Skip to main content
California Department of Education Logo

SACS Forum Meeting Minutes, February 2014

Standardized Account Code Structure (SACS) meeting minutes for February 4, 2014.

Meeting held at the California Department of Education (CDE), Sacramento

Meeting Agenda

Announcements and Information
  • Posting of the California School Accounting Manual (CSAM) 2013 edition

Accounting Issues
  • Deferred outflows and inflows of resources: Governmental Accounting Standards Board (GASB) Statement 63 and Statement 65 (GASB 63 and GASB 65) – update

  • Pension accounting and financial reporting standards (GASB 68) – update

  • 2012–13 unaudited actuals review – accounting observations and reminders

    • Intangible assets
    • Debt refunding
    • OPEB expenditures
    • Use of the appropriate unrestricted/restricted resource in non-general funds, particularly capital project and debt service funds

  • Local control funding formula (LCFF) accounting issues (Attachment A)

    • Discuss compliance with local control accountability plan (LCAP) regulations  - proportionality, increased services to unduplicated pupils
    • Transfer to Special Education Resource 6500 via Object 8091
    • County office funds transfers - funding now credited to districts
    • Disposition of transportation resource codes 7230, 7235 and 7240
    • Clarification regarding year-end reporting of resources and other code combinations ending as a result of funding consolidated into the LCFF
SACS Software Issues
  • SACS2014 software budget release – proposed changes (Attachment B)

  • Reminder to update SACS2013ALL software for interim reporting
Other Issues
  • Next meeting scheduled for Tuesday, May 6, 2014

Meeting Minutes

Announcements and Information
  • Posting of the CSAM 2013 edition

    The CSAM is expected to be posted on the CDE Website within the week.

    UPDATE: The CSAM [http://www.cde.ca.gov/fg/ac/sa/index.asp] has now been posted.

    The CDE will not be publishing hard copies for purchase.

Accounting Issues

  • Deferred outflows and inflows of resources: Governmental Accounting Standards Board (GASB) Statement 63 and Statement 65 (GASB 63 and GASB 65) – update

    The CDE is still in the process of developing guidance for local educational agencies (LEAs) to implement the provisions of GASB 63 and GASB 65. The CDE expects guidance to be provided in the next few months.

    The CDE is incorporating the new financial reporting elements in the SACS software fund forms for 2013–14 estimated actuals and government-wide reports for 2013–14 unaudited actuals.

    A participant requested that the CDE add the new codes to the SACS validation tables so the codes can be used in their financial systems. The CDE will establish them in the next update, which should be in March.

    Please refer to previous SACS Forum meeting minutes for additional information regarding the provisions of GASB 63 and GASB 65.

  • Pension accounting and financial reporting standards: GASB 68 – update

    GASB 68, Accounting and Reporting for Pensions, is effective 2014–15, and requires employers that participate in cost sharing pension plans, such as the California Public Employees’ Retirement System (CalPERS) and California State Teachers’ Retirement System (CalSTRS), to report in their accrual-basis financial statements a proportionate share of the pension plan’s net pension liability. This liability is required to be recorded in the financial statements, e.g., Statement of Net Position, not merely disclosed in the notes to the financial statements.

    The CDE continues to monitor developments in implementing these standards. The CDE will provide accounting guidance and the necessary changes to SACS software forms and government-wide conversion entries and reports to aid LEAs in reporting the liability and associated costs in 2014–15.

    CalPERS and CalSTRS are responsible for providing the reporting information to LEAs. CalSTRS established a Web page on which they provide GASB 68 information and resources [http://www.calstrs.com/gasb-accounting-changes] External link opens in new window or tab.. They plan to provide Webinars in the late spring. CalPERS does not appear to have provided much information to date.

    CDE staff recently attended a CalSTRS GASB 68 presentation at a county office of education (COE). A few key points that were discussed at the presentation:

    • The CalSTRS June 30, 2012 actuarial valuation shows a $71 billion unfunded liability, based on an estimated 7.5% long-term investment rate of return.
    • GASB 68 requires that a blended rate of return be used when projected plan assets are no longer sufficient to pay projected plan benefits. CalSTRS projects this to happen in 2043.
    • Using an estimated blended rate of return of 4.85%, CalSTRS estimates a net pension liability of $167 billion, more than double the $71 billion unfunded liability valuation made as of June 30, 2012.
    • Employers will report their proportionate share of the net pension liability calculated based on the blended rate required by GASB 68.
    • CalSTRS indicated that based on the current estimate most LEAs’ total liabilities will double, resulting in negative net position for many.

    LEA auditors also have a significant role in implementing these standards, as they prepare the notes and required supplemental information for the annual financial reports as well as audit the information reported. The American Institute of Certified Public Accountants will issue white papers in the near future that will aid auditors with these reporting and auditing activities.

    LEA staff may want to consider beginning to make their governing boards and other stakeholders aware of these new standards and their impact on the financial statements.

    The GASB very recently issued the GASB 68 Implementation Guide [http://www.gasb.org/jsp/GASB/Page/GASBSectionPage&cid=1176163026371] External link opens in new window or tab..

  • 2012–13 unaudited actuals review – accounting observations and reminders

    The CDE provided and discussed a list of accounting and reporting observations (Attachment A) [http://www.cde.ca.gov/fg/ac/ac/sacsminutes020414a.asp] made during the 2012–13 unaudited actuals data review.

    As mentioned at the October meeting, a focus of the review was the indirect cost rate calculation.  Several items observed during these reviews are noted on this list. 

