SACS Forum Meeting Minutes, May 2021

Standardized Account Code Structure (SACS) May 11, 2021 meeting minutes.

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

Meeting Agenda

Meeting Minutes

Announcements and Information

2021 Bid Threshold Adjustment and Parent Liability

The Annual Adjustment to Bid Threshold for Contracts Awarded by School Districts and 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 2021, both amounts received an increase of 1.57% from the prior year. The bid threshold amount is $96,700, and the willful pupil misconduct amount is $21,200.

Local Education Agency (LEA) Approved Indirect Cost Rates Posted

The 2021–22 approved indirect cost rates have been published and can be found on the CDE’s Indirect Cost Rates (ICR) web page.

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

The collection of the 2019–20 reporting data for the ESSA PPE has closed. For the 2019–20 reporting year collection, the CDE received a 100% response rate from all county offices of education, school districts, and direct funded charter schools. The CDE anticipates posting the LEA and school-level data on CDE’s ESSA Per-Pupil Expenditure Data Files web page by June 30, 2021. Additional information regarding the ESSA PPE requirement can be found on the CDE’s ESSA Per-Pupil Expenditure (PPE) Reporting web page.

SACS2021 Budget Software Release

The SACS2021 budget financial reporting software has been released and is available for download from the CDE’s Financial Reporting software web page.

Accounting Updates

Governmental Accounting Standards Board (GASB 84): Fiduciary Activities – Entries in SACS

Due to GASB 95, Postponement of the Effective Dates of Certain Authoritative Guidance, the effective year of GASB 84, Fiduciary Activities, and its Implementation Guide 2019-2, Fiduciary Activities, has been postponed from 2019–20 to 2020–21. Changes have already been implemented in the SACS chart of accounts and SACS software. Please refer to the Attachment A (PDF) of the SACS Forum Meeting Minutes, October 2020 for a summary of previous SACS Forum discussions on GASB 84.

Custodial Funds (Funds 76 and 95)

GASB 84 reclassifies the former agency funds (funds 76 and 95) as custodial funds. Prior to GASB 84, agency funds required the presentation of assets and liabilities only in the statement of fiduciary net position. The Components of Ending Fund Balance screen was not available in the SACS software, and the reporting to CDE was optional. For custodial funds, GASB 84 requires a statement of fiduciary net position reflecting assets, deferred outflows, liabilities, deferred inflows, and fiduciary net position and a statement of changes in fiduciary net position reflecting additions and deductions. The Components of Ending Fund Balance screen now is available in SACS software, and the reporting to CDE is required.

Two new object codes have been established to accommodate expanded financial reporting for custodial funds:

Object 7500, Funds Distributed to Others
- Created to allow LEAs to record resource deductions in custodial funds.
- Object range 7501–7519, Funds Distributed to Others: Locally Defined, is reserved to allow LEAs to create locally defined object codes within this range to identify specific distributions.
- When reporting data to CDE, LEAs must roll up all objects within this range to Object 7500.
Object 8800, Funds Collected for Others
- Created to allow LEAs to record resource additions in custodial funds.
- Object range 8801–8819, Funds Collected for Others: Locally Defined, is reserved to allow LEAs to create locally defined object codes within this range to identify specific sources.
- When reporting data to CDE, LEAs must roll up all objects within this range to Object 8800.

Resource 9010, Other Restricted Local, is now open to custodial funds to allow LEAs to report restricted fiduciary net position.

The beginning fund balance of custodial funds in 2020–21 should be established using Object 9795, Other Restatements, rather than Object 9791, Beginning Fund Balance, which must be zero. Otherwise, a fatal technical review check (TRC) exception(s) will be generated in SACS for the TRC that compares the current year’s beginning fund balance to the prior year’s ending fund balance.

It is common for LEAs using a clearing account to accumulate resources from employee payroll withholding and accrued employer payroll taxes that will be submitted to the appropriate agencies when due. With the implementation of GASB 84, LEAs should not report the clearing account in a custodial fund because LEAs are holding the amounts for their own benefit. Please refer to the pages 8 and 9 of the Attachment A (PDF) for details and accounting entries example.

