Transcript Tier 1 Annual Update

Tier I Annual Update
2012-2013
CASBO Class SM401A
A.C.A. §6-20-2204
Required Tier 1 Training
• Superintendent, Education Service Cooperative
Director, Open-enrollment Public Charter School
Director, General Business Manager.
• 12 hours of initial training.
• 4 hours of annual update training.
A.C.A. §6-20-2204
Required Tier 1 Training (Cont’d)
• ADE has approved the following AASBO courses for
the 12 hours of initial training:
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–
–
–
–
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SF101A, Revenues
SF101B, Expenditures
SM102, Ethics and Audit Compliance
PS101, Introduction to Purchasing
SM401A, School Management Issues & Updates
SF401A, School Finance Issues & Updates
A.C.A. §6-20-2204
Required Tier 1 Training (Cont’d)
• If employed by July 1, Tier 1 training must be
completed by December 31 of the same calendar
year.
• If employed after July 1, Tier 1 training must be
completed by December 31 of the following calendar
year.
• Failure to complete the required training by
December 31 shall constitute an accreditation
citation.
A.C.A. §6-20-2204
Required Tier 1 Training (Cont’d)
• If a person fails to obtain the required training by
December 31 and fails to cure the deficiency by
March 1 of the following calendar year without filing
a request for an extension as determined from the
records of ADE, that person shall be unable to
continue in his or her position.
A.C.A. §6-20-2204
Required Tier 2 Training
• Four hours of annual training for employees who are
involved in the process of recording and/or reporting
of financial transactions but:
– Do not make decisions about selecting codes, or
– Have a limited number of codes that they can use
• School district trainers are required to attend Tier 1
training.
• Training materials should be based on Tier 1 material
and focused on the specific needs of school district
employees.
A.C.A. §6-20-2204
Required Tier 2 Training (Cont’d)
• Maintain annual files and records indicating all
employees who are required to have Tier 2 Training
and those who have completed Tier 2 training in the
district office.
• Provide ADE with assurance statement regarding the
completion of Tier 2 training by the required
individuals. (This is pulled in State Reporting Cycle
7 – June 15)
A.C.A. §§ 6-20-2204 & 6-20-2205
Sanctions-Tier 1 & 2
• Standards citation - Tier 1 only, school districts and
open-enrollment charter schools
• Admonishment - Tier 1 only, education service
cooperatives
• Fiscal distress - Tier 1&2, school districts and openenrollment charter schools
• Sanction - Tier 1 & 2, education service cooperatives
PURCHASING
State Buying Authority
• Office of State Purchasing (OSP) has authority
over the procurement practices of State
Agencies only.
• Public Schools are allowed by law to purchase
off the Statewide contracts, but are not
mandated to do so.
• Utilizing state purchasing is a way for school
districts, charters, and coops to make sure the
cost is fair and reasonable.
Cooperative Purchasing – A.C.A. §19-11-249
Any public procurement unit may either participate in,
sponsor, conduct, or administer a cooperative
purchasing agreement for the acquisition of any
commodities or services with one (1) or more public
procurement units or external procurement activities
in accordance with an agreement entered into
between the participants. Such cooperative purchasing
may include, but is not limited to, joint or multiparty
contracts between public procurement units and openended state public procurement unit contracts which
are made available to local public procurement units.
What does this mean?
That Arkansas governmental entities may utilize a
purchasing agreement established by another
governmental entity or established cooperative that
has issued, reviewed and awarded a contract to a
supplier where all the procurement laws of Arkansas
were followed.
See Taps and TCPN; §19-11-249 controls over usual bid
requirements of § 6-21-304, A.G. Op. 2006-042
Schools & Cooperatives
• If a school is approached by a vendor who has a
contract with a Cooperative Entity (such as US
Communities, TIPS/TAPS, NJPA, NIPA, etc.) their
administration should review the contract to see if it
meets their school district’s procurement
requirements and is a good value purchase.
• Must meet the state’s bid requirements for OSP to
include as approved.
• If it has been bid, then it meets threshold.
How do I know if a particular contract
meets these requirements?
If a cooperative agreement is on the Office of State
Procurement Contract Website, it has been through
that review.
http://www.arkansas.gov/dfa/procurement/pro_con
tracts.html#coop
If it is not on the OSP website, the buying entity must
review the solicitation documentation used by the
originating entity/cooperative to ensure compliance
with Arkansas laws.
Benefits of using a Cooperative Contract
• Convenience
• Obtain advantages of volume purchases
• Combines qualities so that each entity will
obtain the best value
• Reduces administrative costs of purchasing
School District Buying Authority
• School districts function under separate
purchasing laws from State Agencies.
• The laws are found in A.C.A. §§ 6-21-301
thru 6-21-306 and give authority to the
respective school boards.
Procurement
• A.C.A. 6-21-303 requires the school board to develop
policies to outline the method for soliciting bids and
allows the board to adopt other rules governing
procurement.
• School boards may wish to develop rules that allow
certain types of commodities and services to be bid
for multiple years. (copiers, maintenance, custodial,
substitutes, banking)
– Include procedures for terminating and/or maybe an
annual renewal process.
– Include a clause that allows termination if future school
board fails to budget funds to pay the contract.
Procurement (Cont’d)
• Bid threshold for purchase of commodities is $10,000.
– Per 6-21-301 Commodities means: “all supplies, goods,
material, equipment, machinery, facilities, personal property,
and services, other than personal and professional services,
purchased for or on behalf of the school district.”
– Per 19-11-801(b), “competitive bidding shall not be used for the
procurement of legal, financial advisory, architectural,
engineering, construction management, and land surveying
professional consultant services.
– Per 19-11-801(c) may elect to not use competitive bidding for
other professional services not listed in (b) with a 2/3 vote of
board.
Procurement
(Cont’d)
• All bids may be rejected and a contract
negotiated.
• All bidders must have reasonable opportunity to
negotiate
• Items MUST NOT be split between purchase
orders to make the purchase under $10,000.
Procurement (Cont’d)
• Bid Solicitation Exemptions (6-21-305):
– Emergency
• With written statement from superintendent
– Commodities available only from federal government
– Utility services regulated by state or federal agency
– Used equipment and machinery (school buses +2 years to
be considered used)
– Single source
• With written statement from purchasing official
See Appendices for copy of FIN-09-071, April 28, 2009
BIDS
• Do not write specifications to eliminate or restrict
competition or include name or identity of any
specific vendor.
• Notify in writing all prospective bidders who have
asked to be notified of bids
• Provide an adequate time for a response
• Include a response form to be notarized by the agent
of the bidder
• The wording for the form is found in A.C.A. §6-21304(a)(4)(A)
School Buses
• The school board has jurisdiction over the purchase
of Types, A, B, C, and D school buses. (A.C.A. 6-21304)
• The Academic Facilities and Transportation
Commission, with the assistance of an advisory
committee, shall provide minimum specifications for
buses.
School Buses (Cont’d)
• School Board may request the State Procurement
Director to take bids on their behalf.
• If the district solicits the bids they must provide the
OSP:
1. A copy of the bid Specs
2. List of bidders
3. Any correspondence
4. Bid tabulation
5. Copy of bid award
School Buses (Cont’d)
• A School bus is considered “used” 2 years after the
date on the manufacturer’s certificate of origin.
– If the body of the school bus is installed by other than
the manufacturer of the chassis, the bus becomes used
2 years after the date of issuance on the certificate of
origin issued by the entity that installed the body on the
chassis.
• Purchases of used school buses are not subject to
approval by the OSP nor bidding procedures
prescribed by law.
ETHICS
Ethics-School Board Members
• A.C.A. §6-24-105 states that: “it is a breach of the
ethical standards of this chapter for a board member
to contract with the public educational entity the
member serves if the board member has knowledge
that he or she is directly or indirectly interested in the
contract.”
• A public educational entity may not initially employ a
board member’s family member during the member’s
tenure of service for compensation in excess of
$5,000 unless the Commissioner of Education issues a
letter of exemption approving the contract based on
unusual and limited circumstances.
Ethics-School Board Members
(Cont’d)
• Any family member employed before the board member’s
tenure may continue in employment but may not be
promoted if compensation will increase more than $2,500.
• Family members may be employed as a substitute teacher,
cafeteria worker, or bus driver for no more than 30 days
per fiscal year.
• Non-employment contracts with a board member or family
member of a board member are prohibited if the total
transactions or contracts will total $5,000 or more during a
fiscal year—unless the Commissioner of Education issues a
letter of exemption based on unusual and limited
circumstances.
Ethics-Administrators
• A.C.A. §6-24-106 states: “it is a breach of ethical
standards of this chapter for an administrator to
contract with the public educational entity
employing him or her if the administrator has
knowledge that he or she is directly or indirectly
interested in the contract.”
• Family members of an administrator may be
employed by the educational entity that the
administrator serves without approval from the
Commissioner of Education. (but cannot be initially
employed as a disbursing officer without approval
from the Commissioner)
Ethics-Administrators (Cont’d)
• To contract with other public educational entities, an
administrator shall first get approval from the board
employing the administrator and then shall get
approval from the Commissioner.
• Rules Governing Ethical Guidelines and Prohibitions for
Educational Administrators, Employees, Board Members, and
other Parties included in Appendices
Ethics-Employees
• A.C.A. §6-24-107 states: “it is a breach of the ethical
standards of this chapter for an employee to
contract with the public educational entity
employing him or her if the employee has knowledge
that he or she is directly interested in the contract.”
• If the total transactions or contracts with an
employee total $5,000 or more for a fiscal year, the
contract(s) must be approved by the Commissioner.
Ethics-School Board Approval
• A school board’s approval of a contract under A.C.A.
§6-24-101 et seq. must be documented by a written
resolution adopted after discussion in an open
meeting.
– Must state the unusual and limited circumstances that
make the contract necessary.
Ethics-Approval by Commissioner
• To seek Commissioner’s approval of a contract, an
educational entity must send the resolution, along
with any other relevant data, to the Commissioner
via certified mail.
• The Commissioner, after reviewing the resolution
and other data, will approve or disapprove the
contract within 20 days of receipt of the resolution.
Ethics-Approval by Commissioner
(Cont’d)
• If the Commissioner requests additional information
in order to rule on a request, the Commissioner will
approve or disapprove the contract within 20 days of
receipt of the additional information.
• If the Commissioner does not respond within the
specified number of days, the request is deemed to
have been approved by the Commissioner.
• No approval may be granted for more than two
consecutive fiscal years.
Ethics-Approval by Commissioner
(Cont’d)
• A.C.A. §6-24-105(b)(1)(ii) provides that the
determination of “unusual and limited
circumstances” shall be at the sole discretion of
the Commissioner. Because of this, the
Commissioner looks at each request on a caseby-case basis.
• If you have questions or need assistance with a
request for an exemption, please call the ADE
Attorney’s Office at 501-682-4227.
Ethics – for Arkansas Educators
• Allegation – Any written and signed statement by any
person with the Arkansas Department of Education
local school board, Arkansas State Board of Education,
or public school superintendent of this state and
subsequently filed with the Professional Licensure
Standards Board (PLSB) claiming that an educator has
breached one or more of the Standards of Professional
Conduct as set forth in Rule. An allegation may also
include4 a finding made in an audit report forwarded
to ADE by the Arkansas Legislative Joint Auditing
Committee pursuant to A.C.A,. 6-117-426.
Ethics for Arkansas Educators (Cont’d)
• Standard of Professional Conduct:
– Standard 1: An educator maintains a professional relationship
with each student, both in and outside the classroom
– Standard 2: An educator maintains competence regarding skills,
knowledge, and dispositions relating to his/her organizational
position, subject matter, and/or pedagogical practice.
– Standard 3: An educator honestly fulfills reporting obligations
associated with professional practices.
– Standard 4: An educator entrusted with public funds and
property honors that trust with honest, responsible
stewardship.
Ethics for Arkansas Educators (Cont’d)
• Standards of Professional Conduct – cont’d
– Standard 5: An educator maintains integrity regarding the
acceptance of any gratuity, gift, compensation or favor that
might impair or appear to influence professional decisions or
actions and shall refrain from using the educator’s position
for personal gain.
