[00:00:05] GOOD EVENING. [B. CALL TO ORDER] IT IS 5:30 ON THURSDAY, OCTOBER THE 17TH, 2024. I HEREBY CALL THIS MEETING OF THE ROUND ROCK INDEPENDENT SCHOOL DISTRICT BOARD OF TRUSTEES PUBLIC HEARING ON THE ROUND ROCK ISD'S 2023 2024 SCHOOL FINANCIAL INTEGRITY RATING SYSTEM OF TEXAS, ALSO KNOWN AS THE FIRST RATING TO ORDER TONIGHT IN ATTENDANCE, WE HAVE ALL SEVEN TRUSTEES. A QUORUM IS MET. PLEASE STAND FOR THE PLEDGE. I PLEDGE ALLEGIANCE TO THE FLAG OF THE UNITED STATES OF AMERICA, AND TO THE REPUBLIC FOR WHICH IT STANDS. ONE NATION UNDER GOD, INDIVISIBLE, WITH LIBERTY AND JUSTICE FOR ALL. [E. DISCUSSION ITEM] WE HAVE NO PUBLIC SPEAKERS TONIGHT, SO WE WILL GO STRAIGHT INTO AGENDA ITEM E1 DISCUSSION ITEM OF THE PUBLIC HEARING THE ROUND ROCK ISDS 2023 2024 SCHOOL FINANCIAL INTEGRITY RATING SYSTEM OF TEXAS. PRESENTATION. AND I'LL TURN IT OVER TO MR. COVINGTON TO GET US STARTED. THANK YOU MA'AM. GOOD EVENING EVERYBODY. TONIGHT, AS THE BOARD CHAIR SAID, WE'RE GOING TO WALK THROUGH THE FINANCIAL INTEGRITY RATING SYSTEM. THE FIRST REPORT. THESE NUMBERS ARE BASED ON THE FY 22-23 FINANCIALS. OKAY. THERE WE GO. THE FIRST RATING WAS ADOPTED BY OUR LEGISLATURE TO ACHIEVE THE PRIMARY GOAL OF QUALITY PERFORMANCE IN THE MANAGEMENT OF SCHOOL DISTRICT FINANCIAL RESOURCES. THE RATING IS BASED ON STAFF, STUDENT AND FINANCIAL DATA REPORTED TO TEA FOR THE FISCAL YEAR PRIOR TO THE RATING, AND THE RATING IS BASED ON THE PRIOR FISCAL YEAR DATA. DISTRICTS ARE RATED ON INDICATORS OUTLINED AND SET BY THE COMMISSIONER OF EDUCATION. THERE ARE THREE TYPES OF INDICATORS. WE HAVE THE CRITICAL INDICATORS WHICH ARE YES OR NO, PASS OR FAIL. YOU HAVE SOLVENCY INDICATORS. AND THEN WE ALSO HAVE FINANCIAL COMPETENCY INDICATORS. THERE ARE A TOTAL OF 21 INDICATORS THAT WE WILL REVIEW. DETERMINATION OF THE RATINGS IN PARAGRAPH A, YOU WILL SEE THAT IF A DISTRICT FAILS THE CRITICAL INDICATORS 1, 2, 3 OR 4, THEY WILL AUTOMATICALLY RECEIVE A F FOR SUBSTANDARD ACHIEVEMENT REGARDLESS OF POINTS EARNED WITH ALL THE OTHER INDICATORS. ONCE YOU PASS THE FIRST FOUR INDICATORS, YOUR RATING IS BASED ON THE POINTS THAT YOU RECEIVE FOR ALL THE OTHER INDICATORS WHERE IF YOU GET 90 TO 100 POINTS, YOU WILL RECEIVE AN A FOR SUPERIOR AND AS YOU CAN SEE, A, B, C, AND F, AND THE POINTS ASSOCIATED WITH EACH ONE. IF THE SCHOOL DISTRICT SCORES