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SACS Forum Meeting Minutes, November 2017

Standardized Account Code Structure (SACS) meeting minutes for November 7, 2017.

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

Meeting Agenda

Announcements and Information
  • New School Fiscal Services Division Director

  • 2016–17 Unaudited Actuals – CDE Review
Accounting Issues
  • Updates to Special Education Individuals with Disabilities Education Act (IDEA), Part B, Section 611 Resource Codes

  • Every Student Succeeds Act (ESSA) Per-Pupil Spending Update

  • Governmental Accounting Standards Board (GASB) 75 Update

  • CDE’s Evaluation of Requests for New SACS Codes
SACS Software Issues
  • SACS2018 Software Release – Proposed Changes
Other Issues
  • Next Meeting

Meeting Minutes

The November 7th SACS Forum PowerPoint presentation slides (PDF) are now available for download.

Announcements and Information
  • New School Fiscal Services Division Director

It was announced that Caryn Moore has been hired as the new Director of the School Fiscal Services Division, replacing the previous Director, Peter Foggiato.

  • 2016–17 Unaudited Actuals – CDE Review

The Financial Accountability and Information Services (FAIS) staff are in the process of reviewing the 2016–17 Unaudited Actuals (UA) data submissions. Again this year, a focus of the review is the indirect cost rate calculation to ensure the rates calculated are in accordance with the CDE’s delegation agreement with the U.S. Department of Education (ED).  In addition, because the UA data is available to the public and is used for several state and federal reports, the CDE wants to ensure that reported financial data is reliable, accurate, and prepared in accordance with generally accepted accounting principles.

FAIS staff may be contacting local education agency (LEA) staff with questions regarding the indirect cost rate calculation or any other financial reporting questions. The CDE appreciates LEA staff assistance with these questions. The deadline to finalize the review is mid-December, which facilitates prompt publishing of the financial data and completion of other time-sensitive tasks, e.g., SACS financial reporting software development and county office of education first interim reviews.

Accounting Issues
  • Updates to Special Education Individuals with Disabilities Education Act (IDEA), Part B, Section 611 Resource Codes

Previously, the State Budget Act had separate schedules within the federal Special Education budget item for IDEA Local Assistance entitlements, IDEA Preschool Local entitlements, and State Institution funding. Currently, the federal Special Education budget item has only one schedule for IDEA Local Assistance entitlements. Because the funding is now consolidated into one schedule, CDE program staff have determined that it is no longer necessary to prepare three separate grant awards. Consequently, it is no longer necessary to maintain three separate resource codes. Effective 2018–19, the CDE will consolidate the following resource codes into the existing Resource 3310, Special Education: IDEA Basic Local Assistance Entitlement, Part B, Sec 611:

  • Resource 3320, Special Ed: IDEA Preschool Local Entitlement, Part B, Sec 611
  • Resource 3400, Special Ed: Disabled Children State Institutions, Part B, Sec 611

Note that this change is due to a legislative issue and will not impact funding levels. Additionally, Resource 3332, Special Ed: IDEA Part B, Sec 611, Preschool Local Entitlement Early Intervening Services, will be eliminated, since it is used to track expenditures associated with Resource 3320 funds.

Although resource codes 3320, 3332, and 3400 will remain open in the SACS validation tables for an additional three years, through 2020-21, CDE encourages LEAs to expend carryover balances as soon as possible. Note that LEAs should not record new revenue in these resource codes beginning 2018–19, other than revenue associated with carryover balances that were reported as unearned revenue in the prior year.

FAIS staff have confirmed with the CDE Special Education program office that the total revenues of combined Resource Codes 3310 and 3320 will be subject to the private school proportionate share calculation. Further information on updates to the 2018–19 proportionate share calculation and 2018–19 funding calculation will be provided by the Special Education program office at a later date.

  • Every Student Succeeds Act (ESSA) Per-Pupil Spending Update

At the May 2017 SACS Forum meeting, the CDE announced that the federal regulations implementing the ESSA per-pupil expenditure reporting requirement were repealed by Congress in March 2017. These regulations would have required states to develop a uniform procedure for LEAs to calculate LEA and school-level per-pupil expenditures, within a prescribed implementation timeline. States would have been allowed to file for a one-year extension of reporting per-pupil expenditures in State and LEA report cards, from 2017–18 to 2018–19.

The ED issued a “Dear Colleague LetterExternal link opens in new window or tab. (PDF) on June 28, 2017, which provides State educational agencies (SEAs) and LEAs an extra year to implement the requirement to include LEA and school-level per-pupil expenditures on the annual State and LEA report cards. This is consistent with the extension that would have been granted under the rescinded regulations.                                                                                

The CDE has also learned that ED will issue non-regulatory guidance by the end of 2017 regarding per-pupil expenditure reporting. The CDE expects this guidance to be general in nature, providing flexibility to States for determining the amounts reported. The CDE will evaluate the ED’s guidance once it is issued, and plans to convene a workgroup of LEA representatives as originally intended. The CDE’s goal is to provide guidance to LEAs that stresses consistency in determining per-pupil expenditures at the LEA level to ensure comparability among an LEA’s schools.

The CDE mentioned that the ED’s “Dear Colleague Letter” references an organization working with the ED to support States in implementing the ESSA per-pupil expenditure reporting requirement. The Building State Capacity and Productivity (BSCP) Center has provided some financial transparency and reporting resources External link opens in new window or tab. on its Web site that CDE will use, along with the pending guidance from ED, to assist with implementing the per-pupil expenditure reporting requirement.

