School Financial Integrity Rating System of TexasRating System of Texas Annual Financial Management Report

Conroe Independent School District’s FIRST RatingDistrict’s FIRST RatingDan Cox, CFODarrin Rice, Director of Finance

Primary Goal/DevelopmentPrimary Goal/DevelopmentThe Texas Administrative Code (TAC), Title 19 § 109 1001 states that the purpose of the19, § 109.1001, states that the purpose of the financial accountability rating system is to ensure that school districts will be held accountable for the quality of their financial management practices and achieve improved performance in the management of theirperformance in the management of their financial resources. The system is designed to encourage Texas public schools to manage their financial resources better in order to provide the maximum allocation possible for direct instructional purposesdirect instructional purposes.

Primary Goal/Development ( )(cont.)

The system will also disclose the quality of y q ylocal management and decision-making processes that impact the allocation of financial resources in Texas public schools. An evaluation of the long-term effectiveness of the system should disclose aeffectiveness of the system should disclose a measurable improvement in the quality of Texas public schools' financial decision-Texas public schools financial decisionmaking processes

Primary Goal/Development ( )(cont.)

The School FIRST rating is based upon an g panalysis of staff and student data reported for the 2009-2010 school year, and budgetary and actual financial data for the fiscal year ended August 31, 2010.

Schools FIRST Ratings:Schools FIRST Ratings:The School First accountability rating system y g yassigns one of four financial accountability ratings to Texas school districts.

1. Superior Achievement2. Above-Standard Achievement3. Standard Achievement4. Substandard Achievement

Conroe Independent School Di i ’ FIRST R iDistrict’s FIRST Rating

Conroe Independent School District received a rating of “Superior Achievement”. g pThe Superior Achievement rating is the state’s highest, demonstrating the quality of g , g q yConroe ISD’s financial management and reporting system.

How Ratings are AssessedHow Ratings are AssessedThe School FIRST rating system rated Texas g ydistricts based on their answers to 22 separate questions.Each question was designed to assess the quality of the financial management of the di t i t’district’s resources.

Questions/Explanations and C ISD’ AConroe ISD’s Answers.

1. Was total Fund Balance less Reserved Fund Balance greater than zero in the General Fund. School districts must legally have a fund balance to ensure adequate funding for operations. This indicator is designed to ensure that your district has a positiveg y pamount of fund balance cash (savings) that is not designated or reserved for a specific purpose. In other words, “Does your district have funds set aside for a y f frainy day?”Conroe’s answer – 2009-10 Yes $75,686,126

Questions/Explanations and C ISD’ A

2. Was the Total Unrestricted Net Asset

Conroe ISD’s Answers.2. Was the Total Unrestricted Net Asset Balance (Net of Accretion of Interest on Capital Appreciation Bonds) In the Cap ta pp ec at o o ds) t eGovernmental Activities Column in the Statement of Net Assets Greater than S e e o Ne sse s G e eZero? (If the District's 5 Year % Change in Students was 10% more)g % )Conroe’s answer -2009-10 Yes $45 263 442$45,263,442

Questions/Explanations and C ISD’ A ( t )Conroe ISD’s Answers (cont.)

3. Were there No disclosures in the Annual3. Were there No disclosures in the Annual Financial Report and/or other sources of information concerning default on bonded indebtedness obligations.This indicator seeks to make certain that your district has paid your bills/obligations on bonds issued to pay for school construction, etc.Conroe’s answer – 2009-10 Yes

Questions/Explanations and C ISD’ A ( t )Conroe ISD’s Answers (cont.)4. Was the Annual Financial Report filed pwithin one month after the January 28th

deadline for the district’s Fiscal Year end date August 31?A simple indicator. Was your Annual Financial R fil d b h d dli ?Report filed by the deadline?Conroe’s answer – 2009-10 Yes, January 25

Questions/Explanations and C ISD’ A ( t )Conroe ISD’s Answers (cont.)