    In addition, some other accounting issues were observed and while not necessarily common were noteworthy and are addressed on the list:

    • Intangible assets
    • Debt refundings
    • OPEB expenditures
    • Use of the appropriate unrestricted/restricted resource in non-general funds, particularly capital project and debt service funds

    Overall the data submissions looked good, with fewer technical review exceptions noted than compared to previous years. The CDE appreciates county offices of education working with their school districts, and the school districts working themselves, to submit accurate and reliable financial data.

  • LCFF accounting issues

    The CDE provided, as a reference point, the portion of the minutes [http://www.cde.ca.gov/fg/ac/ac/sacsminutes101413.asp] from the October 14, 2013 SACS Forum meeting addressing LCFF SACS coding and accounting changes.

    • Discuss compliance with local control accountability plan (LCAP) regulations - proportionality, increased services to unduplicated pupils

      The CDE has determined that, based on the LCFF statute and newly adopted emergency LCAP regulations, at this time unique SACS codes will not be established for LEAs to track revenues and/or expenditures associated with increased services to unduplicated pupils in proportion to the increase in funds apportioned for the supplemental and concentration grants. LEAs may establish locally defined codes to meet local reporting needs if they choose. If LEAs choose to establish locally defined resource codes, those resource codes must be unrestricted.

      Although the LCAP regulations address spending requirements, these requirements are tied to increased levels of services and not restricting the expenditure of supplemental and concentration grants. Expenditures and funding are used as a proxy to calculate a percentage by which services must be increased or improved. Neither statute nor regulations require that LEAs must demonstrate in their general ledgers how they are providing services. Furthermore, a complete picture of the LEA’s actions to improve services will not necessarily be apparent through the general ledger transactions.

      There have been previous discussions about establishing unique goal codes to track services for the unduplicated pupils. However, those pupils are already being reported in the appropriate instructional setting under an existing SACS goal code, such as Goal 1110, Regular Education K–12, or the 5000 range of Special Education goals. These pupils must continue to be reported under these goals.

      There was a brief discussion about establishing unique functions to track expenditures. However, as with the goal codes, there would be drawbacks as LEA activities are already captured in existing function codes, e.g., Function 1000, Instruction. Since many activities are appropriate for providing increased services to unduplicated pupils, several codes would potentially have to be established under each existing function, creating a burdensome reporting requirement.

    • Transfer to Special Education Resource 6500 via Object 8091

      The CDE will close the combination of Resource 6500 with Object 8091 effective 2013–14. All transfers of unrestricted revenue to Resource 6500 should be recorded using Object 8980, Contributions of Unrestricted Resources. The CDE has determined that this “revenue limit” transfer to Special Education is a holdover from before the Assembly Bill 602 funding model was implemented. There is no part of the LCFF calculation that is tied to amounts that should be transferred for Special Education.

    • County office funds transfers - funding now credited to districts

      The CDE continues to evaluate the most appropriate accounting for funding for pupils served in county-operated programs that was credited to COEs under the revenue limit funding formula but is now credited to districts of residence under the LCFF. A few alternatives were discussed, including the pass-through revenue, contract for services, and excess costs accounting models.

      The impact of the accounting on compliance calculations such as Special Education maintenance of effort, No Child Left Behind maintenance of effort, indirect cost rate, program cost reporting and current expense/minimum classroom compensation must be taken into consideration in the evaluation of these alternatives.

      Much of the discussion involved whether the district or the COE is ultimately responsible for providing services to these students.

    • Disposition of transportation resource codes 7230, 7235 and 7240

      The CDE will add end dates to the transportation resource codes:

      7230 Transportation: Home to School
      7235 Transportation: School Bus Replacement
      7240 Transportation: Special Education (Severely Disabled/Orthopedically Impaired)

      Although there is a maintenance of effort requirement, the transportation add-on portion of the LCFF is considered unrestricted. There is no legal obligation to spend it on transportation. Transportation expenditures can be captured through SACS Function 3600, Pupil Transportation.

    • Clarification regarding year-end reporting of resources and other code combinations ending as a result of funding consolidated into the LCFF

      Activity that has, through second interim, been reported using resource and object codes that are now obsolete due to the consolidation of categorical funding into the LCFF should be reported in the correct resource and object codes for estimated actuals data (SACS2014 software budget release) per the CDE’s guidance. LEAs should not wait to make these adjustments in the unaudited actuals data.

      The exception is that activity associated with 2012–13 carried over balances of now-obsolete resource codes should continue to be reported in those resource codes. Those resource codes will be available through 2015–16 for this purpose.

    In addition, there was a question regarding what object code charter schools should use to record prior year adjustments. By default, since Object 8015 is being eliminated, Object 8019 should be used.
SACS Software Issues
  • SACS2014 software budget release – proposed changes

    The CDE provided a handout (Attachment B) [http://www.cde.ca.gov/fg/ac/ac/sacsminutes020414a.asp] listing the proposed updates to the SACS2014 software budget release.

  • Reminder to update SACS2013ALL software for interim reporting

    The CDE reminded participants that the SACS2013ALL software needs to be updated for interim reporting periods. The CDE released an update on October 18, 2013 that reflects changes resulting from LCFF implementation. The CDE noted during its review of COE first interim reports that a few of them had not updated their SACS2013ALL software to the updated version.
Other Issues
  • Next meeting scheduled for Tuesday, May 6, 2014

    The next meeting will be held on Tuesday May 6 at the CDE. Additional meeting information [http://www.cde.ca.gov/fg/ac/ac/sacsforum.asp] is available on the CDE Web site. 
Questions:   Financial Accountability Information Services| sacsinfo@cde.ca.gov | 916-322-1770
Last Reviewed: Friday, November 18, 2016
Recently Posted in Accounting