– Standard 6: An educator keeps in confidence secure
standardized test material as well as information about
students and colleagues obtained in the course of
professional service unless disclosure serves a professional
purpose or is allowed or required by law.
Ethics for Arkansas Educators (Cont’d)
• Standards of Professional Conduct – cont’d:
– Standard 7: An educator refrains from using, possessing and/or
being under the influence of alcohol, tobacco, or unauthorized
drugs while on school premises or at school sponsored activities
involving students.
• Ethical Violation is one involving acts or omissions on the
part of an educator, when the educator knew, or
reasonably should have known, that such acts or omissions
were in violation of the Standards of Professional Conduct
as set forth in Rule.
– An ethical violation does not include a reasonable mistake made
in good faith, or acts or omissions undertaken in reasonable
reliance upon the advice of a supervisor.
AUDITS
Audit Findings for 2010-2011
• Findings based on 97% of audits having been
reviewed by ADE (262 of 272).
– 65 had no findings (25%)
Audit Findings for 2010-2011 (Cont’d)
• Findings in Rank Order:
– Segregation of duties /Internal Control
– Exceeded Budget /Unallowable Cost
– Misstatements missed by internal controls
– Davis-Bacon
– Federal cost principals (time certifications)
– Fixed assets not recorded in inventory
Audit Findings for 2010-2011 (Cont’d)
• Findings in Rank Order-cont’d:
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–
–
–
–
–
–
–
Buy American
Incorrect employee payroll
Bank Reconciliations (accuracy/timeliness)
Misappropriation of funds
Child Nutrition inaccurate record keeping
40% Pullback Errors
Conflict of Interest
Failure to get bid or performance bond
Audit Findings for 2010-2011 (Cont’d)
• Other findings included:
– Failure to record Accounts Payable or Accounts
Receivable
– Failure to record interest earned on CD.
– Salary schedules not reflecting actual pay
practices.
– Personnel contracts not handled properly and in a
timely manner
– Uninsured and uncollateralized bank balances
Audit Findings for 2010-2011 (Cont’d)
• Other findings included:
– District did not contact applicable private schools
for possible participation in federal programs.
– Failure to provide a performance bond on a
construction contract
– Failure to comply with debarment procedures for
federal funds.
– District had Activity Accounts with deficit balances
BUDGETS
COMMON 2011-12 BUDGET ERRORS
• Not budgeting Property Tax Revenue to 11120 and
11125.
• Improper accounting of debt including QZABs and
QSCBs from proceeds to payoff.
Districts are responsible for budgeting to the
proper codes as listed in the Arkansas Financial
Handbook
BUDGET MISCONCEPTIONS
• Budgeting revenue to equal expenditures in the
ACSIP plan when part of the revenue is already in the
carryover balance.
 Cash on-hand or Carry-forward balance is NOT
Revenue in the current year.
 If it cannot be receipted to CASH (increase to
Cash (DR) and an increase to Revenue (CR) It is
NOT Revenue.
BUDGET MISCONCEPTIONS
• YES, the budget can be adjusted in APSCN AFTER the
cycle 1 budget submission.
 The cycle 1 budget submission remains the “official budget”
submitted to the ADE.
• Isolated Funding cannot be used to meet the 9%
Maintenance and Operation rule. Requirement is
determined by using 9% of FOUNDATION FUNDING
ONLY
2012-13 BUDGET & FINANCIAL REVIEWS
• GT Requirement
• Fund Balances
• 9% M & O Requirement
• Categorical Funds
• Debt (proper coding)
• Capital Expenses
• Food Service
• Taxes
• Revenues
• Athletics
• Expenditures
POSTINGS to WEB
LICENSED SALARY SCHEDULES AND PERSONNEL
POLICIES - A.C.A. §6-17-201
• Licensed Salary Schedules and Personnel Policies shall be posted
to the district’s website no later than September 15 (but as early
as possible) and are to include:
•
•
•
•
Benefits
•
Compensation
•
Designation of workdays
•
Holidays & non-instructional •
Days
•
• The annual calendar
• Methods of evaluation
• Extra duties
Leave
Grievance
Dismissal or non-renewal
Reduction in force
Assignment of teacher aides
CLASSIFIED SALARY SCHEDULES AND
PERSONNEL POLICIES – A.C.A. §6-17-2301
• Classified Salary Schedules and Personnel Policies shall be
posted to the district’s website no later than September 15 (but
as early as possible) and are to include:
• Salary schedule, fringe
• Termination, Non-renewal,
benefits and other
or Suspension
compensation issues
• Reduction in Force
• Annual school calendar, incl. • Assignments
work days & holidays
• Evaluation procedures
• Leave
• Grievance procedures
NOTIFICATION TO ADE OF COMPLIANCE
• The district is to notify the ADE of the website location
of their posted licensed and classified salary schedules
and personnel policies no later than September 15
(earlier, if possible).
• Send website address, providing a direct link to the
salary schedules and polices, by email to:
[email protected] no later than September 15
(earlier, if possible)
• If the district revises it’s salary schedule during the
school year, email a copy of the revised schedule to:
[email protected]
REQUIRED WEBSITE POSTINGS
A.C.A. § 6-11-129
Required Financial Reports to be posted to district
website:
• Local and state revenue sources
• Administrator & teacher salary; and benefit
expenditures
• School district balances, including legal balances and
building fund balance
• Minutes of regular and special meetings of school board
• District budgets for current year, posted by October 15.
• Financial listing of monthly expenses
• Salary schedules of all employees
REQUIRED WEBSITE POSTINGS (Cont’d)
• Current contract information for all district employees minus
SS#, telephone, addresses, and signatures (may be in a list
format instead of individual contracts)
• The annual school district statistical report
All this information and data shall be available and easily
accessible on the district’s website for the previous two
years and the projected budgeted information for the
current school year.
MORE REQUIRED WEBSITE POSTINGS
A.C.A. § 6-15-2202
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•
•
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•
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ACSIP School Improvement Plan
Uses of NSLA funding – current and previous year
Annual District/School Report Card
School Improvement status of each school
Supplemental services available
District status on any type of distress
Distress Plans
Parent Involvement Plan and Policy
Teacher qualification for all schools
Compliance is required for accreditation. Data must be easily
accessible, in parent friendly language and shall be the actual
data for two years.
Duplicate Enrollment Audits
DUPLICATE ENROLLMENT AUDITS
• Duplicate enrollment audits begin after the data from cycles 3, 5,
6, & 7 are loaded into the data warehouse.
• Notification that the website is open will be by Commissioner’s
Memo and posting to the FMS and SMS listservs. Instructions
will be attached to the Commissioner’s Memo.
• The person entering the data must have a Triand ID, password,
and security setting for “district access”
• Contact Sarah Cox at 501-682-5660 or [email protected]
for help with Triand ID and/or security settings.
• Contact Danita Hyrkas for any other questions 501-682-5059 or
email [email protected].
Reconfiguring or Changing LEA Numbers
LEA RECONFIGURATIONS
• COMMITTEE REVIEWS:
 Enrollment
 Prior changes
 Requested change
LEA RECONFIGURATIONS
• If it is determined that the school will change
status or if enrollment increases 50% or more,
the ADE may assign a new LEA number to the
school.
LEA RECONFIGURATIONS
• Changes that must be made in District
databases
– SMS Changes
Update student demographics
Building table
Configurations
Scheduling students
LEA RECONFIGURATIONS
– FMS Changes
Shipping table
Location in the organization chart
Employee budget unit
Update Job Assignment screen for nonteaching personnel
CHANGES MUST NOT BE MADE UNTIL AFTER
FISCAL YEAR-END CLOSE
Special Education
Special Education
• FY 2012-13 Budget Data
– Budget to provide only Special Ed (SPED) instruction and
related services for students with disabilities.
– Budget Data for each district’s MYSPED is pulled from Cycle 1 –
September 30, 2012
– SPED Budget Signature Sheets are due 10-1-12
– Equipment, Bus, and/or Construction/Renovation Project
Requests due 10-1-12
– Budget Checklist must be completed by October 1, 2012
Special Education
• FY 2011-12 Annual Financial Report (AFR)
– Expenditures must provide Special Ed (SPED) instruction
and related services for students with disabilities
– AFR Data for each district’s MYSPED is pulled from Cycle 9 –
August 31, 2012
– Report of Equipment, buses, and/or Construction/Renovation
Project completed are due 10-1-12
– AFR Checklists must be completed by October 1, 2012
• Required to include Excess Cost calculation
• Location codes must be used to separate expenditures by
elementary and secondary levels.
Special Education
• To meet Maintenance of Effort:
• The total expenditures for 2011-12 must equal or
exceed the total expenditures for 2010-2011.
– The exception is if the district qualified for federal
exemptions to MOE as allowed by 34CFR 300.204.
• NOTE: If the amount on the MySPED is positive, the
district met MOE. If negative, the district must provide
on the AFR checklist the allowable federal exception(s)
and justify the negative amount.
Special Education
• To meet Maintenance of Effort (cont’d)
• The Budget for 2012-13 must show a total budget that
equals or exceeds total expenditures for 2011-12
– Unless district qualifies for federal exemption
• If amount on the 2012-13 State/Local Budget in
MySPED is positive, the district met MOE. If negative,
must provide on the Budget Checklist the allowable
federal exception(s) and justify the negative amount.
Special Education
• Exemptions to Reduce MOE as allowed:
–
–
–
–
Departure of personnel
Decrease in enrollment of children with disabilities
Departure of an exceptionally costly child, or
Termination of costly expenditures
•Budget 100% of Title VI-B funds
–Reserves from previous year and
–Total Allocation for current year.
Special Education
10% Budget/Expenditure Variance
• EDGAR 80.30 (c) allows budget changes up to 10% of
the total approved budget (Title VI-B) without ADE
approval.
• Changes after Cycle 1 submission requires submitting
an amendment and a Cognos Report Budget showing
the revision to Special Ed Grants section to change the
MySPED budget
Special Education
• Equipment Request Forms
– Obtain prior approval to purchase equipment, buses or
renovation/construction
– Equipment on list must match amount shown in Capital Outlay object
code 67000 column for each function code, and
– The total amount of the object code 67000 column on the district’s
budget.
– Bus requests must include copy of specification and certify bus is for
SPED students or students with IEPs that require specialized
transportation.
– Construction/Renovation - provide assurance the project does NOT
create a Least Restrictive Environment
– Building specifications and drawing must be provided.
Special Education
CEIS – Coordinated Early Intervening Services
• Allows districts to use Title VI-B funds for services to non-special
education students that provides interventions to becoming special
education students.
• Cannot exceed maximum amount posted on MySPED
• Function codes 1297 and 2213 may be used for Voluntary CEIS
and Program code 265 must be used
• Voluntary EEIS funds may be carried over to the next year
PSPS – Private School Proportionate Share
• Proportionate share of Part B funds are required for PSPS
– Service eligible private or home school students
– Required amount on MySPED and must be budgeted to PSPS
– Function codes 1218, 1228, 2158 and 2168 may be used – Code to
Program 268.
A write up from Special Ed which includes
information from this section is in the
Appendices
Categorical and NSLA Funding
Categorical Funds
•Categorical Funds (NSLA, ALE, ELL, Prof Dev)
– The required Source of Fund code must be used for all
revenue and expenditures related to Categorical Funds.
– Categorical Funds cannot end the year with a negative
balance.
– Transfers are allowed between categorical funds but only
from Categorical Operating Fund (Fund 2) to Categorical
Operating Fund (Fund 2). For example, a transfer should not
be made from NSLA Operating Fund (Fund 2) to ALE Salary
Fund (Fund 1).
– All NSLA expenditures must include one of the required
program codes
– The planned and budgeted use of Categorical Funds shall be
included in the ACSIP.
The Rule on Special Needs (Categorical Funding)
is in the Appendices
CATEGORICAL FUNDS
A.C.A. § 6-20-2305
Funding for 2012-13
ALE: $4,228 Multiplied by the number of identified ALE
students enrolled in previous school year.