BELOW THE MINIMUM PASSING SCORE OF 70, IT WILL RECEIVE AN F RATING FOR SUBSTANDARD ACHIEVEMENT. SO LET'S WALK THROUGH THE INDICATORS. INDICATOR ONE WAS THE ANNUAL FINANCIAL REPORT FILED WITHIN 30 DAYS AFTER THE TEA SET DEADLINE OF NOVEMBER 27TH. WE SUBMITTED OUR FINANCIAL REPORT ON 1117, SO IT WAS PRIOR TO THE DEADLINE. AND THE RESULT WAS YES. INDICATOR TWO WAS THERE AN UNMODIFIED OPINION IN THE ANNUAL FINANCIAL REPORT ON THE FINANCIAL STATEMENTS AS A WHOLE? ROUND ROCK ISD RECEIVED AN UNMODIFIED OR CLEAN OPINION FROM OUR OUTSIDE AUDITORS AND THE RESULTS WERE WE PASSED. INDICATOR THREE WAS THE SCHOOL DISTRICT IN COMPLIANCE WITH THE PAYMENT TERMS OF ALL DEBT AGREEMENTS AT THE FISCAL YEAR END? DID WE PAY OUR BILLS? YES. RESULTS PASSED. INDICATOR FOUR DID THE DISTRICT MAKE TIMELY PAYMENTS TO TEACHERS RETIREMENT SYSTEM? TRS TEXAS WORKFORCE COMMISSION, TWC, THE IRS OR OTHER GOVERNMENT AGENCIES. ALL REPORTS WERE SUBMITTED TIMELY TO ALL GOVERNMENTAL ENTITIES. RESULTS WE PASSED. SO THAT WAS THE FIRST FOUR CRITICAL INDICATORS. THE NEXT FEW ARE OUR SOLVENCY INDICATORS. SO INDICATOR FIVE WAS A TOTAL NET POSITION IN THE GOVERNMENTAL ACTIVITIES COLUMN. AND THE STATEMENT OF NET POSITION, NET OF ACQUISITION OF INTEREST FOR CAPITAL APPRECIATION BONDS, NET PENSION LIABILITY AND OTHER POST-EMPLOYMENT BENEFITS GREATER THAN ZERO. THE FORMULA, AS YOU CAN SEE, IS WRITTEN DOWN BELOW WHERE WE HAVE 102 MILLION OF TOTAL NET POSITION PLUS 147 MILLION NET PENSION LIABILITY PLUS NET OTHER POST-EMPLOYMENT OF 83. SO WE HAVE A TOTAL OF 333,707,888. [00:05:02] RESULT WE PASSED. INDICATOR SIX WAS THE AVERAGE CHANGE IN ASSIGNED AND UNASSIGNED FUND BALANCE OVER THREE YEARS, LESS THAN A 25% DECREASE OR THE CURRENT YEAR IS ASSIGNED TO UNASSIGNED FUND BALANCE EXCEEDS 75 DAYS OF OPERATIONAL EXPENDITURES. FOR 22-23 OUR ASSIGNED AND UNASSIGNED FUND BALANCE WAS 122,159,296, OR 75 DAYS OF OPERATING EXPENSES 118,475,999. SO OUR ASSIGNED AND UNASSIGNED FUND BALANCE EXCEEDED THE 75 DAYS OF OPERATIONAL EXPENDITURES. AS A RESULT, WE PASSED. INDICATOR SEVEN WAS THE NUMBER OF DAYS OF CASH ON HAND AND CURRENT INVESTMENTS IN THE GENERAL FUND FOR THE SCHOOL DISTRICT SUFFICIENT TO COVER OPERATING EXPENSES AT SCHOOL AND FACILITIES ACQUISITION AND CONSTRUCTION. AS YOU CAN SEE, OUR CASH AND EQUIVALENTS WAS 282.2 MILLION. TOTAL