Governmental Associated Student Body (ASB) Activities

A new special revenue fund, Fund 08, Student Activity Special Revenue Fund, has been established to account for those ASB activities that do not meet the fiduciary activity criteria pursuant to GASB 84 but are determined to be governmental activities. The use of Fund 08 is optional. LEAs may choose to use the general fund for reporting ASB activities or use Fund 09 or Fund 62 for reporting charter school ASB activities (following the rules for use of those funds).

A new restricted resource, Resource 8210, Student Activity Funds, has also been established for reporting governmental ASB activities. The use of Resource 8210 is mandatory. Resource 8210 is open to Fund 01, Fund 08, Fund 09, and Fund 62. This will allow CDE to capture all governmental ASB activities regardless of the fund in which they are reported.

The range of resources 8201 through 8299 is reserved by CDE to allow LEAs the option to locally define and track different ASB activities. When reporting data to CDE, LEAs must roll up these locally defined resources to Resource 8210.

Similarly, Object 9795, not Object 9791, should be used to report beginning balance to Fund 08. Please refer to the above under custodial funds for details

The following are common ASB revenues and expenditures that could be recorded using the existing SACS object codes:

Donation received
- Object 8699, All Other Local Revenue
Sales of goods and/or services
- Object 8639, All Other Sales
- Examples: yearbook sales, food/concession sales, ASB card sales, cookie dough sales, student ticket sales for events (e.g., football game)
Most ASB expenditures could be recorded using:
- Object 4300, Materials and Supplies
- Object 5800, Professional/Consulting Services and Operating Expenditures
- NOTE: Object 5200 was listed on the presentation slides in error. Object 5200 is not open to Fund 08 because Object 5200 is only for actual and necessary expenses incurred by and/or for employees and other representatives of the LEA for travel and conferences. Students are not legal representatives or employees of the LEA. Therefore, Object 5800 should be used for travel related costs for ASB.

GASB 87: Leases Update

Due to GASB 95, the effective year of GASB 87, Leases, and its Implementation Guide 2019-3, Leases, has been postponed from 2020–21 and 2021–22. Under previous guidance, leases could be presented as either capital leases or operating leases. Under GASB 87, there is only one single model for lease accounting and there is no longer a distinction between capital and operating leases.

GASB 87 defines a lease as “a contract that conveys control of the right to use another entity’s nonfinancial asset (the underlying asset) as specified in the contract for a period of time in an exchange or exchange-like transaction.”

GASB 87 identifies three types of leases:
- Short-term leases
- Contracts that transfer ownership
- All Other Leases (leases other than short-term leases and contracts that transfer ownership

The accounting for short-term leases can be reported using existing SACS object codes – Object 8650, Leases and Rentals, for lease revenues; and Object 5600, Rentals, Leases, Repairs, and Noncapitalized Improvements, for lease expenditures.

The accounting for a contract that transfers ownerships is reported by the lessee as a financed purchase by reporting the underlying asset and a liability, rather than a lease asset and a lease payable. The lessor should report it as a sale of the asset. The transaction can be reported using existing SACS object codes.

The accounting for all other leases requires new object codes to allow LEAs to account for these leases pursuant to GASB 87, and the titles of some existing object codes are also required to be changed to remove “capital” from the titles.

Please refer to SACS Forum Meeting Minutes, February 2020 for details about the accounting of these three types of leases.

