EDLD+5342+Week+4+Part+1

The FIRST (Financial Integrity Rating System of Texas) is a financial accountability system that measures the degree to which school districts and open-enrollment charters the quality of their financial management practices and their ability to maximize the performance of their financial resources. This system is mandated by Texas Administrative Code (TAC), Title 19, § 109.1001. From the state’s viewpoint, the school districts in Texas maximize the use of funds when they work to provide the largest allocation possible for direct instruction purposes. The system will also disclose the quality of local management and decision-making processes that impact the allocation of financial resources in Texas public schools. There are several important components of the FIRST system. Our group has determined reserve funds, transparency, and consistent assessment of districts across Texas to be the most critical areas the FIRST system.


 * Reserve Funds:** Districts with a healthy fund balance are able to use these funds when experiencing decreased funding from the state and the district can address unexpected expenditures that are likely to occur from time to time. Reserve funds are a critical component of any Texas’s school budget in this date in time. School districts are, in fact, receiving less state funding and many districts are experiencing unexpected expenditures as a result of a year-long drought. The Board of Trustees as well as school district officials are responsible for ensuring that the district makes responsible financial decisions and that the district can remain solvent, even when unexpected factors influence funding. On March 16, 2011, a "To The Administrator Addressed" letter was sent to school districts to inform them of changes to the FIRST rating system so they will not be penalized for dipping into their reserve funds during the current biennium due to the current financial situation the state is facing.
 * Transparency:** School districts are required to explain how tax payer funds are used to fund education. Not only are districts required to manage funds appropriately, they are also responsible for showing that those funds were used to deliver services to the student body and support a high quality education. Additionally, this system of funding must have checks and balances to ensure that district expenditures are in line with district goals as well as the adopted budget. Transparency is the critical component that ensures districts are spending funds intended and that interested parties can observe this function.


 * Consistency:** Consistency is a very broad terms but, it is one of the most important components of the FIRST system. This component determines that all school districts in Texas are held accountable for the same measures when assessing district financial integrity and that the state uses the same methodology to examine the quality of school district management decisions.


 * Reflection:** Just like a student report card demonstrates performance over time, interested parties can use the FIRST accountability rating to determine the quality of school district fund management. In contrast to the student report card, interested parties can also examine all district accountability ratings to further analyze district performance. This accountability system simplifies the examination process any interested party would undertake to understand the quality of school district funding management.