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SACS Forum Meeting Minutes, January 2011

Meeting Agenda

Announcements

• Upcoming California Association of School Business Officials (CASBO) SACS workshops

Accounting Issues

• California County Superintendent Educational Services Association (CCSESA), Business and Administration Steering Committee (BASC) November 9, 2010, Common Message – clarification regarding flexed balances
  
  
• 2010-11 mandate reimbursement accounting
  
  
• 2009-10 unaudited actuals data - common errors noted
  
  
• Special education local plan area (SELPA) administrative unit (AU) pass-through revenue fund – update
  
  
• Governmental Accounting Standards Board (GASB) Statement 54 – update
  
  
  • Status of the California Department of Education (CDE) guidance
  • Outstanding issues

SACS Software Issues

• SACS2011 software - update

Other Issues

• California School Accounting Manual (CSAM) 2011
• Next SACS Forum meeting

Meeting Minutes

Announcements

• Upcoming CASBO SACS workshops

SACS: Basic Concepts
January 25, 2011, Fresno County Office of Education, Fresno
February 2, 2011, San Bernardino County Superintendents of Schools, Rancho Cucamonga (Ontario Area)

SACS: Advanced Concepts
January 26, 2011, Fresno County Office of Education, Fresno
February 3, 2011, San Bernardino County Superintendents of Schools, Rancho Cucamonga (Ontario Area)

Further information can be found on the CASBO Web site [http://www.casbo.org/].

Accounting Issues

• Common Message – clarification regarding flexed balances
  
  The CDE provided a handout (Attachment A [http://www.cde.ca.gov/fg/ac/ac/sacsminutes010611a.asp]) that clarifies language included in the CCSESA BASC November 9, 2010, Common Message regarding disposition of June 30, 2008 restricted balances not “swept” by June 30, 2010. That language is inconsistent with the CDE’s April 17, 2009 letter regarding implementation of categorical and other fiscal flexibility. The CDE has discussed the inconsistent language with the primary author and anticipates it will be corrected in the next version of the Common Message.
  
  
• 2010-11 mandate reimbursement accounting
  
  The 2010-11 mandated cost reimbursement should be accounted for the same as all other mandate claim reimbursements using Object 8550, Mandated Cost Reimbursements. Please refer to the SACS Query  page [http://www2.cde.ca.gov/sacsquery/pcadetail.asp?pca=25157&resourcecode=0000], for further information regarding this funding.
  
  
• 2009-10 unaudited actuals data - common errors noted
  
  The CDE expects to have the review of the 2009-10 unaudited actuals completed in the next few weeks. The CDE will prepare a handout for distribution at the March meeting that lists common errors noted during the review and the appropriate accounting.
  
  The CDE mentioned that many of the technical review exceptions noted were the result of adjustments for restricted resource codes closed because of flexed funding, where the Local Educational Agency had not yet reclassified the flexed funds to an unrestricted resource code.
  
  Also mentioned was that considerable time was spent reviewing the indirect cost rate calculations where the percentage change in the rate exceeded 25% over the prior year.  Most of the increases in indirect cost rates were the result of decreased base expenditures due to budget reductions, but there were still some coding issues especially among smaller districts.
  
  Finally, the CDE noted that more charter schools are reporting using SACS but that further guidance is necessary to achieve the correct coding, e.g., there were many instances of salaries reported without accompanying benefits.
  
  
• SELPA AU pass-through revenue fund  – update
  
  The CDE continued discussion of the new SELPA AU pass-through fund. It was decided at the June 8, 2010, SACS Forum meeting that a new fund would be created to account for SELPA AU pass-through funding.
  
  The CDE reiterated that the use of Fund 10 is required for SELPA AUs composed of multiple local educational agencies (LEAs) to ensure consistency in reporting SELPA AU pass-through funds, and in order to achieve comparability between LEAs. Also, as discussed at the October 12, 2010, SACS Forum meeting, only the pass-through portion of the special education revenues is reported in the SELPA AU pass-through fund, with the portion of the funding that will remain with the AU reported in the AU’s general fund.
  
  The CDE has been collaborating with a group of LEA representatives to ensure that all possible situations are considered in developing accounting guidance and the structure of the new fund.
  
  Attachment B [http://www.cde.ca.gov/fg/ac/ac/sacsminutes010611b.asp] provides a listing of resource codes that will be opened to Fund 10.  The version distributed at the meeting described Resource 0000 as used for the Special Education Mandate Settlement reimbursements. That funding has ended, but Resource 0000 will remain open for other unrestricted funding such as interest earnings. The CDE expects that the SACS valid code combination table updates for Fund 10 will be available in early February 2011.
  
  Draft accounting examples using the new fund were reviewed during the meeting, showing how the SELPA AU will record Special Education funding between Fund 01 and Fund 10, including interest earnings.  Following the meeting, these examples were updated to serve as an attachment to the CDE’s guidance letter on the new Fund 10, which is also being posted on the Web site. To avoid duplication, the examples were not posted with these minutes.
  
  Participants had questions about allocating funding between Fund 01 and Fund 10 when the allocation is not known at the time funds are received, or when the allocation is adjusted later during the year. A few options were discussed, including:
  
  
  • Use a Suspense Clearing account (Object 9910) and reclassify once the allocation is known.
    
    
  • Record all funding to either Fund 01 or Fund 10, then make reclassifying entries between funds 01 and 10 as necessary once the allocation is known.
    
