Skip to content
Quick Start for:
Chapter 3
FINANCIAL MANAGEMENT

This chapter examines the financial management of the Christoval Independent School District (CISD) in eight sections:

A. Fiscal Operations and Budgeting
B. Fund Balance
C. Payroll
D. Risk Management
E. Cash and Investments
F. Fixed Assets
G. Purchasing

Financial management in school districts involves effective planning, budgeting and managing the district's ability to maximize resources. A district's ability to perform these tasks affects its relationships with its employees, vendors, funding agencies and the local community. Financial management is most effective when resources are spent based on the district's established priorities; when internal controls are in place and operate as intended; when financial information is provided in a timely way and in useful formats; and when staff resources and technology are allocated efficiently.

Fund balances or reserve balances are established by school systems to function much like a savings account. Fund balances can serve as a source of funds in case of an emergency, a source of cash to pay bills if revenue is not available or a place to build up savings to make large purchases, such as a new computer system.

Within this overall financial framework, asset and risk management provides insurance to adequately cover the district's assets with the lowest possible premiums; cash management places district funds in investments with good interest potential, while safeguarding the district's cash; taxes are collected quickly and efficiently; and fixed assets are accounted for and safeguarded against theft and obsolescence.

The purchasing function assures that goods and services are acquired at the best price, at the right time and in the right quantity to support the needs of the district and its personnel, while complying with local, state and federal regulations. Opportunities are identified to cooperatively purchase goods with other jurisdictions when it is mutually beneficial to all parties.

BACKGROUND

School districts must maintain and operate effective financial management systems in a highly regulated environment. They must meet financial management requirements established by federal and state laws, rules and regulations. The Texas Education Agency's (TEA) Financial Accountability System Resource Guide outlines accounting and reporting requirements for Texas school districts. Internally developed policies and procedures, Generally Accepted Accounting Principles and the Governmental Accounting Standards Board guidelines also affect school districts' financial management activities.

Texas school districts are required by Texas law to conduct school programs in accordance with the state constitution. The Texas Education Code (TEC) spells out the specific requirements that school districts must comply with and authorizes the TEA to establish standards for all school districts.

The state's financial contribution to public education is appropriated to school districts through three tiers of funding. Tier I funding is designed so that school districts and the state share in the basic cost of education. Funding allotments under the Tier I formula are based on student attendance in weighted average daily attendance (WADA). WADA is a measure of special needs such as special education, compensatory education, bilingual education and gifted and talented programs. Tier I formulas also provide partial funding for school transportation. Tier I allotments are adjusted for the individual district's property tax base. Therefore, a district's property wealth factors significantly into the state funding formula.

Tier II funding rewards the local tax efforts made by a district by guaranteeing that tax efforts beyond the annual required local share in Tier I will yield a minimum amount of money per WADA.

Senate Bill 4 of the 1999 Legislature added a new component to the education funding formula. Tier III funds allow local school districts to receive partial state funding for debt service requirements on previously issued bonds.

The Texas Constitution authorizes local governments, including school districts, to levy property taxes. School property taxes represent almost 60 percent of total property taxes levied in the state. Property taxes levied by school districts are important because they can significantly affect the amount of funding provided to individual districts by the state. There are two categories of property levies made by school districts. The maintenance and operations (M&O) portion is used to cover routine operating costs of education, while the interest and sinking (I&S) portion is used for debt service for financing building programs.

CISD receives revenue from local, state and federal sources. Texas school districts receive about 51.2 percent of their revenues from local property taxes, 44.3 percent from the state and 3.5 percent from federal sources. The amount of state revenue sent to each district is proportional, based upon a district's property values. Districts with greater property wealth per pupil receive less from the state because they can generate more property taxes, while districts with lower property value per pupil receive more from the state.

Texas has a court-approved school finance system to equalize property wealth among school districts, which requires wealthy districts to pay into a pool that, together with additional state funds, subsidizes poorer districts. "Wealthy" is defined as a district with property values at or above $295,000 per pupil in WADA.

The Tom Green County tax assessor collects property taxes on behalf of the district. These receipts are deposited directly into the district's local maintenance account at Wells Fargo Bank of Texas, N.A. The county tax assessor also follows up on delinquent taxes for the district. For the 1999-2000tax year, the district collected approximately 98 percent of taxes due.

In 2000-01, CISD has a property value per pupil of $156,589, compared to the state average value per pupil of $215,121.

Exhibit 3-1 compares CISD to its peer districts in terms of property value per pupil for 1999-2000, the last full year of available property tax peer data. Only two of the peer districts exceeded the state average, with Brookeland ISD meeting the "wealthy" district threshold. CISD was in the upper half of its peer group. However, the district was well below the state average and remains so in 2000-01.

Exhibit 3-1
CISD and Peer District Property Value per Pupil
1999-2000
District Property Value
per Pupil
Apple Springs $102,432
Brookeland $312,674
Christoval $156,972
Leggett $239,377
Meadow $121,174
Slidell $101,384
Texas $198,090
Source: TEA, AEIS 1999-2000.

The state distributes payments to all districts based on the WADA basic allotment. This allotment is adjusted according to the property wealth of the district. For CISD, the basic allotment was $3,961 per student for 1999-2000.