New Object Codes

CDE previously established the following new object codes (* For proprietary and fiduciary funds (except custodial funds) only):

New capital outlay expenditures object codes
- Object 6600, Lease Assets (used in governmental funds only)
- Object 6910, Amortization Expense–Lease Assets*
New asset object codes
- Object 9380, Lease Receivable
- Object 9460, Lease Assets*
- Object 9465, Accumulated Amortization–Lease Assets*
  
  Combinations of valid codes were issued in the April 2021 SACS validation tables updates to reflect the above newly established object codes and object title change. Changes have also already been made in the SACS2021 Budget financial reporting software for 2021–22 budget data, and fund forms have also been modified to include these newly established object codes for 2021–22 budget data.
Changes to Special Education Maintenance of Effort (SEMOE)

SEMOE reports (reports SEMB and SEMAI) have already been updated to exclude Object 6600 and 6910 expenditures from capital outlay expenditures. Lease assets are intangible right-to-use assets pursuant to GASB 87; however, intangible right-to-use assets under lease contracts are not considered as capital leases per federal uniform guidance.

No changes were made to the report SEMA because GASB 87 is effective 2021–22 and SEMA compares 2020–21 actuals data to comparison year’s actuals data in the SACS2021ALL software.
Reclassification of FY 2019–20 CARES Act Expenditures

The CDE discussed two available options for LEAs who are required to reclassify FY 2019–20 CARES Act expenditures in 2020–21:

Option 1 – Adjust beginning balance of current year

The beginning balance of current year can be adjusted using Object 9793, Audit Adjustments, for adjustments recommended by auditors during the 2019–20 audit process.

Option 2 – Reclassify expenditures in the current year

Some LEAs have incurred eligible CARES expenditures in 2019–20 but recorded such expenditures using non-CARES resource (for example, Resource 0000) in 2019–20. In the current year (2020–21), LEAs can reclassify those 2019–20 CARES expenditures not reported until 2020–21 by debiting expenditures in CARES resource and crediting expenditures in Resource 0000.

On the other hand, some LEAs reported 2019–20 expenditures using CARES resources in 2019–20 but are now required to report such expenditures using another applicable resource in the current year (for example, those expenditures were found not to be eligible in the current year). In the current year, the LEA can reclassify the expenditures by debiting expenditures in the applicable resource and crediting expenditures in CARES resource.

Please note that the reclassification of expenditures is not the accounting guidance we have recommended in the past. Generally, we recommend LEAs use contributions for corrections in the current year. However, contribution object codes are not open in combination with CARES resources in order to facilitate transparent reporting of expenditures in CARES resources. CARES expenditures would be distorted if contributions were made. Therefore, we propose this option for CARES expenditures reclassification.

NOTE: Subsequent to the meeting, we concluded that Object 9795, Other Restatements, could be another option for LEAs to adjust balances in the CARES Act resources as a result of reclassifying prior year expenditures, although restatements should be done for material corrections in accordance with CSAM. This is due to the fact that LEAs may not want to reclassify the expenditures in the current year and the “contribution” option is not available for CARES Act resources.

COVID Related Resource Codes

The CDE provided an overview of recent resource codes established for funding sources related to COVID-19.
- RS 5033 – Child Development: Preschool Development Grant - Renewal FY 2020
- RS 5057 – Child Development: Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act - Alternative Payment Programs and Migrant Day Care
- RS 5058 – Child Development: Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act - One-time Stipend
- RS 7422 – In-Person Instruction (IPI) Grant
  The IPI Grant is subject to unearned revenue. LEAs will not recognize revenue until all eligibility requirements are met, pursuant to Education Code Section 43521(c)(3).
- RS 7425 – Expanded Learning Opportunities (ELO) Grant
- RS 7426 – Expanded Learning Opportunities (ELO) Grant: Paraprofessional Staff
  This resource was established for LEAs to account for the paraprofessional staff requirement portion of the ELO Grant, pursuant to Education Code Section 43522(c).
- Resource to be Determined - ESSER III
  The CDE has received inquiries asking when a resource code will be established for ESSER III. CDE is working on the correct accounting guidance and will release the resource code as soon as practical.
  
  NOTE: Subsequent to the meeting, the CDE released a SACS validation table update on June 11, 2021 establishing Resource 3213, Elementary and Secondary School Emergency Relief III (ESSER III) Fund and Resource 3214, Elementary and Secondary School Emergency Relief III (ESSER III) Fund: Learning Loss. The updated validation tables are available on CDE’s SACS Valid Codes and Combinations web page.

