1. 1 Schools FIR$T Eagle Pass ISD 2006 Report September 12, 2006 Financial Integrity Rating System of Texas

2. 2 Financial Accountability Known as “Schools FIR$T” Fourth Year of Implementation Created by the Texas Legislature in 2001 Designed to help improve management of school districts’ financial resources by evaluating their Financial Performance Evaluates the financial health, stability, and condition of school districts in Texas Provides Financial Management Performance Rating of school districts for the Texas Education Agency (TEA) Rating System of Texas

3. 3 How Much Money Flows Through Texas Public School Business Offices? Amount* Percentage Local $14,942,058,462 42.63% State $12,309,158,320 35.12% Federal $ 2,418,773,992 6.90% Financing -Bonds $ 5,333,850,386 15.22% Capital Leases $ 47,149,266 0.13% Total*$35,050,990,426 100.00% * TEA Statistical Info: FY Ended August 31, 2001 (in billions)

4. 4 EAGLE PASS INDEPENDENT SCHOOL DISTRICT FISCAL YEAR 2004-05 ALL FUNDS 2004-05 ANNUAL FINANCIAL REPORT

5. 5 Range of Public School Expenditures in 1,040 Districts SMALLEST $203,896 LARGEST $1.8 Billion 04-05 EPISD* $104.4 Million Note: EPISD is 173rd Largest District (Top 17%) * 2004-05 Annual Financial Report

6. 6 Total Enrollment *13,531 Campuses 24 Total Staff *1,896 Teachers *794 (Starting Salary: $33,000) Payroll Checks **58,200 Governmental Fund Budgets75 Total G/L Accounts **18,000 Purchase Orders Per Year **9,254 Total Vendors 8,500 (500 Local Vendors) * 2004-2005 AEIS Report ** Estimated EPISD Fact Sheet 2004-2005

7. 7 Defined Expands the Public Education Accountability System in Texas to include both Academic and Financial Reporting Comprised of indicators at the district level similar to the current Academic Performance Rating System (AEIS Report)

8. 8 Financial Accountability Rating System SB 875, 76th Legislative Session TEA consulted with Comptroller of Public Accounts TEA forwarded a Proposal to Legislature in December, 2000 SB 218 Requires Implementation of this System

9. 9 Senate Bill 218 Subchapter I. FINANCIAL ACCOUNTABILITY Added to Chapter 39, Texas Education Code Section 39.201. Definitions Section 39.202. Development and Implementation Section 39.203. Reporting Section 39.204. Rules

10. 10 Goals Achieve improved performance in the management of school districts’ financial resources Facilitate better uses of financial resources Demonstrate increased district financial performance

11. 11 Objectives Assess the quality of financial management Publicly report the Rating Assure the maximum allocation possible for direct instructional purposes Implement a Rating System that fairly and equitably evaluates the quality of financial management decisions

12. 12 Objectives (Continued) Make a Financial Rating System that: Is simple and understandable Is applicable to all districts Is based on quantifiable data Allows for self administration Provides an early warning Is substantially within district’s control Is zero burden to districts

13. 13 Data Sources Annual Financial Reports filed by school district Public Education Information Management System (PEIMS) Data

14. 14 District Ratings Based on 21 Indicators Failure to pass any of the First 5 (Five) Indicators will result in Automatic Failing: Indicator #1: Deficit Fund Balance in General Fund Indicator #2: Default on Debt Payment Indicator #3: Annual Financial Report not filed within one Month after November 27 or January 28 Indicator #4: Qualified Opinion in Audit Indicator #5: Material Weaknesses in Internal Controls

15. 15 District Ratings Rating Number of “No” Answers Superior Achievement 0-2 Above Standard Achievement 3-4 Standard Achievement 5-6 Substandard Achievement More than 6 or No to Default Indicator Suspended – Data Quality

16. 16 Sanctions Substandard Achievement Rating may result in assignment of a Financial Monitor or Master to control district finances.

