TSPR Wall Independent School District

Chapter 3
FINANCIAL MANAGEMENT

This chapter reviews the Wall Independent School District's (WISD) financial management operations in the following five sections.

A. Accounting Department

B. Budgeting

C. Asset and Risk Management

D. Purchasing

E. Cash and Investments

Effective financial management in school districts requires planning, budgeting, managing and the ability to maximize resources. A district's capacity 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.
BACKGROUND
WISD receives revenue from local, state and federal sources. The amount of state revenue provided to each school district is proportional, based on the district's property values. Districts with greater than the state average property wealth per pupil receive less from the state because of their ability to generate revenue from property taxes, while districts with lower than the state average property value per pupil receive more from the state.
WISD receives a greater percent of its revenue than the state average (Exhibit 3-1).
Exhibit 3-1
WISD, State and Peer District Revenue Sources
As a Percent of Total Revenues
Budget 2000-01

District Local/Other
Revenue State
Revenue Federal
Revenue

Bangs 25.0% 74.8% 0.2%

Crockett County 92.2% 7.7% 0.1%

Grape Creek 19.5% 80.4% 0.1%

Holliday 38.0% 62.0% 0.0%

Reagan County 68.5% 31.4% 0.1%

Wall 23.2% 73.0% 3.8%

*State Average 50.5% 46.1% 3.4%

Source: TSPR peer survey.
*TEA, AEIS 1999-2000.
Exhibit 3-2 provides the revenue, expenditures and fund balance for WISD for the last three years.
Exhibit 3-2
WISD Actual Revenues, Expenditures and Fund Balance
General Operating Fund
1997-98 through 1999-2000

1997-98 1998-99 1999-2000 Percent
Change

Revenue

Local and Intermediate $1,181,979 $1,304,360 $1,522,576 28.8%

State $4,461,347 $4,586,349 $5,173,307 15.9%

Federal $0 $12,339 $11,125 (9.8%)

Total Revenue $5,643,326 $5,903,048 $6,707,008 18.8%

Expenditures

Salaries $4,120,570 $4,353,534 $4,807,103 16.7%

Professional Services $352,686 $373,956 $454,413 28.8%

Supplies $384,448 $366,434 $436,402 13.5%

Other Operating Costs $411,446 $492,233 $633,198 53.9%

Debt Service $54,253 $74,701 $55,939 3.1%

Capital Outlay $167,392 $234,251 $306,869 83.3%

Total Expenditures $5,490,795 $5,895,109 $6,693,924 21.9%

Beginning Fund Balance $535,004 $683,460 $787,577 NA

Designated Fund Balance $0 $500,000 $500,000 NA

Unrestricted Fund Balance $535,004 $287,577 $343,065 (49.8%)

Source: WISD Business Manager, WISD Annual Financial Audits.
Since 1997-98, WISD's revenue from the state has increased by 15.9 percent, while local revenue has increased by 28.8 percent. The district uses local revenue to support most of the district's funding needs, but not special education and food services. Since 1997-98, WISD's revenue from all sources increased by 18.8 percent.
Texas has a court-approved school finance system to equalize wealth among school districts that requires wealthy districts to pay into a pool that, together with additional state funds, subsidizes poor districts. Wealthy is defined as a district with property values of at least $295,000 per pupil in weighted average daily attendance (WADA). The 2001 Texas Legislature has adopted a change that will raise that property value threshold for wealthy districts to $300,000. WISD has a property value of $105,362 per pupil.
Exhibit 3-3 compares WISD to its peer districts in terms of property value per pupil. WISD is third to last in its peer group. Only two of five peer districts exceed the state average. Two of the districts are considered to be wealthy districts. Crockett County has the highest property value per pupil based on its oil and gas property.
Exhibit 3-3
WISD and Peer District and State Average Property Value per Pupil
1999-2000

District Property Value
per Pupil

Bangs $102,363

Crockett County $720,191

Grape Creek $70,406

Holliday $122,214

Reagan County $337,603

Wall $105,362

State Average $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. WISD's basic allotment was $3,456 per student for 2000-01.
More than half of WISD's taxable property base is made up of residential property. Undeveloped land makes up 28.6 percent of its total property value compared to 7.3 percent for the state. Only 15.8 percent of the Wall ISD property value is business or commercial property compared to 40.6 percent statewide (Exhibit 3-4).
Exhibit 3-4
WISD and State Property Value by Category
As a Percent of Total Property Value
1999-2000

Property Category WISD State

Residential 53.4% 48.7%

Business 15.8% 40.6%

Land 28.6% 7.3%

Other 1.1% 0.6%

Oil and gas 1.1% 2.8%

Total 100.0% 100.0%

Source: TEA, AEIS 1999-2000.
WISD ranks third among its peer districts in property value from residential property (Exhibit 3-5). The percent of oil and gas property and business property in WISD is low. A significant percent of two of the peer districts' property value is related to oil and gas.
Exhibit 3-5
WISD and Peer Districts Property Value by Category
1999-2000

District Land Business Residential Oil and Gas Other Total

Bangs $41,600,640 $25,484,510 $71,465,500 $2,068,690 $2,764,830 $143,384,170

Crockett County 426,911,070 $180,378,910 $35,384,750 $438,760,470 $1,258,470 $682,693,670

Grape Creek $15,372,980 $19,688,039 $66,444,885 $88,960 $4,023,600 $105,618,464

Holliday $24,311,933 $25,383,181 $90,369,973 $7,925,600 $880,250 $148,870,937

Reagan County $12,203,980 $97,838,340 $27,589,090 $189,632,350 $1,338,400 $328,602,160