Additional information on COVID related funding can be found on CDE’s COVID-19 Relief and School Reopening Grants web page.

Medi-Cal Administrative Activities (MAA) and Medi-Cal Billing Option Update

During the October 2020 SACS Forum meeting, the CDE discussed a possible change to the accounting of certain Department of Health Care Services (DHCS) administered programs, including the School-Based Medi-Cal Administrative Activities (SMAA) and the LEA Medi-Cal Billing Option Programs (LEA BOP). Additional information regarding the discussion can be found on the CDE’s SACS Forum Meeting Minutes, October 2020 web page.

As proposed, the CDE will make the following changes to both the SMAA and the LEA BOP:
- SMAA program: Change the revenue object code from 8290 to 8699, All Other Local Revenue.
- LEA BOP: Change resource code from 5640 to Resource 9010, Other Restricted Local, and object code 8699.

Note that for SMAA, the change only affects revenue reporting since the resource code is 0000.

For LEA BOP, LEAs will need to reclassify the program transactions from Resource 5640 to Resource 9010 (or a locally defined resource within the range 9000–9999 that rolls to 9010 for state reporting). For 2021–22, LEAs can reclassify the beginning balance from Resource 5640 to Resource 9010 using Object 9795, Other Restatements.

Each of these changes can be done in fiscal year 2020–21 or 2021–22. Resource code 5640 will become inactive beginning fiscal year 2022–23.

Transfer of Childcare Programs to the State Department of Social Services

To better align the child care and development programs, Senate Bill 98 (Chapter 24, Statutes of 2020) enacted the Early Childhood Development Act of 2020, which transfers some of these programs from the CDE to the California Department of Social Services (CDSS) effective July 1, 2021. As these programs are being transitioned to CDSS, LEAs should expect to receive communication from both CDE and CDSS. At this time there will be no changes to the existing SACS resource codes for these programs. As more information becomes available, updates will be made and can be found on CDE’s SACS Query web page. The CDE has not determined how the resource codes will be assigned for future program funding from CDSS. Additional information will be provided at a later date.

Currently, the following programs will be transferred from CDE to CDSS effective July 1, 2021:

Alternative Payment Programs (CAPP)
Migrant Alternative Payment Programs (CMAP)
California Work Opportunity and Responsibility to Kids (CalWORKs) Stage 2 Childcare
CalWORKs Stage 3 Childcare
General Childcare and Development Programs (CCTR)
Migrant Childcare and Development Programs (CMIG)
Childcare and Development Services for Children with Severe Disabilities
The Child and Adult Care Food Program
Childcare and Development Facilities Capital Outlay
The Early Learning and Care Workforce Development Grants Program
The California Head Start State Collaboration Office
The Early Head Start-Child Care Partnerships Grant
Other Childcare Quality Improvement Projects

More information regarding this transition can be found on the CDSS’s Child Care Transition web page.

2019–20 Unaudited Actuals (UA) Data Review – Observations

The CDE provided a list of accounting and reporting observations (DOCX) made during review of the 2019-20 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.

SACS Software Update

SACS2021ALL Software Release

CDE anticipates releasing the SACS2021ALL financial reporting software during the first week of July.
Criteria and Standards Facilities Maintenance

District only – Budget/Interims – Criterion 7 – Facilities Maintenance

Senate Bill 98 (Chapter 24, Statutes of 2020), excludes on-behalf pension contributions (Resource 7690) from the routine restricted maintenance account (RRMA) calculation. Senate Bill 820 (Chapter 110, Statues of 2020), excludes CARES Act related expenditures from the RRMA calculation, which include resource codes 3210, 3215, 3220, 5316, 7027, and 7420. These resource codes will automatically be excluded from the three percent total general fund expenditures and other financing uses calculation. LEAs no longer need to manually exclude those resource codes in the SACS2021 budget/interims software.

