Dallas ISD Working on FY07 Audit as $1.35B Bond Vote Nears

DALLAS - The Dallas Independent School District still hasn't filed its fiscal 2007 audit that was due to the Texas Education Agencyin late November and school officials don't know when the audit will be completed.

DISD has said for months that the audit may uncover "systemic problems with internal controls," according to published reports. The finances of the second-largest school system in the state have been plagued by scandal and scrutinized for years, especially since the summer of 2006 when it was uncovered that hundreds of employees were abusing district-issued credit cards.

Superintendent Michael Hinojosa and the board of trustees have set a goal of being recognized as "the best urban school district in the United States" by 2010.

In May, district voters will decide on a $1.35 billion bond package for 15 new schools, 12 additions, and about $500 million in renovations to more than 200 campuses. Many of the 229 schools in the district are more than 50 years old. The DISD currently serves about 160,000 students.

The bond referendum also includes 19 new science labs at six secondary schools, renovations and expansions of kitchens and lunchrooms at numerous campuses, $96 million for technology upgrades in classrooms, and $14 million to refurbish sports complexes.

A facilities task force considered four bond packages ranging from about $1.28 billion to roughly $2.65 billion, and the board settled on the $1.35 billion scenario.

The district's inability to submit the audit by the deadline resulted in an automatic failure under the Texas Education Agency's financial integrity rating system of Texas, or School FIRST, program. The district's fiscal year ended June 30 and officials had 120 days to submit the audit.

Last week, the district "formally launched a strategy to transform its financial operations."

Chief operating officer Eric Anderson heads the new financial team that will include co-chief financial officers - Steve Korbyand Carolyn Jones- and Tom Canby, a former managing director of financial audits for the TEA.

Canby, echoing the information provided in a news release last week, said the financial team is tasked with transforming the district's financial reporting by implementing strict controls and improving efficiencies.

"The district is working on it and that's really all I can [say]," said Canby, who also is a research consultant for the Texas Association of School Business Officials.

The new financial team at DISD will attempt to develop a comprehensive five-year plan.

"The current fiscal position of the district is sound and we plan to keep it that way," Jones said in the press release. "At the same time, we need to develop a framework to make hard decisions on how we spend our funds - what we fund and what we don't fund based on our core mission of graduating students college and work-force ready."

Most of the projects from a $1.37 billion bond package approved by DISD voters in 2002 are completed or nearing completion. The district built 20 new schools, added more than 1,600 classrooms, and renovated numerous existing facilities with proceeds from that bond package.

The district, which is the twelfth-largest in the country, carries underlying ratings of AA from Fitch Ratings and Standard & Poor's, and Aa3 from Moody's Investors Service.

Analysts said the district's strong rating reflects a large and diversified economic base, an adequate financial position, and a manageable debt burden. DISD has about $1.5 billion of debt outstanding.

Banc of America SecuritiesLLC and Walton Johnson& Co.are the district's co-financial advisers. Vinson & ElkinsLLP and West & Gooden PC serve as co-bond counsel.

 

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