Further details of CDE’s efforts on this project will be provided at the next SACS Forum meeting

  • Governmental Accounting Standards Board (GASB) Statement 75 Update

The CDE reminded participants that GASB 75, effective 2017–18, establishes similar guidance for postemployment benefits other than pensions (OPEB) accounting and reporting as GASB 68 did for pension plan accounting and reporting. GASB 75 supersedes GASB 45. Under GASB 75, OPEB accounting and financial reporting are de-linked from actuarial funding policy.

For financial statements prepared using the full accrual basis of accounting, GASB 75 requires the OPEB expense and net or total OPEB liability, depending on whether the plan is administered by a qualifying trust or equivalent arrangement, be recognized and reported on the face of the financial statements. Additionally, OPEB expense is not the annual contribution or funding amount to the OPEB plan, but rather the change in the net or total OPEB liability from one year to the next. Also, GASB 75 requires significant additional note disclosures and required supplementary information.

For financial statements prepared using the modified accrual basis of accounting, i.e., governmental fund accounting, OPEB expenditures should be recognized and reported for the amounts paid by the employer to the OPEB plan, including amounts paid for OPEB as the benefits are due. This for the most part is no different than what was required under GASB 45.

For background and detailed information on GASB 75, see the November 7th SACS Forum PowerPoint presentation slides (PDF). 

NOTE: Subsequent to the meeting, CDE received clarification regarding the provisions of the California Employers’ Retiree Benefit Trust Fund (CERBTF) agreement, resulting in a revision to the guidance provided in the presentation. Although the CERBTF OPEB participation agreement provides that trust assets may be returned to the employer if the amount in the plan exceeds a specified amount, which itself does not meet the irrevocability criterion necessary for the plan to be considered a qualifying trust per GASB 74, paragraph 3, it was clarified with CDE that such action would only be taken if the GASB accounting standards permit it. Thus, since GASB accounting standards do not currently permit such action, the CERBTF meets the criteria to be considered a qualifying trust.

The contribution to the CERBTF, therefore, should not be accounted for as employer assets as previously advised, but rather accounted for as OPEB expenditures in the governmental funds.

  • CDE’s Evaluation of Requests for New SACS Codes

Occasionally, FAIS receives requests to add new codes to the account code structure charts of accounts to meet local and/or program reporting requirements. For example, recently FAIS received several requests to expand the goal code for the adult education and career technical education programs.

CDE exercises prudence in response to such requests. Generally, only those codes that are required by law, required in accordance with generally accepted accounting principles, or necessary for federal fiscal compliance and data reporting purposes are established in the SACS charts of accounts. Keeping SACS as simple as possible minimizes errors in data reporting, prevents overly complicating LEA budgeting and financial reporting, and maintains stability in the account codes as programs change over time.

As a reminder, an LEA may create its own unique locally defined codes and definitions to reflect accounting detail not covered by CDE-defined required or optional SACS codes. When reporting data to CDE, locally defined codes must be rolled up by the LEA to a CDE-defined code. For example, the CDE has provided two specific ranges of goals for use as locally defined codes:

  • Goals 1130–1999, for local definition of regular K–12 instruction. When reporting data to CDE, LEAs must roll up these goals to Goal 1110, Regular Education, K–12.
  • Goals 4130–4399, for local definition of regular adult education. When reporting data to CDE, LEAs must roll up these goals to Goal 4110, Regular Education, Adult.

Alternatively, some LEAs have appended existing SACS codes with another digit; for example, Fund 012 (for dividing the General Fund into greater detail), or Goal 38003 (for a locally defined industry-specific Career Technical Education goal). Again, any locally defined codes must roll up to the appropriate CDE-defined SACS codes.

Although SACS allows local flexibility, LEAs should be aware that in the future locally defined codes could be preempted by CDE for other uses. Therefore, the CDE does not encourage the use of locally defined codes outside the ranges defined for this purpose. Refer to the California School Accounting Manual (PDF; 5MB) for additional information regarding flexibility of the SACS codes.

III. SACS Software Issues
  • SACS2018 Software Release – Proposed Changes

Proposed Criteria and Standards Modifications in SACS2018 Software

  • County Office of Education (COE) only – Budget only – Criterion 2 – LCFF Revenue

To assist COEs with completing the newly reactivated criterion accurately, the software will lock cells that are not relevant based on the Local Control Funding Formula (LCFF) revenue funding status selection. For example, if “at target” revenue funding status was selected, then the hold harmless line (section I-b) would be locked. If “hold harmless” revenue funding status was selected, then the COE funded at target lines (section I-a to I-a2) would be locked.

  • COE and District – Budget and Interims – Criterion 5/7 – Facilities Maintenance

The Ongoing and Major Maintenance/Restricted Maintenance Account required minimum contribution will be modified to incorporate Proposition 51 requirements. If an LEA receives Proposition 51 funding, the required contribution is three percent of the total unrestricted (COEs only) general fund expenditures and other financing uses in the year subsequent to the fiscal year in which funding is received. More details will be provided at the next meeting.

Please refer to the February 7th, 2017 SACS Forum minutes for more information on the minimum required contribution under the current and Proposition 51 requirements.

  • COE/District – Budget and Interims – Supplemental Information 7 – Unfunded Liabilities

Modify to remove the reference of “annual required contribution” (ARC) and replace it with “actuarially determined contribution” (ADC) per GASB 75 implementation. As CDE progresses with GASB 75 implementation, additional changes may be required.

IV. Other Issues
  • Next Meeting

The next SACS Forum is tentatively scheduled for Tuesday, February 6th, 2018. The CDE is planning to offer the next forum as a webinar only.

Questions:   Financial Accountability & Information Services | sacsinfo@cde.ca.gov | 916-322-1770
Last Reviewed: Wednesday, September 9, 2020