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SACS Forum Meeting Minutes, May 2014

Standardized Account Code Structure (SACS) meeting minutes for May 6, 2014.

Meeting Agenda

Announcements and Information
  • Local Educational Agency (LEA) approved indirect cost rates posted

  • SACS 2014 budget software released

  • March 28, 2014 letter regarding format of 2014–15 proposed budgets
Accounting Issues
  • Deferred outflows and inflows of resources, Governmental Accounting Standards Board (GASB) Statement 63 and Statement 65 (GASB 63 and GASB 65) - guidance update

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

  • Local Control Funding Formula (LCFF) accounting issues

  • County office funds transfers from districts – continued discussion
  • Deferred Maintenance Fund and contributions to the Restricted Maintenance Account (RMA) (Resource 8150)
  • Reminders regarding reporting 2013–14 actuals data for resources closed as a result of funding consolidated into the LCFF
SACS Software Issues
  • SACS2014ALL software release – proposed changes

  • April Validation Table Update
Other Issues
  • Next meeting tentatively scheduled for October 7, 2014

Meeting Minutes

Announcements and Information
Accounting Issues
  • Deferred outflows and inflows of resources, Governmental Accounting Standards Board (GASB) Statement 63 and Statement 65 (GASB 63 and GASB 65) - guidance update

    The CDE is still in the process of formulating guidance for LEAs to implement the provisions of GASB 63 and GASB 65.

    The CDE discussed the following items LEAs are most likely to encounter as they close 2013–14 that should be evaluated for classification as deferred outflows of resources, deferred inflows of resources, or expenditures.

    • Unavailable revenue. Revenue that is earned and measurable but not collectible within the timeframe defined for availability. Formerly reported as a liability but now reported as a deferred inflow of resources. This applies to governmental fund types only.

    • Grant amounts received where the only eligibility requirement that has not been met is the time requirement, i.e., amounts received prior to the period in which they are first allowed to be expended. Formerly reported as a liability but now reported as a deferred inflow of resources.

    • Current or advance debt refundings resulting in the defeasance of debt. The difference between the carrying value of the refunded debt and the amount needed to refund the debt. Formerly reported as an asset or liability, depending on whether a debit amount or credit amount, i.e., gain or loss. Now reported as a deferred outflow or deferred inflow of resources.

    • Debt issuance costs, except for prepaid insurance. Debt issuance costs were formerly reported as an asset, i.e., prepaid expense, and amortized over the life of the debt. Debt issuance costs are now expensed in the period incurred. Note that in governmental funds these amounts have always been and continue to be reported as expenditures. These amounts will no longer be converted to an asset in the SACS software government-wide conversion entries.

    Also note that amounts associated with the above items that are carried forward from prior years and reported as assets or liabilities, e.g., unamortized bond issuance costs and the gain or loss on the refunding of debt, should be reclassified in 2013–14 with an adjustment to beginning fund balance, i.e., restatement, if necessary.

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

    The CDE continues to monitor developments regarding GASB 68. GASB 68 is effective 2014–15 but most work won’t need to be done until year-end financial statement preparation. The net pension liability, pension expense, and deferred inflows / deferred outflows of resources required to be reported by employers will primarily affect the government-wide financial statements, not the governmental fund statements. Not-for-profit charter schools that use the full-accrual basis of accounting may need to report these amounts in their fund statement if amounts can be attributed to the charter school.                                                                                       

    The California State Teachers Retirement System (CalSTRS) continues its outreach efforts. An Employer Information Circular [http://www.calstrs.com/sites/main/files/file-attachments/eicvol30iss2_v2.pdf] External link opens in new window or tab. (PDF) was issued in April that describes how CalSTRS will assist LEAs with GASB 68 implementation.

    Per the information currently available on their Web site, the California Public Employees Retirement System (CalPERS) will provide additional information beginning this fall, but they do not plan to provide the information needed for LEAs to prepare their 2014–15 financial statements until the fall of 2015. In addition, CalPERS has indicated they will charge a fee to employers for providing this information.

    UPDATE: The CDE has learned the CalPERS expects to be ready to provide the information needed by LEAs in the spring of 2015.

  • Local Control Funding Formula (LCFF) accounting issues

    • County office funds transfers from districts – continued discussion

      The CDE continues to solicit feedback from LEA staff to aid in developing accounting guidance. The CDE’s objective is to align generally accepted accounting principles (GAAP) with Special Education and No Child Left Behind maintenance of effort, current expense of education and program cost reporting.