EXPENDITURES OF 577. FACILITY ACQUISITION AND CONSTRUCTION WAS 1,000,047. TOTAL NUMBER OF DAYS IS 178. THE NUMBER OF DAYS 178 EXCEEDS THE 90 DAYS REQUIRED FOR MAXIMUM POINTS. AS A RESULT, THE DISTRICT RECEIVED TEN OF TEN POINTS. NEXT SLIDE PLEASE. IT WAS THE MEASURE OF CURRENT ASSETS TO CURRENT LIABILITIES RATIO FOR THE SCHOOL DISTRICT SUFFICIENT TO COVER SHORT TERM DEBT. CURRENT ASSETS WAS 580.5 MILLION AND CURRENT LIABILITIES WAS 282.5 MILLION. SO WE HAD A 2.055 RATIO, AND A 2.005 IS GREATER THAN TWO, BUT LESS THAN 2.5. SO WE GOT SIX OF THE TEN POINTS. INDICATOR NINE DID THE DISTRICT'S GENERAL FUND REVENUES EQUAL OR EXCEED EXPENDITURES? IF NOT, WAS THE SCHOOL DISTRICT NUMBER OF DAYS OF CASH ON HAND GREATER THAN OR EQUAL TO 60 DAYS. OUR TOTAL GENERAL REVENUE FUND WAS 537.8 MILLION. TOTAL EXPENDITURES WERE 576 MILLION. SO WE DID NOT PASS THE FIRST QUESTION. SO THE CASH AND EQUIVALENTS OF 282 WITH A TOTAL EXPENDITURE LESS FACILITIES OF 576 CAME TO OUR TOTAL NUMBER OF DAYS OF CASH ON HAND WAS 178. AND THAT EXCEEDED THE 60 DAYS. SO WE PASSED WITH TEN OF TEN POINTS. INDICATOR TEN WAS NOT BEING SCORED. INDICATOR 11 WAS THE LONG TERM LIABILITIES TO TOTAL ASSETS FOR THE SCHOOL DISTRICT SUFFICIENT TO SUPPORT LONG TERM SOLVENCY, AS IF THE SCHOOL DISTRICT'S INCREASE OF STUDENTS AND MEMBERSHIP OVER FIVE YEARS, OR 7% OR MORE THAN SCHOOL DISTRICTS, AUTOMATICALLY PASSES THIS INDICATOR. SO IF YOU GO DOWN TO THE BOTTOM, YOU WILL SEE OUR TOTAL NUMBER OF STUDENTS DID NOT INCREASE BY 7% OR MORE ACTUALLY DECREASED. BUT SO WE HAD TO GO TO THE FIRST INDICATOR THAT MEASURING OUR LONG TERM LIABILITIES TO OUR TOTAL ASSETS, AND THE RATIO WAS 56.1. AS A RESULT, WE RECEIVED A TEN POINTS. INDICATOR 12 WAS THE DEBT PER $100 OF ASSESSED PROPERTY VALUE RATIO, SUFFICIENT TO SUPPORT FUTURE DEBT PAYMENTS. OUR TOTAL LOCAL INTERMEDIATE SOURCES WAS 113.3 MILLION, DIVIDED BY YOUR TOTAL REVENUE TIMES YOUR LONG TERM LIABILITIES TIMES 100. YOU GET YOUR DIVIDED BY YOUR ASSESSED PROPERTY VALUE. YOU GET THE RATIO OF 1.55, WHICH MEETS THE STANDARD OF LESS THAN OR EQUAL TO FOUR FOR MAXIMUM POINTS. SO WE RECEIVED TEN OF TEN POINTS. INDICATOR 13 WAS SCHOOL DISTRICT'S ADMINISTRATIVE COST RATIO EQUAL TO OR LESS THAN THE THRESHOLD RATIO. THE DISTRICT ADMINISTRATIVE COSTS OF ROUND ROCK WAS 0.0577. THE ADA IS 42,943. THE ADMINISTRATIVE