Charter schools face monitoring
Budget issues trigger TEA action
Raul Yzaguirre Schools For Success, one of Houston's oldest and highestperforming charter school networks, faces additional state monitoring in the coming months after failing a financial health test two years in a row.
The Texas Education Agency this month downgraded the accreditation rating of Raul Yzaguirre Schools for Success, commonly known as RYSS, to “warned,” prompting the likely appointment of a state monitor. Only 1 percent of districts received a rating below “accredited” in 2019.
The accreditation downgrade followed “F” ratings in 2017 and 2018 on the state’s financial integrity rating system, largely due to overspending and a shortage of cash on hand. Texas officials recommend school districts keep enough cash to cover at least 45 days’ worth of expenses, but RYSS had about 18 days’ worth at the end of fiscal 2017, the cutoff point for the state’s financial health analysis.
RYSS opened in the mid-1990s as part of Texas’ first foray into charter schools. The network serves 955 students in Houston and 375 children in the Rio Grande Valley. Nearly all children attending the four RYSS campuses are Hispanic and economically disadvantaged, according to state data.
In interviews this week, RYSS officials said they have made several changes designed to ensure a passing score in 2019. The district’s superintendent, former Houston ISD administrator and current Houston Community College trustee Adriana Tamez, said she took ownership of financial oversight in mid-2017 and replaced several employees.
Tamez said she also made multiple cost-cutting moves: reducing staff, freezing pay for nonteacher positions, renegotiating supplier contracts and virtually eliminating overtime.
“Mark my words: we’re going to pass this next year,” Tamez said of the financial integrity test.
Operating loss
TEA notified the district last week that it plans to install a monitor at RYSS who will provide reports to agency leaders about the district’s progress.
RYSS officials can request a formal review of the district’s accreditation rating, which could delay the appointment of a monitor.
While RYSS has had academic success in recent years — the network scored an 88 on the 2018 state accountability rating system, equivalent to a “B” letter grade — administrators overseeing the district failed to balance its budget during that time.
The network reported an operating loss of $720,000 on $17 million in expenses in fiscal 2017.
David Corpus, vice chair of the RYSS governing board, said prior administrators who no longer work for the network provided incomplete information to the board about the district’s finances, leading to the shortfall.
“A lot of the decisions the board did make were based on information that was not totally accurate,” Corpus said. “Since Dr. Tamez has come over, there’s been a lot of improvements.”
To further cut costs, RYSS officials also hope to refinance about $25 million worth of bonds that were issued in 2009, amid of the global financial crisis.
The bonds bear interest rates ranging from 7.75 percent to 9 percent, double the going rates for most Texas school districts. The high rates result in greater interest payments, weighing down the district’s finances.
Current outlook
RYSS officials noted that the 2017 and 2018 state financial ratings are based on figures from the prior fiscal year, meaning they do not reflect the district’s current outlook. Corpus said he expects the network to show net income of about $800,000 in fiscal 2018, though the district’s audit has not been finalized.
Charter schools are publicly funded entities governed by unelected, nonprofit boards. Students do not pay tuition to attend. The schools also are subject to fewer state laws than other public schools, a scenario intended by state leaders to foster innovation and flexibility.