      Participants discussed how they are currently accounting for the transfer of funds from the district to the county office of education (COE). Current methods include interagency transfers, including transfer of apportionment, and excess cost bill backs to the districts from the COE.

      There were discussions regarding how the accounting can affect the LCFF proportionality calculation. The increased district revenue increases the proportionality calculation, i.e., the amount of supplemental and concentration funds that must be used to increase or improve services for unduplicated pupil populations. Some participants suggested that the transfer of funds from the district to the COE should be an offsetting transfer within the LCFF revenue range, thereby reducing LCFF revenue that is used in the proportionality calculation. However, offsetting revenue is not an option per statute and per GAAP.

      There were also discussions about the unintended consequences of using the contracted services accounting model. First, it may be difficult for districts to determine how to break out the expenditures to the appropriate Special Education goal without getting detailed information from the COE. Additionally, some participants noted that the increased expenditure will cause an increase in the amount districts set aside for reserves, although accounting for the outlay as excess costs will also cause reserve amounts to increase. The CDE notes that to the extent LEAs have additional expenditures then the additional reserve amount reflects the additional obligation incurred.

      UPDATE: The CDE sent its guidance on COE transfers by e-mail on June 26, 2014.

    • Deferred Maintenance Fund (Fund 14) and contributions to the Restricted Maintenance Account (RMA), Resource 8150

      A discussion regarding implications for LEAs that continue to use Fund 14, as contributions to that fund no longer count towards the three percent RMA contribution requirement, is provided in Attachment A to the SACS Forum meeting minutes for May 6, 2014[http://www.cde.ca.gov/fg/ac/ac/sacsminutes050614a.asp]. This is because the implementation of GASB Statement 54 necessitated changing the accounting for funding sources reported in Fund 14 in order to allow the continued use of that fund, and that accounting no longer captures what gets counted towards the RMA.

      Included in the discussion are potential options to address this unintended consequence of the new accounting treatment. Note that the CDE does not intend to change its accounting guidance because that guidance is based on generally accepted accounting principles. Participants appeared to favor a change in statute to allow RMA deposits in any fund to count towards the three percent contribution requirement.

      The CDE will continue to evaluate alternatives, along with LEA feedback, to determine the next steps, if any, to be taken.

    • Reminders regarding reporting 2013–14 actuals data for resources closed as a result of funding consolidated into the LCFF

      The CDE recapped accounting for resources closed as a result of funding consolidated into the LCFF as well as other LCFF-related accounting guidance that LEAs should use for preparing 2013–14 actuals financial data.

      A summary of LCFF accounting guidance is provided in a question and answer format in Attachment B to the SACS Forum meeting minutes for May 6, 2014 [http://www.cde.ca.gov/fg/ac/ac/sacsminutes050614b.asp].
      A few participants indicated that some of the guidance will be difficult to implement based on the workload it creates and the materiality, e.g., adjusting excess expenditures out of obsolete resource codes rather than being able to make an unrestricted contribution to cover those expenditures. The CDE acknowledged that there is workload involved but reiterated that to the extent that resources were no longer restricted in 2013–14, reporting them as restricted would be misleading, and indicated that LEAs should follow the CDE’s guidance to maintain consistency and relevance in the statewide data.
SACS Software Issues
  • SACS2014ALL software release – proposed changes

    A list of the proposed changes to be made in the SACS2014ALL software release is provided in Attachment C to the SACS Forum meeting minutes for May 6, 2014 [http://www.cde.ca.gov/fg/ac/ac/sacsminutes050614c.asp].These changes were briefly reviewed.

  • April validation table update

    The CDE issued a SACS validation table update dated April 29, which was also included with the SACS2014 budget software release. The CDE notified participants that these tables should not be used to update the SACS2013ALL software for LEAs that are required to prepare end of year projections, or third interim, reports. This is because some fund by object code combinations were closed effective 2013–14 that may cause fatal technical review exceptions for LEAs that use those code combinations in their third interim reports.
Other Issues
  • Next meeting tentatively scheduled for October 7, 2014

    The next SACS Forum meeting is scheduled for Tuesday, October 7, 2014 at the California Department of Education headquarters in Sacramento.
Questions:   Financial Accountability & Information Services | sacsinfo@cde.ca.gov | 916-322-1770
Last Reviewed: Monday, August 5, 2019