Dripping Springs ISD earns ‘A’ financial rating

DRIPPING SPRINGS — Dripping Springs ISD received a superior rating for its financial accountability.

At its Oct. 23 meeting, the DSISD Board of Trustees listened to a presentation by director of finance Joseph Riggs on how the district performed according to the Financial Integrity Rating System of Texas (FIRST). The state’s financial accountability rating system was originally mandated by Senate Bill 875 of the 76th Texas Legislature in 1999 to assess the quality of financial management in Texas schools.

For the 2022-23 rating year — which uses 2021-22 data — DSISD received an ‘A’ rating (Superior Achievement) and scored 90 out of 100 points on the graded indicators. This comes after it was presented in December 2022 that the district received a ‘C’ rating (Standard Achievement) for the previous school year based on 2020-21 data.

“I’m excited that we’ve gone from a rating of letter C to letter A. I think that is simply outstanding. I appreciate the information that was presented to us tonight,” said trustee Kim Cousins.

The FIRST report underwent changes because of House Bill 5 of the 83rd Texas Legislature in 2013, requiring the commissioner of education to include processes in the financial accountability rating system for anticipating the future financial solvency of each school district and open enrollment charter school. The changes under HB 5 were finalized and implemented by the Texas Education Agency (TEA) in August 2015 and were phased-in over three years.

During the phase-in period, the new FIRST system had separate worksheets for rating years 2014-15, 2015-16, and 2016-17 and subsequent years.

• The worksheet for rating year 2014-15 contained only seven indicators, as opposed to the 20 indicators used in 2013-14.

• The worksheets for rating years 2015-16 and 2016-17 increased to 15 indicators

• The ratings for years 2017-18 through 2019-20 used the same 15 indicators

• The worksheets for rating years 2016-2017 and beyond require higher scores for select ratings compared to the worksheet for rating year 2015-2016.

For the rating year 2022-23, the system consists of 20 base indicators with five critical indicators, nine indicators related to solvency and six indicators related to financial competence. Three indicators were not scored by TEA for this rating year.

“In looking at the research that you provided back in 2013, there were only seven indicators on how this rating was evaluated and now we are looking at 20 indicators,” Cousins said. “To look at these 20 indicators and go from a C to an A, I think, is kudos to our entire financial department.”

While DSISD received an ‘A’ rating with 90 out of 100 points, the district did not receive any points for Indicator 18, which states, “Did the external independent auditor indicate the AFR [annual financial report] was free of any instance(s) of material noncompliance for grants, contracts and laws related to local, state, or federal funds?”

Whitley Penn, L.L.P., the district’s external auditors for 2021-22, noted noncompliance material to the financial statements and significant deficiency in internal control over financial reporting for expenditures in excess of appropriations, according to agenda documents.

“What this means is that the district did not adopt sufficient legal appropriations for the general fund expenditures, as overall expenditures were $2 million over the legally adopted appropriations by $5.1 million,” Riggs presented. “The district also did not adopt sufficient appropriations in the debt service fund, as actual expenditures exceeded legally adopted appropriations by $5.2 million.”

Riggs said that the district anticipates receiving full credit for Indicator 18 in future years, due to strong internal controls that have been established; current financial services staff that is strong and continuing to make positive changes; the general, debt service and child nutrition funds had sufficient appropriations for 2022-23; and it received a clean audit for 2022-23.

To read the full FIRST report, and other financial postings that DSISD has made, visit www.dsisdtx.us/Page/1760. To learn more about the rating system and the indicators that school districts are graded on, visit bit.ly/3Qa1iYk.