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SACS Forum Meeting Minutes, February 2023

Standardized Account Code Structure (SACS) February 14, 2023 meeting minutes.

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

Meeting Agenda

Announcements and Information

Accounting Update

Accounting Discussion

SACS Financial Reporting

Other Updates

Meeting Minutes

Announcements and Information

2021–22 Unaudited Actuals (UA) Data Review – Observations

The CDE provided a list of accounting and reporting observations (DOCX) made during review of the 2020–21 unaudited actuals data reviews. Once again, indirect cost rate calculations were the focus of these reviews and associated observations are also noted on this list.

Bid Threshold Adjustment

The Annual Adjustment to Bid Threshold for Contracts Awarded by School Districts are the Annual Adjustment to Liability Limit of Parent or Guardian for Willful Pupil Misconduct letters have been posted on CDE’s Accounting Correspondence web page. For 2023, both amounts received an increase of 10.32% from the prior year. The bid threshold amount is $109,300, and the willful pupil misconduct is $23,900

Every Student Succeeds Act (ESSA) Per-Pupil Expenditure (PPE) Reporting Update

LEAs are in the process of submitting their ESSA PPE reports. Access codes were initially distributed to LEAs in December. If an LEA has not received their access code, they can email The CDE held three webinars surrounding reporting requirements in January and February of 2023, they are posted on the website. Approximately a quarter of LEAs have submitted their ESSA PPE reports as of the date of this meeting, thank you! LEAs that still haven’t submitted their reports are urged to review the FAQs on the CDE website and email with additional questions. The ESSA PPE data submittal deadline is March 1, 2023.

For further information, please see the ESSA PPE Webpage at ESSA Per-Pupil Expenditure (PPE) Reporting.

Accounting Updates

Accounting Reminders
  • School-Based Medi-Cal Administration Activities (SMAA) and Medi‑Cal Billing Option (BOP)

During the October 2020 SACS Forum, CDE informed LEAs that the Department of Health Care Services (DHCS) determined that LEAs are considered contractors, not sub-recipients. As contractors, LEAs are not required to report the funding on the Schedule of Expenditures of Federal Awards.

Due to this change, LEAs had to change how they accounted for these programs. Originally, LEAs would account for the SMAA program using Resource 0000 – Unrestricted with Object 8290, All Other Federal Revenue and would account for LEA BOP using Resource 5640, Medi-Cal Billing Option, with Object 8290, All Other Federal Revenue.

To align with the DHCS determination, CDE proposed that these programs be reported as local revenue, with the following accounting changes. For the SMAA program it was proposed to change the revenue object code from 8290 to 8699, All Other Local Revenue and for LEA BOP, change resource code from 5640 to Resource 9010, Other Restricted Local, and revenue object code from 8290 to 8699. The proposed change took effect in 2021–22.

During UA reviews CDE noticed LEAs are still using the original accounting guidance, causing warning technical review check (TRC) exceptions in the data submissions. LEAs can reclassify the beginning balance from Resource 5640 to Resource 9010 using Object 9795, Other Restatements.

  • OB 8625, Community Redevelopment Funds Not Subject to Local Control Funding Formula (LCFF) Deduction, and Object 8681, Mitigation/Developer Fees, with Restricted Resources Only

The combination of Object 8625 with Resource 0000 was no longer valid after June 30, 2018. Community redevelopment funds not subject to LCFF deduction are restricted in regard to what they can be spent on, so LEAs should use Resource 9010, Other Restricted Local, or a locally-defined restricted resource that rolls up to Resource 9010.

The combination of Object 8681 with Resource 0000 was no longer valid after June 30, 2019. Since developer fees are restricted in regard to what they can be spent on, LEAs should use Resource 9010, Other Restricted Local, or a locally-defined resource that rolls up to Resource 9010. Please refer to October 2018 SACS Forum Meeting Minutes for further information.