COST RATIO WAS SIGNIFICANTLY BELOW THE THRESHOLD OF 0.0855 FOR THE ADA OF 10,000 OR MORE. AS A RESULT, WE RECEIVED TEN OF TEN POINTS. INDICATOR 14. THE SCHOOL DISTRICT DID NOT HAVE A 15% DECLINE IN THE STUDENTS TO STAFF RATIO OVER THREE YEARS. TOTAL ENROLLMENT TO TOTAL STAFF. AS YOU CAN SEE, OUR 22-23 TOTAL ENROLLMENT WAS 46,510. NUMBER OF FTE STAFF WAS 6,061. SAME NUMBER, SAME TITLES FOR 2021. AND AS A CALCULATION, THE DISTRICT PERCENT DECLINE IN STUDENT STAFF RATIO OF 4.9% IS WELL BELOW THE THRESHOLD OF 15% OVER THREE YEARS. [00:10:06] AS A RESULT, WE HAVE RECEIVED TEN OF TEN POINTS. INDICATOR 15 FINANCIAL COMPETENCY INDICATOR STARTS HERE AND THIS ONE WAS NOT SCORED. INDICATOR 16 DID A COMPARISON OF PUBLIC EDUCATION INFORMATION MANAGEMENT SYSTEM PEIMS DATA TO LIKE INFORMATION IN SCHOOL DISTRICTS AFR RESULT IN A TOTAL VARIANCE OF LESS THAN 3% OF ALL EXPENDITURES BY FUNCTION. THE SUM OF DIFFERENCE 481 DIVIDED BY ALL EXPENDITURES RATIO, AS YOU CAN SEE, IS 0.0000083, WHICH WELL MEETS THE REQUIREMENT OF 0.03. SO WE PASS THE TEST. INDICATOR 17 DID THE EXTERNAL INDEPENDENT AUDITOR REPORT THAT THE ALPHA WAS FREE OF ANY INSTANCES OF MATERIAL WEAKNESS IN INTERNAL CONTROLS OVER FINANCIAL REPORTING AND COMPLIANCE FOR LOCAL, STATE OR FEDERAL FUNDS? I'M PROUD TO REPORT THAT THERE WAS NO MATERIAL WEAKNESSES. AND SO AS A RESULT, WE PASSED. INDICATOR 18. DID THE EXTERNAL AUDITOR INDICATE THAT AFR WAS FREE OF ANY INSTANCES? THAT'S THE SAME ONE. I'M SORRY. INDICATOR 19. DID THE SCHOOL DISTRICT POST THE REQUIRED FINANCIAL INFORMATION ON ITS WEBSITE IN ACCORDANCE WITH GOVERNMENT CODE, LOCAL GOVERNMENT CODE, TEXAS EDUCATION CODE, TEXAS ADMINISTRATIVE CODE AND OTHER STATUTES LAWS AND RULES. DISTRICT POSTED REQUIRED FINANCIAL INFORMATION ON OUR WEBSITE AND WE RECEIVED FIVE OF THE FIVE POINTS ALLOWED. INDICATOR 20. DID THE SCHOOL BOARD MEMBERS DISCUSS THE DISTRICT'S PROPERTY VALUES AT A BOARD MEETING WITHIN 120 DAYS BEFORE THE DISTRICT ADOPTED THIS BUDGET? THE BOARD DISCUSSED THE DISTRICT PROPERTY AT A BOARD MEETING WITHIN THOSE 120 DAYS, AND AS A RESULT, WE WERE PASSED AND THIS IS ONE THEY ADDED THIS YEAR. DID THE SCHOOL DISTRICT RECEIVE AN ADJUSTED REPAYMENT SCHEDULE FOR MORE THAN ONE FISCAL YEAR FOR AN OVERALLOCATION OF THE FOUNDATION SCHOOL PROGRAM FUNDS BECAUSE OF FINANCIAL HARDSHIP, AND WE