17. 17 TEA Reports Require: Distribution of hard copy reports in transitional year of implementation 1 st Year: FY 2001-20023 rd Year: 2003-2004 2 nd Year: FY 2002-20034 th Year: 2004-2005 Publication on TEA internet site during full implementation Public Notice Posting of Rating Public Meeting for discussion of Ratings

18. 18 Overview of 21 Indicators (Divided into Five Components) I.Critical Indicators (Indicators #1-5) II.Fiscal Responsibility (Indicators #6-10) III.Budgeting (Indicators #11-14) IV.Personnel Management (Indicators #15-17) V.Cash Management (Indicators #18-21)

19. 19 Five Critical Indicators (Required for a “Passing Rating”) Are you Bankrupt? Did you pay your Bond Payments? Did you file Reports on Time? Did you receive a Clean Audit? Have you kept the District in Financial Compliance?

20. 20 I.Critical Indicators (Indicators #1-5)

21. 21 Are you bankrupt?

22. 22 Indicator 1 Are you bankrupt? 1. Was Total Fund Balance less Reserved Fund Balance, greater than zero in the General Fund? * Current Result: Yes ** Previous Result: Yes Calculations: * Total General Fund Balance as of 8/31/05 $8,621,972 LESS Reserves $89,784 = $8,532,188 ** Total General Fund Balance as of 8/31/04 $6,509,570 LESS Reserves $204,962 = $6,304,608

23. 23

24. 24 EAGLE PASS INDEPENDENT SCHOOL DISTRICT REVENUES VS. EXPENDITURES MAINTENANCE & OPERATIONS FUND

25. 25 Fund Balance Spending Is for nonrecurring costs. Is not for paying recurring costs such as payroll, utilities, etc. Should not be too low or too high.

26. 26 Indicator 2 Did you pay your Bond Payments? 2. Were there no disclosures in the Annual Financial Report and/or other sources of information concerning default on bonded indebtedness obligations? * Current Result: Yes ** Previous Result: Yes Calculations: * The Annual Financial Report for the year ended August 31, 2005 did not disclose Default Disclosures. ** The Annual Financial Report for the year ended August 31, 2004 did not disclose Default Disclosures.

27. 27 Did you pay your Bond Payments? No defaults through 2005 Ability to pay over time Debt retirement to utilize Interest & Sinking Tax Rates I & S Revenues, not too much or too little

28. 28 Indicator 3 Did you file Reports on time? 3. Was the Annual Financial Report filed within one month after November 27 th or January 28th Deadline depending upon the District’s Fiscal Year End Date (June 30 th or August 31 st )? * Current Result: Yes ** Previous Result: Yes Calculations: * Date Audit Received 12-16-05 (Due Date: 02-28-06) ** Date Audit Received 12-20-04 (Due Date: 02-28-05)

29. 29 Indicator 4 Did you receive a Clean Audit? 4. Was there an unqualified opinion in Annual Financial Report? * Current Result: Yes ** Previous Result: Yes Calculations: * Unqualified Opinion for 2004-2005 Annual Financial Report ** Unqualified Opinion for 2003-2004 Annual Financial Report

30. 30 Did you receive a Clean Audit? Illegal deficit spending Lack of internal controls Misappropriation of funds Co-mingling of Designated Purpose Funds Failure to meet 85% Requirement Improper securities by depository

31. 31 Indicator 5 Have you kept the District in Financial Compliance? 5. Did the Annual Financial Report not disclose any instance(s) of material weaknesses in internal controls? * Current Result: Yes ** Previous Result: Yes Calculations: * No disclosure of Weak Internal Controls included in the 2004-2005 Annual Financial Report. ** No disclosure of Weak Internal Controls included in the 2003-2004 Annual Financial Report.