5. Was there an Unqualified Opinion in the5. Was there an Unqualified Opinion in the Annual Financial Report?A “qualification” on your financial reportA qualification on your financial report means that you need to correct some of your reporting or financial controls. A district’s goal, therefore, is to receive an “unqualified opinion” on its Annual Financial Report.Conroe’s answer – 2009-10 Yes

Questions/Explanations and C ISD’ A ( t )Conroe ISD’s Answers (cont.)6. Did the Annual Financial Report NOT pdisclose any instance(s) of material weakness in internal controls?A clean audit of your Annual Financial Report would state that your district has no material

k i i l lweaknesses in internal controls.Conroe’s answer – 2009-10 Yes

Questions/Explanations and C ISD’ A ( t )Conroe ISD’s Answers (cont.)7. Did the Districts Academic Rating Exceed Academically Unacceptable?Conroe’s Answer – 2009-2010 Yes

Questions/Explanations and C ISD’ A ( t )Conroe ISD’s Answers (cont.)8.Was the Three- Year average percent of Total Tax Collections (including Delinquent) greater than 98%?

Conroe’s answer 2009-2010 – Yes 100.04%

Questions/Explanations and C ISD’ A

9. Did The Comparison of PEIMS DATA to

Conroe ISD’s Answers.p

Like Information in Annual Financial Report Result In An Aggregate Variance of Less than 3 Percent of Expenditures Per Fund Type?C ’ A 2009 2010 Y 0%Conroe’s Answer 2009-2010- Yes , 0%

Questions/Explanations and C ISD’ A

10. Were Debt Related Expenditures (Net Of

Conroe ISD’s Answers.p (

IFA And/Or EDA Allotment) < $250.00 Per Student? (If The District's Five-Year Percent Change In Students = Or > 7%, Or If Property Taxes Collected Per Penny Of Tax Effort > $200 000 Per Student)?Effort > $200,000 Per Student)?Conroe’s answer – 2009-10 Yes

Questions/Explanations and C ISD’ A ( t )Conroe ISD’s Answers (cont.)11. Was there NO disclosure in the Annual11. Was there NO disclosure in the Annual Audit Report of Material Noncompliance?No disclosure means the Annual Audit report pincludes no disclosure indicating that the school district failed to comply with laws, rules, and regulations for a government entity.Conroe’s answer – 2009-10 Yes

Questions/Explanations and C ISD’ A ( t )Conroe ISD’s Answers (cont.)12. Did the district have full accreditation12. Did the district have full accreditation status in relation to financial management practices?Did TEA take control of your district due to financial issues such as fraud or having a negative fund balance? If not, you pass this indicator.C ’ 2009 10Conroe’s answer – 2009-10 Yes

Questions/Explanations and C ISD’ A ( t )Conroe ISD’s Answers (cont.)13. Was the aggregate of Budgeted Expenditures and Other Uses LESS THAN the aggregate of Total Revenue, Other resources and Fund Balance in Generalresources and Fund Balance in General Fund?Your district will receive a negative rating on g gthis measure if your total expenditures and other uses for the fiscal year exceeded your total funds availableavailable.Conroe’s answer – 2009-10 Yes

Questions/Explanations and C ISD’ A ( t )Conroe ISD’s Answers (cont.)14. If the district’s Aggregate Fund Balance in the General Fund and Capital Projects Fund was LESS THAN zero, were construction projects adequately financed?construction projects adequately financed?This indicator measures your district’s ability to construct facilities without damaging your Fund f g g yBalance.Conroe’s answer – 2009-10 Yes, Conroe’s

t f d b l $129 690 703aggregate fund balance was $129,690,703

Questions/Explanations and C ISD’ A ( t )Conroe ISD’s Answers (cont.)15. Was the ratio of Cash and Investments to Deferred Revenues ( excluding amount equal to net delinquent taxes receivable) in the General Fund greater than or equal to 1:1?This indicator measures whether or not your di i h ffi i h d idistrict has sufficient cash and investments to balance fund balance monies such as TEA overpayments (deferred revenues)overpayments (deferred revenues).Conroe’s answer – 2009-10 Yes

Questions/Explanations and C ISD’ A ( t )Conroe ISD’s Answers (cont.)16. Was the Administrative Cost Ratio less16. Was the Administrative Cost Ratio less than the standard in State Law?TEA and state law sets a cap on the percentage of their budget that p p g f gTexas school districts can spend on administration. Did you stay within the cap for districts of your size?