  • Classified School Employee Summer Assistance Program (CSESAP) – No Contributions from Unrestricted/Restricted Revenues

During  review of 2021–22 unaudited actuals data, CDE noted that some LEAs made contributions to the CSESAP (Resource 7415) to cover additional expenditures (e.g., statutory benefits associated with the state matched salaries). CDE would like to remind LEAs that contributions to CSESAP are not allowed because the state match funds are only intended to cover actual salary expenditures. Any contributions made to the CSESAP will trigger technical review check exception(s) in the SACS Web System and will distort expenditure reporting for this program. Please refer to the May 2019 SACS Forum Meeting Minutes for further information.

Validation Tables

A validation table update was released on January 20, 2023 which included the following new resource codes:

6333 – CA Community Schools Partnership Act – Coordination Grant

6383 – Golden State Pathways Program

7033 – Child Nutrition: School Food Best Practices Apportionment

7339 Dual Enrollment Opportunities

An update to the SACS Web System was deployed on January 30, 2023 which contained the new resource codes.

CDE reminded participants that with the transition to the SACS Web System, LEAs are no longer required to manually update the software with the valid codes and combinations. The SACS Web System will automatically be updated with all future validation table updates.

The tables are still being provided and posted to the web for those LEAs who opt to use them in their local accounting systems. The updated tables are available for download and can be found on CDE’s SACS Valid Codes and Combinations web page.

Home to School Transportation – Indirect Costs

CDE received the following question: In the Home-to-School Transportation Reimbursement (HTSTR) FAQ webpage, it indicates that indirect costs are an allowable expense for transportation. However, it seems that this amount would not be included in the reimbursement.  For example, if CDE pulls costs based on Function 3600 and indirect costs use Function 7210, then these costs would never be included. Is there a way to code indirect costs so they would be included in the reimbursement?

Education Code Section 41850.1 is silent on whether LEAs can charge indirect costs for HTSTR program. However, it is clearly stated that only expenditures reported in Function 3600 are eligible for reimbursement. Since indirect costs are reported using general administration functions (functions 7200–7999), these costs are not eligible for reimbursement for HTSTR program under the current law.

NOTE: This guidance differs from what was discussed at the meeting, which was that a proportionate share of indirect costs may be transferred from Function 7200 to Function 3600. It was determined that guidance would result in inaccurate financial reporting.

Governmental Accounting Standards Board (GASB) 96 – Subscription-Based Information Technology Arrangements (SBITAs) Reminder

GASB 96 is effective 2022–23. “Subscription-Based Information Technology Arrangement (SBITA)” is defined as “a contract that conveys control of the right to use another party’s (a SBITA vendor’s) information technology (IT) software, alone or in combination with tangible capital assets (the underlying IT assets), as specified in the contract for a period of time in an exchange or exchange-like transaction”.

In order to determine if a contract meet the definition of SBITA, all of the four elements must be met:

  • Control
  • Underlying IT software
  • Subscription Term
  • Exchange or exchange-like transaction

In determining which statement (GASB 87, Leases, or GASB 96) should be applied, the following guidance can be used:

  • If the contract covers tangible capital assets only, GASB 87 should be applied.
  • If the contract covers IT software only, GASB 96 should be applied.
  • If the contract covers both IT software in combination with tangible capital assets and:
    • the cost of the IT software component is insignificant when compared to the cost of the underlying capital asset, GASB 87 should be applied.
    • the cost of the IT software component is significant when compared to the cost of the underlying capital asset, GASB 96 should be applied.

Costs for activities associated with a SBITA should be grouped into the following three stages:

  1. Preliminary project stage

    • Costs incurred during this stage should be expensed.
    • Examples – conceptual formulation and evaluation of alternatives, determination of existence of needed technology, final selection of alternatives for the SBITA.2.

  2. Initial implementation stage

    • Costs incurred during this stage should be capitalized as part of the subscription asset.
    • However, for short-term SBITA, costs incurred during this stage should be expensed because no subscription asset should be recognized for short-term SBITA.

  3. Operation and additional implementation stage

    • Costs incurred during this stage should be expensed.

GASB has issued two proposed implementation guide updates which included three questions, in total, on SBITAs, and the final guide is scheduled to be released in June 2023. These two proposed implementation guide updates can be found at GASB website External link opens in new window or tab. for reference.