32. 32 Have you kept the District in Financial Compliance? Check and balance system Internal controls intended to guarantee: –Proper recording of transactions –Legal compliance –Safeguard funds, property & assets against loss

33. 33 II.FISCAL RESPONSIBILITY (Indicators #6-10)

34. 34 Indicator 6 Are you doing a good job collecting your taxes? 6. Was the percent of Total Tax Collections (Including Delinquent) greater than 96%? * Current Result: Yes ** Previous Result: Yes Calculations: * 2004-05 Total Tax Collections  Total Tax Levy = 14,502,130  ** 2003-04 Total Tax Collections ¸Total Tax Levy = 13,382,473  13,587,674 = 98.48%

35. 35 EPISD Taxes Collected Current* Delinquent** Total 2005 89.41% 8.25% 97.66% 2004 88.51% 9.97% 98.48% 2003 87.87% 11.10% 98.97% 2002 88.02% 9.63% 97.65% 2001 85.03% 9.77% 94.80% Ninety percent (90%) of school districts state-wide collect 96% of their taxes or more. *Current Collections  Tax Levy = $13,277,294  14,850,249 = 89.41%, Total Current **Delinquent Collections  Tax Levy = $1,224,836  14,850,249 = 8.25%, Total Delinquent

36. 36 Indicator 7 Do your numbers match? 7. Did the comparisons of PEIMS Data to like information in Annual Financial Report result in an aggregate variance of less than 4% of expenditures per Fund Type (Data Quality Measure)? * Current Result: Yes ** Previous Result: Yes * The difference was less than zero percent or 0%. ** The difference was less than zero percent or 0%.

37. 37 Indicator 8 Can the district afford the Debt payment? 8. Were debt related expenditures less than $770.00 per student? * Current Result: Yes ** Previous Result: Yes Eagle Pass ISD had less than $65.69 per student. Calculation: (Function 71 Expenditures – IFA and EDA Allotments) / 2002 Total Students = * $3,632,908 - $2,743,994 / 13,531 = $65.69 ** $8,116,123 - $2,894,377 / 13,385 = $390.12

38. 38 Indicator 8 EPISD 5-Year Percentage Change in students is greater than 2% Enrollment Growth for Fiscal Year Ending 2005 was 1.1% * 5-Year Growth was 8.2% ** Calculation: * 2005 Total Students – 2004 Total Students / 2004 Total Students = 13,531-13,385/13,385 = 1.1% ** 2005 Total Students – 2001 Total Students / 2001 Total Students = 13,531-12,515/12,515 = 8.2%

39. 39 Indicator 9 Did you follow the rules? 9. Was there no disclosure in the Annual Audit Report of material noncompliance? * Current Result: Yes ** Previous Result: Yes * No Material Non-Compliance included in the 2004-2005 Annual Financial Report ** No Material Non-Compliance included in the 2003-2004 Annual Financial Report

40. 40 Did you Follow the Rules? Poor segregation of duties Records do not reconcile (such as PEIMS and Annual Financial Audit) Competitive bid violations Inaccurate and untimely reporting Fund balance deficit Expenditures exceed the budget

41. 41 Indicator 10 Were you able to stay in Financial Compliance? 10. Did the district have full accreditation status in relation to financial management practices? * Current Result: Yes ** Previous Result: Yes * Full Accreditation, No Master or Monitor Assigned for 2004-2005 ** Full Accreditation, No Master or Monitor Assigned for 2003-2004

42. 42 III. BUDGETING (Indicators #11-14)

43. 43 Indicator 11 Were Students First? 11. Was the Percent of Operating Expenditures Expended for Instruction more than 54%? * Current Result: Yes ** Previous Result: Yes * General Fund Budget: State Average 57.9% and EPISD 55.8% as per 2004-2005 AEIS Report ** General Fund Budget: State Average 51.8% and EPISD 54.2% as per 2003-2004 AEIS Report

44. 44 Were Students first? Start above 54% to allow for resignations, unfilled teaching positions, etc? If too far above 54%, are you overstaffed? Schools exist to teach students and additional costs serve to provide support. All “Function 11” Expenditures are included.