Conroe’s answer 2009 10 Yes theConroe s answer – 2009-10 Yes, the acceptable administrative cost ratio is .1105 and Conroe’s ratio .039.

Questions/Explanations and C ISD’ A ( t )Conroe ISD’s Answers (cont.)17. Was the Ratio of Students to Teachers within the ranges shown below according to district size?R f ti f di t i t ith t d tRange for ratio for districts with student population =>10,000 Low 13.5 High 22This indicator measures your pupil teacher ratioThis indicator measures your pupil teacher ratio to ensure that it is within TEA’s recommended range.Conroe’s answer – Yes, 15.7 (8/31/2010)

Questions/Explanations and C ISD’ A ( t )Conroe ISD’s Answers (cont.)18. Was the Ratio of Students to Total Staff within the ranges shown below according to district size?Range for ratio for districts with student population =>10,000 Low 7.0 High 14.This indicator measures your pupil-staff ratio to ensure that it is within TEA’s recommended range.Conroe’s answer – 2009-10 Yes, 8.17

Questions/Explanations and C ISD’ A ( t )Conroe ISD’s Answers (cont.)19. Was the Total Fund Balance in the General Fund more than 50 percent and less than 150 percent of Optimum according to the Fund Balance and Cash Flow Calculation Worksheet in the Annual Financial Report?E hibi A i h di i ’ di idExhibit A in the district’s audit provides an optimum General Fund “Fund Balance” for Conroe ISDConroe ISD.Conroe’s answer – 2009-10 Yes 108.65%

Questions/Explanations and C ISD’ A ( t )Conroe ISD’s Answers (cont.)20. Was the decrease in Undesignated Fund gBalance less than 20 percent over two Fiscal Years?Are you “feeding off of your Fund Balance” to pay for salaries or other district operating

?expenses?Conroe’s answer – 2009-10 Yes

Questions/Explanations and C ISD’ A ( t )Conroe ISD’s Answers (cont.)21. Was the Aggregate Total Cash and gg gInvestments in the General Fund more than $0?Does Conroe ISD have cash in the bank, and/or investments?Conroe’s answer – 2009-10 Yes, $106,764,121

Questions/Explanations and C ISD’ A ( t )Conroe ISD’s Answers (cont.)22. Were Investment Earnings in all funds gmore than $20 per student?

Conroe’s answer – 2009-10 No, $5.94

School First Annual Financial Management ReportSchool FIRST Annual Financial Management Report CONROE INDEPENDENT SCHOOL DISTRICT

Reimbursements Received by the Superintendent and Board Members

For the Twelve-Month PeriodEnded August 31, 2010

Superintendent Board Board Board Board Board Board BoardMember 1 Member 2 Member 3 Member 4 Member 5 Member 6 Member 7

Description of Reimbursements

Dr. Don Stockton

Member 1 Member 2 Member 3 Member 4 Member 5 Member 6 Member 7

Mel Brown Chris IrishC.J.

Haynes Ann Snyder Lynda SasserJohn

Husbands Gerald IronsMeals $ 228.00 $ - $ - $ - $ - $ 33.00 $ - $ 33.00 Lodging 528.47 - - - - 174.27 - 174.27 Transportation 2,679.46 - - - - 62.15 - 74.15 Motor Fuel - - - - - - - -Other - - - - - - - -Total $3,435.93 $0.00 $0.00 $0.00 $0.00 $269.42 $0.00 $281.42,

All “reimbursements” expenses, regardless of the manner of payment, including direct pay, credit card, cash, and purchase order are to be reported. Items to be reported per category include:Meals – Meals consumed out of town, and in-district meals at area restaurants (outside of board meetings, excludes catered boardmeeting meals).Lodging - Hotel charges.Transportation - Airfare, car rental (can include fuel on rental, taxis, mileage reimbursements, leased cars, parking and tolls).p , ( , , g , , p g )Motor fuel – Gasoline.Other: - Registration fees, telephone/cell phone, internet service, fax machine, and other reimbursements (or on-behalf of) to the superintendent and board member not defined above.

Outside Compensation and/or Fees Received by the Superintendent for Professional Consulting and/or Other Personal Services

For the Twelve-Month PeriodEnded August 31, 2010Name(s) of Entity(ies) Amount ReceivedN/A $ -

Total $ -

C ti d t i l d b i t d f f il b i (f i hi t ) th tCompensation does not include business revenues generated from a family business (farming, ranching, etc.) that has no relation to school district business.

