An Audit Report on Financial Operations at the Texas Education Agency
May 2006
Report Number 06-036
Overall Conclusion
Weaknesses in the Texas Education Agency's (Agency) operations left the Agency unable to correctly forecast a $170 million funding deficit that occurred in the Foundation School Program in fiscal year 2005. The Foundation School Program is the program through which the Agency distributes state funds to school districts. Although the Agency incorrectly forecasted the amount of the deficit, it should be noted that the $170 million deficit represented less than 1 percent of the $19.9 billion in original appropriations to the Foundation School Program for the 2004-2005 biennium.
The Agency has made improvements in its Budget Office and State Funding Division that should help to detect future deficits, but it should implement additional controls. Most significantly:
- The Commissioner of Education should regularly certify the status of Foundation School Program funding (including any forecasted deficits or surpluses) to the Governor and the Legislative Budget Board.
- The Agency's Budget Office and State Funding Division should regularly monitor Foundation School Program funding trends to identify potential deficits or surpluses and, through the Commissioner of Education, formally report that information periodically to the Governor and the Legislative Budget Board on a timely basis.
The Agency's controls over automated processes that support the Foundation School Program reasonably ensure that data is protected and that distributions to school districts are accurate. However, there are opportunities to improve controls in areas such as server security, password requirements, and security settings.
The Agency's insufficient oversight of the development of new Foundation School Program automated system applications continues to expose it to risks related to the accuracy of payments to school districts.
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