Socorro ISD receives substandard FIRST rating; auditors issue clean opinion as district outlines fixes

Socorro Independent School District officials told the Board of Trustees on Dec. 17 that the district received a 66-point Financial Integrity Rating System of Texas (FIRST) score — a designation of substandard achievement for the 2024–25 rating year. David Solis, the district’s chief financial officer, said the rating is calculated from 21 indicators based on fiscal 2023–24 data and that a material compliance error in the district’s calculation of its M&O tax rate (indicator 18) cost the district 10 points.

Solis said the district’s points also declined on solvency indicators tied to cash-on-hand and liquidity, noting that days of cash on hand fell from earlier highs to roughly 46.7 days and that expenditures exceeded revenues by about $46 million in fiscal year 2023–24. "For the 24–25 first rating, Socorro Independent School District earned a score of 66 points, resulting in a rating of substandard achievement," Solis told trustees during the required public hearing.

The presentation listed the most significant drivers as: lower cash reserves and cash equivalents, a reduced solvency ratio (about 2.08), an operational deficit in which expenditures exceeded revenues, and a five‑year enrollment decline (193 students) that affected long‑term ratios. Solis and board members described steps already taken, including strengthening tax‑rate review processes, adopting a balanced FY25–26 operating budget, monthly cash‑flow monitoring, and tighter internal controls.

Board members and members of the public asked about the time frame for improvement. Solis said the district expects to regain the 10 points lost for indicator 18 in the next rating cycle because the material noncompliance has been corrected, and he projected a higher score (mid‑70s) if other indicators stabilize. Public commenter Tom Lane and others emphasized that many of the structural problems predated the current superintendent and CFO.

Following the FIRST hearing, the board heard the district’s external audit. Vanessa Larkon, managing partner at the district’s audit firm, and Sonia Sanchez, lead auditor, presented the FY24–25 audit and management letter. They issued an unmodified (clean) opinion on the financial statements and the single audit and reported no current‑year audit findings. The auditors noted implementation of GASB standards and offered management recommendations for internal control improvements. The board approved the audit report by motion.

The audit presentation quantified several operating pressures: a roughly $35.6M decrease in district revenue year‑over‑year (largely due to the end of ESSER federal funds and a one‑time EPA school‑bus rebate in the prior year), decreases in investment earnings tied to lower cash balances, a general‑fund per‑pupil expenditure decline from about $12,133 to $10,939, and transfers to the health insurance fund totaling $11.3M in FY25 and $44.1M since 2020. Auditors and staff said making the health insurance fund self‑sufficient is a near‑term priority.

The board’s next finance monitoring steps include monthly cash‑flow updates, continued enhancement of tax‑rate verification processes and reporting on progress against the district’s financial constraints adopted earlier in the meeting.