Wall $36,583,670 $20,231,376 $68,287,706 $1,354,020 $1,342,550 $127,799,322

Source: TEA, AEIS 1999-2000.
Texas public school districts generate local revenue primarily through property taxes. The amount of revenue generated from property taxes is a function of the tax rate and the taxable value of property in the district. Districts are allowed to adjust tax rates to meet the district's operating and debt payment requirements. WISD's tax rate has increased by 4.2 percent since 1997-98 (Exhibit 3-6).
Exhibit 3-6
WISD Tax Rates and Tax Levy
1997-98 through 2000-01

Tax Category 1997-98 1998-99 1999-2000 2000-01 Percent Change

Maintenance and operations $1.144 $1.220 $1.435 $1.435 25.4%

Interest and sinking fund $0.373 $0.360 $0.145 $0.145 (61.1%)

Total Tax Rate $1.517 $1.580 $1.580 $1.580 4.2%

Total Tax Levy $1,389,147 $1,501,901 $1,496,074 $1,594,595 14.8%

Source: TEA, AEIS 1997-2000, WISD.
WISD has the highest property tax rate (Exhibit 3-7) of its peer group and is above the average state rate for 1999-2000. WISD increased its tax rate to $1.58 for the 1998-99 school year.
Exhibit 3-7
WISD Adopted Tax Rate and Taxable Property Value
Compared to Peer Districts
1999-2000

District Taxable Property
Value/Pupil M & O
Tax Rate I & S
Tax Rate Total
Tax Rate

Bangs $102,363 $1.420 $0.007 $1.427

Crockett County $720,191 $1.313 $0.111 $1.424

Grape Creek $70,406 $1.475 $0.000 $1.475

Holliday $122,214 $1.424 $0.000 $1.424

Reagan County $337,603 $1.500 $0.000 $1.500

Wall $105,362 $1.435 $0.145 $1.580

Source: TEA, AEIS 1999-2000.

District	Local/Other Revenue	State Revenue	Federal Revenue
Bangs	25.0%	74.8%	0.2%
Crockett County	92.2%	7.7%	0.1%
Grape Creek	19.5%	80.4%	0.1%
Holliday	38.0%	62.0%	0.0%
Reagan County	68.5%	31.4%	0.1%
Wall	23.2%	73.0%	3.8%
*State Average	50.5%	46.1%	3.4%

	1997-98	1998-99	1999-2000	Percent Change
Revenue
Local and Intermediate	$1,181,979	$1,304,360	$1,522,576	28.8%
State	$4,461,347	$4,586,349	$5,173,307	15.9%
Federal	$0	$12,339	$11,125	(9.8%)
Total Revenue	$5,643,326	$5,903,048	$6,707,008	18.8%
Expenditures
Salaries	$4,120,570	$4,353,534	$4,807,103	16.7%
Professional Services	$352,686	$373,956	$454,413	28.8%
Supplies	$384,448	$366,434	$436,402	13.5%
Other Operating Costs	$411,446	$492,233	$633,198	53.9%
Debt Service	$54,253	$74,701	$55,939	3.1%
Capital Outlay	$167,392	$234,251	$306,869	83.3%
Total Expenditures	$5,490,795	$5,895,109	$6,693,924	21.9%
Beginning Fund Balance	$535,004	$683,460	$787,577	NA
Designated Fund Balance	$0	$500,000	$500,000	NA
Unrestricted Fund Balance	$535,004	$287,577	$343,065	(49.8%)

District	Property Value per Pupil
Bangs	$102,363
Crockett County	$720,191
Grape Creek	$70,406
Holliday	$122,214
Reagan County	$337,603
Wall	$105,362
State Average	$198,090

Property Category	WISD	State
Residential	53.4%	48.7%
Business	15.8%	40.6%
Land	28.6%	7.3%
Other	1.1%	0.6%
Oil and gas	1.1%	2.8%
Total	100.0%	100.0%

District	Land	Business	Residential	Oil and Gas	Other	Total
Bangs	$41,600,640	$25,484,510	$71,465,500	$2,068,690	$2,764,830	$143,384,170
Crockett County	426,911,070	$180,378,910	$35,384,750	$438,760,470	$1,258,470	$682,693,670
Grape Creek	$15,372,980	$19,688,039	$66,444,885	$88,960	$4,023,600	$105,618,464
Holliday	$24,311,933	$25,383,181	$90,369,973	$7,925,600	$880,250	$148,870,937
Reagan County	$12,203,980	$97,838,340	$27,589,090	$189,632,350	$1,338,400	$328,602,160
Wall	$36,583,670	$20,231,376	$68,287,706	$1,354,020	$1,342,550	$127,799,322

Tax Category	1997-98	1998-99	1999-2000	2000-01	Percent Change
Maintenance and operations	$1.144	$1.220	$1.435	$1.435	25.4%
Interest and sinking fund	$0.373	$0.360	$0.145	$0.145	(61.1%)
Total Tax Rate	$1.517	$1.580	$1.580	$1.580	4.2%
Total Tax Levy	$1,389,147	$1,501,901	$1,496,074	$1,594,595	14.8%

District	Taxable Property Value/Pupil	M & O Tax Rate	I & S Tax Rate	Total Tax Rate
Bangs	$102,363	$1.420	$0.007	$1.427
Crockett County	$720,191	$1.313	$0.111	$1.424
Grape Creek	$70,406	$1.475	$0.000	$1.475
Holliday	$122,214	$1.424	$0.000	$1.424
Reagan County	$337,603	$1.500	$0.000	$1.500
Wall	$105,362	$1.435	$0.145	$1.580