statewide on their financial management, called the School Financial Integrity Rating System of Texas, or FIRST. A B score indicates that a district is "above standard achievement," per the TEA.
At LCISD's Nov. 18 board meeting, Chief Financial Officer Jill Ludwig said Indicator 5, which measures the district’s net fund position, was reintroduced after six years for the 2023-24 rating and affected the score. The rating is based on the district’s fiscal year 2022-23 budget.
Digging in
The B rating, given to LCISD in early November, is mostly caused by the district’s bond debt exceeding its assets, or the equity created by existing schools and properties, Ludwig said. This was incurred by the $1.52 billion bond voters passed in November 2022.
“As we build buildings and purchase land, that will help us,” she said.
However, she said the district will issue more debt in the future as well as it builds more schools amid rapid growth. In late September, FBISD administrators said they are considering a potential 2025 bond referendum to fund new schools, land purchases, technology, safety and security, and transportation.
The context
Trustee Kay Dazinger said LCISD is being “penalized for being a hypergrowth district” with the lowered rating.
Demographers have said the district is in "hypergrowth" mode, meaning it has an elementary school zone that has between 150 to 300 new home starts annually, Community Impact reported.
To meet the needs of the “hypergrowth” district, the 2022 bond has funded numerous campuses and facilities since August 2023, Chief Operations Officer Greg Buchanan said.
Buchanan said LCISD will construct 23 buildings over the next five years, including:
- Five campuses and a transportation facility in 2025
- Three campuses and an administration building in 2026
Board President Zach Lambert, reading a statement from the board, said he wanted to be transparent with the community on what the FIRST means with the reintroduction of the indicator.
“I want to emphasize that while this temporarily impacts our rating, it does not reflect the quality of management by our finance team,” Lambert said.
Additionally, the board and Superintendent Roosevelt Nivens are advocating with the TEA and Commissioner of Education Mike Morath for a revision of FIRST to better account for hypergrowth school districts, Lambert said.
“As we build our buildings, we anticipate a positive adjustment in our net position,” Lambert said. “However, given our expected growth over the next decade, bond issuances will continue, and if the measurement criteria remain the same, we will face ongoing challenges with this indicator.”
What’s next
At the December board meeting, Ludwig said she will bring a comprehensive overview of the other FIRST indicators for trustees for review.