PD:
$ 52 (current estimated funding is $43.39)
ELL: $ 305 For each identified ELL student
NSLA: $1,549* free and reduced percentage of 90% or greater
$1,033* free and reduced percentage of 70-89%
$ 517* free and reduced percentage below 70%
*These rates do not account for
adjustments due to transition.
Categorical Funds Balance Requirements Per Act 1220
of 2011
Commissioner’s Memo FIN-12-095
• A.C.A. §6-20-2305(e)(2) On June 30, 2012, and on June 30
of each school year thereafter, if the total aggregate
balance of all state categorical fund sources exceeds
twenty percent (20%) of the school district’s total
aggregate annual state categorical fund allocations for the
current school year, the school district shall reduce the
total balance by at least ten percent (10%) each school
year until the school district’s June 30 balance of aggregate
annual categorical fund sources is twenty person (20%) or
less of the total aggregate annual state categorical fund
allocations for the current school year.
Commissioner’s Memo
FIN-12-095 included in Appendices
Categorical Funds Balance Requirements Per
Act 1220 of 2011
Commissioner’s Memo FIN-12-095
• Total Aggregate Categorical Funding is the total of
the current year funding for English Language
Learners (ELL), Alternative Learning Environments
(ALE), National School Lunch state funding (NSLA),
including transitional and growth funds, and
Professional Development (PD).
Categorical Funds Balance Requirements Per Act 1220
of 2011
Commissioner’s Memo FIN-12-095
line
1
June 30, 2011 Total Balance for Aggregate Categorical Funds
Example:
2
2011-2012 Aggregate Categorical Funding
250,000
3
2011-2012 Aggregate Categorical Expenditures
225,000
4
2011-2012 Current Year Aggregate Categorical funds remaining
5
June 30, 2012 Aggregate Categorical Funds Balance (lines 1 + 4)
June 30, 2012 Targeted Aggregate Categorical Balance (line 2 * 20%)
200,000
25,000
225,000
50,000
Since Line 5 exceeds the Targeted Balance, calculate the 10% required reduction
6
Required 10% annual reduction in Aggregate Categorical balance
(line5 * 10%)
7
22,500
June 30, 2013 Required Aggregate Categorical balance (lines 5 - 6)
202,500
In order to meet the Required 10% reduction, the district must spend the
full funding amount plus the 10% reduction
8
2012-2013 Aggregate Categorical Funding
9
10% reduction in prior year ending balance (line 6)
10
2012-2013 Total Aggregate Categorical Funds expenditures
(line(8 + 9))
June 30, 2013 Aggregate Categorical Balance (lines ((5 + 8)-10)
265,000
22,500
287,500
202,500
CATEGORICAL FUNDS
A.C.A. § 6-20-2305
ALE, ELL, PD, and NSLA:
• As of June 30, 2012, if the total categorical fund balance
exceeds 20% of current allocations, the school district
shall reduce the total balance by 10% each year until the
aggregate balance is at or less than 20% of current
allocations.
• Funds received from any categorical fund source may be
transferred to another categorical fund source.
• The ADE is required to monitor district compliance
NSLA Funding Changes
A.C.A. § 6-20-2305
NSLA Funds
• By June 30 (starting in 2012), a school district
shall spend a minimum of 85% of its annual
NSLA allocation.
• A district with an NSLA balance in excess of 15%
of the current allotment shall reduce its total
NSLA balance by at least 10% each year so that
by June 30, 2022, a district has a balance of no
more than 15% of current allocation.
NSLA Funding Changes (Cont’d)
A.C.A. § 6-20-2305
NSLA
• Districts can ask for a one-year waiver from the ADE in
"unusual and limited circumstances."
• Sanctions exist for failure to comply (withhold from
next year's allocation.)
• The ADE may redistribute amounts withheld to other
districts.
NSLA Balance Requirements
Per Act 1220 of 2011 and Commissioner’s
Memo FIN-12-094
• A.C.A. §6-20-2305(b)(4)(F)(ii): A school district that on June 30,
2012, has a national school lunch state categorical funding balance
in excess of fifteen percent (15%) of the school district’s current
year annual national school lunch state categorical funding
allocation shall reduce its national school lunch state categorical
funding balance by at least ten percent (10%) each school year so
that by June 30, 2022, and by June 30 of each year thereafter, the
school district has a balance of no more than fifteen percent (15%)
of the school district’s current year annual national school lunch
state categorical funding allocation.
FIN-12-094 is included in the Appendices
NSLA Balance Requirements
Per Act 1220 of 2011
Example:
line
1
June 30, 2011 NSLA Balance
2
2011-2012 NSLA Funding
3
2011-2012 NSLA Required Expenditures (85%)
85,000
4
2011-2012 NSLA funds remaining
15,000
5
June 30, 2012 NSLA Balance (lines 1 + 4)
June 30, 2012 Targeted NSLA Balance (lines 2 * 15%)
20,000
100,000
35,000
15,000
If Line 5 exceeds the Targeted Balance, calculate the 10% required reduction
6
10% annual reduction in NSLA balance (line 5 * 10%)
7
June 30, 2013 Required NSLA balance (lines 5 - 6)
3,500
31,500
In order to meet the Required 10% reduction, the district must spend the
full funding amount plus the 10% reduction
8
2012-2013 NSLA Funding
9
10% reduction in prior end ending balance (line 6)
10
2012-2013 Total NSLA Expenditures
11
June 30, 2013 NSLA Balance (lines ((5 + 8)-10)
400,000
3,500
403,500
31,500
National School Lunch
Categorical Funding:
2012-2013 Changes
Compliments of Mark White, ADE Attorney
Child Nutrition
• Provision 2 Schools
• Reduced-Price Students
Photo Courtesy of ADE CNU
Curriculum / Instruction
• Early Intervention in 3-12
• Ark. Advanced Initiative for Math & Science
• Interim Building-Level Assessments
Curriculum / Instruction
• Longer School Day /
Longer School Year
• Summer Programs
• Teach for America
Professional Development
College and Career
• College and
Career Coaches
• ACT for 11th
Grade
• College
Remediation
• CCRPP
Photo Courtesy of Brandon Rush
Budget & Balances
• ACSIP and APSCN Must Agree
• NSL Min. Expenditures (85%)
• NSL Max. Fund Balance (15%)
• Fund Transfers
• Waiver
Budget & Balances
June 30, 2011 Balance
$20,000
2011-2012 Allocation
$100,000
Total Available
$120,000
Min. Expenditure (85%)
($85,000)
Max. Balance (15%)
$15,000
June 30, 2012 Balance
$35,000
Min. Reduction (10%)
$3,500
Budget & Balances
June 30, 2012 Balance
$35,000
+ 2012-2013 Funding
$100,000
=Funds Available
$135,000
- Max. Balance
($31,500)
Min. Expenditures
$103,500
Budget & Balances
Combined Categorical
Fund Balances
• Max. Balance of 20%
• No Minimum Expenditure
• No Waiver Available
Fiscal Distress
Fiscal Distress
• Arkansas Code Annotated 6-20-1901 thru 6-20-1911
• Indicators of Fiscal Distress
– A declining balance determined to jeopardize the
fiscal integrity of a school district.
• However, capital outlay expenditures for academic
facilities from a school district balance shall not be
used to put the school district in fiscal distress.
Fiscal Distress
• Indicators of Fiscal Distress, cont’d:
– Any act or violation determined to jeopardize the
fiscal integrity of a school district, including but not
limited to:
• Material failure to properly maintain school
facilities.
• Material violation of local, state, or federal fire,
health, or safety code provisions or law.
• Material violation of local, state, or federal
construction code provisions or law.
Fiscal Distress
• Indicators of Fiscal Distress, cont’d:
• Material state or federal audit exceptions or
violations.
• Material failure to provide timely and accurate
legally required financial reports to the
department, the Division of Legislative Audit, the
General Assembly, or the Internal Revenue
Service.
• Insufficient funds to cover payroll, salary,
employment benefits, or legal tax obligations.
Fiscal Distress
• Indicators of Fiscal Distress, cont’d:
• Material failure to meet legally binding minimum
teacher salary schedule obligations.
• Material failure to comply with state law
governing purchasing or bid requirements.
• Material default on any school district debt
obligation.
• Material discrepancies between budgeted and
actual school district expenditures.
Loans and Bonds
Types of Debt
• Short-term
• State Revolving Loan Program
• Commercial Bonds
Applicable Law
• AR Code Ann. §§ 6-20-401 et seq.
– Short-term
• AR Code Ann. §§ 6-20-801 et seq.
– State revolving loan program
• AR Code Ann. §§ 6-20-1201 et seq.
– Commercial bonds
http://www.arkleg.state.ar.us
Applicable Rules
• Arkansas Department of Education Rules Governing
Loan and Bond Applications – February 24, 2012
• Arkansas Department of Education Rules and
Regulations Governing the Allocation of Qualified
Zone Academy Bonds - November 2000
http://www.arkansased.org/rules/rules.html
Short-Term Debt
A.C.A. § 6-20-401 et seq.
Installment contracts, lease purchase agreements, and
postdated warrants:
– State Board approval not required but must be
registered with ADE
– No statutory maximum loan amount
– The amount borrowed may include issuance costs
– May be refinanced if it results in net savings and
other requirements are met
Short-Term Debt
A.C.A. § 6-20-401 et seq.
Installment contracts, lease-purchase agreements, and
postdated warrants:
See A.C.A. § 6-20-402 for complete list of eligible purposes
• Purchase of school buses, equipment, school sites
• Energy conservation measures
• Construction, repair, renovation of school facilities
• Professional development and training of teachers
under QZABs
Maximum term 10 years from the date of issuance,
except:
• Energy conservation measures may be financed up to
20 years
State Revolving Loan Program
A.C.A. § 6-20-801 et seq.
• State revolving loan program
– State board approval of application required
– The maximum amount of money a district may have
outstanding is $500,000
– Maximum term ten years
– Current interest rate 4.95% - no other fees charged
State Revolving Loan Program
A.C.A. § 6-20-801 et seq.
• See § 6-20-802 for complete list of eligible
purposes
–
–
–
–
Purchase of new or used school buses
Construction or renovation of school facilities
Purchase of buildings, school sites, or equipment
Energy conservation measures
Bonds
A.C.A. § 6-20-1201 et seq.
• State board approval required
– Bonds issued for new construction
– Bonds issued to restructure debt
– Second lien bonds
• State board approval not required
– Rate reduction refunding bonds meeting required
savings minimum with no extension of maturity
date
Bonds – A.C.A. § 6-20-1201 et seq.
• A school district may issue negotiable bonds to:
– Build, add to, equip, or repair schools buildings
– Purchase sites, school buses
– Provide professional development and training of
teachers under the QZAB program
– Pay off outstanding postdated warrants, installment
contracts, lease purchase agreements, revolving
loans, and bonds as provided by law
• School bonds are secured by debt service millage
Bonds – A.C.A. § 6-20-1201 et seq.
Second-lien commercial bonds
• Repaid with surplus revenue from existing debt service mills
– Surplus revenue could be generated if assessment has
increased to point that revenue from debt service mills
exceeds the amount needed to make bond payments for
existing debt.
• The maturity of second lien bonds cannot extend beyond the
maturity date of the debt issuance with the first lien
– Example: 6 mills are pledged to a bond that matures in
2021. Assessment has increased so a surplus exists and
second lien bonds may be issued. Second lien bonds must
mature in 2021 or earlier.
Bonds – A.C.A. § 6-20-1201 et seq.
Second-lien commercial bonds – Con’t
•Voter Approval not required, but state board approval required
•All second-lien bonds issued by school districts shall:
– Have semiannual interest payments
– First interest payment due within eight (8) months of the
issuance of the second-lien bond.
– Have repayment schedules that are either:
» Equalized payments in which the annual payments are
substantially equal in amount; or
» Decelerated payments in which the annual payments
decrease over the life of the schedule.
Important Issues to Consider
•Post-issuance compliance as required by the IRS is
growing in importance.