Please note the ESSER II (CRRSA Act), In-Person Instruction, Expanded Learning Opportunities, and ESSER III (ARP Act) are currently not excluded from the RRMA calculation. In the May Revise 2021-22 budget, there is proposed language to exempt ESSER II and ESSER III funds from RRMA calculation. However, since the budget has not passed, CDE does not recommend LEAs to exclude any ESSER II and ESSER III resource codes from the RRMA calculation at this time. Once the budget is approved, and assuming the ESSER II and ESSER III exclusion of the RRMA calculation are included, then LEAs can adjust the RRMA contribution requirements at First Interim. In the SACS2021ALL financial reporting software for First Interim, the “Required Minimum Contribution” cell is unlocked. LEAs can adjust the amounts to exclude ESSER II and ESSER III resource codes.
SACS Replacement System Update

The CDE provided an update on the progress of the new system and its key features. As background, the CDE contracted with the Fiscal Crisis and Management Assistance Team/California School Information Services (FCMAT/CSIS), subsidiaries of the Kern County Superintendent of Schools, in August 2018 to develop a web-based SACS financial reporting system. The web-based system will replace the over twenty-year-old legacy downloadable desktop software and associated components. The project is in its third year of development, with a scheduled go live date of early April 2022, in time for 2022–23 budget period reporting.

Several new components and functionality will be available with the new system, including:
- User roles and security
- Modeled workflow
- Dataset drafts versus submissions
- Multiuser functionality
- Dataset versioning
User roles and security

All system users will be required to establish a user account and access the system with an email account and password. Each user level will be will assigned one or more user roles that will determine what system operations the user is allowed to perform, e.g., edit datasets, approve datasets, user management, etc.

Modeled workflow

Because SACS and charter school alternative form datasets will now be managed through the web-based system, considerable time was spent during system requirements refinement to ensure all possible actions on a dataset can are handled by the system.

Dataset drafts versus submissions

Datasets will be classified in two different categories – draft and submission.

Draft datasets will be available in the user’s personal working area, and only visible to that user unless a copy is shared with others. A maximum of five drafts will be allowed in the user’s draft working area. A draft dataset may be promoted to a submission dataset.

Submission datasets will be visible to all entity users assigned the correct roles. An entity may only have one submission dataset at a time. Once a submission dataset is promoted to oversight for review, the submission will be locked for edits, meaning the submitting entity will not be able to make additional edits while the dataset is with the oversight entity.

Multiuser functionality

Simultaneous collaboration on a submission dataset will be allowed by entity users with the correct roles, e.g., edit dataset. Individual forms can be edited by different users, e.g., one user may be editing Form A while another may be editing Form CAT. Note that multiple users may not edit the same form at the same time. A locking feature will prevent this from occurring.

Dataset versioning

As a dataset moves through the workflow stages, versions of the dataset will be recorded so an entity may restore a previous version of the dataset if necessary.

System enhancements and improvements

Other notable enhancements and improvements with the new system include:

eTransfer component integrated
Charter school Alternative Form integrated
Validation table updates integrated
User interface and layout enhancements
DAT files become online “datasets”

Thinking ahead

Although the SACS financial reporting functionality remains essentially unchanged, LEAs will nevertheless need to consider how the transition from a stand-alone desktop application to a web-based system will affect their current processes and procedures. Areas to consider include:

Security / internal controls in a web-based environment
Staff user roles
Managing dataset versions
Other internal procedural changes necessary as a result of implementing the web-based system

CDE and FCMAT/CSIS will continue outreach and training efforts to ensure LEAs have the information needed to implement the new system.

Targeted outreach in the Fall 2021
Formal training for nonpublic users planned for January through March 2022

Other Updates

Next Meeting

The next SACS Forum meeting is tentatively scheduled for October 5, 2021. CDE is again planning on offering the forum via webinar only. Meeting information can be found on the SACS Forum Upcoming Meetings web page.

Questions: Financial Accountability & Information Services | sacsinfo@cde.ca.gov | 916-322-1770

Last Reviewed: Tuesday, August 22, 2023

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