DID NOT RECEIVE AN ADJUSTED REPAYMENT PLANS AS A RESULT, WE PASSED. SO IN TOTAL, ROUND ROCK IS THE FIRST RESULTS FOR 2023. TOTAL POSSIBLE POINTS WAS 100. ROUND ROCK RECEIVED 96 AS A FINAL RATING. WE HAVE AN A FOR SUPERIOR ACHIEVEMENT. AS ADDITIONAL REPORTING REQUIREMENTS FOR THE FIRST REPORT, WE HAVE TO REPORT ON OUTSIDE COMPENSATION RECEIVED BY THE SUPERINTENDENT AND THE SUPERINTENDENT DID NOT RECEIVE ANY OUTSIDE PAYMENTS FOR CONSULTING OR ANY OTHER PERSONAL SERVICES DURING THE 22-23 SCHOOL YEAR. ALSO, THE SUPERINTENDENT AND BOARD MEMBERS DID NOT RECEIVE ANY GIFTS WITH ANY ECONOMIC VALUE OF $250 OR MORE. THIS REPORT SHOWS TRAVEL EXPENSES FOR ALL THE BOARD MEMBERS AND THE SUPERINTENDENT FOR THE YEAR 2023. AND I JUST PAUSE FOR A MINUTE FOR YOU TO READ THOSE. ANOTHER ADDITIONAL REPORTING IS BUSINESS TRANSACTIONS BETWEEN SCHOOL DISTRICTS AND BOARD MEMBERS. AND AS YOU CAN SEE, ALL BOARD MEMBERS DID NOT RECEIVE ANY BUSINESS TRANSACTIONS BETWEEN THE SCHOOL DISTRICT AND THEMSELVES. IT'S ALSO REQUIRED THAT WE POST THE SUPERINTENDENT CONTRACT ON THE WEBSITE, AND THAT IS THE ADDRESS TO GET TO THE SUPERINTENDENT'S WEBSITE. MADAM CHAIR, THAT IS THE END OF THE FIRST REPORT AND I'M HERE TO ANSWER QUESTIONS. ANY QUESTIONS? TRUSTEES. THANK YOU VERY MUCH FOR THE PRESENTATION. TRUSTEE WESTON. THANK YOU, MR. COVINGTON. SO IT LOOKS LIKE THE FOUR POINTS THAT WE LOST WERE ON INDICATOR EIGHT. IS THAT CORRECT? WE ACTUALLY LOST TWO POINTS. I THOUGHT IT SAID. WE HAD 2 OR 2 FROM LAST YEAR. IT WENT DOWN TWO POINTS FROM LAST YEAR. RIGHT. WE HAD 96 OUT OF 100. RIGHT. WE HAD 98 LAST YEAR. RIGHT. YES. SO THE FOUR POINTS IT LOOKS TO ME WERE ALL FROM INDICATOR EIGHT. DO I SEE THAT RIGHT. DO YOU MIND. CAN YOU JUST SHARE SOME SOME WORDS FOR US AND SOME WORDS FOR THE PUBLIC AND SOME WORDS FOR THE RECORD ON. CAN YOU GO IT'S SLIDE NUMBER 12. CAN YOU JUST ADD SOME DETAIL TO WHAT'S GOING ON THERE WITH THAT INFORMATION? THIS IS A MEASURE OF YOUR CURRENT LIABILITIES TO YOUR CURRENT ASSETS, AND THAT INCLUDES YOUR CAPITAL PROJECTS FUND, YOUR GENERAL FUND, AND YOUR DEBT SERVICE FUND. [00:15:01] AND SO FOR THAT YEAR, OUR DEBT, OUR CURRENT ASSETS DECREASED FROM THE PREVIOUS YEAR BY ABOUT 52 MILLION, AND MOST OF THAT WAS DUE TO THE PAYMENTS FOR ALL THE CAPITAL PROJECTS THAT WE WERE COMPLETING. AND SO WE ARE FOR THE 22 