– Designate a responsible person as the authority on
district bond issues – record-keeping and retention,
proper and timely use of bond proceeds, investments
and arbitrage compliance, etc.
• Bond documents should be monitored closely by
the designated responsible person.
• The designated responsible person should report to
the full board at least annually concerning the
outstanding bond.
Important Issues to Consider (Cont’d)
• Post-issuance compliance as required by the
IRS is growing in importance. (Cont’d)
– IRS has increased efforts for auditing postissuance compliance of tax-exempt
obligations (school bonds).
– Speak with fiscal agent prior to issuing bonds
about post-issuance compliance
requirements.
Self-Insured Fidelity Bond
Program
Authority and Purpose
• Arkansas Code Annotated § 21-2-701 et seq.
• The Arkansas Fidelity Bond Trust Fund, administered by the
Arkansas Governmental Bonding Board, shall provide coverage
for actual losses sustained by the Participating Governmental
Entities through fraudulent or dishonest act or acts committed
by Employees or Officials of the Participating Governmental
Entities during the Bond Period.
• Arkansas school districts (this includes open-enrollment charter
schools and education service cooperatives) are covered under
this bond
• LIMIT OF COVERAGE: $250,000 Per Occurrence
• DEDUCTIBLE: $1,000 Per Occurrence
Additional Information
• The Self-Insured Fidelity Bond Program, administered by
the Arkansas Governmental Bonding Board, has been
renewed for the January 1 -December 31, 2012 policy
year.
• A Certificate of Coverage is your evidence of coverage.
Present the certificate when asked for proof of Fidelity
Bond coverage. A certificate and a copy of the bond
policy may be obtained by contacting the Risk
Management Division at (501) 371-2690 or via email
(preferred method):
[email protected]
• All Proof of Loss notices must be submitted to the
Arkansas Governmental Bonding Board by the Division of
Legislative Audit.
Contact Information
Risk Management Division
Arkansas Insurance Department
1200 West Third Street
Little Rock, AR 72201-1904
Phone: 501-371-2690
Fax: 501-371-2842
Email: [email protected]
Web Site: www.insurance.arkansas.gov/Risk/divpage
ADE contact: Cindy Hollowell (501) 682-4484
General Business Manager
General Business Manager Qualifications
• Applies to all school districts, open-enrollment
charter schools, and education service cooperatives.
• A Chief Financial Officer or Business Manager or
however titled:
– Operates under the direction of superintendent
– Meets minimum qualifications in ADE rule
– Responsible for fiscal operations of entire entity
– Person other than superintendent or charter/coop director
General Business Manager Qualifications
(Cont’d)
• Must meet qualifications of a Certified
Arkansas School Business Official (CASBO)
based on the requirements established by the
Arkansas Association of School Business
Officials (AASBO) or be enrolled in the CASBO
required courses of study.
– 10 required courses and five electives
– See AAEA website under AASBO
General Business Manager Qualifications
(Cont’d)
• Must complete at least 5 CASBO courses per year
and must complete the 15 courses required within 3
years.
• Must renew certificate by completing at least 2
upper level CASBO courses per year after the date of
certification.
• GBM failing to complete certification cannot function
in that role until certification requirements are met.
District/charter/co-op must appoint another person
to the position and that person must meet
qualifications.
School District Treasurer
School District Treasurer
• A.C.A. 6-13-701 authorizes a district or charter
school to appoint a treasurer.
• Must be appointed at a regular board meeting.
• Must execute a Certificate of Appointment which
must be filed with the County Clerk, the County
Treasurer, and the Director of the Department of
Finance and Administration.
• Serves until board appoints a new treasurer and files
a new Certification of Appointment.
School District Treasurer (Cont’d)
• Duties are outlined in A.C.A. 6-13-701(e):
– Receive and disburse funds. Issue receipts for
funds received and maintain a duplicate.
– Record all transactions in APSCN.
– Provide monthly statement of financial condition
to board.
– Submit annual statement of finances to board in
July each year.
– Make required financial reports to ADE.
School District Treasurer (Cont’d)
• Duties are outlined in A.C.A. 6-13-701(e)-cont’d:
– Must not have an interest, directly or indirectly,
in any contract made by the district or charter
school board.
– Make financial records available for inspection by
any district taxpayer.
– Perform all duties imposed by law upon school
district treasurers and be subject to all
regulations.
School District Treasurer (Cont’d)
• Disbursement of funds shall be made by treasurer only
upon:
– Checks or warrants signed by disbursing officer of
district or charter school board and superintendent
or charter school director; or
– Electronic transfer of funds if electronic transfer is:
• Initiated by the district or charter school; and
• Authorized in writing by both the board disbursing
officer and superintendent or charter school
director.
School District Treasurer (Cont’d)
• Treasurer shall have on hand as evidence of authority
for disbursement approved:
– Invoices;
– Payrolls that conform with written contracts on file;
and
– Other appropriate documentation that indicates
authority for disbursement.
School District Treasurer (Cont’d)
• Fraudulent use of district/charter school funds by a
treasurer is a Class C felony.
• Upon conviction, restitution to be made by treasurer
is double the amount taken.
Sample “Certificate of Appointment” is included in the
Appendices
Child Nutrition
Child Nutrition Charge Polices
• Bad debts are a non-allowable expenditure in the National
School Lunch Program and After School Snack and Breakfast
Programs according to Cost Principles in OMB Circular A-87.
• USDA regulations do not require districts to provide meal
when students who are ineligible for free meals do not have
money to pay for meal. (However not feeding a child
because they can’t pay may not be an acceptable option for
a district.)
– Districts should adopt a written policy to address this problem.
– Policy may differ depending on grade level.
Child Nutrition Charge Polices (Cont’d)
– Policy must be communicated to both parents and students
at the beginning of the year.
– Policy should have special provisions for handling preprimary, young primary, and disabled students.
• Parent notification system regarding non-payment
must be implemented in a way that does not
embarrass the child.
Child Nutrition Charge Polices (Cont’d)
• District decision whether to:
– Extend credit to students
• Food Service Fund cannot absorb loss for failure to pay.
• With or without credit limit.
– Provide an alternate meal
• Not reimbursable so cost must be absorbed by district.
• Not defined in federal regulations but regulations do
state that schools must provide nutritious and well
balanced meals to all the children they serve. (Title 7
CFR Part 210.10(a)(1))
– Deny meal.
Tier I Annual Update
2012-2013
CASBO Class SF401A
Accounting and Reporting
Concepts of the Arkansas Uniform
Accounting and Reporting System
• Standard Chart of Accounts
– Where do funds come from?
• Fund Codes
• Source of Fund Codes
• Revenue Codes
– Where do funds go?
• Function Codes
• Location Codes
• Program Codes
• Subject Codes
• Object Codes
What Funds Are On Hand
• Balance Sheet Accounts
– Assets
»Cash
» Investments
» Receivables
» Inventory
– Liabilities
» Accounts Payable
» Payroll Deductions and Withholding
» Deferred Revenue
» Notes Payable
» Bonds Payable
– Equity (Reserves & Fund Balances)
Reasons for “Standard” Chart of Accounts
– Provides consistent method of reporting financial
information across fiscal years
– Aids with the budgeting process
– Allows for valid comparison of financial information
between entities
• Schools
• Districts
• States
– Improves the value of statewide financial information used
by policy makers and other public education stakeholders
Where is the Standard Chart of
Accounts Located?
– Where is the Standard Chart of Accounts
Located?
–APSCN Web Page at www.k12.ar.us
»FMS>Financial Management
System>Accounting Documentation
»Described as “Arkansas Financial
Accounting Handbook 2011-2012”
Financial Coding Decision Process
• Funds Received
– Which Fund?
• Teacher Salary Fund (Fund 1)-No receipts are
entered in this fund. Expenditures and Transfers-in
only.
• Operating Fund (Fund 2)-Receipts not belonging to
one of the special purpose funds.
• Building Fund (Fund 3)-Receipts pertaining to
Specific building projects.
Financial Coding Decision Process (Cont’d)
• Funds Received (Cont’d)
– Which Fund? (Cont’d)
• Debt Service Fund (Fund 4)-Tax receipts from debt
service mills and state debt service funding
supplement.(Recording revenue in Debt Service
Fund is optional. Use of Operating Fund also allowed
for these receipts.)
• Capital Outlay/Dedicated Maintenance &
Operation Fund (Fund 5)-Tax receipts from mills
voted specifically for capital outlay and dedicated
maintenance and operations purposes.
Which Fund? (Cont’d)
• Federal Grants Fund (Fund 6)-Receipts directly from Federal
Government or from Federal Government that pass through
the state. Restricted to federally sponsored programs.
• Activity Fund (Fund 7)-Receipts used to support co-curricular
and extra-curricular student and district activities.
– Co-curricular generally are school-related activities outside
the regular classroom that directly add value to the formal or
stated curriculum. Involve wide range of student clubs and
organizations.
– Extra-curricular activities encompass a wide variety of other
district-directed activities such as organized sports and nonacademic interscholastic competitions.
Which Fund? (Cont’d)
– Student Activity Funds - Students not only participate in the
activities of the organization, but also are involved in managing
and directing the organization’s activities:
» Art Club
» Drama Club
» Student Council
– District Activity Funds – Used to support district’s co-curricular
and extra-curricular activities and are administered by the
school district. District determines how district activity funds
are spent and the district programs that receive support:
» Athletics
» School Plays
» Music Concerts
»Book Fair
Which Fund? (Cont’d)
•Food Service Fund (Fund 8)-Receipts pertaining to
the school Food Service Program . Includes revenue
from students and adults for the sale of breakfasts
and lunches as well as Federal reimbursements from
the United States Department of Agriculture.
•Fixed Asset Fund (Fund 9)-No receipts should be
entered to this fund. Can be used to record district’s
fixed assets or Long-Term Debt (Optional).
Teacher Salary Expenditures – Fund 1
 Salaries paid to personnel whose job requires a teacher
license (certified personnel) must be paid from the
Teacher Salary Fund.
• Teachers
• Counselors
• Librarians
• School Administrators
• District Administrators
• All other licensed personnel with a 4-digit job code
• Substitutes for those paid from the Teacher Salary
Fund
Operating Fund Expenditures – Fund 2
 Used to record the receipts and expenditures for current
operating expenses other than those that relate to the
purposes set out for the other funds listed. Examples:
• Personnel benefits not paid from Salary Fund (unless paid
from Salary Fund as approved by majority of certified
personnel).
• Salaries and benefits of classified personnel not paid from the
Building Fund, Federal Fund, the Activity Fund or the Food
Service Fund.
• All purchased services, supplies, capital outlay and other
expenditures not paid from the Building Fund, Debt Service
Fund, Capital Outlay Fund, Federal Fund, Activity Fund or
Food Service Fund.
Building Fund Expenditures – Fund 3
 Used for major facilities construction and
renovation projects.
 Required for any project funded with state
Academic Facilities Partnership Program funds.
 If part of the legal fund balance is being retained
for future construction/renovation projects, it
should be transferred to the Building Fund.
 School Board approval should be obtained
whenever funds are transferred to or from the
Building Fund.
Debt Service Fund Expenditures – Fund 4
 Interest paid on bonded debt
 Principal paid on bonded debt
 Fees pertaining to bonded debt
Capital Outlay Fund Expenditures – Fund 5
Dedicated Maintenance and Operations
 Expenditures that conform to the reasons stated on the ballot
when the Capital Outlay/Dedicated M&O millage was
approved by voters.
 Cannot end the year with a negative balance in this fund.
• Tax receipts should be allocated to this fund when
received.
• Pullback applies to this fund (36% 2011-2012; 32% 20122013)
• Balances carryover each year.
• Except for interest earnings, no other funds should be
transferred to or deposited into this fund.
