Bills that passed and some that didn’t….
HB 1785 Effective June 12, 2014
Authorizing de minimis use of state resources to provide information about programs that may be authorized payroll deductions.
(3) This section does not prohibit de minimis use of state facilities to provide employees with information about (a) medical, surgical, and hospital care; (b) life insurance or accident and health disability insurance; or (c) individual retirement accounts, by any person, firm, or corporation administering such program as part of authorized payroll deductions pursuant to RCW 41.04.020.
HB 2613 Delivered to Governor, Scheduled to be signed March 31
Efficiency bill – as requested by higher education. Allows - but does not require - colleges to pay employees every other week (instead of twice a month). Primarily for UW’s hospital shift workers where determining overtime is based on a two-week work period. Also,
(6) Notwithstanding subsections (1), (2), and (4) of this section, academic employees at institutions of higher education as defined in RCW 28B.10.016 whose employment appointments are less than twelve months may have their salaries prorated in such a way that coincides with the paydays used for full-time employees.
SB 5318 Delivered to Governor, Scheduled to be signed April 2
Waiving the one-year waiting period for veterans paying in-state tuition
The term "resident student" shall mean:…
…(h) A student who is on active military duty or a member of the national guard who entered service as a Washington resident and who has maintained
Washington as his or her domicile but is not stationed in the state;
(i) A student who is the spouse or a dependent of a person who is on active military duty or a member of the national guard who entered service as a
Washington resident and who has maintained Washington as his or her domicile but is not stationed in the state. If the person on active military duty is reassigned out-of- state, the student maintains the status as a resident student so long as the student is continuously enrolled in a degree program;…
…(k) A student who has separated from the military under honorable conditions after at least two years of service, and who enters an institution of higher education in Washington within one year of the date of separation who:
(i) At the time of separation designated Washington as his or her intended domicile; or
(ii) Has Washington as his or her official home of record; or
(iii) Moves to Washington and establishes a domicile as determined in RCW 28B.15.013;
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(l) A student who is the spouse or a dependent of an individual who has separated from the military under honorable conditions after at least two years of service who:
(i) At the time of discharge designates Washington as his or her intended domicile; and
(ii) Has Washington as his or her primary domicile as determined in
RCW 28B.15.013; and
(iii) Enters an institution of higher education in Washington within one year of the date of discharge;
SHB 2336 DID NOT PASS (May be a sign of things to come…)
Would have required each two-year institution of higher education to publish a detailed financial report of its operating expenditures on its website. At a minimum to include expenditure information by statewide object code. (The SBCTC already prepares an annual comparative expenditure report that could possibly be used by institutions to meet this requirement.)
SHB 2651 DID NOT PASS (May be a sign of things to come)
Would have required OFM to create a web site with accessible information on revenues and expenditures for each public institution of higher education.
No change in how this is funded, just a change in accounting. We will treat this cost the same way we do revolving fund (aka central services) charges. We’re making the change because you’ll have to report this amount in your financial statements, and this will make it more readily available to you.
BAC Operations committee has been asked to develop a form or methodology for colleges to use when requesting approval for supplemental or shared funding, based on a draft policy prepared by SBCTC.
The intent is to clarify when colleges can count full or partial FTE as state-funded when grant funds are also involved.
Legislation that passed the year before procurement reform requires state agencies and colleges to provide technical assistance to small businesses in order to increase the amount of goods and services obtained from small businesses. DES is supposed to provide a model plan (colleges can choose to follow this plan or create their own) and an online tool to assist agencies and colleges in this effort. DES made changes to WEBS effective January 2014, but has not yet developed a model plan. DES has indicated they want to put together a group to work on developing a model plan. Neither DES nor any of the colleges or universities has yet submitted a report to the Legislature for 2013. We intend to prepare a report for 2015. (See RCW 43.19.725 and 727)
This practice appears to be outdated and creates a permanent reconciling item between the CAFR and college financial statements. On the CAFR, the SBCTC shows this as cash and a liability, while the college shows it as a receivable. OFM eliminates interagency receivables and payables in the CAFR, simply
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leaving the cash. When colleges’ prepare their own financial statements, it must be re-categorized from a receivable to a cash equivalent “Cash held by a fiscal agent”. To avoid this, and because it has outlived its original purpose, SBCTC recently sent instructions to colleges on how to submit for reimbursements or refunds of your reserve amounts.
As you may already know, the Legislature includes money to pay central services charges in our system operating budget allocation. SBCTC pays these bills during the year, then in one of the final allocations of the year distributes both the funding and the cost to the colleges so it can be recorded on each college’s books.
Many of these central services charges are based on flat rate or prorated charges that are not directly related to the amount of services each college (or state agency) consumes. However, two are based on actual usage by the colleges. These include legal services provided by the Attorney General’s Office and
Whistleblower investigations conducted by the State Auditor’s Office. Although SBCTC pays these bills, we have no way of knowing what services the colleges actually received. As a result, we will begin sending you a notice each month of any charges you’ve incurred with a request that you work directly with the AAG or SAO to resolve any disputes. We also request that you inform Jason Gordon if there is a dispute so we know there may be an adjustment pending.