45. 45 Were Students First? Instruction = 55.8% of Expenditures Calculation: Expenditures in General, Special Revenue and Capital Projects Funds (Excluding SSA Fund Codes) in Function 11 and Object Codes 6112-6499/Expenditures in General Fund, Special Revenue Fund (Excluding SSA Fund Codes), Capital Project Fund, Enterprise Fund 701 (Child Nutrition Program), Functions 11-61 and Object Codes 6112-6499 = Current:$55,196,496 / $98,999,806 = 55.8% Previous: $51,982,807 / $92,402,268 = 56.3%

46. 46 Did you live within your means?

47. 47 Indicator 12 Did you live within your means? 12. Was the aggregate of Budgeted Expenditures and other uses less than the Aggregate of Total Revenues, other resources and fund balance in General Fund? * Current Result: Yes ** Previous Result: Yes * The remaining aggregate in the General Fund was $6.8 million for 2004-05 FY. ** The remaining aggregate in the General Fund was $8.2 million for 2003-04 FY.

48. 48 Did you live within your means? Do not begin with a deficit budget. Student attendance and tax collections determine revenues. Put the expenditure brakes on if the previous months are not meeting budgeted expectations. Just because it is in the budget does not mean it is in the bank.

49. 49 Indicator 13 Did you borrow enough money for construction? 13. If the district’s Aggregate Fund Balance in the General Fund and Capital Projects Fund was less than zero, were construction projects adequately financed? * Current Result: Yes ** Previous Result: Yes Calculation: Fund Balance in the General Fund as of the Fiscal Year End + Fund Balance in the capital projects fund as of the Fiscal Year End > Standard Capital Fund Margin = * $8,621,972 + $6,039,549 = $14,661,521 > 0 ** $6,509,570 + $7,000,862 = $13,510,432 > 0

50. 50 Indicator 14 Did you save the overpayment? 14. Was the ratio of cash and investments to deferred revenues in the General Fund greater than or equal to 1:1, or, less than or equal to 0? * Current Result: Yes -126,313 <= 0 ** Previous Result: Yes -178,144 <= 0 Calculation: Cash and Investments in the General Fund / (Deferred Revenue in the General Fund – Property Tax Receivable Net of Uncollectable = * $8,389,588 / ($3,067,654 - $3,193,967) = -66.41 => 1 or 0 => -126,313 ** $7,226,838 / ($2,883,838 - $3,061,952) = -40.57 => 1 or 0 => -178,144

51. 51 Did you save the overpayment? TEA funds on estimates. Spend only what is earned…or less Overpayments should be in the bank, not in the budget. State Summary of Finances overpayments settle in the following year and are deducted from next year’s allocations.

52. 52 IV. PERSONNEL MANAGEMENT (Indicators #15-17)

53. 53 Indicator 15 Is Administration Overstaffed? 15. Was the Administrative Cost Ratio less than the Standard in Law? Current Result: Yes Previous Result: Yes

54. 54 State Standards for Administrative Cost Ratio: Standard Enrollment ADA 0.1105 >10,000 0.1250 5,000 to 9,999 0.1401 1,000 to 4,999 0.1561 500 to 999 0.2654 <500 0.3614 Sparse

55. 55 EPISD Standard for Administrative Cost Ratio * FY 05 Actual.0884 **FY 04 Actual.0904 FY 03 Actual.0842 FY 02 Actual.0766 FY 01 Actual.0785 Calculation: Acceptable Administrative Cost Ratio > District Administrative Cost Ratio = *.1105 >.0884 **.1105 >.0904

56. 56 Indicators 16 & 17 Did the district hire the acceptable number of teachers and staff? Not too many, not too few?