    
  • Allocate the funding between Fund 01 and Fund 10 based on an estimate, and use reclassifying entries once the allocation is known.

  Interfund transfers were discussed. The CDE reiterated that interfund transfers will not be allowed because revenue must be recognized correctly in both funds in order to ensure comparability between LEAs. There was discussion that if interfund transfer accounts were available, there would be the possibility that allocations of revenue between the funds might be made with an interfund transfer rather than by entries to revenue accounts. A participant asked whether interfund transfers can be available just for transfers of prior year carry over balances, for instance when a portion of the SELPA AU's funding in a subsequent year needs to be transferred to member LEAs. It was noted that there would be no way to distinguish transfers of prior year amounts from transfers of current year amounts. Suggested workarounds included:

  • Use of a locally defined sub-object code to identify prior year revenues.
    
    
  • If immaterial, record the prior year amounts passed-through in the AU's general fund.

The CDE has carefully considered the decision not to open interfund transfers to Fund 10, and is certain that there is an appropriate alternative for any transaction that could be recorded using an interfund transfer.

The CDE also concluded that ending fund balance will be allowed in Fund 10.

Previous discussions regarding the establishment of Fund 10 are documented in the June 8, 2010 and October 12, 2010 SACS Forum meeting minutes [http://www.cde.ca.gov/fg/ac/ac/sacsforumrecap.asp].

The next update of the CSAM will include revised Special Education accounting guidance incorporating the use of Fund 10.

• GASB 54 – update
  
  
  • Status of the CDE’s guidance
    Subsequent to the meeting, the CDE issued the GASB 54 guidance. The letter and related attachments [http://www.cde.ca.gov/fg/ac/co/] are available on the CDE Web site. The CDE will continue to identify issues relating to the implementation of GASB 54 and will communicate additional guidance through future.
    
    
  • Outstanding issues
    The CDE provided clarification regarding the use of restricted resource codes in funds other than the general fund. Some questions posed to the CDE have given the impression that all funding sources reported in funds other than the general fund are recorded to a restricted resource code. Only funding that meets the definition of restricted is reported in a restricted resource. It is possible that some funding sources will not meet the definitions of restricted, for example contributions of unrestricted revenue from the general fund to cover a deficit in the other fund.
    
    Participants were asked to articulate any additional concerns or questions regarding the implementation of GASB 54.
    
    A participant asked whether a board resolution is necessary to impose the level of constraint needed to use the committed classification. The CDE explained that the constraints must be imposed by “formal action of the highest level of decision-making authority” not by the “highest formal action.” For LEAs, a formal action may be a vote, resolution, or some similar action such as adoption of the budget.
    
    Another participant asked how to classify a portion of fund balance that is set aside for cash flow purposes. The CDE responded that such an amount should be included in an LEA’s fund balance policy and reported in Object 9789, Reserve for Economic Uncertainties.

SACS Software Issues

• SACS2011 software – update
  
  The CDE requested participant consideration and feedback on several additional potential SACS software form changes. Attachment C [http://www.cde.ca.gov/fg/ac/ac/sacsminutes010611c.asp], Proposed SACS2011 Software Modifications, provides additional detail.
  
  
  • Forms Average Daily Attendance (A) and Revenue Limit (RL)
    The CDE has previously asked participants to consider whether these forms could be eliminated. These forms are particularly time intensive to update each year because of the intricacy and last-minute nature of the changes that affect them. Participants, particularly county office of education (COE) representatives, indicated that these forms are very useful for their fiscal oversight reviews and want them to remain in the software. Participants agreed to go back and survey their LEAs for further feedback. The CDE requested that the participants submit specific comments as to exactly what items contained on the forms benefit the LEA so that the CDE can look into an alternative to these two forms. The CDE requested that participants forward comments to sacsinfo@cde.ca.gov.
    
    
  • Form CB—Budget Certification and Form CI—Interim Certification
    The CDE surveyed the participants to consider adding the explanations from Form 01CS, Criteria and Standards Review, to Form CB and Form CI. Participants would like more time to communicate this potential change to LEAs and provide feedback along with the comments regarding the RL Form and Form A to the CDE.
    
    
  • The CDE surveyed the participants regarding opening the following forms in additional reporting periods, but optional and not required for submission:
    
    Form CASH—Cashflow Worksheet
    
    Form ICR—Indirect Cost Rate Worksheet
    
    Form NCMOE—No Child Left Behind Maintenance of Effort
    
    Form SIAB—Summary of Interfund Activities – Budget
    
    Participants agreed that these forms should be opened to additional reporting periods.
    
    
  • Form 01CSI—Criteria and Standards Review—Interims
    Consider adding internal form checks to the Unfunded Liabilities Supplemental Information, Sections S7A and S7B, to provide requested information in the form.
    
    Participants agreed to the addition of the internal form check and a fatal TRC with the condition that language is added to indicate in the FORM01CSI that the COE is part of a Joint Powers Agency.
    
    
  • Technical Review Checks—New  
    CHK-RESOURCE-LOCALLY-DEFINED –Participants agreed to the addition of a new technical review check that ensures LEAs roll locally-defined resource codes into the CDE-defined resource codes.

Other Issues

• CSAM 2011
  
  The new edition of CSAM is scheduled to be adopted by the State Board in July 2011, and released shortly thereafter.
  
  
• The next SACS Forum meeting is scheduled for March 8, 2011.