We are not making any changes in the allocation or payment processes.
After discussions with WACTC OBC, the full WACTC, BAC members from the pilot colleges, BAC
Operations Committee, and the full BAC, the official consensus is to move to annual preparation and financial statements (rather than every other year). You may recall that the pilot group identified that the learning curve involved in preparing financial statements is considerable – and felt that preparing financial statements annually will make this much more manageable, especially as colleges begin to transition to ctcLink.
Nine more colleges recently received letters from the Northwest Commission on Colleges and
Universities (our accrediting body), bringing the total to 16. Of these, 14 have an ad hoc report due to
NWCCU in Fall 2014. I’ll be working with the pilot group to develop some sort of bullet points or framework would be useful to colleges when writing their ad hoc reports.
At the request of WACTC, we’re working on figuring out timing and logistics to train Presidents and
Trustees how to read financial statements. We’ll share information about that with BAC and BAR too, since we know you are the people who will get questions about the financial statements. We have plenty of time to figure this out for the non-pilot colleges, since we don’t want to do training too far in advance of when they will have statements. For the pilot colleges, we’ll need to do something sooner than later.
We distributed a list of “things colleges can do now to prepare for future financial statements” via the
BAR mailing list in January. Make sure you have a copy and try to plan some time to work through it.
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We haven’t been hearing many questions from colleges about this yet. (No doubt you’re all working on
IPEDS.  ) I’ve started an update with a few additional items, but I don’t want to overwhelm everybody.
Independence of State Auditor
I periodically get questions about whether the State Auditor’s Office is sufficiently independent for their opinion on college financial statements to be acceptable under accreditation standards. The confusion may be the result of the different construction, roles and mission of auditor offices in various states. In
Washington, the State Auditor is a state-wide elected position and meets the independence requirements of Generally Accepted Government Auditing Standards as published by the U.S.
Government Accountability Office. I also contacted Sandra Elman, the Executive Director of NWCCU and verbally verified her understanding Washington SAO audits meet the “by professionally qualified personnel” element of the standard.
Audits of Foundations
I continue to get questions about why and how College Foundations are included in the college’s financial statements. As to why, there are two possible criteria that lead to including Foundations.
It is unlikely that any of the college foundations meet the “financially accountable” criteria:
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College appoints voting majority, and
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Can impose its will on Foundation, or
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Foundation is fiscally dependent (e.g. college approves Foundation budget) and provides significant financial benefit or burden on college
However, it is likely the foundations meet the “would be misleading to exclude” criteria:
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Based on nature and significance of relationship
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Legally separate, tax-exempt organizations should be reported if all conditions are met: o Economic resources received or held are entirely or almost entirely for the direct benefit of college and its constituents (students, faculty, staff), and o College is entitled to or has the ability to otherwise access a majority of the economic resources received or held by the Foundation. (GASB explains in a footnote that they intend this as a broad concept, not about control, giving the example that if a college
“historically received a majority of economic resources” provided by the Foundation, it then meets this element), and o Foundation’s resources are significant to the College.
As a result, almost all of the colleges will include Foundation financial statement information in their financial statements. The included Foundation information should be audited annually, allowing the
State Auditor to rely on the work of other auditors.
As to how, we have three options for discrete presentation of Foundation financial information in the college’s financial statements.
Separate column on the face of the college’s financial statements
Since Foundations report under FASB and colleges report under GASB, this is awkward and results in certain line descriptions only applying to one or the other. For this inaugural financial statement for the colleges, the pilot group thought this might be too difficult to explain to the financial statement readers, along with everything else that will need to be explained.
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Include face of Foundation’s statements in the college’s financial statements, along with a note describing the relationship and how reader can get a full copy of the Foundation financial statements.
This is the least impact on workload.
Include a condensed version of the Foundation’s statements in the notes to the college’s financial statements (GASB defines minimum elements that must be included in the condensed data).
We looked at common practice among Washington’s six public four-year colleges. All include their foundations as a component unit. One college blends their Foundation, five report discretely. Of those who report discretely, two use the columnar format, while three include the face of their Foundation’s financial statements in their own. None use the condensed statement approach.
The pilot group has chosen the second option.
Each year FMAC (sort of the state agency equivalent to BAR) brings in someone from the Government
Accounting Standards Board (GASB) to give a presentation on changes in GASB standards. We have the opportunity to coordinate calendars and share costs to have the GASB person give our colleges an update while they’re here in the state. We would likely invite all BAC members and any BAR members who will be working on financial statements. FMAC is looking to schedule GASB for their September 25 th meeting. While the timing is not ideal for our colleges, we will look at options such as in-person for those who can get there and WebEx or ITV for others.
Gives the State Auditor’s Office authority to incur $300,000 to contract with a CPA firm and charge those costs to higher education institutions. Will include two community colleges – one with baccalaureate programs and one without. Requires examination, a narrative summary and recommendations related to dedicated local (fund 148) and operating fee (fund 149) accounts (RCWs use the word “accounts” for what we and OFM call “funds”). Language relating to examining transfers and reviewing “other issues of significance” could result in examination of monies in other funds.
