Both the Sherman Independent School District and Denison Independent School District recently received superior ratings from the School Financial Integrity Rating System of Texas based on performance during the 2015-2016 school year.
This is Denison ISD’s 15th straight year to receive the superior rating and Sherman ISD’s eighth year. The scores were presented during the districts’ special board meetings the week before the Thanksgiving break.
“We are committed to being good stewards of our taxpayers’ dollars, and maximizing resources to support our academic programs,” Sherman ISD Assistant Superintendent Tyson Bennett said. “It feels very rewarding to sustain the highest rating for financial integrity for so many years.”
Denison ISD Superintendent Henry Scott said the district is very grateful to Assistant Superintendent Randy Reid and the staff in the business office for taking care of the finances in an expert and professional manner.
“The Financial Integrity Report is always important,” Scott said. “We’re very proud of all the superior ratings we’ve received for the past 15 years. We owe that to the people who are in charge of our budget and the great job they do every single day.”
The purpose of FIRST is to hold public schools accountable for their financial management practices. By holding them accountable, the rating system aims to encourage Texas public schools to manage financial resources in a way that provides maximum allocation for direct instructional purpose.
The rating system grades school districts on five yes or no questions as well as 10 questions scored on a 10 point scale for a total of 15 standards. The districts both passed all but one of the numbered standards with a 10 out of 10 rating and all five yes or no questions with a yes. The remaining standard was still passed with a score less than 10 for both districts.
For standard one, the districts both submitted the required annual financial report along with relevant data to the Texas Education Agency within 30 days of the Nov. 27 or Jan. 28 deadlines depending on the fiscal year end date for the school district.
To pass standard two, an auditor assessed whether the AFR was free of material weaknesses in internal controls regarding financial reports or compliance for local, state and federal funds.
Standard No. 3 required the districts to establish their compliance with payment terms of all debt agreements at the culmination of the fiscal year.
For standard four, the districts were required to have made timely payments to the Teachers Retirement System, Texas Workforce Commission, Internal Revenue Service and all other government agencies.
The fifth standard involved the total unrestricted net asset balance for the governmental activities column of the Statement of Net Assets report equaling greater than zero. Sherman ISD’s total equaled $25,462,175 and Denison ISD passed with a total of $18,335,686, both well above the zero dollars benchmark.
Standard six begins the numerically graded standards. It requires the number of days of cash on hand and current investments in the general fund for the school districts to be sufficient in covering operating expenditures. The indicator measures how long after the end of the fiscal year the district could handle operating expenditures without receiving any new revenues. Denison ISD passed with the ability to disburse funds for 110 days. Sherman ISD passed with the ability to disburse funds for 96 days.
The measure of the district’s current assets in ratio to current liabilities must be sufficient to cover short-term debt according to standard number seven. Sherman ISD passed this standard with eight out of 10 points and a 2.9276 ratio. Denison ISD passed with a 5.8975 ratio.
For standard eight, the ratio of long-term liabilities to total assets must be sufficient for the school district. This measure is to determine whether the school district had sufficient assets to cover long-term liabilities. Sherman ISD passed with a 0.51 ratio. DISD passed with a score of six out of 10 possible points and a ratio of 0.7.
The school districts were required to prove that they earned more than they spent for standard nine. Sherman ISD and Denison ISD passed with general fund revenues exceeding expenditures and 60 days cash on hand.
For standard 10, it must be established that the district has sufficient short-term assets to pay off short-term liabilities. The measure indicates whether the district has the ability to make its debt principal and interest payments throughout the year. SISD passed with a 1.8145 debt service coverage ratio. DISD passed with a 1.7104 ratio.
Standard 11 ensures the school districts’ administrative cost ratio is equal to or less than the threshold ratio. This indicator measures the percentage of the budget each district spent on administration against the ranges in the state. Sherman ISD passed with a ratio of .0759 and Denison ISD passed with a ratio of .0829.
For standard 12, the districts must not have a 15 percent decline in the students to staff ratio over 3 years. If the student enrollment did not decrease, the school district will automatically pass this indicator. Sherman ISD passed with a 7,191 increase and Denison ISD passed with an increase of 172.
Standard 13 required the comparison of Public Education Information Management System data to like information in the school districts’ Annual Financial Report result in a total variance of less than 3 percent. SISD passed with .04 percent and DISD passed with .03 percent.
For standard 14, the auditors indicated the AFR was free from any instance of material noncompliance for all grants, contracts and laws related to local, state and federal funds for both districts.
To pass standard number 15, the auditor had to establish the school districts did not receive an adjusted repayment schedule for more than one fiscal year for an over-allocation of Foundation School Program funds as a result of a financial hardship.