The Keller school district’s score in the Financial Integrity Rating System of Texas (FIRST) dropped from an “A” to a “B” after Texas Education Agency officials changed the measures to more closely mirror corporate standards, according to Keller district administrators.
Keller schools were penalized for having a portion of their cash invested in longer-term securities, having a high level of debt to assets and carrying a deficit budget.
“Some of it was not our fault. I wrote the TEA a five-page letter to say why some of these measures didn’t apply to public education,” said Mark Youngs, KISD chief financial officer.
Youngs said that the system didn’t account for having a portion of current reserves invested longer than a year, and Keller had about half its reserves in such investments. If they are needed, they can be quickly liquidated, he said, and they produce higher returns.
“I’d rather earn yields for the district than stars in a rating,” Youngs told trustees at the Nov. 10 board meeting.
To earn full points for FIRST, they needed 90 days in cash on hand or in short-term investments and district officials had 41. Counting $37 million invested longer than a year, administrators had 94 days on hand, Youngs said.
Keller also was dinged for not having $2 in assets for every $1 in debt. The district has 96 cents in assets for every $1. Youngs said that fast-growth districts that have built many schools in recent years carry significant debt, but that growth also pays down the balance over time.
Youngs said that school districts don’t have traditional business assets because they are educating children, not selling products
Another measure that caused issues was the district’s deficit budget. Keller district officials have been using district savings, or fund balance, to address state funding shortfalls. The spending is planned to bring the fund balance down to around 20 percent of the operating budget, the state’s recommended amount.
Youngs said that officials are reducing the deficit each year, with plans to balance the budget for 2017-18.