March 16, 2011

TO THE ADMINISTRATOR ADDRESSED:

SUBJECT: Fund Balance and Cash Management Indicators for School FIRST and School FIRST for Charters for FY 2010-2011, FY 2011-2012 and FY 2012-2013

Today, the Texas Education Agency (TEA or agency) is beginning the process of modifying indicators in the 2010-2011 School Financial Integrity Rating System of Texas (FIRST) that require school districts and charter schools to maintain approximately 60 days of operating expenses in their general fund account. By early May, the agency will disseminate information on these proposed rule amendments and provide stakeholders the opportunity to comment on the agency’s proposal. These initial actions, which will affect the FIRST ratings issued in 2012, will be taken to support districts and charter schools as they take proactive steps to address their financial needs for the upcoming years.

Additionally, given the state’s future revenue projections, it is the intent of the agency to avoid penalizing districts and charters that elect to expend portions of their fund balance in the upcoming biennium as a result of the nation’s slow economic recovery and any changes the Legislature may make in state funding. The agency’s goal is to provide school districts and charter schools flexibility to manage their budgets locally, and TEA will work on changes to the FIRST rules relating to the 2011-2012 and 2012-2013 fiscal years, which will affect FIRST ratings issued in 2013 and 2014.

Additional details on these proposed changes will be shared in the coming months. If you have questions about this letter or School FIRST requirements, please contact Rita Chase or Janice Hollingsworth in the Division of Financial Audits at (512) 463-9095.

Sincerely,

Robert Scott
Commissioner of Education