Will meet April 15 th
Goals are to debrief responses to IRS, share best practices, and update system guidance. Three BAR members and two ctcLink employees will participate. The Instruction Commission and Registrar’s group will also send representatives.
The new circular makes significant changes to administrative requirements, cost principles and audit requirements for federal grants.
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Federal agencies must implement the requirements to be effective by December 26, 2014.
Subpart F, Audit requirements, will apply to audits of non-Federal entity fiscal years beginning on or after December 26, 2014. The revised audit requirements are not applicable to fiscal years
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beginning prior to that date. As a result, for college Foundations that have a Single Audit and are on a calendar year, it’s effective for calendar year 2015. For the colleges themselves, it’s effective for Fiscal year 2015-16.
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Administrative requirements and cost principles will apply to new awards and to additional funding (funding increments) to existing awards made after Dec 26, 2014.
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Existing Federal awards will continue to be governed by the terms and conditions of the Federal award.
We’re talking with BAR leadership about including training in an upcoming meeting.
SBCTC issued a revised copy of College Time and Effort Reporting Guidelines, dated February 2014.
Highlights for the revision include:
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Removed language that previously stated time and effort was not necessary if an employee was working solely on single federal grant or program. Clarified that all employees working on a federal grant or program must submit a timesheet or certification that meets federal requirements.
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Removed reference to time and effort being split between activities within the same grant. College staff only need to track time and effort by grant, not by each grant activity. For example, staff must track of how much time they work on WorkFirst grant activities as a whole but do not need to track how much time was spent on individual WorkFirst activities (WorkFirst
Financial Aid, WorkFirst Internal Controls, Customized Job Skills Training, Administration, etc.).
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Provided updated examples of timesheets and certification reports.
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Removed examples specific to inactive programs and replaced with examples related to active programs.
A copy of the Time & Effort Guidelines can also be found in the “How To” section of OGMS and in the
“Resources” section of OBIS . Questions can be directed to David Bishop, Michele Rockwell, Susan
Wanager or Joann Wiszmann.
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NACUBO Annual Meeting in Seattle
July 19 – 22
New Business Officers track Thursday thru Saturday, July 17 -19
Recent Ethics Cases
A college custodial supervisor used state resources to promote his outside custodial business. Evidence indicated he hired his subordinates to work for him in his private business and also used agency equipment and resources to further his private business. Civil penalty of $8,000. Referred by college.
Two college employees used state resources to promote an outside employment of proctoring tests at the college. Employees had not received prior ethics training. Whistleblower filed with SAO.
A university employee used state resources to support a political candidate for Superior Court Judge.
Email with RSVP link sent from Yahoo account, to other employee’s college email addresses and cc’ing the employee’s own college email account. Civil penalty of $1,500 with $500 suspended. Anonymous complaint.
A college employee used her state computer to conduct personal business in regard to Pampered Chef and ItWorks. 17 files and 17 emails. Civil penalty of $2,500 with $1,000 suspended. Whistleblower filed with SAO.
A university professor used state resources for personal gain in support of two outside business ventures. Sold environmental photos online using college email and phone number as contact information. Received unauthorized honoraria for newspaper articles. Civil penalty of $3,000 with
$1,500 suspended. Whistleblower field with SAO.
A college employee used his state computer and email to promote an outside business. Civil penalty of
$500 with $250 suspended Ethics Board received a complaint.
A college employee used state resources to promote an outside business that her husband owned. Used logo created while state employee (owned by state) on shirts, mugs, and totes and sold book of student and employee writings. Did not intend to make a profit. Civil penalty of $500 with $250 suspended.
Ethics Board received a complaint.
State Auditor’s Office Recent Audits
Whistleblower Reports
A university director of GEAR UP failed to follow travel regulations when traveling for business purposes and used her position to secure special privileges for herself and her family when traveling for business purposes.
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A university initiated an investigation and determined: Two finance assistants recorded falsified expenses and inserted fake receipts to misappropriate funds through travel advances at the I-TECH
Tanzania location. The financial accountant at the I-TECH Namibia location recorded fake vendor expenses in order to wire payments to her personal account as well as accounts of her sister and a friend.
A former Executive Dean at a college allowed a non-profit organization to operate a daycare at the college free of charge since September 1, 1997.
Two parking attendants misappropriated $15,932 in June and July 2011. We could not determine whether an additional $31,532 or more was misappropriated because internal controls were too poor to make that determination.
A Faculty union member sent eight emails to full time and part time faculty, encouraging employees to contact legislators or to attend rallies opposing or supporting specific legislation, among other topics.
Also sent an email to the union executive board outlining a draft action plan to strategize the union’s lobbying activities for the upcoming legislative session. The Executive Ethics Board previously has determined that the Ethics Law prohibits using state email to encourage employees to lobby legislators on matters of interest to the union.
Employee used university equipment (tripod, motorized platform, etc.) to shoot photographs and video for personal use. He stored personal videos that he shot for a film festival on his university computer.
He also used his state email account to communicate about being paid $500 apiece for editing videos.
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