TEA Adopts Significant Charter FIRST Revisions

Effective
July 18, 2026

What Charter School Leaders Need to Know

The Texas Education Agency (TEA) has adopted revisions to 19 TAC §109.1001, Financial Accountability Ratings, effective July 18, 2026. These changes update the Charter FIRST rating worksheets for the 2025–2026 rating year and establish additional methodology changes beginning with the 2026–2027 rating year and beyond.

• 19 TAC 109.1001(f)(1) 2025-2026 Rating Year

• 19 TAC 109.1001(f)(2) 2026-2027+ Rating Years

While the overall Charter FIRST framework remains unchanged (21 indicators, 100 possible points, and existing rating thresholds), several indicators have been revised that will directly affect financial accountability planning for charter schools.

What's Changing?

>> Indicator 1 – Annual Financial Report (AFR) Submission
For the 2025–2026 rating year only, TEA revised the AFR submission deadline due to the delayed release of the 2025 Federal Compliance Supplement. Beginning with future rating years, the standard reporting timeline resumes.

>> Indicator 12 – Debt Service Coverage Ratio
The debt service coverage calculation has been modernized to better align with current governmental accounting practices.

Key revisions include:

• Incorporating Function 71 – Debt Service into the calculation.

• Using principal, interest, and other long-term debt payments reported in the Statement of Cash Flows.

• Eliminating the prior pension expense add-back.

To allow schools time to transition to the revised methodology, all charter schools will automatically receive the maximum 10 points for Indicator 12 during the 2025–2026 rating year.

>> Indicator 14 – Administrative Cost Ratio
TEA clarified the administrative cost calculation by excluding Object Code 6144 while maintaining the existing administrative cost thresholds based on charter school ADA size. The underlying methodology remains substantially the same.

>> The Most Significant Change
Indicator 16 - Actual ADA vs. Biennial ADA Projections
Beginning with the 2026–2027 Charter FIRST rating year, TEA is fundamentally changing how Indicator 16 is evaluated.

Previous Methodology
Schools earned points by comparing:

• Actual Average Daily Attendance (ADA)

• Annual ADA Estimate submitted each year for Foundation School Program (FSP) funding.

New Methodology
Schools will now be evaluated using:

• Actual ADA

• Biennial ADA Projection submitted through TEA's biennial projection process.

Additionally, TEA has replaced the single 10% variance requirement with enrollment-based thresholds:

If a charter school does not submit its own biennial projection, it must certify TEA's projected enrollment and ADA figures.

Why This Matters

Many charter schools certified TEA's biennial projections—or submitted their best estimate—nearly two years before actual enrollment patterns became known.

Since that time, schools may have experienced significant enrollment growth or decline and have continued updating their Annual Estimate Data for funding purposes. Under the revised Charter FIRST methodology, however, those annual updates will no longer serve as the accountability benchmark for Indicator 16.

As a result, schools with substantial enrollment changes may experience lower Charter FIRST scores.

Recommended Actions

Charter school leadership teams should begin preparing now by:

• Reviewing the adopted Charter FIRST revisions and understanding how each change affects financial accountability.

• Separately tracking Annual Estimate Data for budget development and Biennial ADA Projections (used for Charter FIRST and initial SOF estimates).

• Involving Finance, PEIMS, and Enrollment teams in developing future biennial projections.

• Updating Charter FIRST forecasting models to reflect the revised calculations.

• Monitoring actual ADA throughout the year against both funding estimates and biennial projections.

The Bottom Line

The July 18, 2026 revisions do more than update Charter FIRST calculations—they change how schools will be measured for financial accountability.

The shift from annual ADA estimates to biennial ADA projections for Indicator 16 is one of the most significant accountability changes in recent years and reinforces the need for long-term enrollment planning, accurate forecasting, and close collaboration between finance, PEIMS, and school leadership teams.

Need assistance?

The inSchools Finance Team is actively reviewing the revised Charter FIRST methodology and can assist your school with forecasting, financial accountability planning, Charter FIRST readiness assessments, and strategic enrollment analysis.

Questions? Contact DeAnna Clavell l dclavell@theinschools.com