DALLAS — Officials of the Dallas Independent School District plan to present a fiscal 2007 audit to trustees at the regularly scheduled school board meeting today.
The audit was due to the Texas Education Agency in December. The district’s inability to submit the audit on time resulted in an automatic failure under the state agency’s Financial Integrity Rating System of Texas, or School FIRST, program.
The financial condition of the second-largest school system in the Lone Star state has been plagued by scandal and scrutinized for years, particularly since the summer of 2006 when it was uncovered that hundreds of employees were abusing district-issued credit cards.
Co-chief financial officer Steve Korby said there are a number of things the district needs to address to get the finances back in order.
“Deloitte & Touche made a presentation to the audit committee that showed numerous material deficiencies and significant weakness that have to be improved,” Korby said.
“My partner and I have been here since late February and we have received a strong commitment from the board level on down, as well as from the superintendent, to address these issues,” he said. “Everyone knows it needs to be fixed and everyone is committed to working hard to do so.”
Earlier this year, the district “formally launched a strategy to transform its financial operations.”
Chief operating officer Eric Anderson was named head of a new financial-management team that includes Korby and Carolyn Jones as co-chief financial officers and Tom Canby, a former managing director of financial audits for the TEA and a research consultant for the Texas Association of School Business Officials.
The team is tasked with transforming the district’s financial reporting by implementing strict controls and improving efficiencies while attempting to develop a comprehensive five-year plan.
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, voters approved the district’s $1.35 billion bond package for 15 new schools, 12 additions and about $500 million of renovations to more than 200 campuses. Many of the 229 schools in the DISD are more than 50 years old. The district currently serves about 160,000 students.
The district isn’t able to access the public-debt markets until its audit is complete, and the exact size and timing of any new-money bond sale is still unclear.
“It depends on our needs and it doesn’t get any cheaper to build stuff…the timing is also critical as whatever we build has to be ready by late August,” Korby said.
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.