Federal Fund Expenditures – Fund 6
– Restricted Aid Direct from Federal Government
• Elementary/Secondary Education Programs (revenue codes
43110-43192)
• Indian Education Programs (revenue code 43610)
• Desegregation Programs (revenue codes 43710 & 43720)
• Other (revenue codes 43910-43976)
– Restricted Aid from the Federal Government through the
State
• Elementary/Secondary Education Act (ESEA) (revenue codes
45110-45326)
• Adult Education (revenue codes 45410-45590)
• Special Education (revenue codes 45612-45670)
• Other (revenue codes 45910-45999)
Activity Fund Expenditures – Fund 7
 Student Activity Fund
• Expenditures from revenue other than local taxes, state, and federal
government.
– Fund raising activities
• Expenditures approved by Student Organization and its sponsor.
– Supplies and equipment used by organization
– Travel/Transportation expenses for organization
– Items purchased for resale/fund-raising activities
– Cash donations or purchases to benefit school or program
 District Activity Fund
• Expenditures from revenue other than local taxes, state and federal
government:
– Gate Receipts
--Vending Machines
--Fees
• Expenditures approved by school board or in compliance with board policy:
– Field Trips
--Athletics
--Band Uniforms --Book Fairs
Food Service Fund Expenditures – Fund 8
 Direct cost of operating food service
program
•Food purchases
•Kitchen/Cafeteria labor
•Administrative personnel who supervise
food service staff
•Supplies and equipment
Required Source of Funds
• Examples:
– Isolated Funding (212)
– Student Growth Funding (217)
– Declining Enrollment Funding (218)
– Supplemental Transportation (222)
– Professional Development (223)
– Alternative Learning Environment (275)
– English Language Learners (276)
– National School Lunch Act-State (281)
SOF – Source of Funds
• Allows matching of expenditures to specific revenue
sources.
• A three-digit number that when attached to the one-digit
fund number, establishes a unique sub-fund containing
separate balance sheet accounts (assets, liabilities, equity)
• Allows expenditures from specific revenue sources to be
tracked (growth funding, declining enrollment funding,
etc.).
• Required for all restricted funds (federal,
categorical/special needs, state facilities funding, etc.).
• Allows fund balances pertaining to specific revenue sources
to carry forward to next fiscal year
SOF – Source of Funds - (Cont’d)
• Table II of the Accounting Manual provides a listing of
all Source of Fund codes.
• Source of Fund codes marked with an asterisk (*) must
be used for the specified revenue as well as the
expenditures from that revenue (no transfers in or
out).
• Source of Fund codes 002-099 are reserved for
district/co-op use and are therefore defined by the
district or co-op
Function
 Four-digit code that describes the activity being
performed when a good or service is received.
•Function codes are grouped into five broad categories:
– Instruction (1000-1999)
– Support Services (2000-2999)
– Operation of Non-Instructional Services (3000-3999)
– Facilities Acquisition and Construction (4000-4999)
– Other Uses (5000-5999)
»Debt Service
»Fund Transfers
»Indirect Costs
Location
• The three-digit number that identifies the
campus or other cost center where the goods
and services are being used. The number for
school campuses matches the ADE assigned LEA
number.
Program
• A three-digit number pertaining to a plan of activities
and procedures designed to accomplish a
predetermined objective or set of objectives.
• Required Program Codes include:
–
–
–
–
All NSLA Expenditures
Pre-School
Extracurricular/Athletics
Recruitment/Retention
Incentives
– Teachers in Special Settings
-- Special Education
-- Gifted & Talented
-- Alternative Ed
-- State Academic Facilities
Projects
Subject Area
– Final two-digits of Budget Unit
– Not currently required by state
– Can be used to identify:
•Courses (math, science, social studies, etc.)
•Sports (football, basketball, track, etc.)
•Person responsible for budget
Expenditure Budget Unit







Fund
2
Source of Fund
275
Function
1140
Location
041
Program
438
Subject Area
00
Example: 2 275 1140 041 438 00
Object
• A five-digit number that describes the type of
expenditure-Examples:
– Salary
– Employee Benefit
– Purchased Service
– Supplies and Materials
– Capital Outlay
Coding for Foundation Funding
• Commissioner’s Memo FIN-09-047, January 29, 2009,
and FIN-10-008, July 22, 2011, contained financial coding
requirements for 2009-2010 for revenues and
expenditures specific to foundation funding.
– Required all revenue pertaining to foundation funding,
and all expenditures paid with that revenue to be coded
to funds 1000, 1100-1199, 2000 and 2100-2199.
– In response to a motion passed by the House and
Senate Joint Education Committee on December 24,
2008, to determine and implement coding changes
required in order to better compare school district
expenditures with the components of the Adequacy
Funding Matrix.
FIN-09-047 and FIN-10-008 are included in
the Appendices
Coding for Foundation Funding (Cont’d)
• The coding requirement for 2012-2013 (same as FY 12)
– All property tax, state foundation funding and miscellaneous
funds will be receipted in Fund 2001.
– An amount exactly equal to the foundation funding amount
will be transferred from Fund 2001 to Fund 2000.
– No revenue will be posted in Funds 1000, 1100-1199, 2000
and 2100-2199.
Coding for Foundation Funding (Cont’d)
• The amount to be transferred from Fund 2001 to Fund
2000 for next year will be $6,267 times the 2011-2012
3QTR ADM.
A copy of the Adequacy Funding Matrix is included in the
Appendices
Refer to FIN-11-080 for example Journal Entry recording transfer
included in the Appendices
9% Maintenance & Operation
• A.C.A §6-21-808(d)(1)(A) requires districts to expend 9% of
foundation funding exclusively to payment of utilities, and costs
of custodial, maintenance, repair, and renovation activities,
including related personnel costs.
• 9 percent of foundation funding multiplied by the prior year 3
Quarter ADM
• Code as follows: Fund = 2000 or 2100-2199
Function = 2600 through 2699
Objects = 61000 – 65199 and 65300 – 69999
• If the 9% Requirement is not met, an amount equal to the
variance must be moved to SOF 391 in the same fiscal year.
FIN-12-022 on 9% Requirement
included in Appendices
Gifted and Talented
• A.C.A §6-20-2208(c)(6) requires districts to expend state and
local revenues on gifted and talented programs in an amount
equal to 15% of the foundation funding amount multiplied by
5% of the district’s prior year 3 quarter ADM.
• The District’s budget for GT should have an amount equal to
this requirement.
• A Commissioner’s memo is posted each year with the
required amounts listed in an spreadsheet for each district
• Classroom expenditures must be coded to Function 1910 and
Program Code 270. The GT Coordinator, Function 2291
should also be coded to Program Code 270.
FIN-12-054 is the latest CM and is
included in the Appendices
Student Growth Funding/Declining
Enrollment Funding
Overview
• A.C.A. §§ 6-20-2303 (22) and 6-20-2305 (c) (2)

ADE Rules Governing the Calculation Methods for Declining
Enrollment and Student Growth Funding for Public School
Districts

One-fourth of current year per student foundation funding x
any increase in each of:
o CY Qtr 1 ADM over PY 3-Qtr ADM
o CY Qtr 2 ADM over PY 3-Qtr ADM
o CY Qtr 3 ADM over PY 3-Qtr ADM
o CY Qtr 4 ADM over PY 3-Qtr ADM
Timeline





By January 31
 Estimated SGF is calculated using actual CY Qtr 1 ADM & estimates of CY Qtrs
2, 3, & 4 ADM
 60% of estimated SGF is disbursed
By April 30
 Remaining 40% of estimated SGF is disbursed
By June 30
 Districts should calculate actual SGF and make appropriate journal entries for
accrual of the adjustment to actual SGF funding
By July 31
 Actual SGF is calculated by ADE using actual ADM from cycle 7 for all 4
quarters
By August 31
 Any SGF plus ISN or DEF due to districts is distributed and any over-funded
SGF plus ISN or DEF paid to districts is recouped by ADE
Considerations



An eligible district cannot receive both DEF and SGF
An eligible district cannot receive both DEF and ISN
An eligible district can receive both SGF and ISN
SGF + ISN
DEF
If DEF > (SGF + ISN), district receives DEF
If (SGF + ISN) > DEF, district receives SGF + ISN
Important Notes

SGF is initially disbursed based on an estimate of current year
quarterly ADM (see Rules for details on calculating estimate)

Estimated current year quarterly ADM is provided on the
second and third state aid notices

SGF is unrestricted funding
Revenue & expenditures from SGF revenue sources are
tracked

Important Notes

Districts may be required to repay an entire amount received
for an affected funding category (SGF, DEF, or ISN) due to the
difference between actual SGF calculated and estimated SGF
disbursed

Actual SGF is not calculated by ADE until July 31 and the
adjustment from estimated to actual is not disbursed by ADE
until August 31 – after the fiscal year has ended

Districts are required to calculate actual SGF and make
appropriate journal entries to record actual SGF by June 30 of
the current fiscal year – including any effect on DEF or ISN –
and the appropriate journal entries to record adjustment to
actual by August 31
Coding Instructions
• Repaying SGF to ADE
SOF Revenue
PY Period 13 Journal Entry
(By June 30 – see Timeline)
2217
31450
2217
04110
CY Period 1 Reverse Journal Entry
(By August 31 – see Timeline)
2217
04110
2217
31450
Check payable to ADE charged to
(By August 31 –see Timeline)
Debit Credit
$$
$$
$$
$$
2217 31450
Coding Instructions
• Repaying DEF to ADE
SOF
Revenue
PY Period 13 Journal Entry
(By June 30 – see Timeline)
2218
31460
2218
04110
CY Period 1 Reverse Journal Entry
(By August 31 – see Timeline)
2218
04110
2218
31460
Check payable to ADE charged to
(By August 31 –see Timeline)
Debit
Credit
$$
$$
$$
$$
2218 31460
Coding Instructions
• Receiving SGF from ADE
SOF Revenue
Debit
PY Period 13 Journal Entry
(By June 30 – see Timeline)
2217
2217
01410
31450
$$
CY Period 1 Reverse Journal Entry
(By August 31 – see Timeline)
2217
31450
$$
2217
01410
Receipt funds from ADE to
(By August 31 –see Timeline)
Credit
$$
$$
2217 31450
Coding Instructions
• Receiving DEF from ADE
SOF
Revenue
PY Period 13 Journal Entry
(By June 30 – see Timeline)
2218
01410
2218
31460
CY Period 1 Reverse Journal Entry
(By August 31 – see Timeline)
2218
31460
2218
01410
Receipt funds from ADE to
(By August 31 –see Timeline)
Debit Credit
$$
$$
$$
$$
2218 31460
Supplemental Transportation
Legal Authority
• Act 1075 of 2011 – See CM FIN-12-086 in Appendices
– Section 1, Item No. 53
• Appropriation $500,000
– Section 32
• Special Language
• ADE Rules Governing the Distribution of
Supplemental Transportation Funds included in
Appendices
Details
• Commissioner’s Memo # FIN-12-086 (dated March 16, 2012)
– Data
– Calculations
– Funding amounts per each eligible district
• 44 eligible districts
• Source of Fund Code 222
• Revenue Code 31400
• Restricted revenue
– To be used for transportation needs of the district
Miscellaneous Funds
Definition and Calculation
• A.C.A. § 6-20-2303 (11)
• A.C.A. § 6-20-2503 (a)(3)
• ADE Rules Governing the Calculation of Miscellaneous
Funds (Included in Appendices)
• Details of calculation of Miscellaneous Funds published
under “Other Reports” section at bottom of page:
http://arkansased.org/about/reports.html
Data
• Miscellaneous Funds categories and revenue codes:
Category
Revenue Codes
Federal Forest Reserves
*Federal Grazing Rights
Federal Mineral Rights
Severance Taxes
Federal Impact Aid
Federal Flood Control
Wildlife Refuge Funds
42100
42400
42300
21200
42500
42200
41200
12800
**12100
Payment In Lieu of Taxes
***Local Sales & Use Taxes11200
28000
41300
48000
* Not currently received by any AR districts
** Revenue code 12100 was changed to
12800 in FY07.
*** Sales and use taxes for capital
improvements dedicated to education only.
Calculation
• Calculated pursuant to statutory definition.
