School finance: A study of school districts in Texas that successfully emerged from 'substandard' fiscal ratings

Historically, the educational community has assumed that with the existing resources school districts could maintain their financial stability. Within the past decade, we have found that these expectations are not true, as many districts have found their resources insufficient to accomplish their objectives. Currently, there are no studies in Texas of school districts' decision-making processes that have contributed to 'substandard' fiscal ratings from the Texas Education Agency. Nor have there been studies of school districts that have emerged from such ratings.; The purpose of this study was to describe the context within which financial decisions were made and the decision-making processes regarding resource allocation in two school districts in Texas. The focus was on identifying factors that have contributed to fiscal insolvency and those which have promoted fiscal solvency. This study was qualitative in nature in that it examined two cases of school districts that received 'substandard' fiscal ratings from the Texas Education Agency and subsequently emerged from those ratings. A quantitative application of four financial ratios was utilized to ensure the selected schools met the criteria. The content analysis of interview data was supported by an analysis of primary documents such as board minutes and audits. The respondents that were interviewed included the current superintendent, business manager, and TEA representative of the districts.; The research focused on those contextual conditions, including changes in the law governing taxes and allocation of monies, and the fiscal decisions that have resulted in districts becoming fiscally insolvent and then regaining solvency. The theoretical framework of the research included budgetary decision-making models and their application to public school budgeting.; The research suggests that the financial problems in each district were severe, yet incremental. The contributing factors included a lack of financial leadership and knowledge as well poor communication based on inadequate budgetary decision-making models.; This research further develops scholarship in terms of fiscal recovery. Recommendations are made for school boards, superintendents and financial officers in individual school districts. The findings should allow education policy makers to understand and possibly preempt fiscal problems in their jurisdictions.