Waco ISD earns A on state's School FIRST financial report; bond debt trims a few points

WACO ' In a public hearing Monday evening, Waco Independent School District's Executive Director of Finance Sherry Smith presented the district's 2024 Annual Financial Integrity Rating System of Texas (School FIRST) report and said the district received an A with a score of 92 out of 100.

"Tada, our score. So, we received an A, superior achievement. We received a score of 92 out of a 100," Smith said during the presentation. She explained the School FIRST framework uses 21 indicators (four critical, multiple solvency and financial-competency items) and that failing any critical indicator results in an overall failing rating.

Smith highlighted several strong measures: the district reported roughly 179.94 days of cash on hand, a three-year average change in fund balance of +4.77%, an unmodified (clean) audit opinion on the annual financial report, and general fund revenue exceeding expenditures by about $2,500,000 (excluding facility acquisition and construction costs). She told trustees the district's current assets to current liabilities ratio was 5.9274 and that PIMS-to-AFR variance was 0.004 percent, well within thresholds.

At the same time, Smith told the board the district lost a few points on solvency indicators tied to outstanding bond debt. "We issued 72,800,000 of this unlimited school bond series 2022b, and then we issued another 78,400,000 in series 2023," she said, explaining those issues raised the district's long-term liabilities and contributed to a ratio of long-term liabilities to total assets of about 0.7012. That figure placed the district in a scoring band that cost the district several points on indicator 11; Smith described the difference as "just a little hair" from a higher band.

She also described the district's debt-per-$100-of-assessed-value ratio (reported as 5.6908) and an administrative cost ratio of 9.75%, which resulted in modest point reductions under TEA's solvency and administrative-cost measures.

Smith said the district met all four critical indicators, received maximum points for most solvency and competency measures, and did not report material weaknesses or noncompliance in the external auditor's report. She also noted disclosures included in the School FIRST submission, such as the superintendent's contract used for the preliminary scores and an itemized schedule of board and superintendent reimbursements.

Board members asked clarifying questions about specific indicator calculations and the effect of bond series timing. Smith and trustees discussed the mechanics of the solvency bands and the practical reasons for issuing bonds for campus needs; the board closed the public hearing after the Q&A.

What happens next: The School FIRST report was presented as a public hearing item and will be part of the district's compliance record with the Texas Education Agency. No corrective action was required; the district's A rating indicates "superior achievement" under TEA's current scoring rules.