diff --git a/.github/workflows/unit-test-and-coverage-gate.yml b/.github/workflows/unit-test-and-coverage-gate.yml
index 9e09247c..62d386a4 100644
--- a/.github/workflows/unit-test-and-coverage-gate.yml
+++ b/.github/workflows/unit-test-and-coverage-gate.yml
@@ -46,8 +46,15 @@ jobs:
           INPUT_COV_THRESHOLD: ${{ inputs.cov_threshold }}
         run: |
           # Read threshold from file, allow manual override
-          FILE_THRESHOLD=$(cat .coverage-threshold 2>/dev/null || echo "65.0")
+          # Use fallback 65.0 if file is missing, empty, or unreadable
+          FILE_THRESHOLD=$(cat .coverage-threshold 2>/dev/null | tr -d '[:space:]')
+          FILE_THRESHOLD="${FILE_THRESHOLD:-65.0}"
           COV_THRESHOLD="${INPUT_COV_THRESHOLD:-$FILE_THRESHOLD}"
+          # Validate it's a number, otherwise use fallback
+          if ! [[ "$COV_THRESHOLD" =~ ^[0-9]+\.?[0-9]*$ ]]; then
+            echo "::warning::Invalid threshold '$COV_THRESHOLD', using 65.0"
+            COV_THRESHOLD="65.0"
+          fi
           echo "cov_threshold=${COV_THRESHOLD}" >> "$GITHUB_OUTPUT"
           echo "build_id=${GITHUB_RUN_ID}" >> "$GITHUB_OUTPUT"
           if [[ -n "${INPUT_COV_THRESHOLD}" ]]; then
@@ -89,7 +96,8 @@ jobs:
               # Extract numeric values using simpler patterns
               OVERALL=$(grep "Overall Coverage:" coverage_report.txt | sed 's/[^0-9.]*\([0-9.]\+\)%.*/\1/')%
               THRESHOLD=$(grep "Threshold:" coverage_report.txt | sed 's/[^0-9.]*\([0-9.]\+\)%.*/\1/')%
-              STATUS=$(grep "Status:" coverage_report.txt | sed 's/[^A-Z]*\([A-Z]\+\).*/\1/')
+              # Get last word on the Status line (PASSED or FAILED)
+              STATUS=$(grep "Status:" coverage_report.txt | awk '{print $NF}')
               
               # Status badge
               if [[ "$STATUS" == "PASSED" ]]; then
diff --git a/Earthfile b/Earthfile
index 6412ea5e..09a1d379 100644
--- a/Earthfile
+++ b/Earthfile
@@ -153,9 +153,13 @@ test:
     
     # Run the comprehensive coverage tests using our script
     # Args: COV_THRESHOLD PRINT_TS FAIL_ON_NO_TESTS DEBUG
-    # If COV_THRESHOLD not provided, read from .coverage-threshold file
+    # If COV_THRESHOLD not provided or empty, read from .coverage-threshold file
     RUN cd /work && \
-        THRESHOLD="${COV_THRESHOLD:-$(cat .coverage-threshold 2>/dev/null || echo 65.0)}" && \
+        FILE_THRESH=$(cat .coverage-threshold 2>/dev/null | tr -d '[:space:]') && \
+        FILE_THRESH="${FILE_THRESH:-65.0}" && \
+        THRESHOLD="${COV_THRESHOLD:-$FILE_THRESH}" && \
+        THRESHOLD="${THRESHOLD:-65.0}" && \
+        echo "Using coverage threshold: ${THRESHOLD}%" && \
         ./scripts/run_coverage_tests.sh "${THRESHOLD}" "${PRINT_TS}" "${FAIL_ON_NO_TESTS}"
     
     # Save coverage artifacts locally
@@ -176,9 +180,13 @@ test-debug:
     
     # Run the coverage tests with debug output (keeps temp files for inspection)
     # Args: COV_THRESHOLD PRINT_TS FAIL_ON_NO_TESTS DEBUG
-    # If COV_THRESHOLD not provided, read from .coverage-threshold file
+    # If COV_THRESHOLD not provided or empty, read from .coverage-threshold file
     RUN cd /work && \
-        THRESHOLD="${COV_THRESHOLD:-$(cat .coverage-threshold 2>/dev/null || echo 65.0)}" && \
+        FILE_THRESH=$(cat .coverage-threshold 2>/dev/null | tr -d '[:space:]') && \
+        FILE_THRESH="${FILE_THRESH:-65.0}" && \
+        THRESHOLD="${COV_THRESHOLD:-$FILE_THRESH}" && \
+        THRESHOLD="${THRESHOLD:-65.0}" && \
+        echo "Using coverage threshold: ${THRESHOLD}%" && \
         ./scripts/run_coverage_tests.sh "${THRESHOLD}" "${PRINT_TS}" "${FAIL_ON_NO_TESTS}" "true"
     
     # Save coverage artifacts locally
diff --git a/scripts/run_coverage_tests.sh b/scripts/run_coverage_tests.sh
index e3180a35..3c03f10d 100755
--- a/scripts/run_coverage_tests.sh
+++ b/scripts/run_coverage_tests.sh
@@ -433,19 +433,23 @@ echo "Calculation method: ${COVERAGE_METHOD}"
 COVERAGE_NORMALIZED=$(printf '%.1f' "${OVERALL_COVERAGE}")
 THRESHOLD_NORMALIZED=$(printf '%.1f' "${COV_THRESHOLD}")
 
+# Track coverage status separately from test status
+COVERAGE_PASSED="true"
 if (( $(echo "${COVERAGE_NORMALIZED} >= ${THRESHOLD_NORMALIZED}" | bc -l) )); then
     echo -e "${GREEN}✓ Overall coverage PASSED threshold${NC}"
 else
     echo -e "${RED}✗ Overall coverage FAILED threshold${NC}"
+    COVERAGE_PASSED="false"
     OVERALL_EXIT_CODE=1
 fi
 
 # Generate coverage reports for saving
+# Note: Status reflects COVERAGE check only, not test failures
 echo "## Test Coverage Report" > coverage_report.txt
 echo "" >> coverage_report.txt
 echo "**Overall Coverage:** ${COVERAGE_NORMALIZED}%" >> coverage_report.txt
 echo "**Threshold:** ${THRESHOLD_NORMALIZED}% (applies to overall coverage only)" >> coverage_report.txt
-echo "**Status:** $(if [[ ${OVERALL_EXIT_CODE} -eq 0 ]]; then echo "PASSED"; else echo "FAILED"; fi)" >> coverage_report.txt
+echo "**Status:** $(if [[ "${COVERAGE_PASSED}" == "true" ]]; then echo "PASSED"; else echo "FAILED"; fi)" >> coverage_report.txt
 echo "" >> coverage_report.txt
 
 # FIXED: Use safer array check that works with set -u