School First Annual Financial Management ReportGifts Received by Executive Officers and Board Members (and First Degree Relatives, if any) (gifts that had an economic value of $250 or more in the aggregate in the fiscal year)

For the Twelve-Month PeriodEnded August 31, 2010

Superintendent Board Board Board Board Board Board Board

Dr. DonMember 1 Member 2 Member 3 Member 4 Member 5 Member 6 Member 7

C.J. JohnDr. Don Stockton Mel Brown Chris Irish

C.J. Haynes Ann Snyder Lynda Sasser

John Husbands Gerald Irons

Total $ - $ - $ - $ - $ - $ - $ - $ -

Note – An executive officer is defined as the superintendent, unless the board of trustees or the district administration names additional staff under this classification for local officials.

Business Transactions Between School District and Board Members

For the Twelve-Month PeriodEnded August 31, 2010

Board Board Board Board Board Board BoardMember 1 Member 2 Member 3 Member 4 Member 5 Member 6 Member 7Mel Brown Chris Irish C.J. Haynes Ann Snyder Lynda Sasser John Husbands Gerald Irons

Amounts $ - $ - $ - $ - $ - $ 815,507.25 $ -Note - The summary amounts reported under this disclosure are not to duplicate the ititems disclosed in the summary schedule of reimbursements received by board members.

The above amount reflects normal business transactions between Conroe I.S.D. and the employers of Mr. Husbands (Soules Insurance). Mr. Husbands receives no commission from these revenues and his relationship predates his membership on the Board of Trustees

Summary Schedule of Data Submitted under the Financial Solvency Provisions of TEC §39.0822

General Fund - First-Quarter Expenditures By Object CodeReport 2010-2011 first-quarter (first three months of fiscal year 2010-2011) GENERAL FUND expenditures by object code using whole

numbers.

Payroll-Expenditures for payroll costs object codes 6110-6149 $ 52,772,783.71 Contract Costs-Expenditures for services rendered by firms, individuals, and other organizations object code series 6200 $ 7,968,675.27Contract Costs Expenditures for services rendered by firms, individuals, and other organizations object code series 6200 $ 7,968,675.27

Supplies and Materials-Expenditures for supplies and materials necessary to maintain and/or operate furniture, computers, equipment, vehicles, grounds, and facilities object code series 6300 $ 4,957,698.88

Other Operating-Expenditures for items other than payroll, professional and contracted services, supplies and materials, debt service, and capital outlay object code series 6400 $ 1,928,704.24

Debt Service-Expenditures for debt service object code series 6500 $ -Capital Outlay-Expenditures for land, buildings, and equipment object code series 6600 $ 577,682.77

School First Annual Financial Management ReportAdditional Financial Solvency Questions

1) Districts with a September 1- August 31 fiscal year:

Within the last two years, did the school district Yes No1) draw funds from a short-term financing note (term less than 12 months) between the months of September and December, inclusive, and XX2) for the prior fiscal year, have a total General Fund balance of less than 2 percent of total expenditures for General Fund function codes 11-61? XX

2) Has the school district declared financial exigency within the past two years? XX

3) Provide comments or explanations for student-to-staff ratios significantly (more than 15%) below the norm, rapid depletion of General Fund balances, or any significant discrepancies between actual budget figures and projected revenues and expenditures, or any other information that may be helpful in evaluating the school district's financial solvency.

85% of Mean Enroll-to-Teacher Ratio

Mean Enroll-to-Teacher Ratio School District Size

8.39 7.13 Under 1009 48 8 06 100 to 2499.48 8.06 100 to 249

10.73 9.12 250 to 49911.48 9.76 500 to 99912.45 10.58 1,000 to 1,59913.52 11.50 1,600 to 2,99914.29 12.15 3,000 to 4,99914.80 12.58 5,000 to 9,99914.88 12.65 10,000 to 24,99915 01 12 76 25 000 to 49 99915.01 12.76 25,000 to 49,99915.06 12.80 50,000 and Over

4) How many superintendents has your school district had in the last five years? 1

5) How many business managers has your school district had in the last five years? 1