YEAR, THAT NUMBER WAS 212 MILLION. AND FOR 23 IT WAS THE 135 MILLION. SO WE PAID ABOUT $57 MILLION OF OUR PROJECTS SO THAT WE HAVE THE CASH FOR WHEN WE MADE THE BOND SALES. AND SO WHEN THE PROJECTS GET COMPLETED, WE HAVE TO PAY FOR THOSE BILLS. AND SO OUR ASSETS REDUCED BY THAT AMOUNT. AND OUR LIABILITIES, ON THE OTHER HAND, WENT UP BECAUSE OF RECAPTURE. WHEN YOU CLOSE THE YEAR OUT, WE MAKE OUR RECAPTURE PAYMENT IN AUGUST. AND SO OUR RECAPTURE GREW FROM THE 61 MILLION THAT THE PREVIOUS YEAR TO 115 MILLION. SO OUR LIABILITY ON THE BOOKS FOR THE CLOSE OF THE 22-23 YEAR WENT UP ABOUT 48. 9 MILLION. SO WHEN YOU PUT THOSE RATIOS TOGETHER, THAT'S WHY IT DROPPED TO THE 2.055. ANY OTHER QUESTIONS, TRUSTEES. TRUSTEE BONE. THANK YOU. CAN YOU KIND OF EXPAND ON THAT? I KNOW THIS IS AND CAN YOU CLARIFY THIS IS 16 MONTH OLD DATA REALLY. BECAUSE THIS IS REALLY FROM 16 MONTHS YEAH 22-23 SCHOOL YEAR. RIGHT. SO NOT SUPER HELPFUL HONESTLY TO US. I MEAN, I KNOW YOU HAVE TO REPORT IT, BUT CAN YOU EXPAND ON WHAT TRUSTEE WESTON WAS ASKING? AND DO YOU SEE THIS NUMBER DECLINING AGAIN THIS YEAR? OUR ASSETS TO LIABILITIES IN THE FIRST RATING? IS THIS SOMETHING WE SHOULD BE WATCHING? CAN YOU KIND OF GIVE SOME ADVICE TO THE BOARD? I REALLY DON'T THINK IT'S TRULY JUST A CALCULATION. WE HOPEFULLY WE'RE GOING CAPITAL PROJECTS WILL GO DOWN AGAIN BECAUSE WE ARE STILL, YOU KNOW, COMPLETING PROJECTS FOR THE SCHOOLS. AND RECAPTURE IS GOING TO GREATLY DECLINE. WE'RE HOPING IT'S GOING TO COME IN AROUND THE 17 MILLION INSTEAD OF THE 115 MILLION. SO YOU'RE THINKING THIS RATIO WILL BE BETTER THIS YEAR? YES. THANK YOU. I DON'T HAVE ANY OTHER LIGHTS ON. THAT WAS MY QUESTION THAT I'D ASK THE SUPERINTENDENT WAS A BIT OF AN INDICATOR EIGHT. SO IT'S PRETTY STANDARD. ANYBODY ELSE HAVE ANY OTHER. ALL RIGHT. WELL THANK YOU VERY MUCH. THANK YOU MA'AM. THANK YOU TRUSTEES. AND IT IS 5:47. THIS MEETING IS ADJOURNED. WE'LL BEGIN OUR NEXT MEETING. DO WE? OH, WE HAVE ONE MORE PUBLIC COMMENT THAT CAME IN DURING. OKAY. HOLD ON. SINCE THIS IS A PUBLIC HEARING, YOU CAN SIGN UP FOR PUBLIC COMMENT UNTIL THE CONCLUSION OF THE MEETING. LET ME JUST MAKE SURE WE DIDN'T MISS ANYBODY. WE'RE GOOD. ALL RIGHT. IT IS 5:48. WE ARE ADJOURNED. WE'LL START BACK AT 6:00 WITH OUR NEXT MEETING. * This transcript was compiled from uncorrected Closed Captioning.