  • Question: Is a licensing agreement for a vendor’s computer software that automatically renews until cancelled a licensing agreement that provide a perpetual license?

Answer: No. A provision under which a licensing agreement automatically renews until cancelled is an option to terminate the agreement at each renewal date. An agreement that includes an option to terminate is not a purchase, whereas a perpetual license is a purchase in which a government is granted a permanent right to use the vendor’s computer software.

  • Question: A government enters into a six-year SBITA contract with no options to extend or terminate the contract and begins making semiannual subscription payments to the SBITA vendor immediately after the contract takes effect. The initial implementation stage is not completed until the end of the second year after the contract takes effect. What is the subscription term?

Answer – The subscription term is four years. The initial implementation stage is completed at the end of the second year of the contract. Therefore, the subscription term commences at the beginning of the third year and ends at the conclusion of the sixth year when the SBITA contract ends.

  • Question – Does a cloud computing agreement meet the definition of a SBITA?

Answer – A cloud computing agreement may or may not meet the definition of a SBITA in paragraph 6 of GASB 96. As part of its determination of whether a cloud computing agreement meets the definition of a SBITA, a government should evaluate whether the contract conveys control of the right to use the underlying IT assets in accordance with paragraph 7 of GASB 96.

Accounting for Short-Term SBITAs

Short-term subscription payments should be recognized as outflows of resources (for example, expense). Examples are as follows:

  • Object 4100, Approved Textbooks and Core Curricula Materials, should be used for internet-based or computer-based state adopted core curriculum.
  • Object 5800, Professional/Consulting Services and Operating Expenditures, should be used for internet-based publications and materials.

Accounting example for SBITAs (other than Short-term SBITAs) in Governmental Funds

  • Subscription start date = July 1, 2022
  • Subscription end date = June 30, 2027
  • First payment date = July 1, 2022
  • Payments = $15,000 annually, paid in advance (July 1st)
  • Discount rate = 5%
  • The SBITA contains the following amortization schedule:

    Date Subscription Payment Interest Expenditure @ 5% Principal Expenditure Balance of Subscription Liability
    7/1/2022 $0 $0 $0 $68,189
    7/1/2022 $15,000 $0 $15,000 $53,189
    7/1/2023 $15,000 $2,659 $12,341 $40,848
    7/1/2024 $15,000 $2,042 $12,958 $27,890
    7/1/2025 $15,000 $1,395 $13,605 $14,285
    7/1/2026 $15,000 $715 $14,285 $0
    Total $75,000 $6,811 $68,189 $0
  1. Record the SBITA at inception. 07/01/2022 is the date when the vendor makes the underlying asset available for use by the government.

    Debit/Credit Description Amount
    Debit Object 6700, Subscription Assets $68,189
    Credit Object 8974, Proceeds from SBITAs $68,189

  2. Record the first subscription payment on 07/01/2022.

    Debit/Credit Description Amount
    Debit Object 7439, other Debt Service-Principal $15,000
    Credit Object 9110, Cash $15,000

  3. Record the second subscription payment on 07/01/2023.

    Debit/Credit Description Amount
    Debit Object 7438, Debt Service-Interest $2,659
    Debit Object 7439, Other Debt Service-Principal $12,341
    Credit Object 9110, Cash $15,000

Acounting Discussion

Proposal to Close LCFF Transfers (Objects 8091 and 8099) in Adult Education (Fund 11) and Deferred Maintenance (Fund 14) for JPAs

Joint powers agreements/agencies (JPAs) do not receive Local Control Funding Formula (LCFF) apportionments. Therefore, LCFF revenue object codes (objects 8011 and 8019) are not valid for JPAs. However, Object 8091, LCFF Transfers–Current Year, and Object 8099, LCFF/Revenue Limit Transfers–Prior Years, were opened to Funds 11, Adult Education Fund, and Fund 14, Deferred Maintenance Fund in error in 2013–14.

