State reports warned of Mercedes ISD financial struggles since 2015

State reports show that the Mercedes school district had since 2015 been warned of a financial shift that has now led to as many as 25 teachers losing their jobs.

The Financial Integrity Rating System of Texas, a state program that holds school districts accountable for their money management and financial practices, showed a financial decline in the district starting in the 2014-15 academic year. This came after seven years of MISD earning a “superior” ranking in FIRST measurements.

The reports are based on data from the previous year.

In the last two years, the rating has dwindled from “superior” to “passing.” In 2018, the district scored 60, which is the minimum passing score. The district also received a score of zero on both the “debt service coverage ratio” and “general fund revenues equal or exceed expenditures.”

The rating reports for 2014-15, 2016-17 and 2017-18 specifically showed a decline in the rankings and signs of financial struggle. The 2015-16 year in which the district earned an “A superior” ranking still received a zero on the “debt service coverage ratio.”

The fund balance today has dwindled to less than $1 million, and in response, the school district did not renew contracts for about 25 teachers. The district held a special school board meeting on May 7 to address the financial situation.

Board President Oscar Riojas has served as a Mercedes trustee for about two years, around the time the state reports began showing red flags, and was “alarmed from the get-go.”

“The FIRST rating report was very alarming and difficult to swallow, those were the indicators … that was truly a perfect — a very clear red flag — that something’s not right here and we need to fix it,” Riojas said.

“The warning signs were there, I don’t ever, nor will I ever place blame on anybody,” he said.

Riojas said former board members have questioned and tried to solve the issues, but “the person in charge for all these years was just not being truthful,” and declined to comment further about who he was referring to.

The school board works with the superintendent directly, and has been trying to monitor the situation more closely, he said.

The district brought in an interim superintendent in the wake of the sudden resignation of former Superintendent Dr. Daniel Treviño earlier this year.

Riojas said the district’s finances were always a major priority in discussions with the now former superintendent. Treviño resigned around March, and Dr. Filomena Leo stepped in as interim superintendent.

Attempts to reach Treviño and the district’s chief finance officer, Olga Hinds, for comment were unsuccessful.

Before Leo’s arrival, however, Riojas said the district attempted to address the district’s financial woes by holding a tax ratification election around 2016, which was approved by voters and generated about $4 million for the district.

Although saying it wasn’t easy, the board president said an overstaffing issue remained and that it was necessary to decrease personnel. Leo said hiring services and building a new stadium also contributed toward a declining fund balance.

Former educators and community members expressed their frustration and anger during a school board meeting on May 13.

One audience member, who identified himself as a former educator, held two water bottles to symbolize the predicament — one nearly full and the other nearly empty. He said he has been giving warnings to “stop the bleeding” that went unheeded, or were dismissed.

Yolanda Molina, a retired support staff member, said the district has made questionable decisions such as hiring consultants or employees as the student enrollment declined. The district didn’t act like they were losing students, she said.

“We’ve reached a new low,” Molina said, adding that low morale has people questioning: “Am I next?”

Molina, however, praised Leo’s leadership in her interim capacity as superintendent.

Riojas said there is some truth to the criticism, adding that the situation “hurts tremendously.”

Despite the years of financial trouble and criticism from the community, Riojas remains optimistic about the district’s future. He said if the process of hiring a new superintendent goes well, a new head administrator and the financial committee can put the district on the right path.