• Same calculation of Miscellaneous Funds used in State
Foundation/Foundation Funding and Bonded Debt
Assistance.
• Calculation begins with average of Miscellaneous Funds
collected in the five school years immediately preceding
the previous school year
(ex: FY12 funding uses five-year average of Miscellaneous Funds
received in FY06 – FY10)
Calculation (Cont’d)
• If a district did not receive a category of Miscellaneous
Funds during the most recent school year used in the fiveyear average, then previous collections from that category
of Miscellaneous Funds shall not be included in the fiveyear average.
• The five-year average is multiplied by the ratio of the
uniform rate of tax (URT) to the district’s total millage rate
in effect as of January 1 of the fiscal year prior to the
current funding year.
Calculation (Cont’d)
• For the purpose of calculation the amount of
Miscellaneous Funds of a school district, a school year
is the period beginning on July 1 of a calendar year and
ending on June 30 of the next calendar year.
Additional Information
• In FY12, out of 239 school districts in the state, 50
school districts had an amount of calculated
Miscellaneous Funds of $0 and the remaining 189
districts ranged from a low of $6 to a high of nearly
$970K.
• State Foundation/Foundation Funding:
Total foundation funding per district = calculated
Miscellaneous Funds + net revenues + State Foundation
Funding aid + URT adjustment
Important Notes
• The calculated Miscellaneous Funds amount used in
funding calculations may be higher or lower than the
actual Miscellaneous Funds received in a single year.
• The actual Miscellaneous Funds received will always be
higher than the calculated Miscellaneous Funds
amount used in funding calculations when comparing
the same five-year period.
Important Notes (Cont’d)
• It is important to review Miscellaneous Funds to
ensure that accurate data is used to calculate funding.
Common errors:
– Ad valorem taxes miscoded as miscellaneous funds or
miscellaneous funds miscoded as ad valorem taxes
– Revenue erroneously coded to local sales and use tax
dedicated to education (11200) or grazing rights (4240042499)
– One category of miscellaneous funds erroneously coded
to another (forest reserve coded as flood control)
Important Notes (Cont’d)
• As Miscellaneous Funds are not always received by
school districts in a level dollar amount or frequency,
look for large variances between actual Miscellaneous
Funds received and the calculated amount used for the
funding year in preparation for impact on the
Foundation Funding and Bonded Debt Assistance
formulas.
Indirect Cost Rate
Indirect Cost Rates
• Commissioner’s Memo FIN-12-060, April 24, 2012,
provided Indirect Cost rates and information for 20112012.
• Indirect cost rate is a device for determining in a
reasonable manner the proportion of indirect cost each
program should bear.
• Indirect costs are those costs that are not readily
identified with the activities funded by the federal
grant or contract but are nevertheless incurred for the
joint benefit of those activities and other activities and
programs of the organization.
• Direct costs are those that can be identified specifically
with a particular cost objective.
FIN-12-060 is included in Appendices
Indirect Cost Rates (Cont’d)
• The Indirect Cost rate is calculated by dividing Indirect
Costs, plus carry forward adjustment, by Direct Costs.
All funding sources are used.
• Excluded costs are those that generally are one-time in
nature or tend to distort normal annual operating
expenses.
• Unallowable costs are those costs that are
unacceptable as applied to federal grants and
contracts whether applied directly to a grant or
indirectly through the indirect cost rate.
Indirect Cost Rate- (Cont’d)
• Expenditures from the second preceding fiscal year are
to be used for the indirect cost allocation plan. For
example, expenditures for fiscal year 2009-2010 must be
used to compute the indirect cost rate for fiscal year
2011-2012.
• Carry forward adjusts the calculated indirect cost rate to
be applied in the current fiscal year by the difference
between the anticipated indirect cost totals in the
second preceding fiscal year and the actual indirect cost
totals realized in the second preceding fiscal year.
Indirect Cost Rate (Cont’d)
• If a district can identify and isolate the first $25,000
of a purchased service contract then it can include
the first $25,000 of that contract in total
expenditures before applying the indirect cost rate.
If a district is unable to identify and isolate the first
$25,000 of a purchased service contract, then that
contract must be excluded from total expenditures
before applying the indirect cost rate. The indirect
cost rate can only be applied to the first $25,000 of
each purchased service contract.
Basic Formula
• Indirect Cost Rate =
Indirect Expenditures
Direct Expenditures
Carry-forward
• A fixed rate with carry-forward provision is an indirect cost rate
computed and fixed for a specified future school year based on
an estimate of that school year’s level of operations. However,
when the actual costs of that school year are known, the
difference between the estimated costs and the actual costs is
“carried forward” as an adjustment to the rate established in a
future school year.
• Carry-forward =
Actual indirect costs – indirect costs used in calculation 2 years ago
• Positive carry-forward adjusts for an under-recovery of expenses
• Negative carry-forward adjusts for an over-recovery of expenses
Data Cycle
• FY08 actual expenditures -
FY10 calculated rates
• FY09 actual expenditures + FY07 carry-forward FY11 calculated rates
• FY10 actual expenditures + FY08 carry-forward FY12 calculated rates
• FY11 actual expenditures + FY09 carry-forward
FY13 calculated rates
-
Data Used in Rates
Function Group Codes
1000
2100
2200
All 2300
except 2321, 2323, 2324, 2325
2321, 2323, 2324, 2325
2400
All 2500
except 2540-2549
2540-2549
2600
2700
2900
3100
3200
3300
3400
Unrestricted
Direct/Indirect
Direct
Direct
Direct
Restricted
Direct/Indirect
Direct
Direct
Direct
General Administration
Indirect
Indirect
General Administration
School Administration
Indirect
Direct
Direct
Direct
Business
Indirect
Indirect
Business
Operation/Maintenance
Transportation
Other Support Services
Food Services
Enterprise Operations
Comm. Services Operations
Other Non-Instr. Services
Indirect
Indirect
Direct
Indirect
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Indirect
Direct
Direct
Direct
Direct
Function Group Description
Instruction
Support Services-Students
Support Services-Instr. Staff
Other Sources
• Cost Allocation Guide for State and Local Governments
http://www2.ed.gov/about/offices/list/ocfo/fipao/guideigcwebsite.pdf
• Office of Management and Budget (OMB) Circular A-87
http://www.whitehouse.gov/omb/circulars_a087_2004/
• Arkansas Financial Accounting Handbook
http://www.apscn.org/fms/fms.htm
Pullback
Pullback (Optional)
• Beginning with 2011-2012 school year:
– 40% will be reduced to 36% and another 4% per year
until it is completely eliminated.
– FY 2011-2012 percentage is 36%. ADE Assessment 36%
PullBack Report for 2011 Total valuations for Taxes
Payable in 2012 is in the Appendices
– Property tax revenue collected January through June 30
shall be recorded as revenue to code 11120 – Property
Taxes or 11125 – Property Tax Relief in the year collected
(no deferral).
– If actual collections by June 30 are less than the
calculated Pullback amount, the difference MAY be
accrued at June 30 (accrual allowed, but not required).
Pullback - Cash Basis (Optional)
• 2011-2012 school year (Con’t)
– Any district may convert to cash basis for recognizing
revenue from property taxes beginning with the 20112012 school year.
– Cash basis will include funds on hand at the County
Treasurer’s Office at June 30 that are apportioned for the
school district (or that are in transit).
– Once converted to cash basis the district cannot
choose to accrue Pullback in subsequent years.
Pullback - Accrual Basis (Optional)
•2011-2012 School Year:
– Multiply the 2011 assessments (for taxes payable in
2012) times the greater of voted mills, other than debt
service, or the 25 mills uniform rate of tax.
– Multiply above result by 36% to determine the
“Calculated 36% Pullback”. (ADE includes calculated
amount in a Commissioner’s Memo.)
– In Period 1 of 2012-2013 the district should post a journal
entry that reverses the amount accrued in 2011-2012.
(No Deferral Allowed)
2012-2013 PULLBACK (A.C.A. §6-20-401)
Beginning with 2012-2013 school year:
• Pullback is reduced to 32% and another 4% per
year until it is completely eliminated.
• If actual collections by June 30 are less than the
calculated Pullback amount, and the district
accrued in the previous year, the difference may
be accrued at June 30.
• Property tax revenue collected by June 30 shall
be recorded as revenue in the year collected.
(No Deferral Allowed)
Property Taxes Account Codes
10000 Revenue from Local Sources
11000 Taxes. Compulsory charges levied by a governmental entity
for the purpose of financing services for the common benefit.
11100 Property Taxes. Taxes levied as a result of a vote by the
electorate of a millage rate on personal property, real estate
and utilities.
11110 Property Taxes - Taxes received from the general levy
July through December
11115 Property Tax Relief – Relief Taxes received July
through December. (May be receipted to 11110
Property)
11120 Property Taxes – Taxes received from the general levy
January through June
11125 Property Tax Relief - Relief Taxes received January
through June. (May be receipted to 11120 Property)
Property Taxes Account Codes
(Cont’d)
11140 Property Taxes - Delinquent. Taxes received
during the current year from the general levy
for prior years.
11150 Excess Commission. Amounts received from
commissions in excess of the treasurer’s salary
for the cost of operating the treasurer’s office.
11160 Land Redemption (Include State Land Sales).
Amounts received from the sale of land on
which delinquent taxes have not been paid.
How – To Help Ensure Accurate Coding
• Typically, taxes collected by the County during a month are
distributed to school districts the following month.
Therefore, to reconcile school district receipts for a calendar
year to county collections for the same year, the month of
January needs to be considered.
• Other than Property Tax Relief, the school district receipts
from February 2011 through January 2012 should compare
with County Collections for the 2011 calendar year.
• School district receipts of Property Tax Relief January –
December, 2011 should agree, or come close to agreeing with
what the County received for 2011.
Ad Valorem Tax Revenue Data
What – Data is Reported
• A.C.A. § 6-20-2303 (17)
• Total ad valorem tax revenue collected and disbursed at the
county level to each school district during the preceding
calendar year
• Includes current taxes, delinquent taxes (including penalties
and interest), homestead tax credit, excess commissions,
interest earned on tax funds held in trust, and state land
redemptions
• Costs and commissions authorized by law relating to the
collection of ad valorem taxes are subtracted
Who – Reports the Data
• Pursuant to Act 633 of 2011, beginning with 2011-12
school year
– Ad valorem data is reported by the county treasurers
– This treasurer’s report replaces the “template” previously
used by the designated county “preparer of the tax books”
When – Data is Due
• Revenue data is reported to ADE by the county treasurers on
or before January 31 each year
– A.C.A. § 26-80-101 (b)(4)(A)(ii)
• Penalty imposed for failure to report revenue data
– County reappraisal funding withheld
– A.C.A. § 26-80-101 (b)(4)(A)(iii) – (vi)
• ADE provides time period for district review of reported data
and accepts revisions from county treasurers
Where - Data Goes
• County treasurer reports revenue to:
(see A.C.A. § 26-80-101 (b)(4)(A)(ii))
– ADE
– State Treasurer
– School District Superintendent
• ADE publishes county reported data to
http://arkansased.org/about/reports.html under “Other
Reports” section
• ADE publishes URT funding adjustment calculations as
attachment to a Commissioner’s Memo
Commissioner’s Memo FIN-12-082
is included in the Appendices
Why – Accurate Data is Important
• District Foundation Funding amount
– A.C.A. § 6-20-2305 (a)(2)
– Equals per student foundation funding times district prior year 3-Qtr ADM
• District Foundation Funding sources:
– Net Revenues from ad valorem taxes
• A.C.A. § 6-20-2303 (13)
– Calculated Miscellaneous Funds
• A.C.A. § 6-20-2303 (11)
– State Foundation Funding Aid
• A.C.A. § 6-20-2303 (21)
– URT Adjustment
• A.C.A. § 6-20-2305 (a)(4)
Why – Accurate Data is Important
• Net Revenues
– Initially estimated as 98% * URT * assessment
– Finally calculated using county reported actual
revenues from the URT
• URT Adjustment
– Funding adjustment to bring district up or down
to statutory foundation funding total
How – To Help Ensure Accurate Funding
• County reports vs. District records
– Resolve discrepancies with county treasurer
– County treasurer may submit revised report to ADE by indicated
deadline
• ADE reports vs. District records
– May be helpful to compare state aid notice to district records
– Compare current state aid notice, noting unusual changes
• To prior year state aid notice of same date (July 2011 to July
2010)
• To current year state aid notice last received (February 2012
to July 2011)
Athletics
ATHLETICS
• Commissioner’s Memo FIN-12-073 (See Appendices),
provides a copy of the amended and approved new
Rules Governing Athletic Revenue & Expenditures.