CDE has reviewed 2021–22 unaudited actuals data and noted that no JPAs used these two object codes in their financial data reporting. CDE proposes to close the combinations effective 2023–24.

Proposal to Open Special Education Goals to Child Development (Fund 12)

Pursuant to Education Code Section 8208(c)(1): California State Preschool Program are required to set aside at least 5% of funded enrollment for children with exceptional needs. This requirement also increases to 7.5% in 2023–24 and 10% in 2024–25. Due to these requirements, CDE has received inquiries from LEAs requesting to open Special Education goal codes (5XXX) to Fund 12, Child Development Fund. Additionally, during the review of the 2021–22 unaudited actuals data, several LEAs coded goal 5XXX to Fund 12 since the technical review check for CHK-FundxGoal is only a warning check.

If CDE does open the 5XXX goal codes to Fund 12, it would be effective 2023–24.

Since CDE rarely opens goal codes to other funds, LEA feedback is needed.  Please send your comments to You can also refer to Early Education’s Management Bulletin 23-02 for more information.

SACS Financial Reporting

SACS Web-based Financial Reporting System (SACS Web System) Updates

Release Updates

Following is the SACS Web System release schedule:

  • 2022-23 2nd Interim reporting period was released on 01/20/23
  • 2022-23 End of Year Projection reporting period is expected by mid-April
  • 2023-24 Budget reporting period is anticipated mid- to late-April
  • 2022-23 Unaudited Actuals (UA) reporting period anticipated late-June

The SACS UA reporting period as well as the 2022–23 UA Charter School Alternative Form (ALT Form) will be available in the SACS Web System. All charter schools will report their 2022–23 UA financial data, whether SACS or ALT Form, in the SACS Web System. Planning should start now for adding charter school users that haven’t yet been added to the system.

CDE is in the process of developing a training program for UA functionality, included the ALT Form.

CDE has received several questions regarding availability of the Publishing functionality. Development of that functionality is going to be a priority after the UA reporting period is released.

Proposed Changes for 2023-24 Budget Reporting Period

Criteria and Standards Form 01CS

  • COE only -- Criterion 2 LCFF Revenue
    • Modify Line I.b, COE Funded at Hold Harmless LCFF, to incorporate the COLA add-on for hold harmless COEs, pursuant to AB 181, Chapter 52 (Statutes of 2022). Add two lines to allow COE to enter the projected county operations grant and alternative education grant to calculate the COLA add-on amount.
  • District only -- Criterion 7 Facilities Maintenance
    • Section 7.2, Ongoing and Major Maintenance/Restricted Maintenance Account Line 2A, Budgeted Expenditures and Other Financing Uses
    • Add the following new resources to exclude from calculation: 3225, 3226, 3227, 3228, 5632, 5633, and 5634
    • Remove the following resources from the exclusion, effective 2023–24: 3210 and 3215

Changes due to GASB 96, Subscription-Based Information Technology Arrangements (SBITAs):

  • New object codes, effective 2022–23:
    Funds 01, 08, 09, 11, 12, 13, 14, 15, 18, 21, 25, 30, 35, 40, 49
    • Object 6700, Subscription Assets
    • Object 8974, Proceeds from SBITA
    Funds 61, 62, 63, 66, 67, 73
    • Object 6920, Amortization Expense - Subscription Assets
    • Object 9660, Subscription Liability
    • Object 9470, Subscription Assets
    • Object 9475, Accumulated Amortization-Subscription Assets
  • Form ASSET
    • Add the following objects, effective 2022–23:
      • Object 9470, Subscription Assets
      • Object 9475, Accumulated Amortization-Subscription Assets
    • Add Object 9475, Accumulated Amortization-Subscription Assets, effective 2022–23
  • Form DEBT
    • Add Object 9660, Subscription Liability, effective 2022–23

Other Updates

Next Meeting

The next SACS Forum is tentatively scheduled for Tuesday, May 16, 2023. CDE is again planning on offering the forum via webinar only.

Questions:   Financial Accountability & Information Services | | 916-322-1770
Last Reviewed: Friday, June 14, 2024
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