Over the past three years there has been a decrease in the property value per student in each of the peer districts with the exception of Apple Springs ISD. CISD has seen a 3.6 percent decrease during this period (Exhibit 3-2).

Exhibit 3-2
Property Value Per Pupil
CISD versus Peer Group
(1997-98 through 1999-2000)
District 1997-98 1998-99 1999-2000 Percent Change
over Period
Apple Springs $  91,361 $102,145 $102,432 12.1%
Brookeland $387,092 $338,124 $312,674 (19.2%)
Christoval $162,753 $166,392 $156,972 (3.6%)
Leggett $330,437 $300,429 $239,377 (27.6%)
Meadow $168,979 $132,150 $121,174 (28.3%)
Slidell $108,790 $106,214 $101,384 (6.8%)
State $182,154 $190,769 $198,090 8.7%
Source: TEA, AEIS 1999-2000.

The adopted tax rate in the district has decreased 2.7 percent from $1.463 in 1997-98 to $1.459 in 1999-2000 (Exhibit 3-3).

Exhibit 3-3
CISD Adopted Tax Rates
(1997-98 through 1999-2000)
1997-98 1998-99 1999-2000 Percent Change
over Period
$1.463 $1.460 $1.459 (2.7%)
Source: TEA, AEIS 1999-2000.

Compared to its peer districts, CISD had the third-lowest property tax rate for the 1999-2000 school year (Exhibit 3-4). The rate also is well below the average tax rate for the state.

Exhibit 3-4
CISD Adopted Tax Rate and Taxable Property Value
Compared to Peer Districts
1999-2000
District Taxable Property
Value/Pupil		 Adopted Tax Rate
Apple Springs $102,432 $1.353
Slidell $101,384 $1.450
Christoval $156,972 $1.459
Leggett $239,377 $1.496
Brookeland $312,674 $1.500
Meadow $121,174 $1.587
Texas $198,090 $1.512
Source: TEA, AEIS 1999-2000.

CISD receives a greater percentage of its revenues from the state than three of its five peer districts, with the exception of Brookeland and Slidell ISDs (Exhibit 3-5).

Exhibit 3-5
CISD, State and Peer District Revenue Sources
as a Percentage of Total Revenues
2000-01
District Local/Other
Revenue		 Percent
of Local		 State
Revenue		 Percent of
State		 Federal
Revenue		 Percent of
Federal
Apple Springs $454,400 21.8% $1,554,235 74.6% 75,000 3.6%
Brookeland $1,774,931 61.5% $946,463 32.8% 166,595 5.8%
Christoval $933,755 30.8% $2,058,595 68.0% 36,000 1.2%
Leggett $1,012,450 46.2% $1,085,163 49.5% 93,000 4.2%
Meadow $636,381 27.8% $1,565,429 68.3% 89,265 3.9%
Slidell $1,646,280 55.5% $1,276,280 43.0% 44,500 1.5%
Texas $13,858,297,839 53.1% $11,337,498,894 43.5% $884,281,086 3.4%
Source: TEA, PEIMS 2000-01.

Since 1997-98, CISD's total revenue from the state has increased 30.2 percent, while local revenue has decreased by 1.4 percent. Federal funding is well below the state average. The General Fund covers most of the district's funding needs, other than special funds such as special education and food services. Overall, general revenue from all sources increased by 18.2 percent during this period (Exhibit 3-6).

Exhibit 3-6
CISD Total Revenue by Source
1997-98 through 2000-01
Revenue
Source		 1997-98 1998-99 1999-2000 2000-01 Percent Change
over Period
Local and Intermediate $946,827 $920,238 $925,150 $933,755 (1.4%)
State $1,580,894 $1,698,475 $2,020,680 $2,058,595 30.2%
Federal $34,600 $34,000 $37,500 $36,000 4.1%
Total $2,562,321 $2,652,713 $2,983,330 $3,028,350 18.2%
Source: CISD Audit Reports and TEA, PEIMS 1997-98 through 2000-01.

On August 28, 1999, voters approved a $1.5 million capital improvement program. The program is funding the following:

  • the construction of a new middle school (grades 6 through 8), consisting of five additional classrooms;
  • a cafetorium to provide food preparation for the secondary schools;
  • physical education dressing facilities for grades 6 through 8; and
  • an Agriculture Science facility.

The project was completed in May 2001. The first classes in the new facility will begin with the start of the 2001-02 school year. The bond issue raised the adopted tax rate from $1.459 to $1.594, an increase of 9.3 percent.

The Texas Legislature appropriated $150 million under the Instructional Facilities Allotment program (IFA) to pay a portion of the debt service for bonds issued by qualified Texas school districts. The district applied for additional state funds under the IFA in December 1999 but was unsuccessful in receiving the funding when TEA cancelled the December 15, 1999 appropriation. When the district reapplied for the next cycle of funding in June 2000, the total number of districts applying for the funding increased significantly. The state awarded funding to the first 84 districts, CISD was number 143 on the list. The district has applied for IFA funding in the June 15, 2001 cycle but is not hopeful that it will be successful.