• Changes method for allocating a portion of the cost of
facilities, facilities maintenance, property insurance,
utilities, and salary and benefits for employees
providing janitorial or maintenance services to
athletics (program code 115).
• Refer to “Athletic Coding Basic Steps” by Kathy Hanlon, which
is included in the Appendices
ATHLETICS (Cont’d)
–The new method is based on adjusted square footage of
athletic buildings as a percentage of total square
footage of all buildings
• Required PE Square Footage: obtain from the School
Facility Manual – Facilities website – after entering the
prior three-quarter average (ADM) for each building
by grade (http://arkansasfacilities.arkansas.gov
• Adjusted Square Footage: The total square footage of
all athletic buildings (from the most current property
insurance statement) , minus the square footage for
PE.
•)
ATHLETICS (Cont’d)
• The adjusted athletic square footage is divided by the
total square footage of all buildings to determine the
athletic expenditure allocation percentage.
• Carry the percentage to five decimal places.
• Apply percentage to total cost of property insurance,
utilities, and all other maintenance costs to determine
the amount applicable to athletics.
• Record amount by journal entry prior to year-end final
close using program code 115.
IF the adjusted athletic square footage should calculate negative, do
not make ‘negative’ athletic expenditure allocation.
ATHLETICS (Cont’d)
COMMENT: Since this is a new procedure, there are going to be
“gray” areas related to athletic square footage in a multi-purpose
building. The district should use sound judgment in determining the
amount of athletic square footage and document the calculations
used.
Example: An old gym that is used only two periods a day for high
school basketball practice. If the district is on a seven-period day,
2/7ths of the square footage should be counted as athletic square
footage.
3.01.2 of the Rule: “If only a portion of a multi-function building is
used for an interschool athletic program, only the square footage
of the portion of the building used for or by an interschool athletic
program shall be included in the calculation of adjusted square Footage of
athletic buildings.”
ATHLETICS (Cont’d)
• Charge construction or renovations of athletic building to
athletics program code 115, MINUS construction and
renovation costs of square footage required for physical
education courses.
– Program Requirements are published by the Division of
Public School Academic Facilities & Transportation
• Coaching stipends and related benefits must be charged to
athletics.
• Prep periods in excess of one-period must be allocated to
athletics unless the additional prep time is clearly
documented to pertain to non-athletic duties.
ATHLETICS (Cont’d)
• Annual Athletic Report to ADE – A.C.A. §6-20-2003
• District must obtain approval of the report of prior year
athletic expenditures by the local school board at a legally
held meeting prior to submitting to the ADE by September
15 each year.
– The content is from Cycle 1 for current year budget and
Cycle 9 for the prior year actual expenditures and consists
of state funds only.
• The report must be posted on the district’s website for a
minimum of three years.
• Gate receipts MUST be posted in the Activity Fund (Fund 7).
Allocation of Property Insurance
Total District Cost of Property Insurance X
Allocation Percentage = Property Insurance to Charge to Athletics
AT THIS TIME DISTRICTS ARE NOT REQUIRED TO CHARGE THIS TO
THE CAMPUS LEVEL.
Example Journal Entry:
DR 2000 26XX 000 115 00 65210 $ x.xx (Property Insurance)
CR 2000 26XX 000 000 00 65210 $ x.xx (Property Insurance)
Allocation of Utilities
Total District Cost of Utilities x Allocation Percentage =Utilities to
Charge to Athletics
AT THIS TIME DISTRICTS ARE NOT REQUIRED TO CHARGE THIS TO
THE CAMPUS LEVEL.
Example Journal Entry:
DR 2000 26XX 000 115 00 64110 $ x.xx (Water & Sewer)
66210 $ x.xx (Natural Gas)
66220 $ x.xx (Electricity)
CR 2000 26XX 000 000 00 64110 $ x.xx (Water & Sewer)
66210 $ x.xx (Natural Gas)
.
66220 $ x.xx (Electricity)
Allocation of All Other Maintenance
Total District Charges to Operating Fund Function 26* Less
Property Insurance and Utilities x Allocation Percentage =
Maintenance to Charge to Athletics
AT THIS TIME DISTRICTS ARE NOT REQUIRED TO CHARGE THIS TO
THE CAMPUS LEVEL.
Example Journal Entry:
DR 2000 26XX 000 115 00 68999 $ x.xx (Allocated Charges)
CR 2000 26XX 000 000 00 68999 $ x.xx (Allocated Charges)
Account number 68999 “Allocated Charges” is recommended. The
other option is to debit and credit each separate account in
function 26*. Caution: This calculation should result in the TOTAL
athletic portion of maintenance expenditures (other than property
insurance and utilities). If other maintenance expenditures have
been charged directly to athletics, subtract those amounts before
entering journal entry.
Allocation of Student Transportation
– Transportation Rate for 2011-2012 is $3.45
– or $1.92 if there is no cost for the driver, e.g.:
• Volunteer Driver
• Coaches drive and compensated by a coaching
stipend
• If Bus Driver Salaries/Benefits are charged directly
to athletics on a per trip basis, use the $1.92
• Documentation required whenever the $1.92 rate is
used
• Commissioner’s Memo: FIN-12-077 Included in
Appendices
Allocation of Student Transportation (Cont’d)
• For allocating 2011-2012 athletic bus transportation costs, the
statewide transportation cost per mile for 2010-2011 is used.
Expenditures charged to functions 2700-2798 were divided by annual
transportation route miles per Cycle 6 of 2010-2011. The daily route
miles reported by districts in Cycle 6 were multiplied by 178 days to
determine annual miles. If a district failed to report any route miles in
Cycle 6, that district's expenditures were not included in calculating
the state's average cost per mile.
The average statewide transportation cost per mile for 2011-2012 is
$3.45 (or $1.92 if there is no cost for the driver).
• In order to record the allocation of student transportation costs to
athletics, it is recommended that object code 68999 be used and
defined as “Allocated Charges.” The journal entry would be:
DEBIT 2000 2700 000 115 00..........68999
CREDIT 2000 2700 000 000 00..........68999
Athletic Problem Areas
(Cont’d)
– Facilities Construction/Renovation
• Facility used exclusively for athletics
– Charge 100% of the cost to a budget unit
containing program code 115
• Multi-purpose buildings
– Determine total cost of building or renovation
based on information from:
– Architect
– General Contractor
– Construction Manager
Athletic Problem Areas – (Cont’d)
• Multi-purpose buildings (Con’t)
– Construction Manager
– Estimate total hours the building will be used
during a complete school year.
– Estimate total hours the building will be used for
athletics during a complete school year.
– Divide total athletic hours by total hours and
multiply the result times the total cost to arrive
at the amount pertaining to athletics.
– The amount pertaining to athletics must be
charged to a budget unit containing program
code 115.
Athletic Problem Areas
(Cont’d)
– Salaries and benefits of coaches
• 100% of any stipend paid exclusively for athletics
must be charged to a budget unit containing
program code 115.
• 100% of the pay for days above the base teacher
contract must be charged to a budget unit
containing program code 115.
Athletic Problem Areas (Cont’d)
–Salaries and benefits of coaches (Con’t)
• If the coach is assigned to classes that are especially for
students participating in athletics, part of the base
teacher contract pay (per teacher salary schedule)
must be charged to athletics:
– Divide total class periods pertaining to athletics,
including any preparation period(s) in excess of one,
by total class periods during the school day.
– The factor obtained above should be multiplied by
the teacher contract amount to obtain the amount
pertaining to athletics.
Athletic Problem Areas (Cont’d)
– Salaries and benefits of coaches (Cont'd)
•
If the coach is assigned to classes that are especially for students
participating in athletics, part of the base teacher contract pay
(per teacher salary schedule) must be charged to athletics:
(Cont'd)
– This amount must be charged to a budget unit
containing program code 115.
– APSCN has an Excel spreadsheet that can be saved to
your computer to assist in calculations
www.apscn.org > FMS > FMS Training documentation
> Forms > Salary Allocation Form
Athletic Audits
• Act 255 of 2007 requires Legislative audit to conduct
annual reviews of the Athletic expenditures reported
to ADE at least once every five years.
• Legislative Audit identifies districts with 10% or more
variance.
• Non-compliance can result in being identified as a
district in fiscal distress in accordance with ACA § 6-201901 et seq.
• See appendix for the Rules Governing Athletic
Revenues and Expenditures for Public School Districts,
Section 9.00
Athletic Audit 2010-2011
• 46 districts selected for testing in Western and
Southwestern Arkansas
• Review adjustments total - $1.6 million
• Athletic expenditures for 20 districts with adjustments
greater than 10% ranging from $9,553 to $777,916
• 12 districts improperly allocated salary and benefits
• 37 districts improperly allocated maintenance expenditures
• 10 district improperly allocated travel related expenditures
• 9 districts did not code athletic related construction
properly
Athletic Audit 2009-2010
• 45 districts selected for testing in Northeastern Arkansas
• Review adjustments total - $0.3 million
• Athletic expenditures for 15 districts with adjustments
greater than 10% ranging from $9,443 to $292,591
• 11 districts improperly allocated salary and benefits
• 15 districts improperly allocated maintenance expenditures
• 17 district improperly allocated travel related expenditures
• 8 districts did not code athletic related construction
properly
Athletic Audit 2008-2009
• 48 districts selected for testing in Southeastern Arkansas
• Review adjustments total - $3.4 million
• Athletic expenditures for 23 districts with adjustments
greater than 10% ranging from $7,759 to $2.0 million
• 27 districts improperly allocated salary and benefits
• 38 districts improperly allocated maintenance expenditures
• 26 district improperly allocated travel related expenditures
• 9 districts did not code athletic related construction
properly
Athletic Audit 2007-2008
• 51 districts selected for testing in Northwestern Arkansas
• Review adjustments total - $3.3 million
• Athletic expenditures for 14 districts with adjustments
greater than 10% ranging from $11,694 to $457,191
• 16 districts improperly allocated salary and benefits
• 18 districts improperly allocated maintenance expenditures
• 15 district improperly allocated travel related expenditures
• 4 districts did not code athletic related construction
properly (the commissioner’s memo on construction did
not come out until late FY 2008)
Rules on Accounting and Reporting
Rules Governing the Arkansas Financial
Accounting and Reporting System
8.0 Department Review of LEA Financial Records
8.01 By February 15 of each year, the Financial Accountability Unit
of the Department shall review the LEAs’ most currently submitted
AFR, AFB, FTEs, and Average Salaries to determine if the financial
records are deficient. Any error related to the coding and
reporting of financial information that causes a material
misstatement of financial information will be cause for
determining a deficiency. A material misstatement occurs
whenever the submitted data has more than a ten percent
variance or when the Department has sent written notification to
an LEA regarding specific errors discovered in the financial records.
Rules on Ark. Financial Accounting and Reporting
System & Annual Training Requirements
included in Appendices
Rules Governing the Arkansas Financial
Accounting and Reporting System
8.03 The Department shall notify in writing, via
certified mail, the superintendent or director of the LEA
whose financial records are found to be deficient.
8.07 The SBE may require the superintendent or
director and board members to explain and/or appear
before the SBE to explain why the district is not
complying with state laws or rules.
Rules Governing the Arkansas Financial
Accounting and Reporting System
• 11.01 Any school district that does not comply
with and meet the requirements of these rules,
shall, after receiving notice as required by law,
be identified by the Department as being in
fiscal distress.
Fiscal Distress
• Indicators of Fiscal Distress, cont’d:
• Material failure to comply with audit requirements.
