Carthage ISD is providing information to our community regarding the district’s final 2024–25 rating under the Financial Integrity Rating System of Texas (FIRST), issued by the Texas Education Agency (TEA). The district received a rating of “F – Substandard Achievement” based on fiscal year 2023–24 data.
FIRST is designed to evaluate the financial management and accountability practices of public school districts in Texas.
What Led to the Rating
The rating was primarily driven by a material finding related to internal controls and compliance issues within the district’s food service program. These findings, identified through the district’s annual financial report, were significant enough to trigger an automatic failing designation under TEA’s scoring system. While these two indicators were limited to food service operations, the severity of the finding capped the rating for the entire district.
Reflecting on the rating, Chief Financial Officer Bart Blair said, “While we are disappointed by the rating, we have taken steps to correct the food service problem, including transitioning to a new food service provider and enhancing our internal controls. Our financial team remains committed to transparency, accountability, and doing what’s right for the students and taxpayers of Carthage ISD.”
Other factors impacting the rating included low cash on hand at the time of evaluation and an imbalance between district revenue and expenditures. A clerical error in the district’s Public Education Information Management System (PEIMS) submission also contributed to point deductions. The error created a 4 percent variance when compared with the annual audit, and TEA allows only a 3 percent variance. After correction, the variance was less than 1 percent, but the timing prevented it from counting toward this year’s rating.
Carthage ISD filed an appeal after receiving the preliminary FIRST rating in August. As anticipated, the appeal was denied and the district’s rating remains unchanged.
Corrective Steps Already in Motion
Carthage ISD began addressing the identified issues immediately after receiving the audit findings last spring. Steps taken include:
A comprehensive review of food service operations
Selection of a new food service management company following the required legal process
Stronger oversight procedures and enhanced internal controls
Long-range planning to “right-size” district staffing and expenditures after the expiration of ESSER (COVID relief) funding and the loss of additional revenue
Adjustments in response to long-term enrollment decline of approximately 300 students over the past 15 years
Since the preliminary rating was issued in the fall, district leaders have conducted an even deeper review of all business operations. While the food service findings were the original driver of the failing designation, this broader review has identified additional areas where internal processes need strengthening. The district is now conducting a complete assessment of business office procedures, protocols, and practices to improve our financial systems.
Superintendent Jarrod Bitter emphasized the district’s focus, stating, “This rating does not represent the standards we have for ourselves as a district. The moment we were made aware of the issues within our food service program, we took action to correct it. We also have measures in place to prevent future errors with regard to data entry and submission. Our leadership team has responded with urgency and focus to ensure this situation is fully addressed, while continuing to develop strategies to operate effectively and efficiently with the revenue shortfalls and funding challenges that districts across the state are facing. We know that this will be a multi-year effort, and we’re committed to maintaining the trust of our community and working diligently to uphold the standards of excellence that Carthage ISD is known for.”
Why Improvement Will Take Time
FIRST ratings operate on a one-year delay because they are based on audited financial data from the previous fiscal year. By the time deficiencies are identified, the district is already near closing the books on the next year that will be rated. As a result, corrective measures do not immediately appear in the FIRST scoring system.
Carthage ISD expects improvement in the 2025–26 rating, but reaching the district’s long-term goals will take several years as corrections work their way through the reporting cycle.
Moving Forward
Carthage ISD remains committed to making the necessary changes, strengthening oversight and applying best practices across all areas of financial management to ensure that our financial operations meet the standards our taxpayers expect.