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2012 Financial Solvency Final Determination

Upon completion of a review process developed in accordance with the requirements of House Bill 3, the Texas Education Agency (TEA) has identified the following school districts and open-enrollment charter schools as having circumstances that could lead to financial insolvency. Excel (14KB)    PDF (46 KB)

Background

The financial solvency review process was developed in accordance with the requirements of House Bill (HB) 3, passed by the 81st Texas Legislature in 2009. This bill added Section 39.0822, Financial Solvency Review Required, and Section 39.0823, Projected Deficit, to the Texas Education Code. These two statutes are published online.

In response to the requirements of HB 3, TEA adopted 19 Texas Administrative Code (TAC) §109.1101, Financial Solvency Review, which is published online. This rule describes how TEA will use financial indicators, including financial data, student counts, and staffing information to identify LEAs with circumstances that could lead to financial insolvency. TEA’s specific methodology is published online.

Determination Process

TEA’s final determination regarding financial solvency was made following a process that involved analysis of financial indicators (such as financial data, student counts, and staffing information) for all local educational agencies (LEAs) in Texas. Some LEAs failed the financial indicators and were placed on a preliminary list. These LEAs were given an opportunity to respond to TEA with interim financial data to address the failed financial indicators. TEA carefully reviewed and considered these responses, and determined that some LEAs did not have circumstances that could lead to financial insolvency. However, the LEAs listed above either did not respond to TEA or were still determined by TEA to have circumstances that could lead to financial insolvency.

Financial Plan Requirement

The LEAs on the list above must submit a financial plan to TEA for approval per Section 39.0823(b) of the Texas Education Code (TEC). The agency may approve the plan only if it determines that the plan will permit the LEA to avoid the projected insolvency. By late January 2013, TEA will inform LEAs if their plans have been approved, disapproved, or require modification.

Failure to comply with all specified requirements related to the financial plan may affect an LEA’s accreditation status. TEC Section 39.0823(c) states that the commissioner shall assign an LEA an accredited-warned status if one of the following occurs:

  1. The LEA fails to submit a plan.
  2. The LEA fails to obtain approval from the agency for a plan.
  3. The LEA fails to comply with a plan approved by the agency.
  4. The agency determines in a subsequent school year, based on financial data submitted by the LEA, that the approved plan for the LEA is no longer sufficient or is not appropriately implemented.

Financial Plan Questions and Actions (62 KB)

Attachment A - Required Financial Plan Template (76 KB)

Attachment B - Certification of Financial Plan (60 KB)

Attachment C - Budget and Cash Flow for School Districts: Excel (49 KB)PDF (206 KB)

Attachment C - Budget and Cash Flow for Charter Schools: Excel (83 KB)PDF (193 KB)

Open Records Information

Per 19 TAC §109.1101(d)(6), all documentation generated and gathered in the process of determining an LEA’s financial solvency will be considered working papers and will not be subject to open records requests. However, documentation generated after an LEA is determined to have circumstances that could lead to financial insolvency and is placed on the above list will be subject to open records requests as permitted by statute or rule.

For additional information, contact:

Robin Aldridge (512) 463-3940 robin.aldridge@tea.state.tx.us

Yolanda Walker (512) 463-0947 yolanda.walker@tea.state.tx.us

 

 

 

Page last modified on 10/30/2012 07:00:00 AM.