• Material failure to comply with any provision of the
Arkansas Code that specifically places a school district
in fiscal distress based on non-compliance.
– Any other fiscal condition of a school district deemed
to have a detrimental negative impact on the
continuation of educational services by that school
district.
Federal Programs
Federal Education Jobs Fund
• Commissioner’s Memo FIN-11-032, December 1,
2010, provides information and allocation amounts.
• For school-level employee compensation and
benefits and other expenses, such as support
services necessary to:
–
–
–
–
Retain existing employees
Recall or rehire former employees
Hire new employees
Implement salary increases and/or bonuses
Federal Education Jobs Fund (Cont’d)
• Cannot be used for:
– General administrative expenses (including operation of
superintendent’s office)
– LEAs board of education
– Salaries and benefits of district-level administrative
employees
• Must be coded to Fund/Source of Fund 6519 and
Program Code 056.
ARRA JOBS Funds
• $92,464,608 Total Funds Allocated
– $5,813,718 Funds Remaining
– Funds must be obligated by September 30,
2012
– When notified that plans are open, spend the
funds.
– No reimbursement of expenditures unless the
Plan is entered into the ARRA Cognos program.
ARRA State Fiscal Stabilization Fund
• This ARRA Fund is Closed
– $341,091,157 in total awarded funds
– $630,680 remaining funds
– Less than 1/10 of 1% unspent - (.18%)
– If district has any activity remaining in SFSF,
contact Patty Martin at 501-682-1114.
ARRA IDEA Funds
• $112,177,929 Total Funds Allocated
– $610,906 Funds Remaining
– Most expenditures have been moved from school
bus purchases to other allowable expenditures
– Plans will be opened for these districts to change
the program code
– The opening of the plans will be announced via
the FMS and SMS listservs.
ARRA Title I Funds
• $106,471,468 Total Funds Allocated
– $550,932 Funds Remaining
– That is about ½ of 1%
Clarification of Changes to Federal Grants
Budgets and Program
• Education Department General Administrative
Regulations (EDGAR) 34 CFR Part 80:30
• District’s may re-budget within the approved direct
cost budget to meet unanticipated requirements.
• District’s may make limited program changes to the
approved project.
• However, these changes may require prior written
approval of the ADE.
Federal Grants Budgets
• District shall obtain prior written approval of the ADE whenever
any of the following changes are anticipated under a nonconstruction award:
– Any revision which would result in the need for additional
funding
– Unless waived by the ADE, cumulative transfers among the
cost categories, or among separately budgeted programs,
projects, functions, or activities which exceed ten percent of
the current TOTAL APPROVED budget.
This means budget changes ARE ALLOWED up to 10% of the total
approved budget WITHOUT ADE approval
See Commissioner’s Memo FIN-12-107 included in the Appendices
– Transfer of funds allotted for training allowances
Federal Grants Budgets
(Cont’d)
• District shall obtain prior approval of the ADE
whenever any of the following changes is anticipated
under construction projects:
– Any revision which would result in the need for additional
funding
– Before making any fund or budget transfers from nonconstruction to construction or vice versa when the
funding is for both construction and non-construction
activities.
Federal Grants Programs
• District shall obtain prior approval of the ADE
whenever any of the following changes to the
Program is anticipated:
– Revision to scope or objectives (regardless of whether
there is an associated budget).
– Need to extend the period of availability of funds
– Any changes in key persons in cases where specified in the
application or grant award.
– Under non-construction projects, contracting out,
subgranting or otherwise obtaining services of 3rd party to
perform the activities central to the purpose of the award.
Other Federal Grants Approval Requirements
• Requests for budget revisions must be in writing, in
the same format the district used in its application
and include a narrative of justification.
Maintenance of Effort
Maintenance of Effort (MOE)
• Commissioner’s Memo FIN-12-078, February 8,
2012, provides information regarding the MOE
requirement of programs authorized by the Federal
Elementary and Secondary Education Act.
– Purpose is to ensure that federal funds are not used to
replace state and local funds.
– Requires LEAs to maintain at least 90% of their level of
expenditures for programs from state and local funds from
one year to the next.
FIN-12-078 is included in the Appendices
Maintenance of Effort (MOE) (Cont’d)
• Special Education (IDEA) has a 100% requirement on
MOE. Exceptions include:
– Voluntary departure, by retirement or otherwise, or
departure for just cause, of special education personnel.
– A decrease in the enrollment of identified children with
disabilities.
– The termination of the obligation to provide special
education program to a particular child because the child has
left the district, reached the age at which the LEA obligation
has ended, or no longer needs special education services.
– Termination of long-term costly expenditures, such as
construction.
Maintenance of Effort (MOE) (Cont’d)
• Expenditures do not include:
–
–
–
–
Community Services
Capital Outlay
Debt Service
Expenses incurred as a result of a presidentially declared
disaster
– Expenditures from funds provided by federal government
Maintenance of Effort (MOE)(Cont’d)
• MOE can be met based on either aggregate or per
student expenditures.
• ARRA SFSF and Federal Jobs Funds may be counted as
state and local funds for purposes of meeting MOE.
– But when ARRA SFSF and Jobs Funds are gone, state and
local funds must replace them.
Maintenance of Effort (MOE)(Cont’d) loss of federal funds of
• Failure to meet MOE requires
an amount equal to the decline in MOE.
– May seek waiver by demonstrating that the decline
was the result of:
• Exceptional or uncontrollable event; or
• Drastic decline in financial resources.
Non-Recurring Bonuses
Nonrecurring Bonuses
• Ark. Code Ann. §6-20-412 provides information
related to nonrecurring salaries paid to licensed
personnel From revenues “not considered to be
recurring sources of revenue.”
• Federal Jobs Fund
• Fund balances
• Proceeds from sale of property
Nonrecurring Bonuses (Cont’d)
• Divided equally among licensed personnel employed
by the school district at the time approved by the
board of directors of the school district unless:
– The school board and a majority of teachers agree to a
different distribution.
• “Equal” means an equal dollar amount.
– Not equal percentage
– Not prorated based on days contracted or worked
– Not prorated based on full-time or part-time status
Nonrecurring Bonuses (Cont’d)
• Act 989 of 2011 amended §6-20-412
– Changed requirement that it be paid to licensed
personnel employed by the school district at the
“time of payment” to employed by the school
district at the time “approved by the board of
directors of the school district.”
– Removed requirement that a report be submitted
to ADE and Legislative Audit.
Sales Tax Exemptions
Sales Tax Exemptions
• School buses sold to Arkansas school districts. (A.C.A.
26-52-410(b)
• Sale of school buses that will be used exclusively by
purchaser to provide school bus service for an
Arkansas school district. (A.C.A. 26-52-410(c).
• Sales of motor vehicles to public school districts in
Arkansas. (A.C.A. 26-52-410(a))
• Sales of food in public school cafeteria and
lunchrooms. (A.C.A. 26-52-410(3))
Sales Tax Exemptions (Cont’d)
• Sales of textbooks, library books, or other items
purchased by the State of Arkansas to be distributed
free of any charge to public schools of Arkansas.
(A.C.A. 6-21-411)
• Sales of tickets for admissions to athletic events and
interscholastic activities at public and private schools
in Arkansas.(A.C.A. 26-52-412(a))
• Sales of sheet music, electronic software, maps,
globes, charts, videotapes, DVDs, films and cassettes
for use as instructional materials. (A.C.A. 26-52-437)
Sales Tax Exemptions (Cont’d)
• Sales of digital resources when purchased as
instructional materials for Arkansas public schools.
(Act 288 of 2011)
“Digital resources” yet to be defined. (As of April 26,
2012, Arkansas Department of Finance &
Administration considered I-Pads as computer
hardware, and therefore taxable. However, they are
reviewing this issue)
SEE GR-35-69 Exemptions from Tax – Schools included in
Appendices from the Dept. of Finance & Administration
Resources
• ADE Web Site - http://arkansased.org
– Commissioner Memos
– Rules
– Publications and Reports
• APSCN Web Site – http://www.apscn.org
– FMS Listserv – http://list.k12.ar.us/mailman/listinfo/fms
SMS Listserv – http://list.k12.ar.us/mailman/listinfo/sms
• APSCN Field Support
– On-site, phone, email support M-F, 8:00 a.m.-4:30 p.m. or
7:30 a.m.-4:00 p.m. – APSCN Main Number – 501-6824887
– Emergency after-hours support -DIS Call Center (800-4357989)
Other Resources
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•
•
•
ADE Data Center - http://adedata.arkansas.gov
Special Education - http://arksped.k12.ar.us/
Child Nutrition - http://cnn.k12.ar.us
Academic Facilities and Transportation
– http://www.arkansasfacilities.com/
• Arkansas Division of Legislative Audit
– http://www.legaudit.state.ar.us/
ADE Contacts
•
•
Question regarding Financial Coding
– Kathleen Crain – 501-682-1297
– [email protected]
• Questions regarding Transportation expenditure of funds
– Mike Simmons - 501-682-4261
– [email protected]
Questions regarding Funding and Loans and Bonds
– Cindy Hedrick Hollowell - 501-682-4484
– [email protected]
• Questions regarding Fiscal Distress
– Hazel Burnett - 501-683-5288
– [email protected]
ADE Contacts
• Questions regarding Financial Audits, Budgets, Duplicate Enrollments,
Property Assessments and Millage:
– Danita Hyrkas – 501-682-5059
– [email protected]
• Questions Regarding Federal Program
– Annette Pearson or Kim Bajorek
– 501-683-1243, 501-683-6530, respectively
[email protected]
– [email protected]
APPENDICES LIST
1. Commissioner’s Memo FIN-09-071- Purchasing & Bidding Requirements
2. Rules and Regs Governing Ethical Guidelines and Prohibitions for
Educational, Administrators, Employees, Board Members, and Other
Parties
3. Special Education Information –Special Ed. Information in this
presentation was based on this document by Donald Watkins, ADE Special
Education
4. Rules Governing Distribution of Student Special Needs Funding and the
Determination of Allowable Expenditures of Those Funds
5. Commissioner’s Memo FIN-12-095 – Aggregate Categorical Funds Balance
6. Commissioner’s Memo FIN-12-094 - NSLA Fund Balances , Per Act 220
7. Commissioner’s Memo FIN-09-047 – Coding Requirements
8. Commissioner’s Memo FIN-10-008 – Title I Allocations
9. Adequacy Funding Matrix
APPENDICES LIST (cont’d)
10. Commissioner’s Memo FIN-11-080 – Coding Requirements for 2011-12
11. Commissioner’s Memo FIN-12-022 – 9% M & O Requirement
12. Commissioner’s Memo FIN-12-054 – 2011-2012 Expenditure Requirement
for Gifted and Talented Programs
13. Commissioner’s Memo FIN-12-086 – Re: Supplemental Trans. Funds
14. Rules Governing the Distribution of Supplemental Transportation Funds
15. Rules Governing Calculation of Miscellaneous Funds
16. Commissioner’s Memo FIN-12-060– Indirect Cost Rates for 2011-2012
17. Assessment and 36% Pullback Report Calendar Year 2011 Total Valuations
for Taxes Payable in 2012
18. Commissioner’s Memo FiN-12-082 – URT Calculations for FY2011-2012
APPENDICES LIST (cont’d)
19. Commissioner’s Memo FIN-12-073 - Re Amended Athletic Expenditure
Rules
20. Athletic Coding Basic Steps – By: Kathy Hanlon, Rogers School District
21. Commissioner’s Memo FIN-12-077 – FY12 transportation Rates for Athletics
22. Rules Governing Athletic Revenues and Expenditures for Public Schools
23. Rules Governing the Arkansas Financial Accounting and Reporting System
and Annual Training Requirements
24. Commissioner’s Memo FIN-12-107 – 10% Variance on Federal Funds
25. Commissioner’s Memo FIN-12-078 – Maintenance of Effort
26. School District Sales Tax Exemptions from the Dept. of Finance &
Administration
27. Certificate of Appointment as District Treasurer Form