57. 57 Indicators 16 & 17 16. Was the ratio of students to teachers in allowable ranges according to district size? Current Result: Yes Previous Result: Yes 17. Was the ratio of students to total staff in allowable ranges according to district size? Current Result: Yes Previous Result: Yes

58. 58 Acceptable Ratio Students Low Ratio High Ratio >10,000 13.5/6.6 22/14 Student to Teacher/Student to Total Staff

59. 59 Ratio Comparison State EPISD 2005 * 13.5-22.0/6.6-14.0 17.04/ 7.14 2004 ** 13.5-22.0/6.6-14.0 17.38/ 7.18 Student to Teacher/Student to Total Staff State Avg. Student to Teacher Ratio: 14.9, 2004-05 AEIS Report 14.9, 2003-04 AEIS Report State Avg. Student to Total Staff Ratio: 7.51, 2004-05 AEIS Report 7.52, 2003-04 AEIS Report Calculation: Total Number of Students / Total Number of FTE Teachers = * 13,531/794 = 17.04 ** 13,385/770 = 17.38 Total Number of Students / Total Number of FTE Staff = * 13,531/1,895 = 7.14 ** 13,385/1,864 = 7.18

60. 60 V. CASH MANAGEMENT (Indicators #18-21)

61. 61 Indicator 18 Does the district have an appropriate Fund Balance? 18. 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? * Current Result: Yes ** Previous Result: Yes *Current **Previous Optimal balance at 150% = $12.68M $11.86M Optimal balance at 50% = $4.23M $3.95M Fiscal Year Actual = $8.62M $6.51M Calculation: Estimate of one Month’s Cash Disbursement Amount During the Regular School Session X 50% Minimum Fund Balance = Optimal Balance at 50% * $8,452,507 x.50% = $4.23M ** $7,952,713 x.50% = $3.95M * $8,452,507 x 150% = $12.68M ** $7,905,426 x 150% = $11.86M

62. 62 Indicator 19 Is your Fund Balance stable? 19. Was the decrease in Undesignated Unreserved Fund Balance less than 20% over two fiscal years? * Current Result: Yes ** Previous Result: Yes (If 1.5 times Optimum Fund Balance Operating Expenditures in the General Fund, then Answer this Indicator Yes) Calculation: Expenditures in the General Fund in Functions 11-61 Expenditures Object Codes 6100-6400 – Total Revenues in the General Fund < Acceptable Expenditure Revenue Gap * $82,737,999 - $86,709,840 = -$3,971,841 < 0 ** $77,513,492 - $85,200,847 = -$7,687,355 < 0

63. 63 Is Your Fund Balance Stable? Fiscal Year Ended 2003-Undesignated General Fund Balance of $7,860,351 Fiscal Year Ended 2005-Undesignated General Fund Balance of $8,532,188 2004-2005 Excess (Deficiency) of Revenues Over Expenditures in the General Fund $3,971,841 Increase in Undesignated Unreserved General Fund Balance of +$671,837

64. 64 Indicator 20 Can you show me the money? 20. Was the aggregate total of cash and investments in the General Fund more than $0? * Current Result: Yes ** Previous Result: Yes Calculation: The aggregate total of cash and investments in the General Fund was: * $8.4M ** $7.2M

65. 65 Indicator 21 Is your money working for the District? 21. Were investment earnings in all funds more than $15.00 per student? * Current Result: Yes ** Previous Result: No Calculation: Investment Earnings / Number of Students * $617,377 / 13,531 = $45.62 ** $187,494 / 13,385 = $14.01 Note: ** If TEA’s underpayment of $4,466,156 had been invested, an additional $64,313 would have been earned at the Bank’s yearly Average Interest Rate of 1.44%. Indicator 21 would have been “Yes” with an investment of $18.81 per student.

66. 66 Results? Current Results: 21 out of 21 Previous Results: 21 out of 21 Rating: SUPERIOR ACHIEVEMENT!

67. 67

68. 68 2003-2004 School District Rating Status

69. 69 2003-2004 School District Rating Status

70. 70 2003-2004 School District Rating Status

71. 71 2003-2004 School District Rating Status

72. 72 Schools FIR$T Eagle Pass ISD 2006 Report September 12, 2006 Financial Integrity Rating System of Texas